ANNUAL REPORT 2011 1 - dayagroup.com.mydayagroup.com.my/.../07/DMB_Annual_Report_2011.pdf · ANNUAL REPORT 2011 1 Corporate Information Corporate Structure Financial Information Profile

ANNUAL REPORT 2011 1

Corporate Information

Corporate Structure

Financial Information

Profile of Directors

Chairman’s Statement

Corporate Social Responsibility

Corporate Governance Statement

Statement on Internal Control

Audit Committee Report

Financial Statements

Directors’ Responsibilities Statementon Financial Statements

Analysis of Shareholdings

Additional Compliance Information

List of Properties 2011

Notice of Ninth Annual General Meeting

Statement Accompanying Notice of NinthAnnual General Meeting

Form of Proxy

02040708122224303235

119

120123126128132

Contents

COMMITTED

ACCOUNTABLE

RESOLUTE

ETHICAL

DAYA MATERIALS BERHAD (636357-W)2

BOARD OF DIRECTORS

Dato’ Azmil Khalili Bin Dato’ KhalidChairman/Independent Non-Executive Director

Dato’ Mazlin Bin Md. JunidExecutive Vice Chairman,President & Group Chief Executive Officer

Tham Jooi LoonGroup Managing Director

Fazrin Azwar bin Md. NorSenior Independent Non-Executive Director

Dato’ Sri Koh Kin Lip JPIndependent Non-Executive Director

Lim Soon FooIndependent Non-Executive Director

Ronnie Lim Hai LiangAlternate Director to Mr Lim Soon Foo

AUDIT COMMITTEE

Fazrin Azwar Bin Md. NorChairman/Independent Non-Executive Director

Dato’ Azmil Khalili Bin Dato’ Khalid Member/Independent Non-Executive Director

Dato’ Sri Koh Kin Lip JPMember/Independent Non-Executive Director

COMPANY SECRETARY

Chai Churn Hwa (MAICSA 0811600)Suite 18.01, 18th FloorMWE PlazaNo. 8, Lebuh Farquhar10200 PenangTel : 04-263 7762Fax : 04-263 5901

REGISTERED OFFICE

Suite 18.01, 18th FloorMWE PlazaNo. 8, Lebuh Farquhar10200 PenangTel : 04-263 7762Fax : 04-263 5901

HEAD/MANAGEMENT OFFICE

D5-1-10, Solaris DutamasNo.1, Jalan Dutamas 150480 Kuala LumpurMalaysiaTel : 03-6205 3170Fax : 03-6205 3171 Email : [email protected] Website : www.dmb.com.my

PRINCIPAL BANKERS

Hong Leong Bank Berhad AmIslamic Bank BerhadAmBank (M) Berhad Malayan Banking Berhad United Overseas Bank (Malaysia) Bhd

AUDITORS

Ernst & Young (AF 0039)Chartered AccountantsLevel 23A, Menara MileniumJalan DamanlelaPusat Damansara50490 Kuala LumpurTel : 03-7495 8000Fax : 03-2095 5332

REGISTRAR

Symphony Share Registrar Sdn. Bhd.55 Medan Ipoh 1AMedan Ipoh Bistari31400 IpohPerak Darul RidzwanTel : 05-547 4833Fax : 05-547 4363

STOCK EXCHANGE LISTING

MAIN Market of Bursa Malaysia Securities BerhadStock Name : DayaStock Code : 0091

DAYA MATERIALS BERHAD (636357-W)

Corporate Information

2


Committed


Corporate Structure

Daya Materials Berhad (“DMB”) was incorporated in Malaysia under the Companies Act, 1965 on 8 December 2003 as a public limited company. The principal activities of DMB are that of investment holding and provision of management services to its subsidiary companies. The particulars of the subsidiaries, are as follows:

Subsidiary Companies

Date and Place of

Incorporation

Issued and Paid-up Share

Capital

Effective Equity

Interest Principal Activities

Held by the Company

Daya Polymer Sdn. Bhd. (324073-U) (“DPSB”)

21-11-1994/ Malaysia

RM6,000,000 100.00% Manufacturing of semi-conductive compounds and cross-linkable polyethylene compounds for cables and wires and trading of specialty chemicals, related polymer compounds and hardware.

DMB Marketing & Trading Sdn. Bhd. (724943-U) (“DMTSB”)


RM2.00 100.00% General trading, marketing and investment holding.

Meridian Orbit Sdn. Bhd. (780242-P) (“MOSB”)


RM100,000 100.00% Investment holding.

Daya Secadyme Sdn. Bhd. (188542-W) (“DSSB”)

25-10-1989/Malaysia

RM1,008,000 100.00% Trading in petrochemicals products and investment holding.

Daya CMT Sdn. Bhd. (208646-U) (“DCMT”)

28-11-1990/Malaysia

RM8,000,000 100.00% Providing industrial facilities management including builder works, facility operation and maintenance services, upgrade, retrofit, design and build plant facilities.

DMB International Limited (“DINL”)

13-8-2008/Hong Kong

HKD3,000,000 100.00% Center for regional procurement and trading as well as international investments.

Daya Proffscorp Sdn. Bhd. (173309-T) (“DPRO”)

24-8-1988/Malaysia

RM1,650,000 100.00% Ownership and hiring of forklifts, cranes and heavy machineries and provision of related manpower services in the onshore and offshore oil & gas industry.

Daya Urusharta Sdn. Bhd. (863073-M) (“DUSB”)

3-7-2009/Malaysia

RM100,000 100.00% Property investment holding.

Daya OCI Sdn. Bhd. (291138-U) (“DOCI”)

2-3-1994/Malaysia

RM5,000,000 100.00% Supplying of equipment and specialty chemicals for oil & gas process plants, a provider of installation and maintenance services for air-conditioning and ventilation system, a provider for automatic welding services for offshore pipeline installation, a provider for maintenance services for both onshore plants and offshore facilities, a provider for warehousing and forwarding agency.

Held through subsidiaries

Daya Hightech Sdn. Bhd. (791561-V) (“DHSB”)

10-10-2007/Malaysia

RM100,000 100.00% Manufacturer of polymer compounds for cables and wires.

Seca Chemicals and Catalysts Sdn. Bhd. (710772-A) (“SCCSB”)

26-09-2005/Malaysia

RM100,000 100.00% Dealing in petroleum, oil & gas products and consulting services.



Corporate Structure(cont’d)

Subsidiary Companies

Date and Place of

Incorporation

Issued and Paid-up Share

Capital

Effective Equity

Interest Principal Activities

Held through subsidiaries (cont’d)

SD Equipment Sdn. Bhd. (651398-P) (“SDESB”)

05-05-2004/Malaysia

RM10,000 100.00% Providing safety equipment and apparels.

Seca Engineering and Manpower Services Sdn. Bhd. (704437-A) (“SEMSSB”)

28-07-2005/Malaysia

RM100,000 100.00% Providing engineering and manpower services.

Metriwell Sdn. Bhd. (736674-D) (“MWSB”)

06-06-2006/Malaysia

RM1,000 80.00% Dormant.

Daya Clarimax Sdn. Bhd. (597108-K) (“DCLX”)

28-10-2002/Malaysia

RM2,000,000 100.00% Providing recycling of waste solvent and manufacturing of high purity electronics and technical solvents.

Daya FMM Sdn. Bhd. (418776-U) (formerly known as CMT Industry (Kulim) Sdn. Bhd.) (“DFMM”)

27-01-1997/Malaysia

RM350,004 100.00% General contractors and related services.

Daya Land & Development Sdn. Bhd. (524602-D) (formerly known as IHP Supply Sdn. Bhd.) (“DLDSB”)

25-08-2000/Malaysia

RM500,000 100.00% Trader of all kinds of building material, hardware equipment and other related products.

PT Daya Secadyme Indonesia (“PTDSI”)

14-01-2010/Indonesia

USD100,000 100.00% Trading in petrochemicals products.

Daya Proffscorp (Sabah) Sdn. Bhd. (922055-P) (“DPROS”)

15-11-2010/Malaysia

RM2.00 100.00% Ownership and hiring of forklifts, cranes and heavy machineries and provision of related manpower services in the onshore and offshore oil & gas industry.

Ultrafest Sdn. Bhd. (968989-X) (“USB”)

20-11-2011/Malaysia

RM2.00 100.00% Investment holding.

Zen Projects Sdn. Bhd. (974746-K ) (“ZPSB”)

11-01-2012/Malaysia


Joint Venture Company

Daya Sheffield Sdn. Bhd. (919845-U) (formerly known as Daya Oci-Ascent Sdn. Bhd.) (“DSFSB”)

26-10-2010/Malaysia

RM100,000 51.00% Recruiting and providing specialised, qualified and professional personnel for the onshore and offshore oil and gas industries.

Daya NCHO International Limited (formerly known as Daya Clarimax International Limited) (“DNIL”)

26-8-2010/Hong Kong

HKD 100,000 60.00% Investment holding to invest in tank services regionally.

Daya NCHO Sdn. Bhd. (933292-U) (“DNSB”)

22-2-2011/Malaysia

RM1,000,000 60.00% Providing ISO tank cleaning, repair and maintainance services.

Daya Campo (Sabah) Sdn. Bhd. (956357-W) (“DCSB”)

9-8-2011/Malaysia

RM10,000 60.00% Investment holding.

Terra Hill Development Sdn. Bhd. (971347-V) (“THDSB”)

12-12-2011/Malaysia




Corporate Structure(cont’d)



REVENUE(RM’000)

‘07 ‘08 ‘09 ‘10 ‘11

62

,25

8

‘06

29

,32

0

22

4,3

45

18

8,2

44

17

4,2

23

28

1,7

46

EBITDA(RM’000)

‘07 ‘08 ‘09 ‘10 ‘11

9,3

81

‘06

4,3

06

19

,88

3 24

,03

2 29

,20

6

30

,85

3

PBT(RM’000)

‘07 ‘08 ‘09 ‘10 ‘11

8,5

58

‘06

4,0

23

18

,28

4

20

,37

7

22

,73

3

23

,76

0

PAT(RM’000)

‘07 ‘08 ‘09 ‘10 ‘11

6,8

41

‘06

2,9

45

12

,14

8

13

,66

4 16

,96

6

17

,44

3

TOTAL EQUITY(RM’000)

‘07 ‘08 ‘09 ‘10 ‘11

10

1,2

88

‘06

32

,57

7

11

3,3

93

14

3,4

81

17

7,1

56

21

0,6

28

TOTAL ASSETS(RM’000)

‘07 ‘08 ‘09 ‘10 ‘11

11

3,7

60

‘06

39

,73

4

20

4,2

73

22

1,9

20 2

92

,05

0

37

8,1

15

Financial Information


Act Act Act Act Act Act2006

RM’0002007

RM’0002008

RM’0002009

RM’0002010

RM’0002011

RM’000

Revenue 29,320 62,258 224,345 188,244 174,223 281,746

EBITDA 4,306 9,381 19,883 24,032 29,206 30,853

PBT 4,023 8,558 18,284 20,377 22,733 23,760

PAT 2,945 6,841 12,148 13,664 16,966 17,443

Total Equity 32,577 101,288 113,393 143,481 177,156 210,628

Total Assets 39,734 113,760 204,273 221,920 292,050 378,115


Profile of Directors

Dato’ Azmil Khalili bin Dato’ Khalid

Malaysian, aged 52,Independent Non-Executive Chairman.

