ANNUAL REPORT Annual Report

Transcription

1 ANNUAL REPORT Annual Report

2 C O N T E N T S Corporate Information 1 Corporate Structure 2 Notice Of Annual General Meeting 3 Statement Accompanying The Notice Of Annual General Meeting 3 Profile Of The Directors 4 Chairman s Statement 6 Statement On Corporate Governance 8 Audit Committee Report 12 Statement On Internal Control 15 Statement On Directors Responsibility 16 Additional Compliance Requirements 16 Financial Statements Directors Report 17 Statement By Directors 21 Statutory Declaration 21 Independent Auditors Report 22 Statements Of Financial Position 24 Statements Of Comprehensive Income 25 Statements Of Changes In Equity 26 Statements Of Cash Flows 27 Notes To The Financial Statements 28 List Of Properties 61 Analysis Of Shareholdings 62 Proxy Form Attached

3 CORPORATE INFOATION BOARD OF DIRECTORS AUDIT COMMITTEE NOMINATION COMMITTEE REMUNERATION COMMITTEE EXECUTIVE COMMITTEE Datuk Hj. Amir Bin Junus (Independent Non-Executive Chairman) Wong Liew Liew Fat Lin (Managing Director) Wong Mee Yow Liew Mee Yow Cheen (Executive Director) Tai Shzee Yuan (Executive Director) Liew Huat Kwang (Executive Director) Loi Kim Fah (Independent Non-Executive Director) See Thiam Chya (Independent Non-Executive Director) Loi Kim Fah (Chairman) Datuk Hj. Amir Bin Junus See Thiam Chya Loi Kim Fah (Chairman) Datuk Hj. Amir Bin Junus Datuk Hj. Amir Bin Junus (Chairman) Loi Kim Fah Wong Liew Liew Fat Lin (Chairman) Wong Mee Yow Liew Mee Yow Cheen Tai Shzee Yuan SECRETARIES Jauhari Bin Hassan (LS 03681) Lim Suat Ben (f) (MAICSA ) REGISTERED OFFICE CORPORATE OFFICE REGISTRAR Ground Floor, 8, Lorong Universiti B Section 16, Petaling Jaya Selangor Darul Ehsan Tel No: Fax No: , Jalan Kapal Kawasan Perindustrian Tongkang Pecah Batu Pahat Johor Darul Takzim Bina Management (M) Sdn Bhd Lot 10, The Highway Centre Jalan 51/205, Petaling Jaya Selangor Darul Ehsan Tel No: Fax No: AUDITORS Hasnan THL Wong & Partners (AF No: 0942) Chartered Accountants SOLICITORS PRINCIPAL BANKERS STOCK EXCHANGE T K Lim & Co. OCBC Bank (Malaysia) Berhad Malayan Banking Berhad RHB Bank Berhad United Overseas Bank (Malaysia) Bhd Hong Leong Bank Berhad Main Market of the Bursa Malaysia Securities Berhad 1 YONG TAI BERHAD ( T)

4 CORPORATE STRUCTURE 2 ANNUAL REPORT 2012

5 NOTICE OF ANNUAL GENERAL MEETING NOTICE IS HEREBY GIVEN that the Eighteenth Annual General Meeting of the Company will be held at 2nd Floor, 3, Jalan Kapal, Kawasan Perindustrian Tongkang Pecah, Batu Pahat, Johor Darul Takzim on Wednesday, 19 December 2012 at 2.00 p.m. to transact the following: AGENDA As Ordinary Business 1. To receive the Directors' Report and Audited Financial Statements for the year ended 30 June 2012 together with the Auditors' Report thereon. 2. To approve the payment of Directors' Fees amounting to 64, in respect of the year ended 30 June Resolution 1 3. To re-elect the following Directors who shall retire by rotation in accordance with Article 81 of the Company's Articles of Association and being eligible, offer themselves for re-election: i. Wong Liew Liew Fat Lin Resolution 2 ii. Wong Mee Yow Liew Mee Yow Cheen Resolution 3 4. To re-elect the following Director who shall retire by rotation in accordance with Article 86 of the Company's Articles of Association and being eligible, offer himself for re-election: i. See Thiam Chya 5. To re-appoint Messrs. Hasnan THL Wong & Partners as Auditors of the Company and to authorise the Directors to fix their remuneration. Resolution 4 Resolution 5 6. To transact any other business for which due notice has been given. By Order of the Board JAUHARI BIN HASSAN (LS 03681) LIM SUAT BEN (f) (MAICSA ) Company Secretaries Selangor Darul Ehsan 27 November 2012 Notes: 1. A member of the Company entitled to attend and vote at the Meeting may appoint more than one (1) proxy to attend and vote at the Meeting and the provision of Section 149(1)(c) of the Companies Act, 1965 shall not apply to the Company. 2. A proxy may but need not be a member of the Company and the provision of Section 149(1)(b) of the Companies Act, 1965 shall not apply to the Company. 3. Where a member appoints two (2) or more proxies, the appointment shall be invalid unless he/she specifies the proportion of his/her holdings to be represented by each proxy. 4. The Proxy Form shall be in writing under the hand of the appointor or of his attorney duly authorised in writing or, if the appointor is a corporation, either under its common seal or under the hand of an officer or attorney duly authorised. 5. The Proxy Form and the power of attorney or other authority, if any, under which it is signed or a notarially certified copy of that power or authority must be deposited at the Registered Office of the Company at Ground Floor, 8, Lorong Universiti B, Section 16, Petaling Jaya, Selangor Darul Ehsan not less than forty-eight (48) hours before the time for holding the Meeting or any adjournment thereof. STATEMENT ACCOMPANYING THE NOTICE OF ANNUAL GENERAL MEETING 1. The Directors who are standing for re-election at the Eighteenth Annual General Meeting in accordance with Articles 81 and 86 of the Company's Articles of Association are as follows: i. Wong Liew Liew Fat Lin - Article 81 ii. Wong Mee Yow Liew Mee Yow Cheen - Article 81 iii. See Thiam Chya - Article The details of the Directors standing for re-election and re-appointment are set out in Profile of The Directors on pages 4 and 5 of the Annual Report. 3 YONG TAI BERHAD ( T)

6 PROFILE OF THE DIRECTORS Datuk Hj. Amir Bin Junus, age 69, a Malaysian, was appointed to the Board as an Independent Non-Executive Chairman on 10 July Datuk Amir holds a Diploma Sains Kepolisian from Universiti Kebangsaan Malaysia and Certificate of Telecommunication from City & Guilds of London Institute. Datuk Amir was a former member of the Royal Malaysian Police and last served as Commissioner of Police Sabah with the rank of Deputy Commissioner of Police before retiring in November In the force for 29 years, Datuk Amir had served in various positions with the Royal Malaysian Police, including, among others, Deputy Director of the Special Branch. Upon retiring from active duty in November 1998, Datuk Amir was appointed as a board member of Koperasi Polis Diraja Malaysia Berhad (KPD). As a member of KPD, Datuk Amir represented KPD's interest in number of its investment interests in a few public listed companies. Datuk Amir was a director of Prime Utilities Berhad from 1999 to 2004 and was a director of TSM Global Berhad [formerly known as Juan Kuang (M) Industrial Berhad] until October 2008, both companies are listed on Bursa Malaysia Securities Berhad. Since 1999 until 2005, Datuk Amir was the Chairman of KOP Securities Services Sdn. Bhd., a subsidiary of KPD and was the Executive Chairman and Chief Executive Officer of KOP Educators & Consultants Sdn. Bhd. (also known as Kolej Unikop), another subsidiary of KPD. Currently, Datuk Amir is still a board member of the college. Besides representing the interests of KPD, Datuk Amir is also a Council Member of the Maktab Koperasi Malaysia under the purview of the Ministry of Domestic Trade, Cooperative and Consumerism and a director of Eshia & Associates Sdn. Bhd. Datuk Amir also holds Chairman post and directorships in few private limited companies. Datuk Amir is the Chairman of the Remuneration Committee and member of Audit Committee. He does not have any family relationship with any Director and/or major shareholder of the Company. He has not entered into any transaction which has a conflict of interest with the Company and has not been convicted of any offences within the past ten years. Wong Liew Liew Fat Lin, aged 66, a Malaysian, was appointed to the Board on 2 October 1997 and as the Managing Director on 8 November He is a businessman and an entrepreneur with more than 30 years experience in various business sectors primarily in the fields of property development, wholesaling and retailing of garments and apparels, manufacturing and pharmaceutical. He founded Yong Tai and has been in charge of the overall operation since its inception guiding it to its present level of success. Currently, Mr. Liew also holds other directorships in the Yong Tai of Companies and several other private limited companies involve investment holdings and manufacturing. Mr. Liew is the Chairman of the Executive Committee. He is the brother of Mr. Wong Mee Yow Liew Mee Yow Cheen and Mr. Liew Huat Kwang. He has not entered into any transaction which has a conflict of interest with the Company and has not been convicted of any offences within the past ten years. Wong Mee Yow Liew Mee Yow Cheen, aged 59, a Malaysian, was appointed to the Board on 2 October 1997 and as the Executive Director on 8 November Innovative and enterprising, he is responsible for the production, research and market development of Yong Tai and has been actively involved in the establishment of its manufacturing operations. Currently, Mr. Liew also holds other directorships in the Yong Tai of Companies and several other private limited companies involve investment holdings and manufacturing. Mr. Liew is a member of the Executive Committee. He is the brother of Mr. Wong Liew Liew Fat Lin and Mr. Liew Huat Kwang. He has not entered into any transaction which has a conflict of interest with the Company and has not been convicted of any offences within the past ten years. Tai Shzee Yuan, aged 59, a Malaysian, is an Executive Director and was appointed as First Director on 12 August He started his career in the as a General Manager of Yong Tai Brothers Trading Sdn. Bhd., a subsidiary of Yong Tai Berhad in 1 January He is responsible for the overall financial planning and management of Yong Tai. Mr. Tai is a member of the Executive Committee. He also holds other directorships in the Yong Tai of Companies. Mr. Tai does not have any family relationship with any Director and/or major shareholder of the Company. He has not entered into any transaction which has a conflict of interest with the Company and has not been convicted of any offences within the past ten years. 4 ANNUAL REPORT 2012

7 PROFILE OF THE DIRECTORS Liew Huat Kwang, aged 48, a Malaysian, is an Executive Director and was appointed to the Board on 2 October He has more than ten (10) years of experience in the garment retailing business and is in charge of the sourcing of suitable retail outlet sites and to oversee their setting up. Currently, Mr. Liew also holds other directorships in the Yong Tai of Companies and several other private limited companies involve investment holdings and manufacturing. Mr. Liew is the brother of Mr. Wong Liew Liew Fat Lin and Mr. Wong Mee Yow Liew Mee Yow Cheen. He has not entered into any transaction which has a conflict of interest with the Company and has not been convicted of any offences within the past ten years. Loi Kim Fah, aged 46, a Malaysian, is an Independent Non-Executive Director and was appointed to the Board on 18 December He holds a Bachelor of Accounting from the University of Malaya. He is a member of the Malaysian Institute of Certified Public Accountants, Malaysian Institute of Accountants and the Malaysian Institute of Taxation respectively. He is currently the principal of Loi & Co, an audit firm, and also an Independent Non-Executive Director of K-One Technology Bhd., a company listed on ACE Market of Bursa Malaysia Securities Berhad. Mr. Loi has been in public practice since 1991, engaged with international accounting firms prior to starting his own practice in Over the years, he has been involved in the audit of companies in various industries which include securities, banking, finance, construction, aquaculture and manufacturing. He has also been engaged in business advisory assignments in the like of merger and acquisition, internal control review, accounting system consultation, feasibility study, listing exercise and business planning. Mr. Loi is the Chairman of the Audit Committee and Nomination Committee. He does not have any family relationship with any Director and/or major shareholder of the Company. He has not entered into any transaction which has a conflict of interest with the Company and has not been convicted of any offences within the past ten years. See Thiam Chya, aged 49, a Malaysian, is an Independent Non-Executive Director and was appointed to the Board on 2 March Mr. See has over 23 years of experience in the banking and finance sector. He has served in various capacities with Financial institutions such as OCBC Bank (M) Bhd, MBf Finance Bhd, and Affin-ACF Finance Bhd, and has been employed at a managerial level since being promoted to Branch Manager at MBf Finance Bhd in 1994 until his resignation in Subsequently he joined OSK Securities as Head of Operations till He was previously the General Manager of Amshore, subsidiary of a listed company, Bio Osmo Berhad, in charge of the operations of the manufacturing division till Currently Mr See is a consultant at Vykon Technology Sdn. Bhd. In this role, he is involved in advising the company in realizing the sustainability strategies. Mr. See is a member of the Audit Committee. He does not have any family relationship with any Director and/or major shareholder of the Company. He has not entered into any transaction which has a conflict of interest with the Company and has not been convicted of any offences within the past ten years. 5 YONG TAI BERHAD ( T)

8 CHAIAN S STATEMENT On behalf of the Board of Directors, I am pleased to present the Annual Report of Yong Tai Berhad and its subsidiary companies ( the ) for the financial year ended 30 June Financial Highlights For the financial year under review, the achieved a revenue of million, which is 7.09% marginal higher compared to the previous financial year (F/Y 2011: million). The registered a loss before taxation of million for the financial year ended 30 June The significant loss was primary due to higher operation cost incurred in garment and retail businesses, recognition of fair value loss on inventory and allowance for doubtful debts. As at 30 June 2012, the 's total equity was million with a net asset per share of Review of Operations During the financial year under review, the achieved a consolidated revenue of million for its retailing and trading of textile and garment products, a growth of 22.61% over the previous financial year's revenue of million. The consolidated results of this segment, however, reported loss before taxation of million. The chain of Emilio Valentino boutiques contributed a turnover of million and profit before taxation of million within the retailing and trading of textile and garment segment for the financial year under review, a slight decrease as compared to the previous financial year of million and million respectively. On the other hand, the chain of Effu boutiques contributed a turnover of million. The plan to open more profitable outlet for Effu and will continue target middle income and young group of customers with mid-end price products, and to explore new market and respond actively to changes in trends, preferences and retails spending patterns of the consumers. Additional initiatives will be carried out to enhance our branding with promotional activities in order to improve sales revenue. The garment manufacturing segment recorded a turnover of million for the financial year ended 30 June 2012, as compared with the previous financial year of million with a loss before taxation of million. Due to the difficult manufacturing conditions, the continued to focus on cost control and production efficiency. We are still the Nike's certified factory directly through Haddad-Nike. The manufacturing, dyeing and finishing of fabrics segment registered a turnover of million, with profit before taxation of 0.43 million for the financial year ended 30 June 2012, a significant growth of 76.91% as compared with previous financial year (F/Y 2011: turnover of million with profit before taxation of 0.25 million). During the financial year, the has disposed off its 65% equity interest in YongTai Samchem (HK) Company Limited. Nevertheless, this petrol-chemical trading segment recorded a revenue of million (F/Y 2011: million) during the financial year end under review with loss before taxation of million (F/Y 2011: million profit before taxation). Future Prospects The Board of Directors expects 2013 to be another very challenging year for the. In this environment, we will continue exercise greater financial prudence to sustain our cash reserves. Our strategy remain cautiously optimistic and will continue focus on strategies to improve merchandising, sales floor management, productivity, capacity, utilization of resources and cost control. Simultaneously, we are on the lookout for new business and on-going effort has been made to identify potential business with an aim to grow our business and increase the contribution to the 's performance. 6 ANNUAL REPORT 2012

