ANNUAL 2013 REPORT. RAYA INTERNATIONAL BERHAD (FORMERLY KNOWN AS ENVAIR HOLDING BERHAD) (Company No T)

Transcription

1 ANNUAL 2013 REPORT (FORMERLY KNOWN AS ENVAIR HOLDING BERHAD) (Company No T)

2 CONTENTS 1 CORPORATE INFORMATION 2 DIRECTORS PROFILE 3 CHAIRMAN S STATEMENT 8 STATEMENT OF CORPORATE GOVERNANCE 9 AUDIT COMMITTEE REPORT 16 STATEMENT ON RISK MANAGEMENT & INTERNAL CONTROL 21 STATEMENT OF VERIFICATION ON ALLOCATION OF OPTION PURSUANT TO 22 EMPLOYEE SHARE OPTION SCHEME OTHER COMPLIANCE INFORMATION 23 FINANCIAL STATEMENTS Directors Report 24 Statement by Directors and Statutory Declaration 28 Independent Auditors Report 29 Statements of Profit & Loss and Other Comprehensive Income 32 Statements of Financial Position 33 Consolidated Statement of Changes in Equity 34 Statement of Changes in Equity 35 Statements of Cash Flows 36 Notes to Financial Statements 38 LIST OF PROPERTIES 66 ANALYSIS OF SHAREHOLDINGS 67 NOTICE OF SEVENTEENTH ANNUAL GENERAL MEETING 69 PROXY FORM Enclosed

3 Corporate Information 2 Jeneral Tan Sri Abdul Aziz Bin Zainal (Rtd) Chairman, Independent Non-Executive Director BOARD OF DIRECTORS Dato Malek Radzuan Bin Saharin Non-Independent Non-Executive Director Dato Izham Bin Yusoff Independent Non-Executive Director Ezrul Ehsan Bin Ismail Executive Director Abdul Latif Bin Abdul Rahim Non-Independent Non-Executive Director Mohd Shukri Bin Abdullah Independent Non-Executive Director Mejar Ismail Bin Ahmad (Rtd) Non-Independent Non-Executive Director AUDIT COMMITTEE Mohd Shukri Bin Abdullah Independent Non-Executive Director Dato Malek Radzuan Bin Saharin Non-Independent Non-Executive Director SHARE REGISTRAR Tricor Investor Services Sdn Bhd Level 17, The Gardens North Tower Mid Valley City, Lingkaran Syed Putra Kuala Lumpur. Tel : Fax : is.enquiry@my.tricorglobal.com COMPANY SECRETARIES Wan Haslinda Wan Yusoff MAICSA Sangar Nallappan MACS AUDITORS STYL Associates AF 1929 Chartered Accountants No: 107B, Jalan Aminuddin Baki Taman Tun Dr Ismail Kuala Lumpur. Tel : Fax : PRINCIPAL BANKERS Public Bank Berhad CIMB Bank Berhad REGISTERED OFFICE D2-1-11, No: 1, Solaris Dutamas Jalan Dutamas, Taman Sri Hartamas Kuala Lumpur. Tel : Fax : BUSINESS ADDRESS 2 nd Floor, Lot 107, Jalan 6 Off Jalan Chan Sow Lin Sungai Besi Kuala Lumpur. Tel : Fax : Website : STOCK EXCHANGE LISTING ACE Market of Bursa Malaysia Securities Berhad STOCK NAME - RAYA STOCK CODE