He was appointed to the Board on 19 September 2007. Dato’ Azmil graduated with a Bachelors Degree in Civil Engineering and subsequently with a Masters in Business Administration. He began his career with a United Kingdom company, Tarmac National Construction and upon his return to Malaysia worked for Trust International Insurance and Citibank NA.

Dato’ Azmil is currently the President & Chief Executive Officer of MTD Capital Bhd and concurrently holds the same position in MTD ACPI Engineering Berhad. He is also the Chairman of foreign subsidiaries of MTD Capital Bhd namely, MTD Walkers PLC, a company listed on the Colombo Stock Exchange in the Republic of Sri Lanka. Dato’ Azmil holds directorships in other public companies namely, MTD InfraPerdana Bhd and Metacorp Berhad, both are subsidiaries of MTD Capital Bhd. Dato’ Azmil is also a director of Environment Idaman Sdn. Bhd., a solid waste concession company; and a Trustee of the Perdana Leadership Foundation. Dato’ Azmil also sits on the board of several private limited companies.

Dato’ Azmil is the Chairman of the Nomination Committee and a member of the Audit Committee and Remuneration Committee of the Company.

Dato’ Mazlin bin Md Junid

Malaysian, aged 50,Executive Vice Chairman, President & Group Chief Executive Officer.

He was appointed to the Board on 16 August 2007. Dato’ Mazlin holds a Bachelor of Science in Mechanical Engineering from Brighton Polytechnic, Sussex, England and a Master in Business Administration from Cranfield University, England. He has extensive experience in corporate management, business and finance after serving Sime Darby Berhad and Aspac Executive Search Sdn. Bhd. as the Group Manager and the Managing

Director respectively.

Dato’ Mazlin was formerly an Independent, Non-Executive Director of Sapura Industrial Berhad and Sapura Technology Berhad. He was also formerly an Independent Non-Executive Director and Chairman of the Audit Committee of MTD Infraperdana Berhad.

He is also a director of several private limited companies which he owns.


Profile of Directors(cont’d)

Tham Jooi Loon

Malaysian, aged 46,Group Managing Director.

He was appointed to the Board on 30 May 2005. Mr. Tham Jooi Loon joined DPSB in 2003 as a Director. He graduated from McGill University in Montreal, Canada in 1988 with a Master of Business Administration specialising in corporate finance. He is also a qualified Chartered Financial Analyst. He started his career as a credit analyst with Chase Manhattan Bank in Kuala Lumpur in 1989. In 1995, he joined UBS and later became its Executive Director responsible for Malaysian investment banking and Asia-Pacific Mergers and Acquisitions practices. In 2003, Mr. Tham was appointed as a Director of Tradewinds Corporation Berhad and PIHP (Selangor) Berhad, both posts he held until 2005. Presently, he is a Director of several private

companies in Malaysia and Hong Kong.

Fazrin Azwar Bin Md Nor

Malaysian, aged 46,Independent Non-Executive Director.

He was appointed to the Board on 30 May 2005. En. Fazrin graduated from the University of Malaya with a Bachelor of Law (LLB) Honors Degree. He is an Advocate and Solicitor and a member of the Malaysian BAR. He is currently the Managing Partner of Messrs. Azwar & Associates.

En. Fazrin is also currently an Independent Non-Executive Chairman of Mercury Industries Berhad, an Independent Non-Executive Director and Audit Committee member of both Poh Kong Holdings Berhad and Tong Herr Resources Berhad and an Independent Non-Executive Director of Ire-Tex Corporation Berhad, all listed on the Main Market of Bursa Malaysia.

En. Fazrin is also an Independent Non-Executive Director of Times Offset (M) Sdn. Bhd. and a Non-Independent Non-Executive Director of the Kuchinta Holdings Group of Companies.

En. Fazrin is also a chartered member of The Malaysian Institute of Directors and The Institute of Internal Auditors Malaysia.

Encik Fazrin is the chairman of the Audit Committee. Encik Fazrin is a member of the Nomination Committee and Remuneration Committee of the Company.



Dato’ Sri Koh Kin Lip JP


He was appointed to the Board on 22 December 2008. Dato’ Sri Koh graduated from Plymouth Polytechnic, UK with a Higher National Diploma in Business Studies and a Council’s Diploma in Management Studies. He began his career in Standard Chartered Bank in 1977 as a trainee assistant. In 1978 he joined his family business and was principally involved in administrative and financial matters. In 1985, he assumed the role as a Chief Executive Officer of the family business. In 1987 he was pivotal and instrumental in the formation of Rickoh Holdings Sdn. Bhd., the flagship company of the family business. Presently Dato’ Sri Koh is also the Director of Malaysian AE Models Holdings Berhad, NPC Resources Berhad and Cocoaland Holdings Berhad.

Dato’ Sri Koh is the Chairman of the Remuneration Committee and a member of the Audit Committee and Nomination Committee of the Company.

Lim Soon Foo


He was appointed to the Board on 15 August 2011. Mr. Lim was admitted as Member of The Chartered Institute of Shipbrokers, London since 1979 and currently serving as Chairman and Principal Advisor to Wajah Nichiei Sdn. Bhd., Optic Marine Services International Limited (Hongkong), Optic Marine Engineering International Limited providing highly specialized services in the optic fibre submarine cable industry which extend into many countries in Asia Pacific region. The companies also worked alongside many Global Partners in the optic fibre submarine industry. Mr. Lim also sits in the board of several other companies involved in plantation, logging and real

estates.

Ronnie Lim Hai Liang

Malaysian, aged 32,Alternate Director to Mr. Lim Soon Foo.

He was appointed to the Board on 15 August 2011. Mr. Ronnie Lim graduated from the Flinders University of South Australia, Adelaide with a Bachelor of Commerce and Bachelor of Law. He began his career as Assistant Project Manager in small scale housing project developments in Adelaide. He later joined his family business as CEO of Wajah Nichiei Sdn. Bhd., Optic Marine Services International Limited (Hongkong), Optic Marine Engineering International Limited in the optic fibre submarine cable industry. Mr. Ronnie Lim also sits in the board of a number of family owned companies.



Conviction of OffencesAll the Directors have not been convicted of any offence within the past ten (10) years other than traffic offences, if any.

Conflict of InterestAll the Directors do not have any conflict of interest with the Company.

Attendance at Board MeetingsFor the financial year ended 31 December 2011, the Board of Directors of the Company met six (6) times.

Family Relationship and Major Shareholders

Save as disclosed herein, none of the Directors of the Company have any family relationship with any director or major shareholders of the Company:

a) Mr. Lim Soon Foo, the Independent Non-Executive Director and a major shareholder of the Company, is the father of Mr. Ronnie Lim Hai Liang, who is the Alternate Director of Mr. Lim Soon Foo and a shareholder of the Company.




Chairman’sStatement


Dear shareholders,

In my five years as the Chairman of Daya, I have sometimes proved too sanguine about the growth prospects of the Group, speaking adoringly about our strengthening franchise or improving operating performance. Indeed, the past five years have witnessed a pleasing sequence of uninterrupted growth in our earnings base. We have been riding a wave of double-digit growth in profitability every single year since 2007. But 2011 was a dichotomy. While we achieved respectable top line growth of 61.7%, the margin contraction we experienced was telling, confining us to our smallest growth in earnings yet. 2011 also marked the first time in five years we failed to make an acquisition despite a couple of close calls. Those were the low lights of the year.

ANNUAL REPORT 2011 13ANNUNUUUALALALALAA R RR RRRREPORORRRRRRTT TT TTT 20202020222001111111111111 13131313131333

Chairman’s Statement(cont’d)


Now, let me get to the more tantalizing developments that transpired last year. First, we were deeply enriched by the additional of two new members to our Board, namely, Mr. Lim Soon Foo and his son, Mr. Ronnie Lim, as Non-Executive Director and Alternate Director, respectively. They bring with them an incredible mix of business experience and operating savvy, especially in the field of offshore services - an area we intend to build our strategic capabilities as we position our business further upstream. Second, we embarked on a reorganisation of our top executive team in which Dato’ Mazlin Junid was appointed as President & Group CEO and Mr. Tham Jooi Loon as Group Managing Director. Mr. Tham Wooi Loon, who had served us brilliantly as our Managing Director for many years, decided to step down from the Board - though he will remain a key member of our Executive Committee. Third, after an extensive marketing campaign, we successfully pried open the huge Indonesian downstream chemical market with Pertamina, the national oil company, as our primary customer. Lastly, we managed to turnaround both our mobile crane and ISO tank cleaning & repair businesses, albeit at a slower pace than we would have liked.

Going forward, our Group will hold steadfast to our business model of pursuing organic growth while seeking out synergistic acquisitions. If there were ever any doubts as to the resiliency of our model, 2011 was awake-up call. After the lean spell, we are now hungrier. Our burning desire for growth is as poignant as ever. With a stronger balance sheet and a more entrenched Oil & Gas (“O&G”) platform, we are now in a better position to hunt for new assets and potential targets as we work diligently to secure some of the major upstream projects we have been eyeing the past 12 months. 2012 will test the intensity of our resolve and the potency of our execution.

REVIEW OF RESULTS

For FYE2011, the Group’s revenue grew by 61.7% from RM174.2 million to RM281.7 million, reflecting not only strong organic growth, but also the inherent scalability of two of our core businesses - O&G and Technical Services. Indeed, revenue of RM281.7 million was a record for our Group as the previous high was RM224.3 million. However, our cash flow as measured by EBITDA only increased marginally by 5.6% to RM30.9 million. Correspondingly, our PBT and PAT rose by 4.5% and 2.8% respectively to RM23.8 million and RM17.4 million. While the strong top line growth demonstrated our ability to secure new contracts and expand our market shares in a number of business segments, the compressed profit margin hinted a somewhat hollow victory. Pre-tax margin was reduced to 8.4% as compared to 13.0% in FYE2010. This was due largely to: (i) lower gross margins of some of the large contracts and projects we delivered; (ii) a significant drop in the performance of our Specialized Polymer business; and (iii) recognition of losses arising from a FPSO desludging contract and a crude tank cleaning contract, both of which were new services we rendered to our O&G clients. Nonetheless, we were able to control our operating expenses and other costs well, ensuring that we had another year of increased profitability.

SEGMENTAL ANALYSIS

Allow me to give you a more detailed evaluation of the operating performance of our three core businesses. (To facilitate comparisons, all profitability and cash flow figures provided in this section are before management fees and corporate guarantee fees paid by the Divisions to the holding company).




OIL & GAS DIVISION

The O&G Division remains the single most important pillar of our business. O&G revenue grew 97.4% to RM101.6 million in 2011 against RM51.5million in 2010. The significant growth was primarily attributable to our continued strength in downstream chemicals where we secured and delivered several large contracts. We remained the dominant leader in catalysts (key ingredients in many downstream applications), gas odorants (the smell in your cooking gas), DIPA (a carbon dioxide remover from the gas stream), DMDS (sulfiding/presulfiding agent to activate the catalysts & protection against formation of coke in petrochemical plants), among various other downstream products. We successfully expanded our market share in several sub-segments, further solidifying our overall market position.

