MASB ED 72 FRS for SMEs Illustrative Financial Statements

Transcription

1 Knowledge. Create. Value MASB ED 72 FRS for SMEs Illustrative Financial Statements 2011 edition A publication of AXP Technical Support Unit Copyright All rights reserved. AXP Solutions Sdn. Bhd. Printed in Malaysia

2 FOREWORD Since 2007, AXP has issued several sets of Model Financial Statements for Malaysia, Singapore and Hong Kong markets that conform to local reporting standards and received encouraging responses from customers and other Audit Practitioners. As part of our mission to assist audit practitioners to resolve contemporary issues, we have prepared the Illustrative Financial Statements for FRS for SMEs 2011 ( IFS for FRS for SMEs 2011 ) aiming to assist our existing clients and other audit practitioners to audit, and companies to prepare, financial statements that are in compliance with the prevailing financial reporting and disclosure requirements of the EXPOSURE DRAFT 72 Financial Reporting Standard for Small and Medium-sized Entities ( FRS For SMEs ). In addition to this IFS for FRS for SMEs 2011, AXP has also prepared the Illustrative Financial Statements for: 1. Malaysia Financial Reporting Standards 2010 (FRS 2010) 2. Malaysia Private Entity Reporting Standards 2009 (PERS 2009) [English and Malay versions] 3. International Financial Reporting Standard for Small and Medium-sized Entities (IFRS for SMEs) 4. Singapore Financial Reporting Standard for Small Entities (SFRS for Small Entities) 5. Hong Kong Financial Reporting Standard for Private Entities (HKFRS for Private Entities) [English and Chinese versions] 6. Hong Kong Small and Medium-sized Entity Financial Reporting Standard (SME-FRS) [English and Chinese versions] ABOUT OUR IFS FOR FRS FOR SMES 2011 Our IFS for FRS for SMEs 2011 provides various alternative presentation and disclosure requirements for the FRS for SMEs Sections indicated in the scope below. Our IFS for FRS for SMEs 2011 is based on the financial statements of a hypothetic group of companies, called Illustrative Group Sdn. Bhd. and its subsidiaries, for the financial year ending 31 December We trust that you will find our IFS for FRS for SMEs 2011 a useful reference point when you are auditing or preparing 2011 financial statements. While every effort has been made to ensure that our IFS for FRS for SMEs 2011 demonstrates all the possible disclosure and presentation requirements of the FRS for SMEs, it should not be used as a substitute for the laws, regulations and existing body of FRS. However, should you have any questions on the application of any of the statutory and financial reporting requirements not presented in our IFS for FRS for SMEs 2011, you are welcomed to contact our Technical Support Unit for assistance. REFERENCES IN OUR IFS FOR FRS FOR SMES 2011 To the left of each disclosure and presentation item, requirements under the FRS for SMEs are shown with FRS. Where there are alternative applications allowed under the FRS for SMEs, we have also presented the alternative disclosures throughout our IFS for FRS for SMEs 2011 for your reference. SCOPE OF OUR IFS FOR FRS FOR SMES 2011 Our IFS for FRS for SMEs 2011 covers the following sections in the FRS for SMEs issued in 2010: Sections Descriptions 1 Small and Medium-sized Entities 2 Concepts and Pervasive Principles 3 Financial Statement Presentation 4 Statement of Financial Position i

3 Sections Descriptions 5 Statement of Comprehensive Income and Income Statement 6 Statement of Changes in Equity and Statement of Income and Retained Earnings 7 Statement of Cash Flows 8 Notes to the Financial Statements 9 Consolidated and Separate Financial Statements 10 Accounting Policies, Estimates and Errors 11 Basic Financial Instruments 13 Inventories 14 Investments in Associates 15 Investments in Joint Ventures 16 Investment Property 17 Property, Plant and Equipment 18 Intangible Assets other than Goodwill 19 Business Combinations and Goodwill 20 Leases 21 Provisions and Contingencies 22 Liabilities and Equity 23 Revenue 24 Government Grants 25 Borrowing Costs 26 Share-Based Payment 27 Impairment of Assets 28 Employee Benefits 29 Income Tax 30 Foreign Currency Translation 32 Events After the End of the Reporting Period 33 Related Party Disclosures 34 Specialised Activities (for agriculture and service concession arrangements) 35 Transition to the FRS for SMEs However, our IFS for FRS for SMEs 2011 does not include the disclosure and presentation requirements of: Sections Descriptions 12 Other Financial Instruments Issues 31 Hyperinflation 34 Specialised Activities (for extractive activities) AXP has exercised professional due care and diligence in the preparation of our IFS for FRS for SMEs However, the information contained herein is intended to be a general guide. While every effort has been made to ensure accuracy, no liability is accepted by AXP or any member of AXP on any grounds whatsoever to any party in respect of any errors or omissions, or any action or omission to act as a result of the information contained in our IFS for FRS for SMEs ABOUT AXP AXP was formed in 2005 by a team of qualified accountants with years of extensive experience in both the public practice and commercial sector. Through extensive research and development since 2001 under both its predecessor and AXP, we have successfully developed in-house a wide range of IT tools and solutions for audit practitioners. Besides being able to optimise the business value of IT in the audit practice, our products also possess enhanced features and updates that are in full compliance with the requirements of the prevailing FRS. For more information on AXP, please visit us at or contact us at support@myaxp.com. ii