9 CHAIAN S STATEMENT Acknowledgement and Appreciation On behalf of the Board of Directors, I would like to take this opportunity to thank the Management and staff of the for their support, dedication and commitment throughout the year. We would also like to express our heartfelt gratitude and appreciation to our valued shareholders, customers, business associates, bankers and various government authorities for their continuous support given to the. Datuk Hj. Amir Bin Junus Chairman 8 November YONG TAI BERHAD ( T)

10 STATEMENT ON CORPORATE GOVERNANCE The Board of Directors of Yong Tai Berhad recognizes the importance of the Principles and Best Practices of Malaysian Code on Corporate Governance ( the Code ) and is committed in ensuring that the Company and its subsidiaries ( the ) practise the highest standards of corporate governance. This Statement describes the manner in which the has applied the Code's Principles and the extent of compliance with the Code's Best Practices. BOARD OF DIRECTORS The Board Composition and Balance The Board assumes the overall responsibility for corporate governance, strategic direction, financial matters and overseeing the businesses, investments and operations of the. It is the ultimate body in decision making for outlining and implementation of corporate vision, directions, objectives and policies of the as a whole. The Board currently consists of seven (7) members, comprising a Managing Director, three (3) Executive Directors and three (3) Independent Non-Executive Directors (including the Chairman). The Company complies with the Bursa Malaysia Securities Berhad ( Bursa Securities ) Main Market Listing Requirements that requires at least two (2) or one-third (1/3) of the Board to be independent Directors. The Board practices a clear division of responsibility to ensure a balance of power and authority between the Chairman, Managing Director and Non-Executive Directors. The Chairman is primarily responsible for the orderly conduct and functions of the Board whilst the Managing Director is responsible for the overall operations of the business and direction on policy formation and decision making. The Managing Director is ably assisted by the Executive Directors who are responsible for the day-to-day operations and business activities of the. The roles of Independent Non-Executive Directors are to provide unbiased and independent views, advice and judgement, and to ensure that the Board practices good governance in discharging its duties and take into account of the interests, not only of the, but also of the shareholders, employees and customers. Board Meetings and Supply of Information The Board meets at least four (4) times a year at quarterly intervals with additional meetings to be convened as and when necessary. During the financial year ended 30 June 2012, the Board convened five (5) meetings, with details on the attendance of Directors are as follows:- Name of Directors No. of meetings attended Datuk Hj. Amir Bin Junus 5/5 Wong Liew Liew Fat Lin 5/5 Wong Mee Yow Liew Mee Yow Cheen 5/5 Tai Shzee Yuan 5/5 Liew Huat Kwang 4/5 Tan Kau Tan Seong Tin (retired on 21 December 2011) 3/3* Loi Kim Fah 5/5 See Thiam Chya (appointed on 2 March 2012) 1/1* Note: * Reflects the number of meetings held during the tenure of the respective Director. Prior to the Board meetings, all Directors are provided with the agenda together with reports and papers containing information relevant to the business of the meetings, such as information on major financial, operational and corporate matters as well as activities and performance of the, to enable the Directors to peruse and contemplate the issues to be deliberated at the Board meetings. The Directors have full access to all information within the and is entitled to the advice and services of the Company Secretaries and may obtain independent professional advice at the Company's expense, where necessary. 8 ANNUAL REPORT 2012

11 STATEMENT ON CORPORATE GOVERNANCE Appointments to the Board The Nomination Committee comprises exclusively of Independent Non-Executive Directors as follows:- Loi Kim Fah Datuk Hj. Amir Bin Junus Chairman/Independent Non-Executive Director Member/ Independent Non-Executive Director The Nomination Committee is established with the responsibility of identifying, proposing and recommending the right candidates to the Board and Board Committees by taking into account the individual's skill, knowledge, expertise, experience, professionalism and integrity as well as his other commitments, resources and time. In addition, the Nomination Committee also has the following duties and functions:- 1. to evaluate the ability to discharge such responsibilities/functions as expected from individual non-executive Directors. 2. to annually review the required mix of skills, experience and other qualities include core competencies, which non-executive Directors should bring to the Board. 3. to annually assess the effectiveness of the Board as a whole, the Board Committees and assess contribution of each Director. The decision as to who shall be appointed shall be the responsibility of the full Board after considering the recommendations of the Nomination Committee. The Board will examine its size with a view to determining the impact of the number upon its effectiveness. Re-election of Directors The Articles of Association of the Company provide that at least one-third (1/3) of the Directors are subject to retirement by rotation at each Annual General Meeting ( AGM ) but shall be eligible for re-election and that all Directors (including the Managing Director) shall retire at least once in every three (3) years. The Company's Articles of Association also provide that a Director who is appointed during the year shall hold office only until the next AGM and shall then be eligible for re-election. Directors' Training All the Directors have completed the Mandatory Accreditation Programme prescribed by Bursa Securities. All the Directors are provided with the opportunity to continually undergo other relevant training programmes to further enhance their skills and knowledge and to enable them to discharge their respective duties effectively. Those programmes included Budget Proposals & Recent Tax Developments, Seminar Percukaian Kebangsaan 2011 and National Tax Conference DIRECTORS' REMUNERATION The Remuneration Committee comprises wholly of Independent Non-Executive Directors as follows:- Datuk Hj. Amir Bin Junus Loi Kim Fah Chairman/Independent Non-Executive Chairman Member/Independent Non-Executive Director The Remuneration Committee is responsible for recommending to the Board the remuneration packages of Executive Directors. The Board as a whole determines the remuneration of Non-Executive Directors. The individual concerned will abstain from the discussion of their own remuneration. The remuneration of Directors is determined at levels which enable the Company to attract and retain Directors with the relevant experience and expertise to run the successfully and effectively. In the case of Executive Directors, their remunerations are structured to link rewards to corporate and individual performance. For Non-Executive Directors, the level of remuneration reflects the experience and level of responsibilities undertaken by them. The aggregate remuneration of Directors during the financial year under review are as follows: Directors Remuneration Executive Non-Executive () () Fees - 64,000 Salaries/Allowances 965,099 - Bonuses 30,000 - Benefit In Kind 16,400 - Total 1,011,499 64,000 9 YONG TAI BERHAD ( T)

12 STATEMENT ON CORPORATE GOVERNANCE DIRECTORS' REMUNERATION (Cont d) The number of Directors of the Company whose total remuneration falls within the following bands for the financial year under review are:- Number of Directors Range of remuneration Executive Non-Executive Below 50, , , , , , , , , Above 250, OTHER BOARD COMMITTEES Other than the Nomination Committee and Remuneration Committee, the Board has also established other Board Committees, namely Audit Committee and Executive Committee, which operates within defined terms of reference. These committees have been accorded the necessary authority to analyse the relevant issues and report to the Board with recommendations and deliberations for the Board's approval. Audit Committee The members of the Audit Committee comprises exclusively of three (3) Independent Non-Executive Directors. The Composition and the Terms of Reference of the Committee are set out in Audit Committee Report on pages 12 and 13 of the Annual Report. The Audit Committee's meeting is mostly held before the Board's meeting to ensure that all critical issues highlighted can be brought to their attention on a timely basis. It reviews issues of accounting policies and presentation for external financial reporting and ensures an objective and professional relationship is maintained with the external auditors. Executive Committee (Exco) The Exco comprises the Managing Director and two (2) Executive Directors. The Exco is the main approving authority on the major routine matters and meets regularly to review and approve major strategic, operational and financial matters, investments and funding decisions. SHAREHOLDERS Dialogue between Company and Investors The Company acknowledges the importance of timely dissemination of material information affecting the to the shareholders, investors and the public. The release of annual reports, announcements and financial results on a quarterly basis provides the shareholders and the investing public with an overview of the 's performance and operations. The Company has set up its own website which provides more information about the Company and the. The Annual General Meeting ( AGM ) The AGM remains the principal forum of dialogue and a mean of communication with shareholders. Shareholders are encouraged to attend and participate at the AGM and are allowed to appoint proxies to attend and vote on their behalf. Members of the Board as well as the Auditors of the Company are present to answer questions raised during the meeting. 10 ANNUAL REPORT 2012

13 STATEMENT ON CORPORATE GOVERNANCE ACCOUNTABILITY AND AUDIT Financial Reporting The Company's financial statements are prepared in accordance with the requirements of applicable approved accounting standards in Malaysia issued by the Malaysian Accounting Standards Board and the provisions of the Companies Act, The Directors take responsibility in ensuring that the annual financial statements and the quarterly results announcements are presented to convey a balanced and understandable assessment of the 's financial performance and position. The Audit Committee assists the Board by reviewing and scrutinizing the information to be disclosed to ensure accuracy and adequacy. Internal Control The Board has overall responsibility for the development of sound internal control system for the to achieve its objectives within the acceptable risk profile as well as to safeguard shareholder's investment and the Company's assets. The Board and Audit Committee review the effectiveness of the 's system of internal controls periodically and such review covers the financial, operational and compliance controls as well as risk management. The Statement on Internal Control which provides an overview of the state of the internal control within the is set out on page 15 of the Annual Report. Relationship with Auditors The has established a transparent relationship with the External Auditors and seeks their professional advice in ensuring compliance with applicable standards and statutory requirements. The External Auditors are invited to attend the Audit Committee's meeting at least twice a year to discuss the audit plan, audit findings and their review. CORPORATE SOCIAL RESPONSIBILITY The acknowledges the importance of Corporate Social Responsibility ( CSR ) towards the well-being of its employees, community and environment, and strives to balance its social responsibility to the society with its business objectives and shareholders' expectations. In our daily operations, the continues to be committed on recycling and undertaking measures to reduce wastages, pollution and harmful emissions. We encourage our employees to be environmental friendly by adopting cost and energy saving method to minimize the environmental impact and risks. The believes that it is the employees who have significantly contributed to its continued success and growth and we strive to motivate and retain the employees with the Long Service Award in recognizance of their loyalty and services towards the Company. The also continuously promotes human capital development by encouraging and sponsoring the participation of the employees in training programmes and seminars to enhance their knowledge, skills and competences. The training programmes and seminars include Steam Boiler Operation Training, Human Resource Development Fund Contribution, Basic Safety Trading and etc. The strives to forge a safe working environment and promotes healthy work practices for all levels of employee. Improvements are ongoing at the factory premises to ensure the entire production process is truly professional and systematic. Safety programmes such as K.S.D.K.I. Alam Sekitar Malaysia, World Health Organisation Drinking Water Training, Seminar Perakuan Bomba dan Menghapuskan Bahaya Kebakaran and etc have been conducted to create the awareness of the safety environment and practices. The is committed to play its role as a caring corporate citizen and has taken initiative in making contributions towards the local community from time to time. We understand that CSR will be an ongoing commitment and we will devise and implement additional CSR practices in other areas of its businesses and operations in future. 11 YONG TAI BERHAD ( T)

14 AUDIT COMMITTEE REPORT COMPOSITION AND MEMBERSHIP The Audit Committee comprises three (3) directors and the composition is as follows: Loi Kim Fah Datuk Hj. Amir Bin Junus See Thiam Chya Chairman/Independent Non-Executive Director Member/Independent Non-Executive Chairman Member/Independent Non-Executive Director TES OF REFERENCE The Audit Committee carried out its duties as set out in the Terms of Reference. The Board of Directors reviews the Terms of Reference from time to time to ensure continuous compliance with Bursa Malaysia Securities Berhad ( Bursa Securities ) Main Market Listing Requirements. Objective The primary objective of the Audit Committee is to assist the Board of Directors in the effective discharge of its fiduciary responsibilities as to corporate governance, financial reporting, auditing and internal control. Composition The Audit Committee shall be appointed by the Board of Directors from amongst its members which fulfils the following requirements: 1. the Audit Committee must be composed of no fewer than three (3) members; 2. all the Audit Committee members must be non-executive directors, with a majority of them being independent directors; 3. at least one (1) member of the Audit Committee:- i. must be a member of the Malaysian Institute of Accountants; or ii. if he is not a member of the Malaysian Institute of Accountants, he must have at least three (3) years' working experience; and a. he must have passed the examinations specified in Part I of the 1st Schedule of the Accountants Act 1967; or b. he must be a member of one of the associations of accountants specified in Part II of the 1st Schedule of the Accountants Act 1967; or c. fulfils such other requirements as prescribed or approved by Bursa Securities. 4. no alternate director is appointed as a member of the Audit Committee. Chairman The members of the Audit Committee must elect a Chairman among themselves who is an independent director. Secretary The Company Secretary of the Company shall be the Secretary of the Audit Committee. Meetings and Minutes The Audit Committee shall meet at least four (4) times a year or more frequently as they consider necessary. A quorum shall be two (2) members present, a majority of whom must be independent directors. The Audit Committee may invite the Head of Finance, the internal auditor and external auditor to attend the meeting. Other Board members and/or employees may attend any particular meeting upon invitation of the Audit Committee. The external auditor may request for a meeting if they consider necessary. The minutes of Audit Committee meeting shall be signed by the Chairman of the meeting and distributed to each member of the Audit Committee and the Board of Directors. The Chairman of the Audit Committee shall report to the Board of Directors on each meeting. 12 ANNUAL REPORT 2012

15 AUDIT COMMITTEE REPORT TES OF REFERENCE (Cont d) Authority The Audit Committee shall in accordance with a procedure determined by the Board of Directors: i. have authority to investigate any matter within its terms of reference; ii. have the resources which are required to perform its duties; iii. have full and unrestricted access to any information pertaining to the Company and the ; iv. have direct communication channels with the internal and external auditors and with senior management of the Company; v. be able to obtain independent professional or other advice; and vi. be able to convene meeting with external auditor, internal auditor or both, excluding the attendance of other Directors and employees of the Company, whenever deemed necessary. Functions and Duties The functions and duties of the Audit Committee are:- 1. to review the following and report the same to the Board of Directors of the Company: a. with the external auditor, the audit plan; b. with the external auditor, his evaluation of the system of internal controls; c. with the external auditor, his audit report; d. the assistance given by the employees of the Company to the external auditor; e. the adequacy of the scope, functions, competency and resources of the internal audit functions and that it has the necessary authority to carry out its work; f. the internal audit programme, processes, the results of the internal audit programme, processes or investigation undertaken and whether or not appropriate action is taken on the recommendations of the internal audit function; g. the quarterly results and year end financial statements, prior to the approval by the board of directors, focusing particularly on - changes in or implementation of major accounting policy changes; - significant and unusual events; and - compliance with accounting standards and other legal requirements; h. any related party transaction and conflict of interest situation that may arise within the Company or including any transaction, procedure or course of conduct that raises questions of management integrity; i. any letter of resignation from the external auditors of the Company; and j. whether there is reason (supported by grounds) to believe that the Company's external auditor is not suitable for reappointment. 2. to recommend the nomination of a person or persons as external auditors. 3. to carry out such other functions as may be agreed to by the Audit Committee and the Board of Directors. The Chairman of the Audit Committee shall engage on a continuous basis with senior management, such as the Chairman, the Managing Director, the Head of Finance, the Head of Internal Audit and external auditors in order to be kept informed of matters affecting the Company. MEETINGS The Audit Committee held five (5) meetings during the financial year ended 30 June 2012 and the attendance of each Audit Committee member are as follows: Members No. of meetings attended Loi Kim Fah 5/5 Datuk Hj. Amir Bin Junus 5/5 Tan Kau Tan Seong Tin (retired on 21 December 2011) 3/3* See Thiam Chya (appointed on 2 March 2012) 1/1* Note: * Reflects the number of meetings held during the tenure of the respective Director. 13 YONG TAI BERHAD ( T)

