CONTENTS TABLE OF DIRECTORS RESPONSIBILITY STATEMENT 02 GROUP S FINANCIAL HIGHLIGHTS 03 CORPORATE STRUCTURE 04 CORPORATE INFORMATION 05

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1 TABLE OF CONTENTS DIRECTORS RESPONSIBILITY STATEMENT 02 GROUP S FINANCIAL HIGHLIGHTS 03 CORPORATE STRUCTURE 04 CORPORATE INFORMATION 05 BOARD OF DIRECTORS PROFILE 06 CALENDAR OF EVENTS 2011/ CHAIRMAN S STATEMENT 12 NOTICE OF ANNUAL GENERAL MEETING 16 STATEMENT OF CORPORATE GOVERNANCE 20 STATEMENT OF INTERNAL CONTROL 26 AUDIT COMMITTEE REPORT 28 FINANCIAL STATEMENTS 31 ANALYSIS OF SHAREHOLDINGS 115 PROPERTIES OWNED BY THE GROUP 117 FORM OF PROXY 119

2 DIRECTORS RESPONSIBILITY STATEMENT The Directors are required by the Companies Act, 1965 (the Act ) to prepare financial statements for each financial year which give a true and fair view of the state of affairs of the Group and of the Company and their results and cash flows for the financial year. As required by the Act and the Listing Requirements of Bursa Malaysia Securities Berhad, the financial statement have been prepared in accordance with the applicable approved accounting standards in Malaysia and provisions of the Act. Following discussions with the external auditors, the Directors consider that the Company uses appropriate accounting policies that are consistently applied and supported by reasonable as well as prudent judgments and estimates. The Directors are responsible for ensuring that the Group and the Company keep proper accounting records which disclose with reasonable accuracy at any time the financial position of the Group and the Company and to enable them to ensure that financial statements comply with the Act. The Directors have a general responsibility for taking such steps that are reasonably available to them to safeguard the assets of the Group and of the Company and to prevent and detect fraud and other irregularities.

3 GROUP S FINANCIAL HIGHLIGHTS (15 months) RM 000 RM 000 RM 000 RM 000 RM 000 INCOME STATEMENT Revenue 215, , , , ,218 Profit Before Taxation 15,433 23,745 44,217 84,858 54,953 Profit Attributable To Shareholders 13,424 20,564 33,824 58,910 39,364 Balance Sheet Issued And Paid Up Capital * 88,071 88,071 87,819 94,039 96,985 Shareholders Funds 266, , , , ,807 Total Assets 418, , , , ,789 Per Share Data (sen) Net Earnings Per Share (EPS) # 65.0 # 41.0 Net Assets Per Share Dividend Per Share * Net of treasury shares # Earnings per share is calculated based on the weighted average number of ordinary shares

4 04 Corporate Structure PLANTATION 90% DELLOYD PLANTATION SDN BHD 60% PT REBINMAS JAYA OTHERS 100% DELLOYD MANAGEMENT SERVICES (M) SDN BHD 100% DELLOYD R&D (M) SDN BHD 100% DELLOYD INFOCOMM SDN BHD 97.5% PREMIER ASIAN AUTO PUBLICATIONS (M) SDN BHD 40% INTELLI-TELEMATICS ASIA SDN BHD AUTOMOTIVE 100% DELLOYD AUTO PARTS (M) SDN BHD 45% THAI DELLOYD CO., LTD. 100% DELLOYD AUTO PARTS MFG SDN BHD 100% DELLOYD (MALAYSIA) SDN BHD 100% DELLOYD ELECTRONICS (M) SDN BHD 40% BROSE DELLOYD AUTOMOTIVE CO., LTD. 30% ICHIKOH (MALAYSIA) SDN BHD 10% PT JIDECO INDONESIA 100% DELLOYD INDUSTRIES (M) SDN BHD 100% PT DELLOYD 100% DELLOYD INDUSTRIES (THAILAND) CO., LTD 100% GMI MOULD INDUSTRIES SDN BHD 21% AUTOPARTS NETWORKS ALLIANCES SDN BHD VEHICLE DISTRIBUTION 100% ATOZ MOTOR MARKETING SDN BHD 100% ATOZ MOTOR WORKSHOP SDN BHD 100% ATOZ MOTOR CONCEPT SDN BHD 100% ATOZ MOTOR SERVICES SDN BHD 100% VANTAGE SPEED SDN BHD 100% MAGNAVISION (M) SDN BHD 100% DELLOYD CORPORATION SDN BHD 51% PT ASIAN AUTO INTERNATIONAL

5 05 BOARD OF DIRECTORS General Tan Sri (Dr) Mohamed Hashim Bin Mohd Ali (Rtd) Chairman, Independent Non-Executive Director Dato Sri Tee Boon Kee Group Managing Director Dato Ir Haji Noor Azmi Bin Jaafar Executive Director Datin Sri Chung Geok Siew Executive Director Dato Tee Boon Keat Executive Director Chung Chee Sun Non-Independent Non-Executive Director Dato Dr. M SHANmughalingam Independent Non-Executive Director Dato Mohamed Nizam Bin Abdul Razak Independent Non-Executive Director Eow Kwan Hoong Independent Non-Executive Director SECRETARIES Ng Say Or Yew Ing Chuo AUDIT COMMITTEE Dato Mohamed Nizam Bin Abdul Razak Chairman Dato Dr. M SHANmughalingam Eow Kwan Hoong REMUNERATION COMMITTEE Dato Dr. M SHANmughalingam Chairman Eow Kwan Hoong Dato Sri Tee Boon Kee NOMINATION COMMITTEE General Tan Sri (Dr) Mohamed Hashim Bin Mohd Ali (Rtd) Chairman Dato Mohamed Nizam Bin Abdul Razak Dato Dr M SHANmughalingam Eow Kwan Hoong REGISTERED OFFICE 52A, Lebuh Enggang, Klang Selangor Darul Ehsan Tel : (03) Fax : (03) AUDITORS Crowe Horwath Kuala Lumpur Office Chartered Accountants REGISTRAR Bina Management (M) Sdn Bhd Lot 10, The Highway Centre, Jalan 51/ Petaling Jaya, Selangor Darul Ehsan Tel : (03) Fax : (03) STOCK EXCHANGE LISTING Bursa Malaysia Main Market Stock Code : 6505 PRINCIPAL BANKERS HSBC Bank Malaysia Berhad RHB Bank Berhad Hong Leong Bank Berhad OCBC Bank (Malaysia) Berhad SOLICITORS J. M. Chong, Vincent Chee and Co Lee, Perara & Tan MANAGEMENT TEAM Dato Sri Tee Boon Kee Group Managing Director Dato Ir Haji Noor Azmi Bin Jaafar Executive Director CEO - Manufacturing Datin Sri Chung Geok Siew Executive Director Finance & Administration Dato Tee Boon Keat Executive Director CEO - Delloyd Auto Parts (M) Sdn Bhd Dato Leon Tee Wee Leng Deputy CEO Corporate & Business Chua Soo Seong Deputy CEO Operations Badrol Hisham Bin Jeran Chief Operating Officer Delloyd Industries (M) Sdn Bhd Lawrence Chong Kin Min Chief Operating Officer Delloyd Industries (M) Sdn Bhd- Tg. Malim Gan Nean Paul Chief Operating Officer Delloyd Electronics (M) Sdn Bhd Tay Koh Heng Chief Operating Officer Delloyd Auto Parts Mfg Sdn Bhd & Delloyd Industries (Thailand) Co., Ltd Chan Yoke Hoong Senior General Manager Group Purchasing & Corporate Services General Manager/ Technical Advisor Research & Development Hasbullah Bin Abdul Rahman General Manager Research & Development Mazlan Bin Mamat General Manager Group Marketing Ryuichiro Ito Advisor International Business Development Yuji Matsuzaki Technical Advisor Delloyd Industries (M) Sdn Bhd Mustaffa Bin Haji Bakar CEO PT Delloyd, Indonesia Muhamad Bin Aman CEO PT Asian Auto International, Indonesia Ruddy Soesilo Marketing Director PT Asian Auto International, Indonesia Chung Chee Yoke General Manager Delloyd Plantation Sdn Bhd Chang Poh Meng Senior Manager - Estate Division PT Rebinmas Jaya, Indonesia Lim Swee Leong Advisor - Oil Mill Division PT Rebinmas Jaya, Indonesia Jessica Tho Lai Foong General Manager Group Finance & Accounts Tsuneo Matsunaga

6 BOARD OF DIRECTORS PROFILE GENERAL TAN SRI (DR) MOHAMED HASHIM BIN MOHD ALI (Rtd) CHAIRMAN INDEPENDENT NON-EXECUTIVE DIRECTOR General Tan Sri (Dr) Mohamed Hashim Bin Mohd Ali (Rtd), aged 77, a Malaysian, was appointed an Independent Non-Executive Director and Chairman of Delloyd Ventures Berhad (DVB) on 6 August He is also the Chairman of the Nomination Committee of the Board. He holds a Diploma in Advance Business Management from the Harvard Business School and was conferred the Honorary Doctorate by the University of Salford, United Kingdom in January General Tan Sri (Dr) Mohamed Hashim joined Country Heights Holdings Berhad after his retirement as the Chief of the Defence Forces in the Malaysian Armed Forces where he chalked up 40 years of dedicated service. During his tenure in the Malaysian Armed Forces, he had initiated the re-organisation and modernisation of the Army. He is also the Chairman of Ajinomoto (Malaysia) Berhad and sits on the Boards of Country Heights Holdings Berhad, Borneo Highlands Hornbill Golf & Jungle Club Berhad, Bluwater Developments Berhad, Mines Excellence Golf Resort Berhad (fka Excellence Golf Resort Berhad) and some private companies. He has no family relationship with any directors and/or major shareholders of DVB nor any personal interest in any business arrangement involving the Company. He has no convictions for any offences within the past 10 years. Dato Sri Tee Boon Kee aged 58, a Malaysian is the Group Managing Director of Delloyd Ventures Berhad. He was appointed to the Board on 6 August 1996 and sits on the ESOS and the Remuneration Committees of the Board. He is the spouse of Datin Sri Chung Geok Siew and brother to Dato Tee Boon Keat. Dato Sri Tee is a businessman by profession and co-founder of the DVB Group. The first company founded by him was Delloyd Auto Parts (M) Sdn Bhd in 1984, which specializes in importing and distributing of automotive parts and accessories in Malaysia. Whilst in the midst of establishing a market niche in Malaysia, he had also set up Delloyd (Malaysia) Sdn Bhd in 1987 to undertake direct exports of replacement equipment/ accessories parts. He formed Delloyd Industries (M) Sdn Bhd and Delloyd Auto Parts Mfg Sdn Bhd DATO SRI TEE BOON KEE GROUP MANAGING DIRECTOR to produce OEM and replacement equipment / accessories parts in 1989 and 1990 respectively. He also possesses in-depth knowledge and experience in the other major sectors of the Group s business viz. the motor vehicles and oil palm plantation sectors. He is deemed interested in certain related party transactions of a revenue or trading nature which are necessary for the day-today operations of the Group as disclosed on page 94 to 95 of the Annual Report. He has no convictions for any offences within the past 10 years.

7 DATO IR HAJI NOOR AZMI BIN JAAFAR EXECUTIVE DIRECTOR DATIN SRI CHUNG GEOK SIEW EXECUTIVE DIRECTOR Dato Ir. Haji Noor Azmi Bin Jaafar aged 57, a Malaysian is an Executive Director of Delloyd Ventures Berhad. He was appointed to the Board on 6 August 1996 and sits on the ESOS Committee of the Board. He graduated from UiTM with Diploma in Mechanical Engineering and a Bachelor of Science in Mechanical Engineering. Subsequently, he obtained a Master of Science in Mechanical Engineering from University of Miami, USA. He is a Member of the Institution of Engineers Malaysia (MIEM) and a registered Professional Engineer (P. Eng) with the Board of Engineer, Malaysia. Dato Ir. Haji Noor Azmi started his career in 1979 as a lecturer in the Faculty of Mechanical Engineering, UiTM and his last position at UiTM was Head of Thermodynamics and Heat Transfer Division. In 1984, he joined PROTON (Perusahaan Otomobil Nasional Berhad) and assumed various capacities in Quality Control, Local Content, Localisation, Warranty & Technical Services and Procurement & Vendor Development. After seven and half years with PROTON, he joined Delloyd Industries (M) Sdn Bhd in 1991 as Director and Advisor to the Managing Director. He was appointed Manufacturing Director in 1995 and with effect from August 2008 was appointed Chief Executive Officer of the Group s automotive components division. This division comprises main subsidiaries including Delloyd Industries (M) Sdn Bhd, Delloyd Electronics (M) Sdn Bhd, Delloyd Auto Parts Mfg Sdn Bhd, Delloyd (Malaysia) Sdn Bhd, Delloyd R&D (M) Sdn Bhd., PT Delloyd of Indonesia and other overseas operations. Dato Ir. Haji Noor Azmi is an academic advisor to the Faculty of Mechanical Engineering UiTM, Faculty of Mechanical Engineering for Doctor and Master of Philosophy Programme for UTM Razak School of Engineering and Advanced Technology, Faculty of Mechanical Engineering Politeknik Sultan Salahuddin Abdul Aziz Shah, Shah Alam and School of Manufacturing Engineering University Malaysia Perlis (Uni MAP). He is also a Treasurer of the Engineering Faculty Alumni Association (EFAA) UiTM. On May 27, 2011, Dato Ir. Haji Noor Azmi was elected the President of Proton Vendors Association for the 2011/12 term. He is deemed interested in certain related party transactions of a revenue or trading nature which are necessary for the day-today operations of the Group as disclosed on page 94 to 95 of the Annual Report. He has no convictions for any offences within the past 10 years. Datin Sri Chung Geok Siew, aged 59, a Malaysian is an Executive Director of Delloyd Ventures Berhad. She was appointed to the Board on August 1996 and sits on the ESOS Committee of the Board. She is the spouse of Dato Sri Tee Boon Kee and the sister of Chung Chee Sun. Datin Sri Chung is one of the founding members of the DVB Group. She has been with the Group since the inception of Delloyd Auto Parts (M) Sdn Bhd in She holds the position of Group Finance Director primarily responsible for the finance, administration, purchasing and human resources functions of the Group. She has garnered wide experience in the financial and administrative aspects of the Group s automotive components business as well as its oil palm plantations business. She is deemed interested in certain related party transactions of a revenue or trading nature which are necessary for the day-to-day operations of the Group as disclosed on page 94 to 95 of the Annual Report. She has no convictions for any offences within the past 10 years.

8 BOARD OF DIRECTORS PROFILE DATO TEE BOON KEAT EXECUTIVE DIRECTOR Dato Tee Boon Keat, aged 48, a Malaysian is Executive Director of Delloyd Ventures Berhad. He was appointed to the Board on 6 August 1996 and is the brother of Dato Sri Tee Boon Kee. Dato Tee is a businessman by profession and has vast experience in the management of the automotive accessories business. He is the Chief Executive Officer of Delloyd Auto Parts (M) Sdn Bhd. His main responsibility is to oversee the company s local and export sales activities. He is deemed interested in certain related party transactions of a revenue or trading nature which are necessary for the day-to-day operations of the Group as disclosed on page 94 to 95 on the Annual Report. He has no convictions for any offences within the past 10 years. CHUNG CHEE SUN NON-INDEPENDENT NON-EXECUTIVE DIRECTOR Chung Chee Sun, aged 58, a Malaysian is a Non-Independent & Non-Executive Director of Delloyd Ventures Berhad. He was appointed to the Board on 6 August 1996 and is the brother of Datin Sri Chung Geok Siew. Mr. Chung is one of the founding members of the DVB Group. He has been with the Group since the inception of Delloyd Auto parts (M) Sdn Bhd in He has vast experience in the operation of plastic injection machines and mould management. On 27 August 2008, Mr Chung was redesignated as non-independent and non-executive director. He is deemed interested in certain related party transactions of a revenue or trading nature which are necessary for the day-to-day operations of the Group as disclosed on page 94 to 95 on the Annual Report. He has no convictions for any offences within the past 10 years. DATO MOHAMED NIZAM BIN ABDUL RAZAK INDEPENDENT NON-EXECUTIVE DIRECTOR Dato Mohamed Nizam Bin Abdul Razak aged 53, a Malaysian was appointed as an Independent Non-Executive Director of Delloyd Ventures Berhad (DVB) on 6 August He is Chairman of the Audit Committee and also sits on the Nomination Committee of the Board. He graduated in Politics, Philosophy and Economics from Oxford University, UK in He began his career in 1981 when he joined the Corporate Finance Department in Bumiputra Merchant Bankers Berhad. In 1984 he joined GP Securities Sdn Bhd (now known as PB Securities Sdn Bhd) as General Manager. He became the Chief Executive Officer in 1992 and held the position until his retirement in Dato Nizam currently sits on the Boards of public companies including Mamee-Double Decker (M) Bhd, Yeo Hiap Seng (M) Bhd, Deutsche Bank (M) Bhd and Synergy Track Bhd. He is also a Trustee on several charitable foundations such as Noah Foundation, Hong Leong Foundation and the National Children Welfare Foundation. He has no family relationship with any directors and/or major shareholders of DVB nor any personal interest in any business arrangement involving the Company. He has no convictions for any offences within the past 10 years.

9 DATO DR M SHANMUGHALINGAM INDEPENDENT NON-EXECUTIVE DIRECTOR Y. Bhg. Dato Dr. M SHANmughalingam aged 72, a Malaysian, was appointed an Independent Non- Executive Director of Delloyd Ventures Berhad (DVB) on 6 August He is Chairman of the Remuneration Committee and also sits on the Audit and Nomination Committees of the Board. He obtained his Doctorate of Philosophy in Economics and Government from Oxford University, UK, Masters degree in Economics and Government from Harvard University, USA and Bachelor of Arts (Honours) degree in Economics from Univ. of Malaya. He is a Fellow of the Economic Development Institute, World Bank, USA. From 1962 to 1978 Dato Dr M SHAN served the Treasury, Ministry of Finance, his last post being Deputy Secretary (Economic) and from 1979 to 1991 in PETRONAS (Petroleum Nasional Bhd) his last post being General Manager. From 1992 to 1996 he was Managing Director of Sri Inderajaya Sdn Bhd, the holding company of GEC Malaysia Sdn Bhd. He is now Managing Director of Trilogic Sdn Bhd, an investment holding company since He sits on the Boards of non-listed companies. He is Adviser, Hextar Holdings Bhd. He also sits on the Board of Trustees of the Malaysian Institute of Economic Research (MIER) and the international advisory panel to Asian Strategy and Leadership Institute (ASLI). He was a Director of Mamee Double Decker, Edaran Otomobil Nasional Berhad (EON) and Chairman of its Remuneration Committee and PBA Holdings Bhd, all listed on the Main Board. He was also on the Board of CIMB (Commerce International Merchant Bankers) (L) Ltd, CIMB Discount House Bhd, CIMB Securities Sdn Bhd, MIDF Aberdeen Asset Management Sdn Bhd, and Malaysian International Merchant Bankers Berhad (MIMB), a subsidiary of MIDF and an associate of Barclays Bank Group, UK. He was on the Committee of the Malaysian Administrative and Diplomatic Service (P.T.D.) Alumni Association, on the Board of the VIOBA Foundation and Chairman, Scholarship Committee and on the Board of Selectors, Rhodes scholarship to Oxford University. Dato Dr. M SHAN represented Malaysia at international conferences of the ADB (Asian Development Bank), the Commonwealth, IMF (the International Monetary Fund), OPEC (the Organisation of Petroleum Exporting Countries), the United Nations and the World Bank. He was the Chairman and lead speaker at several sittings of PECC (Pacific Economic Co-operation Conference). On invitation by the Kennedy School of Government, Harvard University and the Harvard Institute for International Development, USA, he helped in the design of a new Executive Programme for Leaders in Development : Managing Economic and Political Reform for Harvard University. He has no family relationship with any directors and/or major shareholders of DVB nor any personal interest in any business arrangement involving the Company. He has no convictions for any offences within the past 10 years. EOW KWAN HOONG INDEPENDENT NON-EXECUTIVE DIRECTOR Mr. Eow Kwan Hoong aged 59, a Malaysian was appointed an Independent Non-Executive Director of Delloyd Ventures Berhad (DVB) on 22nd May He sits on the Audit, ESOS, Nomination and Remuneration Committees of the Board. Mr. Eow is a member of the Malaysian Institute of Accountants and a Fellow member of the Chartered Institute of Management Accountants (CIMA), United Kingdom. He was the President of CIMA Malaysia Division from June 2006 to June Currently, he serves as the vice chairman of the South East Asia Regional Board of CIMA UK. Mr. Eow joined the Lion Group as an Accounts Manager in After serving the Group for 17 years and holding the post of Group Chief Accountant, he left in April 1998 to join IRIS Corporation Berhad as the Chief Operating Officer. Currently, he sits on the Board of IRIS Corporation Berhad and Main Board public listed company Versatile Creative Berhad. In addition, he also sits on the Boards of Lion AMB Resources Berhad and several Malaysian private limited companies. He has no family relationship with any directors and/or major shareholders of DVB nor any personal interest in any business arrangement involving the Company. He has no convictions for any offences within the past 10 years.

10 011 CALENDAR OF EVENTS AUGUST JANUARY MARCH MAY JULY SEPTEMBER FEBRUARY APRIL JUNE APRIL OCTOBER 10/10/11 - Payment of final single tier dividend of 10 sen per share for the financial period ended 31 March /08/11-15th Annual General Meeting at Kota Permai Golf and Country Club, Shah Alam, Selangor Darul Ehsan.

11 2012 JANUARY FEBRUARY 23/02/12 - Annual blood donation campaign amongst staff to replenish General Hospital s blood bank. MARCH MAY JULY APRIL JUNE 06/01/12 - Delloyd Group of Companies Annual Dinner. 12/04/12 - Delloyd Ventures Berhad presented the 2012 Frost & Sullivan Malaysia Excellence Award for Automotive Component Manufacturer of the Year. 07/01/12 - Participated in Bursa Malaysia s Market Chat 2011/2012 Roadshow at Securities Commission, Kuala Lumpur hosted by Affin Investment Bank Berhad. 18/01/12 - Payment of interim single tier dividend of 5 sen per share for the financial year ended 31 March 2012.

12 12 CHAIRMAN S STATEMENT Dear Shareholders, On behalf of the Board of Directors, I am pleased to present the Annual Report and Audited Financial Statements of Delloyd Ventures Berhad for the financial year ended 31 March Economic Landscape The year 2011 witnessed a slowdown in the global economy as advanced nations posted lower growth mainly due to slow financial sector reforms along with high fiscal deficits and debts. On the local front, the Malaysian economy remained resilient and registered growth of 5.1% (2010 : 7.2%) despite fears that the country s economic growth prospects would be derailed by the contagion fallout from the European sovereign debt crisis as well as the disruptions in the global manufacturing supply chain arising from the effects of the tsunami in Japan. Malaysia s economic growth improved primarily due to its strong economic fundamentals and robust domestic demand reinforced by the ongoing implementation of projects under the Economic Transformation Programme (ETP) and the New Economic Model of the 10th Malaysia Plan. Financial Review For the financial year ended 31 March 2012, the Group s consolidated revenue reached RM466.2 million and posted a profit after tax of RM44.2 million. DELLOYD VENTURES BERHAD annual report 2012 Pemegang-pemegang saham yang dihormati, Bagi pihak Lembaga Pengarah, saya dengan sukacitanya membentangkan Laporan Tahunan dan Penyata Kewangan Beraudit Delloyd Ventures Berhad bagi tahun kewangan berakhir 31 Mac Lanskap Ekonomi Tahun 2011 menyaksikan kelembapan dalam ekonomi global dimana negara-negara maju mencatatkan pertumbuhan yang lebih rendah disebabkan oleh pembaharuan sektor kewangan yang perlahan serta defisit dan hutang fiskal yang tinggi. Di pasaran tempatan, ekonomi Malaysia kekal bertahan dan mencatatkan pertumbuhan sebanyak 5.1% (2010 : 7.2%) disebalik kebimbangan bahawa prospek pertumbuhan ekonomi negara akan tersasar disebabkan kejatuhan merudum dari krisis hutang di Eropah serta gangguan dalam rangkaian bekalan perusahaan global akibat daripada tsunami di Jepun. Pertumbuhan ekonomi Malaysia meningkat disebabkan ekonomi asas dan permintaan domestik yang teguh serta diperkukuhkan oleh perlaksanaan projek dibawah Program Transformasi Ekonomi (ETP) dan Model Ekonomi Baru dalam pelan Malaysia ke 10. Tinjauan Kewangan Bagi tahun kewangan berakhir 31 Mac 2012, hasil terkumpul Kumpulan mencecah RM466.2 juta dan mencatatkan keuntungan selepas cukai sebanyak RM44.2 juta. Pendapatan sesaham

13 CHAIRMAN S STATEMENT 13 Earnings per share stood at 41sen (2011 : 65 sen) and Net assets per share was RM4.11 (2011 : RM3.90). Shareholders funds increased to RM398.8 million (2011 : RM367.1 million). On the whole, the year s revenue and earnings was largely contributed by the two major sectors, namely, the automotive components and the oil palm plantations sectors. The automotive components sector contributed 67.9% and 56.7% to the Group s revenue and pre-tax earnings respectively, and the plantations sector contributed 17.1% and 46.7% to the Group s revenue and pre-tax earnings respectively. It is evident that the plantations sector has emerged to play a very significant role in the Group s business operations. Dividend The Group has been successful in maintaining a consistent and regular dividend payment that provides a steady stream of return to its shareholders. An interim single tier dividend of 5 sen per share was declared and paid in January The Board is now recommending for shareholders approval at the forthcoming AGM a final single tier dividend of 7 sen per share hence making a total payout of 12 sen per share for the current financial year. Business Review The automotive industry worldwide demonstrated significant resilience in 2011 amidst uncertainty in the global economy, led by Europe and the United States. Automotive sales in the major markets of Asia such as Japan and Thailand experienced considerable setbacks in terms of supply chain which adversely affected automotive sales due to the earthquake and tsunami in Japan and then the floods in Thailand. On the local front, total vehicle sales for 2011 recorded a slight decline by 0.8% to 600,123 units compared to 605,156 units in Needless to say these negative market forces had a direct adverse impact on the local automotive components industry albeit not extensive. In spite of the tough economic environment, the Group s automotive components sector performed reasonably well. This sector was affected by higher depreciation and personnel costs due to further investments to enhance manufacturing capacity. Margins were lower as a result of more competitive pricing in the industry. Nonetheless, our focus and effort for greater efficiency and productivity through the implementation of lean manufacturing system contributed in part to the year s satisfactory results. We will constantly review and enhance operational efficiencies to ensure sustainability and profitability in this major sector of the Group s business. The Group s plantation sector recorded a commendable revenue amounting to RM79.8 million and pre-tax earnings of RM27.6 million for the year in review. Both the Sungai Rambai and Pulau Belitung plantations contributed positively to the year s performance. Apart from the stable CPO price and strong global demand, the sector s results in part is due to the steadily increasing yield of the Belitung estates, producing a total FFB of 80,976 metric tonnes for the year. Despite the lower CPO price and FFB yield and higher fertiliser cost experienced during the year, this sector made a significant contribution to the year s profits. Meanwhile, the oil mill at the Belitung plantations is also steadily increasing its CPO production. Together with the purchase of berjumlah 41sen (2011: 65 sen) dan aset bersih sesaham adalah RM4.11 (2011: RM3.90). Dana pemegang saham meningkat kepada RM398.8 juta (2011: RM367.1 juta). Secara keseluruhannya, hasil pendapatan tahun ini sebahagian besarnya disumbangkan oleh dua sektor utama, iaitu, komponen automotif dan sektor perladangan kelapa sawit. Sektor komponen automotif dan sektor perladangan kelapa sawit masing-masing menyumbang 67.9% dan 17.1% kepada hasil pendapatan Kumpulan, 56.7% dan 46.7% kepada pendapatan sebelum cukai. Ia adalah jelas bahawa sektor perladangan telah muncul untuk memainkan peranan yang amat penting dalam operasi perniagaan Kumpulan. Dividen Kumpulan telah berjaya mengekalkan pembayaran dividen yang konsisten dan memperuntukkan pulangan yang stabil kepada para pemegang saham. Dividen interim satu peringkat sebanyak 5 sen sesaham telah diisytiharkan dan dibayar pada bulan Januari Lembaga Pengarah kini mengesyorkan untuk kelulusan pemegang saham pada Mesyuarat Agung Tahunan yang akan datang dividen akhir satu peringkat sebanyak 7 sen sesaham - maka membuat jumlah pembayaran sebanyak 12 sen sesaham bagi tahun kewangan semasa. Tinjauan Perniagaan Industri automotif di seluruh dunia telah menunjukkan daya tahan yang ketara pada tahun 2011 di tengah-tengah ketidaktentuan dalam ekonomi global, diterajui oleh Eropah dan Amerika Syarikat. Jualan automotif di pasaran utama Asia seperti Jepun dan Thailand mengalami kemunduran yang besar dari segi rantaian bekalan yang menjejaskan jualan automotif disebabkan gempa bumi dan tsunami di Jepun dan kemudian banjir di Thailand. Di pasaran tempatan, jumlah jualan kenderaan bagi 2011 mencatatkan penurunan sebanyak 0.8% kepada 600,123 unit berbanding 605,156 unit pada tahun Tidak perlu dijelaskan bahawa tekanan pasaran yang negatif ini secara langsung memberi kesan buruk kepada komponen industri automotif tempatan walaupun tidak secara meluas. Di sebalik persekitaran ekonomi yang sukar, sektor komponen automotif Kumpulan menunjukkan prestasi yang agak baik. Sektor ini telah terjejas oleh susut nilai yang tinggi dan kos kakitangan disebabkan pelaburan untuk meningkatkan keupayaan pengeluaran. Margin adalah lebih rendah akibat harga yang lebih kompetitif dalam industri. Walau bagaimanapun, tumpuan dan usaha kami untuk meningkatkan kecekapan dan produktiviti melalui pelaksanaan Lean Manufacturing System turut menyumbang kepada keputusan yang memuaskan pada tahun ini. Kami akan sentiasa mengkaji semula dan meningkatkan kecekapan operasi bagi memastikan kemantapan dan keuntungan dalam sektor utama perniagaan Kumpulan ini. Sektor perladangan Kumpulan mencatatkan perolehan yang memberangsangkan sebanyak RM79.8 juta dan pendapatan sebelum cukai sebanyak RM27.6 juta bagi tahun ini. Ladang Sungai Rambai dan Pulau Belitung kedua-duanya memberikan sumbangan yang positif kepada prestasi tahun ini. Selain daripada harga CPO yang stabil dan permintaan global yang kukuh, pencapaian sektor sebahagiannya adalah disebabkan peningkatan dari estet-estet di Belitung, yang menghasilkan Buah Tandan Bersih (FFB) berjumlah 80,976 tan metrik bagi tahun ini. Walaupun harga CPO dan hasil Buah Tandan Bersih (FFB) yang lebih rendah serta kos baja yang lebih tinggi pada tahun ini, sektor ini merupakan penyumbang annual report 2012 DELLOYD VENTURES BERHAD