4 ABOUT THE EDITORIAL TEAM The editorial team consists of both AXP s Technical Adviser and Business Partners, who jointly possess a wealth of experience in financial reporting and wide exposure to the accounting industry in general. The profile of each team member is as follows: Keith Farmer, FCA, B.A., Technical Adviser of AXP, holds an honours degree in Economics and became a Fellow of the Institute Chartered of Accountants in England and Wales ( ICAEW ) in January He taught in London at the London School of Accountancy and Emile Woolf College and at the University of Essex until he came to Asia in early He has been based in Asia ever since. His specialist subject is Financial Accounting. He has conducted courses for both students and practitioners in many parts of the world, including the UK, Malaysia, Singapore, Hong Kong, Kenya, and Mauritius for both private colleges and the Association of Chartered Certified Accountants ( ACCA ). His students have consistently won numerous prizes in the ACCA examinations. Whilst Keith is justifiably proud of individual student performance, his key aim is to convey a fundamental understanding of the basic principles and concepts which underlie financial accounting and a detailed knowledge and application of the requirements of accounting standards. This is based on the three core principles of education: instruction, demonstration and experience. Understanding is important, in fact it is a prerequisite to developing the level of knowledge required to sit examinations with confidence and inspires individuals to achieve far more than they ever expected in far less time than they ever anticipated. In furtherance of achieving his aim, Keith has recently embarked upon a three point strategy. Firstly, he is writing a series of books, primarily aimed at students, covering consolidation and accounting standards which contain numerous progressive worked examples. Secondly, he is currently engaged in developing a series of DVD's which, together with the books, will form an integral part of a new co-ordinated learning package. Finally, in the near future, this learning package will be extended to a structured continuing professional development programme. Ivan Er Soon Lock, C.A.(M), FCCA, B.Com(NZ), is a member of the Malaysian Institute of Accountants ( MIA ) and a fellow member of ACCA. Ivan first joined Deloitte in 1997 as an Audit Assistant, and subsequently became an Audit Manager. He left Deloitte in 2003 to join Horwath, another international public practice. At Horwath, he was soon promoted to become an Audit Principal. In 2005, he left Horwath to join AXP. His experience includes managing the audit and the corporate finance functions and the setting up of the business improvement division of the practice, assisting companies listing on the stock exchange by providing consultancy services on listing exercise and financial management, advising on good accounting and internal control systems to a wide range of companies, provision of technical training on financial reporting standards and conducting duediligence review on companies in Malaysia and China. Currently, he is involved in conducting financial reporting courses for internal and external parties. Eric Chia Kok Haur, C.A.(M), C.A.(NZ), B.Com(Hons), is a member of the MIA and New Zealand Institute of Chartered Accountants ( NZICA ). Eric started his career as an Audit Assistant with Deloitte in He was an Assistant Audit Manager when he left the firm to join KPMG Singapore in He was also an Assistant Audit Manager at KPMG, where he served until From KPMG, he moved on to H W Kuah & Co., another public practice in Singapore, as the Audit Manager. In 2005, he left H W Kuah & Co. to join AXP. Eric is well-versed with the financial reporting environment of both Malaysia and Singapore. In addition, as he has spearheaded major audit assignments in China, he is also familiar with China financial reporting requirements. His experience includes managing audit and due diligence assignments, monitoring the budgetary function of the practice, provision of advisory services for corporate exercises and corporate governance matters, preparation and review of published financial statements, including those of significantly large groups of companies, and conducting training on technical subjects. iii

5 Kua Le Ting, C.A.(M), FCCA, is a member of the MIA and a fellow member of ACCA. Ms. Kua joined Deloitte in 1995 as an audit assistant and was soon promoted to become an audit senior. She was in-charge of the managing and supervising of audit engagements ranging from small to big multinational companies. To further enhance her experience, she then joined the tax department of Deloitte, where she was involved in tax planning and consultancy services, in addition to preparing tax returns for both corporate and individual clients. She left the public practice in 1999 to set up her own consultancy business, LT Kua Consultation Services, specialising in personal financial planning and risk management planning. In addition, Ms. Kua is also involved in the preparation of various study materials for professional courses used in institutions of higher learning. Vicky Chuar Xin Peng, B.Com.(Hons), graduated in May 2007 and soon started her career in CPA Group as an Audit Assistant. Then she moved on to join BDO Binder while pursuing her study for the ACCA qualification, professional level. She was a Senior Associate when she left BDO Binder to join AXP in 2010 as Consultant (Customer support and technical research). CONTACT US AXP Technical Support Unit Southern Malaysia 83A, Jalan Emas Satu, Taman Sri Skudai, Johor Bahru, Johor, Malaysia. Tel: or Fax: Central Malaysia A-3-03 & A-3-05, SME Technopreneur Centre 2 Cyberjaya, 2260, Jalan Usahawan 1, Cyberjaya, Selangor, Malaysia. Tel: or Fax: Singapore Blk 5000, Ang Mo Kio Ave 5, #03-09, TechPlace II, Singapore Tel: Fax: Hong Kong Suites , 12/F, Tower 2, The Gateway, Canton Road, Tsim Sha Tsui, Kowloon, Hong Kong 香港九龍尖沙咀廣東道 號港威大廈 2 座 12 樓 室 Tel: Fax: support@myaxp.com Copyright All rights reserved. AXP Solutions Sdn. Bhd. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise without the prior written permission of AXP. However, written permission need not be obtained from AXP if it is used internally within the Firm. iv