4 Directors Profile JENERAL TAN SRI ABDUL AZIZ BIN ZAINAL (RTD) Chairman / Independent Non Executive Director Jeneral Tan Sri Abdul Aziz Hj Zainal, a Malaysian, aged 63, is the Chairman of the Company. He was appointed to the Board on 10 October He received his secondary education at Boys Wing, Royal Military College (RMC) in Sungai Besi. He then underwent Officer Cadet training and was commissioned into the Royal Malay Regiment (RMR) in His maiden posting was to the 3rd RMR as Platoon Commander on 16 April As an infantry officer, Jeneral Tan Sri Abdul Aziz served in several capacities in RMR battalions, reaching the level of Commanding Officer. He also held several key command and staff appointments in various headquarters, departments and training establishments. These included as Staff Officer 2 Human Resource in the Infantry Directorate, Army Headquarters; and Chief Instructor at the Army Management School in Port Dickson. He was assigned as Military Assistant to the Chief of Defence Force in As a Colonel, he was appointed as Commandant of the Army Combat Training Centre, as well as Chief of Staff in the Department of Planning and Development. Jeneral Tan Sri Abdul Aziz was a graduate of the Malaysian Armed Forces (MAF) Staff College and MAF Defence College. Upon his promotion to Brigadier-General in 1997, he was made Assistant Chief of Staff Operations and Training in the Army Headquarters. Subsequently, he was Commander 4 Mechanised Brigade from 1998 to 2000, and Chief of Staff of Army Headquarters. His next promotion to Major-General saw him appointed as General Officer Commanding 3 Division. He assumed command of the Army Field Command in August 2003 upon being elevated to the rank of Lieutenant-General. On 9 September 2004, he was promoted to General, and given the ultimate responsibility of leading the Malaysian Army. Jeneral Tan Sri Abdul Aziz was appointed the 16th Chief of Defence Force on 1 February Jeneral Tan Sri Abdul Aziz has a wide repertoire of experiences at the international level. He was Assistant Defence Attache in the Philippines from 1981 to 1983, and served NATO as Malaysian Contingent Commander in Bosnia & Herzegovina from 1996 to In addition to that, he also attended several courses and seminars overseas, such as the Battle Shooting Management Course in the United Kingdom, the Peace Support Operations Seminar in Victoria, British Columbia, and the Pacific Armies Management Seminars in Sydney, Tokyo and Calgary. In 1996, he graduated with a Masters Degree in Management from the Asian Institute of Management, Manila. Jeneral Tan Sri Abdul Aziz is a towering figure in the military realm, as evident in his able leadership and management. He made notable contributions when he was at the helm of the Malaysian Army, such as revitalising the Army s mission and vision, known as , and introducing the Balanced Scorecard as an assessment instrument for the Service. He also wrote a book entitled, The Marksman, which highlights the management philosophy of the Army towards excellence, and addressed appropriate key performance indexes (KPI). Having assumed the MAF highest office, he made similar contributions that led to the inception of the Balanced Scorecard and KPI in the MAF Headquarters as well as producing a sequel to his previous work, The Marksman in the 21st Century. His most significant legacy is the Armed Forces capability development plan, called the Fourth Dimension MAF (4D MAF); a transformation era towards becoming a highly credible, fully integrated and balanced force-after-next in all dimensions, and placing emphasis on jointness and inter-operability among the three Services. In recognition of those accomplishments, he was conferred various distinguished awards, namely the Triple A Award from the Asian Institute of Management, Manila on 3 April 2007; and the Old Putera Association of the Year Award on 16 June On 16 December 2007, he was conferred an Honorary Doctorate in Leadership and Management by the University of Tun Abdul Razak, Kuala Lumpur. This honour acknowledged Jeneral Tan Sri Abdul Aziz s leadership and management at MAF s highest level, after having served the organisation for more than 40 years. His managerial acumen was duly recognised with his appointment as Adjunct Professor to the Management Centre of the International Islamic University, Malaysia in In addition, he also received an Honorary Doctorate in Management from the Malaysian University of Sabah on 25 August 2008.

5 Directors Profile (Cont d) 4 Owing to his meritorious service to the nation, he has been bestowed with numerous awards from His Majesty the King and His Majesty the State Rulers respectively. Renowned for promoting security and stability in the region, he was conferred awards by His Majesty the King of Thailand, His Majesty the Ruler of Brunei, His Excellency the President of the Republic of the Philippines, His Excellency the President of the Republic of Singapore and His Excellency the President of Indonesia. Having led an illustrious career and rendered remarkable service to the nation and the MAF for four decades, Jeneral Tan Sri Abdul Aziz handed over his portfolio as Chief of Defence Force to his successor on 1 September Having retired from the Military career, he is again reenlisted into the Government services in May 2010 and posted as the Ambassador of Malaysia to France, accredited as well to Portugal and Monaco. He is currently the Chairman of Heitech Defence System Sdn. Bhd. and the Chairman of Perbadanan Perwira Niaga (Malaysia) (Pernama) He has no family relationship with other Directors or major shareholders of the Company. There is no conflict of interest with the Company. Within the last 10 years, he has not been convicted for any offences. He is not a member of any Board Committee of the Company and he does not hold any directorships in other public companies. He does not hold any shares in the Company. During the financial year, he has attended all the meetings of the Board. DATO IZHAM BIN YUSOFF Independent Non-Executive Director Dato Izham Bin Yusoff, a Malaysian, aged 47, is an Independent Non-Executive Director of the Company. He was appointed to the Board on 1 October 2013 He graduated with Bachelor of Accounting, University of Miami and Master of Business Administration (Accounting and International Business), University of Miami. He also and Associate Member of Institute of Internal Auditors Malaysia Dato Izham bin Yusoff began his career with Citibank NA in Miami as Assistant Business Planning & Analysis Manager in 1992 before joining Procter & Gamble in Singapore as Financial Analysis Manager, Corporate from 1992 to He joined Citibank Berhad in Malaysia as Financial Controller in 1995, and was the Corporate Strategy Manager with Maxis Berhad from 1996 to He was Special Assistant to the Managing Director of EON Berhad from 1998 to 2002, Managing Director of Amanah Raya Berhad from 2002 to 2004, and the CEO of KUB Malaysia Berhad from 2004 to He was also the COO of Ninebio Sdn Bhd and its Executive Director from August 2007 to January 2010 and remained a Non-Executive Director until October 2010 He had served numerous companies as director including : Director, Bursa Malaysia ( ) Director, AKN Technology Bhd ( ) Director, Satang Holdings Berhad ( ) He has no family relationship with other Directors or major shareholders of the Company. There is no conflict of interest with the Company. Within the last 10 years, he has not been convicted for any offences. He is not a member of any Board Committee of the Company and currently he is the Managing Director of Bina Darulaman Berhad. He does not hold any shares in the Company During the financial year, he has attended all the meetings of the Board.