14 14 CHAIRMAN S STATEMENT fresh fruit bunches from the surrounding smallholders, the mill will continue to contribute to the plantations overall revenue and profits. Corporate Social Responsibility The Group acknowledges that as a responsible corporate member of the society, we should play an active role in the betterment of the communities around us. As we drive for growth, we are committed to deliver good Corporate Social Responsibility. The Group has undertaken various initiatives throughout FY2012 to offer hope and charity to the needy ones in the community. Besides direct charitable contributions to the welfare of the needy and the less fortunate, other CSR activities of the Group included support of projects and events that promote healthcare, education and disaster relief. Our employees play a pivotal role in ensuring the success of our business. To this end, we place emphasis on the development and training of the employees to enable them to reach their full potential and to inculcate team spirit in achieving success for the Group. We are also committed to ensuring a safer and healthier work environment for all and to improve the safety standards via the Occupational Safety and Health policies. Outlook for 2012/13 The global economy will be anticipating a weak resurgence as uncertainties and volatility will persist over the medium term. The Malaysian economy which saw healthy growth in 2011 may still be vulnerable to global developments. However, Malaysia remains optimistic as the domestic economy is forecasted to grow primarily through the implementation of various governmental economic programmes and supported by private consumption and investment. The Malaysian Automotive Association (MAA) has forecasted the total industry volume growth of 2.5% to 615,000 units for year 2012 from 600,123 units for year It is anticipated that the soon to be announced new National Automotive Policy (NAP) will turn Malaysia into a regional hub for hybrid, electric and environmentally friendly vehicles. Such a move will provide exciting prospects for the automotive industry in the country. In light of the economic scenario in the region and the developments in the industry, the Board is of the view that the Group s automotive components sector s performance for the new financial year will be satisfactory. The Group will continue to build on its deep knowledge and experience in the industry, and will focus on prudent cost management and enhancing plant efficiency as well as productivity to ensure that the sector s profitability is sustained. It is deemed that palm oil will be in great demand for edible purposes to serve the growing needs of the world population, particularly in the densely populated nations such as China and India. At the same time, demand for non-food uses such as biofuel and biomass is projected to expand as an alternate source of energy and coupled with the impact on inventory levels as a result of climatic changes, the outlook for palm oil is expected to be positive. This favourable outlook augurs well for the Group s plantations sector s performance in the new financial year. DELLOYD VENTURES BERHAD annual report 2012 penting kepada keuntungan tahunan. Sementara itu, kilang minyak sawit di ladang Belitung juga semakin meningkatkan pengeluarannya. Dengan pembelian buah tandan bersih daripada pekebun-pekebun kecil berhampiran, kilang ini akan terus menyumbang kepada keuntungan sektor perladangan dan perolehan keseluruhan. Tanggungjawab Sosial Korporat Kumpulan mengakui bahawa sebagai ahli korporat yang bertanggungjawab kepada masyarakat, kita perlu memainkan peranan aktif dalam kebajikan masyarakat di sekeliling kita. Dalam usaha kita memacu kearah pertumbuhan, kami juga komited untuk menyumbang kepada Tanggungjawab Sosial Korporat yang baik. Kumpulan telah melaksanakan pelbagai inisiatif sepanjang FY2012 untuk menghulurkan bantuan dan kebajikan kepada orang-orang yang memerlukan dalam masyarakat. Selain daripada sumbangan amal secara terus kepada mereka yang memerlukan dan kurang bernasib baik, aktiviti-aktiviti CSR Kumpulan yang lain termasuk sokongan terhadap projek-projek dan acara-acara yang menggalakkan penjagaan kesihatan, pendidikan dan bantuan bencana. Kakitangan kami memainkan peranan penting dalam memastikan kejayaan perniagaan kami. Untuk tujuan ini, kita memberi penekanan kepada pembangunan dan latihan pekerja bagi membolehkan mereka mencapai potensi penuh mereka dan memupuk semangat berpasukan dalam mencapai kejayaan untuk Kumpulan. Kami juga komited untuk memastikan persekitaran kerja yang lebih selamat dan sihat untuk semua dan untuk meningkatkan piawaian keselamatan melalui dasar Keselamatan dan Kesihatan. Tinjauan bagi 2012/13 Ekonomi global menjangkakan kebangkitan yang lemah disebabkan ketidaktentuan dan keadaan tidak menentu akan berterusan untuk jangkamasa pertengahan. Ekonomi Malaysia yang menyaksikan pertumbuhan yang sihat pada tahun 2011 mungkin masih terdedah kepada perkembangan global. Walau bagaimanapun, Malaysia masih kekal optimis dimana ekonomi domestik diramalkan berkembang terutamanya melalui pelaksanaan pelbagai program ekonomi kerajaan dan disokong oleh pengguna dan pelabur swasta. Persatuan Automotif Malaysia (MAA) telah meramalkan jumlah pertumbuhan industri sebanyak 2.5% kepada 615,000 unit bagi tahun 2012 daripada 600,123 unit bagi tahun Adalah dijangka bahawa pengumuman yang bakal diumumkan tidak lama lagi berkaitan Dasar Automotif Negara (NAP) yang baru akan menjadikan Malaysia sebagai hab serantau bagi kenderaan hibrid, elektrik dan mesra alam. Langkah sedemikian akan memberi prospek menarik bagi industri automotif di negara ini. Memandangkan senario ekonomi dan perkembangan dalam industri di rantau ini, Lembaga berpendapat bahawa prestasi sektor komponen automotif Kumpulan bagi tahun kewangan yang baru adalah memuaskan. Kumpulan akan terus menimba pengetahuan yang lebih mendalam dan pengalaman dalam industri, dan akan memberi tumpuan kepada pengurusan kos berhemat dan meningkatkan kecekapan serta produktiviti bagi memastikan keuntungan sektor dapat dikekalkan.

15 CHAIRMAN S STATEMENT 15 The Group today owns a total of 15,871 hectares of oil palm plantations, with 1,449 hectares in the Sungai Rambai estate, Batang Berjuntai and 14,422 hectares in Pulau Belitung, Indonesia. The total planted area in Belitung as at end March 2012 stands at 11,302 ha, of which 78% or 8,886 ha are classified as fruit-bearing or matured area with trees ranging from 6 to 12 year old. As peak yields generally occur between 10 to 18 years of age, these estates will continue to see growing yields in the near to medium term. The performance of the Group s plantation sector is very much dependent on the price movements of palm oil products. Our plantation operations will also be affected by rising labour and fertiliser costs. We will continue to work towards improving our yields to mitigate the effects of the rising production costs. Despite the current global economic uncertainty, demand for palm oil products will remain steady in the new fiscal year and CPO prices will remain sufficiently buoyed. As such, we remain cautiously optimistic that the plantation sector will perform reasonably well and we are committed to improving our yields and delivering further growth. Corporate Governance The Group is pleased to present this year s Annual Report to the shareholders based on the application of the principles and best practices of good governance as contained in the Malaysian Code on Corporate Governance. The Board is committed to ensuring that the highest standards of corporate governance are practised in order to protect and enhance shareholder value. Acknowledgements Delloyd Ventures Berhad s continued success and growth has indeed been a collective effort of the Board, the Management and staff. On behalf of the Board of Directors, I would like to take this opportunity to record my sincere gratitude and appreciation to the management and staff of Delloyd Group for their perseverance, resourcefulness and dedication. My appreciation also goes to our shareholders, valued customers, suppliers, bankers, business associates and the various government authorities and last but not least, our in-house union for their continued confidence and support to the Group. GENERAL TAN SRI (DR) MOHAMED HASHIM BIN MOHD ALI (Rtd) Chairman Adalah dianggarkan bahawa akan terdapat permintaan besar minyak sawit untuk tujuan pemakanan bagi memenuhi keperluan populasi dunia yang semakin berkembang, terutamanya di negara-negara yang padat dengan penduduk seperti China dan India. Pada masa yang sama, permintaan bagi kegunaan bukan makanan seperti bahanapi-bio dan biojisim dijangka berkembang sebagai sumber tenaga alternatif dan ditambah pula dengan kesan terhadap paras inventori akibat perubahan iklim, prospek untuk minyak sawit dijangka positif. Prospek yang menggalakkan ini merupakan petanda baik bagi prestasi sektor perladangan Kumpulan pada tahun kewangan yang baru. Kumpulan kini memiliki sejumlah 15,871 hektar ladang kelapa sawit, dengan 1,449 hektar di ladang Sungai Rambai, Batang Berjuntai dan 14,422 hektar di Pulau Belitung, Indonesia. Jumlah kawasan yang ditanam di Belitung pada akhir Mac 2012 berjumlah 11,302 hektar, dimana 78% atau 8,886 hektar dikelaskan sebagai kawasan subur atau matang dengan umur pokok antara 6-12 tahun. Secara puratanya hasil tanaman puncak berlaku antara usia 10 hingga 18 tahun, ladang-ladang ini akan terus meningkatkan hasil dalam tempoh terdekat dan sederhana. Prestasi sektor perladangan Kumpulan adalah sangat bergantung kepada pergerakan harga produk minyak sawit. Operasi perladangan kita juga akan terjejas oleh kos buruh dan baja yang meningkat. Kami akan terus berusaha ke arah meningkatkan hasil untuk mengurangkan kesan kenaikan kos pengeluaran. Walaupun dengan ketidaktentuan ekonomi global semasa, permintaan untuk produk minyak sawit akan kekal mantap dalam tahun fiskal yang baru dan harga CPO akan kekal disokong sepenuhnya. Oleh itu, kami tetap optimistik bahawa sektor perladangan akan menunjukkan prestasi yang memuaskan dan kami komited untuk meningkatkan hasil dan mencapai pertumbuhan seterusnya. Urus Tadbir Korporat Kumpulan dengan sukacitanya membentangkan Laporan Tahunan tahun ini kepada para pemegang saham berdasarkan amalan prinsip dan urus tadbir yang baik seperti yang terkandung dalam Kod Urus Tadbir Malaysia, Pihak Lembaga komited untuk memastikan bahawa piawaian tertinggi urus tadbir korporat diamalkan dalam usaha untuk melindungi dan meningkatkan nilai pemegang saham. Penghargaan Kejayaan yang berterusan dan pertumbuhan Delloyd Ventures Berhad sememangnya satu usaha kolektif Lembaga Pengarah, Pengurusan dan semua kakitangan. Bagi pihak Lembaga Pengarah, saya ingin mengambil kesempatan ini untuk menyampaikan ucapan terima kasih dan penghargaan kepada pihak pengurusan dan kakitangan Kumpulan Delloyd kerana usaha gigih, tabah dan penuh dedikasi. Penghargaan ini juga ditujukan kepada para pemegang saham, pelanggan yang dihargai, pembekal, bank, rakan perniagaan dan pelbagai pihak berkuasa kerajaan dan tidak ketinggalan kepada Kesatuan Pekerja atas keyakinan dan sokongan mereka yang berterusan kepada Kumpulan. GENERAL TAN SRI (DR) MOHAMED HASHIM BIN MOHD ALI (Rtd) Pengerusi annual report 2012 DELLOYD VENTURES BERHAD

16 16 NOTICE OF ANNUAL GENERAL MEETING NOTICE IS HEREBY GIVEN THAT the Sixteenth Annual General Meeting of the Company will be held at Danau 3, Kota Permai Golf and Country Club, No.1, Jalan 31/100A, Kota Kemuning, Section 31, Shah Alam, Selangor Darul Ehsan on Thursday, 16 August 2012 at a.m. for the following purposes:- AGENDA 1. To receive the Audited Financial Statements for the financial year ended 31 March 2012 together with the Reports of the Directors and Auditors thereon. 2. To approve the payment of a Final Single Tier Dividend of 7% in respect of the financial year ended 31 March To approve the payment of Directors fees of RM294,000 in respect of the financial year ended 31 March Ordinary Resolution 1 Ordinary Resolution 2 Ordinary Resolution 3 4. To re-elect the following Directors who retire by rotation in accordance with Article 90 of the Company s Articles of Association and being eligible, offer themselves for re-election:- i) Dato Sri Tee Boon Kee ii) Eow Kwan Hoong Ordinary Resolution 4 Ordinary Resolution 5 5. To consider and, if thought fit, pass the resolutions that pursuant to Section 129 of the Companies Act, 1965, the following Directors be re-appointed as Directors of the Company to hold office until the next Annual General Meeting:- i) General Tan Sri (Dr) Mohamed Hashim Bin Mohd Ali (Rtd) ii) Dato Dr. M SHANmughalingam 6. To re-appoint Messrs. Crowe Horwath as Auditors and to authorise the Directors to fix their remuneration. Ordinary Resolution 6 Ordinary Resolution 7 Ordinary Resolution 8 AS SPECIAL BUSINESS To consider and if thought fit, to pass the following resolutions:- 7. Authority to Issue Shares pursuant to Section 132D of the Companies Act, 1965 Ordinary Resolution 9 THAT subject always to the Companies Act, 1965 and the approvals of the relevant governmental and/ or regulatory authorities, the Directors be and are hereby empowered, pursuant to Section 132D of the Companies Act, 1965, 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 10% of the total issued capital of the Company and that such authority shall continue to be in force until the conclusion of the next Annual General Meeting of the Company. 8. Proposed Renewal of the Shareholders Mandate for Recurrent Related Party Transactions of a Revenue or Trading Nature Ordinary Resolution 10 THAT approval be and is hereby given to the Company and its subsidiaries to renew the Shareholders Mandate for the Recurrent Related Party Transactions of a revenue or trading nature with specified class of the Related Parties as stated in Section 3.1 of the Circular to Shareholders dated 25 July 2012 which are necessary for the Group s day to day operations subject further to the following:- i) the transactions are in the ordinary course of business and are on terms not more favourable to the related party than those generally available to the public and is not to the detriment of the minority shareholders and that such transactions are made on an arm s length basis and on normal commercial terms; and DELLOYD VENTURES BERHAD annual report 2012

17 NOTICE OF ANNUAL GENERAL MEETING 17 ii) in disclosing the actual aggregate value of the Recurrent Related Party Transactions conducted pursuant to the Mandate in the 2013 Annual Report, a breakdown of the aggregate value of the Recurrent Related Party Transactions made during the financial year, amongst others, will be provided based on the following information:- a) the type of the Recurrent Related Party Transactions made; and b) the names of the Related Parties involved in each type of the Recurrent Related Party Transactions made and their relationship with the Company and its subsidiaries; iii) the Mandate is subject to annual renewal. In this respect, any authority conferred by a 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 such Mandate was passed, at which time it will lapse, unless by a resolution passed at the meeting, the authority is renewed; b) 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( CA ) (but shall not extend to such extension as may be allowed pursuant to section 143(2) of the CA); or c) revoked or varied by resolution passed by the shareholders in general meeting whichever is the earlier; and iv) the Directors and/or any of them be and are hereby authorised to complete and do all such acts and things (including executing such documents as may be required) to give effect to the Proposed Renewal of the Shareholders Mandate. 9. Proposed Renewal of Authority for the Purchase of Own Shares by the Company Ordinary Resolution 11 THAT subject to the Companies Act, 1965, the provisions of the Memorandum and Articles of Association of the Company, the requirements of Bursa Malaysia Securities Berhad and the approvals of all relevant governmental and/or regulatory authorities, if any, the Company be and is hereby authorised, to the fullest extent permitted by law, to purchase such amount of ordinary shares of RM1.00 each in the Company as may be determined by the Directors from time to time, through Bursa Malaysia Securities Berhad and upon such terms and conditions as the Directors may deem fit and expedient in the interest of the Company provided that:- i) the aggregate number of shares purchased pursuant to this resolution does not exceed ten per cent (10%) of the total issued and paid-up share capital of the Company as quoted on Bursa Malaysia Securities Berhad as at the point of purchase; and ii) an amount not exceeding the Company s retained profit and the share premium account at the time of the purchase(s) be allocated by the Company for the Proposed Share Buy-Back; AND THAT the authority conferred by this resolution shall commence immediately upon the passing of this resolution and shall, subject to renewal thereat, expire at the conclusion of the next Annual General Meeting of the Company following the passing of this resolution (unless earlier revoked or varied by ordinary resolution of shareholders of the Company in a general meeting); AND THAT the Directors be and are hereby authorised to act and to take all steps and do all things as they may deem necessary or expedient in order to implement, finalise and give full effect to the Proposed Share Buy-Back AND FURTHER THAT authority be and is hereby given to the Directors to decide in their absolute discretion to either retain the ordinary shares of RM1.00 each in the Company purchased by the Company pursuant to the Proposed Share Buy-Back as treasury shares to be either distributed as share dividends or resold on Bursa Malaysia Securities Berhad or subsequently cancelled, or to cancel the shares so purchased, or a combination of both. 10. To transact any other business of the Company for which due notice shall have been given. annual report 2012 DELLOYD VENTURES BERHAD

18 18 NOTICE OF ANNUAL GENERAL MEETING NOTICE OF DIVIDEND PAYMENT NOTICE IS ALSO HEREBY GIVEN THAT a Final Single Tier Dividend of 7% in respect of the financial period ended 31 March 2012, if approved by the shareholders, will be paid on 18 October 2012 to Depositors whose names appear in the Record of Depositors on 8 October A Depositor shall qualify for entitlement only in respect of:- a) Securities transferred into the Depositor s Securities Account before 4.00 pm on 8 October 2012 in respect of transfers; b) Securities bought on Bursa Malaysia Securities Berhad on a cum entitlement basis according to the Rules of Bursa Malaysia Securities Berhad. By Order of the Board, NG SAY OR Company Secretary (LS 00515) 25 July 2012 Notes:- i. The members whose names appear in the Record of Depositors on 10 August 2012 shall be entitled to attend, speak and vote at this Sixteenth Annual General Meeting. ii. A proxy shall be a member of the Company and if the proxy is not a member of the Company, the proxy shall be an advocate or an approved company auditor or a person approved by the Registrar of Companies. iii. A member shall be entitled to appoint more than one proxy (subject always to a maximum of two proxies at each meeting) to attend and vote at the same meeting. iv. Where a member appoints more than one proxy, the appointment shall be invalid unless he specifies the proportion of his holdings to be represented by each proxy. v. To be valid, the proxy form duly completed must be deposited at the registered office of the Company situated at 52A, Lebuh Enggang, Klang, Selangor Darul Ehsan not less than 48 hours before the time for holding the meeting. vi. If the appointer is a corporation, the proxy form must be executed under its Seal or under the hand of its attorney. DELLOYD VENTURES BERHAD annual report 2012

19 NOTICE OF ANNUAL GENERAL MEETING 19 Explanatory Notes on Special Business 1. Ordinary Resolution 9 - Authority to Issue Shares pursuant to Section 132D of the Companies Act, 1965 The Proposed Ordinary Resolution 9 of the Agenda is a renewal of the General Mandate for the Directors to issue and allot shares pursuant to Section 132D of the Companies Act, The proposed Ordinary Resolution 9, if passed, will give authority to the Directors of the Company, from the date of the above Annual General Meeting, to issue and allot shares to such persons in their absolute discretion without convening a general meeting provided the aggregate number of share issued does not exceed 10% of the issued share capital of the Company for the time being. This authority, unless revoked or varied at a general meeting, will expire at the conclusion of the next Annual General Meeting of the Company. As at the date of this Notice, no new shares in the Company were issued pursuant to the mandate granted to the Directors at the Fifteenth Annual General Meeting held on 11 August 2011 and which will lapse at the conclusion of the Sixteenth Annual General meeting to be held on 16 August The General Mandate sought will enable the Directors of the Company to issue and allot shares, including but not limited to further placing of shares, for purposes of funding investment(s), working capital and/or acquisition(s). 2. Ordinary Resolution 10 - Proposed Renewal of the Shareholders Mandate for Recurrent Related Party Transactions of a Revenue or Trading Nature The proposed Ordinary Resolution 10, if passed, will empower the Company and its subsidiaries to conduct transactions of a revenue or trading nature with the related parties. Please refer to the Circular to Shareholders dated 25 July 2012 for more information. 3. Ordinary Resolution 11 - Proposed Renewal of Authority for the Purchase of Own Shares by the Company The proposed Ordinary Resolution 11, if passed, will empower the Company to purchase its own shares up to 10% of the issued and paidup capital of the Company. This authority, unless revoked or varied at a general meeting, will expire at the next Annual General Meeting of the Company. Please refer to the Circular to Shareholders dated 25 July 2012 for more information. Statement Accompanying Notice of Annual General Meeting (Pursuant to Paragraph 8.27(2) of the Listing Requirements of Bursa Malaysia Securities Berhad) Details of persons who are standing for election as Directors No individual is seeking election as a Director at the Sixteenth Annual General Meeting of the Company. annual report 2012 DELLOYD VENTURES BERHAD

20 20 STATEMENT OF CORPORATE GOVERNANCE The Board recognises the importance of good corporate governance in directing the business of the Group. The Board is fully committed to ensure that the highest standard of corporate governance as articulated in the Principles and Best Practices set out in the Malaysian Code of Corporate Governance ( Code ) is practised throughout the Group as the underlying principle in discharging its responsibilities and to ensure transparency and corporate accountability. The Board is pleased to disclose how the Company has applied the Principles and the extent to which the Company has complied with the Best of the Code during the financial year ended 31 March The Board is of the opinion that it has, in all material respects, complied with the Principles and Best Practices outlined in the Code. THE BOARD The Board of Directors has the overall responsibility for the performance of the Group by maintaining full and effective control over strategic, financial, operational, compliance and governance issues. The following are specific areas of responsibilities of the Board:- reviewing and adopting a strategic business plan for the Group; overseeing the conduct of the Group s business to evaluate whether the business is being properly managed; identifying principle risks and ensuring the implementation of appropriate systems to manage these risks; succession planning, including appropriate training, fixing the compensation of and, where appropriate, replacing senior management; developing and implementing an investor relations programme or shareholders communications policy for the Group; and reviewing the adequacy and integrity of the Group s system of internal control and management information systems, including systems for compliances with applicable laws, regulations, rules, directives and guidelines. BOARD BALANCE The Board currently has nine (9) members, comprising four (4) Executive Directors, one (1) Non-Independent Non-Executive Director and four (4) Independent Non-Executive Directors. This broad spectrum of skills and experience ensures the Group is under the guidance of an accountable and competent Board. The Board composition complies with the requirement of Malaysian Code on Corporate Governance and paragraph of the Main Market Listing Requirement of Bursa Malaysia Securities Berhad. The Board is satisfied that its present composition fairly reflects the interest of minority shareholders in the Company. All the Executive Directors, led by Group Managing Director, Dato Sri Tee Boon Kee, are true veterans as they have many years of experience in the Group s core businesses and they practise hands-on style of management. There is a clear division of responsibility between the Chairman and the Group Managing Director to ensure a proper balance of power and authority. The Chairman is responsible for ensuring Board effectiveness and conduct whilst the Group Managing Director is responsible for overseeing the Group s operations and business development and the implementation of Board policies and decisions. The Independent Non-Executive Directors provide unbiased and independent views, advice and judgement and exercise objective participation in the proceedings and decision-making process of the Board. Their view carry substantial weight in the decision making process of the Board. The Board has at least four (4) scheduled meetings annually, with additional meetings for particular matters convened as and when necessary. Board meetings are scheduled in advance at the beginning of the new financial year to enable its members to plan ahead. The Board met four (4) times for the financial period from 1 April 2011 to 31 March The following is the record of attendance of the Board Members:- NAME OF DIRECTORS POSITION ATTENDANCE General Tan Sri (Dr) Mohamed Hashim Bin Mohd Ali (Rtd) Independent Non-Executive Chairman 4/4 Dato Sri Tee Boon Kee Managing Director 4/4 Datin Sri Chung Geok Siew Executive Director 4/4 Dato Ir. Hj. Noor Azmi Bin Jaafar Executive Director 4/4 Dato Tee Boon Keat Executive Director 4/4 Chung Chee Sun Non Independent Non-Executive Director 4/4 Dato Dr M SHANmughalingam Independent Non-Executive Director 4/4 Dato Mohamed Nizam Bin Abdul Razak Independent Non-Executive Director 3/4 Eow Kwan Hoong Independent Non-Executive Director 3/4 DELLOYD VENTURES BERHAD annual report 2012

21 STATEMENT OF CORPORATE GOVERNANCE 21 The Board, through the Nomination Committee is responsible for regularly reviewing the Board s structure, size and composition, as well as making recommendations to the Board on any changes deemed necessary. SUPPLY OF INFORMATION All Board members are supplied with Board reports in a timely manner. Board reports are circulated prior to the Board meetings to enable the Directors to obtain further information and explanation, where necessary, before the meetings. The Board reports include the following to enable them to discharge their duties and responsibilities:- quarterly financial results performance reports of the Group budgets major operational and financial matters updates on statutory regulations and requirements affecting the Company The Board members have access to the advice and services of the Company Secretary and all information in relation to the Group whether as a full Board or in their individual capacity to assist them in the furtherance of their duties. Where necessary, the Directors may engage independent professionals at the Group s expense on specialised issues to enable the Board to discharge their duties with adequate knowledge on the matters being deliberated. BOARD COMMITTEES To assist the Board in discharging its duties, various Board Committees have been established. The functions and terms of reference of the Board Committees are clearly defined and, where applicable, comply with the recommendations of the Code. Audit Committee Its principal function is to assist the Board in maintaining a sound system of internal control. The Committee has full access to the auditors both internal and external who, in turn, have access at all times to the Chairman of the Committee. In line with good corporate governance practice, no Executive Directors are members of the Audit Committee. The report on the Audit Committee is presented on page 28 to 30 and the duties of the Audit committee are included therein. Nomination Committee A Nomination Committee was established by the Board and comprise exclusively Independent Non-Executive Directors. NAME MEMBERSHIP DIRECTORSHIP General Tan Sri (Dr) Mohamed Hashim Bin Mohd Ali (Rtd) Chairman Independent Non-Executive Dato Mohamed Nizam Bin Abdul Razak Member Independent Non-Executive Dato Dr M SHANmughalingam Member Independent Non-Executive Eow Kwan Hoong Member Independent Non-Executive The Nomination Committee is delegated the following specific tasks:- to nominate and recommend candidates to the Board for directorships; to consider, in making recommendations, candidates proposed by the Directors for directorships, or by any senior executive or shareholder; recommend to the Board, directors to fill the seats on Board committees; to assist the Board by reviewing annually its required mix of skills and experience and other qualities, including core competencies which Non-Executive Directors should bring to the Board; and to assist the Board in implementing an assessment programme to assess the effectiveness of the Board as a whole, the committees of the Board, and the contribution of each individual director, on an annual basis. to determine the appropriate board size and number of Non-Executive participation in order to comply with the Listing Requirements of Bursa Malaysia Securities Berhad. annual report 2012 DELLOYD VENTURES BERHAD