16 AUDIT COMMITTEE REPORT SUMMARY OF ACTIVITIES During the financial year under review, the activities of the Audit Committee included: i. review internal audit's reports and memorandums; ii. review quarterly financial result prior to submission to the Board of Directors for their consideration and approval; iii. review the external auditors' reports in relation to audit and accounting issues arising from audit, and updates of new developments on accounting standards issued by the Malaysian Accounting Standards Board; iv. review the Company's compliance with revamped Bursa Securities Main Market Listing Requirements; v. review audit strategy and plan of the external auditors; and vi. review the recurrent related party transactions. INTERNAL AUDIT FUNCTION The internal audit function of the is performed by in-house Internal Audit Department. For the financial year ended 30 June 2012, the cost incurred for internal audit function was 39, The internal auditor reports to the Audit Committee and carried out the audit reviews in accordance with the internal audit plan. The audit findings and recommendations will be forwarded to the management concerned for attention and necessary action. The Audit Committee reviews and deliberates the internal audit reports and relevant issued presented during the regular Audit Committee meetings. During the financial year under review, our Internal Audit Department had carried out the following activities:- i. conduct independent reviews on internal control of the key activities within the 's operating units; ii. identify and highlight any deficiency and findings in the risk management and internal controls of the ; iii. propose practical and cost effective recommendations and corrective action plans to the relevant management; and iv. perform follow-up audits to ensure the recommendations and corrective action plan have been taken and implemented accordingly. A number of minor internal control weaknesses were identified, all of which have been or being addressed. None of the weakness has resulted in any material losses or uncertainties that would require disclosure in this Annual Report. During the financial year under review, the Company has engaged AlphaOne Governance Sdn. Bhd. to provide the internal audit services for Yong Tai Brothers Trading Sdn. Bhd. 14 ANNUAL REPORT 2012

17 STATEMENT ON INTERNAL CONTROL Introduction The Malaysian Code on Corporate Governance stipulated that a listed company shall maintain a sound system of internal control to safeguard shareholders' investment and the Company's assets. The Board of Directors of Yong Tai Berhad is pleased to present the Statement on Internal Control for the financial year ended 30 June 2012 made pursuant to Paragraph 15.26(b) of Bursa Malaysia Securities Berhad Main Market Listing Requirements. Board Responsibility The Board of Directors recognizes its responsibility for the 's system of internal control, which includes the establishment of an appropriate control environment and framework as well as reviewing its adequacy and integrity on a regular basis. The 's system of internal control had been designed with the objective of safeguarding shareholders' investment and its assets. However, due to the limitations that are inherent in any system of internal control, it can only provide reasonable but not absolute assurance against material misstatement, operational failures or loss. Risk Management Risk management is seen as an integral part of the 's business operations by the Board. On a daily basis, the Heads of Departments are responsible for managing the risks of their respective departments. The key risks relating to the 's operations and business plans are addressed at the periodic Board and Audit Committee meetings. The continuous to take necessary measures to ensure that there is on going process for identifying, evaluating, managing and monitoring the significant risks affecting the achievement of the 's business objectives. Internal Audit Function The internal audit function of the is performed by in-house Internal Audit Department. All audit findings are deliberated and resolved with the management and respective Head of Department. The Audit Committee reviews the internal audit reports on every quarterly meeting. During the financial year under review, the Company has engaged AlphaOne Governance Sdn. Bhd. to provide the internal audit services for Yong Tai Brothers Trading Sdn. Bhd. Other Key Elements of Internal Control Other key elements of the 's systems of internal control are:- Periodic Board of Directors' and Audit Committee meetings, and regular operational and management meetings are held to discuss and review the business operation, financial and operational performances of the ; The has a defined organizational structure with clear lines of responsibility, segregation of duties and delegation of authority; The Executive Directors are closely involved in the running of day-to-day business and operations of the and they report to the Board of Director on significant changes in the business and external environment; and Quarterly financial results and reports that provides the Board of Directors and Audit Committee with comprehensive information on financial performances of the. Conclusion There were no material finding or loss incurred during the financial year as a result of weaknesses in internal control. The Board, together with the management, continues to take measures to strengthen and further enhance its system of internal control. This Statement is made in accordance with a resolution of the Board of Directors dated 30 October YONG TAI BERHAD ( T)

18 STATEMENT ON DIRECTORS' RESPONSIBILITY 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 Company and the at the end of the financial year and of the results and cash flows of the Company and the for the financial year. The financial statements have been prepared in accordance with the applicable approved accounting standards in Malaysia issued by the Malaysian Accounting Standards Board, the requirements of the Act, the Bursa Malaysia Securities Berhad Main Market Listing Requirements and other statutory requirements. The Directors have ensured that in preparing the financial statements for the year ended 30 June 2012, the Company and the has applied appropriate accounting policies on a consistent basis and supported with reasonable and prudent judgements and estimates. The Directors have responsibility for ensuring that the Company and the keep proper accounting records to enable them to ensure that the financial statements comply with the Act. The Directors have overall responsibility for taking such steps as are reasonably open to them to safeguard the assets of the and to prevent and detect fraud and other irregularities. This Statement is made in accordance with a resolution of the Board of Directors dated 30 October ADDITIONAL COMPLIANCE REQUIREMENTS Share buybacks There was no share buyback by the Company during the financial year under review. Options, warrants or convertible securities The Company has not issued any options, warrants or convertible securities during the financial year under review. American Depository Receipt (ADR) or Global Depository Receipt (GDR) programme The Company did not sponsor any ADR or GDR programme during the financial year under review. Sanctions/penalties There was no sanction/penalty imposed on the Company and its subsidiaries, Directors or management by the relevant regulatory bodies during the financial year under review. Non-audit fees There was no non-audit fees paid to the external auditors during the financial year under review. Variation in results The Company's results for the financial year under review did not differ by more than 10% from unaudited results previously released. The Company did not make any profit estimate, forecast or projection for that period. Profit guarantee No profit guarantee was given by the Company during the financial year under review. Material contracts There was no material contract entered into by the Company and/or its subsidiaries during the financial year under review which involves the interests of Directors and major shareholders. Revaluation of landed properties The Company's revaluation policy is disclosed in Note 2(e) of the Notes to the Financial Statements. Recurrent related party transactions of a revenue nature Details of transactions with related parties undertaken by the during the financial year under review are disclosed in Note 34 of the Notes to the Financial Statements. 16 ANNUAL REPORT 2012

19 DIRECTORS REPORT The Directors hereby submit their report together with the audited financial statements of the and of the Company for the financial year ended 30th June PRINCIPAL ACTIVITIES The principal activity of the Company is that of investment holding. The principal activities of the subsidiary companies are described in Note 8 of the Notes to the Financial Statements. There have been no significant changes in the nature of these activities during the financial year other than the disposal of the subsidiary companies involved in trading of chemical products as disclosed in Note 30 of the Notes to the Financial Statements. FINANCIAL RESULTS Company (Loss)/profit before taxation (8,716,125) 3,796,745 Taxation (523,742) - Net (loss)/profit for the year (9,239,867) 3,796,745 (Loss)/profit attributable to: Owners of the parent (9,298,950) 3,796,745 Non-controlling interest 59,083 - DIVIDENDS No dividend has been paid or declared by the Company since the end of the previous financial year. The Directors do not recommend any dividend for the year ended 30th June (9,239,867) 3,796,745 RESERVES AND PROVISIONS There were no material transfers to or from reserves or provisions during the financial year other than those disclosed in the financial statements. ISSUE OF SHARES AND/OR DEBENTURES No shares and/or debentures were issued during the financial year. INFOATION ON THE FINANCIAL STATEMENTS Before the Statements of Comprehensive Income and Statements of Financial Position of the and the Company were made out, the Directors took reasonable steps :- (a) to ascertain that action had been taken in relation to the writing off of bad debts and the making of allowance for doubtful debts and satisfied themselves that all known bad debts had been written off and that adequate allowance had been made for doubtful debts; and (b) to ensure that any current assets which were unlikely to be realised in the ordinary course of business including their value as shown in the accounting records of the and the Company have been written down to an amount which they might be expected so to realise. 17 YONG TAI BERHAD ( T)

20 DIRECTORS REPORT INFOATION ON THE FINANCIAL STATEMENTS (Cont d) At the date of this report, the Directors are not aware of any circumstances:- (a) which would render the amount written off for bad debts or the amount of the allowance for doubtful debts in the financial statements of the and the Company inadequate to any substantial extent; or (b) which would render the values attributed to the current assets in the financial statements of the and the Company misleading; or (c) which have arisen which render adherence to the existing method of valuation of assets or liabilities of the and the Company misleading or inappropriate. No contingent or other liability has become enforceable or is likely to become enforceable within the period of twelve months after the end of the financial year which, in the opinion of the Directors, will or may substantially affect the ability of the and the Company to meet their obligations as and when they fall due. At the date of this report, there does not exist:- (a) any charge on the assets of the and the Company which has arisen since the end of the financial year which secures the liability of any other person; or (b) any contingent liability of the and the Company which has arisen since the end of the financial year. OTHER STATUTORY INFOATION The Directors state that :- At the date of this report, they are not aware of any circumstances not otherwise dealt with in this report or the financial statements which would render any amount stated in the financial statements misleading. In their opinion:- (a) the results of the operations of the and the Company during the financial year were not substantially affected by any item, transaction or event of a material and unusual nature other than the effects arising from the disposal of its subsidiary companies as disclosed in Note 30 to the Financial Statements; and (b) 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 to affect substantially the results of the operations of the and the Company for the financial year in which this report is made, other than as disclosed in Note 42 of the Notes to the Financial Statements. DIRECTORS The Directors in office since the date of the last report are:- Datuk Hj Amir Bin Junus Wong Liew Liew Fat Lin Wong Mee Yow Liew Mee Yow Cheen Tai Shzee Yuan Liew Huat Kwang Loi Kim Fah See Thiam Chya (Appointed on ) Tan Kau Tan Seong Tin (Retired on ) 18 ANNUAL REPORT 2012

21 DIRECTORS REPORT DIRECTORS (Cont d) The shareholdings in the Company and its related corporations during the financial year of those who were Directors at the end of the financial year are as follows:- No. of Ordinary Shares of 1 each At At Interest in the Company Bought Sold Datuk Hj Amir Bin Junus - direct 140, ,000 Wong Liew Liew Fat Lin - direct 50, ,522 - deemed 20,091, ,091,729 Wong Mee Yow Liew Mee Yow Cheen - direct 74, ,744 - deemed 20,091, ,091,729 Liew Huat Kwang - direct 230, ,520 Tai Shzee Yuan - direct 28, ,001 Other than as disclosed below, no other Directors in office at the end of the financial year held any interest in shares in, or debentures of its related corporations during the year. No. of Ordinary Shares of 1 each Interest in holding company At Bonus issue/ At Liew Fat Lin Holding Sdn. Bhd Bought Sold Wong Liew Liew Fat Lin - direct 9,294, ,294,579 Wong Mee Yow Liew Mee Yow Cheen - direct 6,239, ,239,511 Liew Huat Kwang - direct 3,644, ,644,249 Wong Liew Liew Fat Lin and Wong Mee Yow Liew Mee Yow Cheen have interest in the following related corporations:- Yong Tai Brothers Trading Sdn. Bhd. - deemed 200, , ,000 Golden Vertex Sdn. Bhd. - deemed 2,000,000 3,000,000-5,000,000 Syarikat Koon Fuat Industries Sdn. Bhd. - deemed 127, ,500 Yuta Realty Sdn. Bhd. - deemed 402, ,600 The Image Outlet Sdn. Bhd. - deemed 100, ,000 Yong Tai Samchem Sdn. Bhd. - deemed 1,200, ,200,000 YTB Construction Sdn. Bhd. (Formerly known as Phoenix Step Sdn. Bhd.) - deemed No. of Ordinary Shares of HK$ 1 each At At Bought Sold Yongtai Samchem (HK) Company Limited - deemed 1,010,750 - (1,010,750) - In US Dollar At At Bought Sold Shanghai Sino-Malaysian International Trading Co., Ltd. - deemed 200,000 - (200,000) - DIRECTORS' BENEFITS During and at the end of the financial year, no arrangement subsisted to which the and the Company or its subsidiary companies was a party with the object of enabling Directors of the Company to acquire benefits by means of the acquisition of shares in or debentures of the Company or any other body corporate. Since the end of the previous financial year, no Director has received or become entitled to receive any benefit (other than as disclosed in the Notes to the Financial Statements) by reason of a contract made by the Company or a related corporation with the Director or with a firm of which the Director is a member or with a company in which the Director has a substantial financial interest. 19 YONG TAI BERHAD ( T)

22 DIRECTORS REPORT HOLDING COMPANY The holding company is Liew Fat Lin Holding Sdn. Bhd., a company incorporated in Malaysia. Subsequent to the financial year, the holding company, Liew Fat Lin Holdings Sdn. Bhd. ("LFLH") disposed its controlling equity interest in the Company and hence, LFLH ceased to be the holding company of the Company. AUDITORS Messrs Hasnan THL Wong & Partners, the retiring Auditors, have expressed their willingness to continue in office. Signed on behalf of the Board in accordance with a resolution of the Directors dated 30th October ) DATUK HJ AMIR BIN JUNUS ) ) ) ) ) ) ) DIRECTORS ) ) ) ) ) WONG LIEW LIEW FAT LIN ) Petaling Jaya 20 ANNUAL REPORT 2012

23 STATEMENT BY DIRECTORS We, DATUK HJ AMIR BIN JUNUS and WONG LIEW LIEW FAT LIN, being two of the Directors of YONG TAI BERHAD, do hereby state, in the opinion of the Directors, the financial statements set out on pages 24 to 60 are drawn up so as to give a true and fair view of the state of affairs of the and the Company as at 30th June 2012 and of the results of their operations, changes in equity and cash flows of the and the Company for the financial year ended on that date in accordance with the applicable approved Financial Reporting Standards issued by the Malaysian Accounting Standards Board and the provisions of the Companies Act, 1965 in Malaysia. Signed on behalf of the Board in accordance with a resolution of the Directors DATUK HJ AMIR BIN JUNUS WONG LIEW LIEW FAT LIN Petaling Jaya 30th October 2012 STATUTORY DECLARATION I, TAI SHZEE YUAN, I/C No , the Director primarily responsible for the financial management of YONG TAI BERHAD, do solemnly and sincerely declare that the financial statements of the and the Company set out on pages 24 to 60 are, to the best of my knowledge and belief, correct, and I make this solemn declaration conscientiously believing the same to be true, and by virtue of the provisions of the Statutory Declarations Act, Subscribed and solemnly declared by the ) abovenamed TAI SHZEE YUAN, ) I/C No , ) at Petaling Jaya ) ) on 30th October 2012 ) TAI SHZEE YUAN Before me: N. Madhavan Nair (No. B 064) Commissioner for Oaths 21 YONG TAI BERHAD ( T)

24 INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF YONG TAI BERHAD Report on the Financial Statements We have audited the financial statements of Yong Tai Berhad, which comprise the statements of financial position as at 30th June 2012 of the and of the Company, and the statements of comprehensive income, statements of changes in equity and statements of cash flows of the 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 24 to 60. 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 are 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 judgment, 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 and of the Company as of 30th June 2012 and of their financial performance and cash flows of the and of the Company 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) In our opinion, the accounting and other records and the registers required by the Act to be kept by the Company and its subsidiary companies of which we have acted as auditors have been properly kept in accordance with the provisions of the Act. b) We have considered the accounts and the auditors' reports of all the subsidiary and sub-subsidiary companies of which we have not acted as auditors, which are indicated in Note 8 of the Notes to the Financial Statements. c) We are satisfied that the accounts of the subsidiary companies that have been consolidated with the Company's financial statements are in form and content appropriate and proper for the purposes of the preparation of the financial statements of the and we have received satisfactory information and explanations required by us for those purposes. d) The audit reports on the financial statements of the subsidiary companies did not contain any qualification or any adverse comment made under Section 174(3) of the Act. Other Matters The supplementary information set out in Note 43 of the Notes to the Financial Statements is disclosed to meet the requirement of Bursa Malaysia Securities Berhad. 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 MIA Guidance and the directive of Bursa Malaysia Securities Berhad. 22 ANNUAL REPORT 2012

