CORPORATE INFORMATION

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2 CONTENTS Corporate Information 2 Corporate Structure 3 Chairman s Statement 4 Product Review 6 Distribution Network 8 Five-Years Group Financial Highlights 9 Notice of Annual General Meeting 10 Profile of Directors of Komarkcorp Berhad 13 Statement on Corporate Governance 18 Statement on Risk Management and Internal Control 32 Audit Committee Report 33 Other Information 38 Financial Statements 41 Analysis of Shareholdings 100 List of Properties 103 Proxy Form

3 CORPORATE INFORMATION DIRECTORS Tan Sri Ahmad Bin Mohd Don (Chairman / Independent Non-Executive Director) Koh Hong Koh Gak Siong (Chief Executive Officer / Executive Director) Tan Kwe Hee (Joint Chief Executive Officer / Executive Director) Koh Chie Jooi (Managing Director) Koh Chee Mian (Deputy Managing Director) Lim Pei Liam Ahat Kiat (Executive Director) Datuk Ng Peng Ng Peng Hay (Independent Non-Executive Director) Dato Yeow Wah Chin (Non-Independent Non-Executive Director) Ihsan bin Ismail (Independent Non-Executive Director) Management Team Ong Ann Boon (Director) General Labels & Labelling Pte. Ltd. Chong Jiun Shyang (Group Financial Controller) Leong Kwong Kuan (Group QAQC Manager) Tan Kai Yee (Deputy General Manager) General Labels & Labelling (M) Sdn Bhd Nelson Yeo Tsee Huat (Export Manager) Komark International (M) Sdn Bhd Chan Keng Hing (Operation Manager) General Labels & Labelling (M) Sdn Bhd Komark International (M) Sdn Bhd Registered Office Lot 6.05, Level 6, KPMG Tower 8 First Avenue, Bandar Utama Petaling Jaya Selangor Darul Ehsan Tel : Fax : Principal Place Of Business (Headquarters) Lot 132, Jalan 16/1 Kawasan Perindustrian Cheras Jaya Balakong Selangor Darul Ehsan Tel : Fax : Audit Committee Datuk Ng Peng Ng Peng Hay Chairman (Independent Non-Executive Director) Tan Sri Ahmad Bin Mohd Don Member of the Committee (Chairman / Independent Non-Executive Director) Dato Yeow Wah Chin Member of the Committee (Non-Independent Non-Executive Director) Ihsan bin Ismail Member of the Committee (Independent Non-Executive Director) Remuneration Committee Datuk Ng Peng Ng Peng Hay Chairman (Independent Non-Executive Director) Tan Sri Ahmad Bin Mohd Don Member of the Committee (Chairman / Independent Non-Executive Director) Koh Hong Koh Gak Siong Member of the Committee (Chief Executive Officer / Executive Director) Tan Kwe Hee Member of the Committee (Joint Chief Executive Officer / Executive Director) Ihsan bin Ismail Member of the Committee (Independent Non-Executive Director) Nomination Committee Datuk Ng Peng Ng Peng Hay Chairman (Independent Non-Executive Director) Dato' Yeow Wah Chin Member of the Committee (Non-Independent Non-Executive Director) Ihsan bin Ismail Member of the Committee (Independent Non-Executive Director) Auditors Ong & Wong (AF0241) Chartered Accountants Unit C-20-5, Block C 20th Floor Megan Avenue II 12, Jalan Yap Kwan Seng Kuala Lumpur Tel : Fax : Registrars Tricor Investor Services Sdn Bhd (Company No V) Level 17 The Gardens North Tower Mid Valley City Lingkaran Syed Putra Kuala Lumpur Tel : Fax : Principal Bankers Standard Chartered Bank Bhd (Company No P) Bank of Shanghai Co Ltd Malayan Banking Berhad (Company No K) Kuwait Finance House (M) Bhd (Company No T) Hong Leong Bank Bhd (Company No X) Company Secretaries Liew Irene (MAICSA ) Tai Yit Chan (MAICSA ) Stock Exchange Listing Bursa Malaysia Securities Berhad (Company No W) Main Market 2 Annual Report 2013

4 CORPORATE STRUCTURE 100% GENERAL LABELS & LABELLING (M) SDN. BHD. (93225-V) 100% KOMARK (THAILAND) CO. LTD. (1554/2358) 70% GENERAL LABELS & LABELLING (PENANG) SDN. BHD. ( W) 30% 100% GENERAL LABELS & LABELLING (JB) SDN. BHD. ( X) 8.4% GENERAL LABELS & LABELLING PTE. LTD. ( C) 91.6% 1% 50% GENERAL LABELS & LABELLING (IPOH) SDN. BHD. ( W) 50% 99% PT KOMARK LABELS AND LABELLING INDONESIA 100% KOMARK INTERNATIONAL (M) SDN. BHD. (96626-V) 49% KOMARK ENTERPRISE CO. LTD. (5053) 100% KOMARK AUSTRALASIA PTY. LTD. ( ) 100% SHANGHAI KOMARK LABELS & LABELLING CO. LTD. (020411) 100% KOMARK INVESTMENT HOLDINGS LTD. (440077) 100% GUANGZHOU KOMARK LABELS & LABELLING CO. LTD. (100286) 100% KOMARK HONG KONG CO. LTD. (754596) Komarkcorp Berhad ( A) 3

5 CHAIRMAN S STATEMENT Dear Shareholders, On behalf of the Board of Directors, I am pleased to present the Annual Report of Komarkcorp Berhad and its subsidiary Companies ( Group ) for the financial year ended 30 April 2013 ( FYE 2013 ). PERFORMANCE REVIEW As a result of European financial crisis and the US economic malaise, the global economy continues with its trend of uncertainty. These factors have given rise to yet another year of global economic slowdown. The FYE 2013 presented yet another challenging year for the Group. The Group recorded an increase of 10.29% in revenue to RM million compared to RM million recorded in preceding financial year. The Multinational Customers segment continued to contribute substantially to the Group s turnover. Despite an increase in revenue, the Group recorded a loss before taxation of RM2.273 million and a loss after taxation of RM4.831 million compared to a profit before taxation of RM830,000 and a profit after taxation of RM79,000 recorded in the preceding financial year. This is mainly attributable to higher provisions for slow moving stocks, writing off bad debt and writing off of unreconciled inter-company balance. MARKET OUTLOOK The Malaysia economy is expected to register a GDP growth of % compared to 5.6% achieved in As the global growth outlook in 2013 is expected to improve, the Asia Pacific region s GDP growth is forecasted to pick up from 6.1% in 2012 to 6.6% in 2013 With a diversified markets in the Asia Pacific region (mainly Malaysia, China, Singapore, Thailand, Indonesia, India and Philippines), the Group is in a better position to mitigate any impact of economic slowdown. The prospect of the Group s operations in China remains bright given it's population of approximately 1.3 billion and it's projected GDP growth of 7-8% for 2013, which would create huge demand for labels and related products. We will continue to capitalize on the Group s established brand name, product quality and efficient service to strengthen our market position locally and abroad. In addition, the Group will continue to explore new markets for its products. The Group expects the performance and market outlook to remain challenging with increasing competition. 4 Annual Report 2013

6 CHAIRMAN S STATEMENT (cont d) DIVIDEND The Board has recommended a first and final single-tier dividend of 0.5 sen per ordinary shares of RM1.00 each for the financial year ended 30 April NEW COMPOSITION OF THE BOARD After the FYE 2013, there were some changes on the composition of the Board where four new directors namely Mr Tan Kwe Hee, Mr Lim Pei Tiam, Dato' Yeow Wah Chin and myself, were appointed to the Board on 16 August, 2013 in place of Datuk Wira Jalilah Binti Baba, Mr Koh Chee Kian, Mr Koh Chee Hao, Encik Ihsan Bin Ismail and Mr Alex Chew Chee Chek who had tendered their resignation. Subsequently, Encik Ihsan Bin Ismail was reappointed to the Board on 23 September On behalf of the Board, I would like to thank all of them for their services rendered to the Group. I strongly believe that the new Board with their diverse background and experiences, will augur well for the Group. I am confident we will move forward towards achieving better results in the near future. ACKNOWLEDGEMENTS On behalf of the Board of Directors, I wish to express our sincere appreciation to the Management and staff of the Group for their continued dedication, commitment and loyalty to the Group. I also wish to express our sincere appreciation to our valued shareholders, customers, business associates, government authorities and bankers for their continued support and cooperation. Ahmad Bin Mohd Don Independent Non-Excecutive Chairman Komarkcorp Berhad ( A) 5

7 PRODUCT REVIEW PACKAGING SOLUTION Pressure Sensitive Labels In Reel / Sheet PP Roll-Fed Labels Heat Shrink Sleeves RFID Smart Labels Multiform (Booklet) Labels In-Mould Labels Barcode & Computer Labels Fabric Labels LABELLING & LABELS SOLUTION PUMA SERIES TIGER SERIES LION SERIES K3000 SERIES Four Label Applicator Heads for 2 Sides & Non-Stop Labelling With Stepper MotorDrive System Pressure Sensitive Label Applicator With Servo Motor Drive System Double Side Labelling (Tiger Series) Pressure Sensitive Label Applicator With Fully Synchronised Stepper Motor Drive System - 2 Sides Labelling With Wraparound Station (Lion Series) Pressure Sensitive Label Applicator With Clutch And Brake Drive System - Wraparound Labelling Pressure Sensitive Label High Speed Rotary Labelling Machine Pressure Sensitive Label Applicator For Tube Labelling Fully Customisation Labelling System For Pharmaceuticals Industry Semi Automatic Labelling Machine Pressure Sensitive Label Dispenser Automatic Label Dispenser With Hot Printer High Speed Labels Inspection Machine (LIM380) Pressure Sensitive Labels Inspection Machine (PIM300S) 6 Annual Report 2013

8 PRODUCT REVIEW RETAILING & BARCODING SYSTEM SOLUTION Pricing Labeller - Single Liner Pricing Labeller - Double Liner Pricing Labeller - Three Liner Tag Guns & Pins Digital Computing Scale Barcode Scanner / Printer Barcode Labels Printer cum Applicator Barcoding System Software Scale Labels, Pricing Labels & Tag Rotary Press (1-2 Colours) Labels Rewinder for Pricing Labels With or Without Slitter Mini Slitter for Labels OEM & AGENCY PRODUCTS Axon Automatic Heat Shrink Band and Sleeve Applicator & Heat Tunnel Komark Automatic Heat Shrink Band and Sleeve Applicator and Heat Tunnel Cocito Rotary Labelling Machine Etina for Roll-Fed Label Cocito Pressure Sensitive Label Rotary High Speed Labelling Machine Cocito Rotary Cold Glue / Hot Mett Labelling Machine Styrotech PE Stretch Sleeve Label Applicator Komarkcorp Berhad ( A) 7

9 DISTRIBUTION NETWORK MALAYSIA HEADQUARTER - KUALA LUMPUR Penang Ipoh Johor Bahru Shanghai Langfang GuangZhou Singapore Thailand Indonesia 8 Annual Report 2013

10 FIVE-YEARS GROUP FINANCIAL HIGHLIGHTS YEAR ENDED 30 APRIL Operating Result (RM 000) Turnover 136, , , , ,757 Profit /(Loss) Before Tax (2,273) 830 2,900 2, Profit /(Loss) After Tax (4,831) 79 2,115 2, Key Balance Sheet Data (RM 000) Total Assets 220, , , , ,380 Total Interest Bearing Borrowings 69,938 66,019 75,710 82,856 90,379 Total Liabilities 103,799 94,891 99, , ,870 Paid-Up Capital 81,275 81,275 81,275 81,275 81,275 Shareholders Equity 116, , , , ,510 Share Information Per share (sen) Basic EPS /(LPS) (6.00) Gross Dividend (Recommended) Net Assets Financial Ratio (%) Return on Equity (4.14) Return on Total Assets (2.19) Gearing ratio , ,000 Turnover (RM 000) 3,000 2,400 Profit Before Tax (RM 000) 2,400 1,600 Profit After Tax (RM 000) 130,000 1, , ,000 1, , ,900 2, (800) 115,000 0 (1,600) 110, , ,000 (600) (1,200) (1,800) (2,400) , , , , ,037 (2,273) (2,400) (3,200) (4,000) (4,800) , (4,831) Komarkcorp Berhad ( A) 9

11 NOTICE OF ANNUAL GENERAL MEETING NOTICE IS HEREBY GIVEN THAT the Seventeenth Annual General Meeting of the Company will be convened and held at Perdana Room, Bukit Jalil Golf & Country Resort, Jalan 3/155B, Bukit Jalil, Kuala Lumpur on Wednesday, 30 October 2013 at 3.00 p.m. to transact the following businesses:- AGENDA As Ordinary Business To receive the Audited Financial Statements for the financial year ended 30 April 2013 together with the Directors and Auditors Reports thereon. To declare a first and final single-tier dividend of 0.50 sen per ordinary share of RM1.00 each for the financial year ended 30 April 2013 To approve the increase of Directors Fees for the financial year ended 30 April 2013 and the payment thereof. To re-elect Mr Koh Chee Mian who is retiring under Article 93.1 of the Articles of Association of the Company. To re-elect the following Directors who are retiring under Article 100 of the Articles of Association of the Company:- Please refer to Note 1 of the Explanatory Notes Ordinary Resolution 1 Ordinary Resolution 2 Ordinary Resolution 3 (i) (ii) (iii) (iv) (iv) Mr Tan Kwe Hee Mr Lim Pei Liam Ahat Kiat Tan Sri Ahmad Bin Mohd Don Dato Yeow Wah Chin Encik Ihsan Bin Ismail Ordinary Resolution 4 Ordinary Resolution 5 Ordinary Resolution 6 Ordinary Resolution 7 Ordinary Resolution 8 6. To re-appoint Messrs Ong & Wong as Auditors of the Company and to authorise the Directors to fix their remuneration. Ordinary Resolution 9 As Special Business To consider and, if thought fit, to pass the following resolutions: Authority for Datuk Ng Peng Ng Peng Hay to continue in office as Independent Non-Executive Director THAT authority be and is hereby given to Datuk Ng Peng Ng Peng Hay who has served as an Independent Non-Executive Director of the Company for a cumulative term of more than nine years, to continue to act as an Independent Non- Executive Director of the Company until the conclusion of the next Annual General Meeting ("AGM") in accordance with Malaysian Code on Corporate Governance Proposed Renewal of General Mandate for Recurrent Related Party Transactions THAT the proposed renewal of general mandate pursuant to Paragraph of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, authorising the subsidiaries of the Company to enter into recurrent transactions of a revenue or trading nature as set out in paragraph 2.3 of the Circular to Shareholders dated 7 October 2013 with the related party mentioned therein which are necessary for the Komarkcorp group s day-to-day operations ( Proposed Renewal of General Mandate for Recurrent Related Party Transactions ), be and is hereby approved provided that:- Ordinary Resolution 10 (i) (ii) the transactions are in the ordinary course of business and on normal commercial terms which are not more favourable to the related parties than those generally available to the public and are not to the detriment of the minority shareholders of the Company; and in making the disclosure of the aggregate value of recurrent transactions conducted pursuant to the general mandate in the Annual Report, the Company will provide a breakdown of the aggregate value of the recurrent transactions and type of recurrent transaction made during the financial year. 10 Annual Report 2013

12 NOTICE OF ANNUAL GENERAL MEETING (cont'd) THAT the authority conferred by such mandate shall continue to be in force until: (i) (ii) (ii) the conclusion of the next AGM of the Company following the Seventeenth AGM at which the Proposed Renewal of General Mandate for Recurrent Related Party Transactions is approved, at which time it will lapse, unless by a resolution passed at the AGM, the mandate is again renewed; the expiration of the period within which the next AGM of the Company after the Seventeenth AGM is required to be held pursuant to Section 143(1) of the Companies Act, 1965 (but shall not extend to such extensions as may be allowed pursuant to Section 143(2) of the Companies Act, 1965); or revoked or varied by a resolution passed by the shareholders in general meeting, whichever is earlier. AND THAT the Directors of the Company be and are hereby authorised to complete and do all such acts and things as they may consider expedient or necessary to give effect to the Proposed Renewal of General Mandate for Recurrent Related Party Transactions. Ordinary Resolution Proposed Authority under Section 132D of the Companies Act, 1965 for the Directors to issue shares THAT pursuant to Section 132D of the Companies Act, 1965, the Directors be and are hereby authorised to issue shares in the Company at any time until the conclusion of the next AGM upon such terms and conditions and for such purposes as the Directors may, in their absolute discretion, deem fit provided that the aggregate number of shares to be issued does not exceed ten per centum (10%) of the issued share capital of the Company (excluding treasury shares) for the time being, subject always to the approval of all relevant regulatory bodies being obtained for such allotment and issue. Ordinary Resolution 12 NOTICE OF DIVIDEND ENTITLEMENT AND PAYMENT NOTICE IS HEREBY GIVEN THAT subject to the approval of shareholders at the Seventeenth Annual General Meeting, a first and final single-tier dividend of 0.5 sen per ordinary share of RM1.00 each in respect of the financial year ended 30 April 2013 will be paid on 13 December 2013 to the shareholders whose names appear in the Record of Depositors of the Company on 18 November A depositor shall qualify for entitlement to the dividend only in respect of: a) Shares transferred into the depositor s securities account before 4.00 p.m. on 18 November 2013 in respect of transfers; and b) Shares bought on Bursa Malaysia Securities Berhad on a cum entitlement basis according to Rules of Bursa Malaysia Securities Berhad. BY ORDER OF THE BOARD LIEW IRENE (MAICSA ) TAI YIT CHAN (MAICSA ) Secretaries Selangor Darul Ehsan Date: 7 October 2013 Komarkcorp Berhad ( A) 11

13 NOTICE OF ANNUAL GENERAL MEETING (cont'd) NOTES 1. A member of the Company entitled to attend and vote at the meeting is entitled to appoint a proxy or proxies to attend and vote in his stead. A proxy may but need not be a member of the Company and the provisions of Section 149(1)(b) of the Companies Act, 1965 shall not apply to the Company. There shall be no restriction as to the qualification of the proxy. 2. A member may appoint not more than two (2) proxies to attend and vote at the same meeting. Where a member appoints two (2) proxies, the appointments shall be invalid unless he specifies the proportions of his shareholdings to be represented by each proxy. 3. Where a member of the Company is an exempt authorised nominee which holds shares in the Company for multiple beneficial owners in one securities account ( omnibus account ) as defined under the Securities Industry (Central Depositories) Act, 1991, there is no limit to the number of proxies which the exempt authorised nominee may appoint in respect of each omnibus account it holds. 4. The instrument appointing a proxy 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 the attorney. 5. The instrument appointing a proxy, with the power of attorney or other authority (if any) under which it is signed or a notarially certified or office copy of such power or authority, must be deposited at the Company s Share Registrars office at Level 17, The Gardens North Tower, Mid Valley City, Lingkaran Syed Putra, Kuala Lumpur not less than 48 hours before the time set for holding the meeting or any adjournment thereof. 6. In respect of deposited securities, only members whose names appear on the Record of Depositors on 22 October 2013 (General Meeting Record of Depositors) shall be eligible to attend, speak and/or vote at the meeting or appoint proxy(ies) to attend, speak and/or vote on his behalf. Explanatory Notes to Special Business: (1) To receive the Audited Financial Statements Agenda item no. 1 is meant for discussion only as the provision of Section 169(1) of the Companies Act, 1965 does not require a formal approval of shareholders for the Audited Financial Statements. Hence, this item on the Agenda is not put forward for voting. (2) Authority for Datuk Ng Peng Ng Peng Hay to continue in office as Independent Non-Executive Director The Board of Directors ( Board ) has via the Nomination Committee conducted an annual performance evaluation and assessment of Datuk Ng Peng Ng Peng Hay, who has served as Independent Non-Executive Director of the Company for a cumulative term of more than nine years, and recommended him to continue to act as Independent Non-Executive Director of the Company based on the following justifications:- he fulfils the criteria under the definition on Independent Director as stated in the Main Market Listing Requirements of Bursa Malaysia Securities Berhad and therefore is able to bring independent and objective judgment to the Board; his experience enables him to provide the Board and Audit Committee ( AC ) with a pertinent set of experience, expertise, skills and competence; he has been with the Company long and therefore understands the Company s business operations which enables him to contribute actively and effectively during deliberations or discussions at AC and Board meetings; and he has exercised due care during his tenure as Independent Non-Executive Director of the Company and carried out his professional duties in the interest of the Company. (3) Proposed Renewal of General Mandate for Recurrent Related Party Transactions Ordinary Resolution 11, if passed, will allow Komarkcorp Group to enter into recurrent related party transactions in the ordinary course of business and the necessity to convene separate general meetings from time to time to seek shareholders approval as and when such recurrent related party transactions occur would not arise. This would reduce the expenses associated therewith, improve administrative efficiency and allow human resources and time to be channelled towards attaining corporate objectives. The shareholders mandate is subject to renewal on an annual basis. (4) Proposed Authority under Section 132D of the Companies Act, 1965 for the Directors to issue shares The Company had, during its Sixteenth Annual General Meeting ( AGM ) held on 29 October 2012, obtained its shareholders approval for the general mandate for issuance of shares pursuant to Section 132D of the Companies Act, 1965 ( the Act ). Pursuant to the above mandate granted, the Company had on 24 June 2013 announced that it proposes to undertake a private placement of up to 10% of the issued and paid-up share capital of the Company ( the Proposal ). The application pursuant to the Proposal was approved by Bursa Malaysia Securities Berhad on 28 June As at todate, no new shares were issued or placed out pursuant to the Proposal. The Ordinary Resolution 12 proposed under item 9 of the Agenda is a renewal of the general mandate for issuance of shares by the Company under Section 132D of the Act. The mandate, if passed, will provide flexibility for the Company and empower the Directors to allot and issue new shares speedily in the Company up to an amount not exceeding in total 10% of the issued share capital of the Company (excluding treasury shares) for purpose of funding the working capital and future investment of the Group. This would eliminate any delay arising from and cost involved in convening a general meeting to obtain approval of the shareholders for such issuance of shares. This authority, unless revoked or varied by the Company at a general meeting, will expire at the next AGM. 12 Annual Report 2013

14 PROFILE OF DIRECTORS OF KOMARKCORP BERHAD Tan Sri Ahmad Bin Mohd Don Age : 66 Nationality : Malaysian Qualification : 1. Bachelor of Economics & Business (First Class Hons) Aberystwyth University, United Kingdom 2. Fellow of the Institute of Chartered Accountants in England and Wales (ICAEW) 3. Members of the Malaysian Institute of Certified Public Accountants Directorate : Independent Non-Executive Director Designation : Chairman Other Directorships of Public Companies : 1. MAA Group Berhad 2. United Malacca Berhad 3. Hap Seng Plantations Holdings Berhad The Date He Was First Appointed to the Board : 16 August 2013 The Details of Any Board Committee to Which He Belongs : Audit Committee and Remuneration Committee of Komarkcorp Berhad Securities Holding in the Company : Nil Securities Holding in the Subsidiaries : Nil Family Relationship With Any Director and / or Major Shareholders of the Company : None Conflict of Interest : None List of Convictions for Offences Within the Past 10 Years Other Than Traffic Offences : None Working Experience : Tan Sri Ahmad Bin Mohd Don is the Independent Non-Executive Chairman of Komarkcorp Berhad. He was first appointed as an Independent Non-Executive Director on 16 August 2013 and became the Chairman on 11 September Tan Sri Ahmad graduated summa cum laude in Economics and Business from the Aberystwyth University, United Kingdom. He is fellow of the Institute of Chartered Accountants in England and Wales and a member of the Malaysian Institute of Certified Public Accountants. Tan Sri Ahmad has extensive experience in finance and banking, having worked in various capacities with Pernas Securities Sdn Bhd, Permodalan Nasional Berhad and Malayan Banking Berhad. He was the Group Managing Director and Chief Executive Officer of Malayan Banking Berhad from 1991 to 1994 before assuming the position as the Governor of Bank Negara Malaysia from May 1994 to August Tan Sri Ahmad is currently the Director of MAA Group Berhad, United Melacca Berhad and Hap Seng Plantations Holdings Berhad. Koh Hong Koh Gak Siong Age : 65 Nationality : Malaysian Qualification : Malaysian Certificate of Education Directorate : Executive Director Designation : Chief Executive Officer Other Directorships of Public Companies : None The Date He Was First Appointed to the Board : 16 June 1997 The Details of Any Board Committee to Which He Belongs : Remuneration Committee of Komarkcorp Berhad Securities Holding in the Company : Direct : 6,519,900 ordinary shares Indirect : 10,906,889 ordinary shares Securities Holding in the Subsidiaries : Deemed to have interests in shares of all the subsidiaries to the extent Komarkcorp Berhad has an interest. Family Relationship With Any Director and / or Major Shareholders of the Company : Parent to Mr. Koh Chie Jooi and Mr. Koh Chee Mian. Conflict of Interest : None List of Convictions for Offences Within the Past 10 Years Other Than Traffic Offences : None Working Experience : Mr. Koh Hong Koh Gak Siong is the founder of the Komarkcorp Group of Companies and is currently the Chief Executive Officer of Komarkcorp Group. He is responsible for formulating the overall business development and corporate strategies for the Group. Mr. Koh has been engaged in the manufacturing of pressure sensitive labels and automatic labelling systems for over 38 years during which he gained wide experience in product development and corporate management. He co-invented two sets of patented feeding mechanism in hand-held labellers and precision products feeding device with pneumatic logistic control systems in automatic labelling machines, respectively. Mr. Koh s efforts were recognised by the Malaysian Government when General Labels & Labelling (M) Sdn Bhd and Komark International (M) Sdn Bhd, whollyowned subsidiaries of Komarkcorp Berhad, were granted Pioneer Status for the manufacturing of automatic labelling machines and hand-held labellers by Malaysia Industrial Development Authority (MIDA), Malaysia in 1991 and 1997, respectively. Mr. Koh is a member of The Institute of Printing of the United Kingdom. The Number of Board Meetings Attended in the Financial Year : 4 out of 4 The Number of Board Meetings Attended in the Financial Year : Not Applicable Komarkcorp Berhad ( A) 13