2011 also marked a new milestone for our O&G business - for the first time, we successfully penetrated the Indonesian market. If you recalled in my last Chairman Statement, we had committed a lot of efforts and resources in the past 18 months in opening up the largest market in ASEAN. It was indeed satisfying that we finally sold a significant quantity of chemicals to Pertamina, Indonesia’s national oil company. We hope that this is only the beginning of a lucrative long-term relationship with the state-owned giant – after all, the market as a whole is probably six times the size of the Malaysian market. However, I must caution that much work has to be done in order to ensure not only increased receptiveness from our new Indonesian customers, but also reliable and uninterrupted supply from our principals. In a highly competitive market like Indonesia, there can be no guarantee that our initial success will automatically translate into an entrenched long-term income stream.

While O&G revenue accounted for only 36.1% of Group revenue, it contributed 65.5% of Group EBITDA and 64.0% of Group PBT. This reflected the increasing importance of the O&G business to us despite its relative low revenue contribution. We have every reason to believe that this revenue stream will continue to increase to become an even more significant contributor as we venture further upstream. Already we have successfully completed several offshore pipe-laying and upstream chemicals jobs. We are now actively exploring the possibility of participating in marginal oil field development and strategic marine and rigs services. As and when these ventures come into fruition, our O&G revenue is to set to rise dramatically.


Accountable




TECHNICAL SERVICES DIVISION

Technical Services (“TS”) Division comprises of three main activities: (i) engineering & construction (“E&C”); (ii) ISO tank cleaning & repair (“Tank Services”); and (iii) solvent and waste oil recycling (“SWOR”).

This Division had another sublime year, thanks largely to the continued success of E&C. We had a major management revamp in early 2011 with the departure of several top executives involving in E&C, and naturally we had expected a dip in performance. To the contrary, the over hauled top management team did an exceptional job, not only rejuvenating staff morale, but also boosting our overall market presence. As a result, E&C achieved the highest revenue ever recorded in its history. I wish to take this opportunity to congratulate the entire management team there for their hard work, superb performance and most of all their rekindled team spirits.

Tank Services business achieved a notable turnaround in FYE2011, having suffered significant losses in the previous financial year due to high investment and start-up costs. It clawed its way back from persistent losses to break even and occasional profitability. Obviously, we are still not where we want to be, but being out of the life-support system is an important step towards long-term sustainability. With the close collaboration and technical assistance of our Singaporean partner, we expect this business to continue to improve operationally and become a positive contributor to the Group in 2012.

SWOR remains the only business in our portfolio which was not “operational” in 2011. We have so far invested nearly RM22.7 million in this business. I am glad to report that significant development and progress have been made in the past year and our new recycling plant in Port Klang is now ready for commercial production by April 2012.

As a whole, TS revenue recorded a healthy growth of 74.6% from RM92.1 million to RM160.8 million. However, due to the lower margins of certain jobs we delivered as well as the high investment costs in SWOR, EBITDA of this Division decreased marginally by 8.0% to RM10.4 million. As a result, PBT and PAT also declined by 9.5% and 5.5% to RM9.6 million and RM8.0 million, respectively.


Resolute


Revenue EBITDA PAT

2011

2010

OG

TS

SP

OG

TS

SP

101,615

160,782

19,310

281,707

51,476

92,083

30,632

174,191

24,064

10,369

2,279

36, 712

19,337

11,269

4,339

34,945

PBT

20,090

9,607

1,673

31,370

16,032

10,614

3,605

30,251

16,288

7,983

1,358

25,629

12,578

8,446

2,892

23,916

Segmental Contribution (RM’000)

Segmental Revenue2010

Segmental EBITDA2010

Segmental PBT2010

Segmental PAT2010

Segmental Revenue2011

Segmental EBITDA2011

Segmental PBT2011

Segmental PAT2011

OG29%

SP18%

TS53%

OG36%

SP7%

TS57%

OG66%

SP6%

TS28%

OG64%

SP5%

TS31%

OG64%

SP5%

TS31%

OG55%

SP13%

TS32%

OG53%

SP12%

TS35%

OG53%

SP12%

TS35%



SPECIALIZED POLYMER DIVISION

As I had predicted in a rather inauspicious manner in the previous Chairman Statement, Specialized Polymer (“SP”) Division had a poor year, after a rousing resurgent in 2010. The underlying economics of the business continued to weaken as a result of stifling foreign competition and the consequential market share contraction and margin erosion. For FYE2011, this Division reported a 37.0% drop in business, from RM30.6 million to RM19.3 million. Core profitability measures fell across the board to the depressed levels experienced in 2009, with EBITDA, PBT and PAT of RM2.3 million, RM1.7 million and RM1.4 million, respectively.

In order to rectify this situation, several strategic re-alignment initiatives had been put in place by our management towards the end of last year. Naturally, not all of these initiatives will be effective, but we will know the outcome of these efforts soon enough. Suffice to say that this is a battle that we have to win.


Ethical

DAYA MATERIALS BERHAD (636357-W)20 DAYA MATERIALS BERHAD (636357-W)20


FINANCIAL POSITION & LIQUIDITY

Our Group continued to be in a solid financial position as we prudently managed our balance sheet, replenished our cash and rebuilt our liquidity. Cash and cash equivalents stood at RM62.8 million as at 31 December 2011, as compared to RM34.2 million in the year before. The Group’s gearing ratio, calculated as net debt divided by total shareholders’ funds, dropped from 16.29% to a negligible1.8%. Our current ratio stood at a healthy 1.6x, based on current assets of RM188.6 million and current liabilities of RM114.7 million.

The Group’s normal trading operations were amply supported by more than RM200 million in available trade lines and term loans from a wide range of domestic and foreign financial institutions. As at the end of the financial year, only RM66.7 million of the total available line was drawn down, of which only RM17.9 million was of the short-term nature. This compared favourably against the total debts of RM68.5 million utilized in the previous financial year.

Strengthened by the continued profitability of our operations and a timely private placement of 85 million new shares during the year, our shareholders’ funds further expanded from RM176.6 million to RM210.6 million as at the end of 2011. Our overall improved financial strength implies significant untapped debt capacity, placing us in a strategic position to undertake larger acquisitions and embark on more sizeable projects.

DIVIDENDS

Given our continued profitability and stronger balance sheet, as well as the liquidity needs of our expanding businesses, the Board of Directors has resolved to declare a final dividend of 0.25 sen. This represents an increase of 4% as compared to the previous financial year. Like our income stream, our dividends payout has consistently increased every single year since 2006.

STOCK REPURCHASE

Last year was the first time we commenced our stock repurchase program. The Board felt that our shares had been trading at a discount to its fair value for quite some time, and there was a unique opportunity to invest in our own shares. We purchased a total of 1,787,100 shares at an average price of RM0.18 per share from the open market. Our principle is simple: we will continue to repurchase back our shares so long as our share price trades at an attractive discount to our perceived fair value, the expected rate of return from the repurchase exceeds that of other available investments and our liquidity can comfortably support such a repurchase. If any of these three conditions are not met, we will wait patiently until the opportunity presents itself.

ANNUAL REPORT 2011 21ANNUAL REPORT 2011 21


PROSPECTS

As I said earlier, 2011 was a year of positive but lacklustre earnings growth - akin to a painful constipation. The big question for us is how are we going to revitalize our margins and regain our growth momentum? What will give us the shot in the arm? My view is that if we stay true to our business model and execute our new 4-Year Plan with unyielding will and unbridled passion, 2012 may well be a defining moment in our corporate history.

Indeed, this year marks the beginning of Daya’s 4-Year Plan 2012-2015, which outlines our strategic vision and lays out a path that will lead us to our goal of RM1 billion in Group revenue by 2015. This is no doubt a fairly ambitious target as it represents a compound growth rate of 37.3% per annum, only slightly less than the 45.9% clip we achieved during the past four years. But it is also a target that we feel is well within our grasps.

We have grown from one single business in 2005 to three businesses today, but the whole is greater than the sum of its parts. Leveraging on the core competencies of one business to cross-sell the others’ products and services is the key to our success. Our combined networking capability is a powerful marketing tool. Already, our O&G Division is working hand-in-hand with our TS Division on a range of initiatives, including an O&G industrial park in Kimanis, Sabah as well as waste oil recycling from FPSO and other O&G facilities. More initiatives of this nature are in the pipeline.

The recent past has witnessed a series of rather calamitous world events: from the global financial crisis to the slow-motion implosion of the Eurozone. It is still too early to determine whether the economic recovery in the United States will take hold or the growth engine in China will sputter. Whatever the global or domestic economic trajectories may be, you can rest assured that we will continue to build the Group in such a way that it will prosper under any business environments. As such, we remain very excited about the outlook for the Group in the foreseeable future.

Finally, I would like to take this opportunity to inform you that our Board has established a Risk Management Committee chaired by our Group MD, Mr Tham Jooi Loon. The primarily role of this Committee is to assess the business, financial and market risks of each of our businesses and to ensure that adequate focus, resources and internal control systems are in place to manage these risks. This Committee reports to the Board in conjunction with the Audit Committee. Needless to say, we will continue to strengthen our management teams and diligently monitor external market conditions in order to minimize our risk exposures and ensure the proper execution of our business plans. Our aim is after all to meet our responsibilities to all our stakeholders, including customers, employees, suppliers and shareholders.

Chairman


Corporate Social Responsibility

“Business has a responsibility beyond its basic responsibility to its shareholders; a responsibility to a broader constituency that includes its key stakeholders : customers, employees, NGOs, government – the people of the communities in which it operates”

– Courtney Pratt, Former CEO Toronto Hydro

DMB, in delivering CARE, seeks to conduct its business activities responsibly whilst engaging the community and environment in its base of operations. The year in review saw DMB undertaking numerous community projects to enrich the communities within the locality of our operations.

June 2011

DPSB raised funds to undertake a project in giving the PERKIS (Persatuan Kebajikan Kanak-Kanak Istimewa Daerah Seberang Perai Selatan) center a fresh coat of paint. They also spent a day of fun and games with the special children.

July 2011

DCMT organized a ‘gotong royong’ at the Women’s Welfare Council Penang. This effort saw the staffs of DCMT spending their weekend cleaning and sprucing the community center.


Corporate Social Responsibility(cont’d)

July 2011

DOCI sponsored a mini garden at the Rumah Jagaan & Rawatan Orang Tua Al-Ikhlas. They also spent a day at the center, treating the occupants of the home to lunch and gifting goodie bags.

September 2011

DSSB donated 21 units of wheelchairs to selected patients at Pusat Perubatan Universiti Kebangsaan Malaysia (PPUKM) and 25 boxes containing used clothes to the Sahabat Universiti Kebangsaan Malaysia (UKM), a co-operative of UKM that channels back into the hospital, proceeds from sales of donated items.

November 2011

DPRO realized the dreams of Pusat Pemulihan Dalam Komuniti (PDK) Kompleks Penyayang Kemaman of having its own library and a more lively and comfortable classroom.



The Board of Directors of Daya Materials Berhad (“Board”) is pleased to report to shareholders on the manner the Company has applied the Principles, and the extent of compliance with the Best Practices as set out in Part 1 and Part 2 respectively of the Malaysian Code on Corporate Governance (Revised 2007) (“Code”).