22 22 STATEMENT OF CORPORATE GOVERNANCE The Nomination Committee meets as and when necessary. The quorum of the meeting shall be two (2). The Company Secretary shall record, prepare and circulate minutes of the meeting. In the absence of the committee s Chairman, the Nomination Committee shall elect one of its members present to chair the meeting. The Nomination Committee held one (1) meeting for the financial period from 1 April 2011 to 31 March 2012, which was fully attended by all members. Remuneration Committee The Remuneration Committee comprise majority Non-Executive Directors. The members of the Remuneration Committee are:- NAME MEMBERSHIP DIRECTORSHIP Dato Dr M SHANmughalingam Chairman Independent Non-Executive Director Dato Sri Tee Boon Kee Member Group Managing Director Eow Kwan Hoong Member Independent Non-Executive Director The duties of the Remuneration Committee are: to study and periodically review and implement policies governing the remuneration for Executive Directors; and to make recommendations to the Board on all elements of remuneration and terms of employment for Executive Directors. The Remuneration Committee reviews annually the performance of the CEO and the Executive Directors and furnishes recommendations to the Board on adjustments in remuneration and/or reward payments that reflect their respective contributions for the year, and which are competitive and in tandem with the Company s corporate objectives and strategies. The Executive Directors play no part in decisions on their own remuneration. The determination of remuneration packages of Non-Executive Directors, including Non-Executive Chairman is a matter for the Board as a whole. The Remuneration Committee meets as and when necessary. The Remuneration Committee held one (1) meeting for the financial period from 1 April 2011 to 31 March 2012, which was fully attended by all members. Details of the Directors remuneration comprising of remuneration received or/and receivable from the Company and its subsidiaries for the financial period from 1 April 2011 to 31 March 2012 are as follows: (a) Aggregate remuneration of Directors categorised into appropriate components:- Directorship Fees Salaries Performance Others Total Incentives RM 000 RM 000 RM 000 RM 000 RM 000 Executive Directors Non-Executive Directors Total (b) Number of Directors whose remuneration fall into the following bands: Range of remuneration Executive Non-Executive Total Directors Directors Below RM50, RM50,001 to RM100, RM550,001 to RM600, RM950,001 to RM1,000, RM1,400,001 to RM1,450, Total DELLOYD VENTURES BERHAD annual report 2012

23 STATEMENT OF CORPORATE GOVERNANCE 23 ESOS Committee The ESOS Committee was established to administer the Employees Share Options Scheme of the Company in accordance with the objectives and regulations thereof. To this end, the Committee meets to determine the participation eligibility, option offers and share allocations and to attend to other related matters as may be required. The members of the ESOS Committee are:- NAME MEMBERSHIP DIRECTORSHIP Eow Kwan Hoong Chairman Independent Non-Executive Director Dato Sri Tee Boon Kee Member Group Managing Director Datin Sri Chung Geok Siew Member Executive Director Dato Ir Haji Noor Azmi Jaafar Member Executive Director RE-ELECTION In accordance with the Company s Articles of Association, all Directors shall retire from office at least once in every three (3) years but shall be eligible for re-election. Pursuant to Section 129(2) of the Companies Act, 1965, Directors of or over the age of seventy years shall retire at every annual general meeting and may offer themselves for re-appointment to hold office until the next annual general meeting. TRAINING OF DIRECTORS All the directors of the Company have attended the Mandatory Accreditation Programme (MAP) prescribed by Bursa Malaysia Securities Berhad for directors of listed companies. The Board fully supports the need for its members to further enhance their skills and knowledge on relevant programmes, technologies and current developments in the industry as well as with the new regulatory and statutory requirements. Except those Directors who were not able to attend any training during the year due to tight work schedule and travel, the following Directors had attended the following seminars, conferences and programmes during the financial year:- DIRECTOR COURSE TITLE General Tan Sri (Dr) Mohamed Hashim Bin Mohd Ali (Rtd) Dato Sri Tee Boon Kee Datin Sri Chung Geok Siew Dato Ir. Hj. Noor Azmi Bin Jaafar Board Effectiveness & Management Relationship Decoding Gen Y Program for Management & Workshop Corporate Governance & Directors Duties International Conference and Exhibition of Palm Oil, Jakarta Indonesia Seminar on Succession of Family Business 3rd Palm Oil Summit: Yield Improvement and Carbon Management, Bali Indonesia National Entrepreneurs Convention 2011 CFO Innovation Asia Forum 2011 Finance on the Edge : Balancing Risk and Reward 3rd Palm Oil Summit : Yield Improvement & Carbon Management, Bali Indonesia International Conference & Exhibition of Palm Oil, Jakarta Indonesia KVP-MAI Workshop Luncheon Talk Culture Transformation Towards Business Excellence for Malaysia Productivity & Innovation Class (MPIC) Member Interpreting Accounting & Financial Statement annual report 2012 DELLOYD VENTURES BERHAD

24 24 STATEMENT OF CORPORATE GOVERNANCE DIRECTOR COURSE TITLE Dato Tee Boon Keat Dato Dr M SHANmughalingam Eow Kwan Hoong An Introduction to Futures Trading Sustainability: Taking Corporate Governance a Step Further by Securities Commission Malaysia and Bursa Malaysia. Would it have made a difference? Cause and Effect in Commercial Law Law lecture delivered by The Right Honourable The Lord Walker of Gestingthorpe Justice of Supreme Court of the United Kingdom Half Day Seminar for Directors on Demystifying Fraud Two Day Conference by CIMA Malaysia on Green Sustainability Conference Asia 2011 INVESTOR RELATIONS AND SHAREHOLDERS COMMUNICATION The Board recognises the importance of transparency and accountability to its shareholders. Delloyd communicates with its shareholders regularly through timely release of financial results on a quarterly basis, announcements and disclosures to Bursa Malaysia Securities Berhad, Annual Report, Annual General Meeting and where necessary, to have dialogue or interview with the financial community to discuss on the Group s latest developments or investment proposals. The Group maintains a website at which can be conveniently accessed by the shareholders and the general public. The Group s website is updated from time to time to provide the latest and comprehensive information about the Group. The Annual General Meeting is the principal forum for dialogue with all shareholders, who are encouraged and are given sufficient opportunity to enquire about the Group s activities and prospects as well as to communicate their expectations and concerns. Shareholders are provided with an opportunity to participate in a Question and Answer session. In an effort to further enhance the Company s investor relations function, the Group has embarked on its Investor Relations Incentive Programme (IRIP). This is an on-line Investor Relations programme initiated by the Malaysian Investor Relations Association (MIRA) in collaboration with Bursa Malaysia designed to assist listed companies set up / enhance its investor relations function. Shareholders, investors and members of the financial community may access Delloyd s investor relation portal via ACCOUNTABILITY AND AUDIT Financial Reporting In presenting the annual audited financial statements and quarterly results announcements to shareholders and other interested parties, the Board aims to present a clear, balanced and understandable assessment of the Group s financial position and prospects. The Directors Responsibility Statement pursuant to the Bursa Malaysia Securities Berhad Revamped Listing Guidelines and Statement by Directors pursuant to Section 169(15) of the Companies Act, 1965 are set out on page 2 and page 36 of this Annual Report respectively. Internal Control The Board acknowledges its responsibility for establishing a sound system of internal control to safeguard shareholders investments and the Group s assets, and to provide reasonable assurances on the reliability of the financial statements. In addition, equal priority is given to internal control of its business management and operational techniques. The information on the Group s internal control is presented in the Statement of Internal Control set out on pages 26 to 27 of this Annual Report. Relationship with Auditors The Company maintains a transparent relationship with the auditors in seeking their professional advice and towards ensuring compliance with the approved accounting standards. The role of the Audit Committee in relation to the external auditors is set out on pages 28 to 30 of this Annual Report. OTHER INFORMATION In compliance with the Bursa Malaysia Securities Berhad s Main Market Listing Requirements, the following additional information are provided : Employees Share Option Scheme ( ESOS ) The Company implemented an Employee Share Option Scheme ( ESOS ) on 29 April The ESOS is governed by the bye-laws as approved by shareholders at the Extraordinary General Meeting held on 29 June 2004.

25 STATEMENT OF CORPORATE GOVERNANCE 25 Details of the number of ESOS option granted during the financial period under review can be found in the Director s Report in the Financial Statements of this Annual Report. Share Buybacks During the financial year, the Company bought back a total of 93,800 of its ordinary shares of RM1.00 each from the open market. None of the shares purchased has been sold or cancelled. The shares purchased are retained as treasury shares. As at , a total of 3,019,400 shares were held as treasury shares. Options, Warrants or Convertible Securities There were no options, warrants or convertible securities issued by the Company during the financial year under review. American Depository Receipt (ADR) or Global Depository Receipt (GDR) Programme During the financial year, the Company did not sponsor any ADR or GDR programme. Imposition of Sanctions and/or Penalties There were no sanctions and/or penalties imposed on the Company and its subsidiaries, directors or management by any regulatory authorities during the financial year under review. Non-audit Fees There were no non-audit fees paid to the external auditor during the financial year under review. Profit Guarantee The Company did not give any profit guarantee during the financial period from 1 April 2011 to 31 March Statement on Revaluation Policy As at 31 March 2012, the Company did not carry out any revaluation exercise on its landed properties. Material Contracts Material Contracts of the Company and its subsidiaries entered into during the financial year under review are disclosed in Note 49 to the financial statement under Significant Events During The Financial Year And Subsequent To The Balance Sheet Date on page 114 of the Annual Report. Disclosure of Related Party Transactions The Group took all necessary steps to ensure transactions which were deemed to be related party transactions were appropriately disclosed in accordance with the Listing Requirements. The Company had convened an Annual General Meeting on 11 August 2011 to obtain shareholders mandate to allow the Company and its subsidiaries to enter into recurrent related party transactions of a revenue or trading nature. Significant related party transactions occurred during the financial year are disclosed in Note 43 to the financial statements. Statement of Compliance with the Best Practices of the Code The Board has to the best of its knowledge complied with the principles and best practices of the Malaysian Code on Corporate Governance (MCCG). As part of the ongoing effort of the Group to be a Best Practice company, and as set out in Recommendation 3.3 of the MCCG 2012 with regards to the Independent Directors on the Board serving more than nine years, the Board intends to seek the shareholders approval at the next AGM to retain its Independent Directors on the Board in the same capacity and designation. The Independent Directors have a diverse mix of knowledge, skills, experience and high integrity in fulfilling their role on the Board as active and responsible fiduciaries, and continuing with their independency in the discharge of their responsibilities to ensure that the Group maintains an effective governance structure.

26 26 STATEMENT OF INTERNAL CONTROL The Board of Directors of Delloyd Ventures Berhad is pleased to present its Statement of Internal Control for the financial period from 1 April 2011 to 31 March 2012, which has been prepared pursuant to paragraph 15.26(b) of Bursa Malaysia Securities Main Market Listing Requirements. This statement outlines the nature and state of internal control of the Group during the financial year. RESPONSIBILITY OF THE BOARD The Board acknowledges its overall responsibility in maintaining a sound system of internal control (including systems for compliance with applicable laws, regulations, rules, directives and guidelines) to safeguard shareholder s investments and the Group s assets and for reviewing the effectiveness, adequacy and integrity of these systems. The Board also recognises that a sound system of internal controls is a concerted and continuing process, designed to reduce rather than eliminate the risk of failure in achieving the business objectives. It therefore provides reasonable assurance but not absolute assurance that the Group will not be hindered in achieving its business objectives. Following the publication of the Statement on Internal Control: Guidance for Directors of Public Listed Companies( the Internal Control Guidance ) by Bursa Malaysia Securities Berhad, the Board confirms that there is an ongoing process for identifying, evaluating and managing significant risks faced by the Group, that has been in place for the financial year and up to the date of approval of the annual report and financial statements, and that this process is regularly reviewed by the Board and is in accord with the Internal Control Guidance. RISK MANAGEMENT Risk assessment and evaluation is an integral part of the annual business planning and budgeting process. Each business unit has to establish its business objectives and identify those risks that can significantly affect their achievement. Having identified the risks, business units are required to set out and implement mitigating actions for each significant risk. During the financial year under review, monitoring of the significant risks is an ongoing process exercised through direct involvement of the Executive Directors in regular management meetings and reviewing the effectiveness of risk mitigation strategies implemented by the Management. The Group s objectives are supported with strategic plans and budgets, which were developed and discussed before the beginning of the new financial year to establish plans and targets against which performance is monitored on an ongoing basis. The business objectives and action plans are reviewed regularly in management meetings throughout the year. CONTROL STUCTURE AND ENVIRONMENT The Board is fully committed to ensure that a proper and conducive control environment is maintained within the Group to govern the manner in which the Group and its employees conduct themselves. The key elements of internal controls are: Board Committees Clear definition to the functions and responsibilities of the various committees of the Board of Directors. These include the Audit Committee, Nomination Committee, Remuneration Committee and ESOS Committee. Organisational structure and responsibility levels The Group has a well defined organisational structure with a clear line of accountability and has strict authorisation, approval and control procedures within which senior management operate. Responsibility levels are communicated throughout the Group which set out, among others, authorisation levels, segregation of duties and other control procedures. Authority levels, acquisitions and disposals Clear definition of authorisation procedures and delegated authority levels for major capital expenditure projects, acquisitions and disposals of businesses and other significant transactions. The approval of investment decisions above certain limits is reserved to the Board. The authority of the Directors is required for key treasury matters including changes to equity and loan financing, interest rates, cheque signatories, the opening of bank accounts and foreign operations. Regular operational and management meetings Regular scheduled management meetings are held and attended by senior management and operational management to discuss and report on operational performance, business strategy, key operational statistics, legal and regulatory matters of each business unit where plans and targets are established for business planning. Financial performance The preparation of quarterly and full year financial results, as announced or otherwise are published to shareholders. Full year financial results are reviewed by external auditors. Budget Approval Budgets are prepared annually and submitted to the Board of Directors for approval. Budgets are an important control mechanism used by the Group to ensure an efficient allocation of group resources and that operational managers are sufficiently guided in making decisions.

27 STATEMENT OF INTERNAL CONTROL 27 Internal compliance The Group monitors compliance with its internal controls through management reviews and reports which are internally reviewed by key personnels. Update on development Regular reporting of legal and accounting developments are made to the Board. Training & Development Training and development programmes are identified and scheduled for employees to acquire the necessary knowledge and competency to meet the management s performance and job expectations. Action plans to address employee developmental requirements are prepared and implemented timely. This will enable employees to deliver their Key Performance Indicators (KPI) so that the Group can meet its future management requirements. Policies & Procedures Policies, Procedures and Standard Operating Procedures are systematically documented and made available to guide staff in their day-to-day work. These Control Procedures have been established at Group and individual department levels. Policies and Procedures of most operating units within the Group are documented in Standard Operating Procedure manuals. The integrity and competence of personnel is ensured through recruitment standards and subsequent training courses. ISO/TS 16949:2009 All the subsidiary companies involved in the manufacturing of OEM parts were accredited with ISO/TS16949:2009, an international standard for quality management in the automotive industry. By enhancing the quality management system to meet the stringent quality requirements of the industry, the Company demonstrates its commitment to meet the expectations of the customers. ISO : 2004 Three of the subsidiary companies were accredited with ISO 14001: 2004 to meet the environmental quality requirement in the industry. This certification also signifies the Group s commitment and initiative for the betterment of the Company, customers and community. Site Visits The Executive Directors undertake site visits to production and operating units and communicate with various levels of staff to gauge first-hand knowledge the effectiveness of strategies discussed and implemented. Established control activities for day-to-day financial and operating activities are in place. These include top-level reviews of financial and operating performance, authorisations, verifications, reconciliation, physical controls over the assets, segregation of duties and controls over information systems. Key functions such as finance, treasury, insurance and legal matters are controlled centrally. All joint ventures and associates companies matter of material effects have been brought to the attention of the Board of Directors. The system of internal controls described in this statement is considered by the Board to be adequate and the risks are considered by the Board to be at an acceptable level within the context of the Group s business. However, such system does not eliminate the possibility of human error, collusion, or deliberate circumvention of control procedures by employees and others. The Board is satisfied that for the financial year under review, there is no material control failure or weakness that would have resulted in material loss that requires separate disclosure in the Group s Annual Report. In addition to internal financial controls, the Directors have ensured that safety and health regulations have been considered and complied with. The Internal Audit Function The Internal Audit function is provided by the Internal Audit Department of Delloyd Ventures Berhad. The total cost incurred by the Internal Audit Department for the financial period from 1 April 2011 to 31 March 2012 was RM212,000. The Internal Audit team works to a programme agreed with the Audit Committee annually. The team reviews the systems of internal control discusses areas for improvement on controls and monitoring with operational management and executive management and subsequently reviews the extent to which agreed countermeasures have been implemented. Exceptions are summarised and reported to the Audit Committee quarterly. The Audit Committee in turn report their conclusions to the Board. Review of the Statement by External Auditors As required by paragraph of the Bursa Malaysia Securities Berhad Main Market Listing Requirements, the external auditors have reviewed this Statement on Internal Control. Their review was performed in accordance with Recommended Practice Guide ( RPG ) 5 issued by the Malaysia Institute of Accountants. Based on their review, the external auditors have reported to the Board that nothing has come to their attention that cause them to believe that this Statement is inconsistent with their understanding of the process the Board has adopted in the review of the adequacy and integrity of internal control of the Group. RPG 5 does not require the external auditors to consider (and they did not) whether this Statement covers all risk and control, or to form an opinion on the effectiveness of the Group s risk and control.

28 28 AUDIT COMMITTEE REPORT OBJECTIVE The primary objectives of the Audit Committee are to: (i) (ii) (iii) Provide assistance to the Board of Directors in fulfilling its fiduciary responsibilities, particularly in the areas relating to the Company and its subsidiaries accounting and internal control systems, corporate accounting and reporting practices; Oversee and appraise the quality of the audits conducted both by the Company s internal and external auditors; and Maintain an open line of communication between the Board of Directors, the internal auditor and the external auditor for the exchange of views and information. COMPOSITION The Audit Committee comprise exclusively Independent Non-Executive Directors. The members of the Audit Committee are:- NAME MEMBERSHIP DIRECTORSHIP Dato Mohamed Nizam Bin Abdul Razak Chairman Independent Non-Executive Dato Dr M SHANmughalingam Member Independent Non-Executive Eow Kwan Hoong Member Independent Non-Executive TERMS OF REFERENCE Composition of Audit Committee The Audit Committee was established by the Board of Directors from amongst its directors and comprise exclusively Independent Non-Executive Directors. One of the committee members is a member of the Malaysian Institute of Accountants. In the event of any vacancy in the Committee resulting in the non-compliance of Main Market Listing Requirements of Bursa Malaysia Securities Berhad, the Board shall appoint new members within three months of that event to make up the minimum of three (3) members. The Board shall review the term of office and performance of the Audit Committee and each of its members at least once every 3 years to determine whether they have carried out their duties in accordance with the terms of reference. Duties and Responsibilities of the Audit Committee The duties of the Audit Committee shall be to review the following and report the same to the Board: (i) (ii) (iii) To consider the appointment, resignation or dismissal of the external auditor and to approve the audit fee; To discuss with the external auditor before the audit commences, the nature and scope of audit; To review the quarterly and year-end financial statements of the Company before recommending to the Board for approval, focusing particularly on: any changes in accounting policies and practices significant adjustments arising from the audit the going concern assumptions compliance with approved accounting standards, stock exchange rules and regulations and other legal requirements (iv) (v) (vi) To discuss problems and reservations arising from the interim and final audits, and any other matter the auditors may wish to discuss (in the absence of management where necessary); To review the external auditor s management letter and management s response; To do the following in respect of the internal audit department: review the adequacy of the scope, functions and resources of the internal audit department, and that it has the necessary authority to carry out its work; DELLOYD VENTURES BERHAD annual report 2012

29 AUDIT COMMITTEE REPORT 29 review the internal audit programme and results of the internal audit process and where necessary ensure that appropriate action is taken on the recommendations of the internal audit department; review any appraisal or assessment of the performance of members of the internal audit department; approve any appointment or termination of senior staff members of the internal audit department; inform itself of resignations of internal audit staff members and provide the resigning staff member an opportunity to submit his/her reasons for resigning; (vii) (viii) to consider any related party transactions entered into by the Company and the Group; and to consider major findings of internal investigations and management s response and other subject matters as defined by the Board. Authority of Audit Committee The Committee is authorised by the Board at the cost of the Company to: (i) investigate any activity within its terms of reference; (ii) (iii) (iv) (v) (vi) obtain the resources which are reasonably required to perform its duties; have full and unrestricted access to information pertaining to the Company or the Group; have direct communication channels with the external and internal auditors; obtain external legal or independent professional advice and to secure the attendance of outsiders with relevant experience and expertise, if necessary; and convene meetings with external auditors, excluding the attendance of the executive members of the management, whenever deemed necessary. Committee Meetings The Audit Committee held four (4) meetings during the financial period from 1 April 2011 to 31 March Details of attendance of Audit Committee members are as follows: MEMBERSHIP DIRECTORSHIP ATTENDANCE Dato Mohamed Nizam Bin Abdul Razak Independent Non-Executive 3/4 Dato Dr M SHANmughalingam Independent Non-Executive 4/4 Eow Kwan Hoong Independent Non-Executive 4/4 The Audit Committee shall meet at least four (4) times a year. The Group Managing Director, Executive Director (Finance) and the Head of the Internal Audit shall normally attend meetings but may be asked to leave a meeting as and when deemed necessary by the Committee. Other Board members and employees may only attend meetings upon the invitation of the Committee. The Company Secretary shall be the Secretary of the Audit Committee, and shall be responsible to draw up the agenda and circulating it prior to each meeting, to record attendance of all members and invitees and to take minutes at every meeting. The Secretary shall circulate the minutes of meeting of the Committee to all members of the Board. At least once a year, the Committee shall meet with the external auditors without any executive Board members present. A representative of the external auditors shall attend the meeting to consider the final audited financial statements and such other meetings determined by the Committee. The external auditors may also request a meeting if they consider one necessary. The quorum shall be formed if the majority of members are present at the meeting. If the Chairman is unable to attend any meeting, any other independent non-executive director present shall act as Chairman. annual report 2012 DELLOYD VENTURES BERHAD

30 30 AUDIT COMMITTEE REPORT Summary of the activities of the Audit Committee for the financial year The Committee carried out the following activities in discharging their duties and responsibilities: reviewed the audited financial statements of the Company and of the Group for the financial period from 1 April 2011 to 31 March 2012 with the external auditors to ensure that the audited financial statements were drawn up in accordance with the provisions of the Companies Act, 1965 and applicable standards approved by the Malaysian Accounting Standards Board. met with the external auditors without the presence of Management and Executive Directors. discussed the internal control weakness report from the external auditors and was satisfied that corrective actions have been undertaken by the management to overcome the weaknesses noted in the internal control of the Group. The Audit Committee was satisfied that there were no major breakdown in the internal control of the Group during the financial year. reported to the Board on the proceedings conducted thereof and conveyed the Audit Committee s recommendations for the audited financial statements and the quarterly results announcements as the case may be to be adopted and approved by the Board for release to Bursa Malaysia Securities Berhad. reviewed and discussed the internal audit reports, which highlighted internal audit observations and recommendations relating to the operations of the Company and its subsidiaries. Where necessary, the Committee instructed management to take corrective actions to address issues raised in the said report. reviewed status reports from internal audit to ensure that appropriate action has been taken to implement the audit recommendations. reviewed and sought management explanation on related party transactions entered into by the Company and the Group, and reported the same to the Board of Directors. reviewed the Internal Audit Department s (IAD) significant activities and audit plans for the current and following year for the Group. Summary of activities of the Internal Audit Department for the financial year The Group has an internal audit function whose primary responsibility is to undertake regular and systematic reviews of the system of internal control so as to provide reasonable assurance that such system continues to operate satisfactorily and effectively within the Group. The internal audit function adopts a risk based audit methodology, which is aligned with the risks of the Group to ensure that relevant controls addressing those risks are reviewed on a rotational basis. On a quarterly basis, the IAD submits the audit reports on its audit activities to the Audit Committee for its review and deliberation. The Head of the IAD attends the Audit Committee meetings to present the internal audit findings and makes appropriate recommendations on any areas of concerns within the Company and the Group for the Committee s deliberation. The major activities conducted by the Internal Audit Department during the financial period from 1 April 2011 to 31 March 2012 for the Group are summarised as follows: completed 19 audit assignments on various business units of the Group covering manufacturing, plantation, vehicle distribution and servicing and others. sought operating management explanations and action plans on issues highlighted in the internal audit reports, and conducted subsequent follow-up reviews. audit reports, including relevant action plans agreed with operating management are circulated to responsible senior management and are tabled at Audit Committee meetings. summarised the related party transactions entered into by the Company and the Group and tabled at Audit Committee meetings. reviewed and appraised the soundness, adequacy and application of accounting, financial and other controls and promoting effective control in the Company and the Group at reasonable cost. monitored compliance with set policies and procedures and reviewed the adequacy and effectiveness of policies & procedures manuals and standards relating to subsidiaries and business units of the Group. presented and obtained approval from the Audit Committee, the internal audit plans, strategies and scope of work. DELLOYD VENTURES BERHAD annual report 2012

31 DIRECTORS REPORT 31 The directors hereby submit their report and the audited financial statements of the Group and of the Company for the year ended 31 March PRINCIPAL ACTIVITIES The Company is principally an investment holding company. The principal activities of the subsidiaries are set out in Note 5 to the financial statements. There have been no significant changes in the nature of these activities during the financial year. RESULTS THE GROUP THE COMPANY RM 000 RM 000 Profit after taxation for the financial year 44,234 47,705 Attributable to:- Owners of the Company 39,364 47,705 Non-controlling interests 4,870-44,234 47,705 DIVIDENDS The amount of dividends paid since the end of the previous financial period was as follows: In respect of the financial period ended 31 March 2011: RM 000 Paid on 18 April Second interim single-tier dividend of 5.0 sen per ordinary share 4,703 Paid on 10 October Final single-tier dividend of 10.0 sen per ordinary share 9,618 In respect of the financial year ended 31 March 2012: Paid on 18 January Interim single-tier dividend of 5.0 sen per ordinary share 4,817 19,138 The directors now recommend a final single-tier dividend of 7.0 sen per ordinary share for shareholders approval at the forthcoming annual general meeting. The financial statements for the current financial year do not reflect this proposed final dividend. Such dividend, if approved by the shareholders, will be accounted for as a liability in the financial year ending 31 March RESERVES AND PROVISIONS All material transfers to or from reserves or provisions during the financial year are disclosed in the financial statements. ISSUES OF SHARES AND DEBENTURES During the financial year, (a) (b) (c) there were no changes in the authorised capital; the Company increased its issued and paid-up share capital from RM96,964,250 to RM100,004,250 by the issuance of 3,040,000 new ordinary shares of RM1.00 each to eligible employees of the Group pursuant to options exercised under the Employee Share Option Scheme ( ESOS ) at an issue price of RM2.82 per share for cash. The premium arising from the exercise of ESOS amounting to RM5,532,800 has been credited to the share premium account. The new ordinary shares issued during the financial year rank pari passu in all respects with the existing ordinary shares of the Company; and there were no issues of debentures by the Company. annual report 2012 DELLOYD VENTURES BERHAD