15 PROFILE OF DIRECTORS OF KOMARKCORP BERHAD (cont'd) Tan Kwe Hee Age : 69 Nationality : Malaysian Qualification : 1. Masters in Business Administration (London) 2. Associate in Banking (Malaysia) 3. Associate of Malaysian Institute of Management Directorate : Executive Director Designation : Joint Chief Executive Officer Other Directorships of Public Companies : Group Director of Bina Puri Holdings Bhd The Date He Was First Appointed to the Board : 16 August 2013 The Details of Any Board Committee to Which He Belongs : Remuneration Committee of Komarkcorp Berhad Securities Holding in the Company : Direct : 4,767,000 ordinary shares Indirect :1,200,000 ordinary shares Securities Holding in the Subsidiaries : Nil Family Relationship With Any Director and / or Major Shareholders of the Company : None Conflict of Interest : None List of Convictions for Offences Within the Past 10 Years Other Than Traffic Offences : None Working Experience : Mr. Tan Kwe Hee was appointed as Executive Director of Komarkcorp Berhad on 16 August 2013 and redesignated as Joint Chief Executive Officer on 30 August He is also Group Director of Bina Puri Holdings Bhd. Mr. Tan retired as a Senior Banker who has served in UMBC Bank for 9 1/2 years and AFFIN Bank for 26 years. He has vast banking experience which covers branch banking, banking operations and loan recovery. He retired as Senior Vice President of AFFIN Bank in While still serving in AFFIN Bank, he was appointed by Bank Negara Malaysia (BNM) in August 1996 as Loan Recovery Advisor to the BNM recovery management team on RHB-RMBB Assets (the then Rakyat Merchant Bank). He joined Bina Puri Holdings as Group Financial Advisor in 2003 and later on appointed as Group Executive Director in March 2013 The Number of Board Meetings Attended in the Financial Year : Not Applicable Koh Chie Jooi Age : 35 Nationality : Malaysian Qualification : 1. Degree in Bachelor of Commerce 2. A member of CPA Australia 3. A Chartered Accountant of the Malaysian Institute of Accountants Directorate : Executive Director Designation : Managing Director Other Directorships of Public Companies : None The Date He Was First Appointed to the Board : 27 June 2002 The Details of Any Board Committee to Which He Belongs : None Securities Holding in the Company : Indirect :17,426,789 ordinary shares Securities Holding in the Subsidiaries : Deemed to have interests in shares of all the subsidiaries to the extent Komarkcorp Berhad has an interest. Family Relationship With Any Director and / or Major Shareholders of the Company : Child of Mr. Koh Hong Koh Gak Siong and brother of Mr. Koh Chee Mian. Conflict of Interest : None List of Convictions for Offences Within the Past 10 Years Other Than Traffic Offences : None Working Experience : Mr Koh Chie Jooi was appointed to the Board of Komarkcorp Berhad as an Executive Director on 27 June On 16 May 2011, he was appointed as Managing Director of the Komarkcorp Group. He graduated from the University of Sydney, Australia with a degree in Bachelor of Commerce. Prior to joining Komarkcorp in December 2001 as Assistant Accounts Manager, he was attached to KPMG from February 2001 to November 2001, with his last held position as Audit Assistant. Mr Koh Chie Jooi is a member of CPA Australia and a Chartered Accountant of the Malaysian Institute of Accontants. Currently Mr Koh is the person-in-charge of the overall operations for South East Asia. The Number of Board Meetings Attended in the Financial Year : 4 out of 4 14 Annual Report 2013

16 PROFILE OF DIRECTORS OF KOMARKCORP BERHAD (cont'd) Koh Chee Mian Age : 33 Nationality : Malaysian Qualification : Degree in Bachelor of Engineering Directorate : Executive Director Designation : Deputy Managing Director Other Directorships of Public Companies : None The Date He Was First Appointed to the Board : 15 December 2003 The Details of Any Board Committee to Which He Belongs : None Securities Holding in the Company : Direct : 206,100 ordinary shares Indirect : 17,426,789 ordinary shares Securities Holding in the Subsidiaries : Deemed to have interests in shares of all the subsidiaries to the extent Komarkcorp Berhad has an interest. Family Relationship With Any Director and / or Major Shareholders of the Company : Child of Mr. Koh Hong Koh Gak Siong and brother of Mr. Koh Chie Jooi. Conflict of Interest : None List of Convictions for Offences Within the Past 10 Years Other Than Traffic Offences : None Working Experience : Mr Koh Chee Mian was appointed to the Board of Komarkcorp Berhad as an Executive Director on 15 December On 16 May 2011, he was appointed as Deputy Managing Director of Komarkcorp Group. He graduated from the King s College London, United Kingdom with a degree in Bachelor of Engineering. Currently, Mr Koh is the person-in-charge of the overall operations for China. Lim Pei Liam Ahat Kiat Age : 67 Nationality : Malaysian Qualification : 1. Diploma in Banking from Institute of Bankers, London 2. Senior Associate of Institute of Chartered Bankers, Malaysia Directorate : Executive Director Designation : Company Director Other Directorships of Public Companies : None The Date He Was First Appointed to the Board : 16 August 2013 The Details of Any Board Committee to Which He Belongs : None Securities Holding in the Company : Direct 9,938,800 ordinary shares Securities Holding in the Subsidiaries : Nil Family Relationship With Any Director and / or Major Shareholders of the Company : None Conflict of Interest : Substantial shareholder of Super Enterprise Holdings Berhad, a company with similar business activity as Komarkcorp Berhad. List of Convictions for Offences Within the Past 10 Years Other Than Traffic Offences : None Working Experience : Mr Lim Pei Liam Ahat Kiat has 20 years of experience in large commercial group and position last held was Branch Manager of UMBC Bank. In 1998, Mr Lim set up his own trading business in both Thong Thye Siang Sdn. Bhd. and Great Plus Enterprise Sdn. Bhd. The Number of Board Meetings Attended in the Financial Year : Not Applicable The Number of Board Meetings Attended in the Financial Year : 3 out of 4 Komarkcorp Berhad ( A) 15

17 PROFILE OF DIRECTORS OF KOMARKCORP BERHAD (cont'd) Datuk Ng Peng Ng Peng Hay D.M.SM., D.SM., P.J.K. Age : 61 Nationality : Malaysian Qualification : Malaysian Certificate of Education Directorate : Independent Non-Executive Director Designation : Company Director Other Directorships of Public Companies : Bonia Corporation Berhad Farm s Best Berhd Wellcall Holdings Berhad ICapital.Biz Berhad Invest Melaka Berhad The Date He Was First Appointed to the Board : 16 June 1997 The Details of Any Board Committee to Which He Belongs : Audit Committee, Remuneration Committee and Nomination Committee of Komarkcorp Berhad Securities Holding in the Company : Nil Securities Holding in the Subsidiaries : Nil Family Relationship With Any Director and / or Major Shareholders of the Company : None Conflict of Interest : None List of Convictions for Offences Within the Past 10 Years Other Than Traffic Offences : None Working Experience : Datuk Ng Peng Ng Peng Hay was appointed to the Board of Komarkcorp Berhad on 16 June He was the State Assemblyman for Tengkera Constituency under Barisan Nasional between 1982 and He then served as a Senator in the Malaysian Parliament from 1987 to His first involvement in social activities was upon completing his secondary education. Datuk Ng has been appointed as the Investment Co-ordinator of the Malacca State Development Corporation to handle direct investments in the State of Melaka since Together with his team of officials and his excellent public relations, he has helped in attracting numerous Taiwanese, Singaporean and Chinese investors into the State of Melaka. In recognition of his efforts and dedication, Datuk Ng was conferred the Darjah Mulia Seri Melaka by his Excellency, the Governor of Melaka in On 17 July 1999, the Taiwanese Government awarded him the Economic Medal. Datuk Ng is the Chairman of MCA, 7th Branch Melaka since Presently, he is the Chairman of Koperasi Jayadiri Malaysia Berhad, Board Member of Malaysian Investment Development Authority (MIDA) and Invest Melaka Berhad and Director of The Tun Hussein Onn National Eye Hospital. The Number of Board Meetings Attended in the Financial Year : 4 out of 4 Dato Yeow Wah Chin DSTM, DIMP Age : 53 Nationality : Malaysian Qualification : 1. Bachelor of Economics (Hons) Universiti Kebangsaan Malaysia 2. Bachelor of Laws (LL.B) (Hons) Aberystwyth University, United Kingdom 3. Certificate in Legal Practice Directorate : Non-Independent Non-Executive Director Designation : Company Director Other Directorships of Public Companies : Bina Puri Holdings Bhd The Date He Was First Appointed to the Board : 16 August 2013 The Details of Any Board Committee to Which He Belongs : Audit Committee and Nomination Committee of Komarkcorp Berhad Securities Holding in the Company : Direct : 520,000 ordinary shares Securities Holding in the Subsidiaries : Nil Family Relationship With Any Director and / or Major Shareholders of the Company : None Conflict of Interest : None List of Convictions for Offences Within the Past 10 Years Other Than Traffic Offences : None Working Experience : Dato Yeow Wah Chin, was appointed to the Board on 16 August A lawyer by profession, Dato Yeow holds a Bachelor of Economics (Hons) degree from Universiti Kebangsaan Malaysia in 1984 and worked with Malayan Banking Berhad for a few years before he went for further studies to read law at the Aberystwyth University, United Kingdom in September, 1989 where he graduated with LLB (Hons) degree in Upon his return he continued to serve Malayan Banking Berhad for two years before he set up his own legal practice, Messrs Yeow & Salleh in He specialises in banking and commercial law. He has been appointed as a member of Advocates and Solicitors Disciplinary Committee for some years and had also served as a committee member of the Conveyancing Practice Committee of the Bar Council. As an experienced practising lawyer, he had also been appointed to serve as Legal Advisor for the Society of Interpreters of the Deaf in Selangor and Wilayah Persekutuan and Yeow See Association in Melaka. He also sits as a member of the Board of Bina Puri Holdings Berhad. Dato Yeow is an active member and a senior Lion leader of Lions Clubs International District 308B1 Malaysia. He served as its District Governor in and Vice Council Chairman of Multiple District 308 in In 2011 he founded Lions Education Foundation, of which he is the founding Chairman. The Number of Board Meetings Attended in the Financial Year : Not Applicable 16 Annual Report 2013

18 PROFILE OF DIRECTORS OF KOMARKCORP BERHAD (cont'd) Ihsan Bin Ismail Age : 50 Nationality : Malaysian Qualifications : 1. Master Degree in Business Administration California State University, School of Business Administration, 2. Bachelor of Science in Business Administration Oregon State University, School of Business Administration Directorate : Independent Non-Executive Director Designation : Company Director Other Directorships of Public Companies : None The Date He Was First Appointed to the Board : 1 January 2009, resigned on 16 August 2013 and re-appointed on 23 September 2013 The Details of Any Board Committee to Which He Belongs : Audit Committee, Remuneration Committee and Nomination Committee of Komarkcorp Berhad Securities holding in the company : Nil Securities holding in the Subsidiaries : Nil Family Relationship With Any Director and / or Major Shareholders of the Company : None Conflict of Interest : None List of Convictions for Offences Within the Past 10 Years Other Than Traffic Offences : None Working Experience : Encik Ihsan Bin Ismail was appointed to the Board of Komarkcorp Berhad on 1 January He resigned as Director of Komarkcorp Berhad on 16 August 2013 due to re-composition of the Board of Directors and subsequently re-appointed on 23 September He joined Lembaga Tabung Haji as an investment officer after graduating from Califonia State University, USA in 1987 with a Master degree in Business Administration. Encik Ihsan was attached to Lembaga Tabung Haji for 9 years from 1987 to 1996 and he was a special assistant to Deputy Director General in Investment and an assistant director of corporate affair prior to setting up his own business. He also represented Tabung Haji in several companies namely Peladang Tabung Haji Sdn Bhd for 7 years from 1989 to 1996 and Syarikat Times Offset Malaysia Sdn Bhd for 15 years from 1992 to Encik Ihsan has wide experience in investment management and project evaluations. The Number of Board Meetings Attended in the Financial Year : 3 out of 4 Komarkcorp Berhad ( A) 17

19 STATEMENT ON CORPORATE GOVERNANCE The Board of Directors appreciates the importance of adopting high standards of corporate governance within the Group. The Board views corporate governance as synonymous with three key concepts: namely transparency, accountability and corporate performance. As such, the Board strives to adopt the substance behind corporate governance prescriptions and not merely the form. This Statement outlines the key aspects of how the Company has applied and taken into account the Principles enumerated under the Malaysian Code of Corporate Governance 2012 (the Code ) during the financial year ended Where there are gaps in the Company s observation of any of the Recommendations of the Code, these are disclosed herein with explanations. Principles Statement The following statement sets out how the Group has applied and the extent of its compliance with the best practices set out in the Code. A. Establish Clear Roles and responsibilities The Group acknowledges the pivotal role of the Board of Directors in the stewardship of its direction and operations, and ultimately the enhancement of long-term shareholder value. To fulfil this role, the Board is responsible for the overall corporate governance of the Group, including its strategic direction, establishing goals for management and monitoring the achievement of these goals. The role and function of the Board, as well as the differing roles of executive directors and non-executive directors are clearly delineated and defined. The Board has a formal schedule of matters reserved to itself for decision, which includes the overall Group strategy and direction, acquisition and investment policy, approval of major capital expenditure, consideration of significant financial matters and its review of the financial and operating performance of the Group. The schedule ensures that the governance of the Group is firmly in the Board s hands. Board Charter and Board Committees The Board has adopted a Board Charter on 24 June 2013 which sets out how its roles, responsibilities, composition and processes, having regard to principles of good corporate governance and requirements of Main Market Listing Requirements ( MMLR ) of Bursa Malaysia Securities Berhad ( Bursa Securities ). The Board Charter further defines the matters that are reserved for the Board and its committees as well as the roles and responsibilities of the Chairman, Chief Executive Officer and the Managing Director. Steps will be taken to upload the salient features of the Board Charter on the Company s website at As set out in the Board Charter, the Board is responsible for: reviewing and adopting strategic plan, monitoring corporate performance and implementation of strategies and policies and ensuring that the strategies promote sustainability; overseeing the conduct of the Company s business and build sustainable value for shareholders; reviewing the procedures to identify principal risks and ensuring the implementation of appropriate internal controls and mitigation measures; succession planning, including appointing, assessing, training, fixing the compensation of and where appropriate, replacing senior management; developing and implementing a Corporate Disclosure Policy (including an investor relations programme) for the Group; reviewing the adequacy and the integrity of the internal control systems and management information systems, including systems for compliance with applicable laws, regulations, rules, directives and guidelines; ensuring that the Company s financial statements are true and fair and conform with the accounting standards; monitoring and reviewing policies and procedures relating to occupational health and safety and compliance with relevant laws and regulations; and Ensuring that the Company adheres to high standards of ethics and corporate behaviour. 18 Annual Report 2013

20 STATEMENT ON CORPORATE GOVERNANCE (cont'd) A. Establish Clear Roles and responsibilities (cont'd) Board Charter and Board Committees (cont'd) To assist the Board in carrying out its fiduciary duties and to enhance business and operational efficiency, the Board of Directors delegates certain duties to its committees, namely the Audit Committee, Nomination Committee and Remuneration Committee. Each Board Committee operates in accordance with the written terms of reference approved by the Board. The Board receives reports of their proceedings and deliberations. The Chairman of the various committees will report to the Board the outcome of the Committee meetings which will be recorded in the minutes of the Board meeting. The ultimate responsibility for decision making, however, lies with the Board. Code of Conduct The Board noted the importance of the Code of Ethics and Conduct of the Company that emphasized the Company s commitment to ethical practices and compliance with the applicable laws and regulations which also governs the standards of ethics and good conduct expected from the Directors and employees of the Group. Currently, a formal Code of Ethics and Conduct is not in place for the Group s operations. The Group has in place an Employee Handbook, which contains various human resource policies and serves as a guide for Directors and employees to ensure the proper code of conduct as well as employee responsibilities are practised. Insofar as the Board is concerned, the Directors have a duty to declare immediately to the Board and abstain from further discussion and decision-making process should they be interested in any transaction to be entered into by the Group and or whenever there is a potential conflict arising from any transactions which involved the interest of the Directors. The Board will formalise a Code of Ethics and Conduct as well as Whistle Blowing Policy for adoption and subsequent disclosure on the corporate website. Sustainability The Board recognises the importance of sustainability and its increasing significance in the business. The Board is committed to understanding and implementing sustainable practices and to exploring the benefits to the business whilst attempting to achieve the right balance between the needs of the wider community, the requirements of shareholders and stakeholders and economic success. In transition to implement the Code, the Company will consider formalising a Sustainability Policy which aims to endeavour to integrate the principles of sustainability into the Company s strategies, policies and procedures and ensure that the Board and senior management are involved in implementation of this policy, review the sustainability performance and create a culture of sustainability within the Company, and the community, with an emphasis on integrating the environmental, social and governance considerations into decision making and the delivery of outcomes. Supply and Access to Information The Chairman ensures that all directors have full and timely access to information. Prior to the meetings of the Board and the Board Committees, notice of agenda together with previous minutes and other relevant information were circulated to all directors on a timely basis in order to enable the directors to be well informed and briefed before the meetings. All directors also have full and free access to information within the Group and can as individuals or as a full Board seek independent professional advice, in furtherance of their duties, at the expense of the Group. Every director also has unhindered access to the advice and services of the Company Secretaries. The Board believes that the current Company Secretaries are capable of carrying out their duties to ensure the effective functioning of the Board. In the event that any one of the Company Secretaries fails to fulfil her functions effectively, the terms of the appointment permits her removal and appointment of successor which is a matter for the Board to decide. Komarkcorp Berhad ( A) 19

21 STATEMENT ON CORPORATE GOVERNANCE (cont'd) A. Establish Clear Roles and responsibilities (cont'd) Company Secretaries The Company Secretaries plays an advisory role to the Board in relation to the Company s constitution, the Board s policies and procedures, and compliance with the relevant regulatory requirements, codes or guidance and legislations. The Company Secretaries are suitably qualified, competent and capable of carrying out the duties required and has attended training and seminars conducted by The Malaysian Institute of Chartered Secretaries and Administrators (MAICSA) to keep abreast with the relevant updates on statutory and regulatory requirements and updates on the MMLR of Bursa Securities, Related Party Transactions and Corporate Disclosure Guide. The Company Secretaries also serves notice to the Directors and Principal Officers to notify them of closed periods for trading in the Company s shares, in accordance with Chapter 14 of the MMLR of Bursa Securities. Deliberations during the Board and Board Committees meetings were properly minuted and documented by the Company Secretaries. B. Strengthen composition The Board consists of nine (9) Directors, comprising an Independent Non-Executive Chairman, five (5) Executive Directors, one (1) Non-Independent Non-Executive Director and two (2) Independent Non-Executive Directors. One third (1/3) of the Board comprises of Independent Non-Executive Directors, in compliance with Paragraph 15.02(1) of the MMLR of Bursa Securities. The profile of each Directors is set out on pages 13 to 17 of this Annual Report. Nomination Committee The Company s Nomination Committee ( NC ) comprised of three (3) Members, all of whom are Non-Executive Directors, with a majority being Independent. The current NC Chairman is independent and able to contribute effectively to the NC in view of his wide and vast experience in the industry. During the financial year ended 30 April 2013, two (2) NC meetings were held and the attendance are as follows: No Name of Committee Members Number of meetings attended/held 1. Datuk Wira Jalilah Binti Baba (1) (Chairman, Independent Non-Executive Director) 2. Datuk Ng Peng Ng Peng Hay (2) (Chairman, Independent Non-Executive Director) 3. Mr Chew Chee Chek (3) (Member, Independent Non-Executive Director) 4. Mr Koh Hong Koh Gak Siong (4) (Member, Executive Director) 5. Dato Yeow Wah Chin (5) (Member, Non-Independent Non-Executive Director) 6. Encik Ihsan bin Ismail (6) (Member, Independent Non-Executive Director) N/A * 2/2 2/2 2/2 N/A * N/A * Notes: (1) Appointed as Chairman of the NC on 1 April Ceased as Chairman of the NC following her resignation as Independent Non-Executive Chairman on 30 August (2) Resigned as Chairman of the NC and remain as member of the NC on 1 April Redesignated as Chairman of the NC on 23 September (3) Ceased as member of the NC following his resignation as Independent Non-Executive Director on 16 August (4) Resigned as member of the NC on 1 April (5) Appointed as member of the NC on 30 August (6) Appointed as member of the NC on 23 September * There was no meeting held since their appointment as NC members during the financial year. 20 Annual Report 2013

22 STATEMENT ON CORPORATE GOVERNANCE (cont'd) B. Strengthen composition (cont'd) Nomination Committee (cont'd) The NC makes recommendations to the Board on suitable candidates for appointment as Board members, member of Board Committees and Chief Executive Officer/Executive Director of the Company based on the following evaluation criteria: skills, knowledge, expertise and experience; professionalism; time commitment to effectively discharge his/her role as a director; contribution and performance; character, integrity and competence; boardroom diversity including gender diversity; and in the case of candidates for the position of independent non-executive directors, the NC shall also evaluate the candidates ability to discharge such responsibilities/functions as are expected from independent non-executive directors. The NC will arrange for the induction of any new Directors appointed to the Board to enable them to have a full understanding of the nature of the business, current issues within the Company and corporate strategies as well as the structure and management of the Company. The Board has via the NC reviewed and assessed the size of Board, required mix of skills, experience, performance and contribution of Directors; effectiveness of the Board as a whole; independence of Independent Directors and training courses required by the Directors, and is satisfied with the current composition and performance of the Board. The Board has no specific policy on setting targets on female candidates to be appointed to the Board. The evaluation of the suitability of candidates is based on the candidates competency, character, time commitment, integrity and experience in meeting the needs of the Company. With the current composition, the Board feels that its members have the necessary knowledge, experience, requisite range of skills and competence to enable them to discharge their duties and responsibilities effectively. All Directors on the Board have gained extensive experience with their many years of experience on company Boards and/or also as professionals in their respective fields of expertise. The NC will however continue to take steps to ensure suitable female candidates are sought as part of its recruitment exercise. Remuneration Committee The Remuneration Committee ( RC ) comprises five (5) Members, in which majority are Non-Executive Directors. The RC is responsible for evaluating, deliberating and recommending to the Board the compensation and benefits that are fairly guided by market norms and industry practices for the business the company is in. The RC is also responsible for evaluating the Executive Directors remuneration which is linked to the performance of the Executive Director and performance of the Group. Individual Directors do not participate in the decisions regarding his or her individual remuneration. The RC recommends the Director s fee payable to members of the Board and are deliberated at the Board before it is presented at the Annual General Meeting ( AGM ) for shareholders approval. The Board and RC strive to ensure a fair structure of compensation for an organization of this size and market sector and business complexity. It is also aimed at attracting and retaining Directors who have the right calibre, skills and experience to contribute meaningfully towards the success of the business. Komarkcorp Berhad ( A) 21

23 STATEMENT ON CORPORATE GOVERNANCE (cont'd) B. Strengthen composition (cont'd) Remuneration Committee (cont'd) During the financial year ended 30 April 2013, one (1) RC meeting was held and the attendance is as follows: No Name of Committee Members Number of meetings attended/held 1. Datuk Wira Jalilah Binti Baba (1) (Chairman, Independent Non-Executive Director) 2. Datuk Ng Peng Ng Peng Hay (2) (Chairman, Independent Non-Executive Director) 3. Mr Chew Chee Chek (3) (Member, Independent Non-Executive Director) 4. Mr Koh Hong Koh Gak Siong (Member, Executive Director) 5. Tan Sri Ahmad Bin Mohd Don (4) (Member, Independent Non-Executive Director) 6. Mr Tan Kwe Hee (4) (Member, Executive Director) 7. Encik Ihsan bin Ismail (5) (Member, Independent Non-Executive Director) N/A * 1/1 1/1 1/1 N/A * N/A * N/A * Notes: (1) Appointed as Chairman of the RC on 1 April Ceased as Chairman of the RC following her resignation as Independent Non-Executive Chairman on 30 August (2) Resigned as Chairman of the RC and remain as member of the RC on 1 April Redesignated as Chairman of the RC on 23 September (3) Ceased as member of the RC following his resignation as Independent Non-Executive Director on 16 August (4) Appointed as members of the RC on 30 August (5) Appointed as member of the RC on 23 September * There was no meeting held since their appointment as RC members during the financial year. The RC has reviewed and recommended to the Board the Directors fees for the Non-Executive Directors. The Directors fees are subject to shareholders approval at the Company s forthcoming AGM pursuant to the Articles of Association of the Company. 22 Annual Report 2013