25 INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF YONG TAI BERHAD Other Matters (Cont d) 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. HASNAN THL WONG & PARTNERS (NO. AF 0942) CHARTERED ACCOUNTANTS HASNAN BIN ABDULLAH CHARTERED ACCOUNTANT (NO: 1666/12/12 (J)) Petaling Jaya 30th October YONG TAI BERHAD ( T)

26 STATEMENTS OF FINANCIAL POSITION AS AT 30TH JUNE 2012 Company Note ASSETS NON-CURRENT ASSETS Property, plant and equipment 6 24,222,914 24,801, Investment properties 7 4,980,000 6,421, Investment in subsidiary and sub-subsidiary companies ,901,810 33,901,810 Deferred tax asset 9 2,200 15, ,205,114 31,238,647 48,901,810 33,901,810 CURRENT ASSETS Inventories 10 27,057,329 39,664, Trade receivables 11 22,007,728 38,512, Other receivables 12 2,816,572 4,461,924 1,000 1,000 Amount due from subsidiary companies ,415,526 5,514,983 Tax in credit 904, ,833 48,260 48,260 Assets classified as held for sale 14 1,441, Fixed deposits , Cash and bank balances ,043 24,346,529 5, ,160 54,723, ,636,247 3,470,541 5,684,403 TOTAL ASSETS 83,928, ,874,894 52,372,351 39,586,213 EQUITY AND LIABILITIES CURRENT LIABILITIES Trade payables 17 8,562,111 42,851, Other payables 18 3,295,370 3,025,775 89,460 92,810 Amount due to subsidiary companies ,062,206 69,463 Amount due to Directors 19 10,813,234 11,913, Bank overdraft 16 10,799,800 12,902, Borrowings 20 12,425,435 21,149, Tax payable - 26, ,895,950 91,868,532 9,151, ,273 NON-CURRENT LIABILITIES Deferred tax liability 9 458,381 1,007, Borrowings 20 6,272, , ,730,463 1,792, TOTAL LIABILITIES 52,626,413 93,660,609 9,151, ,273 EQUITY ATTRIBUTABLE TO OWNERS OF THE PARENT Share capital 21 40,115,000 40,115,000 40,115,000 40,115,000 Reserves 22 (9,654,622) (1,540,831) 3,105,685 (691,060) 30,460,378 38,574,169 43,220,685 39,423,940 Non-controlling interest 841,742 7,640, TOTAL EQUITY 31,302,120 46,214,285 43,220,685 39,423,940 TOTAL EQUITY AND LIABILITIES 83,928, ,874,894 52,372,351 39,586,213 The above statements of financial position are to be read in conjunction with the notes to the financial statements set out on pages 28 to ANNUAL REPORT 2012

27 STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 30TH JUNE 2012 Company Note Revenue ,490, ,035,311 3,960,000 - Less: Cost of sales (196,567,026) (180,373,883) - - Gross profit 21,923,530 23,661,428 3,960,000 - Add: Other income 1,018,525 1,352, ,942,055 25,014,360 3,960,000 - Less: Sales and distribution costs (12,713,639) (11,080,816) - - Administrative expenses (7,678,615) (4,900,850) (163,255) (143,589) Other operating expenses (9,083,779) (5,792,417) - - Finance costs 24 (2,182,147) (2,120,458) - - (Loss)/profit before taxation 25 (8,716,125) 1,119,819 3,796,745 (143,589) Taxation 26 (523,742) (246,140) - - Net (loss)/profit for the year (9,239,867) 873,679 3,796,745 (143,589) Other comprehensive income/(expense): Revaluation surplus arising during the year - 349, Reversal of deferred tax on revaluation surplus 818,823 48, Exchange difference arising from foreign subsidiary companies 893,712 (674,064) - - 1,712,535 (275,928) - - Total comprehensive (expense)/income for the year (7,527,332) 597,751 3,796,745 (143,589) Total comprehensive (expense)/income attributable to: Owners of the parent (8,113,791) (206,703) 3,796,745 (143,589) Non-controlling interest 586, , (7,527,332) 597,751 3,796,745 (143,589) (Loss)/profit attributable to: Owners of the parent (9,298,950) (328,959) 3,796,745 (143,589) Non-controlling interest 59,083 1,202, Loss per share attributable to owners of the parent:- Basic loss per share (sen) 27 (23.2) (0.8) (9,239,867) 873,679 3,796,745 (143,589) The above statements of comprehensive income are to be read in conjunction with the notes to the financial statements set out on pages 28 to YONG TAI BERHAD ( T)

28 STATEMENTS OF CHANGES IN EQUITY FOR THE YEAR ENDED 30TH JUNE ANNUAL REPORT 2012

29 STATEMENTS OF CASH FLOWS FOR THE YEAR ENDED 30TH JUNE 2012 Company Note CASH FLOWS FROM OPERATING ACTIVITIES (Loss)/profit before taxation (8,716,125) 1,119,819 3,796,745 (143,589) Adjustments for:- Allowance for specific doubtful debts 2,942, , Bad debts written off - 1,372, Deposit forfeited - 3, Depreciation of property, plant and equipment 1,705,289 1,649, Foreign currency exchange loss - unrealised 103, , Interest expenses 24 2,182,147 2,120, Inventories written down 3,223, Loss on disposal of investment in subsidiary companies 1,468, Property, plant and equipment written off 74, , Allowance for specific doubtful debts no longer required (9,578) (1,746,721) - - Fair value adjustment 7 - (138,000) - - Gain on disposal of property, plant and equipment (57,199) (92,883) - - Interest income (250,571) (90,051) - - Dividend income - - (3,960,000) - Operating profit/(loss) before working capital changes 2,667,095 5,888,562 (163,255) (143,589) Decrease/(increase) in inventories 5,866,111 (5,904,412) - - (Increase)/decrease in receivables (14,892,400) 3,269, (Increase)/decrease in amount due from subsidiary companies - - (202,543) 288,433 (Decrease)/increase in payables (7,300,860) 15,244,740 (3,350) 3,990 Decrease in amount due to subsidiary companies - - (3,705,257) (34,993) Increase/(decrease) in amount due to Directors 252,448 (3,520,530) - - Cash (absorbed by)/generated from operations (13,407,606) 14,977,818 (4,074,405) 113,841 Dividends paid to non-controlling interest (2,640,000) Interest paid (2,182,147) (2,120,458) - - Net tax paid (185,011) (235,135) - - Net cash (used in)/from operating activities (18,414,764) 12,622,225 (4,074,405) 113,841 CASH FLOWS FROM INVESTING ACTIVITIES Dividends received - - 3,960,000 - Interest received 240,102 76, Net cash outflow from disposal of investment in subsidiary companies 30 (544,855) Proceeds from disposal of property, plant and equipment 79,200 92, Purchase of property, plant and equipment 31 (1,118,683) (973,828) - - Net cash (used in)/from investing activities (1,344,236) (804,867) 3,960,000 - CASH FLOWS FROM FINANCING ACTIVITIES Net (repayment of)/proceeds from short term borrowings (10,290,604) 6,582, Withdrawal/(placement) of fixed deposits 703,685 (204,349) - - Repayment of hire purchase creditors (480,749) (366,665) - - Net proceeds from/(repayment of) term loans 7,301,755 (1,552,903) - - Net cash (used in)/from financing activities (2,765,913) 4,459, NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS (22,524,913) 16,276,360 (114,405) 113,841 Effect of exchange rate changes 777,031 (625,109) - - CASH & CASH EQUIVALENTS BROUGHT FORWARD 11,444,125 (4,207,126) 120,160 6,319 CASH & CASH EQUIVALENTS CARRIED FORWARD 16 (10,303,757) 11,444,125 5, , The above statements of cash flows are to be read in conjunction with the notes to the financial statements set out on pages 28 to 60. YONG TAI BERHAD ( T)

30 NOTES TO THE FINANCIAL STATEMENTS 30TH JUNE PRINCIPAL ACTIVITIES AND GENERAL INFOATION The principal activity of the Company is that of investment holding. The principal activities of the subsidiary companies are described in Note 8 of the Notes to the Financial Statements. There have been no significant changes in the nature of these activities during the financial year other than the disposal of the subsidiary companies involved in trading of chemical products as disclosed in Note 30 of the Notes to the Financial Statements. The Company is a public limited liability company, incorporated and domiciled in Malaysia. The registered office of the Company is located at Ground Floor, 8, Lorong Universiti B, Section 16, Petaling Jaya, Selangor Darul Ehsan. The principal place of business of the Company is located at No. 3, Jalan Kapal, Kawasan Perindustrian Tongkang Pecah, Batu Pahat, Johor Darul Takzim. The financial statements were authorised for issue by the Board of Directors in accordance with a resolution of the Directors dated 30th October SIGNIFICANT ACCOUNTING POLICIES Unless otherwise stated, the following accounting policies have been applied consistently in dealing with items that are considered material in relation to the financial statements. a) Basis of preparation The financial statements of the and the Company have been prepared:- i) in accordance with the applicable approved Financial Reporting Standards (FRS), the accounting standards for entities other than private entities issued by the Malaysian Accounting Standards Board (MASB), accounting principles generally accepted in Malaysia and the provisions of the Companies Act, 1965; and ii) under the historical cost convention, unless otherwise indicated and as modified by the revaluation of certain property, plant and equipment, and investment properties, which have been measured at fair value. The financial statements are presented in Ringgit Malaysia (), unless otherwise indicated. b) Basis of consolidation The consolidated financial statements incorporate the financial statements of the Company and all its subsidiaries made up to the end of the financial year. All intergroup balances, transactions and resulting unrealised gains are eliminated on consolidation. Unrealised losses are eliminated on consolidation unless cost cannot be re c o v e red. Consolidated financial statements reflect external transactions only. The financial statements of subsidiaries acquired or disposed off during the financial year are included in the consolidated financial statements based on the purchase method from the effective date of acquisition or up to the effective date of disposal respectively. These assets, liabilities and contingent liabilities assumed of a subsidiary are measured at their fair values at the date of acquisition and these values are reflected in the consolidated statements of financial position. Acquisition costs incurred are expensed and included in administration expenses. Any excess of the cost of the acquisition over the 's interest in the fair value of the identifiable assets, liabilities and contingent liabilities assumed represents goodwill. The accounting policy for goodwill is set out in Note 2 (c). Any excess of the 's interest in the fair value of identifiable assets, liabilities and contingent liabilities over the cost of acquisition is recognised in the statements of comprehensive income. In business combinations achieved in stages, previously held equity interest in the acquiree is remeasured to fair value at the acquisition date and any corresponding gain or loss is recognised in the statements of comprehensive income. Non-controlling interests represent the equity in subsidiaries not attributable, directly or indirectly, to the owners of the Company, and are presented separately in the statements of comprehensive income and within equity in the statements of financial position, separately from shareholders' equity. It is measured at the non-controlling interests' share of the fair value of net assets at the acquisition date and the non controlling interests' share of changes in the equity since then. Losses within a subsidiary are attributed to the non-controlling interest even if that results in a deficit balance. Changes in the 's equity interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions. In such circumstances, the carrying amounts of the controlling and non-controlling interests are adjusted to reflect the changes in their respective interests in the subsidiary. Any difference between the amount by which the noncontrolling interest is adjusted and the fair value of the consideration paid or received is recognised directly in shareholders' equity. 28 ANNUAL REPORT 2012

31 NOTES TO THE FINANCIAL STATEMENTS 30TH JUNE SIGNIFICANT ACCOUNTING POLICIES (Cont d) b) Basis of consolidation (Cont d) If the loses control over a subsidiary, at the date the loses control, it: i) Derecognises the assets (including goodwill) and liabilities of the subsidiary at their respective carrying amounts; ii) iii) iv) Derecognises the carrying amount of any non-controlling interest; Derecognises the cumulative translation differences recorded in equity; Recognises the fair value of the consideration or distribution received; v) Recognises the fair value of any investment retained; vi) vii) Recognises any surplus or deficit in statements of comprehensive income; and Reclassifies the parent s share of components previously recognised in other comprehensive income to statements of comprehensive income or retained earnings, as appropriate. c) Goodwill Goodwill represents the difference between the purchase consideration and the fair value of the 's share of net assets of the subsidiaries at the date of acquisition. Goodwill is stated at cost less accumulated impairment losses, if any. Impairment test is performed annually. Goodwill is also tested for impairment when indication of impairment exists. Impairment losses recognised are not reversed in subsequent periods. Upon disposal of an interest in a subsidiary, the related goodwill will be included in the computation of gain or loss on disposal of the interest in the subsidiary in the statements of comprehensive income. d) Subsidiary companies A subsidiary is a company in which the has the power, directly or indirectly, to exercise control over its financial and operating policies so as to obtain benefits from its activities. Investments in subsidiaries, which are eliminated on consolidation, are stated at cost less accumulated impairment losses, if any, unless the investment is classified as held for sale, in the Company's financial statements. An impairment loss is recognised when there is impairment in the value of the investments determined on an individual basis and is charged to the statements of comprehensive income as an expense. The difference between the net disposal proceeds and its carrying amount is charged or credited to statements of comprehensive income upon disposal of the investment. e) Property, plant and equipment Property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses, if any. Cost includes expenditures that are directly attributable to the acquisition of the asset. Subsequent costs are included in the assets' carrying amount or recognised as a separate asset as appropriate, only when it is probable that future economic benefits associated with the item will flow to the and the cost of the item can be measured reliably. The costs of the day-to-day servicing of property, plant and equipment are recognised in the statements of comprehensive income as incurred. Freehold land and buildings are stated at revalued amount, which is the fair value at the date of the revaluation less any accumulated impairment losses. Fair value is determined from market-based evidence by appraisal that is undertaken by professionally qualified valuers. Revaluations are performed with sufficient regularity to ensure that the fair value of a revalued asset does not differ materially from that which would be determined using fair values at the balance sheet date. Any revaluation surplus is credited to the revaluation reserve included within equity, except to the extent that it reverses a revaluation decrease for the same asset previously recognised in statements of comprehensive income, in which case the increase is recognised in statements of comprehensive income to the extent of the decrease previously recognised. A revaluation deficit is first offset against unutilised previously recognised revaluation surplus in respect of the same asset and the balance is thereafter recognised in statements of comprehensive income. Upon disposal or retirement of an asset, any revaluation reserve relating to the particular asset is transferred directly to retained earnings. Freehold land has an unlimited useful life and therefore is not depreciated. Depreciation of other property, plant and equipment is calculated on the straight line basis to write off the cost of each asset to its residual value over the estimated useful life. 29 YONG TAI BERHAD ( T)