32 32 DIRECTORS REPORT (CONT D) TREASURY SHARES The details of the treasury shares are disclosed in Note 21 to the financial statements. EMPLOYEE SHARE OPTION SCHEME ( ESOS ) The Company implemented an ESOS on 29 April The ESOS is governed by the by-laws as approved by the shareholders at the Extraordinary General Meeting held on 29 June The main features of the ESOS are set out in Note 22(c) to the financial statements. The option prices and the details in the movement of the options granted are as follows:- NUMBER OF OPTIONS OVER ORDINARY SHARES OF RM1 EACH EXERCISE AT 1 April AT 31 MARCH DATE OF OFFER PRICE 2011 EXERCISED FORFEITED LAPSED January 2010 RM2.82 3,171,000 (3,040,000) (38,000) (93,000) - The Company has been granted exemption by the Companies Commission of Malaysia from having to disclose in this report the names of holders to whom options have been granted to subscribe for less than 200,000 ordinary shares of RM1 each. The names of option holders granted options to subscribe for 200,000 or more ordinary shares of RM1 each during the financial year are as fol- lows:- < ---- NUMBER OF SHARE OPTIONS ---- > AT 31 MARCH NAME GRANT DATE EXPIRY DATE EXERCISE PRICE GRANTED EXERCISED 2012 GAN NEAN PAUL ,000 (200,000) - CHUA SOO SEONG ,000 (209,000) - DATO LEON TEE WEE LENG ,000 (231,000) - BAD AND DOUBTFUL DEBTS Before the financial statements of the Group and of the Company were made out, the directors took reasonable steps to ascertain that action had been taken in relation to the writing off of bad debts and the making of allowance for impairment losses on receivables, and satisfied themselves that there are no known bad debts and that adequate allowance had been made for impairment losses on receivables. At the date of this report, the directors are not aware of any circumstances that would require the writing off of bad debts, or the additional allowance for impairment losses on receivables in the financial statements of the Group and of the Company. CURRENT ASSETS Before the financial statements of the Group and of the Company were made out, the directors took reasonable steps to ascertain that any current assets other than debts, which were unlikely to be realised in the ordinary course of business, including their values as shown in the accounting records of the Group and of the Company, have been written down to an amount which they might be expected so to realise. At the date of this report, the directors are not aware of any circumstances which would render the values attributed to the current assets in the financial statements misleading. VALUATION METHODS At the date of this report, the directors are not aware of any circumstances which have arisen which render adherence to the existing methods of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate. DELLOYD VENTURES BERHAD annual report 2012

33 DIRECTORS REPORT (CONT D) 33 CONTINGENT AND OTHER LIABILITIES The contingent liability is disclosed in Note 46 to the financial statements. At the date of this report, there does not exist:- (i) (ii) any charge on the assets of the Group and of the Company that has arisen since the end of the financial year which secures the liabilities of any other person; or any contingent liability of the Group and of the Company which has arisen since the end of the financial year. No contingent or other liability of the Group and of the Company has become enforceable or is likely to become enforceable within the period of twelve months after the end of the financial year which, in the opinion of the directors, will or may substantially affect the ability of the Group and of the Company to meet their obligations when they fall due. CHANGE OF CIRCUMSTANCES At the date of this report, the directors are not aware of any circumstances not otherwise dealt with in this report or the financial statements of the Group and of the Company which would render any amount stated in the financial statements misleading. ITEMS OF AN UNUSUAL NATURE The results of the operations of the Group and of the Company during the financial year were not, in the opinion of the directors, substantially affected by any item, transaction or event of a material and unusual nature. There has not arisen in the interval between the end of the financial year and the date of this report any item, transaction or event of a material and unusual nature likely, in the opinion of the directors, to affect substantially the results of the operations of the Group and of the Company for the financial year. DIRECTORS The directors who served since the date of the last report are as follows: GEN. TAN SRI (DR) MOHAMED HASHIM BIN MOHD ALI (Rtd) (CHAIRMAN) DATO SRI TEE BOON KEE (MANAGING DIRECTOR) DATO IR. HAJI NOOR AZMI BIN JAAFAR DATIN SRI CHUNG GEOK SIEW DATO TEE BOON KEAT CHUNG CHEE SUN DATO MOHAMED NIZAM BIN ABDUL RAZAK DATO DR M SHANMUGHALINGAM A/L MURUGASU EOW KWAN HOONG Pursuant to Article 90 of the Articles of Association of the Company, Dato Sri Tee Boon Kee and Eow Kwan Hoong retire by rotation at the forthcoming annual general meeting and, being eligible, offer themselves for re-election. Pursuant to Section 129 of the Companies Act 1965, Gen. Tan Sri (Dr) Mohamed Hashim Bin Mohd Ali (Rtd) and Dato Dr M Shanmughalingam A/L Murugasu, retire at the forthcoming annual general meeting and, being eligible, offer themselves for re-appointment. annual report 2012 DELLOYD VENTURES BERHAD

34 34 DIRECTORS REPORT (CONT D) DIRECTORS INTERESTS In accordance with the register of directors shareholdings, the interests of directors in office at the end of the financial year in shares in the Company and its related corporations during the financial year are as follows: Interest In Shares In The Company DIRECT NUMBER OF ORDINARY SHARES OF RM1 EACH AT ALLOTTED/ AT 1 APRIL 2011 BOUGHT SOLD 31 MARCH 2012 GEN. TAN SRI (DR) MOHAMED HASHIM BIN MOHD ALI (Rtd) 412, ,500 DATO SRI TEE BOON KEE 2,855, ,855,005 DATO IR. HAJI NOOR AZMI BIN JAAFAR 2,562,927 - (400,000) 2,162,927 DATIN SRI CHUNG GEOK SIEW 653, ,750 DATO TEE BOON KEAT 1,703, ,703,516 CHUNG CHEE SUN 9,640, ,640,060 DATO MOHAMED NIZAM BIN ABDUL RAZAK 412, ,500 DATO DR M SHANMUGHALINGAM A/L MURUGASU 415, ,000 EOW KWAN HOONG 100, ,000 INDIRECT DATO SRI TEE BOON KEE 35,197,823 1,431,000-36,628,823 DATO IR. HAJI NOOR AZMI BIN JAAFAR 4,498, ,498,945 DATIN SRI CHUNG GEOK SIEW 37,399,078 1,431,000-38,830,078 DATO TEE BOON KEAT 31,967,770 1,200,000-33,167,770 CHUNG CHEE SUN 240, ,345 Interest In Shares In a Subsidiary, PT Rebinmas Jaya INDIRECT NUMBER OF ORDINARY SHARES OF RUPIAH 1,000,000 EACH AT ALLOTTED/ AT 1 APRIL 2011 BOUGHT SOLD 31 MARCH 2012 DATO SRI TEE BOON KEE * 19, ,950 DATIN SRI CHUNG GEOK SIEW * 19, ,950 * - Deemed interests by virtue of interests held in the Company and Taipan Hectares Sdn. Bhd. pursuant to Section 6A of the Companies Act Pursuant to Section 6A of the Companies Act 1965, the substantial shareholders of the Company, namely Dato Sri Tee Boon Kee, Datin Sri Chung Geok Siew and Dato Tee Boon Keat are deemed to be interested in shares in the subsidiaries to the extent of the Company s interests. Directors Benefits Since the end of the previous financial period, no director 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 the financial statements, or the fixed salary of a full-time employee of the Company) by reason of a contract made by the Company or a related corporation with the director or with a firm of which the director is a member, or with a company in which the director has a substantial financial interest except for any benefits which may be deemed to arise from transactions entered into in the ordinary course of business with companies in which certain directors have substantial financial interests as disclosed in Note 43 to the financial statements. Neither during nor at the end of the financial year was the Group or the Company a party to any arrangements whose object is to enable the directors to acquire benefits by means of the acquisition of shares in or debentures of the Company or any other body corporate other than the options granted to certain directors pursuant to the ESOS of the Company. DELLOYD VENTURES BERHAD annual report 2012

35 DIRECTORS REPORT (CONT D) 35 SIGNIFICANT EVENT OCCURRING AFTER THE REPORTING PERIOD The significant event occurring after the reporting period is disclosed in Note 49 to the financial statements. AUDITORS The auditors, Messrs. Crowe Horwath, have expressed their willingness to continue in office. Signed In Accordance With A Resolution Of The Directors Dated 16 July 2012 Gen. Tan Sri (Dr) Mohamed Hashim Bin Mohd Ali (Rtd) Chairman Dato Sri Tee Boon Kee Managing Director annual report 2012 DELLOYD VENTURES BERHAD

36 36 STATEMENT BY DIRECTORS We, Dato Sri Tee Boon Kee and Datin Sri Chung Geok Siew, being two of the directors of Delloyd Ventures Berhad, state that, in the opinion of the directors, the financial statements set out on pages 39 to 114 are 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 Group and of the Company at 31 March 2012 and of their results and cash flows for the financial year ended on that date. The supplementary information set out in Note 51, which is not part of the financial statements, is prepared in all material respects, in accordance with Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants and the directive of Bursa Malaysia Securities Berhad. Signed In Accordance With A Resolution Of The Directors Dated 16 July 2012 Dato Sri Tee Boon Kee Datin Sri Chung Geok Siew STATUTORY DECLARATION I, Tho Lai Foong, I/C No , being the officer primarily responsible for the financial management of Delloyd Ventures Berhad, do solemnly and sincerely declare that the financial statements set out on pages 39 to 114 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 ) Tho Lai Foong, I/C No , ) at Kuala Lumpur in the Federal Territory ) on this 16 July 2012 ) Tho Lai Foong Before me Commissioner for Oaths DELLOYD VENTURES BERHAD annual report 2012

37 INDEPENDENT AUDITORS REPORT TO THE MEMBERS OF DELLOYD VENTURES BERHAD 37 Report on the Financial Statements We have audited the financial statements of Delloyd Ventures Berhad, which comprise the statements of financial position as at 31 March 2012 of the Group and of the Company, and the statements of comprehensive income, statements of changes in equity and statements of cash flows of the Group and of the Company for the financial year then ended, and a summary of significant accounting policies and other explanatory information, as set out on pages 39 to 114. Directors Responsibility for the Financial Statements The directors of the Company are responsible for the preparation of financial statements that give a true and fair view in accordance with Financial Reporting Standards and the Companies Act 1965 in Malaysia, and 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 Company 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 Company 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 have been 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 financial position of the Group and of the Company as of 31 March 2012 and of their financial performance and cash flows for the financial year then ended. 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) (b) (c) (d) 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. We have considered the financial statements and the auditors reports of the subsidiaries of which we have not acted as auditors, which are indicated in Note 5 to the financial statements. 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. The audit 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. annual report 2012 DELLOYD VENTURES BERHAD

38 38 INDEPENDENT AUDITORS REPORT TO THE MEMBERS OF DELLOYD VENTURES BERHAD (CONT D) The supplementary information set out in Note 51 to the financial statements 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 Onn Kien Hoe Approval No: 1772/11/12 (J/PH) Chartered Accountant 16 July 2012 Kuala Lumpur DELLOYD VENTURES BERHAD annual report 2012

39 STATEMENTS OF FINANCIAL POSITION AT 31 MARCH THE GROUP THE COMPANY NOTE RM 000 RM 000 RM 000 RM 000 ASSETS NON-CURRENT ASSETS Investment in subsidiaries , ,574 Investment in associates 6 31,452 30, Property, plant and equipment 7 142, , Plantation development expenditure 8 176, , Investment properties 9 1,763 1, Other investments 10 3,153 2, Goodwill on consolidation 11 10,044 10, Deferred tax assets 12 6,243 5, , , , ,574 CURRENT ASSETS Inventories 13 54,293 42, Trade receivables 14 79,421 68, Other receivables, deposits and prepayments 15 18,340 19, Amounts owing by subsidiaries ,026 11,709 Dividend receivable - - 7,050 5,325 Tax refundable 10,068 2,963 4,144 1,956 Short-term investments 17 19,481 26,379 4, Deposits with financial institutions 18 4,113 23, Cash and bank balances 27,634 34, , , ,325 52,103 22,598 TOTAL ASSETS 584, , , ,172 The annexed notes form an integral part of these financial statements. annual report 2012 DELLOYD VENTURES BERHAD

40 40 STATEMENTS OF FINANCIAL POSITION AT 31 MARCH 2012 (CONT D) THE GROUP THE COMPANY NOTE RM 000 RM 000 RM 000 RM 000 EQUITY AND LIABILITIES EQUITY Share capital ,004 96, ,004 96,964 Share premium 20 20,470 14,055 20,470 14,055 Treasury shares 21 (8,059) (7,751) (8,059) (7,751) Other reserves 22 (6,323) (3,933) Retained profits , ,786 46,283 13,013 TOTAL EQUITY ATTRIBUTABLE TO OWNERS OF THE COMPANY 398, , , ,586 NON-CONTROLLING INTERESTS 22,722 18, TOTAL EQUITY 421, , , ,586 NON-CURRENT LIABILITIES Long-term borrowings 24 49,738 51,467 17,220 25,260 Other payable 26 8,130 21, Deferred tax liabilities 27 15,570 14,373 2,350 - Deferred income ,715 87,742 19,570 25,260 CURRENT LIABILITIES Trade payables 29 31,606 26, Other payables and accruals 30 29,688 41, ,145 Short-term borrowings 31 27,385 13,984 8,040 8,040 Provision for taxation 238 7, Derivative liabilities Bank overdraft ,545 89,271 8,549 13,326 TOTAL LIABILITIES 163, ,013 28,119 38,586 TOTAL EQUITY AND LIABILITIES 584, , , ,172 NET ASSETS PER SHARE (RM) DELLOYD VENTURES BERHAD annual report 2012 The annexed notes form an integral part of these financial statements.

41 STATEMENTS OF COMPREHENSIVE INCOME 41 THE GROUP THE COMPANY to to to to NOTE RM 000 RM 000 RM 000 RM 000 REVENUE , ,319 64,840 25,600 COST OF SALES (358,262) (373,932) - - GROSS PROFIT 107, ,387 64,840 25,600 OTHER (LOSS)/INCOME (1,297) 5, , ,516 65,683 26,329 PERSONNEL EXPENSES (25,197) (27,673) (299) (404) ADMINISTRATIVE EXPENSES (22,314) (25,638) (581) (784) SHARE OF PROFITS IN ASSOCIATES, NET OF TAX 295 6, FINANCE COSTS (4,490) (9,776) (1,660) (4,875) PROFIT BEFORE TAXATION 36 54,953 84,858 63,143 20,266 INCOME TAX EXPENSE 37 (10,719) (17,815) (15,438) (5,481) PROFIT AFTER TAXATION 44,234 67,043 47,705 14,785 OTHER COMPREHENSIVE INCOME, NET OF TAX - Fair value changes of available-for-sale financial assets (141) Foreign currency translation (3,047) (5,719) - - (3,188) (5,369) - - TOTAL COMPREHENSIVE INCOME FOR THE FINANCIAL YEAR/PERIOD 41,046 61,674 47,705 14,785 PROFIT AFTER TAXATION ATTRIBUTABLE TO:- Owners of the Company 39,364 58,910 47,705 14,785 Non-controlling interests 4,870 8, TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO:- 44,234 67,043 47,705 14,785 Owners of the Company 37,279 55,688 47,705 14,785 Non-controlling interests 3,767 5, ,046 61,674 47,705 14,785 EARNINGS PER SHARE 38 - Basic 41.0 sen 65.0 sen - Diluted 41.0 sen 64.6 sen The annexed notes form an integral part of these financial statements. annual report 2012 DELLOYD VENTURES BERHAD

42 42 STATEMENTS OF CHANGES IN EQUITY NON-DISTRIBUTABLE DISTRIBUTABLE FAIR ATTRIBUTABLE NON- SHARE TREASURY SHARE TRANSLATION VALUE ESOS RETAINED TO OWNERS OF CONTROLLING TOTAL CAPITAL SHARES PREMIUM DIFFERENCES RESERVE RESERVE PROFITS THE COMPANY INTERESTS EQUITY THE GROUP NOTE RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 Balance at ,863 (1,887) 694 (984) (32) 2, , ,428 12, ,404 Profit after taxation for the financial period ,910 58,910 8,133 67,043 Other comprehensive income for the financial period, net of tax: - Fair value changes of available-forsale financial assets Foreign currency translation (3,572) (3,572) (2,147) (5,719) Total comprehensive income for the financial period (3,572) ,910 55,688 5,986 61,674 Contributions by and distributions to the owners of the Company: - Share-based payments to employees Transfer to retained profits for ESOS lapsed (3) Purchase of treasury shares - (5,864) (5,864) - (5,864) - Issuance of shares pursuant to ESOS exercised 8,101-10, ,830-18,830 - Transfer to share premium for ESOS exercised - - 2, (2,632) Acquisition of additional shares in a subsidiary from minority shareholders (2) - - Dividends (12,886) (12,886) - (12,886) Balance at / ,964 (7,751) 14,055 (4,556) , ,121 18, ,081 The annexed notes form an integral part of these financial statements. DELLOYD VENTURES BERHAD annual report 2012

43 STATEMENTS OF CHANGES IN EQUITY (CONT D) 43 NON-DISTRIBUTABLE DISTRIBUTABLE FAIR ATTRIBUTABLE NON- SHARE TREASURY SHARE TRANSLATION VALUE ESOS RETAINED TO OWNERS OF CONTROLLING TOTAL CAPITAL SHARES PREMIUM DIFFERENCES RESERVE RESERVE PROFITS THE COMPANY INTERESTS EQUITY THE GROUP NOTE RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 Balance at / ,964 (7,751) 14,055 (4,556) , ,121 18, ,081 Profit after taxation for the financial year ,364 39,364 4,870 44,234 Other comprehensive income for the financial year, net of tax: - Fair value changes of available-forsale financial assets (141) - - (141) - (141) - Foreign currency translation (1,944) (1,944) (1,103) (3,047) Total comprehensive income for the financial year (1,944) (141) - 39,364 37,279 3,767 41,046 Contributions by and distributions to the owners of the Company: - Share-based payments to employees Purchase of treasury shares - (308) (308) - (308) - Issuance of shares pursuant to ESOS exercised 3,040-5, ,573-8,573 - Transfer to share premium for ESOS exercised (882) Acquisition of additional shares in a subsidiary from minority shareholders (5) (5) - Dividends (14,435) (14,435) - (14,435) Balance at ,004 (8,059) 20,470 (6,500) , ,807 22, ,529 The annexed notes form an integral part of these financial statements. annual report 2012 DELLOYD VENTURES BERHAD

44 44 STATEMENTS OF CHANGES IN EQUITY (CONT D) NON-DISTRIBUTABLE DISTRIBUTABLE SHARE TREASURY SHARE ESOS RETAINED TOTAL CAPITAL SHARES PREMIUM RESERVE PROFITS EQUITY NOTE RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 THE COMPANY Balance at as previously stated 88,863 (1,887) 694 2,017 10, ,623 - effects of adopting FRS as restated 88,863 (1,887) 694 2,017 11, ,798 Profit after taxation/ Total comprehensive income for the financial period ,785 14,785 Contributions by and distributions to the owners of the Company: - Share-based payments to employees of the: - Company subsidiaries Transfer to retained profits for ESOS lapsed (3) Issuance of shares pursuant to ESOS exercised 8,101-10, ,830 - Transfer to share premium for ESOS exercised - - 2,632 (2,632) Purchase of treasury shares - (5,864) (5,864) - Dividends (12,886) (12,886) Balance at / ,964 (7,751) 14, , ,586 The annexed notes form an integral part of these financial statements. DELLOYD VENTURES BERHAD annual report 2012

45 STATEMENTS OF CHANGES IN EQUITY (CONT D) 45 NON-DISTRIBUTABLE DISTRIBUTABLE SHARE TREASURY SHARE ESOS RETAINED TOTAL CAPITAL SHARES PREMIUM RESERVE PROFITS EQUITY NOTE RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 THE COMPANY Balance at / ,964 (7,751) 14, , ,586 Profit after taxation/ Total comprehensive income for the financial year ,705 47,705 Contributions by and distributions to the owners of the Company: - Share-based payments to employees of the subsidiaries Issuance of shares pursuant to ESOS exercised 3,040-5, ,573 - Transfer to share premium for ESOS exercised (882) Purchase of treasury shares - (308) (308) - Dividends (14,435) (14,435) Balance at ,004 (8,059) 20,470-46, ,698 The annexed notes form an integral part of these financial statements. annual report 2012 DELLOYD VENTURES BERHAD

46 46 STATEMENTS OF CASH FLOWS THE GROUP THE COMPANY to to to to RM 000 RM 000 RM 000 RM 000 CASH FLOWS FROM/(FOR) OPERATING ACTIVITIES Profit before taxation 54,953 84,858 63,143 20,266 Adjustments for:- Allowance for impairment losses on trade receivables 1, Amortisation of plantation development expenditure 3,945 4, Bad debts written off Depreciation of: - investment properties property, plant and equipment 15,365 14, Fair value loss on derivatives Share-based payments Impairment losses on: - other investments investment in a subsidiary - - 1, plant and equipment goodwill Interest expense 3,735 9,446 1,379 4,649 Amounts written off: - plant and equipment 10 1, plantation development expenditure Provision for warranty claims - 2, Reversal of impairment loss in a susidiary - - (1,097) - (Gain)/Loss on disposal of - subsidiary - (2,148) plant and equipment (153) Writedown in value of inventories 99 1, Deferred income recognised - (144) - - Dividend income from - subsidiaries - - (64,840) (25,600) - short-term and other investments (1,078) (833) (22) (53) Loss on foreign exchange - unrealised 5, Interest income (817) (679) (905) (817) Rental income (773) (697) - - Share of profits in associates, net of tax (295) (6,429) - - Writeback in value of inventories (1,104) (203) - - Writeback of provision for warranty claims (102) Operating profit/(loss) before working capital changes 81, ,858 (824) (1,385) The annexed notes form an integral part of these financial statements. DELLOYD VENTURES BERHAD annual report 2012

47 STATEMENTS OF CASH FLOWS (CONT D) 47 THE GROUP THE COMPANY to to to to NOTE RM 000 RM 000 RM 000 RM 000 Operating profit /(loss) before working capital changes 81, ,858 (824) (1,385) (Increase)/Decrease in inventories (11,166) 4, Increase in trade and other receivables (3,948) (23,473) - - (Decrease)/Increase in trade and other payables (10,435) 9,207 (159) (183) Warranty claims paid (785) (1,383) - - CASH FROM/(FOR) OPERATIONS 55,355 98,556 (983) (1,568) Interest paid (4,427) (6,695) (1,379) (4,649) Income tax paid (24,301) (13,502) (15,276) (5,452) NET CASH FROM/(FOR) OPERATING ACTIVITIES 26,627 78,359 (17,638) (11,669) CASH FLOWS (FOR)/FROM INVESTING ACTIVITIES Additional investment in a subsidiary - - (1,899) - Advances/(Repayment) to subsidiaries ,709 (8,758) Deposits paid for purchase of property, plant and equipment (7,871) (7,052) - - Dividends received from: - subsidiaries ,115 30,588 - an associate 2,644 1, short-term and other investments 1, Net cash inflow from disposal of a subsidiary 40-4, Interest received Payments for plantation development expenditure (11,993) (15,029) - - Subscription for ordinary shares in associates (3,382) (3,883) - - Purchase of property, plant and equipment (37,398) (31,080) - - Proceeds from disposal of plant and equipment Net proceeds from the disposal of plantation development expenditure Net proceeds from disposal of short-term investments (862) Rental received NET CASH (FOR)/FROM INVESTING ACTIVITIES (55,480) (47,654) 72,852 22,700 BALANCE CARRIED FORWARD (28,853) 30,705 55,214 11,031 The annexed notes form an integral part of these financial statements. annual report 2012 DELLOYD VENTURES BERHAD

48 48 STATEMENTS OF CASH FLOWS (CONT D) THE GROUP THE COMPANY to to to to NOTE RM 000 RM 000 RM 000 RM 000 BALANCE BROUGHT FORWARD (28,853) 30,705 55,214 11,031 CASH FLOWS FOR FINANCING ACTIVITIES Repayment to subsidiaries - - (35,026) - Repayment to directors - (360) - - Dividends paid (19,138) (8,183) (19,138) (8,183) Net drawdown/(repayment) of revolving credit and draft loans 7,833 (7,863) - - Drawdown of term loans 15,322 51,201-40,000 Proceeds from exercise of ESOS 7,996 18,830 8,573 18,830 Purchase of treasury shares (308) (5,864) (308) (5,864) Repayment of hire purchase obligations - (675) - - Repayment of medium term notes - (50,000) - (50,000) Repayment of term loans (11,931) (12,015) (8,040) (6,700) NET CASH FOR FINANCING ACTIVITIES (226) (14,929) (53,939) (11,917) NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS (29,079) 15,776 1,275 (886) FOREIGN EXCHANGE DIFFERENCES (4,321) (309) - - CASH AND CASH EQUIVALENTS AT BEGINNING OF THE FINANCIAL YEAR/PERIOD 84,359 68,892 3,606 4,492 CASH AND CASH EQUIVALENTS AT END OF THE FINANCIAL YEAR/PERIOD 41 50,959 84,359 4,881 3,606 The annexed notes form an integral part of these financial statements. DELLOYD VENTURES BERHAD annual report 2012

49 NOTES TO THE FINANCIAL STATEMENTS GENERAL INFORMATION The Company is incorporated as a public company limited by shares under the Companies Act 1965 in Malaysia. The registered office is located at No. 52A, Lebuh Enggang, Klang, Selangor Darul Ehsan. The principal place of business is located at Lot 33004/5 and Lot 48938, Jalan Kebun, Kampung Jawa, Klang, Selangor Darul Ehsan. The financial statements were authorised for issue by the Board of Directors in accordance with a resolution of the directors dated 16 July PRINCIPAL ACTIVITIES The Company is principally an investment holding company. The principal activities of the subsidiaries are set out in Note 5 to the financial statements. There have been no significant changes in the nature of these activities during the financial year. 3. BASIS OF PREPARATION The financial statements of the Group are prepared under the historical cost convention and modified to include other bases of valuation as disclosed in other sections under significant accounting policies, and in compliance with Financial Reporting Standards ( FRS ) and the Companies Act 1965 in Malaysia. (a) During the current financial year, the Group has adopted the following new accounting standards and interpretations (including the consequential amendments):- FRSs and IC Interpretations (including the Consequential Amendments) FRS 1 (Revised) First-time Adoption of Financial Reporting Standards FRS 3 (Revised) Business Combinations FRS 127 (Revised) Consolidated and Separate Financial Statements Amendments to FRS 1 (Revised): Limited Exemption from Comparative FRS 7 Disclosures for First-time Adopters Amendments to FRS 1 (Revised): Additional Exemptions for First-time Adopters Amendments to FRS 2: Scope of FRS 2 and FRS 3 (Revised) Amendments to FRS 2: Group Cash-settled Share-based Payment Transactions Amendments to FRS 5: Plan to Sell the Controlling Interest in a Subsidiary Amendments to FRS 7: Improving Disclosures about Financial Instruments Amendments to FRS 138: Consequential Amendments Arising from FRS 3 (Revised) IC Interpretation 4 Determining Whether An Arrangement Contains a Lease IC Interpretation 12 Service Concession Arrangements IC Interpretation 16 Hedges of a Net Investment in a Foreign Operation IC Interpretation 17 Distributions of Non-cash Assets to Owners IC Interpretation 18 Transfers of Assets from Customers Amendments to IC Interpretation 9: Scope of IC Interpretation 9 and FRS 3 (Revised) Annual Improvement to FRSs (2010) annual report 2012 DELLOYD VENTURES BERHAD