The Board is supportive of the recommendations of the Code, which sets out the Principles and Best Practices on structures and processes that the Company may use in its operations towards achieving optimal governance framework.

The following paragraphs describe how the Company has applied the principles and complied with the best practices of the Code.

1. DIRECTORS

1.1a Composition and Balance

As at the date of this statement, the Board consists of six (6) members, comprising two (2) Executive Directors and four (4) Independent Non-Executive Directors. With this Board composition, the Company complies with paragraph 15.02(1) of the Listing Requirements of Bursa Malaysia Securities Berhad (“Bursa Securities”) for the MAIN Market where at least two (2) Directors or 1/3rd of the board of directors of a listed company, whichever is the higher, are independent Directors with an appropriate mix of skills and experience.

The Directors from different backgrounds and specialization collectively bring depth and diversity in experience to the Group’s operations. The Independent Non-Executive Directors are independent from management and have no relationships that could interfere with the exercise of their independent judgment. They bring to bear objective and independent judgment to the decision making of the Board and provide an effective check and balance for the Executive Directors.

The profiles of the members of the Board are set out in this Annual Report under the section named Profile of Directors.

1.1b Duties and Responsibilities

The Board is primarily responsible for:

is being properly managed;

manage these risks;

where appropriate, replacing senior management;

communications policy for the Company; and

management information systems, including systems for compliance with applicable laws, regulations, rules, directives and guidelines.

1.2 Supply of Information

The Board has unrestricted access to timely and accurate information necessary in the furtherance of their duties. All Directors are furnished with the meeting agenda and other documents on matters requiring their consideration prior to and in advance of each meeting. The documents are comprehensive and include qualitative and quantitative information to enable the Board members to make an informed decision. Senior Management is invited to attend these meetings to explain and clarify matters being tabled.


Corporate Governance Statement(cont’d)

The Chairman undertakes primary responsibility for organizing information necessary for the Board to deal with the agenda and in ensuring all Directors have full and timely access to the information relevant to the matters that will be deliberated at the Board meeting.

During the financial year ended 31 December 2011, the Board met six (6) times where it deliberated on and considered matters relating to the Group’s financial performance, significant investments, change to management and control structure of the Group, corporate development, strategic issues and business plan. Details of each Director’s attendance of Board meetings are set out below.

Name of Director No. of meetings attended

Dato’ Azmil Khalili bin Dato’ Khalid 5/6

Dato’ Mazlin bin Md. Junid 6/6

Tham Wooi Loon (resigned w.e.f. 15-8-2011) 3/3

Tham Jooi Loon 6/6

Fazrin Azwar bin Md. Nor 5/6

Dato’ Sri Koh Kin Lip JP 6/6

Lim Soon Foo (appointed w.e.f. 15-8-2011) 2/3

Ronnie Lim Hai Liang (Alternate Director to Lim Soon Foo)(appointed w.e.f. 15-8-2011) 2/3

All proceedings from the Board meetings are recorded by way of minutes signed by the Chairman of the meeting.

All the Directors have access to the advice and services of the Company Secretary. If required, the Directors may engage independent professionals at the Group’s expense, in the furtherance of their duties.

1.3 Appointments to the Board

During the financial year ended 31 December 2011, members of the Nomination Committee were as follows:

Chairman : Dato’ Azmil Khalili bin Dato’ Khalid (Independent Non-Executive Director)Member : Fazrin Azwar bin Md. Nor (Independent Non-Executive Director) Dato’ Sri Koh Kin Lip JP (Independent Non-Executive Director)

The duties and functions of the Nomination Committee are:

i) To review regularly the Board structure, size and composition and make recommendations to the Board with regards to any adjustments that are deemed necessary;

ii) To propose and identify new nominees for appointment to the Board;iii) To assess Directors on an on-going basis, the effectiveness of the Board as a whole, the

Committees of the Board and the contribution of each individual Director;iv) To recommend to the Board, candidates for all directorships to be filled by the

shareholders or the Board;v) To recommend to the Board, Directors to fill the seats on Board Committees;vi) To review annually the Board’s mix of skills and experience and other qualities including

core competencies which non-executive Directors should bring to the Board. This should be disclosed in the Annual Report;

vii) To determine annually whether or not a Director is Executive, Non-Executive or Independent;


viii) To assess effectiveness of the Board as a whole, the committees of the Board and contribution by each individual Director, including independent non-executive directors as well as the chief executive officer to the effectiveness of the Board;

ix) To recommend to the Board for continuation (or not) in service of executive Director(s) and Directors who are due for retirement by rotation;

x) To consider, in making its recommendations, candidates for directorships proposed by the Chief Executive Officer and, within the bounds of practicability, by any other senior executive or any Director or shareholder; and

xi) To orientate and educate new Directors on the nature of the business, current issues within the Company and the corporate strategy, the expectations of the Company concerning input from the Directors and the general responsibilities of Directors.

The decision on appointment of new Directors rests with the Board after considering the recommendations of the Nomination Committee.

During the last financial year, the Nomination Committee met two (2) times and the details of attendance of each member are as follows:





1.4 Re-election of Directors

In accordance with the Company’s Articles of Association, one third or the number nearest to one-third of the Directors shall retire from office and be eligible for re-election at the annual general meeting. Furthermore, each Director shall retire from office at least once in every three years.

Information of the Directors who will be retiring at the forthcoming Annual General Meeting (“AGM”) is disclosed in the Statement Accompanying Notice of Annual General Meeting.

1.5 Directors’ Training

All members of the Board have completed the Mandatory Accreditation Programme (“MAP”) which was conducted by the Research Institute of Investment Analysts Malaysia as required by Bursa Securities. The Directors will continue to undergo further Continuous Education Program to keep themselves abreast with the latest developments in the market place and enhance their professionalism in discharging their fiduciary duties to the Company in compliances with paragraph 15.08 of Listing Requirements of Bursa Securities for the MAIN Market. The Board continues to monitor the needs of the Directors’ training.

Save for the undermentioned Directors who have attended the training as follows, the other Directors have not attended any training during the financial year ended 31 December 2011 due to their respective conflicting schedule and travel commitments:

Fazrin Azwar bin Md. Nor

BAR Council Training Seminar on Effective Defense and International Law: Opportunities and Challenge.

Seminar on Policies, Incentives and Investment Opportunities in the Manufacturing and Services Sectors in Malaysia jointly organize by MIDA and BAR Council.

Green Technology Financing Programme organized by Malaysia Debt Ventures Berhad.

(cont’d)



Talk by John H. Stout - ‘The Board’s Responsibility for Corporate Culture - Selected Governance Concerns and Tools for Addressing Corporate Culture and Board Performance’ organized by Bursa Malaysia.

Sweden Malaysia Innovation Days - Innovation Forum at Pavilion KL organized by Embassy of Sweden, in cooperation with the Special Innovation Unit of the Prime Minister’s Office.

Talk by Rick Payne - ‘The CFO and Conflicts of Interest’ organized by ICAEW and Bursa Malaysia.

Bridging a Gap in Developing CSR Capacity - talk by Richard Welford, Chairman CSR Asia, organized by CSR Asia and Bursa Malaysia.

Sime Darby Lecture Series ‘Challenges to the Islamic World’ - talk by H.E. Shaukat Aziz, former Prime Minister of Pakistan, organized by Sime Darby.

The 2nd International Greentech & Eco Products Exhibition & Conference Malaysia at Kuala Lumpur Convention Centre (KLCC) organized by Malaysian Green Technology Corporation.

Securities Commission-Bursa Malaysia Corporate Governance Week - ‘Independent Directors Are A Myth’, An Oxford Union CG Style Debate.

1st December 2011 - 25th Sultan Azlan Shah Lecture - ‘Would It Have Made Any Difference - Cause and Effect in Commercial Law’.

Securities Commission-Bursa Malaysia Corporate Governance Week - ‘Risk Management and Internal Controls - Are The Boards Aware What They Are Up Against?’

MIDF Investment Seminar 2011, organized by The Malaysian Industrial Development Finance Berhad.

Dato’ Sri Koh Kin Lip JP

Maybank Investment Bank - “Invest Malaysia 2011”.

2. THE AUDIT COMMITTEE

The Board has on 1 June 2005 established the Audit Committee. The present Audit Committee comprises three (3) members. Please refer to the Audit Committee Report for further details.

3. DIRECTORS’ REMUNERATION

The remuneration of Directors is determined at levels, which will enable the Company to attract and retain Directors with the relevant experience and expertise to run the Company successfully. The remuneration of Executive Directors is structured to link rewards to corporate and individual performance. The determination of remuneration packages of non-executive directors, including non-executive chairman, should be a matter for the Board as a whole. The individuals concerned should abstain from discussing their own remuneration.

During the financial year ended 31 December 2011, members of the Remuneration Committee were as follows:

Chairman : Dato’ Sri Koh Kin Lip JP (Independent Non-Executive Director)Member : Dato’ Azmil Khalili bin Dato’ Khalid (Independent Non-Executive Director) : Fazrin Azwar bin Md. Nor (Independent Non-Executive Director)

(cont’d)



The duties and functions of the Remuneration Committee are:

i) To recommend to the Board the framework of Executive Directors’ remuneration and the remuneration package for each Executive Director, drawing from outside advise as necessary;

ii) To recommend to the Board, guidelines for determining remuneration of Non-Executive Directors;

iii) To recommend to the Board any performance related pay schemes for Executive Directors;iv) To review Executive Directors’ scope of service contracts; andv) To consider the appointment of the service of such advisers or consultants as it deems

necessary to fulfill its functions.

During the last financial year, the Remuneration Committee met one (1) time and the details of attendance of each member are as follows:





The details of the remuneration for Directors during the financial year ended 31 December 2011 are as below:

Aggregate remuneration categorized into components:

Executive Directors Non-Executive Directors Total

Fees (RM) 87,000 93,000 180,000

Salaries & other emoluments (RM) 2,565,865 46,000 2,611,865

Total(RM) 2,652,865 139,000 2,791,865

The number of Directors whose total remuneration fall within the following bands:

Range Executive Directors Non-Executive Directors

Below RM50,000 - 4

RM500,001 – RM550,000 1 -

RM750,001 – RM800,000 1 -

RM1,300,001 – RM1,350,000 1 -

4. SHAREHOLDERS

4.1 Dialogue with Investors

The Board recognizes the importance of timely dissemination of information to shareholders and other stakeholders. The primary tools of communication with the shareholders of the Company are through the annual report, announcements through Bursa Securities and circulars. The annual and quarterly reports and share price information are available on Bursa Securities website: www.bursamalaysia.com. The participation of shareholders and investors, both individual and institutional, at general meeting is encouraged whilst request for briefing from the press and investment analysts are usually met as a matter of course. Additional information about the Group is made available at its website: www.dmb.com.my.

(cont’d)



In addition to the above, the Board has identified En. Fazrin Azwar bin Md. Nor as the Senior Independent Non-Executive Director to whom concerns from the shareholders can be conveyed.