24 STATEMENT ON CORPORATE GOVERNANCE (cont'd) B. Strengthen composition (cont'd) Remuneration Committee (cont'd) Details of remuneration of Directors of the Company for the financial year ended 30 April 2013 are as follows: Executive RM 000 Non-Executive RM 000 Directors Fees 1, Salaries & Bonuses Defined Contribution Plan - - Other Benefits - - Total 2, The number of directors of the Company in each remuneration band is as follows: Band (RM) Executive Non-Executive Below 50, , , , , ,050,001 1,100,000 1 Total 3 4 C. Reinforce Independence The Board recognises the importance of independence and objectivity in its decision making process which is in line with the Code. The directors with their different backgrounds and specialisation, collectively bring with them a wide range of experience and expertise in areas such as finance, corporate affairs, marketing and operations. The executive directors are responsible for implementing the policies and decisions of the Board, overseeing the operations as well as co-ordinating the development and implementation of business and corporate strategies. The non-executive directors play key supporting roles, contributing their knowledge and experience towards formulating policies and in the decision-making process. They do not engage in day-to-day management of the Company and do not participate in any business dealings with the Company. The independent non-executive directors bring with them objective and independent judgement to decision-making and provide a capable check and balance for the executive directors. The Board is also satisfied that its composition fairly reflects the investment of minority shareholders in the Company. Annual Assessment of Independence The concept of independence adopted by the Board is in tandem with the definition of an independent director in paragraph 1.01 of the MMLR of Bursa Securities and the Practice Note 13 issued pursuant to the MMLR. The key element for fulfilling the criteria is the appointment of an independent director who is not a member of management and who is free of any relationship which could interfere with the exercise of independent judgement or the ability to act in the best interest of the Company. The Board, via NC assesses Independent Director s independence to ensure ongoing compliance with this requirement annually. Komarkcorp Berhad ( A) 23

25 STATEMENT ON CORPORATE GOVERNANCE (cont'd) C. Reinforce Independence (cont'd) Annual Assessment of Independence (Cont'd) Any Director who considers that he has or may have a conflict of interest or a material personal interest or a direct or indirect interest or relationship that could reasonably be considered to influence in a material way the Director s decisions in any matter concerning to the Company is required to immediately disclose to the Board and to abstain from participating in any discussion or voting on the respective matter. For the financial year ended 30 April 2013, the Board assessed the independence of its Independent Non-Executive Directors based on the criteria set out in the MMLR of Bursa Securities. The Board is satisfied with the level of independence demonstrated by all the Independent Directors and their ability to act in the best interest of the Company. Tenure of Independent Directors The Board is mindful of the recommendation of the Code on limiting the tenure of Independent Directors to nine (9) years of service. In line with the Code and to enable a balance of power and authority in the Board, the Board Charter, which has been adopted by the Company, sets out the restriction on the tenure of an Independent Director to a cumulative term of nine (9) years. However, an Independent Director may continue to serve the Board upon reaching the 9-year limit subject to the Independent Director s re-designation as a Non-Independent Non-Executive Director. In the event the Board intends to retain the Director as Independent after the latter has served a cumulative term of nine (9) years, the Board must justify the decision and seek shareholders approval at general meeting. In justifying the decision, the NC is entrusted to assess the candidate s suitability to continue as an Independent Non-Executive Director based on the criteria on independence. Shareholders Approval for the Re-Appointment of Non-Executive Director Following an assessment by the NC and deliberation at its meeting held in 23 September 2013, Datuk Ng Peng Ng Peng Hay who served as an Independent Non-Executive Director of the Company for a cumulative term of more than 9 years as at the end of the financial year under review had been recommended by the Board to continue to act as Independent Non-Executive Director subject to shareholders approval at the forthcoming AGM of the Company. Key justifications for his recommended continuance as an Independent Non-Executive Director are as follows: he fulfils the criteria under the definition on Independent Director as stated in the MMLR of Bursa Securities and therefore is able to bring independent and objective judgment to the Board; his experience enables him to provide the Board and Audit Committee ("AC") with a pertinent set of experience, expertise, skills and competence; he has been with the Company long and therefore understands the Company s business operations which enables him to contribute actively and effectively during deliberations or discussions at AC and Board meetings; and he has exercised due care during his tenure as Independent Non-Executive Director of the Company and carried out his professional duties in the interest of the Company. Chairman and Chief Executive Officer The positions of Chairman and Chief Executive Officer are held by different individuals. The Chairman is responsible for the leadership, effectiveness, conduct and governance of the Board while the Chief Executive Officer is an Executive Director, who manages the business and operations of the Group and implements the Board s decisions. The distinct and separate roles of the Chairman and Chief Executive Officer, with a clear division of responsibilities, ensure a balance of power and authority, such that no one individual has unfettered powers of decision-making. In view of the current composition of the Board, particularly the separation of the roles of the Chairman and Chief Executive Officer, and the presence of other independent directors, the Board does not consider it necessary to nominate a Senior Independent Non-Executive Director to whom concerns of shareholders may be conveyed. 24 Annual Report 2013

26 STATEMENT ON CORPORATE GOVERNANCE (cont'd) D. Fostering commitment Time commitment The Board endeavours to meet at least four (4) times a year, at quarterly intervals which are scheduled well in advance at the commencement of the financial year to help facilitate the Directors in planning their meeting schedule for the year. Additional meetings are convened where necessary to deal with urgent and important matters that require attention of the Board. Where appropriate, decisions are also made by way of circular resolutions in between scheduled meetings during the financial year. Senior management staff and/or external advisors may be invited to attend Board meetings to advise the Board and to furnish the Board with information and clarification needed on relevant items on the agenda to enable the Directors to arrive at a considered decision. All Board meetings are furnished with proper agendas with due notice issued and board papers and reports are prepared by the Management which provides updates on financial, operational, legal and circulated prior to the meetings to all Directors with sufficient time to review them for effective discussions and decision making during the meetings. The Board is satisfied with the level of time commitment given by the Directors towards fulfilling their roles and responsibilities which is evidenced by the satisfactory attendance record of the Directors at Board meetings. The Board members are required to notify the Board prior to their acceptance of new directorships in other companies with indication of time that will be spent on the new appointment. All pertinent issues discussed at the Board meetings in arriving at the decisions and conclusions are properly recorded by the Company Secretaries. The Board met four (4) times during the financial year under review. The details of Directors attendance are set out as follows: No Name of Directors Number of Board meetings attended/held during the Director s term in office 1. Tan Sri Ahmad Bin Mohd Don (Independent Non-Executive Chairman) - Appointed on 16 August 2013 and redesignated as Chairman on 11 September Mr Koh Hong Koh Gak Siong (Chief Executive Officer/Executive Director) - Redesignated from Chairman to Executive Director on 1 April Mr Koh Chie Jooi (Managing Director) 4. Mr Koh Chee Mian (Deputy Managing Director) 5. Mr Koh Chee Kian (Executive Director) - Resigned on 16 August Mr Koh Chee Hao (Executive Director) - Resigned on 16 August Datuk Ng Peng Ng Peng Hay (Independent Non-Executive Director) 8. Mr Chew Chee Chek (Independent Non-Executive Director) - Resigned on 16 August 2013 N/A * 4/4 4/4 3/4 3/4 3/4 4/4 4/4 Komarkcorp Berhad ( A) 25

27 STATEMENT ON CORPORATE GOVERNANCE (cont'd) D. Fostering commitment Time commitment (cont'd) The Board met four (4) times during the financial year under review. The details of Directors attendance are set out as follows: (cont'd) No Name of Directors Number of Board meetings attended/held during the Director s term in office 9. Encik Ihsan bin Ismail (Independent Non-Executive Director) - Resigned on 16 August 2013 and re-appointed on 23 September Mr Tan Kwe Hee (Joint Chief Executive Officer/Executive Director) - Appointed on 16 August 2013 and redesignated as Joint Chief Executive Officer on 30 August Mr Lim Pei Liam Ahat Kiat (Executive Director) - Appointed on 16 August Dato Yeow Wah Chin (Non-Independent Non-Executive Director) - Appointed on 16 August Datuk Wira Jalilah Binti Baba (Independent Non-Executive Chairman) - Appointed on 1 April 2013 and resigned on 30 August 2013 Note: * There was no meeting held since their appointment as Directors during the financial year. Directors Training All Directors have completed the Mandatory Accreditation Program as prescribed by Bursa Securities, except for Mr Lim Pei Liam Ahat Kiat who joined the Board on 16 August 2013 and will attend in due time. The Board fully supports the need for its members to further enhance their skills and knowledge on relevant new laws and regulations and changing commercial risks to keep abreast with the developments in the economy, industry, technology and the changing business environment within which the Group operates. Throughout their period in office, the Directors are continually updated on the Group s business and the regulatory requirements. The Group acknowledges the fact that continuous education is vital for the Board members to gain insight into the state of economy, technological advances in our core business, latest regulatory developments and management strategies. Therefore, the Directors are encouraged to evaluate their own training needs on a continuous process and to determine the relevant programmes, seminars and briefings that would enhance their knowledge to enable the Directors to discharge their responsibilities more effectively. 3/4 N/A* N/A* N/A* N/A* 26 Annual Report 2013

28 STATEMENT ON CORPORATE GOVERNANCE (cont'd) D. Fostering commitment (cont'd) Directors Training (cont'd) For the financial year ended 30 April 2013, the trainings attended by the Directors are as follows:- Director Datuk Wira Jalilah Binti Baba * Course Title The framework of Shariah Compliance and Governance organized by RHB Banking Group on June 2012 Internal Capital Adequacy Assessment Process ( ICAAP ) organized by RHB Banking Group on June 2012 Managing Banking Operations and Innovation organized by RHB Banking Group and Charles River Center on July 2012 Financial Institutions Directors Education ( FIDE ) Elective Program: The Director s Legal Tool Kit organized by ICLIF on July 2012 Mandatory Accreditation Programme for Directors of Public Listed Companies organized by Bursatra Sdn Bhd on July 2012 Flex Business Re-Imagined organized by RHB Banking Group on September 2012 Professionalism in Directorship Programme organized by Malaysian Alliance of Corporate Directors on September 2012 Training Session 2 of ICAAP organized by RHB Banking Group on September 2012 Fide Core 2011: Module A organized by ICLIF on October 2012 FIDE Elective Program: Banking Insight organized by ICLIF on October 2012 Boardroom Essential Soft Skills & Board Simulation Training organized by Lead Women Sdn Bhd on November 2012 Training Session No.3 of ICAAP organized by RHB Banking Group on December 2012 Director Duties, Regulatory Updates & Governance Seminar for Directors of PLCs 2013 organized by MICG on January th Annual Corporate Governance Summit Embedding the Culture of Voluntary Governance In Organizations organized by Asian World Summit Sdn Bhd on March 2013 FIDE Elective Program: The Nomination/Remuneration Committee Program organized by ICLIF on April 2013 FIDE Elective Program: The Winning The War For Talent Program organized by ICLIF on April 2013 FIDE Elective Program: Banking Fundamental Programs organized by ICLIF on April 2013 Financial Services Act 2013, Islamic Financial Services Act 2013 And Directors & Officers Liability Insurance Policy Presentation For Directors organized by RHB Banking Group on May 2013 FIDE Core: Module B organized by ICLIF on June 2013 Governance In Groups Program organized by ICLIF on June 2013 Komarkcorp Berhad ( A) 27

29 STATEMENT ON CORPORATE GOVERNANCE (cont'd) D. Fostering commitment (cont'd) Directors Training (cont'd) For the financial year ended 30 April 2013, the trainings attended by the Directors are as follows:- (cont'd) Director Koh Hong Koh Gak Siong Koh Chee Mian Koh Chee Kian ** Koh Chee Hao ** Datuk Ng Peng Ng Peng Hay Ihsan bin Ismail *** Course Title Seminar on Making the most of the Chief Financial Officer Role : Every Responsibility? organised by Institute of Chartered Accountants in England and Wales on 4 July 2012 Seminar on Making the most of the Chief Financial Officer Role : Every Responsibility? organised by Institute of Chartered Accountants in England and Wales on 4 July 2012 Training Course on Financial Management for Beginners and Non- Financial Managers organized by Chinese Chamber of Commerce and Industry of Kuala Lumpur and Selangor (KLSCCCI) on 16 July 2013 Training Course on Financial Management for Beginners and Non- Financial Managers organized by Chinese Chamber of Commerce and Industry of Kuala Lumpur and Selangor (KLSCCCI) on 16 July 2013 The Malaysian Code on Corporate Governance 2012 organized by Farm s Best Berhad on 26 November 2012 Understanding Financial Statements Use of Healthy Scepticism organised by Malaysian Institute Of Certified Public Accountants on 3 December 2012 Managing Corporate Risk and Achieving Internal Control Through Statutory Compliance organised by Companies Commission of Malaysia on 5 December 2012 Notes: * Resigned on 30 August 2013 ** Resigned on 16 August 2013 *** Resigned on 16 August 2013 and re-appointed on 23 September 2013 In addition, the Company Secretaries circulated the relevant guidelines on regulatory requirements from time to time for the Board s reference and briefed the Board quarterly on these updates at the Board Meetings. E. Uphold integrity in financial reporting Financial Reporting The Board upholds integrity in financial reporting by ensuring that shareholders are provided with reliable information of the Company s financial performance, its position and future prospects, in the Annual Audited Financial Statements and quarterly financial reports. The AC is entrusted with the responsibility of assisting the Board in meeting its responsibilities relating to accounting and reporting practices of the Company and its subsidiary companies. One of the key responsibilities of the AC is to ensure that the financial statements of the Group and Company comply with applicable financial reporting standards in Malaysia. Such financial statements comprise the quarterly financial report announced to Bursa Securities and the annual statutory financial statements. In addition, the AC shall:- (a) (b) (c) Oversee and appraise the quality of the audits conducted both by the Company s internal and external auditors; Maintain open lines of communication between the Board of Directors, the internal auditors and external auditors for the exchange of views and information, as well as to confirm their respective authority and responsibilities; and Determine the adequacy of the Group s administrative, operating and accounting controls. 28 Annual Report 2013

30 STATEMENT ON CORPORATE GOVERNANCE (cont'd) E. Uphold integrity in financial reporting (cont'd) Financial Reporting (cont'd) The AC comprises of four (4) members of whom all are Non-Executive Directors with majority Independent Non-Executive Directors. The composition of the AC, including its roles and responsibilities are set out on pages 33 to 37 under AC Report of this Annual Report. The composition of the AC is as follows: 1. Datuk Ng Peng Ng Peng Hay (Chairman, Independent Non-Executive Director, redesignated from Chairman to member of the AC on 30 August 2013 and subsequently redesignated as Chairman of the AC on 23 September 2013) 2. Tan Sri Ahmad Bin Mohd Don (Member, Independent Non-Executive Director; appointed as Chairman of the AC on 30 August 2013 and redesignated as member of the AC on 23 September 2013) 3. Encik Ihsan bin Ismail (Member, Independent Non-Executive Director; ceased as member of the AC following his resignation as Independent Non-Executive Director on 16 August Appointed as member of the AC on 23 September 2013) 4. Datuk Wira Jalilah Binti Baba (Member, Independent Non-Executive Director, appointed as member of the AC on 1 April 2013 and ceased as member of the AC following her resignation as Independent Non-Executive Chairman on 30 August 2013) 5. Chew Chee Chek (Member, Independent Non-Executive Director, ceased as member of the AC following his resignation as Independent Non-Executive Director on 16 August 2013) 6. Dato Yeow Wah Chin (Member, Non-Independent Non-Executive Director, appointed as member of the AC on 23 September 2013) Suitability and Independence of Internal and External Auditors To ensure independence, the AC members have met with the External Auditors without the presence of the Management during the financial year to discuss issues arising from any audit exercises or other matters, which the External Auditors may wish to raise. The External Auditors have also confirmed that they are, and have been, independent throughout the conduct of the audit engagement in accordance with the independence criteria set out by the Malaysian Institute of Accountants. The Board has outsourced the independent internal audit function to MAC & Associates that reports directly to the AC. The key activities covered by the internal audit function during the financial year under review is provided in the AC Report of the Company as set out on pages 33 to 37 of this Annual Report. F. Recognise and manage risks The Company has in place an on-going process for identifying, evaluating and managing significant risks that may affect the achievement of the business objectives of the Group. Reviews on the key risks identified were conducted to ensure proper management of risks and that measures are taken to mitigate any weaknesses in the control environment. The Board has mandated the AC with the overall responsibility of ensuring adequacy, completeness and effectiveness of the internal control system. The AC undertakes periodic reviews and monitors the compliance to these systems via the Internal Audit Function who carries out audit checks on such control processes and provides feedback on its effectiveness and compliance at the operating level. Any weaknesses or variances reported by the Internal Auditor to the AC will be turned into management actions to rectify any weaknesses in those control processes. The outsourced Internal Auditor acts as a unit independent of management to carry out the audit of management processes and business transactions of the operating units and reports its findings back to the AC. This independent mechanism provides independent feedback of the accountability, adequacy and effectiveness of the system of internal controls in place, giving the assurance that the Board needs to fulfill its responsibility. The key activities covered by the internal audit function during the financial year under review is provided in the AC Report of the Company as set out on pages 33 to 37 of this Annual Report. Komarkcorp Berhad ( A) 29

31 STATEMENT ON CORPORATE GOVERNANCE (cont'd) G. Timely and high quality disclosure The Board is aware of the need to establish corporate disclosure policies and procedures to enable comprehensive, The Board is aware of the need to establish corporate disclosure policies and procedures to enable comprehensive, accurate and timely disclosures relating to the Group to the regulators, shareholders and stakeholders. Steps will be taken to formalise pertinent corporate disclosure policies to comply with the disclosure requirements as stipulated in the MMLR of Bursa Securities, and to set out the persons authorised and responsible to approve and disclose material information to shareholders and stakeholders. To augment the process of disclosure, the Board has established a dedicated section for corporate information on the Company s website where information on the Company s announcements, financial information and the Company s Annual Report may be accessed. H. Strengthen relationship between company and shareholders The Company aims to ensure that the shareholders and investors are kept informed of all major corporate developments, financial performance and other relevant information by promptly disseminating such information to shareholders and investors via announcements to Bursa Securities, which is in line with Bursa Securities objectives of ensuring transparency and good corporate governance practices, through dialogue with analysts and the media. The AGM is the principal forum for dialogue with the shareholders. Shareholders are notified of the meeting and provided with a copy of the Company s Annual Report before the meeting. All shareholders are encouraged to attend the Annual General Meeting and participate in its proceedings. Every opportunity is given to the shareholders to ask questions and seek clarification on the business and performance of the Group. The AC is available at the AGM to answer questions and consider suggestions. The External Auditors are also present to provide their professional and independent clarification on issues of concern raised by the shareholders, if any. The annual report and the quarterly announcements are the primary mode of communications to report on the Group s business activities and financial performance to all shareholders. The Company also maintains an effective communication channel between the Board, shareholders and the general public through timely dissemination of all material information. Minority shareholders may communicate with the Company through the Company s website ( The Notice of AGM will be circulated at least twenty-one (21) days before the date of the meeting to enable shareholders sufficient time to peruse the Annual Report and papers supporting the resolutions proposed. The Board encourages participation at general meetings and will generally carry out resolutions by show of hand, except for Related Party Transaction if any (wherein poll will be conducted) and unless otherwise demanded by shareholders in accordance with the Articles of Association of the Company. The Chairman of the Board will inform the shareholders of their right to demand a poll vote at the commencement of the general meeting, While the Company endeavours to provide as much information as possible to its shareholders and stakeholders, the Company is mindful of the legal and regulatory framework governing the release of material and price sensitive information. Directors Responsibility Statement in Respect of the Preparation of the Audited Financial Statements The Board is responsible for ensuring that the financial statements of the Group give a true and fair view of the state of affairs of the Group and of the Company as at the accounting period and of their profit or loss and cashflow for the period then ended. In preparing the financial statements, the Directors have ensured that applicable approved accounting standards in Malaysia and the provisions of the Companies Act, 1965 have been applied. In preparing the financial statements, the Directors have applied consistently suitable accounting policies and made reasonable and prudent judgements and estimates. The Directors also have a general responsibility for taking such steps as are reasonably available to them to safeguard the assets of the Group and to prevent fraud and other irregularities. 30 Annual Report 2013

32 STATEMENT ON CORPORATE GOVERNANCE (cont'd) Corporate Social Responsibility The Group acknowledges and integrates the Corporate Social Responsibility ( CSR ) into its operations and decision making based on ethical values and respect for the environment, community, marketplace and employees welfare. a) The Environment The Group has undertaken various measures to mitigate the adverse impact from our manufacturing operations to the environment. The Group is also encourages its staff to reduce the paper usage and recycle the wastage materials. b) The Community The Group continues to contribute to the charitable, social and welfare programs and authorities on ad hoc basis. c) The Marketplace The Group engages in ethical procurement practices by adopting a standard procedure in the vendor selection and ensure that the supplies are in accordance to the Group s materials requirements. The Group also continues to strive to meet the expectation of its shareholders by enhancing the value of the Group in all possible ways. d) The Employees Welfare The Group recognises that employees are important assets. In line with this belief, the Group has in place a Safety Policy to provide a safe and healthy working environment to its employees with comprehensive occupational health and safety resources. The Group believes in promoting employees morale through the proper human capital development. This Corporate Governance Statement is made in accordance with the resolution of Board of Directors dated 23 September Komarkcorp Berhad ( A) 31

33 STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL The Board of Directors is ultimately responsible for the Group s risk management and internal controls system and review it s effectiveness during the year pursuant to paragraph (b) of the Bursa Securities Main Market Listing Requirements. The risk management and internal controls system is primarily designed to cater for the business needs and manage the potential business risks of the Group. The Board has overall responsibility to establish a sound risk management and internal controls system to safeguard shareholders investments and the Group s assets. The Board further affirms to embed risk management in all aspects of the Group s activities and review the adequacy and integrity of these systems in mitigating risks within the Group s acceptable risk appetite. In view of the limitations that are inherent in any systems of risk management and internal control, such systems are designed to manage rather than eliminate the risk of failure to achieve its business objectives. Accordingly, these systems can provide only reasonable and not absolute assurance against material misstatement, frauds or loss. The concept of reasonable assurance also recognizes that the cost of control procedures should not exceed the expected benefits. There are always opportunities to further improve the current risk management and internal control systems of the Group. A programme of actions to enhance the risk management and internal control system was undertaken in line with corporate governance compliance. The Company has on 30 March 2010 outsourced the internal audit function of the Group to a professional firm. The Internal Auditor s main role is to independently assess of the adequacy and integrity of such system of risk management and internal control established by the Management based on the audit plan approved by the Board and to make appropriate recommendations for Management s implementation. The Internal Auditors presents their report to the Audit Committee for deliberation. In seeking to achieve the objectives of the risk management and internal control systems, the following key elements will be considered: Control Environment and Activities It is imperative that the Group should operate on a sound system of internal control. In general, the overall line of communications across the business should be defined and there is an appropriate integrity in risk management. There is also a limit on authority that clearly defines authorisation limits to ensure proper identification of accountabilities and segregation of duties. Operation control procedures have been established according to ISO 9001 standard. This will ensure that the business process flow is accordingly and properly executed. Risk Management The Board recognises that the management of principal risks plays an important and integral part of the Group s daily operations and that the identification and the management of such risk will affect the achievement of the Group s corporate objectives. As an ongoing process, business issues faced by the Group are identified and evaluated and consideration is given on the potential impact of achieving the business objectives. This includes examining business issues in critical areas, assessing the likelihood of material exposures and identifying the measures taken to mitigate the risks arising from these issues. The Board has received assurance from the Group Chief Executive Officer and Group Financial Controller that the Group s risk management and internal control system are operating adequately and effectively in all material aspects, based on the risk management and internal control system of the Group. Key Internal Control Processes The following are the key processes that have been establish as part of the Group s internal control effort: (a) (b) (c) (d) (e) A clearly defined organisation and hierarchical structure outlining line of reporting and job responsibilities with strong risk control culture at the operational level. In ensuring that each operating unit is functioning efficiently, emphasis is placed on personal employed where the integrity and competence of personnel are ensured through recruitment evaluation process. Financial reports are supplied to the Audit Committee and the Board on a quarterly basis for review and if necessary correction action to be taken. The Board, Audit Committee and Management meets regularly to review the internal audit reports and monitor the status of the implementation of recommendations to address internal control weakness noted. Regular reporting made to the Board by the Management of corporate, legal, accounting and environmental developments. 32 Annual Report 2013

34 AUDIT COMMITTEE REPORT COMPOSITION Name of Director Datuk Ng Peng Ng Peng Hay (Chairman) Tan Sri Ahmad Bin Mohd Don Dato Yeow Wah Chin Ihsan bin Ismail Directorship Independent Non-Executive Director Chairman/Independent Non-Executive Director Non-Independent Non-Executive Director Independent Non-Executive Director TERMS OF REFERENCE 1. OBJECTIVE The objective of the Audit Committee is to assist the Board of Directors in meeting its responsibilities relating to accounting and reporting practices of the Company and its subsidiary companies. In addition, the Audit Committee shall:- a) Oversee and appraise the quality of the audits conducted both by the Company s internal and external auditors; b) Maintain open lines of communication between the Board of Directors, the internal auditors and the external auditors for the exchange of views and information, as well as to confirm their respective authority and responsibilities; and c) Determine the adequacy of the Group s system of risk management and internal controls including administrative, operating and accounting controls. 2. COMPOSITION The Audit Committee shall be appointed by the Directors from among their number (pursuant to a resolution of the Board of Directors) which fulfils the following requirements:- a) the audit committee must be composed of no fewer than three (3) members; b) a majority of the audit committee must be independent directors; c) all members of the Audit Committee must be non-executive directors; d) all members of the Audit Committee should be financially literate and at least one 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 thee (3) years working experience and:- he must have passed the examinations specified in Part 1 of the 1st Schedule of the Accountants Act, 1967; or 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 iii) fulfils the requirements as may be prescribed or approved by Bursa Malaysia Securities Berhad ( Bursa Securities ) and/or other relevant authorities from time to time; and e) no alternate Director shall be appointed as a member of Audit Committee. Komarkcorp Berhad ( A) 33