32 NOTES TO THE FINANCIAL STATEMENTS 30TH JUNE SIGNIFICANT ACCOUNTING POLICIES (Cont d) e) Property, plant and equipment (Cont d) The principal annual rates of depreciation used are as follows:- Long-term leasehold land Over 30 to 32 years Buildings years Air conditioners and air curtains 10% EDP/IT equipment 10% Electrical installation 10% Furniture, fittings and renovations 10%-50% Machinery and equipment 10% Models 10% Office equipment 10% - 18% Warehouse equipment 10% Motor vehicles 20% Counter set-up 20%-33 1/3% The residual values, useful life and depreciation method are reviewed at each financial year end to ensure that the amount, method and period of depreciation are consistent with previous estimates and the expected pattern of consumption of the future economic benefits embodied in the items of property, plant and equipment. An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. The difference between the net disposal proceeds, if any, and the net carrying amount is recognised in profit or loss and the unutilised portion of the revaluation surplus on that item is taken directly to retained earnings. Fully depreciated property, plant and equipment are retained in the financial statements until they are no longer in use and no further charge for depreciation is made in respect of these property, plant and equipment. f) Investment properties Investment properties are properties held for long term rental yield and/or for capital appreciation and is not occupied by the or the Company. Such properties are measured initially at cost, including transaction costs. Subsequent to initial recognition, investment property are stated at fair value. Fair value is arrived at by reference to market evidence for which the properties could be exchanged between knowledgeable, willing parties in an arm's length transaction and is performed by registered independent valuers having an appropriate recognised professional qualification and recent experience in the location and category of the properties being valued. Gains or losses arising from changes in the fair values of investment properties are recognised in statements of comprehensive income in the financial period in which they arise. A property interest under an operating lease is classified and accounted for as an investment property when the holds it for long term rental yield and/or capital appreciation. Such property interest is carried at fair value. Investment properties are derecognised when they have been disposed or when the investment property is permanently withdrawn from use and no future economic benefit is expected from its disposal. Any gains or losses on the retirement or disposal are recognised in statements of comprehensive income in the financial period of the retirement or disposal. g) Inventories Inventories are stated at the lower of cost and net realisable value and are determined on the first-in-first-out method. The cost of inventories comprises actual costs of purchase, incidental costs in bringing the inventories into store and appropriate proportions of manufacturing overheads. Net realisable value represents the estimated selling price in the ordinary course of business less the estimated costs to completion and the estimated costs necessary to make the sale. h) Financial assets Financial assets are recognised in the statement of financial position when, and only when, the and the Company become a party to the contractual provisions of the financial instrument. When financial assets are recognised initially, they are measured at fair value, plus, in the case of financial assets not at fair value through profit or loss, directly attributable transaction costs. The and the Company determine the classification of their financial assets at initial recognition, and the categories include loans and receivables. 30 ANNUAL REPORT 2012

33 NOTES TO THE FINANCIAL STATEMENTS 30TH JUNE SIGNIFICANT ACCOUNTING POLICIES (Cont d) h) Financial assets (Cont d) Loans and receivables Financial assets with fixed or determinable payments that are not quoted in an active market are classified as loans and receivables. Subsequent to initial recognition, loans and receivables are measured at amortised cost using the effective interest method. Gains and losses are recognised in statements of comprehensive income when the loans and receivables are derecognised or impaired, and through the amortisation process. Loans and receivables are classified as current assets, except for those having maturity dates later than 12 months after the financial year which are classified as non-current. A financial asset is derecognised where the contractual right to receive cash flows from the asset has expired. On derecognition of a financial asset in its entirety, the difference between the carrying amount and the sum of the consideration received and any cumulative gain or loss that had been recognised in other comprehensive income is recognised in statements of comprehensive income. i) Impairment of financial assets The and the Company assess at each financial year end whether there is any objective evidence that a financial asset is impaired. i) Trade and other receivables and other financial assets carried at amortised cost To determine whether there is objective evidence that an impairment loss on financial assets has been incurred, the and the Company consider factors such as the probability of insolvency or significant financial difficulties of the debtor and default or significant delay in payments. For certain categories of financial assets, such as trade receivables, assets that are assessed not to be impaired individually are subsequently assessed for impairment on a collective basis based on similar risk characteristics. Objective evidence of impairment for a portfolio of receivables could include the 's and the Company's past experience of collecting payments, an increase in the number of delayed payments in the portfolio past the average credit period and observable changes in national or local economic conditions that correlate with default on receivables. If any such evidence exists, the amount of impairment loss 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. The impairment loss is recognised in statements of comprehensive income. The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables, where the carrying amount is reduced through the use of an allowance account. When a trade receivable becomes uncollectible, it is written off against the allowance account. 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 to the extent that the carrying amount of the asset does not exceed its amortised cost at the reversal date. The amount of reversal is recognised in statements of comprehensive income. ii) Unquoted equity securities carried at cost If there is objective evidence (such as significant adverse changes in the business environment where the issuer operates, probability of insolvency or significant financial difficulties of the issuer) that an impairment loss on financial assets carried at cost has been incurred, the amount of the loss is measured as the difference between the asset's carrying amount and the present value of estimated future cash flows discounted at the current market rate of return for a similar financial asset. Such impairment losses are not reversed in subsequent periods. j) Non-current assets held for sale Non-current asset, or disposal group comprising assets and liabilities that are expected to be recovered primarily through sale rather than through continuing use, are classified as held for sale. Immediately before classification as held for sale, the assets, or components of a disposal group, are remeasured in accordance with the 's accounting policies. Thereafter generally the assets or disposal group are measured at the lower of their carrying amount and fair value less costs to sell. 31 YONG TAI BERHAD ( T)

34 NOTES TO THE FINANCIAL STATEMENTS 30TH JUNE SIGNIFICANT ACCOUNTING POLICIES (Cont d) j) Non-current assets held for sale (Cont d) Any impairment loss on a disposal group is first allocated to goodwill, and then to remaining assets and liabilities on pro rata basis, except that no loss is allocated to financial assets, deferred tax assets and investment property, which continue to be measured in accordance with the 's accounting policies. Impairment losses on initial classification as held for sale and subsequent gains or losses on remeasurement are recognised in the statements of comprehensive income. Gains are not recognised in excess of any cumulative impairment loss. Intangible assets and property, plant and equipment once classified as held for sale are not amortised or depreciated. k) Cash and cash equivalents Cash comprises of cash at bank and cash in hand including bank overdraft and deposits. Cash equivalents comprises of investments maturing within three months from the date of acquisition and which are readily convertible to known amount of cash which are subject to an insignificant risk of change in value. l) Impairment of non-financial assets The carrying values of assets (other than inventories, deferred tax assets and financial assets) are reviewed at the end of each financial year for impairment to determine whether there is an indication that the assets might be impaired. If any such indication exists, the asset's recoverable amount is estimated to determine the amount of impairment loss. Impairment is measured by comparing the carrying values of the assets with their recoverable amounts. The recoverable amount is the higher of an asset s net selling price and its value in use, which is measured by reference to discounted future cash flows. Recoverable amounts are estimated for individual assets, or if it is not possible, for the cash-generating unit. An impairment loss is recognised in statements of comprehensive income immediately, unless the asset is carried at a revalued amount. Any impairment loss of a revalued asset is treated as a revaluation decrease to the extent of previously recognised revaluation surplus for the same asset. Subsequent increase in the recoverable amount of an asset is treated as reversal of the previous impairment loss and is recognised to the extent of the carrying amount of the asset that would have determined (net of amortisation and depreciation) had no impairment loss been recognised. The reversal is recognised in the statements of comprehensive income immediately, unless the asset is carried at revalued amount. A reversal of an impairment loss on a revalued asset is credited directly to revaluation surplus. 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. m) Financial liabilities Financial liabilities are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability. Financial liabilities, within the scope of FRS 139, are recognised in the statement of financial position when, and only when, the Company become a party to the contractual provisions of the financial instrument. The 's and the Company's financial liabilities are classified as other financial liabilities. Other financial liabilities The 's and the Company's other financial liabilities include trade payables, other payables, loans and borrowings. Trade and other payables are recognised initially at fair value plus directly attributable transaction costs and subsequently measured at amortised cost using the effective interest method. Loans and borrowings are recognised initially at fair value, net of transaction costs incurred, and subsequently measured at amortised cost using the effective interest method. Borrowings are classified as current liabilities unless the Company has an unconditional right to defer settlement of the liability for at least 12 months after the end of financial year. For other financial liabilities, gains and losses are recognised in profit or loss when the liabilities are derecognised, and through the amortisation process. A financial liability is derecognised when the obligation under the liability is extinguished. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in statements of comprehensive income. 32 ANNUAL REPORT 2012

35 NOTES TO THE FINANCIAL STATEMENTS 30TH JUNE SIGNIFICANT ACCOUNTING POLICIES (Cont d) n) Lease Finance leases, which transfer to the and the Company substantially all the risks and rewards incidental to ownership of the leased item, are capitalised at the inception of the lease at the fair value of the leased asset or, if lower, at the present value of the minimum lease payments. Any initial direct costs are also added to the amount capitalised. Lease payments are apportioned between the finance charges and reduction balance of the liability. Finance charges are charged to statements of comprehensive income. Contingent rents, if any, are charged as expenses in the periods in which they are incurred. Leased assets are depreciated over the estimated useful life of the asset. However, if there is no reasonable certainty that the and the Company will obtain ownership by the end of the lease term, the asset is depreciated over the shorter of the estimated useful life and the lease term. o) Equity instruments Ordinary shares are classified as equity. Dividends on ordinary shares are recognised in equity in the period in which they are declared. The transaction costs of an equity transaction are accounted for as a deduction from equity, net of tax. Equity transaction costs comprise only those incremental external costs directly attributable to the equity transaction which would otherwise have been avoided. p) Revenue recognition Revenue is recognised to the extent that it is probable that the economic benefits will flow to the or the Company and the revenue can be reliably measured. Revenue is measured at the fair value of consideration received or receivable. i) Sale of goods Revenue from sale of goods is recognised upon the transfer of significant risk and rewards of ownership of the goods to the customer. Revenue is not recognised to the extent where there are significant uncertainties regarding recovery of the consideration due, associated costs or the possible return of goods. ii) Interest income Interest income is recognised on a time proportion basis, by reference to the principal outstanding and at the interest rate applicable. iii) Dividend income Dividend income is recognised when the shareholder's right to receive payment is established. iv) Rental income Rental income is recognised on an accrual basis in accordance with the substance of the relevant agreement. q) Government grants Government grants are recognised initially at their fair value in the balance sheet as deferred income where there is reasonable assurance that the grant will be received and all attaching conditions will be complied with. Grants that compensate the Company for expenses incurred are recognised as income over the periods necessary to match the grant on a systematic basis to the costs that it is intended to compensate. Grants that compensate the Company for the cost of an asset are recognised as income on a systematic basis over the useful life of the asset. r) Borrowing costs All interest and other costs incurred in connection with borrowings are recognised in statements of comprehensive income in the period they are incurred. s) Taxation Income tax on the statements of comprehensive income for the financial year comprises current and deferred tax. Current tax is the expected amount of income taxes payable in respect of the taxable profit for the financial year and is measured using the tax rates that have been enacted at the end of the financial year. 33 YONG TAI BERHAD ( T)

36 NOTES TO THE FINANCIAL STATEMENTS 30TH JUNE SIGNIFICANT ACCOUNTING POLICIES (Cont d) s) Taxation (Cont d) Deferred tax is provided in the financial statements, using the liability method, on temporary differences at the end of the financial year 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 and deferred tax assets are recognised for all deductible temporary differences, unused tax credits and losses. Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against the temporary differences and unused tax credits and losses. Deferred tax is not recognised if the temporary difference arises from goodwill or negative goodwill or from the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the transaction, affects neither accounting profit nor taxable profit. Deferred tax is 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 tax rates that have been enacted at the end of the financial year. Deferred tax is recognised in the statements of comprehensive income, except when it arises from a transaction which is recognised directly in equity, in which case the deferred tax is also charged or credited directly in equity, or when it arises from a business combination that is an acquisition, in which case the deferred tax is included in the resulting goodwill or the amount of any excess of the acquirer's interest in the net fair value of the acquiree's identifiable assets, liabilities and contingent liabilities over the cost of the combination. t) Foreign currencies Transactions in foreign currencies are recorded in Ringgit Malaysia at rates of exchange ruling at the time of the transactions. Foreign currency monetary assets and liabilities are translated at exchange rates ruling at the end of the financial year. Gains and losses from conversion of short term assets and liabilities, whether realised or unrealised are included in operating profit or loss as they arise. The assets and liabilities of the foreign entities are translated at financial year end rates and operating results are translated at the average exchange rates for the year, which approximates the exchange rates at the dates of the transactions. Gains and losses arising on translation are taken directly to the foreign exchange translation reserve. All other foreign exchange differences are recognised in statements of comprehensive income in the financial period in which they arise. The principal closing rates used are as follows:- 1 Singapore Dollar Euro US Dollar Hong Kong Dollar China Renminbi u) Segment reporting For management purposes, the is organised into operating segments based on their products and services which are independently managed by the respective segment managers responsible for the performance of the respective segments under their charge. The segment managers report directly to the management of the or the Company who regularly review the segment results in order to allocate resources to the segments and to assess the segment performance. Additional disclosures on each of these segments are shown in Note 35, including the factors used to identify the reportable segments and the measurement basis of segment information. v) Employee benefits i) Short term benefits Wages, salaries, bonuses and social security contributions are recognised as an expense in the financial year in which the associated services are rendered by employees. Short term accumulating compensated absences such as paid annual leave are recognised when services are rendered by employees that increase their entitlement to future compensated absences, and short term non-accumulating compensated absences such as sick leave are recognised when the absences occur. ii) Defined contribution plan As required by law, companies in Malaysia make contributions to the Employees Provident Fund. Such contributions are recognised as an expense in the statements of comprehensive income as incurred. 34 ANNUAL REPORT 2012

37 NOTES TO THE FINANCIAL STATEMENTS 30TH JUNE SIGNIFICANT ACCOUNTING POLICIES (Cont d) w) Related parties Related parties are entities with common directors or shareholders wherein one party has the ability to control or exercise significant influence over the other parties in financial or operating policy decision. x) Dividends Dividends on ordinary shares, if approved by the shareholders will be accounted for in shareholders' equity as an appropriation of retained earnings in the financial year in which they are declared. 3. CHANGES IN ACCOUNTING POLICIES AND EFFECTS ARISING FROM ADOPTION OF NEW AND REVISED FRSs The financial statements of the and the Company have been prepared in accordance with Financial Reporting Standards (FRSs), generally accepted accounting principles and the Companies Act, 1965 in Malaysia. During the financial year, the and the Company has adopted the following new and amended FRS and IC Interpretations. Amendments to FRS 1, First-time Adoption of Financial Reporting Standards (a) Limited Exemption from Comparative FRS 7 Disclosures for First-time Adopters (b) Additional Exemptions for First-time Adopters Amendments to FRS 2, Share-based Payment: Cash-settled Share-based Payment Transactions Amendments to FRS 7, Financial Instruments: Disclosures Improving Disclosures about Financial Instruments Improvements to FRSs issued in 2010 IC Interpretation 4, Determining Whether an Arrangement contains a Lease IC Interpretation 18, Transfers of Assets from Customers IC Interpretation 19, Extinguishing Financial Liabilities with Equity Instruments Amendments to IC Interpretation 14, Prepayments of a Minimum Funding Requirement TR i-4, Shariah Compliant Sale Contracts The application of the above FRSs, Amendments to FRSs, Improvements to FRSs (2010) and IC Interpretations did not and/or are not expected to result in any significant changes in the accounting policies and presentation of the financial results of the and the Company. The Malaysian Accounting Standards Board (MASB) has issued the following new FRSs and IC Interpretations that are yet to be effective and have not been adopted by the and the Company in preparing these financial statements. FRSs / Interpretations For financial periods beginning on or after FRS 124, Related Party Disclosures (revised) 1 January 2012 Amendments to FRS 1, First-time Adoption of Financial Reporting Standards - Severe Hyperinflation and Removal of Fixed Dates for First-time Adopters 1 January 2012 Amendments to FRS 7, Financial Instruments: Disclosures - Transfer of Financial Assets 1 January 2012 Amendments to FRS 112, Income Taxes Deferred Tax: Recovery of Underlying Assets 1 January 2012 Amendments to FRS 101, Presentation of Financial Statements Presentation of Items of Other Comprehensive Income 1 July 2012 Amendments to FRS 1, First-time Adoption of Financial Reporting Standards - Government Loans 1 January 2013 Improvements to FRSs issued in January 2013 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, Employee Benefits 1 January 2013 FRS 127, Separate Financial Statements 1 January 2013 FRS 128, Investment in Associates and Joint Ventures 1 January 2013 IC Interpretation 20, Stripping Costs in the Production Phase of a Surface Mine 1 January 2013 Amendments to FRS 7, Financial Instruments: Disclosures - Offsetting Financial Assets and Financial Liabilities 1 January 2013 Amendments to FRS 7, Financial Instruments: Disclosures - Mandatory Date of FRS 9 and Transition Disclosures 1 January 2013 Amendments to FRS 10, FRS 11 and FRS 12, Consolidated Financial Statements, Joint Arrangements and Disclosure of Interest in Other Entities: Transition Guidance 1 January 2013 Amendments to FRS 132, Financial Instruments: Presentation - Offsetting Financial Assets and Financial Liabilities 1 January 2014 FRS 9, Financial Instruments (2009) 1 January 2015 FRS 9, Financial Instruments (2010) 1 January YONG TAI BERHAD ( T)