50 50 NOTES TO THE FINANCIAL STATEMENTS 3. BASIS OF PREPARATION (CONT D) (a) The adoption of the above accounting standards and interpretations (including the consequential amendments) did not have any material impact on the Group s financial statements, other than the following:- FRS 3 (Revised) introduces significant changes to the accounting for business combinations, both at the acquisition date and post acquisition, and requires greater use of fair values. In addition, all transaction costs, other than share and debt issue costs, will be expensed as incurred. This revised standard has been applied prospectively during the current financial year with no financial impact on the financial statements of the Group but may impact the accounting of its future transactions or arrangements. FRS 127 (Revised) requires accounting for changes in ownership interests by the group in a subsidiary, whilst maintaining control, to be recognised as an equity transaction. When the group loses control of a subsidiary, any interest retained in the former subsidiary will be measured at fair value with the gain or loss recognised in profit or loss. The revised standard also requires all losses attributable to the non-controlling interests to be absorbed by the non-controlling interests instead of by the parent. The Group has applied FRS 127 (Revised) prospectively during the current financial year with no financial impact on the financial statements of the Group but may impact the accounting of its future transactions or arrangements. Amendments to FRS 7 expand the disclosure requirements in respect of fair value measurements and liquidity risk. In particular, the amendments require additional disclosure of fair value measurements by level of a fair value measurement hierarchy, as shown in Note 48(e) to the financial statements. Comparatives are not presented by virtue of the exemption given in the amendments. Annual Improvements to FRSs (2010) contain amendments to 11 accounting standards that result in accounting changes for presentation, recognition or measurement purposes. These amendments have no material impact on the financial statements of the Group upon their initial application. Furthermore, the amendments to FRS 101 (Revised) also clarify that an entity may choose to present the analysis of the items of other comprehensive income either in the statement of changes in equity or in the notes to the financial statements. The Group has chosen to present the items of other comprehensive income in the statement of changes in equity. (b) The Group has not applied in advance the following accounting standards and interpretations (including the consequential amendments) that have been issued by the Malaysian Accounting Standards Board (MASB) but are not yet effective for the current financial year: FRSs and IC Interpretations (including the Consequential Amendments) Effective Date FRS 9 Financial Instruments 1 January 2015 FRS 10 Consolidated Financial Statements 1 January 2013 FRS 11 Joint Arrangements 1 January 2013 FRS 12 Disclosure of Interests in Other Entities 1 January 2013 FRS 13 Fair Value Measurement 1 January 2013 FRS 119 (Revised) Employee Benefits 1 January 2013 FRS 124 (Revised) Related Party Disclosures 1 January 2012 FRS 127 (2011) Separate Financial Statements 1 January 2013 FRS 128 (2011) Investments in Associates and Joint Ventures 1 January 2013 Amendments to FRS 1 (Revised): Severe Hyperinflation and Removal of Fixed Dates for First-time Adopters 1 January 2012 Amendments to FRS 7: Disclosures Transfers of Financial Assets 1 January 2012 Amendments to FRS 7: Disclosures Offsetting Financial Assets and Financial Liabilities 1 January 2013 Amendments to FRS 9: Mandatory Effective Date of FRS 9 and Transition Disclosures 1 January 2015 Amendments to FRS 101 (Revised): Presentation of Items of Other Comprehensive Income 1 July 2012 Amendments to FRS 112: Recovery of Underlying Assets 1 January 2012 Amendments to FRS 132: Offsetting Financial Assets and Financial Liabilities 1 January 2014 Amendments to FRS 1 Government Loans 1 January 2013 IC Interpretation 15 Agreements for the Construction of Real Estate Withdrawn on 19 November 2011 IC Interpretation 19 Extinguishing Financial Liabilities with Equity Instruments 1 July 2011 IC Interpretation 20 Stripping Costs in the Production Phase of a Surface Mine 1 January 2013 Amendments to IC Interpretation 14: Prepayments of a Minimum Funding Requirement 1 July 2011 DELLOYD VENTURES BERHAD annual report 2012

51 NOTES TO THE FINANCIAL STATEMENTS BASIS OF PREPARATION (CONT D) (b) On 19 November 2011, MASB issued a new MASB approved accounting framework, the Malaysian Financial Reporting Standards ( MFRSs ) that are equivalent to International Financial Reporting Standards. The MFRSs are to be applied by all Entities Other Than Private Entities for annual periods beginning on or after 1 January 2012, with the exception of entities that are within the scope of MFRS 141 (Agriculture) and IC Interpretation 15 (Agreements for Construction of Real Estate), including its parent, significant investor and venturer (herein called Transitioning Entities ). Transitioning Entities are allowed to defer the adoption of the MFRSs for an additional one year, i.e. to annual periods beginning on or after 1 January 2014 after which the MFRSs will become mandatory. The Group falls within the definition of Transitioning Entities and has opted to prepare its first MFRSs financial statements for the financial year ending 31 March In representing its first MFRSs financial statements, the Group will quantify the financial effects of the differences between the current FRSs and MFRSs. The Group has commenced transitioning its accounting policies and financial reporting from the current FRSs to MFRSs. However, the Group has not completed its quantification of the financial effects of the differences between FRSs and MFRSs due to the ongoing assessment by the management. The majority of the adjustments required on transition will be made, retrospectively, against opening retained profits. The Group expects to be in a position to fully comply with the requirements of MFRSs for the financial year ending 31 March SIGNIFICANT ACCOUNTING POLICIES (a) 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 and production factors which could change significantly as a result of technical innovations and competitors actions in response to the market conditions. The Group anticipates that the residual values of its property, plant and equipment will be significant and have been taken into consideration for the computation of the depreciable amount. Changes in the expected level of usage and technological development could impact the economic useful lives and the residual values of these assets, therefore future depreciation charges could be revised. (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 estimates of whether such taxes will be due in the ordinary course of business. Where the final outcome of these matters is different from the amounts that were initially recognised, such difference will impact the income tax and deferred tax provisions in the period in which such determination is made. (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) Writedown 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. annual report 2012 DELLOYD VENTURES BERHAD

52 52 NOTES TO THE FINANCIAL STATEMENTS 4. SIGNIFICANT ACCOUNTING POLICIES (CONT D) (a) Critical Accounting Estimates And Judgements (Cont d) (v) Classification Between Investment Properties and Owner-Occupied Properties The Group determines 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 loans and receivables financial assets and analyses historical bad debts, customer concentrations, customer creditworthiness, current economic trends and changes in the customer payment terms when making a judgement to evaluate the adequacy of the allowance for impairment losses. Where there is objective evidence of impairment, the amount and timing of future cash flows are estimated based on historical loss experience for assets with similar credit risk characteristics. If the expectation is different from the estimation, such difference will impact the carrying value of receivables. (vii) Impairment of Available-for-Sale Financial Assets The Group reviews its available-for-sale financial assets at the end of each reporting period to assess whether they are impaired. The Group also records impairment loss on available-for-sale equity investments when there has been a significant or prolonged decline in the fair value below their cost. The determination of what is significant or prolonged requires judgement. In making this judgement, the Group evaluates, among other factors, historical share price movements and the duration and extent to which the fair value of an investment is less than its cost. (viii) Classification of Leasehold Land The classification of leasehold land as a finance lease or an operating lease requires the use of judgement in determining the extent to which risks and rewards incidental to its ownership lie. Despite the fact that there will be no transfer of ownership by the end of the lease term and that the lease term does not constitute the major part of the indefinite economic life of the land, management considered that the present value of the minimum lease payments approximated to the fair value of the land at the inception of the lease. Accordingly, management judged that the Group has acquired substantially all the risks and rewards incidental to the ownership of the land through a finance lease. (ix) 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. DELLOYD VENTURES BERHAD annual report 2012

53 NOTES TO THE FINANCIAL STATEMENTS SIGNIFICANT ACCOUNTING POLICIES (CONT D) (a) Critical Accounting Estimates And Judgements (Cont d ) (x) Fair Value Estimates for Certain Financial Assets and Liabilities The Group carries certain financial assets and liabilities at fair value, which requires extensive use of accounting estimates and judgement. While significant components of fair value measurement were determined using verifiable objective evidence, the amount of changes in fair value would differ if the Group uses different valuation methodologies. Any changes in fair value of these assets and liabilities would affect profit and/or equity. (xi) Share-based Payments The Group measures the cost of equity settled transactions with employees by reference to the fair value of the equity investments at the date at which they are granted. The estimating of the fair value requires determining the most appropriate valuation model for a grant of equity instruments, which is dependent on the terms and conditions of the grant. This also requires determining the most appropriate inputs to the valuation model including the expected life of the option volatility and dividend yield and making assumptions about them. (b) Basis of Consolidation The consolidated financial statements include the financial statements of the Company and its subsidiaries made up to 31 March A subsidiary is defined as a company in which the parent company has the power, directly or indirectly, to exercise control over its financial and operating policies so as to obtain benefits from its activities. Subsidiaries are consolidated from the date on which control is transferred to the Group up to the effective date on which control ceases, as appropriate. Intragroup transactions, balances, income and expenses are eliminated on consolidation. Where necessary, adjustments are made to the financial statements of subsidiaries to ensure consistency of accounting policies with those of the Group. Non-controlling interests are presented within equity in the consolidated statement of financial position, separately from the Company s shareholders equity, and are separately disclosed in the consolidated statement of comprehensive income. Transactions with non-controlling interests are accounted for as transactions with owners. Gain or loss on disposal to noncontrolling interests is recognised directly in equity. Profit or loss and each component of other comprehensive income are attributed to the owners of the parent and to the non-controlling interests. Total comprehensive income is attributed to noncontrolling 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. 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 and attributed to owners of the parent. Upon loss of control of a subsidiary, the profit or loss on disposal is calculated as the difference between:- (i) (ii) the aggregate of the fair value of the consideration received and the fair value of any retained interest in the former subsidiary; and the previous carrying amount of the assets (including goodwill), and liabilities of the former subsidiary and any noncontrolling interests Amounts previously recognised in other comprehensive income in relation to the former subsidiary are accounted for (i.e. reclassified to profit or loss or transferred directly to retained profits) in the same manner as would be required if the relevant assets or liabilities were disposed of. 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 FRS139/FRS 127. annual report 2012 DELLOYD VENTURES BERHAD

54 54 NOTES TO THE FINANCIAL STATEMENTS 4. SIGNIFICANT ACCOUNTING POLICIES (CONT D) (b) Basis of Consolidation (Cont d) Business combinations from 1 April 2011 onwards 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. Business combinations before 1 April 2011 All subsidiaries are consolidated using the purchase method. At the date of acquisition, the fair values of the subsidiaries net assets are determined and these values are reflected in the consolidated financial statements. The cost of acquisition is measured at the aggregate of the fair values, at the date of exchange, of assets given, liabilities incurred or assumed, and equity instruments issued by the Group in exchange for control of the acquiree, plus any costs directly attributable to the business combination. Non-controlling interests are initially measured at their share of the fair values of the identifiable assets and liabilities of the acquiree as at the date of acquisition. (c) 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. Business combinations from 1 April 2011 onwards 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. Business combinations before 1 April 2011 Under the purchase method, goodwill represents the excess of the fair value of the purchase consideration over the Group s share of the fair values of the identifiable assets, liabilities and contingent liabilities of the subsidiaries at the date of acquisition. If, after reassessment, the Group s interest in the fair values of the identifiable net assets of the subsidiaries exceeds the cost of the business combinations, the excess is recognised as income immediately in profit or loss. (d) Functional and Foreign Currencies (i) Functional and Presentation Currency The individual financial statements of each entity in the Group are presented in the currency of the primary economic environment in which the entity operates, which is the functional currency. The consolidated financial statements are presented in Ringgit Malaysia ( RM ), which is the Company s functional and presentation currency. DELLOYD VENTURES BERHAD annual report 2012

55 NOTES TO THE FINANCIAL STATEMENTS SIGNIFICANT ACCOUNTING POLICIES (CONT D) (d) Functional and Foreign Currencies (Cont d) (ii) Transactions and Balances Transactions in foreign currencies are converted into the respective functional currencies on initial recognition, using the exchange rates approximating those ruling at the transaction dates. Monetary assets and liabilities at the end of the reporting period are translated at the rates ruling as of that date. Non-monetary assets and liabilities are translated using exchange rates that existed when the values were determined. All exchange differences are recognised in profit or loss. (iii) Foreign Operations Assets and liabilities of foreign operations are translated to RM at the rates of exchange ruling at the end of the reporting period. Revenues and expenses of foreign operations are translated at exchange rates ruling at the dates of the transactions. All exchange differences arising from translation are taken directly to other comprehensive income and accumulated in equity under translation reserve. On disposal of a foreign operation, the cumulative amount recognised in other comprehensive income relating to that particular foreign operation is reclassified from equity to profit or loss. Goodwill and fair value adjustments arising from the acquisition of foreign operations are treated as assets and liabilities of the foreign operations and are recorded in the functional currency of the foreign operations and translated at the closing rate at the end of the reporting period. (e) Financial Instruments Financial instruments are recognised in the statements of financial position when the Group has become a party to the contractual provisions of the instruments. Financial instruments are classified as liabilities or equity in accordance with the substance of the contractual arrangement. Interest, dividends, gains and losses relating to a financial instrument classified as a liability, are reported as an expense or income. Distributions to holders of financial instruments classified as equity are charged directly to equity. Financial instruments are offset when the Group has a legally enforceable right to offset and intends to settle either on a net basis or to realise the asset and settle the liability simultaneously. A financial instrument is recognised initially, at its fair value 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. Financial instruments recognised in the statements of financial position are disclosed in the individual policy statement associated with each item. (i) Financial Assets On initial recognition, financial assets are classified as either financial assets at fair value through profit or loss, loans and receivables financial assets, held-to-maturity investments, or available-for-sale financial assets, as appropriate. Financial Assets at Fair Value Through Profit or Loss Financial assets are classified as financial assets at fair value through profit or loss when the financial asset is either held for trading or is designated to eliminate or significantly reduce a measurement or recognition inconsistency that would otherwise arise. Derivatives are also classified as held for trading unless they are designated as hedges. Financial assets at fair value through profit or loss are stated at fair value, with any gains or losses arising on remeasurement recognised in profit or loss. Dividend income from this category of financial assets is recognised in profit or loss when the Group s right to receive payment is established. annual report 2012 DELLOYD VENTURES BERHAD

56 56 NOTES TO THE FINANCIAL STATEMENTS 4. SIGNIFICANT ACCOUNTING POLICIES (CONT D) (e) Financial Instruments (Cont d) (i) Financial Assets (cont d) Held-to-Maturity Investments Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturities that the management has the positive intention and ability to hold to maturity. Held-to-maturity investments are measured at amortised cost using the effective interest method less any impairment loss, with revenue recognised on an effective yield basis. Loans and Receivables Financial Assets Trade receivables and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as loans and receivables financial assets. Loans and receivables financial assets are measured at amortised cost using the effective interest method, less any impairment loss. Interest income is recognised by applying the effective interest rate, except for short-term receivables when the recognition of interest would be immaterial. Available-for-Sale Financial Assets Available-for-sale financial assets are non-derivative financial assets that are designated in this category or are not classified in any of the other categories. After initial recognition, available-for-sale financial assets are remeasured to their fair values at the end of each reporting period. Gains and losses arising from changes in fair value are recognised in other comprehensive income and accumulated in the fair value reserve, with the exception of impairment losses. On derecognition, the cumulative gain or loss previously accumulated in the fair value reserve is reclassified from equity into profit or loss. Dividends on available-for-sale equity instruments are recognised in profit or loss when the Group s right to receive payments is established. Investments in equity instruments whose fair value cannot be reliably measured are measured at cost less accumulated impairment losses, if any. (ii) Financial Liabilities All financial liabilities are recorded initially at fair value plus directly attributable transaction costs and subsequently measured at amortised cost using the effective interest method other than those categorised as fair value through profit or loss. Fair value through profit or loss category comprises financial liabilities that are either held for trading or are designated to eliminate or significantly reduce a measurement or recognition inconsistency that would otherwise arise. Derivatives are also classified as held for trading unless they are designated as hedges. (iii) Equity Instruments Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from proceeds. Dividends on ordinary shares are recognised as liabilities when approved for appropriation. (iv) Treasury Shares When the Company s own shares recognised as equity are bought back, the amount of the consideration paid, including all costs directly attributable, are recognised as a deduction from equity. Own shares purchased that are not subsequently cancelled are classified as treasury shares and are presented as a deduction from total equity. Where such shares are subsequently sold or reissued, any consideration received, net of any direct costs, is included in equity. DELLOYD VENTURES BERHAD annual report 2012

57 NOTES TO THE FINANCIAL STATEMENTS SIGNIFICANT ACCOUNTING POLICIES (CONT D) (e) Financial Instruments (Cont d) (v) Financial Guarantee Contracts A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder for a loss it incurs because a specific debtor fails to make payment when due. Financial guarantee contracts are recognised initially as liabilities at fair value, net of transaction costs. Subsequent to initial recognition, financial guarantee contracts are recognised as income in profit or loss over the period of the guarantee or, when there is no specific contractual period, recognised in profit or loss upon discharge of the guarantee. If the debtor fails to make payment relating to a financial guarantee contract when it is due and the Group, as the issuer, is required to reimburse the holder for the associated loss, the liability is measured at the higher of the best estimate of the expenditure required to settle the present obligation at the end of the reporting period and the amount initially recognised less cumulative amortisation. (f) Investments in Subsidiaries Investments in subsidiaries are stated at cost in the statement of financial position of the Company, and are reviewed for impairment at the end of the reporting period if events or changes in circumstances indicate that the carrying values may not be recoverable. On the disposal of the investments in subsidiaries, the difference between the net disposal proceeds and the carrying amount of the investments is recognised in profit or loss. (g) Investments in Associates An associate is an entity in which the Group has a long-term equity interest and where it exercises significant influence over the financial and operating policies. The investment in an associate is accounted for under the equity method, based on the financial statements of the associate made up to 31 March The Group s share of the post acquisition profits of the associate is included in the consolidated statement of comprehensive income and 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. Unrealised gains on transactions between the Group and the associates are eliminated to the extent of the Group s interest in the associates. Unrealised losses are eliminated unless cost cannot be recovered. (h) Property, Plant and Equipment Property, plant and equipment, other than freehold land, are stated at cost less accumulated depreciation and impairment losses, if any. Freehold land is stated at cost or revalued amount and is not depreciated. Depreciation is calculated on the straight-line method to write off the cost over their estimated useful lives. Depreciation of an asset does not cease when the asset becomes idle or is retired from active use unless the asset is fully depreciated. The principal annual rates of depreciation and residual values are as follows: Depreciation Rate Residual Value Freehold buildings 2% - 5% - Leasehold buildings 5% - Plant and machinery 10% - 25% 10% - 20% Factory equipment 10% - 25% 20% Motor vehicles 12.5% to 25% 1% - 20% Office equipment 10% % - Store and store equipment 10% - 25% - Furniture and fittings 10% % - Laboratory equipment 10% - 25% - Moulds 10% - 50% - annual report 2012 DELLOYD VENTURES BERHAD

58 58 NOTES TO THE FINANCIAL STATEMENTS 4. SIGNIFICANT ACCOUNTING POLICIES (CONT D) (h) Property, Plant and Equipment (cont d) The depreciation method, useful life and residual values are reviewed, and adjusted if appropriate, at the end of each reporting period to ensure that the amount, method and periods of depreciation are consistent with previous estimates and the expected pattern of consumption of the future economic benefits embodied in the items of the property, plant and equipment. Capital work-in-progress represents progress payments made towards the acquisition of land and building and related capital assets which are not ready for commercial use at the end of the reporting date. Capital work-in-progress is stated at cost and will be transferred to the relevant category of long-term assets and depreciated accordingly when the assets are completed and ready for commercial use. Cost of capital work-in-progress includes direct costs and related expenditure. Subsequent costs are included in the asset s carrying amount or recognised as a separate asset, as appropriate, only when the cost is incurred and it is probable that the future economic benefits associated with the asset will flow to the Group and the cost of the asset can be measured reliably. The carrying amount of parts that are replaced is derecognised. The costs of the day-to-day servicing of property, plant and equipment are recognised in profit or loss as incurred. Cost also comprises the initial estimate of dismantling and removing the asset and restoring the site on which it is located for which the Group is obligated to incur when the asset is acquired, if applicable. An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use. Any gain or loss arising from derecognition of the asset is recognised in profit or loss. (i) Investment Properties Investment properties are properties held either to earn rental income or for capital appreciation or for both. Investment properties are stated at cost less accumulated depreciation and impairment losses, if any, consistent with the accounting policy for property, plant and equipment as stated in Note 4(h) to the financial statements. Investment properties are derecognised when they have either been disposed of or when the investment property is permanently withdrawn from use and no future benefit is expected from its disposal. On the derecognition of an investment property, the difference between the net disposal proceeds and the carrying amount is recognised in profit or loss. (j) Plantation Development Expenditure Plantation development expenditure comprise cost of land and buildings held for plantation development activities, infrastructure cost such as roads and bridges attached on the plantation estate, cost of planting and development of oil palm and other plantation crops. Plantation development expenditure, other than freehold land, is stated at cost less accumulated amortisation and impairment losses, if any. Freehold land is stated at cost and is not depreciated. Cost of preparation of agriculture land, planting, replanting and upkeep of trees, together with a portion of indirect overheads including general and administrative expenses, are capitalised as immature plantations and transferred to mature plantations account when the trees have matured and meet the criteria for commercial production. Mature plantations are amortised over the estimated productive life of the trees which yield was determined by vegetative growth and management estimation. Amortisation is calculated on the straight-line method to write off the cost over their estimated useful lives. Amortisation of an asset does not cease when the asset becomes idle or is retired from active use unless the asset is fully amortised. The principal annual rates of amortisation are: Mature plantations 20 years Leasehold land remaining lease term of 43 and 50 years Freehold buildings 5% Leasehold buildings 8-20 years Roads and bridges 10% DELLOYD VENTURES BERHAD annual report 2012

59 NOTES TO THE FINANCIAL STATEMENTS SIGNIFICANT ACCOUNTING POLICIES (CONT D) (j) Plantation Development Expenditure (Cont d) The amortisation method and useful life are reviewed, and adjusted if appropriate, at end of each reporting date 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 the plant and equipment. An item of plantation development expenditure is derecognised upon disposal or when no future economic benefits are expected from its use. Any gain or loss arising from derecognition of the asset is included in the profit or loss in the year the asset is derecognised. (k) Impairment (i) Impairment of Financial Assets All financial assets (other than those categorised at fair value through profit or loss), are assessed at the end of each reporting period whether there is any objective evidence of impairment as a result of one or more events having an impact on the estimated future cash flows of the asset. For an equity instrument, a significant or prolonged decline in the fair value below its cost is considered to be objective evidence of impairment. An impairment loss in respect of held-to-maturity investments and loans and receivables financial assets is recognised in profit or loss and is measured as the difference between the asset s carrying amount and the present value of estimated future cash flows, discounted at the financial asset s original effective interest rate. An impairment loss in respect of available-for-sale financial assets is recognised in profit or loss and is measured as the difference between its cost (net of any principal payment and amortisation) and its current fair value, less any impairment loss previously recognised in the fair value reserve. In addition, the cumulative loss recognised in other comprehensive income and accumulated in equity under fair value reserve, is reclassified from equity to profit or loss. With the exception of available-for-sale equity instruments, if, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed through profit or loss to the extent that the carrying amount of the investment at the date the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised. In respect of available-for-sale equity instruments, impairment losses previously recognised in profit or loss are not reversed through profit or loss. Any increase in fair value subsequent to an impairment loss made is recognised in other comprehensive income. (ii) Impairment of Non-Financial Assets The carrying values of assets, other than those to which FRS Impairment of Assets does not apply, are reviewed at the end of each reporting period for impairment when there is an indication that the assets might be impaired. Impairment is measured by comparing the carrying values of the assets with their recoverable amounts. The recoverable amount of the assets is the higher of the assets fair value less costs to sell and their value-in-use, which is measured by reference to discounted future cash flow. An impairment loss is recognised in profit or loss immediately unless the asset is carried at its revalued amount. Any impairment loss of a revalued asset is treated as a revaluation decrease to the extent of a previously recognised revaluation surplus for the same asset. In respect of assets other than goodwill, and when there is a change in the estimates used to determine the recoverable amount, a subsequent increase in the recoverable amount of an asset is treated as a reversal of the previous impairment loss and is recognised to the extent of the carrying amount of the asset that would have been determined (net of amortisation and depreciation) had no impairment loss been recognised. The reversal is recognised in profit or loss immediately, unless the asset is carried at its revalued amount. A reversal of an impairment loss on a revalued asset is credited to other comprehensive income. However, to the extent that an impairment loss on the same revalued asset was previously recognised as an expense in the statements of comprehensive income, a reversal of that impairment loss is recognised as income in the statements of comprehensive income. annual report 2012 DELLOYD VENTURES BERHAD

60 60 NOTES TO THE FINANCIAL STATEMENTS 4. SIGNIFICANT ACCOUNTING POLICIES (CONT D) (l) Assets under Hire Purchase Assets acquired under hire purchase are capitalised in the financial statements and are depreciated in accordance with the policy set out in Note 4(h) above. Each hire purchase payment is allocated between the liability and finance charges so as to achieve a constant rate on the finance balance outstanding. Finance charges are recognised in profit or loss over the period of the respective hire purchase agreements. (m) Inventories Inventories are stated at the lower of cost and net realisable value. Cost is determined on the first-in-first out basis and comprises the purchase price and incidentals incurred in bringing the inventories to their present location and condition. Net realisable value represents the estimated selling price less the estimated costs necessary to make the sale. Where necessary, due allowance is made for all damaged, obsolete and slow-moving items. (n) Income Taxes Income tax for the year comprises current and deferred tax. Current tax is the expected amount of income taxes payable in respect of the taxable profit for the year and is measured using the tax rates that have been enacted or substantively enacted at the end of the reporting period. Deferred tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred tax liabilities are recognised for all taxable temporary differences other than those that arise from goodwill or excess of the acquirer s interest in the net fair value of the acquiree s identifiable assets, liabilities and contingent liabilities over the business combination costs or from the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the transaction, affects neither accounting profit nor taxable profit. Deferred tax assets are recognised for all deductible temporary differences, unused tax losses and unused tax credits to the extent that it is probable that future taxable profits will be available against which the deductible temporary differences, unused tax losses and unused tax credits can be utilised. The carrying amounts of deferred tax assets are reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient future taxable profits will be available to allow all or part of the deferred tax assets to be utilised. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period when the asset is realised or the liability is settled, based on the tax rates that have been enacted or substantively enacted at the end of the reporting period. Deferred tax assets 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. Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss. Deferred tax items are recognised in correlation to the underlying transactions either in other comprehensive income or directly in equity and deferred tax arising from a business combination is included in the resulting goodwill or excess of the acquirer s interest in the net fair value of the acquiree s identifiable assets, liabilities and contingent liabilities over the business combination costs. (o) Cash and Cash Equivalents Cash and cash equivalents comprise cash in hand, bank balances, demand deposits, deposits pledged with financial institutions, bank overdrafts and short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of change in value. (p) Provisions Provisions are recognised when the Group has a present obligation as a result of past events, when it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and when a reliable estimate of the amount can be made. Provisions are reviewed at the end of each reporting period and adjusted to reflect the current best estimate. Where the effect of the time value of money is material, the provision is the present value of the estimated expenditure required to settle the obligation. DELLOYD VENTURES BERHAD annual report 2012

61 NOTES TO THE FINANCIAL STATEMENTS SIGNIFICANT ACCOUNTING POLICIES (CONT D) (q) Employee Benefits (i) Short-term Benefits Wages, salaries, paid annual leave and sick leave, bonuses and non-monetary benefits are recognised in profit or loss in the period in which the associated services are rendered by employees of the Group. (ii) Defined Contribution Plans The Group s contributions to defined contribution plans are recognised in profit or loss in the period to which they relate. Once the contributions have been paid, the Group has no further liability in respect of the defined contribution plans. (iii) Share-based Payment Transactions At grant date, the fair value of options granted to employees is recognised as an employee expense, with a corresponding increase in equity, over the period in which the employees become unconditionally entitled to the options. The amount recognised as an expense is adjusted to reflect the actual number of share options that are expected to vest. (iv) Defined Benefits Scheme Certain subsidiaries of the Group operate an unfunded defined benefits scheme in respect of their employees in accordance with the Indonesian Labor Law No. 13/2003 dated 25 March The Group s obligations under the scheme are estimated based on an independent actuarial calculation using the Projected Unit Credit Method. The obligation for employee service entitlements is calculated based on the present value of estimated future benefits that the employees have earned in return for their services in the current and prior periods. The Group s obligations under the scheme will be reviewed on a regular basis. Current service cost is recognised as an expense for the current period. Actuarial gains and losses are recognised as income or expense over the expected average remaining working lives of the participating employees when the net cumulative unrecognised actuarial gains and losses for the plan at the end of the previous reporting year exceed 10% of the defined benefit obligation at that date. These gains or losses are recognised on a straight-line basis over the expected average remaining working lives of the employees. Past service costs are recognised immediately to the extent that the benefits are already vested, or otherwise are amortised over the estimated average remaining service years of employees until the employee benefits become vested. The amount recognised at the end of the reporting date represents the present value of the defined benefit obligations adjusted for unrecognised actuarial gains and losses and unrecognised past service cost. (r) Related Parties A party is related to an entity if:- (i) (ii) (iii) (iv) (v) (vi) (vii) directly, or indirectly through one or more intermediaries, the party:- controls, is controlled by, or is under common control with, the entity (this includes parents, subsidiaries and fellow subsidiaries); has an interest in the entity that gives it significant influence over the entity; or has joint control over the entity; the party is an associate of the entity; the party is a joint venture in which the entity is a venturer; the party is a member of the key management personnel of the entity or its parent; the party is a close member of the family of any individual referred to in (i) or (iv); the party is an entity that is controlled, jointly controlled or significantly influenced by, or for which significant voting power in such entity resides with, directly or indirectly, any individual referred to in (iv) or (v); or the party is a post-employment benefit plan for the benefit of employees of the entity, or of any entity that is a related party of the entity. Close members of the family of an individual are those family members who may be expected to influence, or be influenced by, that individual in their dealings with the entity. annual report 2012 DELLOYD VENTURES BERHAD