6 Directors Profile (Cont d) MEJAR ISMAIL BIN AHMAD (RTD) Non-Independent Non-Executive Director 5 Mejar Ismail Bin Ahmad, a Malaysian, aged 65, is a Non-Independent Non-Executive Director of the Company. He was appointed to the Board on 9 October He obtained his Masters in Business Administration from Asian Institute of Management, Manila,. He also holds LLB Hons from University of Wolverhampton, United Kingdom, Master of Law (LLM) from University of London, United Kingdom and possesses Certificate in Legal Practice. He served in the Malaysian Army for 17 years and attended courses both local and overseas. In 1983, he joined Perwira Niaga Malaysia (Pernama), a wholly-owned subsidiary of LTAT, a wholesale and international trading company. His last position in Pernama was Deputy General Manager before he left in He was the CEO of Odasaja Sdn. Bhd. in its formative year and later became the Group Executive Director of the same. He left Odasaja Sdn. Bhd. in December He is now the Chairman of Era Bazil Resources Sdn. Bhd. and Managing Director of Zagma Sdn. Bhd. He and Ezrul Ehsan (Executive Director) are father and son. Mejar Ismail has no other family relationship with other Directors or major shareholders of the Company. There is no conflict of interest with the Company. Within the last 10 years, he has not been convicted for any offences. He is not a member of any Board Committee of the Company and he also sits on the Board of MLABS Systems Berhad and SCAN Associates Berhad. He does not hold any shares in the Company. During the financial year, he has attended all the meetings of the Board. EZRUL EHSAN BIN ISMAIL Executive Director Encik Ezrul Ehsan, a Malaysian, aged 35, is an Executive Director of the Company. He was appointed to the Board on 28 August He holds a Certificate in Information Technology at Canberra Institute of Technology, Australia He started his career as an IT Executive with Linkos Network Sdn. Bhd. In 2003, he was invloved in planning and organizing the operation of the information system, developed and implement policies for electronic data processing, maintaining hardware and software system. In 2006, Encik Ezrul Ehsan joined Carpet Raya Sdn. Bhd. as a Credit Controller. In 2010, Encik Ezrul joined a public listed company, Equine Capital Berhad as Sales and Marketing Executive to promote products to customers, source for clients and potential project to the Company and responsible for collection of payment. He and Mejar Ismail (Non-Independent Non-Executive Director) are father and son. He has no other family relationship with other Directors or major shareholders of the Company. There is no conflict of interest with the Company. Within the last 10 years, he has not been convicted for any offences. He is a member of Remuneration Committee He does not hold any shares in the Company and does not hold any directorships in other public companies. During the financial year, he has attended all the meetings of the Board.

7 Directors Profile (Cont d) 6 DATO MALEK RADZUAN BIN SAHARIN Non-Independent Non-Executive Director Dato Malek Radzuan, a Malaysian, aged 56, was appointed to the Board on 27 August 2012 as Independent Non-Executive Director. He was subsequently re-designated as Non-Independent Non- Executive Director on 2 October He holds a Degree of Arts from College University Octawa Florida. After graduation, Dato' Malek Radzuan pursued his career in music, his first album was launched in 1980 and the subsequent album as was launched in As of todate, Dato' Malek has launched a total of 23 albums In 2003, Dato Malek Radzuan became a member of PAPITA (Persatuan Penyanyi-Pemuzik Penulis Lagu Tanahair). With his vast experience in music industry, Dato' Malek was appointed as Deputy President of PAPITA and he is still serving in the association. Dato' Malek has possessed more than 30 years of experience in music and singing. In 2006, Dato' Malek become a member of Association/Pertubuhan Perniagaan Melayu. Dato' Malek also own a tourism company which has been operating for the past five years. With his vast experience in the industry, Dato Malek was appointed as the Director of Yayasan Artis 1Malaysia in May He has no family relationship with other Directors or major shareholders of the Company. There is no conflict of interest with the Company. Within the last 10 years, he has not been convicted for any offences. There is no conflict of interest with the Company. He is a member of Audit Committee and Remuneration Committee and Chairman of Nomination Committee. He does not hold any shares in the Company and does not hold any directorships in other public companies. During the financial year, he has attended all the meetings of the Board. MOHD SHUKRI BIN ABDULLAH Independent Non-Executive Director Encik Mohd Shukri, a Malaysian, aged 48, is an Independent Non-Executive Director of the Company. He was appointed to the Board on 1 March He started his career with Shell Malaysia Trading Sdn. Bhd. as a Forecourt Executive in the Marketing Retail Development Division in Three years later he joined Panmart Development Sdn. Bhd. In 1998, he was appointed as the Contracts & Promotions Manager for Carpet Raya Sdn. Bhd. ("Carpet Raya"). With his vast experience, Encik Mohd Shukri contributed tremendously to the overall growth of the company to become one of the leading companies in the industry. At present, he is the appointed director for Carpet Raya. Besides Carpet Raya, he is also a director in a number of companies such as TJ Oil Land Services Sdn. Bhd., Asia Canggih Sdn. Bhd., Affluent Corridor Sdn.Bhd., Radiant Splendour Sdn. Bhd., Dekad Darat Sdn. Bhd. and Prudent Plus Sdn. Bhd. Through these companies, he oversees the acquisition and sale of landmark properties in Kuala Lumpur such as Angkasaraya, Glomac Tower, offices and residences within KLCC vicinity.