4.2 General Meeting

At the annual general meeting and extraordinary general meeting, the Chairman gives shareholders ample opportunity to participate through questions on the prospects, performance of the Group and other matters of concern addressed to the Board. Notice of the AGM and the Group’s annual report are sent out to the shareholders within the period prescribed by the Company’s Articles of Association. The notice of the meeting will also be advertised in the newspaper.

5. ACCOUNTABILITY AND AUDIT

5.1 Financial Reporting

The Board is responsible for presenting a balanced and meaningful assessment of the Group’s financial performance and prospects primarily through the annual report, financial statements and quarterly announcements of the Group’s results. The Audit Committee assists the Board in ensuring accuracy, adequacy and completeness of information for disclosure. The Statement by Directors pursuant to Section 169 of the Companies Act, 1965 is set out on page 40 of the Annual Report and the Statement explaining the responsibility for preparing the annual audited financial statements is set out on page119 of the Annual Report.

5.2 Internal Control

The Board is ultimately responsible for the overall system of internal controls, which includes not only financial controls but also controls relating to operations, compliance and risk management. The internal control system which is designed to meet the needs of the Company and to manage risks to which the Company is exposed can only provide reasonable and not absolute assurance against material misstatement, loss or fraud.

Further details relating to internal control are set out in the Statement on Internal Control on pages 30 and 31 and the Audit Committee Report on pages 32 to 34.

5.3 Relationship with Auditors

The external auditors, Messrs Ernst & Young, have continued to report to members of the Company on theirs findings which are included as part of the Company’s financial reports with respect to each year’s audit on the statutory financial statements. In doing so, the Company has established a transparent arrangement with the auditors to meet their professional requirements.

Key features underlying the relationship of the Audit Committee with the external auditor and internal auditor are included in the Audit Committee Report.

(cont’d)




INTRODUCTION

The Board of Directors of Daya Materials Berhad (“Board”) is pleased to provide the following statement on the state of internal control of Daya Materials and its subsidiaries (“Group”), which have been prepared in accordance with the “Statement of Internal Control: Guidance for Directors of Public Listed Companies” (“Internal Control Guidance”) as adopted by the Bursa Malaysia Securities Berhad (“Bursa Securities”).

BOARD RESPONSIBILITY

The Board recognizes the importance of maintaining a sound internal control system covering risk management and the financial, operational and compliance controls to safeguard shareholders’ investment and the Group’s assets. The Board acknowledges its responsibility toward Group’s system of internal control and for the continuing review of its adequacy and integrity. The internal control system is designed to cater for the Group’s needs and to manage the risks to which it is exposed. It should be noted that the system of internal control is designed to manage rather than eliminate the risk of failure to achieve the business objectives of the Group, and can only provide reasonable and not absolute assurance against material misstatement or loss.

THE GROUP’S SYSTEM OF INTERNAL CONTROL

The Board has established an Internal Audit Department in November 2011 to undertake the internal audit function to identify risks in critical areas of the Group which was previously outsourced to an independent firm of Chartered Accountant. Audit visits were carried out at subsidiaries to undertake regular and systematic review of the systems of controls so as to provide reasonable assurance that such systems continue to operate satisfactorily and effectively within the Group. Audit findings will be circulated to the auditees for implementation and rectification. The final audit report together with the recommendation from the internal auditors and the feedback from the auditees will then be submitted to all members of Audit Committee for review on quarterly basis.

The internal audit function has adopted a risk-based approach in its audit work. The audit focused on areas with high risk, which were identified in the risk management framework, to ensure that the controls were functioning and where necessary, action plans were developed to improve on controls to manage significant risks.

The Group has put in place the following key elements of internal control:

i) There is a formal organization structure within the Group with delineated lines of responsibility, authority and accountability;

ii) Clearly documented internal policies, manuals, procedures and work instructions, and which are updated from time to time;

iii) Regular Board and management meetings are held where information is provided to the Board and management covering financial performances and operations;

iv) Major investments, acquisitions and disposals are appraised prior to approval by the EXCO or the Board;

v) Regular training and development programs are being attended by employees with the objective of enhancing their knowledge and competency level; and

vi) Management accounts and reports are prepared monthly for monitoring of actual performance versus budget. In this instance, material variances are explained and corrective actions, where necessary, are taken.

The Audit Committee established by the Board performs an oversight role in maintaining the integrity of the Group’s system of internal control. The Audit Committee will be assisted by the Group Internal Audit Department which performs regular review on the internal controls and risk management practices and also by the external auditors which review the financial reporting controls. The internal control system will continue to be reviewed, added on or updated in line with the changes in the operating environment.

The internal audit expense costs incurred for the financial year ended 31 December 2011 was RM39,457.


(cont’d)


RISK MANAGEMENT

The Group established a formal risk management framework, where a structured process to identify, evaluate, manage and communicate principal risks faced by the Group was formalized for adoption by all business units across the Group.

The senior management is responsible for identifying, managing and reporting on significant risks on an ongoing basis. These functions were carried out during the year with the assistance of the external consultant which conducted workshop and interviews with key management staffs. Significant risk matters and the relevant systems of controls to manage those risks are reported to the Directors for discussion.

The risk profile of the Group has been compiled to facilitate the Board and management to prioritize their focus on areas of high risks. Corresponding controls to manage the relevant risks identified have also been documented. Where there are deficiencies, action plans have been developed to improve on the system of controls in order to manage the risks more effectively.

CONTROL WEAKNESS

The management continues to take measures to strengthen the control environment. In the year under review, there were no material losses, incurred as a result of weakness in the internal control that would require disclosure in this annual report.

CONCLUSION

The Board is of the opinion that based on the current level of activities; the Group’s system of internal control is adequate and accords with the guidance provided by the Internal Control Guidance adopted by the Bursa Securities.

Date: 4 April 2012



COMPOSITION

Members of the Audit Committee, their respective designations and directorships are as follows:

Chairman: FAZRIN AZWAR BIN MD. NOR Chairman, Independent Non-Executive Director

Members: DATO’ SRI KOH KIN LIP JP Independent Non-Executive Director

DATO’ AZMIL KHALILI BIN DATO’ KHALID Independent Non-Executive Director

MEMBERSHIP

The Audit Committee shall be appointed by the Board from amongst the Directors and shall consist of not less than three (3) members, where all members must be non-executive directors with a majority of whom shall be Independent Directors.

The Board shall, within three (3) months of a vacancy occurring in the Audit Committee which results in the number of members reduced to below three (3), appoint such number of new members as may be required to make up the minimum number of three (3) members.

The members of the Audit Committee shall elect a Chairman from among their members who shall be an Independent Director. An alternate Director must not be appointed as a member of the Audit Committee.

The Board shall review the terms of office and performance of the Audit Committee and each of its members at least once (1) every three (3) years to determine whether the Audit Committee and the members have carried out their duties in accordance with their terms of reference.

AUTHORITY

The Committee shall, in accordance with the procedure determined by the Board and at the cost of the Company have authority to investigate any matter within its terms of reference, full and unrestricted access to any information pertaining to the Company and all the resources required to perform its duties. The Committee shall have direct communication channels with the external auditors and person(s) carrying out the internal audit function or activity and be able to convene meetings/obtain independent/external professional or other advice and to secure the attendance of outsiders with relevant experience and expertise if it considers necessary.

MEETINGS

The Committee shall meet at least four (4) times in a year subject to the quorum of at least two (2) independent directors or more frequently as circumstances required or upon the request of any member of the Committee with due notice of issues to be discussed and shall record its deliberations and conclusions in discharging its duties and responsibilities. The Committee may invite any Board member or any member of management or any employee of the Company who the Committee thinks fit to attend its meetings to assist and to provide pertinent information as necessary.

The Committee may regulate its own procedures, in particular:

a) The calling of meetings;b) The notice to be given of such meetings;c) The voting and proceedings of such meetings;d) The keeping of minutes; ande) The custody, production and inspection of such minutes.


(cont’d)


The Company Secretary shall act as Secretary of the Audit Committee and shall be responsible for drawing up the agenda with the concurrence of the Chairman and circulating it, supported by explanatory documentation to Audit Committee members prior to each meeting.

The Secretary shall also be responsible for recording the proceedings of the Audit Committee and the minutes of meetings tabled at Board meetings.

DUTIES

The duties of the Audit Committee include the following:

i) To review the quarterly results and the year-end financial statements, prior approval by the Board, focusing particularly on:

Changes in or implementation of accounting policies and practices; Significant adjustments or unusual events; Going concern assumption; and Compliance with applicable approved Financial Reporting Standards, regulatory and other

legal requirements;ii) To review with the external auditor, the audit scope and plan, including any changes to the planned

scope of the audit plan, and to discuss to ensure co-ordination where more than one audit firm is involved;

iii) To review with the external auditor, the results of the interim and final audits and the Management’s response thereto, including the status of previous audit recommendations;

iv) To review the assistance given by the Company’s employees to the auditors, and any difficulties encountered in the course of audit work, including any restrictions on the scope of activities or access to required information (in the absence of management where necessary);

v) To review the appointment and performance of external auditor, the audit fee and any question of resignation or dismissal before making recommendations to the Board;

vi) To review with the external auditor, its evaluations of the system of internal controls;vii) To review the adequacy of the internal audit scope, functions, authority, competency and resources

of the internal audit function and that it has necessary authority to carry out its work;viii) To review the internal audit programme, processes and reports to evaluate the findings of the

internal audit and to ensure that appropriate and prompt remedial action is taken by Management on the recommendations of the internal audit function;

ix) To review any appraisal or assessment of the performance of the internal audit function;x) To approve any appointment or termination of internal audit function;xi) Take cognisance of resignations of internal audit function and provide an opportunity to submits

its reasons for resigning; xii) To consider any related party transaction and conflict of interest situation that may arise within

the Group including any transaction, procedure or course of conduct that raises questions of management integrity;

xiii) To verify the allocation of Employees’ Share Option Scheme (“ESOS”) in compliance with criteria as stipulated in the By laws of ESOS of the Company, if any;

xiv) To direct and, where appropriate, supervise any special projects or investigation considered necessary, and review investigation reports on any major defalcations, frauds and thefts; and

xv) Such other responsibilities as may be agreed to by the Audit Committee and the Board.

SUMMARY OF ACTIVITIES

During the financial year ended 31 December 2011, the Audit Committee met five (5) times and the details of attendance of each member are as follows:






(cont’d)


In discharging its functions and duties, the Committee have considered, reviewed and discussed the followings:

i) Reviewed the external auditor’s scope of work and audit plan for the financial year. Prior to the audit fieldwork, representatives from the external auditor presented their audit strategy and plan to the Audit Committee;

ii) reviewed with the external auditor the results of the interim and final audits, the management letter, including management’s response and the evaluation of the system of internal controls;

iii) considered and recommended to the Board the re-appointment of the external auditor and approval of audit fees payable to the external auditor;

iv) met with external auditor twice (2) during the financial year without the presence of any Executive Directors, to discuss problems and reservations arising from the interim and final audits, if any, or any other matter the auditor may wish to discuss;

v) reviewed the internal audit function’s resource requirements, adequacy of plan, functions and scope for the financial year under review;

vi) reviewed the performance and competency of internal audit function;vii) reviewed the internal audit plan, processes and reports which highlighted the audit issues,

recommendations and Management’s response. Discuss with Management and ensure appropriate actions were taken to improve the system if internal controls based on improvement opportunities identified in the internal audit reports;

viii) reviewed the adequacy and effectiveness of the governance and risk management processes as well as the internal control system through risk assessment reports from the internal auditor. Significant risk issues were summarized and communicated to the Board for consideration and resolution;

ix) reviewed the unaudited quarterly financial results of the Group and making relevant recommendations to the Board for approval. The review and discussions were conducted with the Group Chief Financial Officer;

x) reviewed the audited financial statements of the Group prior to submission to the Board for its consideration and approval. The review was to ensure that the audited financial statements were drawn up in accordance with the provisions of the Companies Act, 1965 and the applicable approved Financial Reporting Standards for entities other than private entities issued by the MASB. Any significant issues resulting from the audit of the financial statements by the external auditors were deliberated;

xi) reviewed related party transactions entered into by the Group, conflict of interest situations and report the same to the Board;

xii) reviewed the Statement on Internal Control and its recommendation to the Board for inclusion in the Annual report; and

xiii) pertinent issues of the Group which has significant impact on the results of the Group.