35 AUDIT COMMITTEE REPORT (cont'd) 2. COMPOSITION (cont'd) The members of the Audit Committee shall elect a chairman from among their number who shall be an independent director. In the event of any vacancy in the Audit Committee resulting in the non-compliance of item 2 (a) to (d) above, the vacancy must be filled within 3 months of that event. The Board of Directors must review the term of office and performance of the Audit Committee and each of its members at least once every 3 years to determine whether the Audit Committee and members have carried out their duties in accordance with the terms of reference. 3. FUNCTIONS The functions of the Audit Committee are as follows:- a) review the following and report the same to the Board of Directors:- i) with the external auditors, the audit plan; ii) iii) iv) with the external auditors, his evaluation of the system of internal controls; with the external auditor, his audit report; the assistance given by the Company s employees to the external auditors; and v) any related party transaction and conflict of interest situation that may arise within the Company or group including any transaction, procedure or course of conduct that raises questions of management integrity. b) To consider the appointment of the external auditor, the audit fee and any questions of resignation or dismissal and the letter of resignation from the external auditor, if applicable; c) To discuss with the external auditor before the audit commences, the nature and scope of the audit, and ensure co-ordination where more than one audit firm is involved; d) To review the quarterly and year-end financial statements of the Company, focusing particularly on:- Any changes in accounting policies and practices; Significant adjustments arising from the audit; The going concern assumption; Compliance with accounting standards and other legal requirements; e) To discuss problems and reservations arising from the interim and final audits, and any matter the auditor may wish to discuss (in the absence of management where necessary); f) To discuss the contracts for the provision of non-audit services which can be entered into and procedures that must be followed by the external auditors. The contracts that cannot be entered into should include management consulting, policy and standard operating procedures documentation, strategic decision and internal audit. g) To review the adequacy and effectiveness of risk management, internal control and governance systems put in place in the Group, including information technology security and control, and to evaluate the systems with the internal and external auditors. h) To review the external auditor s management letter and management s response; 34 Annual Report 2013

36 AUDIT COMMITTEE REPORT (cont'd) 3. FUNCTIONS (cont'd) i) To do the following in relation to the internal audit function:- Ensure the internal audit function is independent of the activities it audits and the head of internal audit reports directly to the Audit Committee. The head of internal audit will be responsible for the regular review and/or appraisal of the effectiveness of the risk management, internal control and governance processes within the Company and provide assurance to the Audit Committee that the internal controls are operating effectively; Review the adequacy of the scope, functions, competency and resources of the internal audit function, and that it has the necessary authority to carry out its work; Review the internal audit programme and results of the internal audit process and where necessary, ensure that appropriate action is taken on the recommendations of the internal audit function; Review any appraisal or assessment of the performance of members of the internal audit function; Approve any appointments or termination of senior staff members of the internal audit function; Take cognisance of resignations of internal audit staff members (for in-house internal audit function) or the internal audit service provider (for out-sourced internal audit function) and provide the resigning staff member or the internal audit service provider an opportunity to submit his reasons for resigning. j) To consider any related party transaction that may arise within the Company and group; k) To consider the major findings of internal investigations and management s response; l) To consider other areas as defined by the Board, or as may be prescribed by Bursa Securities or any other relevant authority from time to time; and m) To perform any other functions/responsibilities as may be required of them by Bursa Securities or such other relevant authorities from time to time. 4. RIGHTS OF THE AUDIT COMMITTEE The Audit Committee shall, wherever necessary and reasonable for the Company to the performance of its duties, in accordance with a procedure to be determined by the Board of Directors and at the cost of the Company:- a) have authority to investigate any matter within its terms of reference; b) have the resources which are required to perform its duties; c) have full and unrestricted access to any information pertaining to the Company; d) have direct communication channels with the external auditors and person(s) carrying out the internal audit function or activity; e) be able to obtain independent professional or other advice; and f) be able to convene meetings with the external auditors, the internal auditors or both, excluding the attendance of other directors and employees of the Company, whenever deemed necessary. The Chairman of the Audit Committee shall engage on a continuous basis with senior management, such as the chairman, the chief executive officer, the finance director, the head of internal audit and the external auditors in order to be kept informed of matters affecting the Company. Komarkcorp Berhad ( A) 35

37 AUDIT COMMITTEE REPORT (cont'd) 5. MEETINGS The Audit Committee shall meet at least four (4) times a year and such additional meetings as the Chairman shall decide in order to fulfil its duties. However, at least twice a year the Audit Committee shall meet with the external auditors without the presence of executive Board members. In addition, the Chairman may call a meeting of the Audit Committee if a request is made by any committee member, the Company's Chief Executive, or the internal or external auditors. The Company Secretary or other appropriate senior official shall act as secretary of the Audit Committee and shall be responsible, in conjunction with the Chairman, for drawing up the agenda and circulating it, supported by explanatory documentation to committee members prior to each meeting. The Secretary shall also be responsible for keeping the minutes of meetings of the Audit Committee, and circulating them to committee members and to the other members of the Board of Directors. A quorum shall consist of a majority of independent directors. By invitation of the Audit Committee, the Company must ensure that other directors and employees attend any particular audit committee meeting specific to the relevant meeting. DETAILS OF ATTENDANCE AT AUDIT COMMITTEE MEETINGS DURING THE FINANCIAL YEAR ENDED 30 APRIL 2013 Number of Audit Committee Meetings held for the financial year: Four (4) Attendance of the Audit Committee members are shown below:- Name of Audit Committee member Number of meetings attended/held Datuk Ng Peng Ng Peng Hay (1) 4/4 Tan Sri Ahmad Bin Mohd Don (2) Datuk Wira Jalilah Binti Baba (3) N/A* N/A* Chew Chee Chek (4) 4/4 Dato Yeow Wah Chin (5) N/A* Ihsan bin Ismail (6) 3/4 Notes: (1) Redesignated from Chairman to member of the Audit Committee on 30 August 2013 and subsequently redesignated as Chairman of the Audit Committee on 23 September (2) Appointed as Chairman of the Audit Committee on 30 August 2013 and redesignated as member of the Audit Committee on 23 September (3) Appointed as member of the Audit Committee on 1 April 2013 and ceased as member of Audit Committee following her resignation as Independent Non-Executive Chairman on 30 August (4) Ceased as member of Audit Committee following his resignation as Independent Non-Executive Director on 16 August (5) Appointed as member of the Audit Committee on 23 September (6) Ceased as member of Audit Committee following his resignation as Independent Non-Executive Director on 16 August 2013 and subsequently appointed as member of the Audit Committee on 23 September * There was no meeting held since their appointment as Audit Committee members during the financial year. 36 Annual Report 2013

38 AUDIT COMMITTEE REPORT (cont'd) HIGHLIGHTS OF ACTIVITIES During the financial year, the activities of the Audit Committee included:- 1. Review of the quarterly financial results prior to the release of the announcements to Bursa Securities. 2. Assessment of the external auditor s findings in relation to audit and accounting issues arising from the audit of the Group s financial statements and updates on the changes in the reporting of financial statements. 3. Discussion of audit strategy and plan with the internal and external auditors. 4. Examined findings made by the internal auditors and management s response. INTERNAL AUDIT FUNCTION AND SUMMARY OF ACTIVITIES The internal audit function of the Company has been outsourced to an independent professional firm, which assists the Audit Committee in discharging its duties and responsibilities. They act independently and with due professional care and report directly to the Audit Committee. During the financial year ended 30 April 2013, the Internal Auditors had carried out the following internal audit review:- Credit control and collection function of Komark (Thailand) Co Credit control and collection function of General Labels & Labelling (JB) Sdn Bhd ( GLL (JB) ) Inventory management function of GLL (JB) The professional fees incurred for the internal audit function in respect of financial year ended 30 April 2013 amounted to approximately RM21, Komarkcorp Berhad ( A) 37

39 OTHER INFORMATION In compliance with the Bursa Malaysia Securities Berhad s Main Market Listing Requirements, the following additional information is provided: 1. Share Buy-Back The Company had on 29 October 2012 obtained the authority of its shareholders to undertake, inter alia, a share buy back of up 10% of the issued and paid-up share capital. Subsequently, the authority for the share buy-back was renewed via the Company s annual general meeting. During the financial year ended 30 April 2013, the Company has purchased 2,000 of its own shares and resale 1,540,000 of its own shares in the open market on 15 April Details of shares bought-back and re-sold are as follows:- Month Number of shares purchased / resale Lowest purchase price (RM) Highest purchase / resale price (RM) Average purchase / resale price (RM) Total consideration (RM) Purchase May Jun Jul-12 1, Aug Sep Oct Nov Dec-12 1, Jan Feb Mar Apr Total 2, Resale Apr-13 1,540, , Depository Receipt Programme During the financial year, the Company did not sponsor depository receipt programme. 3. Imposition of Sanctions and/or Penalties There were no sanctions and/or penalties imposed on the Company and its subsidiaries, Directors or Management by the relevant regulatory bodies. 4. Non-Audit Fees The amount of non-audit fee paid or payable to external auditors and their affiliated company for the financial year ended 30 April 2013 are as follows:- RM 000 O & W Tax Consultants Sdn. Bhd. 18, Profit Estimate, Forecast or Projection The Company had on 30 August 2013 announced that the Group s profit after tax and minority interest for the financial year ended 30 April 2013 has deviated by 318% from the unaudited fourth quarter results for the period ended 30 April 2013 announced on 28 June Annual Report 2013

40 OTHER INFORMATION (cont'd) 5. Profit Estimate, Forecast or Projection (cont'd) Below is the reconciliation on the profit after tax of the unaudited fourth quarter results and the Audited Financial Statement for the financial year ended 30 April 2013: Description Amount Amount (RM 000) (RM 000) Profit attributable to ordinary equity holders of the parent 1,517 (a) Stock written down/stock slow moving provision 3,927 (b) Under provision for development cost amortization charges 492 (c) Bad debt provision 419 (d) Foreign currency loss on supplier payment 60 (e) Written off un-reconciled inter-company balance 794 (f) Provision for deferred tax 1,247 (g) Addition accrued cost 73 (h) Translation difference on the oversea subsidiaries opening and closing inventories (664) (6,348) Loss attributable to ordinary equity holders of the parent as per Audited Financial Statements for the financial year ended 30 April 2013 (4,831) The above audited results have to be read in conjunction with the full set of the Audited Financial Statements for the financial year ended 30 April Explanatory notes: The root cause of the variance was mainly due to the financial year end audit works of Malaysia are commenced after our quarterly results announcement. a) On the prudent basis, the Company decided to further write down the stock and made provision for slow moving stock. b) The Company has to comply to the Company Policy of amortising the R&D expenditure in 3 years instead of 10 years. c) On the prudent basis, the Company decided to further made provision for doubtful debts as their recoverability are in doubt. d) The Company decided to book in the exchange loss occurred on the payment to supplier. e) The Company decided to write off the un-reconciled inter-company balance. f) The Company decided to provide the deferred tax liability. This is due to the recognition of reinvestment allowance as deferred tax asset has been restricted to 70%. g) The cost has been accrued as it related to the financial period ended 30 April h) The Company decided to recognize the translation difference on the oversea subsidiaries opening and closing inventories. 6. Profit Guarantees During the financial year, there were no profit guarantees given or received by the Company. 7. Material Contracts During the financial year, there were no material contracts of the Company and its subsidiaries involving Directors and major shareholders interest. 8. Contracts Relating to Loans There were no material contracts relating to loans by the Company involving Directors and major shareholders. Komarkcorp Berhad ( A) 39

41 OTHER INFORMATION (cont'd) 9. Utilisation of Proceeds On 24 June 2013, the Company proposed a private placement of up to ten percent (10%) of the issued and paid-up share capital of the Company. There was no new share issued/placed out as at 13 September Options or Convertible Securities There were no options or convertible securities issued by the Company during the financial year under review. 11. Revaluation Policy During the financial year, the Company and its subsidiaries do not have any revaluation policy on landed properties. 12. Disclosure of Recurrent Related Party Transactions The details of the Recurrent Related Party Transactions of a revenue and trading nature carried out by the Group during the financial year ended 30 April 2013 are as follows: Nature of transaction Company Transacting Parties Nature of relationship Amount transacted during the financial year (RM 000) 776 Sale of labels and related products to Komark Enterprise Co. Ltd ( Komark Enterprise ) General Labels & Labelling (M) Sdn Bhd, Komark International Sdn Bhd ( KISB ) Komark Enterprise (a 49%-owned associated company of KISB) Koh Hong Koh Gak Siong, a Director and Major Shareholder of Komarkcorp is also a director and shareholder of Komark Enterprise and a shareholder and director of Aimas Enterprise. Aimas Enterprise is Major Shareholder of Komark Enterprise via Komarkcorp. Koh Chie Jooi who is a Director of Komarkcorp, is also a shareholder of Komark Enterprise and a director and shareholder of Aimas Enterprise and person connected to Koh Hong Koh Gak Siong. Koh Chee Mian who is a director and shareholder of Komarkcorp, is also a director and shareholder of Aimas Enterprise and person connected to Koh Hong Koh Gak Siong. In addition, Koh Chee Kian and Koh Chee Hao, who are former Directors within the preceding 6 months, are also directors and shareholders of Aimas Enterprise and persons conneted to Koh Hong Koh Gak Siong. Apart from the above, Koh Chee Mian, Koh Chee Kian, Koh Chee Hao and Aimas Enterprise have no direct shareholdings in Komark Enterprise other than via Komarkcorp. 40 Annual Report 2013

42 FINANCIAL STATEMENTS Directors Report 42 Statement by Directors 46 Statutory Declaration 46 Independent Auditors Report 47 Statements of Financial Position 49 Statements of Comprehensive Income 50 Consolidated Statement of Changes in Equity 51 Statement of Changes in Equity 52 Statements of Cash Flows 53 Notes to the Financial Statements 55 Komarkcorp Berhad ( A) 41

43 DIRECTORS REPORT FOR THE YEAR ENDED 30 APRIL 2013 The directors present their report and the audited financial statements of the Group and of the Company for the financial year ended 30 April PRINCIPAL ACTIVITIES The Company is principally engaged in investment holding and provision of management services to its subsidiaries. The principal activities of the subsidiaries are as set out in Note 6 to the financial statements. There have been no significant changes in these activities during the financial year. RESULTS Group RM 000 Company RM 000 (Loss)/profit before taxation (2,273) 520 Taxation (2,558) - (Loss)/profit for the year ( 4,831) 520 DIVIDEND The directors has proposed a first and final single tier dividend of 0.50 sen per ordinary share of RM1.00 each in respect of the current financial year on 28 June The proposed dividend will be subject to the shareholders approval at the forthcoming Annual General Meeting of the Company. The financial statements do not reflect the proposed dividend which will be accrued as a liability in the next financial year. RESERVES AND PROVISIONS There were no material transfers to or from reserves or provisions during the financial year. ISSUE OF SHARES During the financial year, there was no issue of shares. TREASURY SHARES During the financial year, the Company repurchased 2,000 ordinary shares from the open market at an average price of approximately RM0.33 per share. The total consideration paid for the repurchase including transaction costs was RM657 and this was financed by internally generated funds. During the financial year, the Company sold the entire 1,540,000 treasury shares for a total consideration of RM782,608 through Bursa Malaysia Securities Berhad. SHARE OPTION During the financial year, the Company did not grant any option to any person to take up the unissued shares of the Company. SIGNIFICANT EVENTS Details of significant events during the financial year are disclosed in note 31 to the financial statements. SUBSEQUENT EVENTS Details of subsequent events after balance sheet date are disclosed in note 32 to the financial statements. 42 Annual Report 2013

44 DIRECTORS REPORT FOR THE YEAR ENDED 30 APRIL 2013 (cont d) DIRECTORS The directors who served since the date of the last report are: Koh Hong Koh Gak Siong Datuk Ng Peng Ng Peng Hay Koh Chie Jooi Chew Chee Chek (resigned on ) Koh Chee Mian Ihsan Bin Ismail (resigned on ) Koh Chee Kian (resigned on ) Koh Chee Hao (resigned on ) Datuk Wira Jalilah Binti Baba (appointed on ; resigned on ) Tan Sri Ahmad Bin Mohd Don (appointed on ) Tan Kwe Hee (appointed on ) Lim Pei Liam Ahat Kiat (appointed on ) Dato Yeow Wah Chin (appointed on ) DIRECTORS INTERESTS IN SHARES According to the Register of Directors Shareholdings, the interests of directors in office at the end of the financial year in shares in the Company during the financial year were as follows: (Direct Interest) Number of ordinary shares of RM1.00 each Balance at Balance at Bought Sold Koh Hong Koh Gak Siong 6,010, ,010,300 Koh Chee Mian - 206, ,100 (Indirect Interest) Koh Hong Koh Gak Siong 10,906,889# ,906,889# Koh Chie Jooi 16,917,189* ,917,189* Koh Chee Mian 16,917,189* ,917,189* Koh Chee Kian 16,917,189* ,917,189* Koh Chee Hao 16,917,189* ,917,189* # Deemed interested in shares held by an affiliated company, Aimas Enterprise Sdn. Bhd., a company incorporated in Malaysia, by virtue of Section 6A(4)(c) of the Companies Act, * Deemed interested in the shares held by persons connected under Section 122A(1)(a) of the Companies Act, By virtue of their interests in the shares of the Company, Koh Hong Koh Gak Siong, Koh Chie Jooi, Koh Chee Mian, Koh Chee Kian and Koh Chee Hao are also deemed to have an interest in the shares of all the subsidiaries of the Company to the extent the Company has an interest. Other than as disclosed above, none of the other directors in office at the end of the financial year had any interest in the shares of the Company or its related companies during the financial year Komarkcorp Berhad ( A) 43

45 DIRECTORS REPORT FOR THE YEAR ENDED 30 APRIL 2013 (cont d) DIRECTORS BENEFITS Since the end of the previous financial year, no director has received or become entitled to receive any benefit (other than a benefit included in the aggregate amount of emoluments received or due and receivable by 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 any director or with a firm of which the director is a member or with a company in which the director has a substantial financial interest except as disclosed in Note 22 to the financial statements. Neither during nor at the end of the financial year was the Company a party to any arrangements which object was to enable the directors to acquire benefits by means of the acquisition of shares in or debentures of the Company or any other body corporate. REMUNERATION COMMITTEE The members of the Remuneration Committee who have served since the date of the last report are: Datuk Wira Jalilah Binti Baba (appointed on ; resigned on ) Datuk Ng Peng Ng Peng Hay Koh Hong Koh Gak Siong Chew Chee Chek (resigned on ) OTHER STATUTORY INFORMATION Before the Statements of Comprehensive Income and Statements of Financial Position of the Group and of the Company were made out, the directors took reasonable steps: i) 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 adequate allowance had been made for doubtful debts; and ii) to ensure that any current assets which were unlikely to realise their book values in the ordinary course of business had been written down to an amount which they might be expected so to realise. At the date of this report, the directors are not aware of any circumstances: i) which would render the amount written off for bad debts or the amount of allowance for doubtful debts in the financial statements of the Group and of the Company inadequate to any substantial extent; ii) iii) iv) which would render the value attributed to the current assets in the financial statements of the Group and of the Company misleading; which have arisen which render adherence to the existing methods of valuation of assets or liabilities in the financial statements of the Group and of the Company misleading or inappropriate; and not otherwise dealt with in this report or in the financial statements of the Group and of the Company, that would render any amount stated in the respective financial statements misleading. At the date of this report, there does not exist: i) any charge on the assets of the Group and of the Company that has arisen since the end of the financial year which secures the liabilities of any other person; or ii) any contingent liability in respect of the Group and of the Company that has arisen since the end of the financial year. No contingent liability or other liabilities of the Group and of the Company has become enforceable, or is likely to become enforceable within the period of twelve months after the end of the financial year which, in the opinion of the directors, will or may substantially affect the ability of the Group and of the Company to meet its obligations as and when they fall due. 44 Annual Report 2013

46 DIRECTORS REPORT FOR THE YEAR ENDED 30 APRIL 2013 (cont d) OTHER STATUTORY INFORMATION (cont d) In the opinion of the directors: i) the results of the operations of the Group and of the Company for the financial year have not been substantially affected by any item, transaction or event of a material and unusual nature; and ii) 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 the operations of the Group and of the Company for the financial year in which this report is made. AUDITORS The Auditors, ONG & WONG, have indicated their willingness to continue in office. Signed on behalf of the Board in accordance with a resolution of the directors. KOH HONG KOH GAK SIONG Director KOH CHIE JOOI Director Dated: 30 August 2013 Kuala Lumpur Komarkcorp Berhad ( A) 45

47 STATEMENT BY DIRECTORS (Pursuant to Section 169[15] of the Companies Act, 1965) We, KOH HONG KOH GAK SIONG and KOH CHIE JOOI, being two of the directors of KOMARKCORP BERHAD, state that, in the opinion of the directors, the financial statements set out on pages 49 to 99 are drawn up in accordance with Malaysian Financial Reporting Standards and the Companies Act, 1965 in Malaysia so as to give a true and fair view of the state of affairs of the Group and of the Company as at 30 April 2013 and of the results and cash flows of the Group and of the Company for the financial year ended on that date. Further to the Statement by directors pursuant to Section 169(15) of the Companies Act, 1965, the information set out in Note 17 to the financial statements have been prepared in accordance with the 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, issued by the Malaysian Institute of Accountants. Signed on behalf of the Board in accordance with a resolution of the directors. KOH HONG KOH GAK SIONG Director KOH CHIE JOOI Director Dated: 30 August 2013 Kuala Lumpur STATUTORY DECLARATION (Pursuant to Section 169[16] of the Companies Act, 1965) I, KOH HONG KOH GAK SIONG, being the director primarily responsible for the financial management of KOMARKCORP BERHAD, do solemnly and sincerely declare that the financial statements set out on pages 49 to 99 are drawn up, 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, at Kuala Lumpur in Wilayah Persekutuan on 30 August 2013 Before me, Commissioner for Oaths KOH HONG KOH GAK SIONG 46 Annual Report 2013

48 INDEPENDENT AUDITORS REPORT TO THE MEMBERS OF KOMARKCORP BERHAD Report on the Financial Statements We have audited the financial statements of Komarkcorp Berhad, which comprise the statements of financial position as at 30 April 2013 of the Group and of the Company, and the statements of comprehensive income, statements of changes in equity and statements of cash flows of the Group and of the Company for the financial year then ended, and a summary of significant accounting policies and other explanatory information, as set out on pages 49 to 99. 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 Malaysian Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia. The directors are also responsible for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatements, 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 whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgement, including the assessment of risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity s preparation of financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements give a true and fair view of the financial position of the Group and of the Company as at 30 April 2013 and of their financial performance and cash flows for the financial year then ended in accordance with Malaysian Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia. Report on Other Legal and Regulatory Requirements In accordance with the requirements of the Companies Act, 1965 in Malaysia, we also report the following: a) In our opinion, the accounting and other records and the registers required by the Act to be kept by the Company and its subsidiaries of which we have acted as auditors have been properly kept in accordance with the provisions of the Act. b) We have considered the financial statements and the auditors reports of all the subsidiaries of which we have not acted as auditors, which are indicated in Note 6 to the financial statements. c) We are satisfied that the financial statements of the subsidiaries that have been consolidated with the Company s financial statements are in form and content appropriate and proper for the purposes of the preparation of the financial statements of the Group and we have received satisfactory information and explanations required by us for those purposes. d) The 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 Komarkcorp Berhad ( A) 47

49 INDEPENDENT AUDITORS REPORT TO THE MEMBERS OF KOMARKCORP BERHAD (cont d) Other Reporting Responsibilities The supplementary information set out in Note 17 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 the MIA Guidance and the directive of Bursa Malaysia Securities Berhad. Other Matters a) As stated in Note 2 to the financial statements, Komarkcorp Berhad adopted Malaysian Financial Reporting Standards on 1 May 2012 with a transition date of 1 May These standards were applied retrospectively by directors to the comparative information in these financial statements, including the statements of financial position as at 30 April 2012 and 1 May 2011, and the statements of comprehensive income, statements of changes in equity and statements of cash flows for the financial year ended 30 April 2012 and related disclosures. We were not engaged to report on the restated comparative information and it is unaudited. Our responsibilities as part of our audit of the financial statements of the Group and of the Company for the financial year ended 30 April 2013 have, in these circumstances, included obtaining sufficient appropriate audit evidence that the opening balances as at 1 May 2012 do not contain misstatements that materially affect the financial position as of 30 April 2013 and the financial performance and cash flows for the financial year then ended. b) 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. ONG & WONG AF 0241 Chartered Accountants ONG KOON LIANG 2909/02/15(J) Partner of Firm Dated: 30 August 2013 Kuala Lumpur 48 Annual Report 2013