6 TABLE OF CONTENTS Report of the Directors 1 5 Statement by the Directors 6 Statutory Declaration 6 Independent Auditors Report 7 8 Page No. Financial Statements 1 Statements of Financial Position 9 10 Statements of Comprehensive Income Expenses Classified by Function 11 Alternative presentation formats for Total Comprehensive Income in one statement - Statements of Comprehensive Income Expenses Classified by Nature 12 Alternative presentation formats for Total Comprehensive Income in two statements - Income Statements Expenses Classified by Function 13 Statements of Comprehensive Income 14 Statements of Changes in Equity Statements of Income and Retained Earnings 2 Statements of Income and Retained Earnings - Expenses classified by Function 17 Statements of Income and Retained Earnings - Expenses classified by Nature Statements of Cash Flows Indirect Method Alternative presentation formats for Statements of Cash Flows ~ Statements of Cash Flows Direct Method 22 Notes to the Financial Statements 1 General Information 23 2 Significant Accounting Policies Transition to the FRS for SMEs Critical Accounting Judgements and Key Sources of Estimation Uncertainty Property, Plant and Equipment Investment Property 41 7 Goodwill 41 8 Other Intangible Assets 42 9 Subsidiaries Investment in Associates Investment in Jointly Controlled Entities Other Financial Assets Deferred Tax Assets / Liabilities Biological Assets Carried at Fair Value through Profit or Loss 48 v

7 Page No. 15 Inventories Trade and Other Receivables Cash and Cash Equivalents Share Capital Share Premium Treasury Shares Premium for Option on Irredeemable Convertible Unsecured Loan Stocks Property Revaluation Surplus Translation Reserves Equity-Settled Employee Benefits Reserves Retained Earnings Retirement Benefit Obligation Provisions Finance Lease Payables Bank Overdrafts and Other Borrowings Other Financial Liabilities Trade and Other Payables Deferred Revenue Equity-Settled Share-Based Payments Revenue Profit Before Tax Tax Expense Dividends Acquisition of A Subsidiary Disposal of A Subsidiary Purchases of Property, Plant and Equipment Binding Sales Agreement Related Party Transactions Commitments Contingent Liabilities Reclassifications of Comparative Figures Events after the Reporting Period Authorisation for Issue of the Financial Statements 70 Additional Notes: Change of the End of the Reporting Period 70 Presentation of First Set of Financial Statements 70 Presentation of First Set of Group Financial Statements 70 * Notes on the presentation of financial statements: 1. In accordance with: Section 3.21: In a complete set of financial statements, an entity shall present each financial statement with equal prominence. Section 3.22: An entity may use titles for the financial statements other than those used in the FRS for SMEs as long as they are not misleading. Section 9.25: In this illustrative financial statements, the entity elects to present separate financial statements. 2. These statements are prepared in accordance with Section 3.18 for illustration purpose only and do not form part of the financial statements of Illustrative Group Sdn. Bhd.. vi

8 REPORT OF THE DIRECTORS CA Ref. 169(6)(b) The directors hereby submit their report together with the audited financial statements of the Group and the Company for the financial year ended 31 December PRINCIPAL ACTIVITIES The principal activities of the Company are that of investment holding and provision of management services to its subsidiaries. The Group is principally engaged in investment holding, research and development, property investment, construction activities, rending of concession services, and agriculture products. There have been no significant changes in the nature of the activities during the financial year. 169(6)(c) RESULTS The Group RM The Company RM Profit for the financial year 7,262, ,886 Less: Attributable to non-controlling interest (156,807) - Profit for the financial year attributable to owners of the parent 7,419, , (6)(p) 169(6)(h) In the opinion of the directors, the results of the operations of the Group and the Company during the financial year have not been substantially affected by any item, transaction or event of a material and unusual nature. DIVIDENDS On 1 April 2011, the Company paid a 10% final tax exempt dividend (total dividend of RM1,105,020) in respect of the previous financial year. The net dividend per share was 10 sen. On 31 August 2011, the directors declared a 10% interim tax exempt dividend (total dividend of RM1,132,020) in respect of the current financial year. The dividend was paid to the shareholders registered on 31 October The net dividend per share was 10 sen. The directors have proposed a 10% final tax exempt dividend in respect of the current financial year. The dividend is subject to approval by the shareholders at the forthcoming Annual General Meeting and has not been included as a liability in the financial statements. Total dividend payable is RM1,122,020 (dividend for treasury shares is not included), and the net dividend per share is 10 sen. If the Company did not declare dividends: No dividends have been paid or declared since the end of the previous financial year. The directors do not recommend that a dividend to be paid in respect of the current financial year. 169(6)(d) 169(6)(e) RESERVES AND PROVISIONS There were no material transfers to or from reserves or provisions except as disclosed in the financial statements. SHARES AND DEBENTURES During the financial year, the authorised ordinary share capital of the Company has been increased by 10,000,000 ordinary shares to 50,000,000 ordinary shares of RM1.00 each. 1