SUMMARY OF ACTIVITIES OF THE INTERNAL AUDIT FUNCTION

In accordance with the internal audit plan, during the financial year the internal audit function carried out three risk-based internal audit assignments. The internal audit assignments were focused on three subsidiaries, namely Daya Proffscorp Sdn. Bhd., Daya OCI Sdn. Bhd. and Daya Secadyme Sdn. Bhd.. In addition, the internal audit function conducted follow-up reviews on previous audit findings. The internal auditors presented the internal audit reports to the Audit Committee during three Audit Committee meetings. The reports set out audit findings and recommendations for improvements and status of prior audit findings. The internal auditors also presented the internal audit plan for the financial year ending 31 December 2012 during one of the meetings. The internal audit plan will be revised and amended during the year to accommodate with the environmental changes within the Group.


Directors' Report

Statement by Directors

Statutory Declaration

Independent Auditors' Report

Income Statements

Statements of Comprehensive Income

Statements of Financial Position

Statements of Changes in Equity

Statements of Cash Flows

Notes to the Financial Statements

Supplementary Information

Financial Statements

36404041434445464851

118


Directors’ Report

The directors have pleasure in presenting their report together with the audited financial statements of the Group and of the Company for the financial year ended 31 December 2011.

PRINCIPAL ACTIVITIES

The principal activities of the Company are investment holding and provision of management services to its subsidiaries.

The principal activities of the subsidiaries are set out in Note 12 to the financial statements.

There have been no significant changes in the nature of the principal activities during the financial year.

RESULTS

Group Company

RM RM

Profit for the year 17,442,602 12,977,516

Attributable to:

Equity holders of the Company 17,381,905 12,977,516

Non-controlling interests 60,697 -

17,442,602 12,977,516

There were no material transfers to or from reserves or provisions during the financial year.

In the opinion of the directors, the results of the operations of the Group and of the Company during the financial year were not substantially affected by any item, transaction or event of a material and unusual nature.

DIVIDENDS

The amount of dividends paid by the Company since 31 December 2010 in respect of the financial year ended 31 December 2010 as reported in the directors’ report of that year was as follows:

RM

Final tax exempt (single-tier) dividends of 2.4% 2,877,982

At the forthcoming Annual General Meeting, a single tier dividends of 2.5% in respect of the financial year ended 31 December 2011 will be proposed for shareholders’ approval. The financial statements for the current financial year do not reflect this proposed dividends. Such dividends, if approved by the shareholders, will be accounted for in equity as an appropriation of retained profits in the financial year ending 31 December 2012.

DIRECTORS

The names of the directors of the Company in office since the date of the last report and at the date of this report are:

Dato’ Azmil Khalili Bin Dato’ KhalidDato’ Mazlin Bin Md. JunidTham Jooi LoonFazrin Azwar Bin Md. NorDato’ Sri Koh Kin Lip JPLim Soon Foo (Appointed on 15 August 2011)Ronnie Lim Hai Liang (Alternate director to Lim Soon Foo, appointed on 15 August 2011)Tham Wooi Loon (Resigned on 15 August 2011)


Directors’ Report

DIRECTORS’ BENEFITS

Neither at the end of the financial year, nor at any time during that year, did there subsist any arrangement, to which the Company was a party, whereby the directors might acquire benefits by means of acquisition of shares in or debentures of the Company or any other body corporate.

Since the end of the previous financial year, no director has received or become entitled to receive any benefits (other than benefits included in the aggregate amount of emoluments received or due and receivables by the directors as shown in the financial statements) 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 26 to the financial statements.

DIRECTORS’ INTERESTS

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:

Number of ordinary shares of RM0.10 each

1.1.2011/ Date of

appointment Acquired Disposed 31.12.2011

The Company

Direct interest

Dato’ Mazlin Bin Md. Junid 216,984,046 15,875,700 (34,000,360) 198,859,386

Tham Jooi Loon 58,300,198 1,200,000 - 59,500,198

Fazrin Azwar Bin Md. Nor 2,099,998 - - 2,099,998

Dato’ Sri Koh Kin Lip JP 78,115,098 - - 78,115,098

Lim Soon Foo 60,829,098 - - 60,829,098

Deemed interest

Dato’ Mazlin Bin Md. Junid (1) 9,000,360 9,000,360 - 18,000,720

Tham Jooi Loon (2) 4,709,998 - - 4,709,998

Lim Soon Foo (3) 279,000 - - 279,000

(1) Deemed interest through his son and daughter.(2) Deemed interest through his spouse.(3) Deemed interest through his son.

ISSUE OF SHARES

During the financial year, the Company increased its:

(a) issued and paid-up share capital from RM109,673,694 to RM119,915,854 by way of:

(i) the issuance of 85,000,000 new ordinary shares of RM0.10 each in the Company through a private placement to identified investors at an issue price of RM0.225 for the first tranche and RM0.22 per share for the second and third tranches for the total cash consideration of RM18,725,000; and

(ii) the issuance of 17,421,603 new ordinary shares of RM0.10 each in the Company pursuant to the conversion of RM3 million Redeemable Convertible Secured Loan Notes at a conversion price of RM0.1722 per share.

(cont’d)


ISSUE OF SHARES (cont’d)

The proceeds from the above issuance were to be utilised for future synergistic acquisitions, expansions and working capital purposes.

The new ordinary shares issued during the year ranked pari passu in all respects with the existing ordinary shares of the Company.

EMPLOYEE SHARE OPTION SCHEME

At an Extraordinary General Meeting held on 26 February 2009, the shareholders of the Company approved the proposed establishment of an Employee Share Option Scheme (“ESOS”) for the eligible directors and employees of the Company and its subsidiaries.

The ESOS will be administered by the ESOS Committee to be duly appointed and approved by the Board of Directors.

The aggregate number of ESOS Options exercised and ESOS Options offered and to be offered under the scheme shall not exceed 10% of the issue and paid-up ordinary share capital of the Company at any point during the duration of the scheme.

No options have been granted since the date of the establishment of the ESOS and at the date of reporting.

OTHER STATUTORY INFORMATION

(a) Before the income statements, 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 has been taken in relation to the writing off of bad debts and the making of provision for doubtful debts and satisfied themselves that all known bad debts had been written off and that adequate provision for doubtful debts has been made; and

(ii) to ensure that any current assets which were unlikely to realise their values as shown in the accounting records in the ordinary course of business had been written down to an amount which they might be expected so to realise.

(b) At the date of this report, the directors are not aware of any circumstances which would render:

(i) the amount of the provision for doubtful debts in respect of the financial statements of the Group and of the Company or the amount written off for bad debts inadequate to any substantial extent; and

(ii) the values attributed to the current assets in the financial statements of the Group and of the Company misleading.

(c) At the date of this report, the directors are not aware of any circumstances which have arisen which would render adherence to the existing method of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate.

(d) At the date of this report, the directors are not aware of any circumstances not otherwise dealt with in this report or financial statements of the Group and of the Company which would render any amount stated in the financial statements misleading.

(e) As at the date of this report, there does not exist:

(i) any charge on the assets of the Group and of the Company which has arisen since the end of the financial year which secures the liabilities of any other person; or

(ii) any contingent liability of the Group and of the Company which has arisen since the end of the financial year.

(f ) In the opinion of the directors:

(i) no contingent or other liability has become enforceable or is likely to become enforceable within the period of twelve months after the end of the financial year which will or may affect the ability of the Group and of the Company to meet their obligations as and when they fall due; 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.

Directors’ Report(cont’d)


SIGNIFICANT AND SUBSEQUENT EVENTS

Details of significant and subsequent events are disclosed in Note 31 and Note 33 to the financial statements.

AUDITORS

The auditors, Ernst & Young, have expressed their willingness to continue in office.

Signed on behalf of the Board in accordance with a resolution of the directors dated 13 April 2012.

Dato’ Mazlin Bin Md. Junid Tham Jooi Loon

Directors’ Report(cont’d)


Statement by Directors

Statutory Declaration

We, Dato’ Mazlin Bin Md. Junid and Tham Jooi Loon, being two of the directors of Daya Materials Berhad, do hereby state that, in the opinion of the directors, the accompanying financial statements set out on pages 43 to 117 are drawn up in accordance with Financial Reporting Standards and the Companies Act, 1965 in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company as at 31 December 2011 and of their financial performance and the cash flows for the year then ended.

The information set out in Note 35 to the financial statements on page 118 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, as issued by the Malaysian Institute of Accountants.

Signed on behalf of the Board in accordance with a resolution of the directors dated 13 April 2012.

Dato’ Mazlin Bin Md. Junid Tham Jooi Loon

I, Tham Jooi Loon, being the director primarily responsible for the financial management of Daya Materials Berhad, do solemnly and sincerely declare that the accompanying financial statements set out on pages 43 to 117 are in my opinion correct, and I make this solemn declaration conscientiously believing the same to be true and by virtue of the provisions of the Statutory Declarations Act, 1960.

Subscribed and solemnly declared bythe abovenamed Tham Jooi Loonat Kuala Lumpur in the Federal Territoryon 13 April 2012. Tham Jooi Loon

Before me,

Pursuant to Section 169(15) of the Companies Act, 1965

Pursuant to Section 169(16) of the Companies Act, 1965


Independent Auditors’ Reportto the Members of Daya Materials Berhad

REPORT ON FINANCIAL STATEMENTS

We have audited the financial statements of Daya Materials Berhad, which comprise the statements of financial position as at 31 December 2011 of the Group and of the Company, and the income statements, statements of comprehensive income, statements of changes in equity and statements of cash flows of the Group and of the Company for the year then ended, and a summary of significant accounting policies and other explanatory notes, as set out on pages 43 to 117.

Directors’ responsibility for the financial statements

The directors of the Company are responsible for the preparation of financial statements that give a true and fair view in accordance with Financial Reporting Standards and the Companies Act, 1965 in Malaysia, and for such internal controls as the directors determine are necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with approved standards on auditing in Malaysia. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance 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 have been properly drawn up in accordance with Financial Reporting Standards and the Companies Act, 1965 in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company as at 31 December 2011 and of their financial performance and cash flows for the year then ended.