62 62 NOTES TO THE FINANCIAL STATEMENTS 4. SIGNIFICANT ACCOUNTING POLICIES (CONT D) (s) Contingent Liabilities A contingent liability is a possible obligation that arises from past events and whose existence will only be confirmed by the occurrence of one or more uncertain future events not wholly within the control of the Group. It can also be a present obligation arising from past events that is not recognised because it is not probable that an outflow of economic resources will be required or the amount of obligation cannot be measured reliably. A contingent liability is not recognised but is disclosed in the notes to the financial statements. When a change in the probability of an outflow occurs so that the outflow is probable, it will then be recognised as a provision. (t) Revenue Recognition (i) (ii) (iii) (iv) (v) Sale of Goods Revenue is recognised upon delivery of goods and customers acceptance and where applicable, net of returns and trade discounts. Services Revenue is recognised upon the rendering of services and when the outcome of the transaction can be estimated reliably. In the event the outcome of the transaction could not be estimated reliably, revenue is recognised to the extent of the expenses incurred that are recoverable. Interest Income Interest income is recognised on an accrual basis. Dividend Income Dividend income from investment is recognised when the right to receive dividend payment is established. Rental Income Rental income is recognised on an accrual basis. (u) 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 to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available. (v) Borrowing Costs Borrowing costs, directly attributable to the acquisition and construction of property, plant and equipment are capitalised as part of the cost of those assets, until such time as the assets are ready for their intended use or sale. Capitalisation of borrowing costs is suspended during extended periods in which active development is interrupted. All other borrowing costs are recognised in profit or loss as expenses in the period in which they are incurred. DELLOYD VENTURES BERHAD annual report 2012

63 NOTES TO THE FINANCIAL STATEMENTS INVESTMENTS IN SUBSIDIARIES THE COMPANY RM 000 RM 000 Unquoted shares, at cost At 1 April 2011/1 January , ,504 Addition during the financial year 1,899 - Share options granted under ESOS to the employees of subsidiaries (Note 22(c)) At 31 March 2012/ , ,398 Accumulated impairment losses:- At 1 April 2011/1 January 2010 (4,824) (4,824) Addition during the financial year (1,433) - Reversal during the financial year 1,097 - (5,160) (4,824) At 31 March 2012/ , ,574 The details of the subsidiaries are as follows:- EFFECTIVE COUNTRY OF EQUITY INTEREST COMPANY INCORPORATION PRINCIPAL ACTIVITIES Delloyd Industries (M) Sdn Bhd Malaysia 100% 100% Manufacturing and trading of automotive parts and accessories. Magnavision (M) Sdn Bhd Malaysia 100% (a) 100% (a) Servicing and repairing motor vehicles. Delloyd Industries (Thailand) Co. Ltd. * Thailand 100% (a) 100% (a) Manufacturing and trading of automotive parts and accessories. GMI Mould Industries Sdn Bhd Malaysia 100% (a) 100% (a) Fabrication of moulds. PT Delloyd * Republic of 100% (a) 100% (a) Manufacturing and trading of Indonesia automotive parts and accessories. Delloyd Electronics (M) Sdn Bhd Malaysia 100% 100% Manufacturing and trading of electronic automotive parts and accessories. Delloyd Auto Parts Mfg Sdn Bhd Malaysia 100% 100% Manufacturing and trading of automotive parts and accessories. Delloyd Auto Parts (M) Sdn Bhd Malaysia 100% 100% Wholesale of automotive parts and accessories. Delloyd (Malaysia) Sdn Bhd Malaysia 100% 100% Exporting of automotive parts and accessories. Delloyd Management Services (M) Sdn Bhd Malaysia 100% 100% Investment holding and provision of management services. annual report 2012 DELLOYD VENTURES BERHAD

64 64 NOTES TO THE FINANCIAL STATEMENTS 5. INVESTMENTS IN SUBSIDIARIES (CONT D) The details of the subsidiaries are as follows:- EFFECTIVE COUNTRY OF EQUITY INTEREST COMPANY INCORPORATION PRINCIPAL ACTIVITIES Delloyd R & D (M) Sdn Bhd Malaysia 100% 100% Providing research and development services. Delloyd Infocomm Sdn Bhd Malaysia 100% 100% Investment holding. Premier Asian Auto Publications (M) Sdn Bhd Malaysia 97.52% (b) 96% (b) Magazine publisher. Delloyd Plantation Sdn Bhd Malaysia 90% 90% Cultivation of oil palm. PT Rebinmas Jaya * Republic of 54% (c) 54% (c) Cultivation of oil palm and milling Indonesia of fresh fruit bunches ATOZ Motor Marketing Sdn Bhd Malaysia 100% 100% Distribution of motor vehicles. ATOZ Motor Services Sdn Bhd Malaysia 100% (d) 100% (d) Distribution of motor vehicles. ATOZ Motor Concept Sdn Bhd Malaysia 100% (d) 100% (d) Distribution of motor vehicles. ATOZ Motor Workshop Sdn Bhd Malaysia 100% (d) 100% (d) Servicing and repairing motor vehicles. Vantage Speed Sdn Bhd Malaysia 100% (d) 100% (d) Distribution of motor vehicles. Delloyd Corporation Sdn Bhd Malaysia 100% 100% Investment holding. PT Asian Auto International * Republic of 51% (e) 51% (e) Manufacturing and assembly of Indonesia completely built-up (CBU) bus and bus chassis. (a) (b) (c) (d) (e) Held by Delloyd Industries (M) Sdn Bhd Held by Delloyd Infocomm Sdn Bhd Held by Delloyd Plantation Sdn Bhd Held by Atoz Motor Marketing Sdn Bhd Held by Delloyd Corporation Sdn Bhd * - These subsidiaries were audited by other firms of chartered accountants. DELLOYD VENTURES BERHAD annual report 2012

65 NOTES TO THE FINANCIAL STATEMENTS INVESTMENT IN ASSOCIATES THE GROUP RM 000 RM 000 Unquoted shares at cost 15,102 11,725 Share of post acquisition profits 16,350 18,699 31,452 30,424 The details of the associates are as follows:- EFFECTIVE COUNTRY OF EQUITY INTEREST COMPANY INCORPORATION PRINCIPAL ACTIVITIES Ichikoh (M) Sdn Bhd Malaysia 30% (a) 30% (a) Manufacturing of lamps, mirrors and other automotive parts. Autoparts Networks Malaysia 21% (b) 21% (b) Trading and manufacturing of Alliances Sdn Bhd interior automotive parts and precision and component parts. Intelli-Telematics Asia Sdn Bhd Malaysia 40% (c) 40% (c) General trading and dealing in electronic components and security systems. Brose Delloyd Automotive Thailand 40% (d) 40% (d) Manufacturing of windows Company Limited regulators for automotive parts. Thai Delloyd Company Limited Thailand 45% (e) 45% (e) Dormant. PT JFD Indonesia Indonesia 21% (f) - Trading and manufacturing of automotive parts. annual report 2012 DELLOYD VENTURES BERHAD

66 66 NOTES TO THE FINANCIAL STATEMENTS 6. INVESTMENT IN ASSOCIATES (CONT D) (a) (b) (c) (d) (e) (f) Held by Delloyd Electronics (M) Sdn Bhd. The results of Ichikoh (M) Sdn Bhd are equity accounted based on the unaudited financial results for the year ended 31 March Held by Delloyd Industries (M) Sdn Bhd. The results of Autoparts Networks Alliances Sdn Bhd are equity accounted based on the unaudited results for the financial year ended 31 December However, the unaudited results for the 3-month period ended 31 March 2012 are not equity accounted as the amount is not material. Held by Delloyd Infocomm Sdn Bhd. The results of Intelli-Telematics Asia Sdn Bhd are equity accounted based on the audited financial results for the financial year ended 31 December 2011 and the unaudited results for the 3-month period ended 31 March Held by Delloyd Electronics (M) Sdn Bhd. The results of Brose Delloyd Automotive Co., Ltd. are equity accounted based on the audited financial results for the financial year ended 31 December 2011 and the unaudited results for the 3-month period ended 31 March Held by Delloyd Auto Parts (M) Sdn Bhd. The results of Thai Delloyd Company Limited are not equity accounted as the amount involved is not material. Held by Delloyd Electronics (M) Sdn Bhd. The results of PT JFD are equity accounted based on the audited financial results for the financial period ended 31 March The summarised audited and unaudited financial information of the associates is as follows:- THE GROUP RM 000 RM 000 Assets and liabilities Total assets 121, ,841 Total liabilities 17,408 7,824 THE GROUP to to RM 000 RM 000 Results Revenue 113, ,478 Profit after taxation 1,935 15,679 DELLOYD VENTURES BERHAD annual report 2012

67 NOTES TO THE FINANCIAL STATEMENTS PROPERTY, PLANT AND EQUIPMENT AT DEPRECIATION TRANSLATION AT ADDITIONS DISPOSALS WRITTEN OFF RECLASSIFICATION CHARGE DIFFERENCES THE GROUP RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 NET BOOK VALUE Freehold land 18,840 4, (9) 23,331 Freehold buildings 23,125 7, (710) (21) 29,898 Leasehold land 5, (428) (215) 4,849 Leasehold buildings 14,561 3, (845) (570) 16,314 Plant and machinery 39,524 9, (5,053) (1,020) 42,784 Factory equipment 4,484 1, (2) (993) (18) 4,996 Motor vehicles 5,977 1,918 (71) - - (1,689) (86) 6,049 Office equipment 1, (2) - (518) (14) 1,339 Store and store equipment 116 1, (129) - 1,103 Furniture and fittings (8) - (229) (6) 991 Laboratory equipment (65) (2) 190 Moulds 8,209 7,225 (485) - - (4,706) 7 10, ,581 37,398 (556) (10) - (15,365) (1,954) 142,094 annual report 2012 DELLOYD VENTURES BERHAD

68 68 NOTES TO THE FINANCIAL STATEMENTS 7. PROPERTY, PLANT AND EQUIPMENT (CONT D) AS PREVIOUSLY EFFECTS REPORTED OF AS RESTATED IMPAIRMENT DEPRECIATION TRANSLATION AT FRS 117 AT ADDITIONS DISPOSALS WRITTEN OFF RECLASSIFICATION LOSSES CHARGE DIFFERENCES AT THE GROUP RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 NET BOOK VALUE Freehold land 18,887-18, (47) 18,840 Freehold buildings 23,656-23, (693) (114) 23,125 Leasehold land - 7,826 7,826 2,740 (4,123) (349) (602) 5,492 Leasehold buildings 2,813-2,813 4,070 (153) (31) 8,838 - (718) (258) 14,561 Plant and machinery 18,326-18,326 6,733 (408) - 20,601 (324) (5,173) (231) 39,524 Factory equipment 4,816-4, (64) - - (28) (1,110) (34) 4,484 Motor vehicles 2,771-2,771 4,846 (109) (1,499) (32) 5,977 Office equipment (3) (2) - - (518) (12) 1,050 Store and store equipment (30) (2) 116 Furniture and fittings 1,157-1, (15) (176) - - (281) (9) 946 Laboratory equipment (124) Moulds 3,614-3,614 8, (3,545) (15) 8,209 Capital-work-in progress - Oil Mill 29,352-29,352 2,343 - (887) (29,439) - - (1,369) - 106,763 7, ,589 31,080 (4,875) (1,096) - (352) (14,040) (2,725) 122,581 DELLOYD VENTURES BERHAD annual report 2012

69 NOTES TO THE FINANCIAL STATEMENTS PROPERTY, PLANT AND EQUIPMENT (CONT D) AT IMPAIRMENT ACCUMULATED NET BOOK COST LOSSES DEPRECIATION VALUE THE GROUP RM 000 RM 000 RM 000 RM 000 At Freehold land 23, ,331 Freehold buildings 35,902 - (6,004) 29,898 Leasehold land 5,952 - (1,103) 4,849 Leasehold buildings 18,032 - (1,718) 16,314 Plant and machinery 66,923 (796) (23,343) 42,784 Factory equipment 14,940 (73) (9,871) 4,996 Motor vehicles 13,158 - (7,109) 6,049 Office equipment 7,279 - (5,940) 1,339 Store and store equipment 1,501 - (398) 1,103 Furniture and fittings 3,153 - (2,162) 991 Laboratory equipment 1,525 - (1,335) 190 Moulds 47,877 - (37,627) 10, ,573 (869) (96,610) 142,094 At AT IMPAIRMENT ACCUMULATED NET BOOK COST LOSSES DEPRECIATION VALUE RM 000 RM 000 RM 000 RM 000 Freehold land 18, ,840 Freehold buildings 28,420 - (5,295) 23,125 Leasehold land 6,194 - (702) 5,492 Leasehold buildings 15,468 - (907) 14,561 Plant and machinery 58,810 (802) (18,484) 39,524 Factory equipment 13,475 (71) (8,920) 4,484 Motor vehicles 11,698 - (5,721) 5,977 Office equipment 7,088 - (6,038) 1,050 Store and store equipment (271) 116 Furniture and fittings 2,922 - (1,976) 946 Laboratory equipment 1,528 - (1,271) 257 Moulds 41,226 - (33,017) 8, ,056 (873) (82,602) 122,581 annual report 2012 DELLOYD VENTURES BERHAD

70 70 NOTES TO THE FINANCIAL STATEMENTS 7. PROPERTY, PLANT AND EQUIPMENT (CONT D) The following property, plant and equipment have been pledged to the licensed banks as security for banking facilities granted to the Group. THE GROUP RM 000 RM 000 At Net Book Value Freehold buildings 1,543 1,568 Leasehold buildings 7,982 8,396 Plant and machinery 18,285 18,541 27,810 28,505 DELLOYD VENTURES BERHAD annual report 2012

71 NOTES TO THE FINANCIAL STATEMENTS PLANTATION DEVELOPMENT EXPENDITURE AT AMORTISATION TRANSLATION AT ADDITIONS DISPOSAL WRITTEN OFF CHARGE DIFFERENCES THE GROUP RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 NET BOOK VALUE Freehold land and matured plantation 100, (2,402) (996) 97,321 Leasehold land 23, (586) (934) 22,388 Freehold buildings (73) Leasehold buildings 2, (154) (88) 2,739 Roads and bridges 4,247 2, (730) (164) 6,198 Immature plantation 40,850 8,412 (5) (115) - (1,593) 47, ,537 11,993 (5) (115) (3,945) (3,775) 176,690 annual report 2012 DELLOYD VENTURES BERHAD

72 72 NOTES TO THE FINANCIAL STATEMENTS 8. PLANTATION DEVELOPMENT EXPENDITURE (CONT D) AT AMORTISATION TRANSLATION AT ADDITIONS WRITTEN OFF CHARGE DIFFERENCES THE GROUP RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 NET BOOK VALUE Freehold land and matured plantation 105, (2,635) (1,786) 100,719 Leasehold land 25, (987) (986) 23,908 Freehold buildings (91) Leasehold buildings 1,472 1,196 - (354) (69) 2,245 Roads and bridges 4,130 1,197 - (890) (190) 4,247 Immature plantation 29,311 12,636 (120) - (977) 40, ,593 15,029 (120) (4,957) (4,008) 172,537 DELLOYD VENTURES BERHAD annual report 2012

73 NOTES TO THE FINANCIAL STATEMENTS PLANTATION DEVELOPMENT EXPENDITURE (CONT D) ACCUMULATED NET BOOK AT COST AMORTISATION VALUE THE GROUP RM 000 RM 000 RM 000 At Freehold land and matured plantation 123,285 (15,339) 107,946 Leasehold land 25,749 (3,361) 22,388 Freehold buildings 1,451 (956) 495 Leasehold buildings 3,397 (657) 2,740 Roads and bridges 8,837 (2,640) 6,197 Immature plantation 36,924-36, ,643 (22,953) 176,690 At Freehold land and matured plantation 114,182 (13,463) 100,719 Leasehold land 26,796 (2,888) 23,908 Freehold buildings 1,451 (883) 568 Leasehold buildings 2,769 (524) 2,245 Roads and bridges 6,231 (1,984) 4,247 Immature plantation 40,850-40, ,279 (19,742) 172,537 Included in the plantation development expenditure of the Group at the end of the reporting period are certain freehold and leasehold land which were pledged as security for term loans granted to the Group. 9. INVESTMENT PROPERTIES The details of the investment properties are as follows:- THE GROUP RM 000 RM 000 At Cost: - Freehold land Freehold buildings 1,659 1,659 2,113 2,113 Accumulated Depreciation (350) (317) Net Book Value 1,763 1,796 No independent valuations by professional valuers have been carried out to determine the fair values of these properties. The Directors estimate the fair values of the investment properties to be approximately RM4,200,000 ( RM3,200,000) based on past selling prices of similar properties at adjacent locations of the Group s investment properties. The rental income and direct operating expenses arising from the investment properties that generate income are RM168,000 and RM11,098 ( RM140,000 and RM14,878) respectively. annual report 2012 DELLOYD VENTURES BERHAD

74 74 NOTES TO THE FINANCIAL STATEMENTS 10. OTHER INVESTMENTS THE GROUP RM 000 RM 000 Quoted shares outside Malaysia Unquoted shares in Malaysia - 1,569 Corporate membership in golf clubs Other investment outside Malaysia 2,306-3,153 2,581 Represented by:- At cost 2,306 1,569 At fair value 847 1,012 3,153 2,581 Market value of quoted shares (a) (b) The Group designated its investments in quoted shares and corporate membership in golf clubs as available-for-sale financial assets and measured at fair value. Investments in unquoted shares of the Group, designated as available-for-sale financial assets, are stated at cost as their fair values cannot be reliably measured using valuation techniques due to the lack of marketability of the shares. 11. GOODWILL ON CONSOLIDATION THE GROUP RM 000 RM 000 At / ,452 12,941 Accumulated impairment losses - (249) Arising from translation differences (408) (2,240) At 31 March 2012/ ,044 10,452 (a) The carrying amount of goodwill allocated to each cash-generating unit is as follows:- THE GROUP RM 000 RM 000 Plantation segment 10,044 10,452 DELLOYD VENTURES BERHAD annual report 2012

75 NOTES TO THE FINANCIAL STATEMENTS GOODWILL ON CONSOLIDATION (CONT D) (b) The Group has assessed the recoverable amount of goodwill allocated and determined that no additional impairment is required. The recoverable amounts of the cash-generating units are determined using the value-in-use approach, and this is derived from the present value of the future cash flows from the operating segments computed based on the projections of financial budgets approved by management covering a period of 5 years. The key assumptions used in the determination of the recoverable amounts are as follows:- GROSS MARGIN GROWTH RATE DISCOUNT RATE Plantation segment 49.1% 57.3% 29.0% 23.4% 8.0% 8.0% 12. DEFERRED TAX ASSETS THE GROUP RM 000 RM 000 At 1 April 2011/1 January ,398 5,754 Recognised in profit or loss (Note 37): - for the financial year/period 723 (330) - Underprovision in the previous financial period/year Translation differences (90) (100) At 31 March 2012/2011 6,243 5,398 The components of the deferred tax assets are as follows:- Provisions and others 3,865 3,283 Writedown of inventories 1,019 1,106 Accelerated depreciation over capital allowances Unabsorbed capital allowances Unutilised tax losses ,243 5,398 At the end of the reporting period, the Group has unutilised tax losses and unabsorbed capital allowances that are available for offset against future taxable profits of the subsidiaries in which the losses arose. No deferred tax assets are recognised in respect of these items as it is not probable that taxable profits of the subsidiaries will be available against which the deductible temporary differences can be utilised. Details of the unutilised tax losses and unabsorbed capital allowances are as follows:- THE GROUP RM 000 RM 000 Unabsorbed capital allowances Unutilised tax losses 968 1,746 1,068 2,193 annual report 2012 DELLOYD VENTURES BERHAD

76 76 NOTES TO THE FINANCIAL STATEMENTS 13. INVENTORIES AT NET REALISABLE AT COST VALUE TOTAL THE GROUP RM 000 RM 000 RM 000 At Raw materials 20,054 1,368 21,422 Work-in-progress 1,456-1,456 Finished goods 24,621 4,169 28,790 Goods-in-transit 1,730-1,730 Agriculture produce ,756 5,537 54,293 At Raw materials 4,483 13,930 18,413 Work-in-progress 1,296-1,296 Finished goods 8,927 8,673 17,600 Goods-in-transit 2,195-2,195 Agriculture produce 2,618-2,618 19,519 22,603 42, TRADE RECEIVABLES THE GROUP RM 000 RM 000 Trade receivables 81,550 69,170 Allowance for impairment losses (2,129) (403) 79,421 68,767 Allowance of impairment losses:- At 1 April 2011/1 January 2010 (403) (220) Addition during the financial year/period (1,795) (183) Translation differences 69 - At 31 March 2012/2011 (2,129) (403) The Group s normal trade credit terms range from 30 to 120 days. Other credit terms are assessed and approved on a case-by-case basis. DELLOYD VENTURES BERHAD annual report 2012

77 NOTES TO THE FINANCIAL STATEMENTS OTHER RECEIVABLES, DEPOSITS AND PREPAYMENTS THE GROUP THE COMPANY RM 000 RM 000 RM 000 RM 000 Other receivables 7,185 12, Allowance for impairment losses (110) ,075 12, Deposits 9,791 5, Prepayments 1,474 1, ,340 19, Allowance for impairment losses:- At 1 April 2011/1 January Addition during the financial year/period (110) At 31 March 2012/2011 (110) Included in other receivables, deposits and prepayments of the Group is an amount of approximately RM7,871,000 ( RM5,252,000) being deposits for the purchase of property, plant and equipment. 16. AMOUNTS OWING BY SUBSIDIARIES THE COMPANY RM 000 RM 000 Amount owing by subsidiaries - Quasi loans - 31,865 - Non-trade balances 36,033 14,877 Amount owing to subsidiaries - Non-trade balances (7) (35,033) 36,026 11,709 Represented by:- At cost 36,026 11,709 (a) (b) Quasi loans represent advances and payments made on behalf of which the settlement is neither planned nor likely to occur in the foreseeable future. These amounts are, in substance, a part of the Company s net investment in the subsidiaries. The quasi loans are stated at cost less accumulated impairment losses, if any. The non-trade balances represent unsecured, interest-free and interest-bearing advances and payments made on behalf. The amounts owing are repayable on demand and are to be settled in cash. annual report 2012 DELLOYD VENTURES BERHAD

78 78 NOTES TO THE FINANCIAL STATEMENTS 17. SHORT-TERM INVESTMENTS THE GROUP THE COMPANY RM 000 RM 000 RM 000 RM 000 Equity fund unit trusts in Malaysia 19,481 26,379 4, Represented by:- At fair value 19,481 26,379 4, The short-term investments are designated as financial assets at fair value through profit or loss investments, measured at fair value. 18. DEPOSITS WITH FINANCIAL INSTITUTIONS (a) The deposits with financial institutions of the Group at the end of the reporting period bore effective interest rates ranging from 0.60% to 3.15% ( % to 8.30%) per annum. The deposits have maturity periods ranging from 1 to 365 days ( to 365 days). (b) Included in deposits with licensed banks of the Group at the end of the reporting period was an amount of RM101,213 ( RM23,568) which has been pledged to a licensed bank as security for a bank guarantee granted to the Group. 19. SHARE CAPITAL The movements in the authorised and paid-up share capital of the Company are as follows:- THE GROUP/THE COMPANY NUMBER OF SHARES RM 000 RM AUTHORISED Ordinary shares of RM1 each 500, , , ,000 ISSUED AND FULLY PAID-UP Ordinary shares of RM1 each: - at 1 April 2011/1 January ,964 88,863 96,964 88,863 - shares issued pursuant to exercise of options under ESOS 3,040 8,101 3,040 8,101 At 31 March 2012/ ,004 96, ,004 96,964 During the financial year, the Company increased its issued and paid-up share capital from RM96,964,250 to RM100,004,250 by the issuance of 3,040,000 new ordinary shares of RM1.00 each to eligible employees of the Group pursuant to options exercised under the Employee Share Option Scheme ( ESOS ) at an issue price of RM2.82 per share for cash. The premium arising from the exercise of ESOS of RM5,532,800 has been credited to the share premium account. DELLOYD VENTURES BERHAD annual report 2012

79 NOTES TO THE FINANCIAL STATEMENTS SHARE PREMIUM The movements in the share premium of the Group and the Company are as follows:- THE GROUP / THE COMPANY RM 000 RM 000 At 1 April 2011/1 January , New shares issued under the employee share option scheme 5,533 10,729 Transfer from ESOS reserve for ESOS exercised 882 2,632 At 31 March 2012/ ,470 14,055 The share premium is not distributable by way of dividends and may be utilised in the manner set out in Section 60(3) of the Companies Act TREASURY SHARES The shareholders of the Company, by an ordinary resolution passed at the Fourteenth Annual General Meeting held on 27 May 2011, renewed their approval for the Company s plan to purchase its own ordinary shares from the open market under the share buy-back program. The details of the shares purchased and held as treasury shares are as follows:- AVERAGE TOTAL SHARE NUMBER CONSIDERATION DATE PRICE OF SHARES RM 000 Prior to Year ,000 2 May , June ,000 2 September ,800 1,057 March , November , December , January , March ,700 1,618 June , July , August , September , November , December , February , March ,500 1,515 Balance at 1 April ,925,600 7,751 June ,000 7 September , November ,000 4 Total purchases during the financial year 93, Balance at 31 March ,019,400 8,059 All shares purchased under the share buy-back program were financed by internally generated funds. The shares purchased were retained as treasury shares and are presented as a deduction from shareholders equity. annual report 2012 DELLOYD VENTURES BERHAD

80 80 NOTES TO THE FINANCIAL STATEMENTS 22. OTHER RESERVES THE GROUP THE COMPANY RM 000 RM 000 RM 000 RM 000 Translation differences (6,500) (4,556) - - Fair value reserve ESOS reserve [Note 22(c)] (6,323) (3,933) (a) Translation Differences Translation differences arose from the translation of the financial statements of foreign subsidiaries and are not distributable by way of dividends. (b) Fair Value Reserve The fair value reserve represents the cumulative fair value changes of available-for-sale financial assets until they are disposed of or impaired. (c) ESOS Reserve The ESOS reserve represents the estimated cumulative value of services received from employees which arose from the vesting of the equity-settled share options granted to the employees. The reserve is reduced by the transfer to other reserves upon expiry or exercise of the share options. Details are as follows:- THE GROUP THE COMPANY RM 000 RM 000 RM 000 RM 000 At 1 April 2011/1 January , ,017 Share options granted under ESOS to the employees of the: - Company subsidiaries Transfer to share premium for ESOS exercised (882) (2,632) (882) (2,632) Transfer to retained profits for ESOS lapsed - (3) - (3) At 31 March 2012/ The fair values of the share options granted were estimated using the Black-Scholes-Merton Valuation Model, taking into account the terms and conditions upon which the options were granted. The fair values of the share options measured at grant date and the assumptions used are as follows:- AT EXERCISE PRICE OF RM2.82 EACH AT EXERCISE PRICE OF RM2.25 EACH Fair value of share options at the grant date (RM) Weighted average share price (RM) Exercise price (RM) Expected volatility (%) 26.24% 19.98% Expected life (years) 2 6 Risk free rate (%) 2.71% 3.46% Expected dividend yield (%) 19% 3% Dilutive ratio DELLOYD VENTURES BERHAD annual report 2012

81 NOTES TO THE FINANCIAL STATEMENTS OTHER RESERVES (CONT D) (c) ESOS Reserve (Cont d) The option prices and the details in the movement of the options granted are as follows:- NUMBER OF OPTIONS OVER ORDINARY SHARES OF RM1 EACH AT AT DATE OF EXERCISE 1 APRIL 31 MARCH OFFER PRICE 2011 EXERCISED FORFEITED LAPSED January 2010 RM2.82 3,171,000 (3,040,000) (38,000) (93,000) - The main features of the ESOS are as follows:- (a) (b) (c) (d) the maximum number of ordinary shares which may be allocated pursuant to the exercise of the option under the scheme shall not exceed 15% of the issued and paid-up share capital of the Company at any point in time during the duration of the scheme; the scheme shall be for a duration of six years and may be extended up to an aggregate duration of ten years from the effective date upon the recommendation of the ESOS Option Committee; eligible persons are confirmed employees who have been employed by the Group and persons who have been appointed directors of a company within the Group for at least six months; the Option Committee may at its discretion from time to time offer in writing to eligible persons to participate in the scheme; (e) the maximum number of shares allocated in aggregate to eligible Directors and Senior Management shall not exceed 50% of the total number of shares available under the scheme; (f) (g) the exercise price for each share under the option shall be the higher of the weighted average market price of the shares for the five market days prior to the date of offer subject to a discount of not more than ten percent which the Option Committee may at its discretion give or the par value of the share; and the new shares to be allocated upon any exercise of options shall rank pari passu in all respects with the then existing issued and paid-up share capital of the Company. 23. RETAINED PROFITS The Company has elected for the single-tier tax system. Therefore, at the end of the reporting date, the Company will be able to distribute dividends out of its entire retained profits under the single-tier tax system. 24. LONG-TERM BORROWINGS THE GROUP THE COMPANY RM 000 RM 000 RM 000 RM 000 Term loans (Note 25) 49,738 51,467 17,220 25,260 annual report 2012 DELLOYD VENTURES BERHAD