9 REPORT OF THE DIRECTORS CA Ref. During the financial year, the Company has issued the following ordinary shares: Date of Issue No. of Shares Issued Issue Price Purposes 1 June ,000 RM4.00 Part finance the acquisition of a subsidiary 6 June ,000 RM2.70 Exercise of ESOS The new ordinary shares issued rank pari passu in respect of the distribution of dividends and repayment of capital with the existing ordinary shares. Details of the debentures issued during the financial year are set out in Note 29 and 30. If the Company did not issue any new shares or debentures: The Company did not issue any new shares or debentures during the financial year. 169(11), (12) EMPLOYEES SHARE OPTION SCHEME The Company has an Employees Share Option Scheme ( ESOS ), which was approved at the Extraordinary General Meeting on 31 October 2006 by its shareholders, for all the eligible employees of the Group. The details of the ESOS are contained in the By-Laws and the salient features of ESOS are disclosed in Note 33 to the Financial Statements. The Company has obtained approval from the Companies Commission of Malaysia for the exemption from disclosing the name of the option holders as at 31 December Grant Date Option Price No. of ordinary shares of RM1 each covered under options At At Granted Exercised January ,000 - (20,000) 5,000 1 January , ,000 1 January ,000-60,000 55,000 60,000 (20,000,) 95, (11), (12) If the Company did not have any share options: SHARE OPTIONS No options have been granted by the Company to any parties during the financial year to take up unissued shares of the Company. No shares have been issued during the financial year by virtue of the exercise of any option to take up unissued shares of the Company. At the end of the financial year, there were no unissued shares of the Company under options. 2

10 REPORT OF THE DIRECTORS 169(6)(a) DIRECTORS The directors who held office since the date of the last report are: Ser L. T. Lian K. K. Mohd. bin R. Z. Gi J. Q. Ran H. P. Hija bin B. T. Yan D. V. Wen M. X. The L. P. (Appointed on 1 July 2011) 169(6)(f) 169(8) 169(6)(g) DIRECTORS BENEFITS During and at the end of the financial year, no arrangements subsisted to which the Company or its subsidiaries is a party, with the object or objects 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 a benefit (other than a benefit included in the aggregate amount of emoluments received or due and receivable by the directors shown in the financial statements or the fixed salary of a full-time employee of the Company) by reason of a contract made by the Company or a related corporation with the director or with a firm of which the director is a member, or with a company in which the director has a substantial financial interest. DIRECTORS INTERESTS According to the register of directors shareholding, the interests of directors in office at the end of the financial year in the ordinary shares of the Company and its related corporations during the financial year are as follows: No. of Ordinary Shares of RM1 each At (or date of appointment) Bought Sold At Direct Interest in holding company Be Competent Sdn. Bhd. Ordinary Shares Ser L. T. 1,000, ,000,000 Lian K. K. 600, ,000 Mohd. bin R. Z. 400, ,000 Gi J. Q. 200, ,000 Direct Interest in a subsidiary AXP Property Sdn. Bhd. Ordinary Shares The L. P. 20,000 - (20,000) - Deemed Interest in the Company Ordinary Shares Ser L. T. 7,000, ,000-7,500,000 Lian K. K. 7,000, ,000-7,500,000 Mohd. bin R. Z. 7,000, ,000-7,500,000 The L. P , ,000 3

11 REPORT OF THE DIRECTORS No. of Ordinary Shares of RM1 each At (or date of appointment) Bought Sold At Direct Interest in the Company Ordinary Shares Ser L. T. 4, ,504 Lian K. K. 3, ,731 Mohd. bin R. Z. 40,000 4,000 (2,000) 42,000 Ran H. P. 2,041 1,076 (246) 2,871 Hija bin B. T. 50,010 6,781-56,791 The L. P. 216, , ,000 None of the other directors in office at the end of the financial year held any shares in the Company or in any related corporations during the financial year ended 31 December By virtue of the abovementioned directors interests in the Company, these directors are also deemed to have interests in the subsidiaries of the Company to the extent of the Company s interests in the subsidiaries. 169(6)(i) OTHER STATUTORY INFORMATION Before the financial statements of the Group and the Company were made out, the directors took reasonable steps: (a) to ascertain that proper action had been taken in relation to the writing-off of bad debts and the making of allowance for doubtful debts, and have satisfied themselves that all known bad debts had been written-off and that adequate allowance had been made for doubtful debts; and 169(6)(k) (b) to ensure that any current assets which were unlikely to be realised at their book values in the ordinary course of business have been written down to their estimated realisable values. 169(6)(j) As of 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 inadequate to any substantial extent in the financial statements of the Group and the Company; or 169(6)(l) (i) 169(6)(l) (ii) 169(6)(o) (b) (c) (d) which would render the values attributed to current assets in the financial statements of the Group and the Company misleading; or which have arisen which render adherence to the existing method of valuation of assets or liabilities of the Group and the Company misleading or inappropriate; or not otherwise dealt with in this report or financial statements which would render any amount stated in the financial statements of the Group and the Company misleading. 169(6)(m) As of the date of this report, there does not exist: (a) (b) any charge on the assets of the Group and the Company which has arisen since the end of the financial year and secures the liability of any other person; or any contingent liability of the Group and the Company which has arisen since the end of the financial year. 4

12 169(6)(n) 169(6)(q) REPORT OF THE DIRECTORS 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 Group and the Company to meet its obligations as and when they fall due. In the opinion of the directors, no item, transaction or event of a material and unusual nature has arisen in the interval between the end of the financial year and the date of this report which is likely to affect substantially the results of operations of the Group and the Company for the succeeding financial year. 169(10) HOLDING COMPANY The Company is a subsidiary of Be Competent Sdn. Bhd., a company incorporated in Malaysia, which is also regarded by the directors as the ultimate holding company. AUDITORS The retiring auditors, Messrs. Auditors & Co., have indicated their willingness to be re-appointed in accordance with Section 172(2) of the Companies Act, Signed on behalf of the Board in accordance with a resolution of the directors, Ser L T Ser L. T. Lian K K Lian K. K. Kuala Lumpur 31 January