8 Directors Profile (Cont d) He established Shapers Malaysia Sdn. Bhd. in 2000 to focus on his passion to effectively produce promotional activities for organisations by garnering support from their industry partners. His passion for the Halal Industry saw him founding and organising the first Malaysia International Halal Showcase in 2004 and in 2010, he founded another Halal related exposition called Halal Fiesta (HALFEST) focusing on Halal certified local products. 7 He has no family relationship with other Directors or major shareholders of the Company. There is no conflict of interest with the Company. Within the last 10 years, he has not been convicted for any offences. There is no conflict of interest with the Company. He is the Chairman of Audit Committee and member of Nomination Committee. He does not hold any shares in the Company and does not hold any directorships in other public companies. During the financial year, he has attended three (3) out of five (5) meetings of the Board. ABDUL LATIF BIN ABDUL RAHIM Non-Independent Non-Executive Director Encik Abdul Latif, a Malaysian, aged 56, is a Non-Independent Non-Executive Director of the Company. He was appointed to the Board on 1 October He holds a Diploma In Business Administration. Encik Abdul Latif began his career in year 1982 with Malaysian Tobacco as a senior executive. In year 1992, he joined Regal Marketing Sdn. Bhd. as Business Executive and worked until He is currently the General Manager of Azeera Management Consultant (M) Sdn Bhd which he has joined since year He has no family relationship with other Directors or major shareholders of the Company. There is no conflict of interest with the Company. Within the last 10 years, he has not been convicted for any offences. There is no conflict of interest with the Company. He is not a member of any Board Committee of the Company. He does not hold any shares in the Company and does not hold any directorships in other public companies. During the financial year, he has attended all the meetings of the Board.

9 Chairman s Statement 8 Dear Shareholders, On behalf of the Board of Directors, I am pleased to present the Annual Report and Audited Financial Statements for the financial year ended 31 December 2013 of the Raya International Berhad ( Raya ). FINANCIAL REVIEW The Group has posted an improved profit after tax of RM 89,165 as compared to a profit after tax of RM 72,879 in Revenue achieved for the financial year ended 31 December 2013 was RM 2,424,165 as compared to RM 871,987 registered in 2012 reflecting an increase of about 178% due to higher sales in Air Filtration products. PROSPECTS As for the prospects for current financial year, the Company is currently deliberating on the viability of the existing business of the Group and are considering options available to improve its long term and sustainable future growth APPRECIATION On behalf of the Board, I would like to record my sincere appreciation to our valued shareholders, customers, business associates, financiers, relevant authorities and other stakeholders for their continuous support and trust in our Group during the past year. Finally, my personal appreciation to my fellow members of the Board for their untiring effort in charting the strategic direction and corporate values of the Group. We will continue to deliver long term value to our customers and stakeholders. We look forward to your continuous trust and support for the year Thank you. JENERAL TAN SRI ABDUL AZIZ BIN ZAINAL (RTD) Chairman

10 Statement of Corporate Governance The Board of Directors ( the Board ) of Raya International Berhad ( Raya ) recognizes the importance of upholding the highest standards of corporate governance in conducting the Group s business activities and discharging the Board s fiduciary responsibilities to protect and enhance the shareholder s value. Premised on this, the Board is committed to the best of its ability under the present circumstances of the Company to ensure that high standards of corporate governance are practised throughout the Company and to apply the principles and best practices as governed by the Listing Requirements of the ACE Market of Bursa Malaysia Securities Berhad ( Listing Requirements ) and Malaysian Code on Corporate Governance ( Code ) 9 This statement describes the Company s compliance with the principles of the Code. A. DIRECTORS i. The Board The Board is primarily responsible for the strategic directions of the Company. In addition, the Board also oversees the conduct of the Company s business, whereby it devises and puts in place adequate systems of control, focuses primarily on the mitigation of any foreseeable or potential risk besetting the Company. ii. Board Balance The current Board has seven (7) directors comprising one (1) Executive Director, three (3) are Non-Independent Non-Executive Directors and three (3) Independent Non-Executive Directors. More than one-third (1/3) of the current Board is represented by Independent Non-Executive Directors who are independent of management and free from any business or other relationship which could interfere with the exercise of independent judgment on the Board s deliberation and decision making, each of whom brings with him vast and varied experiences, exposure and expertise. The profile of each member of the current Board is set out on Directors profile of this Annual Report. The Chairman of the Board holds a Non-Executive position and is primarily responsible for matters pertaining to the Board and the overall conduct of the Group. The Executive Director oversees the day to day management and running of the Group and the implementation of the Board s decision and policies.

11 Statement of Corporate Governance (Cont d) 10 The presence of three (3) Independent Non-Executive Directors is essential in providing unbiased views and impartiality to the Board s deliberation and decision-making process. In addition, the non-executive directors ensure that matters and issues brought to the Board are fully discussed and examined, taking into account the interest of all stakeholders in the Group. In order to ensure the effectiveness of the Independent Directors. In line with the Code, the tenure of an Independent Director shall not exceed nine (9) years consecutively. Upon completion of the nine (9) years, an Independent Director may continue to serve on the Board subject to his redesignation as a Non-Independent Non-Executive Director should an Independent Director be retained after 9 years, his retention must be approved by the shareholders. iii. Board Meetings To ensure that the Raya Group is managed properly, the current Board is scheduled to meet at least four (4) times a year, with additional meetings being convened when necessary. Besides that, the Board also approves matters through the circulation of Director Circular Resolution in accordance with the Articles of Association of the Company. During the financial year ended 31 December 2013, the Board met five (5) times. The details of the Director s attendances at the Board Meetings during their tenure in office are set out below:- No Name of Directors No of Meetings attended during the time the Directors hold office % 1. *Jeneral Tan Sri Abdul Aziz Bin Zainal (Rtd) Independent Non-Executive Director 2. **Dato Izham Bin Yusoff Independent Non-Executive Director 1/ / Dato Malek Radzuan Bin Saharin Non-Independent Non-Executive Director 5/ ***Mr. Deepak Jaikishan A/L Jaikishan Rewachand Managing Director 3/ ****Mr. Arulampalam A/L S Mariampillai Independent Non-Executive Director 4/ Encik Ezrul Ehsan Bin Ismail Executive Director 5/5 100