38 NOTES TO THE FINANCIAL STATEMENTS 30TH JUNE CHANGES IN ACCOUNTING POLICIES AND EFFECTS ARISING FROM ADOPTION OF NEW AND REVISED FRSs (Cont d) On 19th November 2011, the Malaysian Accounting Standards Board ( MASB ) issued a new MASB approved accounting framework, the Malaysian Financial Reporting Standards ( MFRS Framework ). The MFRS Framework is to be applied by all Entities Other Than Private Entities for annual periods beginning on or after 1st 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. The and the Company will be required to prepare financial statements using the MFRS Framework in its first MFRS financial statements for the year ending 30th June In presenting its first MFRS financial statements, the and the Company will be required to restate the comparative financial statements to amounts reflecting the application of MFRS Framework. The majority of the adjustments required on transition will be made, retrospectively, against opening retained profits. As a result of the 's and the Company s adoption of the MFRS framework, the and the Company will not be adopting the above FRSs, Interpretations and Amendments. The and the Company has established a project team to plan and manage the adoption of the MFRS Framework. The and the Company has not completed its assessment of the financial effects to the differences between Financial Reporting Standards and accounting standards under the MFRS Framework. Accordingly, the consolidated financial performance and financial position as disclosed in these financial statements for the year ended 30th June 2012 could be different if prepared under the MFRS Framework. The and the Company consider that it is achieving its scheduled milestones and expects to be in a position to fully comply with the requirements of the MFRS Framework for the financial year ending 30th June SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGEMENTS Estimates and judgments are continually evaluated by the Directors and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The and the Company makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, rarely equal the related actual results. The estimates and assumptions that affect the application of the and the Company's accounting policies and disclosures, and have a significant risk of causing a material adjustment to the carrying amounts of assets, liabilities, income and expenses are discussed below: a) Depreciation of property, plant and equipment The estimates for the residual values, useful lives and related depreciation charges for the property, plant and equipment are based on commercial and production factors which could change significantly as a result of technical innovations and competitors actions in response to the market conditions. The and the Company anticipate that the residual values of its plant and equipment will be insignificant. As a result, residual values are not being taken into consideration for the computation of the depreciable amount. Changes in the expected level of usage and technological development could impact the economic useful lives and the residual values of these assets, therefore future depreciation charges could be revised. b) Allowance for 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. c) Impairment on loans and 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 debt, customer concentrations, customer creditworthiness, current economic trends and changes in 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 original estimate, such difference will impact the carrying value of receivables. 36 ANNUAL REPORT 2012

39 NOTES TO THE FINANCIAL STATEMENTS 30TH JUNE SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGEMENTS (Cont d) d) 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. e) Impairment of investment in unquoted corporations The and the Company follow the guidance of the applicable FRS in Malaysia in determining whether there is a decline other than temporary in the fair value of its investment in unquoted corporations. This determination requires significant judgement. In making this judgement, the and the Company evaluate the quantitative and qualitative factors affecting the market position of the investee including the regulatory support it receives and its longer term business outlook and financial standing. Appropriate considerations are given to the investee's financial gestation period, financial projections, business prospects and the proprietary technology involved. It is also recognised that investments in new start-up investee companies may result in an initial decline of the fair value of such investments, which is deemed temporary, due to development and operational losses in the initial years. The Board of Directors and Management of the and the Company are of the opinion that there is no indication of impairment in the 's and the Company's investment in the unquoted corporations at this juncture. f) Fair value estimates for certain financial assets and liabilities The and the Company carry certain financial assets and liabilities at fair value, which require 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 and the Company use different valuation methodologies. Any changes in fair value of these assets and liabilities would affect profit and equity. g) Recognition of deferred tax liability Significant management judgement is required to determine the amount of deferred tax that can be recognised, based upon the timing and level of future tax expense together with future tax planning strategies. h) Income taxes There are certain transactions and computations for which the ultimate tax determination is uncertain during the ordinary course of business. The and the Company recognise tax liabilities based on estimates of whether additional taxes will be due. 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. 5. FINANCIAL RISK MANAGEMENT POLICIES The 's and Company s financial risk management policy seeks to ensure that adequate financial resources are available for the development of the 's and Company s business whilst managing its risks. The 's and Company s activities expose it to limited financial risk, principally market risk, credit risk, interest rate risk, liquidity risk and foreign currency risk. The Board reviews and agrees policies in respect of the major areas of treasury activities which are as follows:- a) Market risk The has in place policies to manage its competitive risks from its competitors in providing better and more innovative products and services. The regularly takes part in exhibitions, advertise through the media and make faceto-face customer visits to promote its products and services. b) Credit risk Credit risk is the risk of loss that may arise on outstanding financial instruments should a counterparty default on its obligations. The s and the Company's exposure to credit risk, or the risk of counterparties defaulting, arises mainly from receivables. The maximum exposure to credit risk is represented by the total carrying amount of these financial assets in the statements of financial position reduced by the effects of any netting arrangements with counter parties. The and the Company does not have any major concentration of credit risk related to any individual customer or counter party nor does it have any major concentration of credit risk related to any financial instruments. The and the Company manage its exposure to credit risk by investing its cash assets safely and profitably, and by the application of credit approvals, credit limits and monitoring procedures on an ongoing basis. 37 YONG TAI BERHAD ( T)

40 NOTES TO THE FINANCIAL STATEMENTS 30TH JUNE FINANCIAL RISK MANAGEMENT POLICIES (Cont d) b) Credit risk (Cont d) Exposure to credit risk At the end of the financial year, the and the Company's maximum exposure to credit risk is represented by the carrying amount of each class of financial assets recognised in the statements of financial position. Credit risk concentration profile The has significant concentration of credit risk in the form of outstanding balance due from 5 customers (2011: 4 customers) representing 42% (2011: 25%) of the total trade receivables. The credit risk concentration profile of the 's trade receivables at the financial year end by geographical region are as follows:- China - 17,422,554 Europe 4,196,221 2,949,185 Hong Kong - 1,448,305 Malaysia 17,811,507 16,107,119 Singapore - 585,193 c) Interest rate risk 22,007,728 38,512,356 Interest rate risk is the risk that the fair value or future cash flows of the 's and the Company's financial instruments will fluctuate because of changes in market interest rates. The and the Company is exposed to interest rate risk in respect of its bank overdraft and borrowings which will fluctuate as a result of changes in market interest rates. The manages its interest rate exposure by maintaining a mix of fixed and floating rate borrowings. The maturity date and weighted average effective interest rate of the instruments at the end of the financial year are as follows:- Effective Effective Maturity interest rates Maturity interest rates months % months % Fixed deposit Bank overdraft * 8.28 * 8.18 Bank borrowings Banker acceptances Hire purchase Onshore foreign currency loan Term loan Trust receipts * Subject to the lending bank's periodic review Sensitivity analysis for interest rate risk At the end of the financial year, if average interest rates increase/decrease by 1% with all other variables held constant, the Company's profit net of tax will be lower/higher by approximately 295,000 (2011: 384,400). The assumed movement in interest rates for interest rate sensitivity analysis is based on the current observable market environment. d) Liquidity risk Liquidity risk is the risk that the or the Company will encounter in meeting financial obligations due to shortage of funds. The actively manages its debt maturity profile, operating cash flows and the availability of funding so as to ensure that all refinancing, repayment and funding needs are met. As part of its overall prudent liquidity management, the maintains sufficient levels of cash to meet its working capital requirements. 38 ANNUAL REPORT 2012

41 NOTES TO THE FINANCIAL STATEMENTS 30TH JUNE FINANCIAL RISK MANAGEMENT POLICIES (Cont d) d) Liquidity risk (Cont d) In addition, the s objective is to maintain a balance of funding and flexibility through the use of credit facilities, short and long term borrowings and a flexible cost effective borrowing structure. Short-term flexibility is achieved through credit facilities and short-term borrowings. This is to ensure that at the minimum, all projected net borrowing needs are covered by committed facilities. Also, the objective for debt maturity is to ensure that the amount of debt maturing in any one year is not beyond the s means to repay and refinance. Analysis of financial instruments by remaining contractual maturities The table below summarises the maturity profile of the 's and the Company's liabilities at the reporting date based on contractual undiscounted repayment obligations. On demand or within One to one year five years Total 2012 Trade and other payables 11,857,481-11,857,481 Amount due to Directors 10,813,234-10,813,234 Loans and borrowings 23,225,235 6,272,082 29,497,317 Total undiscounted financial liabilities 45,895,950 6,272,082 52,168, Trade and other payables 45,877,253-45,877,253 Amount due to Directors 11,913,026-11,913,026 Loans and borrowings 34,051, ,873 34,836,824 Total undiscounted financial liabilities 91,842, ,873 92,627,103 On demand or within one year Total Company 2012 Other payables 89,460 89,460 Amount due to subsidiary companies 9,062,206 9,062,206 Total undiscounted financial liabilities 9,151,666 9,151, Other payables 92,810 92,810 Amount due to subsidiary companies 69,463 69,463 Total undiscounted financial liabilities 162, ,273 e) Foreign currency risk Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The is exposed to foreign exchange risk on sales and purchases that are denominated in foreign currencies. It manages its foreign exchange exposure by a policy of matching as far as possible receipts and payments in each individual currency. Surpluses of convertible currencies are either retained in foreign currency or sold for Ringgit Malaysia. The s foreign currency transactions and balances are substantially denominated in United States Dollar ( USD ), Singapore Dollar ("SGD"), Hong Kong Dollar ("HKD") and Chinese Renminbi ("B"). Foreign exchange risk is monitored closely and managed to an acceptable level. 39 YONG TAI BERHAD ( T)

42 NOTES TO THE FINANCIAL STATEMENTS 30TH JUNE FINANCIAL RISK MANAGEMENT POLICIES (Cont d) e) Foreign currency risk (Cont d) The 's exposure to foreign currency risk, based on carrying amounts as at the end of the financial year is as follows: Denominated in USD SGD HKD B Trade and other receivables 3,979, Cash and bank balances Trade and other payables (704,594) (14,262) - - Borrowings (2,426,654) Net exposure 848,491 (14,052) Trade and other receivables 2,803,644-2,312,430 17,763,019 Cash and bank balances 3,639, ,066 18,419,746 Trade and other payables (79,139) (12,163) (2,999,294) (30,074,899) Borrowings (6,599,652) Net exposure (235,299) (11,621) (39,798) 6,107,866 Sensitivity analysis for foreign currency risk The following table demonstrates the sensitivity of the 's and the Company's profit net of tax to a reasonably possible change in the USD, SGD, HKD and B exchange rate against the respective functional currencies of the, with all other variables held constant. Increase/(decrease) in profit net of tax USD/MYR - strengthened by 5% 42,425 (11,765) - weakened by 5% (42,425) 11,765 SGD/MYR - strengthened by 5% (703) (581) - weakened by 5% HKD/MYR - strengthened by 5% - (1,990) - weakened by 5% - 1,990 B/MYR - strengthened by 5% - 305,393 - weakened by 5% - (305,393) 40 ANNUAL REPORT 2012

43 NOTES TO THE FINANCIAL STATEMENTS 30TH JUNE YONG TAI BERHAD ( T)

44 NOTES TO THE FINANCIAL STATEMENTS 30TH JUNE ANNUAL REPORT 2012

45 NOTES TO THE FINANCIAL STATEMENTS 30TH JUNE PROPERTY, PLANT AND EQUIPMENT (Cont d) NET CARRYING AMOUNT At At At valuation Freehold land 4,940,000 4,940,000 Long-term leasehold land 745, ,254 Buildings 12,735,437 13,169,027 At cost Air-conditioners and air curtains 70,555 85,961 EDP/IT equipment 135, ,857 Electrical installation 277, ,626 Furniture, fittings and renovations 101, ,092 Machinery and equipment 2,945,892 3,437,371 Models 11,442 14,966 Office equipment 167, ,084 Warehouse equipment 1,026 3,350 Motor vehicles 264, ,641 Counter set-up 1,826,102 1,386, ,222,914 24,801,947 The freehold land and buildings of the were revalued based on opinion of value expressed by an independent firm of external professional valuers, JS Valuers Property Consultant (Johore) Sdn. Bhd., using generally open market value basis on 17th June The previous revaluation was done in June 2009 by the same Firm. The long-term leasehold land were revalued based on opinion of value expressed by an independent firm of external professional valuers, JS Valuers Property Consultant (Johore) Sdn. Bhd., using generally open market value basis on 30th June The previous revaluation was done in May 2006 by the same Firm. The land and buildings of the that have been charged to financial institutions for various credit facilities granted to the are as follows:- Net carrying amount of assets pledged as security for bank borrowings - freehold land 4,940,000 4,940,000 - long-term leasehold land 745, ,254 - buildings 12,735,437 13,169,027 18,421,400 18,881,281 Net carrying amount of revalued land and buildings, had these assets been carried at cost less accumulated depreciation - freehold land 914, ,313 - long-term leasehold land 113, ,729 - buildings 3,833,819 3,950,169 4,862,047 4,982,211 Details of assets under finance lease and hire purchase:- Motor vehicles - cost 377, ,419 - net carrying amount at year end 264, ,152 Machinery and equipment - cost 1,730,502 1,730,502 - net carrying amount at year end 1,228,014 1,401,064 YONG TAI BERHAD ( T)

46 NOTES TO THE FINANCIAL STATEMENTS 30TH JUNE PROPERTY, PLANT AND EQUIPMENT (Cont d) Details of assets under term loan financing:- Machinery and equipment* - cost - 1,327,452 - net carrying amount at year end - 663,726 * The term loan has been fully settled during the financial year. 7. INVESTMENT PROPERTIES At fair value At beginning of the year 6,421,000 6,283,000 Classified as assets held for sale (Note 14) (1,441,000) - Fair value adjustment - 138,000 At end of the year 4,980,000 6,421,000 The following investment properties are held under lease terms:- Buildings 2,521,000 2,521,000 The investment properties have been charged to financial institutions for various credit facilities granted to the. Fair value of investment properties pledged as security for bank borrowings - freehold land 3,050,000 3,050,000 - buildings 1,930,000 3,371,000 4,980,000 6,421,000 During the financial year, a wholly owned subsidiary company, Yong Tai Brothers Trading Sdn. Bhd., entered into two conditional Sale and Purchase Agreements to dispose two buildings bearing the address stated below:- a) a commercial building containing areas of sq. ft. located on the first floor of a shopping complex known as Unit No. A48B, First Floor, Centre Point Sabah, 1, Jalan Centre Point, Kota Kinabalu, Sabah for a total consideration of 426,096; and b) a commercial building containing areas of sq. ft. located on the first floor of a shopping complex known as Unit No. A50, First Floor, Centre Point Sabah, 1, Jalan Centre Point, Kota Kinabalu, Sabah for a total consideration of 1,274,886. Consents of the relevant authorities to fulfil the conditions of the Sale and Purchase Agreements have been obtained subsequent to the financial year end. 8. INVESTMENT IN SUBSIDIARY COMPANIES Company In Malaysia Unquoted shares, at cost 52,864,414 37,864,414 Impairment losses (3,962,604) (3,962,604) 48,901,810 33,901, ANNUAL REPORT 2012