82 82 NOTES TO THE FINANCIAL STATEMENTS 25. TERM LOANS THE GROUP THE COMPANY RM 000 RM 000 RM 000 RM 000 Current portion: - not later than one year (Note 31) 17,375 11,807 8,040 8,040 Non-current portion: - later than one year and not later than two years 17,375 14,444 8,040 8,040 - later than two years and not later than five years 30,579 20,230 9,180 3,216 - later than five years 1,784 16,793-14,004 Sub-total (Note 24) 49,738 51,467 17,220 25,260 67,113 63,274 25,260 33,300 DELLOYD VENTURES BERHAD annual report 2012

83 NOTES TO THE FINANCIAL STATEMENTS TERM LOANS (CONT D) The repayment terms of the term loans are as follows:- Outstanding Amount Month of Term Number Of Installment Commencement The Group The Company Security Loan Installments Amount Tenure Of Repayment RM RM 000 RM 000 RM 000 RM ,050 Monthly December ^ ,111 Monthly December ^ 3 48 * Monthly December ,817 23, ^^ ,000 Monthly July ,260 33,300 25,260 33,300 # 5 20 ** Quarterly February ,597 5, ## 6 54 *** Monthly April , ^^ 67,113 63,274 25,260 33,300 * - Monthly installments ranging from United States Dollar ( USD ) 35,000 to USD325,000. ** - Quarterly installments of USD100,000 *** - Monthly installments ranging from United States Dollar ( USD ) 65,000 to USD170,000 annual report 2012 DELLOYD VENTURES BERHAD

84 84 NOTES TO THE FINANCIAL STATEMENTS 25. TERM LOANS (CONT D) ^ - legal charge over certain freehold and leasehold land and buildings of the subsidiaries. ^^ - (i) legal charge over certain freehold and leasehold plantation land and buildings of certain subsidiaries; (ii) (iii) corporate guarantee issued by the Company and certain directors of the Company; and the subordination of advances from the Group and a shareholder of a subsidiary. # - (i) legal charge over the freehold plantation land and buildings of a subsidiary; and (ii) corporate guarantee issued by the Company. ## - corporate guarantee issued by the Company 26. OTHER PAYABLE The other payable relates to the amount owing to a related party which is non-trade in nature, unsecured, bearing interest rate of 6% ( %) per annum and not subject to fixed terms of repayment. 27. DEFERRED TAX LIABILITIES THE GROUP THE COMPANY RM 000 RM 000 RM 000 RM 000 At 1 April 2011/1 January ,373 14, Recognised in profit or loss (Note 37): - for the financial year/period 1,282 (402) 2, underprovision in the previous financial period/year differential in tax rates - (1,094) - - Translation differences (368) 1, At 31 March 2012/ ,570 14,373 2,350 - The components of the deferred tax liabilities are as follows:- THE GROUP THE COMPANY RM 000 RM 000 RM 000 RM 000 Accelerated capital allowances on qualifying costs: - property, plant and equipment 6,514 4, dividend receivables - - 2, fair value adjustment on plantation development expenditure 8,167 8, plantation development expenditure others ,570 14,373 2,350 - DELLOYD VENTURES BERHAD annual report 2012

85 NOTES TO THE FINANCIAL STATEMENTS DEFERRED INCOME The deferred income relates to invoices billed in advance in respect of services to be rendered in the following financial years. 29. TRADE PAYABLES The normal trade credit terms granted to the Group range from 30 to 90 days. Included in the trade payables of the Group is an amount of approximately RM896,000 ( RM702,000) owing to certain related parties. 30. OTHER PAYABLES AND ACCRUALS THE GROUP THE COMPANY RM 000 RM 000 RM 000 RM 000 Other payables 23,376 29, Dividend payable - 4,703-4,703 Accruals 6,312 7, ,688 41, ,145 Included in other payables and accruals of the Group is a provision for warranty claims of approximately RM3,422,000 ( RM4,309,000). The amounts provided and paid in relation to the warranty claims are disclosed in Note 36 to the financial statements and the statements of cash flows of the Group respectively. Included in the other payables and accruals of the Group is an amount of approximately RM5,902,000 ( RM11,018,000) owing to related parties. Included in other payables and accruals is a provision for employee benefits, as detailed below: THE GROUP RM 000 RM 000 At 1 April 2011/1 January , Amount recognised in the Statements of Comprehensive Income: - Current period charge Payment of employee retirement benefits (124) (58) Sub-total (Note 36) Translation differences (62) (1) At 31 March 2012/2011 2,207 1,598 annual report 2012 DELLOYD VENTURES BERHAD

86 86 NOTES TO THE FINANCIAL STATEMENTS 30. OTHER PAYABLES AND ACCRUALS (CONT D) The details of the provision for employee benefits are as follows: THE GROUP RM 000 RM 000 Present value of employee benefits obligation 3,899 2,176 Unrecognised past service cost - unvested (174) (182) Unrecognised actuarial gain (1,518) (396) 2,207 1,598 The charges recognised in the statements of comprehensive income are as follows:- THE GROUP RM 000 RM 000 Current service costs Interest costs Past service costs 2 18 Actuarial gain/(loss) 2 (1) As at the end of the reporting date, the Group accrued employee benefits expenses based on the actuarial valuation performed by PT Binaputera Jaga Hikmah, an independent actuary, adopting the Projected Unit Credit method, with the following principal actuarial assumptions: THE GROUP RM 000 RM 000 i) Mortality rate: - below age between age 25 to between age 30 to between age 35 to between age 40 to between age 45 to between age 50 to ii) Retirement age iii) Disability rate (per annum) 10% 5% iv) Discount rate (per annum) 6.8% 9.5%/9.7% v) Expected rate of salary increases (per annum) 5%/10% 8%/10% DELLOYD VENTURES BERHAD annual report 2012

87 NOTES TO THE FINANCIAL STATEMENTS SHORT-TERM BORROWINGS THE GROUP THE COMPANY RM 000 RM 000 RM 000 RM 000 Term loans (Note 25) 17,375 11,807 8,040 8,040 Revolving credit and draft loans 10,010 2, ,385 13,984 8,040 8,040 The revolving credit and draft loans of the Group bore effective interest rates ranging from 5% to 10.5% ( % to 6.0%) per annum and are secured by a corporate guarantee issued by the Company. 32. DERIVATIVE LIABILITIES CONTRACT/ NOTIONAL AMOUNT THE GROUP THE COMPANY RM 000 RM 000 RM 000 RM 000 RM 000 Forward foreign currency contracts 2,959 (a) Interest rate swap 25,930 (b) CPO futures 1,694 (c) (d) The Group does not apply hedge accounting. (a) (b) (c) (d) Forward foreign currency contracts are used to hedge the Group s purchases denominated in Japanese Yen (JP ) for which firm commitments existed at the end of the reporting period. The settlement dates on forward foreign currency contracts range between one to three months after the end of the reporting period. The interest rate swap is used to hedge cash flow interest rate risk arising from a floating rate term loan amounting to RM25,930,000. This interest rate swap receives floating interest equal to the higher of 3% or 1 month MYR-KLIBOR, pays a fixed rate of interest of 3.9% and the same maturity terms as the term loan. The CPO future is used to hedge the Group s CPO sales for which firm commitments existed at the end of the reporting period. During the financial year, the Group recognised a loss of approximately RM180,000 ( RM179,000) arising from fair value changes of derivative liabilities. The fair value changes are attributable to the interest rate swap and changes in foreign exchange spot and forward rate. The method and assumptions applied in determining the fair value of derivatives are disclosed in Note 48(d) to the financial statements. 33. BANK OVERDRAFT The bank overdraft of the Group bore an effective interest rate of 10.73% per annum at the end of the reporting period and is secured by a corporate guarantee of the Company. 34. NET ASSETS PER SHARE The net assets per share is calculated based on the total equity attributable to owners of the Company of approximately RM398,807,000 ( RM367,121,000) divided by the outstanding number of ordinary shares in issue, net of treasury shares, at the end of the reporting date of 96,984,850 shares ( ,038,650 shares). annual report 2012 DELLOYD VENTURES BERHAD

88 88 NOTES TO THE FINANCIAL STATEMENTS 35. REVENUE THE GROUP THE COMPANY to to to to RM 000 RM 000 RM 000 RM 000 Automotive parts and accessories 316, , Vehicles distribution 65,822 57, Fresh fruit bunches 15,177 29, Crude palm oils 54,618 45, Oil palm kernels and others 10,047 7, Dividend income ,840 25,600 Others 4,039 1, , ,319 64,840 25, PROFIT BEFORE TAXATION Profit before taxation is arrived at after charging/ (crediting):- THE GROUP THE COMPANY to to to to RM 000 RM 000 RM 000 RM 000 Allowance for impairment losses on trade receivables 1, Amortisation of plantation development expenditure 3,945 4, Auditors remuneration - current year under/(over)provision in respect of the previous financial period 20 - (3) - Bad debts written off Depreciation of: - property, plant and equipment 15,365 14, investment properties Directors remuneration: - non-fee emoluments 3,163 3, fees performance incentives 812 1, share options granted under ESOS Rental of premises 1,348 1, Impairment losses on: - plant and equipment investment in a subsidiary - - 1, other investments goodwill Interest expense: - hire purchase medium term notes - 3,110-3,110 - term loans 2,801 2,758 1,379 1,326 - overdraft revolving credit trust receipts advances from a related party 567 2, others Gain on disposal of a subsidiary - (2,148) - - DELLOYD VENTURES BERHAD annual report 2012

89 NOTES TO THE FINANCIAL STATEMENTS PROFIT BEFORE TAXATION (CONT D) THE GROUP THE COMPANY to to to to RM 000 RM 000 RM 000 RM 000 Loss/(Gain) on foreign exchange: - unrealised 5, realised 383 (274) - - Amounts written off: - plant and equipment 10 1, plantation development expenditure Provision for warranty claims - 2, Rental of equipment Royalty expenses 1,776 1, Staff costs: - salaries, wages, bonuses and allowances 49,612 56, defined contribution plan 3,397 3, share options granted under ESOS defined benefits plan Writedown in value of inventories 99 1, Dividend income from short-term and other investments (1,078) (833) (22) (53) Fair value loss on derivatives Interest income (817) (679) (905) (817) (Gain)/Loss on disposal of plant and equipment (153) Rental income (773) (697) - - Writeback in value of inventories (1,104) (203) - - Bad debts recovered (8) (16) - - Reversal of impairment loss in a subsidiary - - (1,097) - Writeback of provision for warranty claims (102) INCOME TAX EXPENSE THE GROUP THE COMPANY To to to to RM 000 RM 000 RM 000 RM 000 Current tax: - Malaysian tax 7,145 12,766 13,861 6,415 - Foreign tax 3,825 6, ,970 19,117 13,861 6,415 - Overprovision in the previous financial period/year (881) (601) (773) (934) 10,089 18,516 13,088 5,481 Deferred tax (Note 12 and 27): - relating to originating and reversal of temporary differences 559 (72) 2, underprovision in the previous financial period/year differential in tax rates - (1,094) ,719 17,815 15,438 5,481 annual report 2012 DELLOYD VENTURES BERHAD

90 90 NOTES TO THE FINANCIAL STATEMENTS 37. INCOME TAX EXPENSE (CONT D) The tax charge of the Company for the financial year relates mainly to dividend income. The statutory tax rate remained at 25%. Certain overseas subsidiaries of the Group that fall under the Indonesian taxation laws are generally subject to the same tax rates of 25% ( %) and any tax losses reported by those companies are allowed to be carried forward for a period of 5 years. A reconciliation of income tax expense applicable to the profit before taxation at the statutory tax rate to income tax expense at the effective tax rate of the Group and the Company is as follows:- THE GROUP THE COMPANY to to to to RM 000 RM 000 RM 000 RM 000 Profit before taxation 54,953 84,858 63,143 20,266 Tax at the statutory tax rate 13,760 21,136 15,786 5,067 Tax effects of:- Non-taxable gains (1,039) (788) (77) (218) Non-deductible expenses 485 3, ,566 Deferred tax assets not recognised during the financial year/period Utilisation of deferred tax assets previously not recognised (298) (3,073) - - Differential in tax rates - (1,094) - - Under/(over)provision in the previous financial period/year: - current tax (881) (601) (773) (934) - deferred tax Utilisation of reinvestment allowances (790) (1,164) - - Double deduction (701) (871) - - Income tax expense for the financial year/period 10,719 17,815 15,438 5, EARNINGS PER SHARE THE GROUP to to Profit attributable to owners of the Company (RM 000) 39,364 58,910 Weighted average number of ordinary shares:- Issued ordinary shares at 1 April 2011/1 January 2010, net of treasury shares 94,039 87,819 Effects of treasury shares purchased during the financial year/period (55) (989) Effects of new ordinary shares issued during the financial year/period 1,998 3,849 95,982 90,679 Basic earnings per share (Sen) DELLOYD VENTURES BERHAD annual report 2012

91 NOTES TO THE FINANCIAL STATEMENTS EARNINGS PER SHARE (CONT D) THE GROUP to to Profit attributable to owners of the Company for diluted earnings per share computation (RM 000) 39,364 58,910 Weighted average number of ordinary shares for basic earnings per share 95,982 90,679 Effects of dilution: - employee share options in issue ,982 91,217 Diluted earnings per ordinary share (Sen) * - anti-dilutive effect arises from the assumed conversion of the ESOS. 39. DIVIDENDS THE COMPANY to to RM 000 RM 000 Final single-tier dividend of 6.0 sen per ordinary share in respect of the financial year ended 31 December ,456 In respect of the financial period ended 31 March 2011: - first interim single-tier dividend of 3.0 sen per ordinary share - 2,727 - second interim single-tier dividend of 5.0 sen per ordinary share - 4,703 Interim single-tier dividend of 5.0 sen per ordinary share in respect of the financial year ended 31 March ,817 - Final single-tier dividend of 10.0 sen per ordinary share in respect of financial period 31 March ,618-14,435 12,886 At the forthcoming Annual General Meeting, a final single-tier dividend of 7.0 sen per ordinary share in respect of the current financial year will be proposed for shareholders approval. The financial statements for the current financial year do not reflect this proposed dividend. Such dividend, if approved by the shareholders, will be accounted for as a liability in the financial year ending 31 March annual report 2012 DELLOYD VENTURES BERHAD

92 92 NOTES TO THE FINANCIAL STATEMENTS 40. SUMMARY OF EFFECTS OF DISPOSAL OF A SUBSIDIARY In the previous financial period, Delloyd Industries (M) Sdn Bhd, a wholly-owned subsidiary of the Company disposed of all its investment in Delloyd (Guangzhou) Auto Parts Pte Ltd comprising 1,000,000 ordinary shares of RMB1.00 each for a net sale consideration of RM5,642,815. Consequently, DGZ ceased to be a subsidiary of the Group. Details of the net assets disposed of and the net cash flows from the disposal of the subsidiary were as follows:- THE GROUP to to Non-current assets - 4,393 Current assets Current liabilities - (1,559) Group s share of net assets disposed - 3,495 Gain on disposal - 2,148 Proceeds from disposal - 5,643 Cash and cash equivalents of subsidiary disposed - (661) Net cash inflow from disposal of subsidiary - 4,982 The effects of the disposal of the subsidiary on the financial results of the Group in the previous financial period were as follows:- THE GROUP to to RM 000 RM 000 Revenue - - Loss after taxation - (172) 41. CASH AND CASH EQUIVALENTS For the purpose of the statements of cash flows, cash and cash equivalents comprise the following:- THE GROUP THE COMPANY RM 000 RM 000 RM 000 RM 000 Deposits with financial institutions 4,113 23, Short-term investments 19,481 26,379 4, Cash and bank balances 27,634 34, ,765 Bank overdraft (269) ,959 84,359 4,881 3,606 DELLOYD VENTURES BERHAD annual report 2012

93 NOTES TO THE FINANCIAL STATEMENTS DIRECTORS REMUNERATION The aggregate amount of emoluments received and receivable by directors of the Group and of the Company during the financial year/ period is as follows:- Executive directors remuneration: THE GROUP THE COMPANY to to to to RM 000 RM 000 RM 000 RM Salaries and other emoluments 1,648 1, Defined contribution plan Fees Bonus 1,017 1, Performance incentives 812 1, ESOS Non-executive directors remuneration: 4,030 5, Fees ESOS Total directors remuneration 4,384 5, Directors fee Directors non-fee emoluments 3,975 5, ESOS Total 4,384 5, The number of directors of the Company whose total remuneration during the financial year/period fell within the following bands is analysed below: NUMBER OF DIRECTORS to to Executive directors: RM 550,001 - RM 600, RM 800,001 - RM 850,000-1 RM 950,001 - RM 1,000, RM 1,100,001 - RM 1,150,000-2 RM 1,400,001 - RM 1,450, RM 1,600,001 - RM 1,650,000-1 Non-executive directors: Below RM50, RM 50,001 - RM 100, RM 100,001 - RM 150, annual report 2012 DELLOYD VENTURES BERHAD

94 94 NOTES TO THE FINANCIAL STATEMENTS 43. RELATED PARTY DISCLOSURES (i) Identities of related parties The Group has related party relationships with its directors, key management personnel and entities within the same group of companies. (ii) In addition to the information detailed elsewhere in the financial statements, the Group and the Company carried out the following significant transactions with the related parties during the financial year/period:- THE GROUP TRANSACTION VALUE/ BALANCES to to NAMES OF RELATED PARTIES NOTE RM 000 RM 000 Delloyd Holdings (M) Sdn Bhd (a) - rental of premises charged by 1,046 1,366 - corporate expenses received from insurance charged to amount owing by 4 - Saga Capital Sdn Bhd (a) - sales of automotive parts to amount owing to - 1 Master Approach Sdn Bhd (a) - insurance charged to sales of automotive parts vehicles maintenance service to amount owing by 60 - Lian Hwa Casting (M) Sdn Bhd (b) - purchase of die-casting parts from 4,086 5,050 - corporate expenses received from insurance charged to amount owing to Delloyd Technology Resources (M) Sdn Bhd (c) - purchases of automotive parts from sub-contractor for supply of automotive parts to 1, rental received from research and development fee received from sale of mould and mould maintenance services to insurance charged to amount owing to 14 - Automont Gatsby Sdn Bhd (d) - purchases of automotive parts from amount owing to 6 - Gatsby Enterprise (e) - sales of automotive parts and accessories to amount owing by 73 - Taipan Hectares Sdn Bhd (f) - interest expense 1, deemed interest charge (484) 1,765 - amount owing to 14,032 32,622 DELLOYD VENTURES BERHAD annual report 2012

95 NOTES TO THE FINANCIAL STATEMENTS RELATED PARTY DISCLOSURES (CONT D) THE GROUP TRANSACTION VALUE/ BALANCES to to NAMES OF RELATED PARTIES NOTE RM 000 RM 000 Intelli-Telematics Asia Sdn Bhd (g) - subscription fees paid to corporate expenses received from purchases of GPS System from rental received from 12 - Ichikoh (Malaysia) Sdn Bhd (g) - purchases of automotive parts from 174 4,634 - amount owing to Brose Delloyd Automotive Co., Ltd (g) - rental income Hua Fung (M) Sdn Bhd (h) - insurance charged to 1 - (a) (b) (c) (d) (e) (f) (g) (h) A company in which Dato Sri Tee Boon Kee, Datin Sri Chung Geok Siew, Dato Tee Boon Keat and Chung Chee Sun, who are directors of the Company, have interests. A company in which Datin Sri Chung Geok Siew and Chung Chee Sun, who are directors of the Company, have interests. A company in which Dato Sri Tee Boon Kee, Dato Ir. Haji Noor Azmi Bin Jaafar, Datin Sri Chung Geok Siew and Chung Chee Sun, who are directors of the Company, have interests. Dato Sri Tee Boon Kee and Dato Tee Boon Keat, who are directors of the Company, are persons connected with this company. An enterprise in which a sibling member of Dato Sri Tee Boon Kee is a partner. A company in which Dato Sri Tee Boon Kee, Dato Ir. Haji Noor Azmi Bin Jaafar and Datin Sri Chung Geok Siew who are directors of the Company, have interests. Associates of the Group. A company in which Dato Tee Boon Keat who is a director of the Company, has an interest. The key management personnel compensation is as follows:- THE GROUP THE COMPANY to to to to RM 000 RM 000 RM 000 RM 000 Short-term employee benefits 9,909 11, Share options granted under ESOS ,255 11, annual report 2012 DELLOYD VENTURES BERHAD

96 96 NOTES TO THE FINANCIAL STATEMENTS 44. OPERATING SEGMENTS Operating segments are prepared in a manner consistent with the internal reporting 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 and services provided. The Group is organised into the following business segments:- (i) Automotive segment - involved in the manufacturing, trading and wholesale of automotive parts and accessories. (ii) Plantation segment - involved in the cultivation of palm oil activity and milling of fresh fruit bunches. (iii) Vehicle distribution segment - distribution of motor vehicles. (iv) Other segment - investment holding, magazine publisher, fabrication of mould, rendering of management, research and development services. The Group Executive Committee assesses the performance of the operating segments based on operating profit or loss which is measured differently from those disclosed in the consolidated financial statements. The Group income taxes and finance costs are managed on a group basis and are not allocated to operating segments. Assets, liabilities and expenses which are common and cannot be meaningfully allocated to the operating segments are presented under unallocated items. Transfer prices between operating segments are at arm s length basis in a manner similar to transactions with third parties. BUSINESS SEGMENTS At VEHICLES AUTOMOTIVE DISTRIBUTION PLANTATION OTHERS THE GROUP RM 000 RM 000 RM 000 RM 000 RM 000 Revenue External revenue 316,515 65,822 79,842 4, ,218 Inter-segment revenue 60,766 1,653-71, , ,281 67,475 79,842 75, ,187 Adjustments and eliminations (133,969) Consolidated revenue 466,218 Results Segment results 43, ,719 (2,339) 80,264 Interest income Other material items of income 2, ,257 Depreciation of property, plant and equipment (11,306) (184) (3,642) (233) (15,365) Amortisation of plantation development expenditure - - (3,945) - (3,945) Other material items of expenses (1,827) (52) (3,998) (3) (5,880) 33, ,623 (2,403) 59,148 Finance costs (4,490) Share of profits in associates, net of tax 295 Income tax expense (10,719) Consolidated profit after taxation 44,234 DELLOYD VENTURES BERHAD annual report 2012

97 NOTES TO THE FINANCIAL STATEMENTS OPERATING SEGMENTS (CONT D) BUSINESS SEGMENTS (CONT D) VEHICLES AUTOMOTIVE DISTRIBUTION PLANTATION OTHERS THE GROUP RM 000 RM 000 RM 000 RM 000 RM 000 At Assets Segment assets 264,967 14, ,928 10, ,026 Investment in associates 31,452 Tax refundable 10,068 Deferred tax assets 6,243 Consolidated total assets 584,789 Liabilities Segment liabilities 52,658 1,929 64,655 28, ,452 Deferred tax liabilities 15,570 Provision for taxation 238 Consolidated total liabilities 163,260 Other segment items Additions to non-current assets other than financial instruments:- - investment in associates 3, ,377 - property, plant and equipment 34, , ,398 - plantation development expenditure ,993-11,993 37, , ,768 annual report 2012 DELLOYD VENTURES BERHAD

98 98 NOTES TO THE FINANCIAL STATEMENTS 44. OPERATING SEGMENTS (CONT D) BUSINESS SEGMENTS (CONT D) VEHICLES AUTOMOTIVE DISTRIBUTION PLANTATION OTHERS THE GROUP RM 000 RM 000 RM 000 RM 000 RM 000 At Revenue External revenue 368,684 57,464 82,763 1, ,319 Inter-segment revenue 73, , , ,281 58,123 82,763 41, ,911 Adjustments and eliminations (114,592) Consolidated revenue 510,319 Results Segment results 59,581 1,008 44, ,800 Disposal group (172) (172) 59,581 1,008 44, ,628 Interest income (30) 679 Other material items of income 3, ,155 Depreciation of property, plant and equipment (9,716) (238) (3,696) (390) (14,040) Amortisation of plantation development expenditure - - (4,957) - (4,957) Other material items of expenses (1,887) (52) (1,147) (174) (3,260) 52, , ,205 Finance costs (9,776) Share of profits in associates, net of tax 6,429 Income tax expense (17,815) Consolidated profit after taxation 67,043 DELLOYD VENTURES BERHAD annual report 2012

99 NOTES TO THE FINANCIAL STATEMENTS OPERATING SEGMENTS (CONT D) BUSINESS SEGMENTS (CONT D) VEHICLES AUTOMOTIVE DISTRIBUTION PLANTATION OTHERS THE GROUP RM 000 RM 000 RM 000 RM 000 RM 000 At Assets Segment assets 244,801 14, ,598 15, ,363 Disposal group (5,054) (5,054) 244,801 14, ,598 10, ,309 Investment in associates 30,424 Tax refundable 2,963 Deferred tax assets 5,398 Consolidated total assets 563,094 Liabilities Segment liabilities 48,512 1,974 69,090 37, ,132 Disposal group (1,559) (1,559) 48,512 1,974 69,090 35, ,573 Deferred tax liabilities 14,373 Provision for taxation 7,067 Consolidated total liabilities 177,013 Other segment items Additions to non-current assets other than financial instruments:- - investment in associates 3, ,883 - property, plant and equipment 19, , ,080 - plantation development expenditure ,029-15,029 23, , ,992 annual report 2012 DELLOYD VENTURES BERHAD

100 100 NOTES TO THE FINANCIAL STATEMENTS 44. OPERATING SEGMENTS (CONT D) BUSINESS SEGMENTS (CONT D) (a) Other material items of income consist of the following:- THE GROUP to to RM 000 RM 000 Dividend income from short-term and other investments 1, Gain on disposal of a subsidiary - 2,148 Writeback in value of inventories 1, Rental income Realised gain on foreign exchange ,257 4,155 (b) Other material/non-cash items of expenses consist of the following:- THE GROUP to to RM 000 RM 000 Plant and equipment written off 10 1,096 Loss on foreign exchange: - unrealised 5, realised Writedown in value of inventories 99 1,410 5,880 3,260 DELLOYD VENTURES BERHAD annual report 2012

101 NOTES TO THE FINANCIAL STATEMENTS OPERATING SEGMENTS (CONT D) GEOGRAPHICAL INFORMATION REVENUE NON-CURRENT ASSETS to to RM 000 RM 000 RM 000 RM 000 Malaysia 330, , , ,804 Indonesia 131, , , ,131 Others 3,542 3,889 7,462 7, , , , ,769 MAJOR CUSTOMERS The following are major customers with revenue equal to or more than 10% of Group revenue:- REVENUE to to RM 000 RM 000 SEGMENT Customer A and its related group of companies 91, ,621 Automotive Customer B and its related group of companies 59,522 68,581 Automotive Customer C and its related group of companies 46,387 43,160 Automotive 197, ,362 Customer D 56,709 37,016 Plantation 253, , COMMITMENTS THE GROUP RM 000 RM 000 Contracted but not provided for in the financial statements: - Purchase of property, plant & equipment 5,769 20,427 - Purchase of foreign currencies 2,959 1,283 8,728 21,710 annual report 2012 DELLOYD VENTURES BERHAD