12 Statement of Corporate Governance (Cont d) No Name of Directors No of Meetings attended during the time the Directors hold office % Encik Mohd Shukri Bin Abdullah Independent Non-Executive Director 8. *****Encik Abdul Latif Bin Abdul Rahim Non- Independent Non-Executive Director 9. ##Mr. Rajesh A/L Jaikishan Non-Independent Non-Executive Director 10. ###Mejar Ismail Bin Ahmad (Rtd) Non-Independent Non-Executive Director 11. ####Mr. Naresh Kumar Lender Lal A/L K. Lal Independent Non-Executive Director 3/5 60 1/ / / /0 N/A Notes: * Appointed on 10 October 2013 ** Appointed on 1 October 2013 *** Appointed on 10 May 2013 and subsequently resigned on 30 May 2014 ****Resigned on 30 May 2014 ***** Appointed on 1 October 2013 ## Appointed on 2 October 2013 and subsequently resigned on 30 May 2014 ### Appointed on 9 October 2013 #### Appointed on 26 December 2013 iv. Supply of Information and Access to Advice The Board is provided with comprehensive board papers on a timely manner prior to board meetings. This is to ensure and enable the members of the Board to discharge their duties and responsibilities competently in a well-informed manner. All members of the Board have unhindered access to the advice and services of the Company Secretary, and where necessary, may seek independent professional advisers for advice for the purpose of discharging their statutory and fiduciary duties. Every Director also has unrestricted access to all information with regard to the activities of the Raya Group. v. Directors Training All Directors had attended the Mandatory Accreditation Programme for Directors of Public Listed Companies ( MAP ) except Encik Abdul Latif Bin Abdul Rahim. He will attend the MAP in due course pursuant to the Listing Requirements pending registration with Bursatra Sdn Bhd.

13 Statement of Corporate Governance (Cont d) 12 vi. vii. Re-election of Directors In accordance with the Company s Articles of Association, one-third (1/3) of the directors shall retire from office and be eligible for re-election at each Annual General Meeting and all directors shall retire from office at least once in every three (3) years but shall be eligible for re-election. Directors appointed during the year will be subject to retirement and re-election by shareholders in the Annual General Meeting. Directors over seventy (70) years of age are required to retire and submit themselves for reappointment annually in accordance with Section 129(6) of the Companies Act, Presently, none of the Directors is subject to such retirement and re-appointment. Board Committees The Board has set up the following Committees to assist the Board in discharging their duties and decision making:- (a) Audit Committee Pursuant to the resignation of Mr. Naresh Kumar Lender Lal A/L K. Lal and Mr. Arulampalam A/L S Mariampillai as Directors of the Company on 30 May 2014, the current Audit Committee comprises two (2) members as follows:- Chairman Member : Encik Mohd Shukri Bin Abdullah Independent Non-Executive Director : Dato Malek Radzuan Bin Saharin Non- Independent Non-Executive Director The Audit Committee Report is set out on page 16 to 20 of this Annual Report. (b) Nomination Committee The Nomination Committee comprises the following members:- Chairman Members : Dato Malek Radzuan Bin Saharin Non- Independent Non-Executive Director : Arulampalam A/L S Mariampillai Independent Non-Executive Director (resigned on 30 May 2014) Encik Mohd Shukri Bin Abdullah Independent Non-Executive Director The terms of reference of the Nomination Committee are as follows:- To regularly review the Board structure, size and composition. To recommend candidates for the approval of the Board to fill vacancies in the Board.

14 Statement of Corporate Governance (Cont d) To annually review the required mix of skills and experience and other qualities and competencies which non-executive directors should bring to the Board. To annually assess the effectiveness of the Board as a whole, the committee of the Board and contributions of each individual director of the Board. 13 The Nomination Committee has met once during the financial year ended 31 December (c) Remuneration Committee The Company has an established framework of principles to evaluate performance and reward for executive directors. Remuneration packages for the executive directors are formulated to be competitive and realistic, emphasis being placed on performance, with aims to attract, motivate and retain executive directors of high caliber to the Group. For non-executive directors, the level of remuneration commensurate with the level of responsibilities undertaken by them for the Company. The Remuneration Committee comprises the following members:- Chairman : Arulampalam A/L S Mariampillai Independent Non-Executive Director (resigned on 30 May 2014) Members : Ezrul Ehsan Bin Ismail Executive Director Dato Malek Radzuan Bin Saharin Non-Independent Non-Executive Director The term of reference of the Remuneration Committee are as follows:- To review and determine, at least once annually, adjustments to the remuneration package including benefits-in-kind of each executive director, taking into account the performance of the individual, the inflation price index and where necessary, information from independent sources on remuneration packages for the equivalent jobs in the industry. To review and determine the quantum of performance related bonuses, benefits-inkind and Employee Share Options, if available, to be given to the executive directors. To consider and execute the renewal of the service contract of executive directors as and when due, as well as the service contracts and remuneration packages for newly appointed executive directors prior to their appointments. B. DIRECTORS REMUNERATION The Directors are satisfied that the current level of remuneration is in line with the responsibilities expected.