50 STATEMENTS OF FINANCIAL POSITION AS AT 30 APRIL 2013 ASSETS Group Company Note RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 Non-current assets Property, plant and equipment 3 123, , , Prepaid lease payments on land 4 1,706 1,701 1, Investment property Investments in subsidiaries ,683 31,683 31,683 Investment in associate Other investment Development expenditure 9 1,971 2, Goodwill on consolidation 10 1,750 1,750 1, , , ,284 31,683 31,683 31,683 Current assets Inventories 11 37,777 38,023 36, Trade and other receivables 12 42,480 38,750 35, Amount due from related companies ,362 40,945 43,681 Amount due from associate company 13 2, Tax recoverable Cash and bank balances 14 8,933 6,166 5, ,507 83,079 78,030 42,407 41,002 43,734 TOTAL ASSETS 220, , ,314 74,090 72,685 75,417 EQUITY AND LIABILITIES Equity attributable to equity holders of the Company Share capital 15 81,275 81,275 81,275 81,275 81,275 81,275 Treasury shares 16 - (437) (437) - (437) (437) Share premium 15,634 15,289 15,289 15,634 15,289 15,289 Reserves 17 19,739 23,775 22,184 (27,837) (28,357) (25,758) Total equity 116, , ,311 69,072 67,770 70,369 Non-current liabilities Borrowings 18 8,877 13,150 20, Deferred tax liabilities 19 2,654 1,406 1, ,531 14,556 21, Current liabilities Trade and other payables 20 29,730 26,253 20, Amount due to related company ,300 1,300 1,300 Borrowings 18 61,061 52,869 55,580 3,158 2,988 2,987 Tax payable 1,477 1,213 1, ,268 80,335 77,348 5,018 4,915 5,048 Total liabilities 103,799 94,891 99,003 5,018 4,915 5,048 TOTAL EQUITY AND LIABILITIES 220, , ,314 74,090 72,685 75,417 The annexed notes form an integral part of these financial statements. Komarkcorp Berhad ( A) 49

51 STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 APRIL 2013 Group Company Note RM 000 RM 000 RM 000 RM 000 Revenue 136, ,346 2,494 - Cost of sales (74,238) (66,146) - - Gross profit 61,799 57,200 2,494 - Other operating income 21 1, Depreciation and amortisation (12,327) (11,651) - - Staff costs and employee benefits (22,507) (20,927) (1,199) (1,966) Other operating expenses (25,296) (19,793) (521) (377) Profit/(loss) from operations 3,218 5, (2,343) Finance costs (5,491) (4,782) (254) (256) (Loss)/profit before taxation 22 (2,273) (2,599) Taxation 23 (2,558) (751) - - (Loss)/profit after taxation (4,831) (2,599) Other comprehensive income - Foreign currency translation 795 1, Total comprehensive (loss)/income for the year (4,036) 1, (2,599) (Loss)/profit for the year attributable to: - Equity holders of the Company (4,831) (2,599) Total comprehensive (loss)/income for the year attributable to: - Equity holders of the Company (4,036) 1, (2,599) Basic (loss)/earnings per share attributable to equity holders of the Company (sen) 24 (6.0) 0.1 The annexed notes form an integral part of these financial statements. 50 Annual Report 2013

52 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 APRIL 2013 Attributable to Equity Holders of the Company Non-distributable Distributable Non- Share Treasury Share General Translation Retained controlling Total Note capital shares Premium reserve reserve profit Total interest equity RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 At 30 April 2011/1 May ,275 (437) 15,289 1,703 2,218 18, , ,311 Total comprehensive income for the year , ,591-1,591 Treasury shares 16 - repurchased - -# # - -# At 30 April ,275 (437) 15,289 1,703 3,730 18, , ,902 Total comprehensive loss for the year (4,831) (4,036) - (4,036) Disposal of treasury shares Treasury shares 16 - repurchased - -# # - -# - sold At 30 April ,275-15,634 1,703 4,525 13, , ,648 # Amount less than RM1,000. The annexed notes form an integral part of these financial statements. Komarkcorp Berhad ( A) 51

53 STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 APRIL 2013 Nondistributable Share Treasury Share Accumulated Total Note capital shares premium losses Equity RM 000 RM 000 RM 000 RM 000 RM 000 At 1 May ,275 (437) 15,289 (25,758) 70,369 Total comprehensive loss for the year (2,599) (2,599) Treasury shares 16 - repurchased - -# - - -# At 30 April 2012/1 May ,275 (437) 15,289 (28,357) 67,770 Total comprehensive profit for the year Treasury shares 16 - repurchased - -# - - -# - sold At 30 April ,275-15,634 (27,837) 69,072 # Amount less than RM1,000. The annexed notes form an integral part of these financial statements. 52 Annual Report 2013

54 STATEMENTS OF CASH FLOWS FOR THE YEAR ENDED 30 APRIL 2013 Group Company Note RM 000 RM 000 RM 000 RM 000 CASH FLOWS FROM OPERATING ACTIVITIES (Loss)/profit before taxation (2,273) (2,599) Adjustments for: Dividend income - - (2,494) - Unreconciled balances written off Allowance for slow-moving manufactured inventories 1, Allowance for impairment of receivables Amount due from related company written off Amortisation of development expenditure Amortisation of prepaid lease payment on land Bad debt written off Inventories written off 1, Gain on disposal of property, plant and equipment (903) (289) - - Gain on disposal of investment property (53) Property, plant and equipment written off Depreciation of property, plant and equipment and investment property 11,417 11, (Gain)/loss on foreign exchange, unrealised (116) Interest expense 5,491 4, Interest income (98) (70) - - Operating profit/(loss) before working capital changes 19,129 17,121 (1,667) (2,343) Increase in inventories (3,167) (1,031) - - (Increase)/decrease in receivables (7,129) (3,862) (1,458) 2,731 Increase/(decrease) in payables 3,486 5,835 (67) (133) Cash generated from/(absorbed by) operations 12,319 18,063 (3,192) 255 Tax refund Tax paid (1,036) (1,094) - - Interest paid (5,491) (4,782) (254) (256) Interest received Net cash generated from/(used in) operating activities 5,896 12,257 (3,446) (1) CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of property, plant and equipment A (6,293) (5,674) - - Proceeds from disposal of property, plant and equipment 4,525 8, Proceeds from disposal of investment property Dividend received - - 2,494 - Development expenditure paid (173) (2,497) - - Net cash (used in)/generated from investing activities (1,698) 556 2,494 - CASH FLOWS FROM FINANCING ACTIVITIES Purchase of treasury shares -# -# -# -# Decrease in deposits pledged with licensed banks 2,110 1, Proceeds from loan 14,480 13, Proceeds from disposal of treasury shares Repayment of term loans and other borrowings (8,875) (16,598) - - Repayment of hire purchase and lease financing (4,183) (3,641) - - Net change in bills payable (2,081) (3,344) - - Net cash generated from/(used in) financing activities 2,233 (8,535) 782 -# Net increase/(decrease) in cash and cash equivalents 6,431 4,278 (170) (1) Effects of exchange rate changes (757) (1,026) - - Cash and cash equivalents at beginning of year (14,508) (17,760) (2,985) (2,984) Cash and cash equivalents at end of year B (8,834) (14,508) (3,155) (2,985) # Amount less than RM1,000 Komarkcorp Berhad ( A) 53

55 STATEMENTS OF CASH FLOWS FOR THE YEAR ENDED 30 APRIL 2013 (cont d) NOTE A. ACQUISITION OF PROPERTY, PLANT AND EQUIPMENT During the financial year, the Group and the Company acquired the property, plant and equipment by: Group Company RM 000 RM 000 RM 000 RM 000 Cash 6,293 5, Hire purchase 4,552 1, ,845 7, B. CASH AND CASH EQUIVALENTS Cash and cash equivalents included in the statements of cash flows comprise the following amounts: Group Company RM 000 RM 000 RM 000 RM 000 Cash and bank balances 8,933 6, Less: Deposits pledged with licensed institutions (2,741) (631) - - Bank overdrafts (15,026) (20,043) (3,158) (2,988) (8,834) (14,508) (3,155) (2,985) 54 Annual Report 2013

56 NOTES TO THE FINANCIAL STATEMENTS 30 APRIL GENERAL INFORMATION The Company is principally engaged in investment holding and provision of management services to its subsidiaries. The principal activities of the subsidiaries are as set out in Note 6. The Company is a public limited liability company, incorporated and domiciled in Malaysia, and is listed on the Main Market of Bursa Malaysia Securities Berhad ( Bursa Malaysia ). The registered office is located at Lot 6.05, Level 6, KPMG Tower, 8 First Avenue, Bandar Utama, Petaling Jaya, Selangor Darul Ehsan. The principal place of business of the Company is located at Lot 132, Jalan 16/1, Kawasan Perindustrian Cheras Jaya, Balakong, Selangor Darul Ehsan. 2. SIGNIFICANT ACCOUNTING POLICIES The financial statements for the financial year ended 30 April 2013 are the Group s and the Company s first financial statements prepared in accordance with Malaysian Financial Reporting Standards ( MFRSs ). For all periods up to and including the financial year ended 30 April 2012, the Group and the Company prepared its financial statements in accordance with Financial Reporting Standards ( FRSs ). The transition to MFRSs is accounted for in accordance with MFRS 1 First-Time Adoption of Malaysian Financial Reporting Standards, with 1 May 2012 as the date of transition. The transition to MFRSs has not had a material impact on the financial statements. At the date of authorisation for issue of the financial statements, the new and revised Standards and Amendments which were in issue but not yet effective and not early adopted by the Group and the Company are as listed below: Description Effective for annual period beginning on or after MFRS 7 Financial Instruments: Disclosures (Amendments relating to 1 January 2013 Disclosures - Offsetting Financial Assets and Liabilities) MFRS 9 Financial Instruments (IFRS 9 issued by IASB in November 2009) 1 January 2015 MFRS 9 Financial Instruments (IFRS 9 issued by IASB in October 2010) 1 January 2015 MFRS 10 Consolidated Financial Statements 1 January 2013 MFRS 10 Consolidated Financial Statements (Amendments relating to 1 January 2013 Transition Guidance) MFRS 12 Disclosures of Interests in Other Entities 1 January 2013 MFRS 12 Disclosures of Interests in Other Entities 1 January 2013 (Amendments relating to Transition Guidance) MFRS 13 Fair Value Measurement 1 January 2013 MFRS 101 Presentation of Financial Statements (Amendments relating 1 July 2012 to Presentation of Items of Other Comprehensive Income) MFRS 119 Employee Benefits (IAS 19 as amended by IASB in June 2011) 1 January 2013 MFRS 127 Separate Financial Statements (IAS 27 as amended by IASB in May 2011) 1 January 2013 MFRS 128 Investments in Associates and Joint Ventures (IAS 28 as amended 1 January 2013 by IASB in May 2011) MFRS 132 Financial Instruments: Presentation (Amendments relating to Offsetting 1 January 2014 Financial Assets and Financial Liabilities) Amendments to MFRSs contained in the document entitled Annual Improvements 1 January Cycle Komarkcorp Berhad ( A) 55

57 NOTES TO THE FINANCIAL STATEMENTS 30 APRIL 2013 (cont d) 2. SIGNIFICANT ACCOUNTING POLICIES (cont d) The directors anticipate that abovementioned Standards and Amendments will be adopted in the annual financial statements of the Group and of the Company when they become effective and that the adoption of these Standards and Amendments will have no material impact on the financial statements of the Group and of the Company in the period of initial application, except as discussed below. Amendments to MFRS 7 and MFRS 132: Offsetting Financial Assets and Financial Liabilities and the related disclosures The amendments to MFRS 132 clarify existing application issues relating to the offset of financial assets and financial liabilities requirements. Specifically, the amendments clarify the meaning of currently has a legally enforceable right of set-off and simultaneous realisation and settlement. The amendments to MFRS 7 introduce new disclosure requirements relating to rights of offset and related arrangements for financial instruments under an enforceable master netting agreements or similar arrangements. Both MFRS 132 and MFRS 7 require retrospective application upon adoption. To date, the Group and the Company have not entered into any such agreements or similar arrangements. However, the directors anticipate that the application of these amendments to MFRS 132 and MFRS 7 may result in more disclosures being made with regard to offsetting financial assets and financial liabilities in the future. MFRS 9 and Amendments relating to Mandatory Effective Date of MFRS 9 and Transition Disclosures MFRS 9 (IFRS 9 issued by IASB in November 2009) introduces new requirements for the classification and measurement of financial assets. MFRS 9 (IFRS 9 issued by IASB in October 2010) includes the requirements for the classification and measurement of financial liabilities and for derecognition. The amendments to MFRS 9 (IFRS 9 issued by IASB in November 2009 and October 2010 respectively) ( MFRS 9 ) relating to Mandatory Effective Date of MFRS 9 and Transition Disclosures which become immediately effective on the issuance date of 1 March 2012 amended the mandatory effective date of MFRS 9 to annual periods beginning on or after 1 January 2015 instead of on or after 1 January 2013, with earlier application still permitted as well as modified the relief from restating prior periods. MFRS 7 which was also amended in tandem with the issuance of the aforementioned amendments introduces new disclosure requirements that are either permitted or required on the basis of the entity s date of adoption and whether the entity chooses to restate prior periods. Key requirements of MFRS 9 are described as follows: all recognised financial assets that are within the scope of MFRS 139 Financial Instruments: Recognition and Measurement to be subsequently measured at amortised cost or fair value. Specifically, debt investments that are held within a business model whose objective is to collect the contractual cash flows, and that have contractual cash flows that are solely payments of principal and interest on the principal outstanding are generally measured at amortised cost at the end of subsequent accounting periods. All other debt investments and equity investments are measured at their fair values at the end of subsequent accounting periods. In addition, under MFRS 9, entities may make an irrevocable election to present subsequent changes in the fair value of equity instrument (that is not held for trading) in other comprehensive income, with only dividend income generally recognised in profit or loss. with regard to the measurement of financial liabilities designated as at fair value through profit or loss, MFRS 9 requires that the amount of change in the fair value of the financial liability that is attributable to changes in the credit risk of that liability, is presented in other comprehensive income, unless the recognition of the effects of changes in the liability s credit risk in other comprehensive income would create or enlarge an accounting mismatch in profit or loss. Changes in fair value attributable to a financial liability s credit risk are not subsequently reclassified to profit or loss. Previously, under FRS 139, the entire amount of the change in the fair value of the financial liability designated as at fair value through profit or loss was presented in profit or loss. 56 Annual Report 2013

58 NOTES TO THE FINANCIAL STATEMENTS 30 APRIL 2013 (cont d) 2. SIGNIFICANT ACCOUNTING POLICIES (cont d) MFRS 10, MFRS 11, MFRS 12, MFRS 127 and MFRS 128 In November 2011, a package of five Standards on consolidation, joint arrangements, associates and disclosures was issued, comprising MFRS 10, MFRS 11, MFRS 12, MFRS 127 (IAS 27 as amended by IASB in May 2011) and MFRS 128 (IAS 28 as amended by IASB in May 2011). Key requirements of these five Standards are described below. MFRS 10 replaces the parts of MFRS 127 Consolidated and Separate Financial Statements that deal with consolidated financial statements. IC Int. 112 Consolidation - Special Purpose Entities will be withdrawn upon the effective date of MFRS 10. Under MFRS 10, there is only one basis for consolidation, that is, control. In addition, MFRS 10 includes a new definition of control that contains three elements: (a) power over an investee, (b) exposure, or rights, to variable returns from its involvement with the investee, and (c) the ability to use its power over the investee to affect the amount of the investor s returns. Extensive guidance has been added in MFRS 10 to deal with complex scenarios. MFRS 11 replaces MFRS 131 Interests in Joint Ventures. MFRS 11 deals with how a joint arrangement of which two or more parties have joint control should be classified. IC Int. 113 Jointly Controlled Entities - Non-monetary Contributions by Venturers will be withdrawn upon the effective date of MFRS 11. Under MFRS 11, joint arrangements are classified as joint operations or joint ventures, depending on the rights and obligations of the parties to the arrangements. In contrast, under MFRS 131, there are three types of joint arrangements: jointly controlled entities, jointly controlled assets and jointly controlled operations. In addition, joint ventures under MFRS 11 are required to be accounted for using the equity method of accounting, whereas jointly controlled entities under MFRS 131 can be accounted for using the equity method of accounting or proportionate consolidation. MFRS 12 is a disclosure standard and is applicable to entities that have interests in subsidiaries, joint arrangements, associates and/or unconsolidated structured entities. In general, the disclosure requirements in MFRS 12 are more extensive than those in the current standards. In July 2012, the amendments to MFRS 10, MFRS 11 and MFRS 12 were issued to clarify certain transitional guidance on the application of these MFRSs for the first time. The directors anticipate that the application of the above mentioned standards may not have a material effect to the financial statements except for more extensive disclosures in the financial statements. MFRS 13: Fair Value Measurement MFRS 13 establishes a single source of guidance for fair value measurements and disclosures about fair value measurements. The Standard defines fair value, establishes a framework for measuring fair value, and requires disclosures about fair value measurements. The scope of MFRS 13 is broad; it applies to both financial instrument items and non-financial instrument items for which other IFRS s require or permit fair value measurements and disclosures about fair value measurements, except in specified circumstances. In general, the disclosure requirements in MFRS 13 are more extensive than those required in the current standards. For example, quantitative and qualitative disclosures based on the three-level fair value hierarchy currently required for financial instruments only under MFRS 7 Financial Instruments: Disclosures will be extended by MFRS 13 to cover all assets and liabilities within its scope. The directors anticipate that the application of the new Standard may affect the amounts reported in the financial statements and result in more extensive disclosures in the financial statements. Amendments to MFRS 101: Presentation of Items of Other Comprehensive Income The amendments to MFRS 101 retain the option to present profit or loss and other comprehensive income in either a single statement or in two separate but consecutive statements. However, the amendments to MFRS 101 require additional disclosures to be made in the other comprehensive income section such that items of other comprehensive income are grouped into two categories: (a) items that will not be reclassified subsequently to profit or loss; and (b) items that will be reclassified subsequently to profit or loss when specific conditions are met. Income tax on items of other comprehensive income is required to be allocated on the same basis - the amendments do not change the option to present items of other comprehensive income either before tax or net of tax. Komarkcorp Berhad ( A) 57

59 NOTES TO THE FINANCIAL STATEMENTS 30 APRIL 2013 (cont d) 2. SIGNIFICANT ACCOUNTING POLICIES (cont d) Amendments to MFRS 101: Presentation of Items of Other Comprehensive Income (cont d) The amendments also introduce new terminology for the statement of comprehensive income and income statement. Under the amendments to MFRS 101, the statement of comprehensive income is renamed statement of profit or loss and other comprehensive income and the income statement is renamed the statement of profit or loss. The amendments will be applied retrospectively upon adoption and hence, the presentation of items of other comprehensive income will be modified accordingly to reflect the changes. Other than the abovementioned presentation changes, the application of the amendments to MFRS 101 would not result in any impact on profit or loss, other comprehensive income and total comprehensive income. MFRS 119 (IAS 19 as amended by IASB in June 2011) The amendments to MFRS 119 change the accounting for defined benefit plans and termination benefits. The most significant change relates to the accounting for changes in defined benefit obligations and plan assets. The amendments require the recognition of changes in defined benefit obligations and in fair value of plan assets when they occur, and hence eliminate the corridor approach permitted under the previous version of MFRS 119 and accelerate the recognition of past service costs. The amendments require all actuarial gains and losses to be recognised immediately through other comprehensive income in order for the net pension asset or liability recognised in the consolidated statement of financial position to reflect the full value of the plan deficit or surplus. Further, the interest cost and expected return on plan assets used in the previous version of MFRS 119 are replaced with a net-interest amount, which is calculated by applying the discount rate to the net defined benefit liability or asset. Amendments to MFRSs: Annual Improvements Cycle The Annual Improvements Cycle include a number of amendments to various MFRSs. The amendments to MFRSs include: Amendments to MFRS 101 Presentation of Financial Statements; Amendments to MFRS 116 Property, Plant and Equipment; and Amendments to MFRS 132 Financial Instruments: Presentation. Amendments to MFRS 101 MFRS 101 requires an entity that changes accounting policies retrospectively, or makes a retrospective restatement or reclassification to present a statement of financial position as at the beginning of the preceding period (third statement of financial position). The amendments to MFRS 101 clarify that an entity is required to present a third statement of financial position only when the retrospective application, restatement or reclassification has a material effect on the information in the third statement of financial position and that related notes are not required to accompany the third statement of financial position. Hence, the adoption of the amendments when it becomes effective will affect the presentation of the third statement of financial position and related notes in the future periods. Amendments to MFRS 116 The amendments to MFRS 116 clarify that spare parts, stand-by equipment and servicing equipment should be classified as property, plant and equipment when they meet the definition of property, plant and equipment in MFRS 116 and as inventory otherwise. The directors do not anticipate that the amendments to MFRS 116 will have a significant effect on the Group s and the Company s financial statements. Amendments to MFRS 132 The amendments to MFRS 132 clarify that income tax relating to distributions to holders of an equity instrument and to transaction costs of an equity transaction should be accounted for in accordance with MFRS 112 Income Taxes. The directors anticipate that the amendments to MFRS 132 will have no effect on the Group s and the Company s financial statements as this treatment has already been adopted. 58 Annual Report 2013

60 NOTES TO THE FINANCIAL STATEMENTS 30 APRIL 2013 (cont d) 2. SIGNIFICANT ACCOUNTING POLICIES (cont d) a. Basis of Preparation The financial statements of the Group and of the Company have been prepared in accordance with MFRSs and the provisions of the Companies Act, 1965 in Malaysia. The financial statements have been prepared on the historical cost basis except as disclosed in the accounting policies below. The financial statements are presented in Ringgit Malaysia ( RM ). b. Basis of Consolidation Business Combinations The consolidated financial statements comprise the financial statements of the Company and its subsidiaries as at the reporting date. The financial statements of the subsidiaries used in the preparation of the consolidated financial statements are prepared for the same reporting date as the Company. Consistent accounting policies are applied to like transactions and events in similar circumstances. All intra-group balances, income and expenses and unrealised gains and losses resulting from intra-group transactions are eliminated in full. Subsidiaries are consolidated from the date of acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases. Acquisition of subsidiaries are accounted for by applying the acquisition method. Identifiable assets acquired and liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. Acquisition-related costs are recognised as expenses in the periods in which the costs are incurred and the services are received. When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date. This includes the separation of embedded derivatives in host contracts by the acquiree. Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration which is deemed to be an asset or liability, will be recognised in accordance with MFRS 139 Financial Instrument: Recognition and Measurement, either in profit or loss or as change to other comprehensive income. If the contingent consideration is classified as equity, it is not to be remeasured until it is finally settled within equity. In business combinations achieved in stages, previously held equity interests in the acquiree are remeasured to fair value at the acquisition date and any corresponding gain or loss is recognised in profit or loss. The Group elects for each individual business combination, whether non-controlling interest in the acquiree (if any) is recognised on the acquisition date at fair value, or at the non-controlling interest s proportionate share of the acquiree s identifiable net assets. Any excess of the sum of the fair value of the consideration transferred in the business combination, the amount of non-controlling interest in the acquiree (if any), and the fair value of the Group s previously held equity interest in the acquiree (if any), over the net fair value of the acquiree s identifiable assets and liabilities is recorded as goodwill. The accounting policy for the goodwill is set out in Note 2(f). In instances where the latter amount exceeds the former, the excess is recognised as gain on bargain purchase in profit or loss on the acquisition date. Komarkcorp Berhad ( A) 59

61 NOTES TO THE FINANCIAL STATEMENTS 30 APRIL 2013 (cont d) 2. SIGNIFICANT ACCOUNTING POLICIES (cont d) c. Foreign Currencies (i) Functional and Presentation Currency The individual financial statements of each entity in the Group are measured using the currency of the primary economic environment in which the entity operates ( the functional currency ). The consolidated financial statements are presented in Ringgit Malaysia (RM), which is also the Company s functional currency. (ii) Foreign Currency Transactions Transactions in foreign currencies are measured in the respective functional currencies of the Company and its subsidiaries and are recorded on initial recognition in the functional currencies at exchange rates approximating those ruling at the transaction dates. Monetary assets and liabilities denominated in foreign currencies are translated at the rate of exchange ruling at the reporting date. Non-monetary items denominated in foreign currencies that are measured at historical cost are translated using the exchange rates as at the dates of the initial transactions. Non-monetary items denominated in foreign currencies measured at fair value are translated using the exchange rates at the date when the fair value was determined. Exchange differences arising on the settlement of monetary items or on translating monetary items at the reporting date are recognised in profit or loss except for exchange differences arising on monetary items that form part of the Group s net investment in foreign operations, which are recognised initially in other comprehensive income and accumulated under foreign currency translation reserve in equity. The foreign currency translation reserve is reclassified from equity to profit or loss of the Group on disposal of the foreign operation. Exchange differences arising on the translation of non-monetary items carried at fair value are included in profit or loss for the period except for the differences arising on the translation of non-monetary items in respect of which gains and losses are recognised directly in equity. Exchange differences arising from such non-monetary items are also recognised directly in equity. The closing rates used in the translation of foreign currency monetary assets and liabilities and the financial statements of foreign operations are as follows: RM RM 1 United States Dollar (USD) Singapore Dollar (SGD) Renminbi Yuan (RMB) Australia Dollar (AUD) Thailand Baht (THB) Hong Kong Dollar (HKD) Indonesia Rupiah (INR) (iii) Foreign Operations The assets and liabilities of foreign operations are translated into RM at the rate of exchange ruling at the reporting date and income and expenses are translated at exchange rates at the dates of the transactions. The exchange differences arising on the translation are taken directly to other comprehensive income. On disposal of a foreign operation, the cumulative amount recognised in other comprehensive income and accumulated in equity under foreign currency translation reserve relating to that particular foreign operation is recognised in the profit or loss. Goodwill and fair value adjustments arising on the acquisition of foreign operations are treated as assets and liabilities of the foreign operations and are recorded in the functional currency of the foreign operations and translated at the closing rate at the reporting date. 60 Annual Report 2013