47 NOTES TO THE FINANCIAL STATEMENTS 30TH JUNE INVESTMENT IN SUBSIDIARY COMPANIES (Cont d) The details of the subsidiary companies are as follows:- Country of Name incorporation Effective interest Principal activities a) Yong Tai Brothers Trading Sdn. Bhd. Malaysia 100% 100% Trading and retailing of textile and garment products b) Golden Vertex Sdn. Bhd. Malaysia 100% 100% Manufacturing of textile and garment products c) Syarikat Koon Fuat Industries Sdn. Bhd. Malaysia 100% 100% Manufacturing and dyeing of all types of fabric and related products d) Yuta Realty Sdn. Bhd. Malaysia 100% 100% Property development and investment holding e) The Image Outlet Sdn. Bhd. Malaysia 100% 100% Trading and retailing of textile and garment products and related fashion accessories f) YTB Construction Sdn. Bhd. (Formerly Malaysia 100% 100% Dormant known as Phoenix Step Sdn. Bhd.) g) Yong Tai Samchem Sdn. Bhd. Malaysia 60% 60% Investment holding Subsidiary of Yong Tai Samchem Sdn. Bhd.:- *Yong Tai Samchem (HK) Company Hong Kong - 65%** Investment holding; and trading of Limited chemical products Subsidiary of Yong Tai Samchem (HK) Company Limited:- *Shanghai Sino-Malaysian International China - 100%*** Trading of chemical products Trading Co., Ltd. * Subsidiaries not audited by Hasnan THL Wong & Partners ** Direct interest by Yong Tai Samchem Sdn. Bhd. *** Direct interest by Yong Tai Samchem (HK) Company Limited. 9. DEFERRED TAX (ASSET)/LIABILITY At beginning of the year 991, ,933 Recognised in statements of comprehensive income (Note 26) - current year relating to temporary differences (112,700) (20,400) - current year relating to unused tax credits and losses 265,100 48,100 - current year relating to unutilised capital allowances 13,300 (9,700) - current year relating to allowance for doubtful debts 110, ,400 18,000 Recognised in statements of comprehensive income (Note 26) - under provision in prior year relating to unused tax credits and losses (3,600) - - over provision in prior year relating to temporary differences 10,700 3,500 7,100 3,500 Recognised in revaluation reserve - arising from revaluation surplus (Note 28) - 116,552 - transfer to revaluation reserve (Note 28) (818,823) (48,481) (818,823) 68,071 At end of the year 456, , YONG TAI BERHAD ( T)

48 NOTES TO THE FINANCIAL STATEMENTS 30TH JUNE DEFERRED TAX (ASSET)/LIABILITY (Cont d) Presented after appropriate offsetting as follows:- Deferred tax asset (2,200) (15,700) Deferred tax liability 458,381 1,007, , ,504 The components of deferred tax liability/(asset) as at the end of the financial year, prior to offsetting are as follows:- Tax effect of revaluation of leasehold land and buildings 458,381 1,277,204 Tax effect of the excess of property, plant and equipment's net carrying amount over its tax written down value - 99,800 Tax effect of temporary differences in respect of the tax capital allowances (2,200) - Tax effect of allowance for doubtful debts - (110,700) Tax effect of unabsorbed tax losses - (265,100) Tax effect of unused capital allowances - (9,700) Net deferred tax liability 456, ,504 As at 30th June 2012, the amount of deferred tax asset that has not been recognised in the statements of financial positions is as follows:- Tax effect of the excess of property, plant and equipment's net carrying amount over its tax written down value 846, ,500 Tax effect of unrealised foreign currency exchange loss (181,300) (140,400) Tax effect of allowance for doubtful debts (1,148,700) (720,300) Tax effect of unutilised re-investment allowances (507,100) (507,100) Tax effect of unutilised capital allowances (1,959,100) (1,802,300) Tax effect of unabsorbed tax losses (8,296,100) (6,862,200) (11,246,000) (9,284,800) Deferred tax asset has not been recognised in respect of the above items as it is not probable that sufficient taxable profit will be available against which the items can be utilised. 10. INVENTORIES Inventories comprise of the following:- At cost Raw materials 4,183,464 4,531,366 Work-in-progress 4,191,386 3,930,830 Finished goods 18,682,479 31,202,193 27,057,329 39,664, TRADE RECEIVABLES Trade receivables 32,153,857 45,725,255 Less: Allowance for impairment (10,146,129) (7,212,899) 22,007,728 38,512, ANNUAL REPORT 2012

49 NOTES TO THE FINANCIAL STATEMENTS 30TH JUNE TRADE RECEIVABLES (Cont d) Included in the balance is an aggregated amount of Nil (2011: 3,025) due from companies where certain Directors have interest. Trade receivables are non-interest bearing and are generally on 30 to 90 days (2011: 30 to 90 days) terms. They are recognised at their original invoice amounts which represent their fair value on initial recognition. Aging analysis of trade receivables The aging analysis of the 's trade receivables is as follows: Neither past due nor impaired 8,798,059 25,898,059 Past due not impaired:- 1 to 30 days 99, , to 60 days 136,896 36, to 90 days 233, , to 120 days 1,857,944 99,382 More than 121 days 10,882,212 12,086,116 22,007,728 38,512,356 Impaired 10,146,129 7,212,899 Trade receivables that are neither past due nor impaired 32,153,857 45,725,255 Trade receivables that are neither past due nor impaired are creditworthy debtors with good payment records with the. More than 40% (2011: 67%) of the 's trade receivables arise from customers with a few years of experience with the and losses have occurred infrequently. Trade receivables that are past due but not impaired The has trade receivables amounting to 13,209,669 (2011: 12,614,297) that are past due at the end of the financial year but not impaired. The trade receivables that are past due but not impaired are unsecured in nature. The management is confident that the amounts are recoverable as these accounts are still active. Trade receivables that are impaired The 's trade receivables that are impaired at the end of the financial year and the movement of the allowance accounts used to record the impairment are as follows: Collectively Individually impaired impaired Total 2012 Trade receivables - nominal amounts 11,543,216 9,258,752 20,801,968 Less: Allowance for impairment (887,377) (9,258,752) (10,146,129) 10,655,839-10,655, Trade receivables - nominal amounts - 7,212,899 7,212,899 Less: Allowance for impairment - (7,212,899) (7,212,899) Movement in allowance accounts:- At 1 July 7,212,899 6,712,344 Charge for the year 2,942, ,555 No longer required for the year (9,578) - At 30 June 10,146,129 7,212, YONG TAI BERHAD ( T)

50 NOTES TO THE FINANCIAL STATEMENTS 30TH JUNE TRADE RECEIVABLES (Cont d) Trade receivables that are individually determined to be impaired at the end of the financial year relate to debtors that are in significant financial difficulties and have defaulted on payments. These receivables are not secured by any collateral or credit enhancements. 12. OTHER RECEIVABLES Company Analyse into:- Non-trade receivables 270, , Deposits 2,000,514 1,838,946 1,000 1,000 Prepayments 545,918 1,638, ,816,572 4,461,924 1,000 1, AMOUNT DUE FROM/(TO) SUBSIDIARY COMPANIES Company Amount due from/(to) subsidiary companies arose mainly from inter-company advances which bear no interest, unsecured, repayable on demand and are to be settled in cash. 14. ASSETS CLASSIFIED AS HELD FOR SALE During the financial year, the entered into 2 Sale and Purchase agreements to sell certain investment properties to an external party. As at 30th June 2012, the assets classified as held for sale are as follow:- Investment properties (Note 7) 1,441, FIXED DEPOSITS Fixed deposits with licensed commercial banks - 693,216 The fixed deposits of Nil (2011: 693,216) of the subsidiary companies are pledged to licensed commercial banks for credit facilities granted to the subsidiary companies. 16. CASH AND CASH EQUIVALENTS Cash and cash equivalents included in the statements of cash flows comprise the following amounts:- Company Cash and bank balances 496,043 24,346,529 5, ,160 Bank overdraft (10,799,800) (12,902,404) - - (10,303,757) 11,444,125 5, , ANNUAL REPORT 2012

51 NOTES TO THE FINANCIAL STATEMENTS 30TH JUNE CASH AND CASH EQUIVALENTS (Cont d) The bank overdraft is secured by way of:- a) first party fixed charge over the 's freehold land, long-term leasehold land, buildings and investment properties; b) fixed charge over assets of a subsidiary company; c) joint and several guarantee by certain Directors of the ; d) legal charge over freehold land and buildings of certain Directors of the ; and e) corporate guarantee by the Company. The interest is charged at 1.5% to 2.0% above the bank's base lending rate. The weighted average effective interest rates are disclosed in Note 5 of the Notes to the Financial Statements. 17. TRADE PAYABLES Included in the balance of the is an aggregated amount of 171,242 (2011: 129,317) due to companies where certain Directors have interest. 18. OTHER PAYABLES Company Analyse into:- Non-trade payables 1,537,439 1,282,691 16,560 19,910 Accruals 1,664,180 1,654,004 72,900 72,900 Deposit received 93,751 89, ,295,370 3,025,775 89,460 92,810 Included in the balance of the is an amount of 275,933 (2011: 222,333) due to a company where certain Directors have interest. 19. AMOUNT DUE TO DIRECTORS The amount due to Directors bear no interest, unsecured and no scheme of repayment has been arranged. 20. BORROWINGS Current Secured Bankers acceptances 9,670,653 11,747,000 Term loans 2,078, ,470 Hire purchase creditors 526, ,374 Letters of credit and trust receipts 149,141 3,710,233 Onshore foreign currency loan - 4,543,470 12,425,435 21,149,547 Non-current Secured Term loans 5,911,480 - Hire purchase creditors 360, ,873 6,272, ,873 Total borrowings 18,697,517 21,934, YONG TAI BERHAD ( T)

52 NOTES TO THE FINANCIAL STATEMENTS 30TH JUNE BORROWINGS (Cont d) The short term borrowings (bankers acceptances, onshore foreign currency loan, letters of credit and trust receipts) amounting to 9,819,794 (2011: 20,000,703) are secured by way of:- a) first party fixed charge over the 's freehold land, long-term leasehold land, buildings and investment properties; b) fixed charge over assets of a subsidiary company; c) lien on fixed deposits of a subsidiary company as described in Note 15 of the Notes to the Financial Statements; d) joint and several guarantee by certain Directors of the ; e) legal charges over freehold land and buildings belonging to certain Directors of the ; and f) corporate guarantee by the Company. The bankers acceptance interest is charged at a range of 1.0% to 1.5% above the Bank Negara Malaysia s funding rate per annum and 5.12% per annum of the face value. The trust receipt is charged at 1.5% above the bank's base lending rate per annum. a) term loans agreement and specific debenture on machinery and equipment financed; b) first party second legal charge over the investment properties of the ; c) corporate guarantee by the Company; d) third party first legal charge over a property belonging to certain Directors of the ; and e) joint and several guarantee by certain Directors of the. The term loan facilities are offered by two finance institutions, whereby the interest is charged at 2% (2011: 1.25% to 1.75%) above the bank s base lending rate and 12% (2011: N/A) fixed and flat rate per annum respectively. Repayment terms Bank borrowings and loans (excluding hire purchase creditors) - not later than 1 year 11,898,539 20,689,173 - later than 1 year and not later than 2 years 2,277, later than 2 years and not later than 5 years 3,633,882-17,810,019 20,689,173 Finance lease and hire purchase liabilities Minimum lease/instalment payments - not later than 1 year 562, ,427 - later than 1 year and not later than 5 years 372, , ,533 1,347,284 Future finance charges on finance lease/hire purchase creditors (48,035) (102,037) Present value of finance lease/hire purchase liabilities 887,498 1,245,247 Present value of finance lease/hire purchase creditors - not later than 1 year 526, ,374 - later than 1 year and not later than 5 years 360, , ,498 1,245,247 The weighted average effective interest rates for borrowings are as disclosed in Note 5 of the Notes to the Financial Statements. The term loans amounting to 7,990,225 (2011: 688,470) is secured by way of:- 21. SHARE CAPITAL & Company Authorised:- Ordinary shares of 1 each 50,000,000 50,000,000 Issued and fully paid:- Ordinary shares of 1 each 40,115,000 40,115, ANNUAL REPORT 2012

53 NOTES TO THE FINANCIAL STATEMENTS 30TH JUNE RESERVES Company Non-distributable Share premium At beginning/end of the year 1,626,071 1,626,071 1,626,071 1,626,071 Revaluation reserve (Note 28) 6,558,382 5,739, Foreign exchange reserve Exchange difference on translation of oversea subsidiary companies - (268,087) - - Surplus reserve (Note 29) - 252, ,184,453 7,350,286 1,626,071 1,626,071 Distributable (Accumulated losses)/unappropriated profits (17,839,075) (8,891,117) 1,479,614 (2,317,131) Total reserves (9,654,622) (1,540,831) 3,105,685 (691,060) 23. REVENUE RECOGNITION Company Sales of textile and garment products 63,932,094 59,195, Manufacturing and dyeing of fabric and related products 11,757,936 10,550, Sales of chemical products 145,720, ,535, Dividend income - - 3,960,000 - Investment property income 120, , ,530, ,401,509 3,960,000 - Less: Intra-group transactions (3,040,241) (5,366,198) ,490, ,035,311 3,960, FINANCE COSTS Finance costs have been determined after charging the following:- Bank guarantee interest 37, ,626 Bank overdraft interest 938, ,402 Hire purchase interest 7,301 68,139 Term loan interest 571, ,151 Trust receipt and banker acceptance interest 628, ,140 2,182,147 2,120, YONG TAI BERHAD ( T)

54 NOTES TO THE FINANCIAL STATEMENTS 30TH JUNE (LOSS)/PROFIT BEFORE TAXATION (Loss)/profit before taxation for the financial year is arrived at and has been determined after charging/(crediting) amongst other items the following:- Company Allowance for specific doubtful debts 2,942, , Audit fees 89,879 80,615 8,000 8,000 Bad debts written off - 1,372, Depreciation of property, plant and equipment 1,705,289 1,649, Directors' remuneration (Note 33) - fees 64,000 64,000 64,000 64,000 - other emoluments 1,538,882 1,588, Fair value adjustment (Note 7) - (138,000) - - Inventories written off - 107, Inventories written down 3,223, Land rental - 1, Lease rental 167, , Loss on disposal of investment in subsidiary companies 1,468, Management fees 76, , Property, plant and equipment written off 74, , Rental of booths 46,709 94, Rental of equipment 34,637 22, Rental of forklift 24,600 22, Rental of staff accommodation 122, , Rental of premises 3,371,934 2,925, Withholding tax - 406, Allowance for specific doubtful debts no longer required (9,578) (1,746,721) - - Dividend income - - (3,960,000) - Foreign currency exchange loss - unrealised 103, , Foreign currency exchange gain - realised (223,552) (254,688) - - Gain on disposal of property, plant and equipment (57,199) (92,883) - - Interest income (250,571) (90,051) - - Rental income (322,000) (324,000) - - Staff training grant 1 (12,255) (10,318) Staff training grant of 12,255 (2011: 10,318) was received in relation to staff training and is recognised as income in the period in which the training expenditure is being incurred by the. There are no unfulfilled conditions or contingencies attaching to this grant. The estimated monetary value of benefits provided to the Directors of the during the financial year by way of usage of the s assets amounted to 21,700 (2011: 30,875). 26. TAXATION Company Current year tax expenses - Malaysian income tax 41,134 31, Foreign tax 155, , Deferred taxation (Note 9) 276,400 18, , , Under provision in prior years: Tax expenses - Malaysian income tax 43, Deferred taxation (Note 9) 7,100 3, ,606 3, , , There is no current year tax expense for the Company is in respect of dividend income from investments in subsidiary company, whereas the 's current year tax is in respect of the normal business income of the subsidiary companies. 52 ANNUAL REPORT 2012