13 CA169 (15) STATEMENT BY THE DIRECTORS Pursuant to Section 169 (15) of the Companies Act, 1965 The directors of Illustrative Group Sdn. Bhd. state that, in their opinion, the financial statements set out in pages 9 to 70 are drawn up in accordance with the provisions of the Companies Act, 1965 and the Financial Reporting Standard for Small and Medium-sized Entities so as to give a true and fair view of the state of affairs of the Group and the Company as at 31 December 2011 and of the results of their businesses and the cash flows of the Group and the Company for the financial year ended on that date. Signed on behalf of the Board of Directors in accordance with a resolution of the directors, Ser L T Ser L. T. Lian K K Lian K. K. Kuala Lumpur 31 January 2012 CA169 (16) STATUTORY DECLARATION Pursuant to Section 169 (16) of the Companies Act, 1965 I, Gi J. Q., the director primarily responsible for the financial management of Illustrative Group Sdn. Bhd., do solemnly and sincerely declare that the financial statements set out in page 9 to 70 are, in my opinion, correct and I make this solemn declaration conscientiously believing the same to be true, and by virtue of the provisions of the Statutory Declarations Act, Subscribed and solemnly declared by ) the above named Gi J. Q. at ) Gi J Q KUALA LUMPUR on 31 January 2012 ) Before me, Commissioner for Oaths COMMISSIONER FOR OATHS 6

14 Auditors & Co. Chartered Accountants ISA c700 INDEPENDENT AUDITORS REPORT TO THE MEMBERS OF ILLUSTRATIVE GROUP SDN. BHD. (Company No.: A) Report on the Financial Statements We have audited the financial statements of Illustrative Group Sdn. Bhd., which comprise the statements of financial position of the Group and the Company as at 31 December 2011, and the statements of comprehensive income, changes in equity and cash flows of the Group and the Company for the financial year then ended, and a summary of significant accounting policies and other explanatory information, as set out on pages 9 to 70. Director s Responsibility for the Financial Statements The directors of the Company are responsible for the preparation of the financial statements that give a true and fair view in accordance with Financial Reporting Standard for Small and Medium-sized Entities and the Companies Act, 1965 in Malaysia, and for such internal control as 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 the auditor s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity s preparation of financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. 7

15 Auditors & Co. Chartered Accountants ISA 700 INDEPENDENT AUDITORS REPORT TO THE MEMBERS OF ILLUSTRATIVE GROUP SDN. BHD. (Company No.: A) Cont d Opinion 174(2)(a) In our opinion, the financial statements have been properly drawn up in accordance with Financial Reporting Standard for Small and Medium-sized Entities and the Companies Act, 1965 in Malaysia so as to give a true and fair view of the financial position of the Group and the Company as at 31 December 2011 and of their financial performance and cash flows for the financial year then ended. Report on Other Legal and Regulatory Requirements In accordance with the requirements of the Companies Act, 1965 in Malaysia, we also report the following: 174(2)(b) 174(2)(c)(ii) 174(2)(c)(iii) 174(2)(c)(iv) (a) (b) (c) (d) In our opinion, the accounting and other records and the registers required by the Act to be kept by the Company and its subsidiaries have been properly kept in accordance with the provisions of the Act. We have considered the financial statements and the auditors reports of all the subsidiaries of which we have not acted as auditors, which are indicated in Note 9 to the Financial Statements. We are satisfied that the financial statements of the subsidiaries that have been consolidated with the Company s financial statements are in form and content appropriate and proper for the purposes of the preparation of the financial statements of the Group and we have received satisfactory information and explanations required by us for those purposes. The audit reports on the financial statements of the subsidiaries did not contain any qualification or any adverse comment made under Section 174(3) of the Act. Other Matters This report is made solely to the members of the Company, as a body, in accordance with Section 174 of the Companies Act, 1965 in Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of this report. Auditors & Co. Auditors & Co. (AF 99999) Chartered Accountants Hu G E Hu G. E. No. 9999/88/12 (J) Partner of the Firm Kuala Lumpur 31 January

16 3.17(a) STATEMENTS OF FINANCIAL POSITION AT 31 DECEMBER 2011 THE GROUP THE COMPANY (d),(e) Note RM RM RM RM NON-CURRENT ASSETS 4.2(e) Property, plant and equipment 5 10,138,338 6,641,386 2,566 3, (f) 4.2(g) 4.2(g) 4.2(c) 4.2(j), (k) 4.2(c) 4.2(o) Investment property 6 5,999,768 4,094, ,198 Goodwill 7 5,216,330 3,828, Other intangible assets 8 4,163,426 4,222, Subsidiaries ,319,749 11,335,974 Investment in associates 10 1,484,315 1,240,119 23,093 23,093 Investment in jointly controlled entities , , Other financial assets , ,201 19,370 17,952 Deferred tax assets 13 10,985 31, Total Non-current Assets 27,759,228 21,120,683 12,365,458 11,381, (i) 4.2(d) 4.2(b) 23.32(a) 4.2(c) 4.2(a) CURRENT ASSETS Biological assets carried at fair value through profit or loss , , Inventories , , Trade and other receivables 16 2,241,475 1,475,188 3,471,575 5,415,978 Gross amount due from customers for contract work 101, , Other financial assets 12 96, ,781 5,068 52,090 Cash and cash equivalents , , Total Current Assets 3,691,723 2,996,211 3,476,771 5,468,282 TOTAL ASSETS 31,450,951 24,116,894 15,842,229 16,849, (f) CAPITAL AND RESERVES 4.12(a) Share capital 18 11,320,200 11,050,200 11,320,200 11,050, (b) Share premium 19 1,242, ,500 1,242, , (b) Treasury shares 20 (500,000) - (500,000) (b) Premium for option on Irredeemable 4.12(b) Convertible Unsecured Loan Stocks 21 29,810-29,810 - Property revaluation surplus , , (b) Translation reserves , , (b) Equity-settled employee benefits 4.12(b) reserves 24 25,500 14,500 25,500 14,500 Retained earnings 25 9,422,556 4,397,260 2,702,715 4,772, (r) Equity attributable to the owners of the parent 23,037,990 17,159,618 14,820,850 16,296, (q) Non-controlling interests 2,461,253 2,304, TOTAL EQUITY 25,499,243 19,464,064 14,820,850 16,296,194 The accompanying notes form an integral part of the financial statements. 9