15 Statement of Corporate Governance (Cont d) 14 The aggregate Directors remuneration paid or payable to all Directors of the Company categorised into appropriate components for the financial year ended 31 December 2013 are as follows:- Remuneration (RM 000) Non-Executive Directors Executive Directors Salaries Fees 9-9 Bonuses Payroll based expenses - EPF Meeting Allowance Benefits-in-kind Total Total Range of Remuneration Number of Director Non-Executive Directors Executive Directors Below RM 50, RM 50,000 RM 100, RM 100,000 RM 150, RM 150,000 RM 200, Total C. RELATIONSHIP WITH SHAREHOLDERS The Company maintains various methods of dissemination of information important to shareholders, stakeholders and the public at large through timely announcement of events, quarterly announcement of financial results and product information on the Company s various website. The Annual General Meeting also provides an opportunity for the shareholder to seek and clarify any issues relevant to the Company. Shareholders are encouraged to meet and communicate with the Board at Annual General Meeting and to vote on all resolutions. D. ACCOUNTABILITY AND AUDIT i. Financial Reporting The Board aims to provide a balanced and understandable assessment of the Group s financial position and prospects through the annual report as well as quarterly financial results to its shareholders. It is the Board s responsibility to ensure that the financial statements are prepared in accordance with the Companies Act, 1965 and the applicable approved accounting standards set by Malaysian Accounting Standard Board so as to present a balanced and fair assessment of the Group's financial position and prospects. The Directors are also responsible for keeping proper accounting records, safeguarding the assets of the Company and taking reasonable steps to prevent and enable detection of fraud and other irregularities.

16 Statement of Corporate Governance (Cont d) ii. Statement of Directors Responsibility in respect of the Financial Statements The Malaysian Company Law requires the Directors to prepare financial statements for each financial year, which give a true and fair view of the state of affairs of the Company and the results and cash flow of the Company for that period. In preparing those financial statements, the Directors are required to:- 15 a) Select suitable accounting policies and then apply them consistently; b) State whether applicable accounting standards have been followed; c) Make judgments and estimates that are reasonable and prudent; and d) Prepared the financial statements on a going concern basis unless it is inappropriate to presume that the Company will continue in business. The Directors are responsible for keeping proper accounting records, which disclose with reasonable accuracy, at any time, the financial position of the Company. The Directors are also responsible for safeguarding the assets of the Company and for taking reasonable steps for the prevention and detection of fraud and irregularities. iii. Internal Control The Board acknowledges its overall responsibility for maintaining a sound system of internal controls to safeguard shareholders' investment and the Group's assets. However, the Board recognizes that such system is structured to manage rather than eliminate the possibility of encountering risk of failure to achieve corporate objectives. The Statement of Risk Management and Internal Controls is set out on page 21 of the Annual Report providing an overview of the state of internal controls within the Group. iv. Relationships with Auditors The Board has established a transparent relationship with the external auditors through the Audit Committee, which has been accorded the authority to communicate directly with the external auditors. The auditors in turn are able to highlight matters which require the attention of the Board effectively to the Audit Committee in terms of compliance with the accounting standards and other related regulatory requirements. v. Corporate Social Responsibilities The Company did not undertake any corporate social responsiblity activities or practices during the financial year under review.

17 Audit Committee Report 16 The Audit Committee was established with the primary objective to provide assistance to the Board in fulfilling its fiduciary responsibilities relating to the corporate governance and practices for the Group, to improve the business efficiency and enhance the independent role of external and internal auditors. 1. Composition of Audit Committee Pursuant to the resignation of Mr. Naresh Kumar Lender Lal A/L K. Lal and Mr. Arulampalam A/L S Mariampillai as Directors of the Company on 30 May 2014, the current Audit Committee comprises two (2) members as follows:- Chairman Member : Encik Mohd Shukri Bin Abdullah Independent Non-Executive Director : Dato Malek Radzuan Bin Saharin Non- Independent Non-Executive Director 2. Terms Of Reference Composition The Audit Committee shall be appointed by the Board from amongst their members, who fulfils the following requirements:- a) The Audit Committee must be composed of no fewer than three (3) members. In the event of any vacancy in the Audit Committee resulting in the non-compliance of the above, the Company must fill the vacancy within three (3) months. b) All the Audit Committee members must be non-executive directors, with a majority of them being independent directors. c) All the Audit Committee members must be financially literate, with at least one member :- must be a member of the Malaysian Institute of Accountants; or if he is not a member of the Malaysian Institute of Accountants, he must have at least three (3) years working experience and:- he must have passed the examinations specified in Part I 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 fulfils such other requirements as prescribed or approved by the Exchange. d) No alternate director shall be appointed as a member of the Audit Committee.