102 102 NOTES TO THE FINANCIAL STATEMENTS 46. CONTINGENT LIABILITY THE COMPANY RM 000 RM 000 Corporate guarantees given to licensed banks for banking facilities granted to subsidiaries 87,955 64, FOREIGN EXCHANGE RATES The principal foreign exchange rates used (expressed on the basis of one unit of foreign currency to RM equivalent) for the translation of the foreign currency balances at the end of the reporting period were as follows: RM RM Euro Indonesian Rupiah Japanese Yen Thai Baht United States Dollar FINANCIAL INSTRUMENTS The Group s activities are exposed to a variety of market risks (including foreign currency risk, interest rate risk and equity price risk), credit risk and liquidity risk. The Group s overall financial risk management policy focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group s financial performance. (a) Financial Risk Management Policies The Group s policies in respect of the major areas of treasury activity are as follows:- (i) Market Risk (i) Foreign Currency Risk The Group is exposed to foreign currency risk on transactions and balances that are denominated in currencies other than Ringgit Malaysia. The currencies giving rise to this risk are primarily United States Dollar and Japanese Yen. Foreign currency risk is monitored closely on an ongoing basis to ensure that the net exposure is at an acceptable level. On occasions, the Group enters into forward foreign currency contracts to hedge against its foreign currency risks. The Group s exposure to foreign currency compared to the applicable functional currency is as follows:- UNITED RINGGIT THAI STATES JAPANESE MALAYSIA BAHT DOLLAR EURO YEN TOTAL THE GROUP RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 At Financial assets Other investments - - 2, ,344 Trade receivables - - 1, ,704 Other receivables and deposits 1, ,506 Short-term investments Fixed deposits with licensed banks - - 1, ,839 Cash and bank balances , ,974 1, , ,642 DELLOYD VENTURES BERHAD annual report 2012

103 NOTES TO THE FINANCIAL STATEMENTS FINANCIAL INSTRUMENTS (CONT D) (a) Financial Risk Management Policies (cont d) (i) Market Risk (cont d) (i) Foreign Currency Risk (cont d) UNITED RINGGIT THAI STATES JAPANESE MALAYSIA BAHT DOLLAR EURO YEN TOTAL THE GROUP RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 Financial liabilities Term loans , ,741 Trade payables ,293-1,512 13,953 Other payables and accruals 16, ,548 Short term borrowings - - 4,456 1,359-5,815 16, ,577 1,514 1,512 77,057 UNITED RINGGIT THAI STATES JAPANESE MALAYSIA BAHT DOLLAR EURO YEN TOTAL THE GROUP RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 At At Net financial liabilities (14,684) (147) (49,775) (1,270) (539) (66,415) Less: Net financial assets denominated in the respective entities functional currencies 14, ,831 Less: Forward foreign currency contracts (contracted notional principal) ,959 2, (49,775) (1,270) 2,420 (48,625) annual report 2012 DELLOYD VENTURES BERHAD

104 104 NOTES TO THE FINANCIAL STATEMENTS 48. FINANCIAL INSTRUMENTS (CONT D) (a) Financial Risk Management Policies (cont d) (i) Market Risk (cont d) (i) Foreign Currency Risk (cont d) UNITED RINGGIT THAI STATES JAPANESE MALAYSIA BAHT DOLLAR EURO YEN TOTAL THE GROUP RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 At Financial assets Other investments - - 1, ,578 Trade receivables - - 3, ,995 Other receivables and deposits ,182 Short-term investments Fixed deposits with licensed banks Cash and bank balances , ,372 5,327 1, , ,429 13,391 Financial liabilities Term loans , ,877 Trade payables , ,604 Other payables and accruals 20, ,401 Short term borrowings - - 1, ,180 20, , ,062 Net financial assets/(liabilities) (19,491) 609 (23,701) (41,671) Less: Net financial assets denominated in the respective entities functional currencies 19, ,491 Less: Forward foreign currency contracts (contracted notional principal) (1,264) (1,264) (23,701) 360 (712) (23,444) DELLOYD VENTURES BERHAD annual report 2012

105 NOTES TO THE FINANCIAL STATEMENTS FINANCIAL INSTRUMENTS (CONT D) (a) Financial Risk Management Policies (cont d) (i) Market Risk (cont d) (i) Foreign Currency Risk (cont d) Foreign currency risk sensitivity analysis The following table details the sensitivity analysis to a reasonably possible change in the foreign currencies as at the end of the reporting year/period, with all other variables held constant:- Effects on profit after taxation and equity THE GROUP Increase/(Decrease) Increase/(Decrease) RM 000 RM 000 Thai Baht:- - strengthened by 10% weakened by 10% - (46) United States Dollar:- - strengthened by 10% (3,733) (1,778) - weakened by 10% 3,733 1,778 EURO:- - strengthened by 10% (95) 27 - weakened by 10% 95 (27) Japanese Yen:- - strengthened by 10% (181) (53) - weakened by 10% (ii) Interest Rate Risk Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Group s exposure to interest rate risk arose mainly from interest-bearing financial assets and liabilities. The Group s policy is to obtain the most favourable interest rates available. Any surplus funds of the Group will be placed with licensed financial institutions to generate interest income. Information relating to the Group s exposure to the interest rate risk of the financial liabilities is disclosed in Note 48(a)(iii) to the financial statements. It is the Group s policy to enter into interest rate swaps to achieve an appropriate mix of fixed and floating interest rate exposure. Information of the interest rate swaps entered by the Group is disclosed in Note 32 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 year/period, with all other variables held constant:- THE GROUP THE COMPANY Increase/ Increase/ Increase/ Increase/ (Decrease) (Decrease) (Decrease) (Decrease) RM 000 RM 000 RM 000 RM 000 Effects on profit after taxation Increase of 50 basis points (bp) (2,892) (2,454) (947) (1,249) Decrease of 50 bp 2,892 2, ,249 Effects on equity Increase of 50 bp (2,892) (2,454) (947) (1,249) Decrease of 50 bp 2,892 2, ,249 annual report 2012 DELLOYD VENTURES BERHAD

106 106 NOTES TO THE FINANCIAL STATEMENTS 48. FINANCIAL INSTRUMENTS (CONT D) (a) Financial Risk Management Policies (cont d) (ii) Credit Risk The Group s exposure to credit risk, or the risk of counterparties defaulting, arose mainly from trade and other receivables. The Group manages its exposure to credit risk by the application of credit approvals, credit limits and monitoring procedures on an ongoing basis. For other financial assets (including quoted investments, cash and bank balances and derivatives), the Group minimises credit risk by dealing exclusively with high credit rating counterparties. The Group establishes an allowance for impairment that represents its estimate of incurred losses in respect of the trade and other receivables as appropriate. The main components of this allowance are a specific loss component that relates to individually significant exposures, and a collective loss component established for groups of similar assets in respect of losses that have been incurred but not yet identified. Impairment is estimated by management based on prior experience and the current economic environment. Credit risk concentration profile The Group s major concentration of credit risk relates to the amounts owing by 3 customers which constituted approximately 57% of its trade receivables as at the end of the reporting period. Exposure to credit risk As the Group does not hold any collateral, the maximum exposure to credit risk is represented by the carrying amount of the financial assets as at the end of the reporting period. The exposure of credit risk for trade receivables (including amount owing by related parties) by geographical region is as follows:- THE GROUP RM 000 RM 000 Malaysia 67,042 56,529 Indonesia 11,360 11,690 Thailand 1, ,421 68,767 Ageing analysis The ageing analysis of the Group s trade receivables as at 31 March 2012 is as follows:- GROSS INDIVIDUAL COLLECTIVE CARRYING AMOUNT IMPAIRMENT IMPAIRMENT VALUE THE GROUP RM 000 RM 000 RM 000 RM March 2012 Not past due 70, ,702 Past due:- - less than 2 months 6, ,381-2 to 4 months over 4 months 3,631 (2,029) (100) 1,502 81,550 (2,029) (100) 79,421 DELLOYD VENTURES BERHAD annual report 2012

107 NOTES TO THE FINANCIAL STATEMENTS FINANCIAL INSTRUMENTS (CONT D) (a) Financial Risk Management Policies (cont d) (ii) Credit Risk (cont d) Ageing analysis (cont d) GROSS INDIVIDUAL COLLECTIVE CARRYING AMOUNT IMPAIRMENT IMPAIRMENT VALUE THE GROUP RM 000 RM 000 RM 000 RM March 2011 Not past due 62, ,910 Past due:- - less than 2 months 3, ,302-2 to 4 months over 4 months 2,836 (303) (100) 2,433 69,170 (303) (100) 68,767 At the end of the reporting period, trade receivables that are individually impaired were those in significant financial difficulties and have defaulted on payments. These receivables are not secured by any collateral or credit enhancement. The 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 either secured by collateral of customer asset or due from companies with good collection track record and no recent history of default. 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 analyses to monitor the credit quality of the trade receivables. Any receivables having significant balances past due or more than 120 days, which are deemed to have higher credit risk, are monitored individually. (iii) Liquidity Risk Liquidity risk arises mainly from general funding and business activities. The Group practises prudent risk management by maintaining sufficient cash balances and the availability of funding through certain committed credit facilities. The following table sets out the maturity profile of the financial liabilities as at the end of the reporting period based on contractual undiscounted cash flows (including interest payments computed using contractual rates or, if floating, based on the rates at the end of the reporting period):- annual report 2012 DELLOYD VENTURES BERHAD

108 108 NOTES TO THE FINANCIAL STATEMENTS 48. FINANCIAL INSTRUMENTS (CONT D) (a) Financial Risk Management Policies (cont d) (iii) Liquidity Risk (cont d) WEIGHTED AVERAGE CONTRACTUAL OVER EFFECTIVE CARRYING UNDISCOUNTED WITHIN RATE AMOUNT CASH FLOWS 1 YEAR YEARS YEARS THE GROUP % RM 000 RM 000 RM 000 RM 000 RM 000 At Term loans ,113 67,113 17,376 49, Trade payables - 31,606 31,606 31, Other payables and accruals - 37,818 37,946 29,485 8,461 - Revolving credit and draft loans ,010 10,010 10, Bank overdaft Derivative liabilities Forward foreign Currency contracts - Outflow ,084 3, Inflow - - (2,959) (2,959) - - Interest rate swap - Outflow ,156 26, Inflow - - (25,930) (25,930) - - CPO futures - Outflow - 8 1,702 1, Inflow - - (1,694) (1,694) , ,303 89,105 57, WEIGHTED AVERAGE CONTRACTUAL OVER EFFECTIVE CARRYING UNDISCOUNTED WITHIN RATE AMOUNT CASH FLOWS 1 YEAR YEARS YEARS THE GROUP % RM 000 RM 000 RM 000 RM 000 RM 000 At Term loans ,274 63,648 11,875 34,806 16,967 Trade payables - 26,217 26,217 26, Other payables and accruals - 63,428 67,325 40,326 26, Revolving credit and draft loans ,177 2,177 2, Derivative liabilities Forward foreign Currency contracts - Outflow ,321 1, Inflow - - (1,283) (1,283) - - Interest rate swap - Outflow ,111 34, Inflow - - (33,970) (33,970) , ,546 80,774 61,565 17,207 DELLOYD VENTURES BERHAD annual report 2012

109 NOTES TO THE FINANCIAL STATEMENTS FINANCIAL INSTRUMENTS (CONT D) (a) Financial Risk Management Policies (cont d) (iii) Liquidity Risk (cont d) WEIGHTED AVERAGE CONTRACTUAL OVER EFFECTIVE CARRYING UNDISCOUNTED WITHIN RATE AMOUNT CASH FLOWS 1 YEAR YEARS YEARS THE COMPANY % RM 000 RM 000 RM 000 RM 000 RM 000 At Term loans ,260 25,260 8,040 17,220 - Other payables and accruals Derivative liabilities Interest rate swap - Outflow ,156 26, Inflow - - (25,930) (25,930) ,769 25,769 8,549 17,220 - WEIGHTED AVERAGE CONTRACTUAL OVER EFFECTIVE CARRYING UNDISCOUNTED WITHIN RATE AMOUNT CASH FLOWS 1 YEAR YEARS YEARS THE COMPANY % RM 000 RM 000 RM 000 RM 000 RM 000 At Term loans ,300 33,300 8,040 11,256 14,004 Other payables and accruals - 5,145 5,145 5, Derivative liabilities Interest rate swap - Outflow ,111 34, Inflow - - (33,970) (33,970) ,586 38,586 13,326 11,256 14,004 annual report 2012 DELLOYD VENTURES BERHAD

110 110 NOTES TO THE FINANCIAL STATEMENTS 48. FINANCIAL INSTRUMENTS (CONT D) (b) Capital Risk Management The Group manages its capital to ensure that entities within the Group will be able to maintain an optimal capital structure so as to support their businesses and maximise shareholders value. To achieve this objective, the Group may make adjustments to the capital structure in view of changes in economic conditions, such as adjusting the amount of dividend payment, returning of capital to shareholders or issuing new shares. The Group manages its capital based on debt-to-equity ratio. The Group s strategies were unchanged from the previous financial year. The debt-to-equity ratio is calculated as net debt divided by total equity. Net debt is calculated as borrowings plus trade and other payables less cash and cash equivalents. Total capital is calculated as equity plus net debt. The debt-to-equity ratio of the Group as at the end of the reporting year/period was as follows:- THE GROUP RM 000 RM 000 Term loans 67,113 63,274 Revolving credit and draft loans 10,010 2,177 Trade payables 31,606 26,217 Other payables and accruals 37,818 63,428 Bank overdraft , ,096 Less: - deposits with financial institutions (4,113) (23,568) - short-term investments (19,481) (26,379) - cash and bank balances (27,634) (34,412) Net debt 95,588 70,737 Total equity 421, ,081 Debt-to-equity ratio Under the requirement of Bursa Malaysia Practice Note No. 17/2005, the Company is required to maintain a consolidated shareholders equity (total equity attributable to owners of the Company) equal to or not less than the 25% of the issued and paidup share capital (excluding treasury shares) and such shareholders equity is not less than approximately RM99.7 million. The Company has complied with this requirement. The Group is also required to maintain a maximum debt-to-equity ratio of 1.0 to comply with a bank covenant, failing which, the bank may call an event of default. The Group has complied with this requirement. DELLOYD VENTURES BERHAD annual report 2012

111 NOTES TO THE FINANCIAL STATEMENTS FINANCIAL INSTRUMENTS (CONT D) (c) Classification Of Financial Instruments THE GROUP THE COMPANY RM 000 RM 000 RM 000 RM 000 Financial assets Available-for-sale financial assets Other investments, at fair value 847 1, Other investments, at cost 2,306 1, ,153 2, Loans and receivables financial assets Trade receivables 79,421 68, Other receivables and deposits 16,866 17, Dividend receivable - - 7,050 5,325 Amount owing by subsidiaries ,026 11,709 Deposits with financial institutions 4,113 23, Cash and bank balances 27,634 34, , , ,624 43,795 19,801 Fair value through profit and loss Short-term investments, at fair value 19,481 26,379 4, Financial liabilities Other financial liabilities Term loans 67,113 63,274 25,260 33,300 Trade payables 31,606 26, Other payables and accruals 37,818 63, ,145 Revolving credit and draft loans 10,010 2, Bank overdraft , ,096 25,543 38,445 Fair value through profit and loss Derivative liabilities annual report 2012 DELLOYD VENTURES BERHAD

112 112 NOTES TO THE FINANCIAL STATEMENTS 48. FINANCIAL INSTRUMENTS (CONT D) (d) Fair Values Of Financial Instruments The carrying amounts of the financial assets and financial liabilities reported in the financial statements approximated their fair values except for the following:- THE GROUP CARRYING AMOUNT FAIR VALUE CARRYING AMOUNT FAIR VALUE RM 000 RM 000 RM 000 RM 000 Other investments - Unquoted shares 2,306 * 1,569 * Term loans under interest rate swap 25,260 25,034 33,300 33,159 * - The fair value cannot be reliably measured using valuation techniques due to the lack of marketability of the shares. The following summarises the methods used to determine the fair values of the financial instruments:- (i) (ii) (iii) (iv) (v) (vi) The financial assets and financial liabilities maturing within the next 12 months approximated their fair values due to the relatively short-term maturity of the financial instruments. The fair values of quoted investments and the investments in club membership are estimated based on their quoted market prices as at the end of the reporting period. The fair value of non-derivative financial liabilities, which is determined for disclosure purposes, is calculated based on the present value of future principal and interest cash flows, discounted at the market rate of interest at the end of the reporting period. The carrying amounts of the term loans approximated their fair values as these instruments bear interest at variable rates. The fair value of forward foreign currency contracts is estimated by discounting the difference between the contractual forward price and the current forward price for the residual maturity of the contract using a risk-free interest rate. The fair value of interest rate swap is based on broker quotes. Those quotes are tested for reasonableness by discounting estimated future cash flows based on the terms and maturity of each contract and using market interests for a similar instrument at the measurement date. (e) Fair Value Hierarchy The fair values of the financial assets and liabilities are analysed into level 1 to 3 as follows:- Level 1 : Fair value measurements derived from quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 : Fair value measurements derived from inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly or indirectly Level 3 : Fair value measurements derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs). DELLOYD VENTURES BERHAD annual report 2012

113 NOTES TO THE FINANCIAL STATEMENTS FINANCIAL INSTRUMENTS (CONT D) (e) Fair Value Hierarchy (Cont d) As at 31 March 2012, the Group s financial instruments carried at fair values are analysed as below:- LEVEL 1 LEVEL 2 LEVEL 3 TOTAL RM 000 RM 000 RM 000 RM 000 THE GROUP 2012 Financial assets Other investments: - corporate membership in golf club quoted shares outside Malaysia Short-term investments: - equity fund unit trusts in Malaysia - 19,481-19,481 Financial liabilities ,766-20,328 Derivative liabilities: - forward foreign currency contracts interest rate swap CPO futures LEVEL 1 LEVEL 2 LEVEL 3 TOTAL RM 000 RM 000 RM 000 RM 000 THE COMPANY 2012 Financial assets Short-term investments: - equity fund unit trusts in Malaysia - 4,164-4,164 Financial liabilities - 4,164-4,164 Derivative liabilities: - interest rate swap Transfer between level 1 and level 2 There were no transfers between level 1 and level 2 fair value measurements during the current financial year. annual report 2012 DELLOYD VENTURES BERHAD

114 114 NOTES TO THE FINANCIAL STATEMENTS 49. SIGNIFICANT EVENT OCCURRING AFTER THE REPORTING PERIOD At the end of the reporting period, the Company s wholly-owned subsidiary, Delloyd Industries (M) Sdn. Bhd. ( DISB ) held 100% of the equity interest in PT Delloyd ( PTD ) consisting of 1,000 ordinary shares of Rp5,024,500 per share. On 27 June 2012, the Company announced that DISB had entered into an agreement on the same day for the proposed disposal of 51% of the equity interest in PTD to Murakami Corporation, Japan for a cash consideration of USD1,885, COMPARATIVE FIGURES In the previous financial period, the financial year end of the Company and all its subsidiaries were changed from 31 December to 31 March. Consequently, the financial statements of the previous financial period were for a period of 15 months from 1 January 2010 to 31 March SUPPLEMENTARY INFORMATION - DISCLOSURE OF REALISED AND UNREALISED PROFITS / LOSSES The breakdown of the retained profits 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:- THE GROUP THE COMPANY RM 000 RM 000 RM 000 RM 000 Total retained profits - realised 272, ,249 46,368 13,013 - unrealised 890 4,838 (85) - 273, ,087 46,283 13,013 Total share of retained profits of associates: - realised 19,123 18, unrealised (128) ,995 18, Less: Consolidation adjustments At 31 March 2012/ , ,786 46,283 13,013 DELLOYD VENTURES BERHAD annual report 2012

115 ANALYSIS OF SHAREHOLDINGS AS AT 29 JUNE SHARE CAPITAL Authorised - 500,000,000 Ordinary Shares Issued and Paid-up Capital - 96,964,450 Ordinary Shares * Class of Share - Ordinary Shares of RM1.00 Each No. of Shareholders - 2,508 Voting Rights - One Vote Per Ordinary Share * The issued and paid up capital is as per Record of Depositors as at 29 June 2012 and is exclusive of 3,039,800 treasury shares bought back. DISTRIBUTION OF SHAREHOLDINGS Size of Shareholdings Range No. of Shareholders % No. of Shares % , , , ,001-10,000 1, ,922, , , ,454, ,001-1,000, ,117, OVER 1,000, ,274, TOTAL 2, ,964, SUBSTANTIAL SHAREHOLDER Name of Shareholder No. of Shares % Chung & Tee Ventures Sdn Bhd 33,076, Chung Chee Sun 9,640, DIRECTORS SHAREHOLDINGS As per the Register of Directors Shareholdings Indirect Name Direct No. of shares % No. of shares % 1 Chung Chee Sun 9,640, , Dato Sri Tee Boon Kee 2,855, ,628, Dato Ir Haji Noor Azmi Bin Jaafar 2,162, ,498, Dato Tee Boon Keat 1,703, ,167, Datin Sri Chung Geok Siew 653, ,830, Dato Dr M Shanmughalingam 415, Gen Tan Sri (Dr) Mohamed Hashim 412, Bin Mohd Ali (Rtd) 8 Dato Mohamed Nizam Bin Abdul Razak 412, Eow Kwan Hoong 100, annual report 2012 DELLOYD VENTURES BERHAD

116 116 ANALYSIS OF SHAREHOLDINGS AS AT 29 JUNE 2012 LIST OF TOP 30 SHAREHOLDERS No Name of Shareholders No. of Shares % 1 Chung & Tee Ventures Sdn Bhd 33,076, Chung Chee Sun 9,640, Aneka Nostalgia Sdn Bhd 4,363, Flora Grand Sdn Bhd 4,197, Tee Boon Kee 2,855, CIMSEC Nominees (Tempatan) Sdn Bhd Pledged Securities Account for Kam Kar Cheong 2,296, Noor Azmi Bin Jaafar 2,162, HSBC Nominees (Asing) Sdn Bhd Exempt Account for Credit Suisse ( SG BR-TST-ASING ) 1,923, Welloyd Engineering (M) Sdn Bhd 1,914, Tee Boon Keat 1,703, Tan Ah Kee 1,104, Ipjomas Sdn Bhd 1,023, Leon Tee Wee Leng 983, Unique Stallion Sdn Bhd 931, Po Kong Yee 872, Lim Boon Kheng 716, Tang Kwang Siow 707, Chung Geok Siew 653, Tye Hua Sdn Bhd 594, Thean Wui Han 543, CIMSEC Nominees (Tempatan) Sdn Bhd CIMB Bank for Seow Soon Ming 454, RHB Nominees (Tempatan) Sdn Bhd RHB Investment Management Sdn Bhd for Yoong Kah Yin 420, Cimsec Nominees (Tempatan) Sdn Bhd Pledged Securities Account for Shanmughalingam A/L Murugasu 415, Mohamed Hashim Bin Mohd Ali (Gen Rtd Tan Sri) 412, Public Invest Nominees (Tempatan) Sdn Bhd Pledged Securities Account for Mohamed Nizam Bin Abdul Razak 412, Sj Sec Nominees (Tempatan) Sdn Bhd Pledged Securities Account for Khor Ching Lee 376, HLG Nominees (Tempatan) Sdn Bhd Pledged Securities Account for Mohd Nadzmi Bin Mohd Salleh 351, Goh Beng Choo 348, Chan Yoke Hoong 345, Peng Lee Lee 304, TOTAL 76,104, DELLOYD VENTURES BERHAD annual report 2012

117 PROPERTIES OWNED BY THE GROUP AS AT 31 MARCH NET BOOK AGE OF DATE OF VALUE BUILDING LAST DATE OF LOCATION TENURE SIZE DESCRIPTION RM 000 (YEARS) REVALUATION ACQUISITION MALAYSIA Lot & PT2187 Freehold 4.05 ha 2 plots of industrial 15, District Of Klang land / office, factory Selangor Darul Ehsan and warehouse Lot & Freehold 2.03 ha 2 plots of industrial 11, District Of Klang land / office, factory Selangor Darul Ehsan and warehouse H.S(D) & Freehold 1,522 sq.m 2 units 2 1/2 storey 1, Mukim Damansara terrace showroom Selangor Darul Ehsan factory with land Lot No 15 Freehold 2.03 ha 1 plot of industrial 7, Mukim Ulu Bernam Timur land / office, Perak Darul Ridzuan factory and warehouse H.S(D) PT553 Freehold sq.m 1 unit of 4-storey Seksyen 21 shophouse District Of Klang Selangor Darul Ehsan Lot Freehold 1.13 ha 1 plot of industrial 2, Mukim Hulu Bernam Timur land Daerah Batang Padang Perak Darul Ridzuan Lot Freehold 1.25 ha 1 plot of industrial 9, Mukim Hulu Bernam Timur land / office, Daerah Batang Padang factory and warehouse Perak Darul Ridzuan Sungai Rambai Estate Freehold 1, ha Oil Palm Estate 75, District Of Kuala Selangor Freehold 66,493 sq.m Residential Bungalows, Selangor Darul Ehsan Cottages & Amenities Lot No PT69686 & PT69687 Freehold sq.m 2 units 3 storey shop 1, Mukim Klang office building Daerah Klang Selangor Darul Ehsan annual report 2012 DELLOYD VENTURES BERHAD

118 118 PROPERTIES OWNED BY THE GROUP AS AT 31 MARCH 2012 NET BOOK AGE OF DATE OF VALUE BUILDING LAST DATE OF LOCATION TENURE SIZE DESCRIPTION RM 000 (YEARS) REVALUATION ACQUISITION THAILAND 300/28 Moo 1, Tambol Tasit Freehold 12,222 sq.m 1 plot of industrial 5, Amphur Pluakdaeng, Rayong land /office, factory Thailand and warehouse INDONESIA Block A-11 No 19 Leasehold 7,462 sq.m 1 plot of industrial land Kota Bukit Indah Expiring 2019 with factory building Dangdeur Campaka Purwakarta Indonesia Kebun Parit Gunung Leasehold 14, ha Oil Palm Estate 100, Darul Makmur & Air Ruak Expiring 2029 Plantable Reserve Belitung, Indonesia and 2036 land, Residential cottages & Amenities 7,500 sq.m Oil Mill building 9, Kawasan Industri Leasehold 7,750 sq.m 1 plot of industrial land 4, Sentul, Jl. Olympic Raya Expiring 2027 with factory building Blok B6, Kelurahan Sentul Kecamatan Babakan Madang Kabupaten Bogor, Jawa Barat Indonesia Jln Meranti 1, Blok L1 No 9 Leasehold 8,330 sq.m 1 plot of industrial land 7, Delta Silicon Expiring 2021 with factory building Lippo Cikarang Bekasi Indonesia DELLOYD VENTURES BERHAD annual report 2012

119 FORM OF PROXY 119 DELLOYD VENTURES BERHAD ( W) (Incorporated in Malaysia) FORM OF PROXY I/We NRIC/Co.No. of being a member of DELLOYD VENTURES BERHAD hereby appoint of NRIC No. or failing whom, of NRIC No. as my/our proxy to vote for me/us on my/our behalf at the Sixteenth Annual General Meeting of the Company to be held at Danau 3, Kota Permai Golf and Country Club, No.1, Jalan 31/100A, Kota Kemuning, Section 31, Shah Alam, Selangor Darul Ehsan on Thursday, 16 August 2012 at a.m. and, at every adjournment thereof for/against the resolutions to be proposed thereat. NO. ORDINARY RESOLUTIONS FOR AGAINST 1 To receive the Financial Statements and Reports of the Directors and Auditors thereon 2 To approve the payment of Final Dividend 3 To approve the payment of Directors fees 4 To re-elect Dato Sri Tee Boon Kee as Director 5 To re-elect Eow Kwan Hoong as Director 6 To re-appoint General Tan Sri (Dr) Mohamed Hashim Bin Mohd Ali (Rtd) as Director 7 To re-appoint Dato Dr. M Shanmughalingam as Director 8 To re-appoint auditors of the Company 9 To approve the authority to issue shares pursuant to Section 132D of the Companies Act, To approve the proposed renewal of the shareholders mandate for recurrent related party transactions of a revenue or trading nature 11 To approve the proposed renewal of authority for the purchase of own shares by the Company (Please indicate with an X in the spaces provided on how you wish your vote to be cast. If you do not do so, the proxy will vote or abstain from voting at his discretion.) Dated this day of.2012 Signature of Member(s)... Affix Company s Common Seal (if applicable) Notes:- i The members whose names appear in the Record of Depositors on 10 August 2012 shall be entitled to attend, speak and vote at this Sixteenth Annual General Meeting. ii A proxy shall be a member of the Company and if the proxy is not a member of the Company, the proxy shall be an advocate or an approved company auditor or a person approved by the Registrar of Companies. iii A member shall be entitled to appoint more than one proxy (subject always to a maximum of two proxies at each meeting) to attend and vote at the same meeting. iv Where a member appoints more than one proxy, the appointment shall be invalid unless he specifies the proportion of his holdings to be represented by each proxy. v To be valid, this proxy form duly completed must be deposited at the registered office of the Company situated at 52A, Lebuh Enggang, Klang, Selangor Darul Ehsan not less than 48 hours before the time for holding the meeting. vi If the appointer is a corporation, this proxy form must be executed under its Seal or under the hand of its attorney. annual report 2012 DELLOYD VENTURES BERHAD