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

In accordance with the requirements of the Companies Act, 1965 (“Act”) in Malaysia, we also report the followings:

(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 12 to the financial statements.

(c) We are satisfied that the financial statements of the subsidiaries that have been consolidated with the financial statements of the Company are in form and content appropriate and proper for the purposes of the preparation of the consolidated financial statements and we have received satisfactory information and explanations required by us for those purposes.

(d) The auditors’ reports on the financial statements of the subsidiaries were not subject to any qualification and did not include any comment required to be made under Section 174(3) of the Act.


Independent Auditors’ Report

OTHER MATTERS

The supplementary information set out in Note 35 to the financial statements on page 118 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.

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.

Ernst & Young Kua Choh Leang AF : 0039 No. 2716/01/13(J)Chartered Accountants Chartered Accountant

Kuala Lumpur, Malaysia13 April 2012

to the Members of Daya Materials Berhad (cont’d)


Income Statementsfor the year ended 31 December 2011

Group Company

2011 2010 2011 2010

Note RM RM RM RM

Revenue 3 281,745,931 174,222,916 23,492,181 8,238,456

Cost of sales 4 (239,034,754) (127,248,762) - -

Gross profit 42,711,177 46,974,154 23,492,181 8,238,456

Other income 6,432,415 2,976,744 1,307,891 1,151,457

Selling and distribution expenses (626,169) (1,295,626) - -

Administrative expenses (22,178,763) (23,084,444) (5,591,249) (5,667,369)

Operating profit 26,338,660 25,570,828 19,208,823 3,722,544

Finance cost 5 (3,973,337) (3,148,646) (1,786,533) (2,118,168)

Share of results of jointly controlled entities 13 1,394,943 310,692 - -

Profit before tax 6 23,760,266 22,732,874 17,422,290 1,604,376

Income tax expense 7 (6,317,664) (5,767,223) (4,444,774) (538,567)

Profit for the year 17,442,602 16,965,651 12,977,516 1,065,809

Attributable to:

Equity holders of the Company 17,381,905 16,908,270 12,977,516 1,065,809

Non-controlling interests 60,697 57,381 - -

17,442,602 16,965,651 12,977,516 1,065,809

Earnings per share (sen)

- Basic 8 1.50 1.64

- Diluted 8 1.45 1.55

The accompanying accounting policies and explanatory notes form an integral part of the financial statements.


Statements of Comprehensive Incomefor the year ended 31 December 2011

Group Company

2011 2010 2011 2010

RM RM RM RM

Profit for the year 17,442,602 16,965,651 12,977,516 1,065,809

Other comprehensive income:

Foreign currency translation differences for foreign subsidiaries (20,539) 192,289 - -

Total comprehensive income for the year, net of tax 17,422,063 17,157,940 12,977,516 1,065,809

Total comprehensive income for the year attributable to:

Equity holders of the Company 17,361,366 17,100,559 12,977,516 1,065,809

Non-controlling interests 60,697 57,381 - -

17,422,063 17,157,940 12,977,516 1,065,809



Statements of Financial Positionas at 31 December 2011


Group Company

2011 2010 2011 2010

Note RM RM RM RM

Non-current assets

Property, plant and equipment 9 100,018,297 90,865,694 825,658 295,606

Investment properties 10 1,210,400 1,225,395 - -

Intangible assets 11 83,885,182 83,490,527 55,923 -

Investment in subsidiaries 12 - - 172,851,767 171,740,329

Investment in jointly controlled entities 13 3,128,637 1,060,692 - -

Other receivables 14 1,271,456 1,809,111 - -

189,513,972 178,451,419 173,733,348 172,035,935

Current assets

Inventories 15 14,181,536 13,428,106 - -

Trade and other receivables 14 86,513,760 57,255,978 24,995,827 13,662,428

Other current assets 16 22,615,041 5,040,665 174,000 136,014

Tax recoverable 2,205,869 3,561,848 633,112 1,900,530

Marketable securities 17 243,728 158,600 - -

Cash and cash equivalents 18 62,840,884 34,152,997 5,224,754 7,400,676

188,600,818 113,598,194 31,027,693 23,099,648

Total assets 378,114,790 292,049,613 204,761,041 195,135,583

Equity and liabilities

Equity

Share capital 19 119,915,854 109,673,694 119,915,854 109,673,694

Reserves 20 90,711,850 66,923,155 53,303,070 33,966,405

210,627,704 176,596,849 173,218,924 143,640,099

Non-controlling interests - 559,056 - -

Total equity 210,627,704 177,155,905 173,218,924 143,640,099

Non-current liabilities

Deferred tax liabilities 21 951,306 1,085,732 45,201 40,557

Loans and borrowings 22 48,861,621 53,947,433 19,036,841 29,983,153

Other payables 23 3,000,000 5,000,000 3,000,000 5,000,000

52,812,927 60,033,165 22,082,042 35,023,710

Current liabilities

Loans and borrowings 22 17,862,200 14,567,876 6,034,001 6,407,067

Trade and other payables 23 94,473,588 35,578,465 3,426,074 10,064,707

Provisions 24 1,709,277 2,320,733 - -

Tax payable 629,094 2,393,469 - -

114,674,159 54,860,543 9,460,075 16,471,774

Total liabilities 167,487,086 114,893,708 31,542,117 51,495,484

Total equity and liabilities 378,114,790 292,049,613 204,761,041 195,135,583


Statements of Changes in Equityfor the year ended 31 December 2011

Attributable to Equity Holders of the Company

Non-distributable Distributable

Sharecapital

Sharepremium

Equity component

of RCSLN

Foreign translation

reserveTreasury

shares Retained

profits Total

Non- controlling

interests Total

equity

Group Note RM RM RM RM RM RM RM RM RM

At 1 January 2010 82,630,033 18,184,346 443,273 - - 41,541,966 142,799,618 681,338 143,480,956

Issuance of ordinary shares 19,20 7,980,000 8,956,000 - - - - 16,936,000 - 16,936,000

Acquisition of subsidiaries - - - - - - - 96,264 96,264

Acquisition of non-controlling interests 12 - - - - - - - (4) (4)

Disposal of subsidiaries - - - - - - - (90,214) (90,214)

Issuance of bonus shares 19,20 17,612,282 (17,612,282) - - - - - - -

Conversion of Redeemable Convertible Secured Loan Notes (“RCSLN”) 19,20 1,451,379 1,548,621 - - - - 3,000,000 - 3,000,000

Equity component of RCSLN 20 - - (78,224) - - - (78,224) - (78,224)

Transaction cost 20 - (1,078,829) - - - - (1,078,829) - (1,078,829)

Dividends paid 32 - - - - - (2,082,275) (2,082,275) (185,709) (2,267,984)

Total comprehensive income for the year - - - 192,289 - 16,908,270 17,100,559 57,381 17,157,940

At 31 December 2010 109,673,694 9,997,856 365,049 192,289 - 56,367,961 176,596,849 559,056 177,155,905

At 1 January 2011 109,673,694 9,997,856 365,049 192,289 - 56,367,961 176,596,849 559,056 177,155,905

Issuance of ordinary shares 19,20 8,500,000 10,225,000 - - - - 18,725,000 - 18,725,000

Acquisition of non-controlling interests 12 - - - - - 68,180 68,180 (538,180) (470,000)

Disposal of subsidiaries - - - - - - - (81,573) (81,573)

Conversion of RCSLN 19,20 1,742,160 1,257,840 - - - 3,000,000 - 3,000,000

Transaction cost 20 - (1,850,435) - - - - (1,850,435) - (1,850,435)

Purchase of treasury shares 20 - - - - (317,049) - (317,049) - (317,049)

Equity component of RCSLN 20 - - (78,225) - - - (78,225) - (78,225)

Dividends paid 32 - - - - - (2,877,982) (2,877,982) - (2,877,982)

Total comprehensive income for the year - - - (20,539) - 17,381,905 17,361,366 60,697 17,422,063

At 31 December 2011 119,915,854 19,630,261 286,824 171,750 (317,049) 70,940,064 210,627,704 - 210,627,704


Statements of Changes in Equityfor the year ended 31 December 2011 (cont’d)

Non-distributable Distributable

Share capital

Share premium

Equity component

of RCSLN Treasury

shares Capital reserve

Retained profits

Total equity

Company Note RM RM RM RM RM RM RM

At 1 January 2010 82,630,033 18,184,346 443,273 - 17,256,197 7,363,769 125,877,618

Issuance of ordinary shares 19, 20 7,980,000 8,956,000 - - - - 16,936,000

Issuance of bonus shares 19, 20 17,612,282 (17,612,282) - - - - -

Conversion of RCSLN 19, 20 1,451,379 1,548,621 - - - - 3,000,000

Equity component of RCSLN 20 - - (78,224) - - - (78,224)

Transaction cost 20 - (1,078,829) - - - - (1,078,829)

Dividends paid 32 - - - - - (2,082,275) (2,082,275)

Total comprehensive income for the year - - - - - 1,065,809 1,065,809

At 31 December 2010 109,673,694 9,997,856 365,049 - 17,256,197 6,347,303 143,640,099

At 1 January 2011 109,673,694 9,997,856 365,049 - 17,256,197 6,347,303 143,640,099

Issuance of ordinary shares 19, 20 8,500,000 10,225,000 - - - - 18,725,000

Conversion of RCSLN 19, 20 1,742,160 1,257,840 - - - - 3,000,000

Transaction cost 20 - (1,850,435) - - - - (1,850,435)

Purchase of treasury shares 20 - - - (317,049) - - (317,049)

Equity component of RCSLN 20 - - (78,225) - - - (78,225)

Dividends paid 32 - - - - - (2,877,982) (2,877,982)

Total comprehensive income for the year - - - - - 12,977,516 12,977,516

At 31 December 2011 119,915,854 19,630,261 286,824 (317,049) 17,256,197 16,446,837 173,218,924



Statements of Cash Flowsfor the year ended 31 December 2011

Group Company

2011 2010 2011 2010

Note RM RM RM RM

Cash flows from operating activities

Profit before tax 23,760,266 22,732,874 17,422,290 1,604,376

Adjustments for:

Depreciation of property, plant and equipment 6, 9 4,442,883 4,037,094 215,721 178,859

Depreciation of investment properties 6, 10 14,995 15,274 - -

Amortisation on intangible assets 6, 11 5,270 60,004 948 -

Allowance for impairment loss 6, 14 230,439 1,598,391 - -

Reversal of allowance for impairment loss 6, 14 (1,140,470) - - -

Bad debts written off 6 - 160,162 - -

Discount on convertible loan notes 6, 22 74,170 114,315 74,170 114,315

Finance cost 5 3,973,337 3,148,646 1,786,533 2,118,168

Gain on disposal of property, plant and equipment 6 (3,408,144) (1,206,043) (118,000) -

Fair value gain on marketable securities 6 (18,428) (18,600) - -

Property, plant and equipment written off 6, 17 17,731 32,934 - -

Dividends income 3, 6 (5,400) (1,000) (15,447,271) (4,325,165)

Gain on disposal of marketable securities 6 (13,800) - - -

Gain on disposal of subsidiaries 6, 12 (496) (88,558) - -

Share of results of jointly controlled entities 13 (1,394,943) (310,692) - -

Interest income 6 (1,343,461) (787,489) (1,189,891) (1,151,457)