62 NOTES TO THE FINANCIAL STATEMENTS 30 APRIL 2013 (cont d) 2. SIGNIFICANT ACCOUNTING POLICIES (cont d) d. Property, Plant and Equipment and Depreciation All items of property, plant and equipment are initially recorded at cost. The cost of an item of property, plant and equipment is recognised as an asset if, and only if, it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. Subsequent to recognition, property, plant and equipment except for freehold land, are measured at cost less accumulated depreciation and accumulated impairment losses, if any. When significant parts of property, plant and equipment are required to be replaced in intervals, the Group recognises such parts as individual assets with specific useful lives and depreciation, respectively. Likewise, when a major inspection is performed, its cost is recognised in the carrying amount of the property, plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are recognised in profit or loss as incurred. Freehold land has an unlimited useful life and therefore is not depreciated. Depreciation is computed on a straight-line basis over the estimated useful lives of the assets as follows: Buildings 2% and 10% Plant and machinery 5% to 20% Office equipment, furniture and fittings 5% to 25% Motor vehicles 10% to 20% Mould and die cutters 10% to 20% Renovation 10% to 33 1/3 % The carrying values of property, plant and equipment are reviewed for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable. The residual value, useful life and depreciation method are reviewed at each year-end, and adjusted prospectively, if appropriate. An item of plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss on derecognition of the asset is included in the profit or loss in the year the asset is derecognised. e. Investment Property Investment property consists of building held for long term purposes for its capital appreciation or rental revenue or for both. The Group has adopted the cost method in measuring investment property. Investment property is stated at cost less accumulated depreciation and accumulated impairment losses, if any. Investment property is depreciated to write off the cost of the property over its estimated useful life. The principal annual rate used for this purpose is: Freehold building 2% per annum Freehold land is not depreciated. Fair value of investment property is determined based on judgements and estimates with reference to current prices in an active market for similar properties in the same location and condition. Investment property is derecognised when either they have been disposed off or when the investment property is permanently withdrawn from use and no future economic benefit is expected from its disposal. Any gain or loss on the retirement or disposal of an investment property is recognised in the profit or loss. Komarkcorp Berhad ( A) 61

63 NOTES TO THE FINANCIAL STATEMENTS 30 APRIL 2013 (cont d) 2. SIGNIFICANT ACCOUNTING POLICIES (cont d) f. Intangible Assets Goodwill Goodwill is initially measured at cost. Following initial recognition, goodwill is measured at cost less accumulated impairment losses, if any. For the purpose of impairment testing, goodwill acquired is allocated, from the acquisition date, to each of the Group s cash-generating units that are expected to benefit from the synergies of the combination. The cash-generating unit to which goodwill has been allocated is tested for impairment annually and whenever there is an indication that the cash-generating unit may be impaired, by comparing the carrying amount of the cash-generating unit, including the allocated goodwill, with the recoverable amount of the cash-generating unit. Where the recoverable amount of the cash-generating unit is less than the carrying amount, an impairment loss is recognised in the profit or loss. Impairment losses recognised for goodwill are not reversed in subsequent periods. Where goodwill forms part of a cash-generating unit and part of the operation within that cash-generating unit is disposed of, the goodwill associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal of the operation. Goodwill disposed of in this circumstance is measured based on the relative fair values of the operations disposed of and the portion of the cash-generating unit retained. Goodwill and fair value adjustments arising on the acquisition of foreign operation on or after 1 January 2006 are treated as assets and liabilities of the foreign operations and are recorded in the functional currency of the foreign operations and translated in accordance with the accounting policy set out in Note 2(c). Goodwill and fair value adjustments which arose on acquisitions of foreign operation before 1 January 2006 are deemed to be assets and liabilities of the Company and are recorded in RM at the rates prevailing at the date of acquisition. g. Development Expenditure Expenditure on development activities, where research findings are applied to a plan or design for the production of new or substantially improved products and processes, is capitalised if the product or process is technically and commercially feasible and the Group has sufficient resources to complete development. The expenditure capitalised includes the cost of materials, direct labour and an appropriate proportion of overheads. Other development expenditure is recognised in profit or loss as incurred. Capitalised development expenditure is stated at cost less accumulated amortisation. These expenditure are amortised and recognised as expenses on systematic basis from the date of commencement of commercial production so as to reflect the pattern in which the related economic benefits are recognised, which are over three (3) to five (5) years. h. Impairment of Non-Financial Assets The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, or when an annual impairment assessment for an asset is required, the Group makes an estimate of the asset s recoverable amount. An asset s recoverable amount is the higher of an asset s fair value less costs to sell and its value in use. For the purpose of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units ( CGU )). 62 Annual Report 2013

64 NOTES TO THE FINANCIAL STATEMENTS 30 APRIL 2013 (cont d) 2. SIGNIFICANT ACCOUNTING POLICIES (cont d) h. Impairment of Non-Financial Assets (cont d) In assessing value in use, the estimated future cash flows expected to be generated by the asset are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Where the carrying amount of an asset exceeds its recoverable amount, the asset is written down to its recoverable amount. Impairment losses recognised in respect of a CGU or groups of CGUs are allocated first to reduce the carrying amount of any goodwill allocated to those units or groups of units and then, to reduce the carrying amount of the other assets in the unit or groups of units on a pro-rata basis. Impairment losses are recognised in profit or loss except for assets that are previously revalued where the revaluation was taken to other comprehensive income. In this case the impairment is also recognised in other comprehensive income up to the amount of any previous revaluation. An assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the asset s recoverable amount since the last impairment loss was recognised. If that is the case, the carrying amount of the asset is increased to its recoverable amount. That increase cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised previously. Such reversal is recognised in profit or loss unless the asset is measured at revalued amount, in which case the reversal is treated as a revaluation increase. Impairment loss on goodwill is not reversed in a subsequent period. i. Subsidiaries A subsidiary is an entity over which the Group has the power to govern the financial and operating policies so as to obtain benefits from its activities. In the Company s separate financial statements, investment in subsidiaries are accounted for at cost less impairment losses, if any. j. Associate An associated company is defined as a company, not being a subsidiary company, in which the Company has a long term equity interest and where it exercises significant influence over the financial and operation policies Investment in associated company is accounted for in the consolidated financial statements using the equity method of accounting. Under the equity method, the investment in associated company is carried in the consolidated statement of financial position at cost adjusted for post-acquisition changes in the Group s share of net assets of the associated company. The Group s share of the net profit or loss of the associated company is recognised in profit or loss. Where there has been a change recognised directly in the equity of the associated company, the Group recognizes its share of such changes. In applying the equity method, unrealised gains and losses on transactions between the Group and the associated company are eliminated to the extent of the Group s interest in the associated company. After application of the equity method, the Group determines whether it is necessary to recognise any additional impairment loss with respect to the Group s net investment in the associate. The associated company is equity accounted for from the date the Group obtains significant influence until the date the Group ceases to have significant influence over the associated company. When the Group s share of losses in an associated company equals or exceeds its interest in the associate, including any long-term interests that, in substance, form part of the Group s net investment in the associated company, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associated company. The most recent available audited financial statements of the associates are used by the Group in applying the equity method. Where the dates of the audited financial statements used are not coterminous with those of the Group, the share of results is arrived at from the last audited financial statements available and management financial statements to the end of the accounting period. Uniform accounting policies are adopted for like transactions and events in similar circumstances. Komarkcorp Berhad ( A) 63

65 NOTES TO THE FINANCIAL STATEMENTS 30 APRIL 2013 (cont d) 2. SIGNIFICANT ACCOUNTING POLICIES (cont d) j. Associate (cont d) In the Company s separate financial statements, investment in associated company is stated at cost less accumulated impairment losses. On disposal of such investments, the differences between net disposal proceeds and their carrying amounts is included in profit or loss. k. Financial Assets Financial assets are recognised in the statements of financial position when, and only when, the Group 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 Group and the Company determine the classification of their financial assets at initial recognition, and the categories include financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments and available-for-sale financial assets. (i) Financial Assets at Fair Value through Profit or Loss Financial assets are classified as financial assets at fair value through profit or loss if they are held for trading or are designated as such upon initial recognition. Financial assets held for trading are derivatives (including separated embedded derivatives) or financial assets acquired principally for the purpose of selling in the near term. Subsequent to initial recognition, financial assets at fair value through profit or loss are measured at fair value. Any gains or losses arising from changes in fair value are recognised in profit or loss. Net gains or net losses on financial assets at fair value through profit or loss do not include exchange differences, interest and dividend income. Exchange differences, interest and dividend income on financial assets at fair value through profit or loss are recognised separately in profit or loss as part of other losses or other income. Financial assets at fair value through profit or loss could be presented as current or non-current. Financial assets that are held primarily for trading purposes are presented as current whereas financial assets that are not held primarily for trading purposes are presented as current or non-current based on the settlement date. The Group and the Company have not designated any financial assets as at fair value through profit or loss. (ii) 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 profit or loss 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 reporting date which are classified as non-current. (iii) Held-to-Maturity Investments Financial assets with fixed or determinable payments and fixed maturity are classified as held-to-maturity when the Group has the positive intention and ability to hold the investment to maturity. 64 Annual Report 2013

66 NOTES TO THE FINANCIAL STATEMENTS 30 APRIL 2013 (cont d) 2. SIGNIFICANT ACCOUNTING POLICIES (cont d) k. Financial Assets (cont d) (iii) Held-to-Maturity Investments (cont d) Subsequent to initial recognition, held-to-maturity investments are measured at amortised cost using the effective interest method. Gains and losses are recognised in profit or loss when the held-to-maturity investments are derecognised or impaired, and through the amortisation process. Held-to-maturity investments are classified as non-current assets, except for those having maturity within 12 months after the reporting date which are classified as current. The Group and the Company have not designated any financial assets as held-to-maturity investments. (iv) Available-for-Sale Financial Assets Available-for-sale financial assets are financial assets that are designated as available for sale or are not classified in any of the three preceding categories. After initial recognition, available-for-sale financial assets are measured at fair value. Any gains or losses from changes in fair value of the financial assets are recognised in other comprehensive income, except that impairment losses, foreign exchange gains and losses on monetary instruments and interest calculated using the effective interest method are recognised in profit or loss. The cumulative gain or loss previously recognised in other comprehensive income is reclassified from equity to profit or loss as a reclassification adjustment when the financial asset is derecognised. Interest income calculated using the effective interest method is recognised in profit or loss. Dividends on an available-for-sale equity instrument are recognised in profit or loss when the Group s and the Company s right to receive payment is established. Investments in equity instruments whose fair value cannot be reliably measured are measured at cost less impairment loss, if any. Available-for-sale financial assets are classified as non-current assets unless they are expected to be realised within 12 months after the reporting date. The Group classified its quoted investments as available-for-sale financial assets. A financial asset is derecognised when 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 profit or loss. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the period generally established by regulation or convention in the marketplace concerned. All regular way purchases and sales of financial assets are recognised or derecognised on the trade date i.e., the date that the Group and the Company commit to purchase or sell the asset. l. Impairment of Financial Assets The Group and the Company assess at each reporting date 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 Group 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. Komarkcorp Berhad ( A) 65

67 NOTES TO THE FINANCIAL STATEMENTS 30 APRIL 2013 (cont d) 2. SIGNIFICANT ACCOUNTING POLICIES (cont d) l. Impairment of Financial Assets (cont d) (i) Trade and Other Receivables and Other Financial Assets Carried at Amortised Cost (cont d) Objective evidence of impairment for a portfolio of receivables could include the Group 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 profit or loss. 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 profit or loss. (ii) Available-for-Sale Financial Assets Significant or prolonged decline in fair value below cost, significant financial difficulties of the issuer or obligor, and the disappearance of an active trading market are considerations to determine whether there is objective evidence that investment securities classified as available-for-sale financial assets are impaired. If an available-for-sale financial asset is impaired, an amount comprising the difference between its cost (net of any principal payment and amortisation) and its current fair value, less any impairment loss previously recognised in profit or loss, is transferred from equity to profit or loss. Impairment losses on available-for-sale equity investments are not reversed in profit or loss in the subsequent periods. Increase in fair value, if any, subsequent to impairment loss is recognised in other comprehensive income. For available-for-sale debt investments, impairment losses are subsequently reversed in profit or loss if an increase in the fair value of the investment can be objectively related to an event occurring after the recognition of the impairment loss in profit or loss. m. Cash and Cash Equivalents Cash and cash equivalents comprise cash at bank and on hand, demand deposits, and short-term, highly liquid investments that are readily convertible to known amount of cash and which are subject to an insignificant risk of changes in value. These also include bank overdrafts that form an integral part of the Group s cash management. n. Inventories Inventories are stated at the lower of cost and net realisable value. Costs incurred in bringing the inventories to their present location and condition are accounted for as follows: - Raw materials: purchase costs on a first-in first-out basis. - Finished goods and work-in-progress: costs of direct materials and labour and a proportion of manufacturing overheads based on normal operating capacity. These costs are assigned on a first-in first-out basis. Net realisable value is the estimated selling price in the ordinary course of business less estimated costs of completion and the estimated costs necessary to make the sale. 66 Annual Report 2013

68 NOTES TO THE FINANCIAL STATEMENTS 30 APRIL 2013 (cont d) 2. SIGNIFICANT ACCOUNTING POLICIES (cont d) o. 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 MFRS 139, are recognised in the statements of financial position when, and only when, the Group and the Company become a party to the contractual provisions of the financial instrument. Financial liabilities are classified as either financial liabilities at fair value through profit or loss or other financial liabilities. (i) Financial Liabilities at Fair Value through Profit or Loss Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss. Financial liabilities held for trading include derivatives entered into by the Group and the Company that do not meet the hedge accounting criteria. Derivative liabilities are initially measured at fair value and subsequently stated at fair value, with any resultant gains or losses recognised in profit or loss. Net gains or losses on derivatives include exchange differences. The Group and the Company have not designated any financial liabilities as at fair value through profit or loss. (ii) Other Financial Liabilities The Group s and the Company s other financial liabilities include trade payables, other payables and 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 Group has an unconditional right to defer settlement of the liability for at least 12 months after the reporting date. 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 profit or loss. p. Borrowing Costs Borrowing costs are capitalised as part of the cost of a qualifying asset if they are directly attributable to the acquisition, construction or production of that asset. Capitalisation of borrowing costs commences when the activities to prepare the asset for its intended use or sale are in progress and the expenditures and borrowing costs are incurred. Borrowing costs are capitalised until the assets are substantially completed for their intended use or sale. All other borrowing costs are recognised in profit or loss in the period they are incurred. Borrowing costs consist of interest and other costs that the Group and the Company incurred in connection with the borrowing of funds. Komarkcorp Berhad ( A) 67

69 NOTES TO THE FINANCIAL STATEMENTS 30 APRIL 2013 (cont d) 2. SIGNIFICANT ACCOUNTING POLICIES (cont d) q. Employee Benefits (i) Short Term Benefits Wages, salaries, bonuses and social security contributions ( Socso ) are recognised as expenses in the year in which the associated services are rendered by employees of the Group and the Company. 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 Plans r. Leases As Lessee The Group participates in the national pension schemes as defined by the laws of the countries in which it has operations. The companies in the Group make contributions to the Employee Provident Fund in Malaysia, a defined contribution pension scheme. Contributions to defined contribution pension schemes are recognised as an expense in the period in which the related service is performed. Finance leases, which transfer to the Group 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 of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged to profit or loss. 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 Group 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. Operating lease payments are recognised as an expense in profit or loss on a straight-line basis over the lease term. The aggregate benefit of incentives provided by the lessor is recognised as a reduction of rental expense over the lease term on a straight-line basis. s. Revenue Revenue from sales of goods is measured at the fair value of the consideration receivable and is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. Revenue is measured at the fair value of consideration received or receivable. (i) (ii) (iii) (iv) Sale of Goods Revenue from sales of goods is measured at the fair value of the receivable consideration and is recognised upon transfer of significant risks 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. Interest Income Interest income is recognised on an accrual basis using the effective interest method. Dividend Income Dividend income is recognised when the right to receive payment is established. Rental Income Rental income is recognised on accrued basis. 68 Annual Report 2013

70 NOTES TO THE FINANCIAL STATEMENTS 30 APRIL 2013 (cont d) 2. SIGNIFICANT ACCOUNTING POLICIES (cont d) t. Income Taxes (i) Current Tax Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the reporting date. Current taxes are recognised in profit or loss except to the extent that the tax relates to items recognised outside profit or loss, either in other comprehensive income or directly in equity. (ii) Deferred Tax Deferred tax is provided using the liability method on temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred tax liabilities are recognised for all taxable temporary differences, except: - where the deferred tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and - in respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future. Deferred tax assets are recognised for all deductible temporary differences, carry forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised except: - where the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and - in respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, deferred tax assets are recognised only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised. The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are reassessed at each reporting date and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax assets to be utilised. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted at the reporting date. Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss. Deferred tax items are recognised in correlation to the underlying transaction either in other comprehensive income or directly in equity and deferred tax arising from a business combination is adjusted against goodwill on acquisition. Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority. Komarkcorp Berhad ( A) 69

71 NOTES TO THE FINANCIAL STATEMENTS 30 APRIL 2013 (cont d) 2. SIGNIFICANT ACCOUNTING POLICIES (cont d) u. Segment Reporting For management purposes, the Group 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 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 25, including the factors used to identify the reportable segments and the measurement basis of segment information. v. Share Capital and Share Issuance Expenses An equity instrument is any contract that evidences a residual interest in the assets of the Group and the Company after deducting all of its liabilities. Ordinary shares are equity instruments. Ordinary shares are recorded at the proceeds received, net of directly attributable incremental transaction costs. Ordinary shares are classified as equity. Dividends on ordinary shares are recognised in equity in the period in which they are declared. w. Contingencies A contingent liability or asset is a possible obligation or asset that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of uncertain future event(s) not wholly within the control of the Group. Contingent liabilities and assets are not recognised in the statements of financial position of the Group. x. Significant Accounting Judgements and Estimates The preparation of the Group s financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities at the reporting date. However, uncertainty about these assumptions and estimates could result in outcomes that could require a material adjustment to the carrying amount of the asset or liability affected in the future. (i) Judgements Made in Applying Accounting Policies In the process of preparing the financial statements, there were no significant judgements made in applying the accounting policies of the Group which may have significant effects on the amounts recognised in the financial statements. (ii) Key Sources of Estimation Uncertainty The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below. (a) Impairment of Investment in Subsidiaries The management determines whether the carrying amounts of its investments are impaired at reporting date. This involves measuring the recoverable amounts which includes fair value less costs to sell and valuation techniques. Valuation techniques include amongst others, discounted cash flows analysis and in some cases, based on current market indicators and estimates that provide reasonable approximations to the detailed computation or based on total shareholders equity of the subsidiaries. The carrying amount of investment in subsidiaries as at 30 April 2013 were RM31,683,419 (2012: RM31,683,419). Further details are disclosed in Note 6. Based on management s review, no further adjustment for impairment is required for the investment in subsidiaries by the Company during the current year. 70 Annual Report 2013

72 NOTES TO THE FINANCIAL STATEMENTS 30 APRIL 2013 (cont d) 2. SIGNIFICANT ACCOUNTING POLICIES (cont d) x. Significant Accounting Judgements and Estimates (cont d) (ii) Key Sources of Estimation Uncertainty (cont d) (b) Impairment of Loans and Receivables The Group assesses at each reporting date whether there is any objective evidence that a financial asset is impaired. To determine whether there is objective evidence of impairment, the Group considers factors such as the probability of insolvency or significant financial difficulties of the debtor and default or significant delay in payments. 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. The carrying amount of the Group s loans and receivables at the reporting date is disclosed in Note 12. (c) Useful Lives of Property, Plant and Equipment The cost of property, plant and equipment is depreciated on a straight-line basis over the assets estimated economic useful lives. Management estimates the useful lives of these plant and equipment to be within 10 to 15 years. These are common life expectancies applied in the manufacturing industry. Changes in the expected level of usage and technological developments could impact the economic useful lives and the residual values of these assets, therefore future depreciation charges could be revised. The carrying amount of the Group s property, plant and equipment at the reporting date is disclosed in Note 3. (d) Depreciation of Investment Property The cost of investment property is depreciated on a straight-line basis over the asset s estimated economic useful life. The useful life and annual depreciation rate of the investment property is disclosed in Note 2(e). These are common life expectancies applied in the industry. Changes in the expected level of usage could impact the economic useful life and the residual values of the asset, therefore future depreciation charges could be revised. The carrying amount of the Group s investment property at the reporting date is disclosed in Note 5. (e) Deferred Tax Assets Deferred tax assets are recognised for all unused tax losses, unabsorbed capital allowances, unutilised reinvestment allowances and other deductible temporary differences to the extent that it is probable that taxable profit will be available against which the losses, capital allowances and provisions can be utilised. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and level of future taxable profits together with future tax planning strategies. (f) Income Taxes There are certain transactions and computations for which the ultimate tax determination may be different from the initial estimate. The Group and the Company recognise tax liabilities based on its understanding of the prevailing tax laws and estimates of whether such taxes will be due in the ordinary course of business. Where the final outcome of these matters is different from the amounts that were initially recognised, such difference will impact the income tax and deferred tax provisions in the year in which such determination is made. (g) Write-down of Inventories Reviews are made periodically by management on damaged, obsolete and slow-moving inventories. These reviews require judgement and estimates. Possible changes in these estimates could result in revisions to the valuation of inventories. Komarkcorp Berhad ( A) 71

73 NOTES TO THE FINANCIAL STATEMENTS 30 APRIL 2013 (cont d) 3. PROPERTY, PLANT AND EQUIPMENT As at Addition/ Disposal/ Exchange As at Transfer Write off differences RM 000 RM 000 RM 000 RM 000 RM 000 Group 2013 COST Freehold land 5, ,437 Buildings 32,599 - (1,355) ,536 Plant and machinery 157,455 8,886 (4,402) 2, ,686 Office equipment, furniture and fittings 9, (176) ,150 Motor vehicles 1, (195) 31 2,041 Mould and die cutters 15,674 1, ,052 Renovation 5, (205) 113 5, ,510 10,845 (6,333) 3, ,673 As at Charge for Disposal/ Exchange As at the year Write off differences RM 000 RM 000 RM 000 RM 000 RM 000 ACCUMULATED DEPRECIATION Freehold land Buildings 6, (487) 47 6,738 Plant and machinery 72,971 8,194 (1,930) 1,140 80,375 Office equipment, furniture and fittings 8, (174) 144 8,580 Motor vehicles 1, (195) 28 1,726 Mould and die cutters 9,184 1, ,080 Renovation 4, (187) 83 4, ,097 11,417 (2,973) 1, ,164 As at RM 000 Net Book Value Freehold land 5,437 Buildings 24,798 Plant and machinery 84,311 Office equipment, furniture and fittings 1,570 Motor vehicles 315 Mould and die cutters 5,972 Renovation 1, , Annual Report 2013

74 NOTES TO THE FINANCIAL STATEMENTS 30 APRIL 2013 (cont d) 3. PROPERTY, PLANT AND EQUIPMENT (cont d) Group 2012 As at Addition/ Disposal/ Exchange As at Transfer Write off differences RM 000 RM 000 RM 000 RM 000 RM 000 COST Freehold land 11, (6,546) - 5,437 Buildings 33,445 - (1,340) ,599 Plant and machinery 149,951 6,005 (1,520) 3, ,455 Office equipment, furniture and fittings 9, (83) 167 9,757 Motor vehicles 2,141 - (403) 39 1,777 Mould and die cutters 14, ,674 Renovation 5, , ,643 7,484 (9,892) 4, ,510 As at Charge for Disposal/ Exchange As at the year Write off differences RM 000 RM 000 RM 000 RM 000 RM 000 ACCUMULATED DEPRECIATION Freehold land Buildings 6, (281) 67 6,520 Plant and machinery 64,555 7,964 (775) 1,227 72,971 Office equipment, furniture and fittings 7, (83) 160 8,243 Motor vehicles 1, (315) 34 1,719 Mould and die cutters 7,338 1, ,184 Renovation 3, ,460 91,476 11,246 (1,454) 1, ,097 As at As at RM 000 RM 000 Net Book Value Freehold land 5,437 11,656 Buildings 26,079 27,413 Plant and machinery 84,484 85,396 Office equipment, furniture and fittings 1,514 1,548 Motor vehicles Mould and die cutters 6,490 7,127 Renovation 1,351 1, , ,167 Komarkcorp Berhad ( A) 73