55 NOTES TO THE FINANCIAL STATEMENTS 30TH JUNE TAXATION (Cont d) Income tax of the Malaysian subsidiary companies is calculated at the rate of 25% on the estimated taxable profit. Taxation for other jurisdictions is calculated at the rates prevailing in the respective jurisdictions. There is no current year tax expense for Hong Kong operations as its income was derived outside of Hong Kong. China enterprise income tax has been provided in the financial statements at 24% (2011: 24%) on the profit for the year. A reconciliation of average effective tax rate applicable to (loss)/profit before taxation to effective statutory tax rate is as follows:- Company (Loss)/profit before taxation (8,716,125) 1,119,819 3,796,745 (143,589) % % % % Average effective tax rate for the year (6.0) Effect of different tax rate in foreign subsidiary companies (0.1) Tax effect of expenses not deductible for tax purpose 9.7 (56.3) (1.1) 25.0 Tax effect of income not subject to tax (1.7) Deferred tax asset not recognised Utilisation of deferred tax asset not recognised in prior year Under provision in prior year 0.6 (0.3) - - Effective statutory tax rate for the year LOSS PER SHARE The basic loss per share is based on the profit attributable to equity holders of the Company divided by the weighted average number of ordinary shares in issue during the financial year. Loss attributable to equity holders of the Company (9,298,950) (328,959) Ordinary shares of 1.00 each 40,115,000 40,115,000 Basic loss per share (sen) (23.2) (0.8) 28. REVALUATION RESERVE Revaluation surplus 7,016,763 6,550,556 Add: Revaluation surplus arising during the year - freehold land and factory buildings (Note 6) - 466,207 7,016,763 7,016,763 Less: Deferred tax arising on revaluation surplus 1,277,204 1,209,133 Addition due to additional revaluation surplus (Note 9) - 116,552 Transfer from deferred tax (Note 9) (818,823) (48,481) 458,381 1,277,204 6,558,382 5,739,559 Revaluation reserves arose from revaluation surplus on freehold land and factory buildings which were revalued based on opinion of value expressed by an independent firm of external professional valuers, JS Valuers Property Consultant (Johore) Sdn. Bhd., using generally open market value basis on 17th June The previous revaluation was done in June 2009 by the same firm. 53 YONG TAI BERHAD ( T)

56 NOTES TO THE FINANCIAL STATEMENTS 30TH JUNE SURPLUS RESERVE Pursuant to the relevant laws and regulations for foreign investment enterprises established in the People's Republic of China excluding Hong Kong, a certain portion of the profit of the sub-subsidiary company, Shanghai Sino-Malaysian International Trading Co. Ltd., is required to be transferred to surplus reserve which is non distributable. The transfer to this reserve is made out of the sub-subsidiary company's net profit. 30. DISPOSAL OF SUBSIDIARY COMPANIES During the financial year, the entered into a Share Sale Agreement to dispose its 65% equity interest in YongTai Samchem (HK) Company Limited for a total cash consideration of 7,343,750. The agreement has been completed during the financial year Property, plant and equipment 19,428 Inventories 3,787,284 Trade and other receivables 31,781,201 Cash and bank balances 7,888,605 Trade and other payables (28,488,187) Amount due to Directors (1,401,567) Tax payable (30,088) Net assets 13,556,676 Less: Non-controlling interest (4,744,833) Share of net assets disposed 8,811,843 Loss on disposal (1,468,093) Total disposal consideration 7,343,750 Less: Cash and bank balances (7,888,605) Net cash outflow from disposal (544,855) 31. PURCHASE OF PROPERTY, PLANT AND EQUIPMENT Cash payment 1,118, ,828 Hire purchase financing 123, ,400 1,241,683 1,517, HOLDING COMPANY The holding company is Liew Fat Lin Holding Sdn. Bhd., a private limited company incorporated in Malaysia. 33. DIRECTORS' REMUNERATION Directors of the Company Company During the financial year, the acquired property, plant and equipment as follows:- Executive:- Salaries and other emoluments (Notes 25 and 37) 995,099 1,017, Benefit-in-kind 16,400 25, ,011,499 1,043, Non-executive (Note 25):- - fees 64,000 64,000 64,000 64, ANNUAL REPORT 2012

57 NOTES TO THE FINANCIAL STATEMENTS 30TH JUNE DIRECTORS' REMUNERATION (Cont d) Other Directors Company Executive:- Salaries and other emoluments (Notes 25 and 37) 543, , Benefit-in-kind 5,300 5, , , Total 1,624,582 1,682,978 64,000 64,000 Analysis excluding benefit-in-kind Total executive Directors' remuneration excluding benefit in kind (Notes 25 and 37) 1,538,882 1,588, Total non-executive Directors' remuneration (Note 25) - fees 64,000 64,000 64,000 64,000 1,602,882 1,652,103 64,000 64,000 The number of Directors of the whose total remuneration during the financial year fall within the following bands are as follows:- Number of Directors Executive Directors Below 50, , , , , , , , , , , Non-executive Directors Below 50, Executive Directors of the Company do not receive any remuneration from the Company during the financial year. 34. SIGNIFICANT RELATED PARTY TRANSACTIONS Company Gross dividend received from subsidiary companies - - 3,960,000 - Sales to companies where certain Directors have interest - 2, Purchases from companies where certain Directors have interest - 110, Rental paid to companies where certain Directors have interest 62,400 62, The Directors of the /Company are of the opinion that related party transactions are in the normal course of business and have been established on terms and conditions that are not materially different from that obtainable in transactions with unrelated parties. 35. SEGMENT INFOATION a) Business Segments The is basically engaged in the following business segments:- i) Retailing and trading of textile and garment products ii) Manufacturing of garments iii) Manufacturing and dyeing of fabric and related products iv) Property development and investment holding v) Trading of chemical products 55 Inter-segment pricing is determined based on negotiated prices in the normal course of business. The Directors of the Company are of the opinion that all inter-segment transactions have been entered into in the normal course of business and have been established on terms and conditions that are not materially different from that obtainable in transactions with unrelated parties. YONG TAI BERHAD ( T)

58 NOTES TO THE FINANCIAL STATEMENTS 30TH JUNE ANNUAL REPORT 2012

59 NOTES TO THE FINANCIAL STATEMENTS 30TH JUNE YONG TAI BERHAD ( T)

60 NOTES TO THE FINANCIAL STATEMENTS 30TH JUNE SEGMENT INFOATION (Cont d) b) Geographical segments The business segments are mainly managed in three geographical areas. Majority of the business activities are carried out in Malaysia, its home country and in China. The also export finished goods of manufactured garments to Europe. The garments and textile manufacturing activities are conducted in Malaysia, whereas the trading of chemical products are conducted in China. Total revenue from external customers Segment assets Capital expenditure Malaysia 53,476,727 44,879,984 78,825,365 90,047,962 1,227,544 1,517,228 Singapore - 158, , China/Hong Kong 145,720, ,535,431-45,319,021 14,139 - Europe 19,293,062 19,460,953 4,196,221 2,949, Consolidated 218,490, ,035,311 83,021, ,901,361 1,241,683 1,517, CONTINGENT LIABILITIES Company Company Corporate guarantee given for credit facilities granted to subsidiary companies:- - Yong Tai Brothers Trading Sdn. Bhd. 10,933,000 13,833,000 - Golden Vertex Sdn. Bhd. 6,122,245 6,950,000 - Syarikat Koon Fuat Industries Sdn. Bhd. 10,476,000 11,576,000 - Shanghai Sino-Malaysian International Trading Co. Ltd. - 16,000,000 - The Image Outlet Sdn. Bhd. 2,500,000 2,500,000 30,031,245 50,859, EMPLOYEES INFOATION Directors' other emoluments (Note 25 and 33) 1,538,882 1,588,103 EPF 879, ,433 Salaries, wages, bonus and allowance 12,429,777 13,376,096 SOCSO 125, ,184 Other personnel cost 1,099, ,137 16,073,483 16,306,953 The total number of employees of the (including the Directors) as at the end of the financial year were 665 (2011: 769). There were no employees (other than the Directors) for the Company as at the end of the financial year. 38. BANK GUARANTEES AND BANKING FACILITIES Standby credit facilities of USD Nil (2011: USD 1,600,000) have been granted to the sub-subsidiary i.e. Shanghai Sino-Malaysian International Trading Co. Ltd. by a Malaysian local licensed commercial bank. The above bank guarantees and banking facilities are supported by a corporate guarantee from the Company. 39. OPERATING LEASE COMMITMENTS As at the end of the financial year, the has future aggregate minimum lease payments under non-cancellable operating leases as follows:- Within one year - 99,966 Later than 1 year, not more than 5 years - 33, , ANNUAL REPORT 2012

61 NOTES TO THE FINANCIAL STATEMENTS 30TH JUNE FINANCIAL INSTRUMENTS The 's and the Company's financial assets and financial liabilities are measured on an ongoing basis at either fair value or at amortised cost based on their respective classification. The significant accounting policies in Note 2 describe how the classes of financial instruments are measured, and how income and expenses, including fair value gains and losses, are recognised. The following table analyses the financial assets and liabilities of the and the Company in the statements of financial position by the class of financial instrument to which they are assigned, and therefore by the measurement basis. Financial liabilities at Loans and amortised receivables cost Total 2012 Financial assets Trade and other receivables 24,278,382-24,278,382 Cash and bank balances 496, , ,774,425-24,774,425 Financial liabilities Trade and other payables - 11,857,481 11,857,481 Amount due to Directors - 10,813,234 10,813,234 Bank overdraft - 10,799,800 10,799,800 Borrowings - 18,697,517 18,697,517-52,168,032 52,168, Financial assets Trade and other receivables 41,335,532-41,335,532 Fixed deposits 693, ,216 Cash and bank balances 24,346,529-24,346,529 66,375,277-66,375,277 Financial liabilities Trade and other payables - 45,877,253 45,877,253 Amount due to Directors - 11,913,026 11,913,026 Bank overdraft - 12,902,404 12,902,404 Borrowings - 21,934,420 21,934,420-92,627,103 92,627,103 Company 2012 Financial assets Other receivables 1,000-1,000 Amount due from subsidiary companies 3,415,526-3,415,526 Cash and bank balances 5,755-5,755 3,422,281-3,422,281 Financial liabilities Trade and other payables - 89,460 89,460 Amount due to subsidiary companies - 9,062,206 9,062,206-9,151,666 9,151, Company Financial assets Other receivables 1,000-1,000 Amount due from subsidiary companies 5,514,983-5,514,983 Cash and bank balances 120, ,160 5,636,143-5,636,143 Financial liabilities Other payables - 92,810 92,810 Amount due to subsidiary companies - 69,463 69, , ,273 YONG TAI BERHAD ( T)

62 NOTES TO THE FINANCIAL STATEMENTS 30TH JUNE CAPITAL MANAGEMENT The primary objective of the 's and the Company's capital management is to ensure that it maintains a strong credit rating and healthy capital ratios in order to support its business and maximise shareholder value. The and the Company manage its capital structure and make adjustments to it in light of changes in economic conditions. To maintain or adjust the capital structure, the and the Company may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. No changes were made in the objectives, policies or processes during the years ended 30th June 2012 and 2011 respectively. The and the Company is not subject to any externally imposed capital requirements. The and the Company monitor capital by reviewing various financial ratios to ensure they are at acceptable levels and within industry norms. Incidentally, the is not subject to any externally imposed capital requirements. Company Loans and borrowings 29,497,317 34,836, Trade and other payables 11,857,481 45,877,253 89,460 92,810 Amount due to subsidiary companies - - 9,062,206 69,463 Amount due to Directors 10,813,234 11,913, Less: Fixed deposits, cash and bank balances (496,043) (25,039,745) (5,755) (120,160) Net debt 51,671,989 67,587,358 9,145,911 42,113 Equity attributable to the owners of the parent, representing total equity 30,460,378 38,574,169 43,220,685 39,423,940 Capital management ratio 169.6% 175.2% 21.2% 0.1% 42. EVENT OCCURING SUBSEQUENT TO FINANCIAL YEAR Subsequent to the financial year, the holding company, Liew Fat Lin Holdings Sdn. Bhd. ("LFLH") disposed its controlling equity interest in the Company and hence, LFLH ceased to be the holding company of the Company. 43. SUPPLEMENTARY INFOATION - BREAKDOWN OF RETAINED PROFITS INTO REALISED AND UNREALISED The breakdown of the retained profits of the and of the Company as at 30th June 2012 into realised and unrealised profits, pursuant to Paragraph 2.06 and 2.23 of Bursa Malaysia Main Market Listing Requirements, is presented in accordance with the directive issued by Bursa Malaysia Securities Berhad dated 20th December 2010 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. Company Total (accumulated losses)/unappropriated profits of the Company and its subsidiaries - Realised (18,300,970) (9,422,326) 1,479,614 (2,317,131) - Unrealised 461, , (Accumulated losses)/unappropriated profits as per financial statements (17,839,075) (8,891,117) 1,479,614 (2,317,131) 60 ANNUAL REPORT 2012

63 LIST OF PROPERTIES AS AT 30 JUNE 2012 LOCATION DESCRIPTION LAND AREA / TENURE AGE OF NET CARRYING DATE OF (BUILD UP BUILDING AMOUNT VALUATION AREA) (Approximate) ('000) No. 44, 45, 46 & 47, 4 units of Sq.m. / Freehold 34 years 3,900# 17 June 2011 Jalan Abu Bakar 4-storey ( Sq.m.) Batu Pahat shophouse Johor LG14 & LG15 2 units of N/A / Freehold 30 years 6, June 2011 Holiday Plaza commercial (192.1 Sq.m.) Jalan Dato' Sulaiman shopping lot Johor Bahru No. 76, Jalan Rugayah A single storey Sq.m. / Freehold 23years 2, June Batu Pahat shop building ( Sq.m.) Johor A34 & A35 4 units of N/A / Leasehold 22 years 1,080# 24 January 2011 Centre Point Sabah commercial (183.3 Sq.m.) - 99 years Kota Kinabalu shopping lot expiring on Sabah year 2082 No.3, Jalan Kapal 3-storey factory Sq.m. / Leasehold 22years 1, June 2009 Tongkang Pecah Ind. Estate building cum ( Sq.m.) - 60 years Tongkang Pecah office expiring on Batu Pahat, Johor No.2, Jalan Kapal Single storey Sq.m. / Leasehold 25years June 2009 Tongkang Pecah Ind. Estate factory building ( Sq.m.) - 60 years Batu Pahat cum office expiring on Johor No. 18, Jalan Kilang 1 unit of 4-storey 3 arces / Freehold years 7, June 2009 Tongkang Pecah Ind Estate factory building (10, Sq.m.) Batu Pahat cum office & Johor 4 units of single storey factory building # Investment properties stated at fair value. 61 YONG TAI BERHAD ( T)