18 Audit Committee Report (Cont d) e) The member of the Audit Committee shall elect a Chairman from among themselves who shall be an Independent Director. The Chairman of the Audit Committee should engage on a continuous basis with senior management, the head of internal audit and the external auditors in order to be kept informed of matters affecting the Company. 17 All members of the Audit Committee, including the Chairman, will hold office only so long as they serve as Directors of the Company. The Board must review the term of office and performance of the Audit Committee and each of its members at least once every three (3) years to determine whether the Audit Committee has carried out its duties in accordance with its terms of reference. Secretary of the Audit Committee The Company Secretary of the Company shall be the Secretary of the Audit Committee. Duties and Responsibilities of the Audit Committee The following are the main duties and responsibilities of the Audit Committee collectively:- (a) Review the following and report the same to the Board of the Company:- (i) (ii) (iii) (iv) (v) (vi) (vii) (viii) (ix) (x) (xi) oversee the Company s internal control; with the external auditors, the audit plan; with the external auditors, his evaluation of the system of internal controls; with the external auditors, his audit report; the assistance given by the employees of the Company to the external auditors and the internal auditors; the adequacy of the scope, functions, competency and resources of the internal audit functions and that it has the necessary authority to carry out its work the internal audit programme, processes, the results of the internal audit programme, processes or investigation undertaken and whether or not appropriate action is taken on the recommendations of the internal audit function; the quarterly results and year end financial statements, prior to the approval by the Board, focusing particularly on :- changes in or implementation of major accounting policy changes; significant and unusual events; and compliance with accounting standards and other legal requirements; 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; any letter of resignation from the external auditors and any questions of resignation or dismissal; and whether there is reason (supported by grounds) to believe that the Company s external auditor is not suitable for re-appointment; (b) Oversee the Company s internal control structure to ensure operational effectiveness and efficiency, reduce risk of inaccurate financial reporting, protect the Company s assets from misappropriation and encourage legal and regulatory compliance;

19 Audit Committee Report (Cont d) 18 (c) Assist the Board in identifying the principal risks in the achievement of the Company s objectives and ensuring the implementation of appropriate systems to manage these risks; (d) Recommend to the Board on the appointment and re-appointment of the external auditors and their audit fee, after taking into consideration the independence and objectivity of the external auditors and the cost effectiveness of the audit; (e) Discuss with the external auditors before the audit commences the nature and scope of the audit and ensure co-ordination where more than one audit firm is involved; (f) Discuss problems and reservations arising from the audits and any matter the auditors may wish to discuss in the absence of the management where necessary; (g) Review the external auditor s management letter and management s response therein; (h) In relation to the internal audit function:- a. review the adequacy of the scope, functions and resources of the internal audit function and that it has the necessary authority to carry out its work; b. review the internal audit programme and results of the internal audit process and, where necessary, ensure that appropriate actions are taken on the recommendations of the internal audit function; c. review any appraisal or assessment of the performance of members of the internal audit function; d. approve any appointment of termination of senior staff members of the internal audit function; and e. take cognizance of resignations of internal audit staff members and provide the resigning staff member an opportunity to submit his reasons for resigning; (i) Consider the major findings of internal investigations and management s response; (j) To review the effectiveness of the internal controls and risk management processes of the Company; and (k) Consider other matters as defined by the Board. Rights of the Audit Committee In carrying out its duties and responsibilities, the Audit Committee will:- have the authority to investigate any matter within its terms of reference; have the resources which are required to perform its duties; have full and unrestricted access to any information pertaining to the Company; have direct communication channels with the external auditors and person(s) carrying out the internal audit function or activity; be able to obtain independent professional or other advice and to invite outsiders with relevant experience and expertise to attend the Audit Committee meeting (if required) and to brief the Audit Committee; and 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.

20 Audit Committee Report (Cont d) Conduct of Meetings a) The Audit Committee will meet at least four (4) times in each financial year although additional meetings may be called at any time, at the discretion of the Chairman of the Audit Committee. 19 b) The quorum shall consist of a majority of independent committee members and shall not be less than two (2). c) Recommendations to the Audit Committee are submitted to the Board for approval. d) The Company Secretary shall be in attendance at each Audit Committee meeting and record the proceedings of the meeting thereat. e) Minutes of each meeting shall be kept as part of the statutory record of the Company upon confirmation by the Audit Committee and a copy shall be distributed to each member of the Board. f) The Managing Director and other officers may be invited to attend where their presence are considered appropriate as determined by the Audit Committee Chairman. g) The internal auditors and/or external auditors have the right to appear and be heard at any meeting of the Audit Committee. h) Upon the request of the internal auditors and/or external auditors, the Audit Committee Chairman shall also convene a meeting of the Audit Committee to consider any matter the auditor(s) believes should be brought to the attention of the Board or the shareholders. i) The Audit Committee must be able to convene meetings with external auditors without the presence of the executive board members and management at least twice a year and whenever deemed necessary. j) Where the Audit Committee is of the view that a matter reported by it to the Board has not been satisfactorily resolved resulting in a breach or Bursa Malaysia Securities Berhad requirements, the Audit Committee must promptly report such matter to Bursa Malaysia Securities Berhad. k) The attendance at any particular Audit Committee meeting by other directors and employees of the Company shall be at the Audit Committee s invitation and discretion and must be specific to the relevant meeting. SUMMARY OF ACTIVITIES The Audit Committee is scheduled to meet at least four (4) times a year, with additional meetings being convened when necessary.