75 NOTES TO THE FINANCIAL STATEMENTS 30 APRIL 2013 (cont d) 3. PROPERTY, PLANT AND EQUIPMENT (cont d) The net book value of the building of the subsidiary, Guangzhou Komark Labels & Labelling Co., Ltd. amounting to RM1,127,000 (2012: RM1,129,000) is built on a piece of land belonging to and leased from the authority of the People s Republic of China. The lease term is due to expire in the year The net book value of plant and machinery and motor vehicles of the Group acquired under hire purchase agreements amounted to RM14,552,000 (2012: RM13,015,000) and RMNil (2012: RM36,000) respectively. Freehold land, buildings and plant and machinery of the Group amounting to RM5,437,000 (2012: RM5,437,000), RM17,545,000 (2012: RM18,923,000) and RM23,582,000 (2012: RM22,918,000) respectively are charged to licensed banks and financial institutions as security for borrowings granted to certain subsidiaries (Note 18). 4. PREPAID LEASE PAYMENTS ON LAND Group RM 000 RM 000 RM 000 Cost 1,890 1,890 1,890 Accumulated amortisation At 1 May (263) (220) (178) Charge for the year (44) (43) (42) At 30 April (307) (263) (220) Exchange differences (12) Net carrying amount 1,706 1,701 1,658 Leasehold land of the Group has been pledged as security to financial institution for banking facilities granted to the Group. 5. INVESTMENT PROPERTY Group RM 000 RM 000 RM 000 Cost At 1 May Disposal during the year (337) - - At 30 April Accumulated depreciation At 1 May Change for the year Disposal during the year (147) - - At 30 April Net carrying amount The investment property is pledged as security to financial institution for banking facilities granted to the Group. 74 Annual Report 2013

76 NOTES TO THE FINANCIAL STATEMENTS 30 APRIL 2013 (cont d) 6. INVESTMENTS IN SUBSIDIARIES Company RM 000 RM 000 RM 000 Unquoted shares, at cost 31,683 31,683 31,683 The list of subsidiaries, their places of incorporation, their principal activities and the effective interest of the Company are as follows: Name of Country of Effective Company incorporation Principal activities equity interest % % % General Labels & Malaysia Manufacturing of self Labelling (M) Sdn. adhesive labels and Bhd. automatic labelling machines and trading of related tools and equipment Komark Malaysia Manufacturing of self International adhesive labels and (M) Sdn. Bhd. trading of related tools and equipment *# General Labels & Malaysia Manufacturing of self Labelling (Penang) adhesive labels and Sdn. Bhd. trading of related tools and equipment General Labels & Malaysia Manufacturing of self Labelling (Ipoh) adhesive labels and Sdn. Bhd. trading of related tools and equipment ^ Komark Investment British Investment holding Holdings Ltd. Virgin Island ^ Komark Australasia Australia Dormant Pty. Ltd. Komark China Ltd. Caymans Deregistered Island Komarkcorp Berhad ( A) 75

77 NOTES TO THE FINANCIAL STATEMENTS 30 APRIL 2013 (cont d) 6. INVESTMENTS IN SUBSIDIARIES (cont d) The subsidiaries of General Labels & Labelling (M) Sdn. Bhd. are as follows: Name of Country of Effective Company incorporation Principal activities equity interest % % % General Labels & Malaysia Manufacturing of self Labelling (JB) Sdn. adhesive labels and Bhd. trading of related tools and equipment * General Labels & Singapore Manufacturing of self Labelling Pte. Ltd. adhesive labels and trading of related tools and equipment * Komark (Thailand) Thailand Manufacturing of self Co. Ltd. adhesive labels The subsidiaries of Komark Investment Holdings Ltd. are as follows: Name of Country of Effective Company incorporation Principal activities equity interest % % % * Shanghai Komark People s Manufacturing of self Labels & Labelling Republic of adhesive labels and trading Co. Ltd. China of labelling machines * Guangzhou Komark People s Manufacturing of self Labels & Labelling Republic of adhesive labels Co. Ltd. China *# Komark HongKong Hong Kong Dormant Co. Ltd. The subsidiary of Komark International (M) Sdn. Bhd. is as follows: Name of Country of Effective Company incorporation Principal activities equity interest % % % * PT Komark Labels Indonesia Manufacturing and and Labelling trading of self adhesive Indonesia labels * Audited by another firm of auditors. ^ Consolidated based on management financial statements as at 30 April 2013 in which we have reviewed for consolidation purposes. # Subsidiary with auditor s report that is not qualified which contained an emphasis of matter on its going concern, which is dependent upon continuous financial support of its holding or ultimate holding company. 76 Annual Report 2013

78 NOTES TO THE FINANCIAL STATEMENTS 30 APRIL 2013 (cont d) 7. INVESTMENT IN ASSOCIATE Group RM 000 RM 000 RM 000 Unquoted shares, at cost Share of post acquisition results (2) (2) (2) Represented by: Group s share of net assets The shares of the associate are held directly by one of the subsidiaries, namely Komark International (M) Sdn. Bhd. Details of the associate are as follows: Name of Country of Effective Company incorporation Principal activities equity interest % % % * Komark Enterprise Thailand Trading of self Co. Ltd. adhesive labels and related tools and equipment * Audited by another firm of auditors. 8. OTHER INVESTMENT Group RM 000 RM 000 RM 000 Available-for-sale financial assets: Quoted shares in Malaysia, at cost Quoted shares in Malaysia, at market value DEVELOPMENT EXPENDITURE Group RM 000 RM 000 RM 000 Automatic labelling machineries Cost At 1 May 5,574 3,343 3,237 Addition during the year 173 2, At 30 April 5,747 5,574 3,343 Accumulated amortisation At 1 May 3,178 2,982 2,711 Charge for the year At 30 April 3,992 3,178 2,982 Net carrying amount 1,755 2, Komarkcorp Berhad ( A) 77

79 NOTES TO THE FINANCIAL STATEMENTS 30 APRIL 2013 (cont d) 9. DEVELOPMENT EXPENDITURE (cont d) Group RM 000 RM 000 RM 000 Roto-gravure/offset combination labels press project Cost At 1 May 3,407 3,241 3,321 Addition during the year Exchange difference 106 (100) (80) At 30 April 3,513 3,407 3,241 Accumulated amortisation At 1 May 3,147 3,092 3,066 Charge for the year Exchange difference 98 (106) (76) At 30 April 3,297 3,147 3,092 Net carrying amount Total net carrying amount 1,971 2, The roto-gravure/offset combination labels press commenced its commercial production in December The amortisation represents the amount charged from the date of commercial production. 10. GOODWILL ON CONSOLIDATION Group RM 000 RM 000 RM 000 Goodwill on consolidation Amount recognised on acquisitions 2,413 2,413 2,413 Accumulated amortisation (663) (663) (663) Net book value 1,750 1,750 1,750 Negative goodwill amounting to RM7,195,813 has been fully amortised and recognised in the statement of comprehensive income in the previous financial year. Goodwill on consolidation is no longer amortised since financial year 2007, instead it is subject to impairment. There is no impairment as at the end of current financial year. 78 Annual Report 2013

80 NOTES TO THE FINANCIAL STATEMENTS 30 APRIL 2013 (cont d) 11. INVENTORIES Group RM 000 RM 000 RM 000 Raw materials 10,100 12,337 14,244 Work-in-progress 3,587 3,496 4,704 Manufactured inventories 23,458 20,383 18,113 Others 3,735 3,302 2,606 40,880 39,518 39,667 Less : Allowance for slow-moving manufactured inventories (3,103) (1,495) (2,675) 37,777 38,023 36, TRADE AND OTHER RECEIVABLES Group Company RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 Trade receivables - Third parties 38,636 32,322 28, Associated company - 2,132 1, ,636 34,454 30, Less: Allowance for impairment (2,002) (1,484) (1,296) Trade receivables, net 36,634 32,970 28, Other receivables, deposits and prepayment 5,846 5,780 6, ,480 38,750 35, Trade receivables are non-interest bearing and are generally on 1 to 120 (2012: 1 to 120) days term. They are recognised at their original invoice amounts which represent their fair values on initial recognition. Ageing analysis of trade receivables The ageing analysis of the Group s trade receivables is as follows: Group RM 000 RM 000 RM days 32,483 25,566 21, days 1,668 2,807 2, days and above 2,483 4,597 5,005 36,634 32,970 28,867 Impaired 2,002 1,484 1,296 38,636 34,454 30,163 Komarkcorp Berhad ( A) 79

81 NOTES TO THE FINANCIAL STATEMENTS 30 APRIL 2013 (cont d) 12. TRADE AND OTHER RECEIVABLES (cont d) Receivables that are not impaired Trade receivables that are not impaired are creditworthy debtors with good payment records with the Group. None of the Group s trade receivables that are not impaired have been renegotiated during the year. Receivables that are impaired The Group s trade receivables that are impaired at the reporting date and the movement of the allowance accounts used to record the impairment are as follows: Group RM 000 RM 000 RM 000 Trade receivables - nominal amounts 2,002 1,484 1,296 Less: Allowance for impairment losses (2,002) (1,484) (1,296) Movements in allowance accounts: Group RM 000 RM 000 RM 000 At 1 May 1,484 1,296 1,296 Charge for the year At 30 April 2,002 1,484 1,296 Trade receivables that are collectively and individually determined to be impaired at the reporting date mainly relate to balances which have been significantly long outstanding. These receivables are not secured by any collateral or credit enhancements. 13. AMOUNT DUE FROM/(TO) RELATED COMPANIES/ASSOCIATE COMPANY These balances are non-trade in nature, unsecured, non-interest bearing and are repayable on demand. 14. CASH AND BANK BALANCES Group Company RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 Deposits with licensed banks 2, , Cash in hand and at bank 6,192 5,497 3, ,933 6,166 5, Included in deposits placed with licensed banks of the Group is RM2,740,738 (2012: RM630,520) amount pledged as security for borrowings granted to subsidiaries (Note 18). During the financial year, the fixed deposits earned interest rates ranging from 2.25% % per annum and have average maturities of 6 months - 36 months. 80 Annual Report 2013

82 NOTES TO THE FINANCIAL STATEMENTS 30 APRIL 2013 (cont d) 15. SHARE CAPITAL Group and Company Number of ordinary shares Amount RM 000 RM 000 RM 000 Ordinary shares of RM1.00 each Authorised At 1 May/30 April 500,000, ,000, ,000, , , ,000 Issued and fully paid At 1 May/30 April 81,275,010 81,275,010 81,275,010 81,275 81,275 81,275 The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the Company. All ordinary shares rank equally with regard to the Company s residual assets. 16. TREASURY SHARES Group and Company Number of ordinary shares of RM1.00 each At 1 May 1,538,000 1,536,000 1,534,000 Repurchased during the year 2,000 2,000 2,000 Sold during the year (1,540,000) - - At 30 April - 1,538,000 1,536, RM 000 RM 000 RM 000 Ordinary shares of RM1.00 each At 1 May Repurchased during the year -# -# 1 Sold during the year (437) - - At 30 April # Amount less than RM1,000. During the financial year, the Company repurchased 2,000 (2012: 2,000) ordinary shares from the open market at an average price of RM0.33 (2012: RM0.32) per share. The total consideration paid for the repurchase was RM657 (2012: RM637). The repurchased transactions were financed by internally generated funds. During the financial year, the Company sold the entire 1,540,000 treasury shares for a total consideration of RM782,608 through Bursa Malaysia Securities Berhad. Komarkcorp Berhad ( A) 81

83 NOTES TO THE FINANCIAL STATEMENTS 30 APRIL 2013 (cont d) 17. RESERVES Group Company RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 Non-distributable General reserve At 1 May/30 April 1,703 1,703 1, Translation reserve At 1 May 3,730 2,218 2, Foreign currency translation 795 1,512 (268) At 30 April 4,525 3,730 2, Total non-distributable reserves 6,228 5,433 3, Distributable Retained profit/ (Accumulated loss) At 1 May 18,342 18,263 16,148 (28,357) (25,758) (22,751) (Loss)/profit for the year (4,831) 79 2, (2,599) (3,007) At 30 April 13,511 18,342 18,263 (27,837) (28,357) (25,758) Total Reserves 19,739 23,775 22,184 (27,837) (28,357) (25,758) a. General Reserve Subsidiaries in the People s Republic of China ( PRC ) are required to appropriate 10% of their after-tax profit (after offsetting prior year losses), based on the respective PRC statutory financial statements, to a general reserve fund until the balance of the fund reaches 50% of the Company s registered capital. Thereafter, any further appropriation can be made at the Directors discretion. The general reserve fund can be utilised to offset prior year losses, or be utilised for the issuance of bonus shares on the condition that the general reserve fund shall be maintained at a minimum of 25% of the registered capital after such issuance. In accordance with the relevant rules and regulations in the PRC, the subsidiaries may also appropriate a portion of its after-tax profit (after offsetting prior year losses), based on the PRC statutory financial statements, to an enterprise expansion fund and a staff and workers bonus and welfare fund at the Director s discretion. No such appropriation has been made in the current and previous year. b. Translation Reserve This represents foreign currency exchange differences arising from the translation of the financial statements of subsidiaries which are denominated in currency other than the presentation currency of the Company, Ringgit Malaysia. 82 Annual Report 2013

84 NOTES TO THE FINANCIAL STATEMENTS 30 APRIL 2013 (cont d) 17. RESERVES (cont d) c. Additional Disclosure Of Realised And Unrealised Profits Or Losses Group Company RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 Total retained profit/ (accumulated losses) of the Company and its subsidiary companies - Realised 22,740 26,077 25,716 (27,837) (28,357) (25,758) - Unrealised (2,774) (1,532) (1,236) ,966 24,545 24,480 (27,837) (28,357) (25,758) Total share of accumulated losses from associated company - Realised (2) (2) (2) Unrealised ,964 24,543 24,478 (27,837) (28,357) (25,758) Less: Consolidation adjustments (6,453) (6,201) (6,215) Total Group/Company retained profit/(accumulated losses) as per consolidated accounts 13,511 18,342 18,263 (27,837) (28,357) (25,758) 18. BORROWINGS Group Company RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 Current Bank overdrafts - secured 12,628 12,756 16,034 3,158 2,988 2,987 - unsecured 2,398 7,287 5, Bankers acceptance - secured 14,188 12,185 15, unsecured 1,317 1,117 1, Term loans - secured 3,506 3,024 3, Short-term loans - secured - 1, unsecured 22,956 11,039 10, Hire purchase liabilities 4,068 3,471 3, ,061 52,869 55,580 3,158 2,988 2,987 Non-current Term loans - secured 2,148 7,117 11, unsecured 1, , Hire purchase liabilities 5,629 5,581 7, ,877 13,150 20, ,938 66,019 75,710 3,158 2,988 2,987 Komarkcorp Berhad ( A) 83

85 NOTES TO THE FINANCIAL STATEMENTS 30 APRIL 2013 (cont d) 18. BORROWINGS (cont d) a. Term loans and repayment schedule (i) Secured term loans Secured term loans consist of 3 (2012: 6) term loans. Their repayment schedule is as follows: Secured term loan of RM4,606,000 (2012: RM5,586,000) is repayable by 48 consecutive installment commencing February This term loan is obtained by a local subsidiary from local bank. Rescheduled on April 2012 and repayable by 57 consecutive installment commencing from April Secured term loan of RM1,491,896 [equivalent to RMB3,028,000] (2012: RM1,767,000 [equivalent to RMB 3,685,000]) is repayable by quarterly installments over a period of four (4) years commencing February This term loan is obtained by a foreign subsidiary from a foreign bank. Additional secured term loan of RM653,439 [equivalent to USD211,250] is repayable by quarterly installments over a period of three (3) years commencing April This term loan is obtained by a foreign subsidiary from a foreign bank. Secured term loans RM1,398,000 [equivalent to RMB2,915,000] RM283,000, RM1,107,000 and RM1,990,000 [equivalent to RMB4,150,000] as at the end of previous financial year have been fully settled during the current financial year. (ii) Unsecured term loans Unsecured term loans consist of 3 (2012: 4) term loans. Their repayment schedule is as follows: The unsecured short-term loan of RM6,651,450 [equivalent to RMB13,500,000] is rollovered and repayable within one (1) year commencing May This short-term loan is obtained by a foreign subsidiary from foreign bank. Additional unsecured short-term loan of RM1,478,100 [equivalent to RMB3,000,000] is repayable within one (1) year commencing May This short-term loan is obtained by a foreign subsidiary from foreign bank. The unsecured short-term loan of RM2,463,500 [equivalent to RMB5,000,000] is rollovered and repayable within one (1) year commencing June This short-term loan is obtained by a foreign subsidiary from foreign bank. Unsecured short-term loan of RM1,448,000 [equivalent to RMB3,017,000] and RM452,000 [equivalent to RMB941,000] as at the end of previous financial year have been fully settled during the current financial year. b. Significant covenants for term loans granted to foreign subsidiaries In connection with the borrowing facilities agreements and their supplemental agreements, foreign subsidiaries have agreed on the following significant covenants with the lender: i) the subsidiary shall maintain a minimum net worth of RMB60,000,000 at April 2013 and at any time thereafter, where net worth shall include paid-up capital, shareholders loans and retained profits at any time; ii) the ratio of the subsidiary s total liabilities to net worth shall not exceed 200% at 30 April 2013 and at any time thereafter without prior consent of the lenders; 84 Annual Report 2013

86 NOTES TO THE FINANCIAL STATEMENTS 30 APRIL 2013 (cont d) 18. BORROWINGS (cont d) b. Significant covenants for term loans granted to foreign subsidiaries (cont d) iii) iv) not to make any advances, loans or grant any credit (save in the ordinary course of business) to or for the benefit of any other persons (including any related company) or give any guarantee or indemnity to or for the benefit of any other person or otherwise voluntarily assume any liability, whether actual or contingent, in respect of any obligation of any other person without prior consent of the lenders. The foreign subsidiary shall notify the lenders on the ratio of said guarantees, if any over its net tangible assets; and not to raise any additional financing from other financial institutions without prior consent from the lenders and such consent shall not be unreasonably withheld. c. Other borrowings The Company s bank overdraft facility is secured by a second legal charge for RM3 million over certain land and building of the Group. The Group s other borrowings are secured by way of fixed charges over the freehold land and buildings of the respective subsidiaries, a negative pledge over a subsidiary s entire present and future assets, corporate guarantees from the Company and fixed deposits of respective subsidiaries. d. Hire purchase liabilities Group RM 000 RM 000 RM 000 Minimum payment - not later than one year 4,807 4,016 3,705 - later than one year and not later than five years 5,973 6,429 8,037 10,780 10,445 11,742 Future finance charges on hire purchase (1,083) (1,393) (859) Present value of hire purchase payables 9,697 9,052 10,883 Current 4,068 3,471 3,223 Non-current 5,629 5,581 7,660 9,697 9,052 10,883 Present value of hire purchase payables - not later than one year 4,068 3,471 3,223 - later than one year and not later than five years 5,629 5,581 7,660 9,697 9,052 10,883 Hire purchase liabilities are subject to effective interest rate of 2.19% to 6.30% (2012: 2.19% to 6.30%). Komarkcorp Berhad ( A) 85

87 NOTES TO THE FINANCIAL STATEMENTS 30 APRIL 2013 (cont d) 19. DEFERRED TAX Group RM 000 RM 000 RM 000 Deferred tax liabilities At 1 May 1,406 1,525 1,846 Transferred from/(to) statement of comprehensive income (Note 23) 1,248 (119) (321) At 30 April 2,654 1,406 1,525 Deferred tax liabilities and assets are offset where there is a legally enforceable right to set off current tax assets against current tax liabilities and where the deferred taxes relate to the same taxation authority and same entity. The net deferred tax liabilities/(assets) are in respect of the followings: Group RM 000 RM 000 RM 000 Taxable temporary differences 8,624 4,852 5,369 Allowances and provisions (1,459) (311) (324) Unabsorbed capital allowances (1,777) (2,093) (2,847) Unutilised tax losses (535) (535) (545) Unutilised reinvestment allowances (2,584) - - Others 385 (507) (128) 2,654 1,406 1,525 As at 30 April 2013, the amount of estimated net deferred tax assets of the Group measured at current tax rate which are not recognised in the financial statements, are as follows: Group RM 000 RM 000 Temporary difference between book depreciation and capital allowance on property, plant & equipment (108) - Unabsorbed capital allowances Unabsorbed tax losses TRADE AND OTHER PAYABLES Group Company RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 Restated Restated Trade payables 19,307 17,306 12, Other payables, accrued expenses and deposit received 8,172 8,912 7, Amount due to directors 2, ,730 26,253 20, Annual Report 2013

88 NOTES TO THE FINANCIAL STATEMENTS 30 APRIL 2013 (cont d) 20. TRADE AND OTHER PAYABLES (cont d) (a) Trade Payables Trade payables are non-interest bearing and are normally settled on 1 to 120 (2012: 1 to 120) days term. (b) Other Payables These amounts are non-interest bearing. Other payables are normally settled on an average term of 90 (2012: 90) days term. (c) Amount due to directors These balances are unsecured, non-interest bearing and are repayable on demand. 21. OTHER OPERATING INCOME Group Company RM 000 RM 000 RM 000 RM 000 Gain on disposal of investment property Gain on disposal of property, plant and equipment Gain on foreign exchange - Realised Unrealised Interest income Rental income Others , (LOSS)/PROFIT BEFORE TAXATION The following items have been charged in arriving at (loss)/profit before tax: Group Company RM 000 RM 000 RM 000 RM 000 Allowance for impairment of receivables Allowance for slow-moving manufactured inventories 1, Amount due from related company written off Amortisation of development expenditure Amortisation of prepaid lease payments on land Auditors remuneration - Current year s provision Underprovision in prior years Bad debts written off Depreciation of property, plant and equipment 11,417 11, Directors remuneration - Fees 1, Other emoluments - Directors of the Company 993 1, ,535 - Other directors of subsidiary Factory rental Komarkcorp Berhad ( A) 87

89 NOTES TO THE FINANCIAL STATEMENTS 30 APRIL 2013 (cont d) 22. (LOSS)/PROFIT BEFORE TAXATION (cont d) Group Company RM 000 RM 000 RM 000 RM 000 Finance costs - Bank overdrafts 1,018 1, Hire purchase and finance lease Short term borrowings Term loans 2,070 1, Others Inventories written off 1, Loss on foreign exchange - Realised Unrealised Property, plant and equipment written off Rental of equipment Rental of premises Staff costs - Salaries, allowances and others 17,429 16, Retirement benefits 1,232 1, Unreconciled balances written off TAXATION Group Company RM 000 RM 000 RM 000 RM 000 Current income tax Malaysian income tax - Current year Underprovision in prior year Overseas income tax - Current year 1, Overprovision in prior year (1) (44) - - 1, Deferred taxation (Note 19) 1,248 (119) - - 2, Income tax expense recognised in statement of comprehensive income. 88 Annual Report 2013

90 NOTES TO THE FINANCIAL STATEMENTS 30 APRIL 2013 (cont d) 23. TAXATION (cont d) The reconciliation between tax expense and the product of accounting (loss)/profit multiplied by the applicable corporate tax rate for the years ended 30 April: Group Company RM 000 RM 000 RM 000 RM 000 (Loss)/profit before taxation (2,273) (2,599) Taxation at Malaysian statutory tax rate of 25% (2012: 25%) (568) (650) Effect of different tax rates in foreign jurisdictions 758 (5) - - Non-deductible expenses 1,113 1, Income not subject to tax (455) (445) (130) - Deferred tax assets/(liabilities) not recognised 1,704 (711) - - Effect of utilisation of reinvestment allowance - (63) - - 2, Under/(over)provision of income tax in prior years 6 (29) - - Tax expense 2, Domestic income tax is calculated at the Malaysian statutory tax rate of 25% (2012: 25%) of the estimated assessable profit for the year. Taxation for other jurisdictions is calculated at the rates prevailing in the respective jurisdictions. 24. (LOSS)/EARNINGS PER SHARE The basic (loss)/earnings per share is calculated by dividing (loss)/profit for the year net of tax attributable to equity holders of the Company by the weighted average number of ordinary shares of RM1.00 each in issue during the financial year excluding the weighted average treasury shares held by the Company. Group RM 000 RM 000 (Loss)/profit for the year attributable to equity holders of the Company (4,831) 79 Number of ordinary shares in issue at 1 May 79,737 79,739 Effect of shares bought back and held as treasury shares 127 (1) 79,864 79,738 Basic (loss)/earnings per share (sen) (6.0) 0,1 There was no dilution of earnings per share during the financial year. 25. SEGMENT INFORMATION Segmental information is presented in respect of the Group s business and geographical segments based on the Groups management and internal reporting structure. Inter-segment pricing is determined based on negotiated basis in the normal course of business. Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated items mainly comprise of expenses and assets of the Company and its dormant subsidiaries. Komarkcorp Berhad ( A) 89

91 NOTES TO THE FINANCIAL STATEMENTS 30 APRIL 2013 (cont d) 25. SEGMENT INFORMATION (cont d) Business Segment The Group comprises the following main business segments: i) Manufacturing of self adhesive labels and stickers and trading of related products; and ii) Manufacturing of automatic labelling machineries. Geographical segments Manufacturing of automatic labelling machineries is principally operated in Malaysia. Other geographical areas are involved in the manufacturing of self adhesive labels and stickers and trading of related products. In presenting information on the basis of geographical segments, segment revenue and segment assets are based on the geographical location of assets. a. Business Segment Manufacturing of self adhesive labels and Manufacturing of stickers and trading automatic labelling of related product machineries Elimination Consolidation RM 000 RM 000 RM 000 RM Revenue External sales 135, ,037 Inter-segment sales - 1,433 (1,433) - Total revenue 135,497 1,973 (1,433) 136,037 Results Segment results 4, ,826 Unallocated expenses (1,706) Interest income 98 Profit from operations 3,218 Finance costs (5,491) Loss before taxation (2,273) Taxation (2,558) Loss for the year (4,831) Minority interest - Loss attributable to equity holders of the Company (4,831) Assets Segment assets 193,616 26, ,323 Unallocated assets 124 Total Assets 220,447 Liabilities Segment liabilities 97,973 1,695-99,668 Unallocated liabilities 4,131 Total Liabilities 103,799 Other Information Capital expenditure (10,595) (423) (11,018) Depreciation and amortisation (11,274) (1,053) (12,327) 90 Annual Report 2013