17 3.17(a) STATEMENTS OF FINANCIAL POSITION AT 31 DECEMBER 2011 THE GROUP THE COMPANY (d),(e) Note RM RM RM RM NON-CURRENT LIABILITIES 4.2(o) Deferred tax liabilities 13 1,184, ,279 9, (e) Retirement benefit obligation 26 66,743 72, (p) Provisions 27 30,449 44, (m) Finance lease payables 28 91, , (m) Other borrowings , , ,998 41, (m) Other financial liabilities , ,000 - Total Non-current Liabilities 2,096,949 1,418, ,934 41,534 CURRENT LIABILITIES 4.2(l) Trade and other payables 31 1,863,793 1,115, , , (b) Gross amount due to customers for contract work 3,211 1, (n) Current tax liabilities 34,598 68, (p) Provisions , , (m) Finance lease payables 28 56,966 53, (a) Bank overdrafts , ,225 36,068 44, (m) Other borrowings 29 1,352,517 1,406, , , (d) Deferred revenue , , Total Current Liabilities 3,854,759 3,234, , ,788 TOTAL LIABILITIES 5,951,708 4,652,830 1,021, ,322 TOTAL EQUITY AND LIABILITIES 31,450,951 24,116,894 15,842,229 16,849,516 * Note on the presentation of financial statements: In accordance with Section 4.9, FRS for SMEs does not prescribe the sequence or format in which items are to be presented. The accompanying notes form an integral part of the financial statements. 10

18 3.17(b)(i) STATEMENTS OF COMPREHENSIVE INCOME - Expenses classified by Function THE GROUP THE COMPANY (d),(e) Note RM RM RM RM Continuing Operations 5.5(a) Revenue 34 23,743,683 19,326, , , (b) Cost of sales (12,966,796) (11,656,606) - - Gross profit 10,776,887 7,669, , ,722 Other income 352, , , , (b) Distribution costs (618,208) (663,922) (b) Administrative expenses (1,664,403) (1,014,755) (265,406) (251,828) 5.11(b) Other expenses (214,557) (213,573) (9,761) (2,025) 5.5(b) Finance costs (243,782) (256,549) (39,472) (24,262) 5.5(c) Share of profit of associates 225,700 89, Profit before tax 35 8,614,020 5,991, , , (d) Tax expense 36 (1,203,963) (1,168,682) (7,869) - Profit from continuing operations 7,410,057 4,823, , ,489 Discontinued Operations 5.5(e) Profit from discontinued operations 9,086 15, (f) Profit For The Financial Year 7,419,143 4,838, , , (g) 5.5(i) Other Comprehensive Income Exchange differences on translation of foreign operations, net of tax 258, , Total Comprehensive Income For The Financial Year 7,677,409 5,070, , , (a) Profit for the financial year attributable to: Owners of the parent 7,262,336 4,709, , ,489 Non-controlling interests 156, , ,419,143 4,838, , , (b) Total comprehensive income for the financial year attributable to: Owners of the parent 7,520,602 4,940, , ,489 Non-controlling interests 156, , ,677,409 5,070, , ,489 The accompanying notes form an integral part of the financial statements. 11

19 3.17(b)(i) STATEMENTS OF COMPREHENSIVE INCOME - Expenses classified by Nature THE GROUP THE COMPANY (d),(e) Note RM RM RM RM Continuing Operations 5.5(a) Revenue 34 23,743,683 19,326, , ,722 Other income 336, , , , (a) Changes in inventories of finished goods and work in progress 268,393 (493,001) (a) Raw materials and consumable used (46,289) (68,739) (a) Contract costs recognised (9,363,577) (6,312,684) (a) Employees benefit expenses (490,010) (342,001) (58,975) (38,305) 5.11(a) Depreciation of property, plant and equipment (1,228,514) (876,403) (469) (492) 5.11(a) Amortisation of other intangible assets (208,748) (151,708) (a) Impairment losses recognised (40,007) (1,629) (a) Impairment losses reversed 15, (a) Other expenses (4,355,212) (5,302,691) (215,723) (215,056) 5.5(b) Finance costs (243,782) (256,549) (39,472) (24,262) 5.5(c) Share of profit of associates 225,700 89, Profit before tax 35 8,614,020 5,991, , , (d) Tax expense 36 (1,203,963) (1,168,682) (7,869) - Profit from continuing operations 7,410,057 4,823, , ,489 Discontinued Operations 5.5(e) Profit from discontinued operations 9,086 15, (f) Profit For The Financial Year 7,419,143 4,838, , , (g) 5.5(i) Other Comprehensive Income Exchange differences on translation of foreign operations, net of tax 258, , Total Comprehensive Income For The Financial Year 7,677,409 5,070, , , (a) Profit for the financial year attributable to: Owners of the parent 7,262,336 4,709, , ,489 Non-controlling interests 156, , ,419,143 4,838, , , (b) Total comprehensive income for the financial year attributable to: Owners of the parent 7,520,602 4,940, , ,489 Non-controlling interests 156, , ,677,409 5,070, , ,489 The accompanying notes form an integral part of the financial statements. 12