21 Audit Committee Report (Cont d) 20 Details of the attendance during the ended 31 December 2013 are as follows:- No Name of Directors No of Meetings attended during the time the Directors hold office % 1. Encik Mohd Shukri Bin Abdullah Independent Non-Executive Director 2. Dato Malek Radzuan Bin Saharin Non-Independent Non-Executive Director 3. *Mr. Arulampalam A/L S Mariampillai Independent Non-Executive Director 4. **Mr. Naresh Kumar Lender Lal A/L K. Lal Independent Non-Executive Director 5/ / /5 80 0/0 0 Notes: *Resigned as Director on 30 May 2014 ** Appointed on 26 December 2013 and subsequently resigned as Director on 30 May 2014 During the year under review, the following were the activities of the Audit Committee:- (a) Reviewed the quarterly financial results and ensured that the financial reporting and disclosure requirements of relevant authorities had been complied with, focusing particularly on:- (1) changes in or implementation of major accounting policies and practices; (2) the on-going concern assumption; (3) significant and unusual event; and (4) compliance with accounting standards and other legal policies and requirements. (b) Reviewed the related party transactions and conflict of interest situation, if any, within the Company or group including any transactions, procedures or course of conduct that raised questions of management integrity in the ordinary course of business. (c) Reviewed the audit strategy and plan of the external auditors. (d) Meetings with external auditors. INTERNAL AUDIT FUNCTION The Internal Audit function was outsourced to Messrs. Sterling Business Alignment Consulting Sdn Bhd. During the financial year under review, the Internal Auditors had assessed the effectiveness of the internal control environment of the Accounts and Finance function of the Company and the Group. All the findings raised by the Internal Audit Function have been appropriately addressed by management. The fee in respect of the internal audit function for the financial year ended 31 December 2013 is approximately RM 10,000.00

22 Statement on Risk Management & Internal Control INTRODUCTION The Board is committed to maintaining a sound system of internal control of the Company and is pleased to provide the following statement, which outlines the nature and scope of internal control of the Company during the year. 21 THE BOARD S RESPONSIBILITIES The Board of Directors recognizes the importance of sound internal controls and risk management in safeguarding the assets of the Group. However, such systems are designed to manage rather than eliminate the business risk totally. It should be noted that any system could provide only reasonable and not absolute assurance against material misstatement or fraud. The Group has in place an on-going process to identify, evaluate, monitor and manage any significant risks through the internal controls set out in order to attain a reasonable assurance that business objectives have been met. These controls are regularly reviewed by the Board and subject to continuous improvement. THE RISK MANAGEMENT PROCESS Apart from financial controls, the Group s system of internal controls also cover operational and compliance controls and most importantly, risk management. As part of the risk management process, the Board assisted by the Audit Committee, is continuously identifying, assessing and managing significant business risks faced by the Group throughout the financial year. The process will be regularly reviewed by the Board through the Audit Committee and is in accordance with the guidance as contained in the Internal Control Guidelines. THE INTERNAL CONTROL PROCESS The other key features of the Group s internal control system include the following: An organization structure with defined lines of responsibility and appropriate reporting structure including proper approval and authorization limit for approving capital expenditure and expenses within the Group; The Audit Committee had appointed an outsourced independent professional internal audit service provider to discharge the internal audit function which performs regular and systematic review of the internal controls to assess and provide sufficient assurance on the effectiveness of the systems of internal control and to highlight significant risks impacting the Group with recommendation for improvement; and The Audit Committee will regularly review reports by the independent professional internal audit service provider and conducts annual assessment on the adequacy of the function s scope of work and resources. The Group continues to take measures to enhance and strengthen the internal control environment. The Board is of the view that there is no significant breakdown or weaknesses in the system of internal control of the Group that may have material impact against the operations of the Group for the financial year ended 31 December 2013.

23 Statement of Verification on Allocation of Option pursuant to Employee Share Option Scheme 22 The Audit Committee has verified that there was no option granted for the year ended 31 December 2013.

24 Other Compliance Information 1. UTILISATION OF PROCEEDS There were no proceeds raised by the Company from any corporate proposal during the financial year SHARE BUYBACK During the financial year, the Company did not enter into any share buyback transaction. 3. OPTIONS, WARRANTS OR CONVERTIBLE SECURITIES During the financial year, no option, warrants or convertible securities were issued by the Company. 4. DEPOSITORY RECEIPT PROGRAMME During the financial year, the Company did not sponsor any Depository Receipt programme. 5. SANCTIONS AND/OR PENALTIES During the financial year, there were no sanctions and/or penalties imposed on the Company and its subsidiaries, directors or management by the relevant regulatory bodies. 6. NON-AUDIT FEES There were no non-audit fees paid to the external auditors by the Group for the financial year. 7. PROFIT ESTIMATES, FORECAST OR PROJECTION There was no profit estimate, forecast or projection issued by the Company and/or its subsidiaries for the financial year. 8. VARIATION OF RESULTS The variance between the audited results (net profit after tax) and the unaudited results announced is less than 10%. 9. PROFIT GUARANTEE There was no profit guarantee issued by the Company and/or its subsidiaries for the financial year. 10. MATERIAL CONTRACTS There were no material contracts entered into by the Company and its subsidiaries which involved the directors and substantial shareholders interest during the financial year ended 31 December REVALUATION POLICY ON LANDED PROPERTIES In December 2013, the Group undertook a revaluation exercise on its freehold land and building. The basis of valuation is the market value as defined under the Malaysian Valuation Guidances. 12. RECURRENT RELATED PARTY TRANSACTION OF REVENUE NATURE The Company does not have any recurrent related party transaction of revenue nature during the financial year.