92 NOTES TO THE FINANCIAL STATEMENTS 30 APRIL 2013 (cont d) 25. SEGMENT INFORMATION (cont d) a. Business Segment (cont d) Manufacturing of self adhesive labels and Manufacturing of stickers and trading automatic labelling of related product machineries Elimination Consolidation RM 000 RM 000 RM 000 RM Revenue External sales 121,742 1, ,346 Inter-segment sales - 1,411 (1,411) - Total revenue 121,742 3,015 (1,411) 123,346 Results Segment results 7, ,947 Unallocated expenses (2,405) Interest income 70 Profit from operations 5,612 Finance costs (4,782) Profit before taxation 830 Taxation (751) Profit for the year 79 Minority interest - Profit attributable to equity holders of the Company 79 Assets Segment assets 178,416 36, ,653 Unallocated assets 140 Total Assets 214,793 Liabilities Segment liabilities 91,045 1,227-92,272 Unallocated liabilities 2,619 Total Liabilities 94,891 Other Information Capital expenditure (9,981) - (9,981) Depreciation and amortisation (11,215) (436) (11,651) Komarkcorp Berhad ( A) 91

93 NOTES TO THE FINANCIAL STATEMENTS 30 APRIL 2013 (cont d) 25. SEGMENT INFORMATION (cont d) b. Geographical Segment Malaysia China Singapore Thailand Others Elimination Consolidation RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM Revenue from external customers by location of customers 45,589 69,718 8,517 19,131 2,351 (9,269) 136,037 Segment assets by location of assets 203, ,090 4,170 20,971 29,969 (146,480) 220,447 Capital expenditure (4,237) (6,296) (251) (234) - - (11,018) 2012 Revenue from external customers by location of customers 44,723 60,748 9,186 15,757 2,874 (9,942) 123,346 Segment assets by location of assets 208,125 97,902 3,793 18,260 32,224 (145,511) 214,793 Capital expenditure (3,111) (6,720) - (150) - - (9,981) Certain comparatives have been reclassified to conform with the current year s presentation. 92 Annual Report 2013

94 NOTES TO THE FINANCIAL STATEMENTS 30 APRIL 2013 (cont d) 26. CONTINGENT LIABILITIES Company RM 000 RM 000 Corporate guarantees in respect of credit facilities granted to subsidiaries 75,000 72, SIGNIFICANT TRANSACTIONS WITH RELATED PARTIES Controlling related party relationships are as follows: i) Its subsidiaries as disclosed in Note 6. ii) A director of the Company, Koh Hong Koh Gak Siong. In addition to the related party information disclosed elsewhere in the financial statements, the following significant transactions between the Group and related parties took place at terms agreed between the parties during the financial year: Group Company RM 000 RM 000 RM 000 RM 000 Holding company Komarkcorp Bhd. - Dividend income 2,494-2,494 - Subsidiaries Komark International (M) Sdn.Bhd. - Sales 274 1, General Labels & Labelling (M) Sdn. Bhd. - Sales 2,663 2, Rental income, premises General Labels & Labelling (JB) Sdn. Bhd. - Sales 3,959 3, General Labels & Labelling (Penang) Sdn. Bhd. - Sales Guangzhou Komark Labels & Labelling Co. Ltd. - Sales 1,544 1, Shanghai Komark Labels & Labelling Co. Ltd. - Sales Management fee Rental income of machinery General Labels & Labelling Pte. Ltd. - Sales General Labels & Labelling (Ipoh) Sdn. Bhd. - Sales Komark (Thailand) Co. Ltd. - Sales Komark Investment Holdings Ltd. - Dividend income 1, Komarkcorp Berhad ( A) 93

95 NOTES TO THE FINANCIAL STATEMENTS 30 APRIL 2013 (cont d) 28. FAIR VALUE OF FINANCE INSTRUMENTS Determination of Fair Value Financial instruments that are not carried at fair value and whose carrying amounts are reasonable approximation of fair value The following are classes of financial instruments that are not carried at fair value and whose carrying amounts are reasonable approximation of fair value: Note Trade and other receivables 12 Deposits with licensed banks 14 Trade and other payables 20 Borrowings (current) 18 The carrying amounts of these financial assets and liabilities are reasonable approximation of fair values, either due to their short-term nature or that they are re-priced to market interest rates on or near the reporting date. The carrying amount of the current portion of borrowings is reasonable approximation of fair value due to the insignificant impact of discounting. Finance lease obligations The fair values of these financial instruments are estimated by discounting expected future cash flows at market incremental lending rate for similar types of lending, borrowing or leasing arrangements at the reporting date. Quoted equity instruments The fair value of these financial assets is determined by reference to the quoted closing bid price at the reporting date. 29. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES The Group and the Company are exposed to financial risks arising from their operations and the use of financial instruments. The key financial risks include credit risk, liquidity risk, interest rate risk and foreign currency risk. The Board of Directors reviews and agrees policies and procedures for the management of these risks. The Audit Committee provides independent oversight to the effectiveness of the risk management process. It is, and has been throughout the current and previous financial year, the Group s policy that no derivatives shall be undertaken. The following sections provide details regarding the Group s and Company s exposure to the above-mentioned financial risks and the objectives, policies and processes for the management of these risks. (a) Credit Risk Credit risk is the risk of loss that may arise on outstanding financial instruments should a counterparty default on its obligations. The Group s exposure to credit risk arises primarily from trade and other receivables. For other financial assets (including cash and bank balances), the Group minimise credit risk by dealing exclusively with high credit rating counterparties. The Group s objective is to seek continual revenue growth while minimising losses incurred due to increased credit risk exposure. The Group trades only with recognised and creditworthy third parties. It is the Group s policy that all customers who wish to trade on credit terms are subject to credit verification procedures. In addition, receivable balances are monitored on an ongoing basis with the result that the Group s exposure to bad debts is not significant. 94 Annual Report 2013

96 NOTES TO THE FINANCIAL STATEMENTS 30 APRIL 2013 (cont d) 29. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (cont d) (a) Credit Risk (cont d) Exposure to credit risk At the reporting date, the Group s 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. Information regarding credit enhancements for trade and other receivables is disclosed in Note 12. Credit risk concentration profile The Group determines concentration of credit risk by monitoring the business segment of its trade receivables on an ongoing basis. At the reporting date, there was no significant concentration of credit risk for the Group and the Company other than those receivables as analysed in Note 12. Financial assets that are not impaired Information regarding trade and other receivables that are not impaired is disclosed in Note 12. (b) Liquidity Risk Liquidity risk is the risk that the Group or the Company will encounter difficulty in meeting financial obligations due to shortage of funds. The Group s and the Company s exposure to liquidity risk arises primarily from mismatches of the maturities of financial assets and liabilities. The Group s and the Company s objective is to maintain a balance between continuity of funding and flexibility through the use of stand-by credit facilities. Analysis of Financial Instruments by Remaining Contractual Maturities The table below summarises the maturity profile of the Group s and the Company s liabilities at the reporting date based on contractual undiscounted repayment obligations. Group Financial Liabilities On demand or within One to Over five one year five years years Total RM 000 RM 000 RM 000 RM 000 Trade and other payables 29, ,730 Borrowings 61,061 8,877-69,938 Company Financial Liabilities On demand or within One to Over five one year five years years Total RM 000 RM 000 RM 000 RM 000 Trade and other payables Borrowings 3, ,158 Komarkcorp Berhad ( A) 95

97 NOTES TO THE FINANCIAL STATEMENTS 30 APRIL 2013 (cont d) 29. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (cont d) (b) Liquidity Risk (cont d) Analysis of Financial Instruments by Remaining Contractual Maturities (cont d) Group Financial Liabilities On demand or within One to Over five one year five years years Total RM 000 RM 000 RM 000 RM 000 Trade and other payables 26, ,253 Borrowings 52,869 13,150-66,019 Company Financial Liabilities On demand or within One to Over five one year five years years Total RM 000 RM 000 RM 000 RM 000 Trade and other payables Borrowings 2, ,988 (c) Interest Rate Risk Interest rate risk is the risk that the fair value or future cash flows of the Group s and the Company s financial instruments will fluctuate because of changes in market interest rates. As the Group has no significant interest-bearing financial assets, the Group s income and operating cash flows are substantially independent of changes in market interest rates. The Group s interest-bearing financial assets are mainly short term in nature. The Group s interest rate risk arises primarily from interest-bearing borrowings. Borrowings at floating rates expose the Group to cash flow interest rate risk. Borrowings obtained at fixed rates expose the Group to fair value interest rate risk. The Group manages its interest rate exposure by maintaining a mix of fix and floating rate of borrowings. 96 Annual Report 2013

98 NOTES TO THE FINANCIAL STATEMENTS 30 APRIL 2013 (cont d) 29. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (cont d) (c) Interest Rate Risk (cont d) The following tables set out the carrying amounts, effective interest rates as at the reporting date and the remaining maturities of the Group s and the Company s financial instruments that are exposed to interest rate risk: Effective interest Within rate Total 1 year % RM 000 RM 000 Group 2013 Financial assets Deposits with licensed banks ,741 2,741 Financial liabilities Bank overdrafts ,026 15,026 Bankers acceptance ,505 15,505 Term loans ,754 3,506 Short-term loans ,956 22, Financial assets Deposits placed with licensed banks Financial liabilities Bank overdrafts ,043 20,043 Bankers acceptance ,302 13,302 Term loans ,593 3,024 Short-term loans ,029 13,029 Company 2013 Financial liabilities Bank overdraft ,158 3, Financial liabilities Bank overdraft ,988 2,988 (d) 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 Group is exposed to transactional currency risk primarily through sales and purchases and borrowings that are denominated in currencies other than the functional currency of the operations to which they relate. The currencies giving rise to this risk are primarily United States Dollar, Renminbi Yuan and Singapore Dollar and a small percentage in other foreign currencies. Foreign exchange exposures in these transactional currencies other than functional currencies of the operating entities are kept to an acceptable level. Komarkcorp Berhad ( A) 97

99 NOTES TO THE FINANCIAL STATEMENTS 30 APRIL 2013 (cont d) 29. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (cont d) (d) Foreign Currency Risk (cont d) The net unhedged financial assets and liabilities of the Group that are not denominated in the functional currency is as follows: Net unhedged financial (liabilities)/assets: RM RM United States Dollar ( USD ) 3,412,476 6,619,848 Renminbi Yuan ( RMB ) (13,269,886) (8,410,032) Singapore Dollar ( SGD ) 1,593,635 1,145,014 Thailand Baht ( THB ) (496,457) (3,338,257) Indonesia Rupiah ( INR ) 579,405 - (8,180,827) (3,983,427) Sensitivity Analysis for Foreign Currency Risk The following table demonstrates the sensitivity of the Group s profit to a reasonably possible change in the USD, RMB, SGD, THB and INR exchange rates against the respective functional currencies of the Group entities, with all other variables held constant. Gain/(loss) in profit or loss RM RM USD/RM - strengthened 10% 341, ,985 - weakened 10% (341,248) (661,985) RMB/RM - strengthened 10% 1,326, ,003 - weakened 10% (1,326,989) (841,003) SGD/RM - strengthened 10% 159, ,501 - weakened 10% (159,364) (114,501) THB/RM - strengthened 2% 9,929 66,765 - weakened 2% (9,929) (66,765) INR/RM - strengthened 2% 11, weakened 2% (11,588) - (e) Market Price Risk Market price risk is the risk that the fair value or future cash flows of the Group s financial instruments will fluctuate because of changes in market prices. The Group is exposed to market price risk arising from its investment in quoted shares listed on the Bursa Malaysia Securities Berhad. These instruments are classified as available-for-sale financial assets. The Group does not have exposure to commodity price risk. The Group holds low volume of investments in equity instruments for the current and previous financial year. Accordingly, performance of sensitivity analysis for market price risk is not meaningful to the Company. 98 Annual Report 2013

100 NOTES TO THE FINANCIAL STATEMENTS 30 APRIL 2013 (cont d) 30. CAPITAL MANAGEMENT The primary objective of the Group s capital management is to ensure that entities of the Group would be able to continue as going concerns while maximising the return to shareholders through the optimisation of the debt and equity ratios. The overall strategy of the Group remains unchanged from that in the previous financial year. The Group and the Company monitor capital using gearing ratio, which is the amount of borrowings (Note 18 to the financial statements) divided by equity attributable to owners of the Company. The Group s and the Company s policy is to keep the gearing ratio within manageable levels. Capital represents equity attributable to the owners of the parent less the fair value adjustment reserve. Group Company RM 000 RM 000 RM 000 RM 000 Borrowings 69,938 66,019 3,158 2,988 Total equity 116, ,902 69,072 67,770 Gearing ratio (times) SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR (a) On 18 July 2011, Komark International (M) Sdn. Bhd., a wholly-owned subsidiary of the Company had entered into a sale and purchase agreement with Auravilla Project Sdn. Bhd. to dispose of a piece of freehold land of the subsidiary for a consideration of RM8,000,000. This disposal was completed on 29 May (b) On 29 June 2012, the Company announced that an application will be made to the General Registry, Cayman Islands to strike off Komark China Ltd., a wholly-owned subsidiary of the Company from the Register of Companies pursuant to Section 156 of the Companies Act of Cayman Islands. The subsidiary company has been struck from the Companies Register of the Cayman Islands on 28 September EVENTS SUBSEQUENT TO THE BALANCE SHEET On 24 June 2013, the Company announced that the Company proposes to undertake a private placement of up to 10% of the issued and paid-up share capital of the Company to third party investors to be identified later. On 26 June 2013, the Company announced that the application pursuant to the proposed private placement has been submitted to Bursa Malaysia Securities Berhad. On 28 June 2013, the Company announced that Bursa Malaysia Securities Berhad had resolved to approve the listing and quotation for up to 8,127,501 new ordinary shares of RM1 each in the Company to be issued to the Private Placement subject to certain conditions. 33. COMPARATIVES Certain comparative figures have been restated to conform with current year s presentation. 34. AUTHORISATION FOR ISSUE The financial statements of the Company for the financial year ended 30 April 2013 were authorised for issue in accordance with a resolution of the Board of Directors on 30 August Komarkcorp Berhad ( A) 99

101 ANALYSIS OF SHAREHOLDINGS AS AT 13 SEPTEMBER 2013 Authorised share capital : RM500,000, Issued and paid-up share capital : RM 81,275, Class of shares : Ordinary Shares of RM1.00 each Voting rights : One vote per share Size of Holdings No. of Shareholders/ Depositors % of Shareholders/ Depositors No. of Shares held* % of Issued Capital , , , ,001-10,000 1, ,118, , , ,941, ,001-4,063, ,120, ,063,700 (5% of Issued Capital*) and above ,612, TOTAL 3, ,274, Note: * Based on the issued and paid-up share capital less 1,000 Ordinary Shares of RM1.00 each bought back by the Company and retained as treasury shares. SUBSTANTIAL SHAREHOLDERS AS AT 13 SEPTEMBER 2013 Direct Indirect No. of % of Issued No. of % of Issued Shares Capital (1) Shares Capital (1) Aimas Enterprise Sdn Bhd 10,906, Koh Hong Koh Gak Siong 6,519, ,906,889 (2) Lim Pei Lim Ahat Kiat 9,938, Tan Kwe Hee 4,767, ,200,000 (3) Notes: (1) Based on the issued and paid-up share capital less 1,000 Ordinary Shares of RM1.00 each bought back by the Company and retained as treasury shares. (2) Deemed interested in the shares by virtue of Section 6A(4)(c) of the Companies Act, 1965 held through Aimas Enterprise Sdn Bhd. (3) Deemed interested in the shares by virtue of Section 6A of the Companies Act, 1965, held through his spouse, Ho Say Hor Yoke Lan. 100 Annual Report 2013

102 ANALYSIS OF SHAREHOLDINGS AS AT 13 SEPTEMBER 2013 (cont d) THIRTY LARGEST SHAREHOLDERS/DEPOSITORS AS AT 13 SEPTEMBER 2013 Name of Shareholders/Depositors No. of Shares % of Issued Capital* 1. EB Nominees (Tempatan) Sendirian Berhad Pledged Securities Account for Aimas Enterprise Sdn Bhd (Jln Hang Lekiu) 10,906, Lim Pei Liam Ahat Kiat 9,938, Tan Kwe Hee 4,767, Ang Jwee Tong 4,000, EB Nominees (Tempatan) Sendirian Berhad Pledged Securities Account for Koh Hong Koh Gak Siong (Jln Hang Lekiu) 6. RHB Nominees (Tempatan) Sdn Bhd OSK Capital Sdn Bhd for Koh Hong Koh Gak Siong 3,680, ,839, Lim Pay Kaon 2,204, Tan Chuan Ann 1,978, Razali Bin Daud 1,701, Ho Say Hor Yoke Lan 1,200, Myra Phung Pei Ling 1,079, Lim Ah Waa 1,053, CIMSEC Nominees (Tempatan) Sdn Bhd CIMB Bank For Teh Swee Heng (MM1118) 1,026, George Lee Sang Kian 844, Solar Million Sdn Bhd 745, Ambank (M) Berhad Pledged Securities Account for Wong Ah Yong (SMART) 553, Yeow Wah Chin 520, SJ Sec Nominees (Tempatan) Sdn Bhd Pledged Securities Account for Lim Boon Hong (SMT) 514, Lim Jia Chean 500, Wong Ah Yong 463, Ching Kai Xiang (Zhuang KaiXiang) 459, Hsu, Yao-Jih 400, Yap Ngit Ying 365, Mayban Nominees (Tempatan) Sdn Bhd Pledged Securities Account for Tan Swee Ung 25. CIMSEC Nominees (Tempatan) Sdn Bhd CIMB Bank for Wong Ah Yong (MY1278) 349, , Lim Kok Wah & Company Sdn Berhad 280, Maybank Nominees (Tempatan) Sdn Bhd Pledged Securities Account for Chee Peng Wai 28. Maybank Nominees (Tempatan) Sdn Bhd Pledged Securities Account for Chiah Tho Wak 29. UOB Kay Hian Nominees (Tempatan) Sdn Bhd Exempt An for UOB Kay Hian Pte Ltd (A/C Clients) 245, , , Tung P ng Khai 214, TOTAL 53,581, Note: * Based on the issued and paid-up share capital less 1,000 Ordinary Shares of RM1.00 each bought back by the Company and retained as treasury shares. Komarkcorp Berhad ( A) 101

103 ANALYSIS OF SHAREHOLDINGS AS AT 13 SEPTEMBER 2013 (cont d) DIRECTORS INTERESTS AS AT 13 SEPTEMBER 2013 Director s Name No. of Shares Direct Indirect Interest % (1) Interest % (1) Koh Hong Koh Gak Siong (2) 6,519, ,906,889 (3) Lim Pei Liam Ahat Kiat 9,938, Tan Kwe Hee 4,767, ,200,000 (4) Dato Yeow Wah Chin 520, Koh Chee Mian (2) 206,100-17,426,789 (5) Koh Chie Jooi (2) ,426,789 (5) Tan Sri Ahmad Bin Mohd Don Datuk Ng Peng Ng Peng Hay Ihsan bin Ismail Notes: (1) Based on the issued and paid-up share capital less 1,000 Ordinary Shares of RM1.00 each bought back by the Company and retained as treasury shares. (2) By virtue of their interests in shares of the Company, the Directors are also deemed to have an interest in the shares of all the subsidiaries of the Company to the extent the Company has an interest. (3) Deemed interested in the shares by virtue of Section 6A(4)(c) of the Companies Act, 1965, held through Aimas Enterprise Sdn Bhd. (4) Deemed interested in the shares by virtue of Section 6A of the Companies Act, 1965, held through his spouse, Ho Say Hor Yoke Lan. (5) Deemed interested in the shares by virtue of Section 122A(1)(a) of the Companies Act, 1965, held through his parent, namely Koh Hong Koh Gak Siong. 102 Annual Report 2013

104 LIST OF PROPERTIES Owner Title No/Location Land Area/ Age Of Tenure Existing Expiry Net book Build Up Building usage Date Value as at Area Sq. Ft (Year) RM ( 000) Komark International GM No. 439,Lot 132, L-147, Freehold Factory Cum - 21,025 (M) Sdn. Bhd Mukim of Kajang District, B-150,000 Office (HQ) Hulu Langat,Selangor. General Labels & H.S (D) KA L-3, Leasehold Factory Cum 9/3/ Labelling (M) Sdn. Bhd P.T.NO /23 B-2,640 Office Hala Rapat Baru 22, Kawasan Perindustrian, Ringan Kinta Jaya. General Labels & Lot PTD , L-10, Freehold Factory Cum Labelling (M) Sdn. Bhd Mukin of Plentong B-5,394 Office District, Johor Bahru. Guongzhou Komark Title No: L-16, Leasehold Factory Cum 9/11/44 1,126 Labels & Labelling Second Floor,Building 2, B-17,416 Office Co. Ltd. Chunf Yie Road, Scientech Park Economic & Technological Development Zone, Guongzhou Shanghai Komark Title No: L-89,222 7 Leasehold Factory Cum 16/8/52 9,097 Labels & Labelling No.1, Baosheng Road, B-76,751 Office Co. Ltd. Songjiang Industrial Zone, Songjiang, Shanghai , China. Komarkcorp Berhad ( A) 103

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106 PROXY FORM CDS account no. of authorised nominee I/We (name of shareholder, in capital letters) NRIC No./Passport No./ID No./Company No. (new) (old) of (full address) being a member of KOMARKCORP BERHAD, hereby appoint (name of proxy as per NRIC/Passport, in capital letters) NRIC No./Passport No. (new) (old) of (full address) and/or failing him/her (name of proxy as per NRIC/Passport, in capital letters) NRIC No./Passport No. (new) (old) of (full address) and/or failing him/her him/her *the Chairman of the Meeting as my/our proxy to vote for me/us on my/our behalf at the Seventeenth Annual General Meeting of the Company to be held at Perdana Room, Bukit Jalil Golf & Country Resort, Jalan 3/155B, Bukit Jalil, Kuala Lumpur on Wednesday, 30 October 2013 at 3.00 p.m. and at each and every adjournment thereof. * Please delete the words the Chairman of the Meeting if you wish to appoint some other person to be your proxy. My/our proxy is to vote as indicated below: NO. ORDINARY RESOLUTIONS FOR AGAINST 1. Declaration of the first and final single-tier dividend of 0.50 sen per ordinary share of RM1.00 each 2. Approval of increase of Directors Fees and the payment thereof 3. Re-election of Mr Koh Chee Mian as Director 4. Re-election of Mr Tan Kwe Hee as Director 5. Re-election of Mr Lim Pei Liam Ahat Kiat as Director 6. Re-election of Tan Sri Ahmad Bin Mohd Don as Director 7. Re-election of Dato Yeow Wah Chin as Director 8. Re-election of Encik Ihsan bin Ismail as Director 9. Re-appointment of Auditors 10. Authority for Datuk Ng Peng Ng Peng Hay to continue in office as Independent Non-Executive Director 11. Proposed Renewal of General Mandate for Recurrent Related Party Transactions 12. Proposed Authority under Section 132D of the Companies Act, 1965 for the Directors to issue shares (Please indicate with an X in the spaces provided how you wish your vote to be cast. If you do not do so, the proxy will vote or abstain from voting at his discretion.) Signature/Common Seal Number of shares held Date: For appointment of two proxies, percentage of shareholdings to be represented by the proxies: No. of shares Percentage Proxy 1 % Proxy 2 % Total 100% Komarkcorp Berhad ( A) 105

107 Notes: 1. A member of the Company entitled to attend and vote at the meeting is entitled to appoint a proxy or proxies to attend and vote in his stead. A proxy may but need not be a member of the Company and the provisions of Section 149(1)(b) of the Companies Act, 1965 shall not apply to the Company. There shall be no restriction as to the qualification of the proxy. 2. A member may appoint not more than two (2) proxies to attend and vote at the same meeting. Where a member appoints two (2) proxies, the appointments shall be invalid unless he specifies the proportions of his shareholdings to be represented by each proxy. 3. Where a member of the Company is an exempt authorised nominee which holds shares in the Company for multiple beneficial owners in one securities account ( omnibus account ) as defined under the Securities Industry (Central Depositories) Act, 1991, there is no limit to the number of proxies which the exempt authorised nominee may appoint in respect of each omnibus account it holds. 4. The instrument appointing a proxy 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 the attorney. 5. The instrument appointing a proxy, with the power of attorney or other authority (if any) under which it is signed or a notarially certified or office copy of such power or authority, must be deposited at the Company s Share Registrars office at Level 17, The Gardens North Tower, Mid Valley City, Lingkaran Syed Putra, Kuala Lumpur not less than 48 hours before the time set for holding the meeting or any adjournment thereof. 6. In respect of deposited securities, only members whose names appear on the Record of Depositors on 22 October 2013 (General Meeting Record of Depositors) shall be eligible to attend, speak and/or vote at the meeting or appoint proxy(ies) to attend, speak and/or vote on his behalf. 1st fold here AFFIX STAMP Share Registrars KOMARKCORP BERHAD c/o TRICOR INVESTOR SERVICES SDN BHD LEVEL 17, THE GARDENS NORTH TOWER MID VALLEY CITY LINGKARAN SYED PUTRA KUALA LUMPUR MALAYSIA Then fold here 106 Annual Report 2013

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