20 3.17(b)(ii) INCOME STATEMENTS - Expenses classified by Function THE GROUP THE COMPANY (d),(e) Note RM RM RM RM Continuing Operations 5.5(a) Revenue 34 23,743,683 19,326, , , (b) Cost of sales (12,966,796) (11,656,606) - - Gross profit 10,776,887 7,669, , ,722 Other income 352, , , , (b) Distribution costs (618,208) (663,922) (b) Administrative expenses (1,664,403) (1,014,755) (265,406) (251,828) 5.11(b) Other expenses (214,557) (213,573) (9,761) (2,025) 5.5(b) Finance costs (243,782) (256,549) (39,472) (24,262) 5.5(c) Share of profit of associates 225,700 89, Profit before tax 35 8,614,020 5,991, , , (d) Tax expense 36 (1,203,963) (1,168,682) (7,869) - Profit from continuing operations 7,410,057 4,823, , ,489 Discontinued Operations 5.5(e) Profit from discontinued operations 9,086 15, (f) Profit For The Financial Year 7,419,143 4,838, , , (a) Profit for the financial year attributable to: Owners of the parent 7,262,336 4,709, , ,489 Non-controlling interests 156, , ,419,143 4,838, , ,489 The accompanying notes form an integral part of the financial statements. 13

21 3.17(b)(ii) STATEMENTS OF COMPREHENSIVE INCOME THE GROUP THE COMPANY (d),(e) Note RM RM RM RM 5.7 Profit For The Financial Year 7,419,143 4,838, , , (g) 5.5(i) Other Comprehensive Income Exchange differences on translation of foreign operations, net of tax 258, , Total Comprehensive Income For The Financial Year 7,677,409 5,070, , , (b) Total comprehensive income for the financial year attributable to: Owners of the parent 7,520,602 4,940, , ,489 Non-controlling interests 156, , ,677,409 5,070, , ,489 The accompanying notes form an integral part of the financial statements. 14

22 3.17(c) STATEMENTS OF CHANGES IN EQUITY Equity Attributable to the Owners of Parent Share Capital Share Premium Treasury Shares Premium for Option on ICULS Property Revaluation Surplus Translation Reserves * Equity-settled Employee Benefits Reserves Retained Earnings Total,(d),(e) THE GROUP Note RM RM RM RM RM RM RM RM RM RM RM Noncontrolling Interests Total Equity 6.3(c) Balance at 1 January ,045, , , ,049 9,000 1,896,959 14,408,926 2,174,916 16,583,842 Profit for the financial year ,709,341 4,709, ,530 4,838,871 Other comprehensive income for the financial year , , , (a) Total comprehensive income for the financial year ,391-4,709,341 4,940, ,530 5,070, (c) Dividends (2,209,040) (2,209,040) - (2,209,040) 6.3(c) Issue of ordinary shares 5,000 8, (1,500) - 12,000-12, (c) Recognition of share-based payments ,000-7,000-7, (c) Balance at 31 December ,050, , , ,440 14,500 4,397,260 17,159,618 2,304,446 19,464,064 Profit for the financial year ,262,336 7,262, ,807 7,419,143 Other comprehensive income for the financial year , , , (a) Total comprehensive income for the financial year ,266-7,262,336 7,520, ,807 7,677, (c) Dividends (2,237,040) (2,237,040) - (2,237,040) 6.3(c) Issue of ordinary shares 270, , (6,000) - 1,048,000-1,048, (c) Buy-back of ordinary shares - - (500,000) (500,000) - (500,000) 6.3(c) Issue of ICULS , ,746-39, (c) Tax effect on issue of ICULS (9,936) (9,936) - (9,936) Transfer to retained earnings on disposal of property (c) Recognition of share-based payments ,000-17,000-17, (c) Balance at 31 December ,320,200 1,242,500 (500,000) 29, , ,706 25,500 9,422,556 23,037,990 2,461,253 25,499,243 * Disclosure in accordance with Section 30.25(b) The accompanying notes form an integral part of the financial statements. 15

23 3.17(c) STATEMENTS OF CHANGES IN EQUITY Share Capital Share Premium Treasury Shares Premium for Option on ICULS Property Revaluation Surplus Equity-settled Employee Benefits Reserves Retained Earnings Total Equity,(d),(e) THE COMPANY Note RM RM RM RM RM RM RM RM 6.3(c) Balance at 1 January ,045, , ,000 6,850,420 18,354,745 Profit for the financial year , ,489 Other comprehensive income for the financial year (a) Total comprehensive income for the financial year , , (c) Dividends (2,209,040) (2,209,040) 6.3(c) Issue of ordinary shares 5,000 8, (1,500) - 12, (c) Recognition of share-based payments ,000-7, (c) Balance at 31 December ,050, , ,500 4,772,869 16,296,194 Profit for the financial year , ,886 Other comprehensive income for the financial year (a) Total comprehensive income for the financial year , , (c) Dividends (2,237,040) (2,237,040) 6.3(c) Issue of ordinary shares 270, , (6,000) - 1,048, (c) Buy-back of ordinary shares - - (500,000) (500,000) 6.3(c) Issue of ICULS , , (c) Tax effect on issue of ICULS (9,936) (9,936) 6.3(c) Recognition of share-based payments ,000-17, (c) Balance at 31 December ,320,200 1,242,500 (500,000) 29, ,500 2,702,715 14,820,850 The accompanying notes form an integral part of the financial statements. 16

24 3.18 STATEMENTS OF INCOME AND RETAINED EARNINGS - Expenses classified by Function THE GROUP THE COMPANY (d),(e) Note RM RM RM RM Continuing Operations 5.5(a) Revenue 34 23,743,683 19,326, , , (b) Cost of sales (12,966,796) (11,656,606) - - Gross profit 10,776,887 7,669, , ,722 Other income 352, , , , (b) Distribution costs (618,208) (663,922) (b) Administrative expenses (1,664,403) (1,014,755) (265,406) (251,828) 5.11(b) Other expenses (214,557) (213,573) (9,761) (2,025) 5.5(b) Finance costs (243,782) (256,549) (39,472) (24,262) 5.5(c) Share of profit of associates 225,700 89, Profit before tax 35 8,614,020 5,991, , , (d) Tax expense 36 (1,203,963) (1,168,682) (7,869) - Profit from continuing operations 7,410,057 4,823, , ,489 Discontinued Operations 5.5(e) Profit from discontinued operations 9,086 15, (f) Profit For The Financial Year 7,419,143 4,838, , ,489 Retained earnings at the beginning of 6.5(a) the financial year 4,397,260 1,896,959 4,772,869 6,850, (b) Dividends 37 (2,237,040) (2,209,040) (2,237,040) (2,209,040) 6.5(c) Restatements of retained earnings for corrections of prior period errors * - (129,530) (d) Restatements of retained earnings for changes in accounting policy * (156,807) (e) Retained Earnings At The End Of The Financial Year 9,422,556 4,397,260 2,702,715 4,772, (a) Profit for the financial year attributable to: Owners of the parent 7,262,336 4,709, , ,489 Non-controlling interests 156, , The accompanying notes form an integral part of the financial statements. 17 7,419,143 4,838, , ,489 This statement is prepared for illustration purpose only and does not form part of the financial statements of Illustrative Group Sdn. Bhd.. Items marked with * are not able to agree to other part of this illustrative financial statements. As permitted by Section 3.18, the above statement illustrated the format of statement of income and retained earnings in place of a statement of comprehensive income and statement of changes in equity when the only changes to its equity during the financial period arose from profit or loss, dividends, corrections of prior period errors, and changes in accounting policy.

25 3.18 STATEMENTS OF INCOME AND RETAINED EARNINGS - Expenses classified by Nature THE GROUP THE COMPANY (d),(e) Note RM RM RM RM Continuing Operations 5.5(a) Revenue 34 23,743,683 19,326, , ,722 Other income 336, , , , (a) Changes in inventories of finished goods and work in progress 268,393 (493,001) (a) Raw materials and consumable used (46,289) (68,739) (a) Contract costs recognised (9,363,577) (6,312,684) (a) Employees benefit expenses (490,010) (342,001) (58,975) (38,305) 5.11(a) Depreciation of property, plant and equipment (1,228,514) (876,403) (469) (492) 5.11(a) Amortisation of other intangible assets (208,748) (151,708) (a) Impairment losses recognised (40,007) (1,629) (a) Impairment losses reversed 15, (a) Other expenses (4,355,212) (5,302,691) (215,723) (215,056) 5.5(b) Finance costs (243,782) (256,549) (39,472) (24,262) 5.5(c) Share of profit of associates 225,700 89, Profit before tax 35 8,614,020 5,991, , , (d) Tax expense 36 (1,203,963) (1,168,682) (7,869) - Profit from continuing operations 7,410,057 4,823, , ,489 Discontinued Operations 5.5(e) Profit from discontinued operations 9,086 15, (f) Profit For The Financial Year 7,419,143 4,838, , ,489 Retained earnings at the beginning of 6.5(a) the financial year 4,397,260 1,896,959 4,772,869 6,850, (b) Dividends 37 (2,237,040) (2,209,040) (2,237,040) (2,209,040) 6.5(c) Restatements of retained earnings for corrections of prior period errors * - (129,530) (d) Restatements of retained earnings for changes in accounting policy * (156,807) (e) Retained Earnings At The End Of The Financial Year 9,422,596 4,397,260 2,702,715 4,772,869 The accompanying notes form an integral part of the financial statements. 18

26 3.18 STATEMENTS OF INCOME AND RETAINED EARNINGS - Expenses classified by Nature THE GROUP THE COMPANY (d),(e) Note RM RM RM RM 5.6(a) Profit for the financial year attributable to: Owners of the parent 7,262,336 4,709, , ,489 Non-controlling interests 156, , ,419,143 4,838, , ,489 This statement is prepared for illustration purpose only and does not form part of the financial statements of Illustrative Group Sdn. Bhd.. Items marked with * are not able to agree to other part of this illustrative financial statements. Note: As permitted by Section 3.18, the above statement illustrated the format of statement of income and retained earnings in place of a statement of comprehensive income and statement of changes in equity when the only changes to its equity during the financial period arose from: profit or loss, dividends, corrections of prior period errors, and changes in accounting policy. The accompanying notes form an integral part of the financial statements. 19