Unrealised foreign exchange (gain)/loss (161,011) 271,928 (80,303) 228,421

Operating profit/(loss) before working capital changes 25,032,938 29,759,240 2,664,197 (1,232,483)

Inventories (932,421) (4,800,742) - -

Trade and other receivables (28,677,489) (27,408,691) (11,253,096) (1,677,388)

Other current assets (17,574,376) 4,036,342 (37,986) (132,931)

Trade and other payables 60,540,583 1,262,875 (8,638,633) 3,664,726

Provisions (611,456) 1,652,873 - -

Cash generated from/(used in) operations 37,777,779 4,501,897 (17,265,518) 621,924

Finance cost paid 5 (3,973,337) (3,148,646) (1,786,533) (2,118,168)

Tax (paid)/refund (6,841,264) (8,017,241) 708,327 (666,668)

Net cash generated from/(used in) operating activities 26,963,178 (6,663,990) (18,343,724) (2,162,912)


Statements of Cash Flowsfor the year ended 31 December 2011 (cont’d)

Group Company

2011 2010 2011 2010

Note RM RM RM RM

Cash flows from investing activities

Purchase of property, plant and equipment (a) (16,725,054) (30,866,558) (288,473) (23,337)

Proceeds from disposal of property, plant and equipment 4,600,314 1,436,483 280,000 -

Purchase of intangible assets 11 (399,925) - (56,871) -

Purchase of marketable securities 17 (114,900) (110,400) - -

Proceeds from disposal of marketable securities 62,000 - - -

Net cash (outflow)/inflow from disposal of subsidiaries 12 (66,581) 201,529 - -

Increase in pledged deposits placed with licensed banks (7,129,498) (8,764,809) (64,098) (1,356,065)

Acquisition of subsidiaries 12 - (26,283,540) - (30,337,946)

Increase in investment in subsidiaries 12 - - (1,111,438) -

Acquisition of a joint venture company 13 (2) - - -

Increase in investment in a jointly controlled entity 13 (5,998) - - -

Incorporation of a joint venture company 13 (51,000) - - -

Acquisition of non-controlling interest 12 (550,000) (4) - -

Dividends received 3, 6 5,400 1,000 11,585,454 3,243,874

Interest received 6 1,343,461 787,489 1,189,891 1,151,457

Net cash (used in)/generated from investing activities (19,031,783) (63,598,810) 11,534,465 (27,322,017)

Cash flows from financing activities

Repayment of loans and borrowings (15,536,098) (9,782,208) (9,110,295) (4,594,978)

Proceeds from loans and borrowings 13,706,195 37,337,800 - 16,000,000

Proceeds from issuance of shares 18,725,000 16,936,000 18,725,000 16,936,000

Purchase of treasury shares (317,049) - (317,049) -

Distribution of profits from a jointly controlled entity 13 250,000 - - -

Transaction costs paid for issuance of shares 20 (1,850,435) (1,078,829) (1,850,435) (1,078,829)

Dividends paid to owners of the Company 32 (2,877,982) (2,082,275) (2,877,982) (2,082,275)

Dividends paid to non-controlling interests - (185,709) - -

Net cash generated from financing activities 12,099,631 41,144,779 4,569,239 25,179,918

Net changes in cash and cash equivalents 20,031,026 (29,118,021) (2,240,020) (4,305,011)

Effect of exchange rate fluctuations on cash held (20,539) 192,289 - -

Cash and cash equivalents at the beginning of the year 14,358,399 43,284,131 5,202,049 9,507,060

Cash and cash equivalents at the end of the year 34,368,886 14,358,399 2,962,029 5,202,049

The cash and cash equivalents comprise:

Short term investments 18 3,707,582 2,422,352 680,155 2,341,905

Fixed deposits with licensed banks 18 41,231,219 21,115,259 4,070,225 2,198,627

Cash and bank balances 18 17,902,083 10,615,386 474,374 2,860,144

Bank overdraft 22 (3,739,469) (2,191,567) - -

59,101,415 31,961,430 5,224,754 7,400,676

Less: Deposits pledged 18 (24,732,529) (17,603,031) (2,262,725) (2,198,627)

34,368,886 14,358,399 2,962,029 5,202,049


Statements of Cash Flowsfor the year ended 31 December 2011 (cont’d)

(a) During the year, the Group and the Company acquired property, plant and equipment which were financed as follows:

Group Company

2011 2010 2011 2010

Note RM RM RM RM

Cash 16,725,054 30,866,558 288,473 23,337

Hire purchase 1,318,895 365,000 619,300 -

9 18,043,949 31,231,558 907,773 23,337



Notes to the Financial Statements

1. CORPORATE INFORMATION

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.

The registered office of the Company is located at Suite 18.01, 18th Floor, MWE Plaza, 8 Lebuh Farquhar, 10200 Penang. The principal place of business of the Company is located at D5-1-10, Solaris Dutamas, No.1, Jalan Dutamas 1, 50480 Kuala Lumpur.

The principal activities of the Company are investment holding and provision of management services to its subsidiaries.

The principal activities of the subsidiaries are set out in Note 12.

There have been no significant changes in the nature of the principal activities during the financial year.

2. SIGNIFICANT ACCOUNTING POLICIES

2.1 Basis of preparation

The financial statements of the Group and of the Company have been prepared in accordance with Financial Reporting Standards (“FRSs”) and the Companies Act, 1965 in Malaysia. At the beginning of the current financial year, the Group and the Company adopted new and revised FRSs which are mandatory for financial periods beginning on or after 1 January 2011 as described fully in Note 2.2.

The financial statements of the Group and of the Company have also been prepared on a historical cost basis except as disclosed in the acounting policies below.

The financial statements are presented in Ringgit Malaysia (RM).

2.2 Changes in accounting policies

The accounting policies adopted are consistent with those of the previous financial year except as follows:

On 1 January 2011, the Group and the Company adopted the following new and amended FRSs and IC Interpretations:

DescriptionEffective for annual periods

beginning on or after

FRS 1 First-time Adoption of Financial Reporting Standards 1 July 2010

Amendments to FRS 2 Share-based Payment 1 July 2010

FRS 3 Business Combinations 1 July 2010

Amendments to FRS 5 Non-current Assets Held for Sale and Discontinued Operations 1 July 2010

Amendments to FRS 127 Consolidated and Separate Financial Statements 1 July 2010

Amendments to FRS 138 Intangible Assets 1 July 2010

Amendments to IC Interpretation 9 Reassessment of Embedded Derivatives 1 July 2010

IC Interpretation 12 Service Concession Arrangements 1 July 2010

IC Interpretation 16 Hedges of a Net Investment in a Foreign Operation 1 July 2010

IC Interpretation 17 Distributions of Non-cash Assets to Owners 1 July 2010

Amendments to FRS 132: Classification of Rights Issues 1 March 2010

IC Interpretation 18 Transfers of Assets from Customers 1 January 2011

Amendments to FRS 7 Improving Disclosures about Financial Instruments 1 January 2011

Amendments to FRS 1 Limited Exemptions for First-time Adopters 1 January 2011

Amendments to FRS 1 Additional Exemptions for First-time Adopters 1 January 2011

IC Interpretation 4 Determining Whether an Arrangement contains a Lease 1 January 2011

Improvements to FRS issued in 2010 1 January 2011

Adoption of the above standards and interpretations did not have any significant effect on the financial performance and position of the Group and of the Company.


2. SIGNIFICANT ACCOUNTING POLICIES (cont’d)

2.3 Malaysia Financial Reporting Standards

On 19 November 2011, the Malaysian Accounting Standards Board (“MASB”) issued a new MASB approved accounting framework, the Malaysian Financial Reporting Standards (“MFRS Framework”).

The MFRS Framework is to be applied by all Entities Other Than Private Entities for annual periods beginning on or after 1 January 2012, with the exception of entities that are within the scope of MFRS 141 Agriculture (“MFRS 141”) and IC Interpretation 15 Agreements for Construction of Real Estate (“IC 15”), including its parent, significant investor and venturer.

The Group will be required to prepare financial statements using the MFRS Framework in its first MFRS financial statements for the year ending 31 December 2012.

The directors are of the opinion that the financial performance and financial position as disclosed in these financial statements for the year ended 31 December 2011 would not be significantly different if prepared under MFRS Framework.

2.4 Summary of significant accounting policies

(a) Basis of consolidation

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 obtain control, and continue to be consolidated until the date that such control ceases.

One of the subsidiaries, Daya Polymer Sdn. Bhd., is consolidated using the merger method of accounting as the combination is an internal group reorganisation. Under the merger method of accounting, the cost of investment on the Company’s financial statements is recorded at the fair value of shares issued and the difference between the carrying value of the investment and the nominal value of shares acquired is treated as merger reserve or merger deficit. Where the carrying value of investment is less than the nominal value of shares acquired, the merger reserve should be treated as reserve on consolidation. Where the carrying value of investment is greater than the nominal value of shares acquired, the merger deficit is treated on consolidation as a reduction of reserve. The results of the companies being merged are included as if the merger had been effected throughout the current and previous financial years.

Acquisition of the other subsidiaries and all others arising from business combinations are accounted for using the purchase method. The purchase method of accounting involves allocating the cost of acquisition to the fair value of the assets acquired and liabilities and contingent liabilities assumed at the date of acquisition. The cost of an acquisition is measured as the aggregate of the fair values, at the date of exchange, of the assets given, liabilities incurred or assumed, and equity instruments issued, plus any costs directly attributable to the acquisition.

Any excess of the cost of the acquisition over the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities represent goodwill.

Any excess of the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities over the cost of acquisition is recognised immediately in the income statements.

For acquisition on or after 1 January 2011, the Group applied FRS 3, Business Combinations (revised) in accounting for business combinations. The change in accounting policy has been applied prospectively in accordance with the transitional provisions provided by the standard and does not have impact on earnings per share.

Costs related to the acquisition, other than those associated with the issue of debt or equity securities, that the Group incurs in connection with a business combination are expensed as incurred.

Upon the loss of control of a subsidiary, the Group derecognises the assets and liabilities of the subsidiary, any non-controlling interests and the other components of equity related to the subsidiary. Any surplus or deficit arising on the loss of control is recognised in income statements. If the Group retains any interest in the previous subsidiary, then such interest is measured at fair value at the date that control is lost. Subsequently it is accounted for as an equity accounted investee or as an available for sale financial asset depending on the level of influence retained.

Notes to the Financial Statements(cont’d)



2.4 Summary of significant accounting policies (cont’d)

(b) Transaction with non-controlling interests

Non-controlling interests represent the portion of profit or loss and net assets in subsidiaries not held by the Group and are presented separately in profit or loss of the Group and within equity in the consolidated statements of financial position, separately from parent shareholders’ equity. Transactions with non-controlling interests are accounted for using the entity concept method, whereby, transactions with non-controlling interests are accounted for as transactions with owners. On acquisition of non-controlling interests, the difference between the consideration and book value of the share of the net assets acquired is recognised directly in equity. Gain or loss on disposal to non-controlling interests is recognised directly in equity.

(c) Subsidiaries

Subsidiaries are entities over which the Group has the ability to control the financial and operating policies so as to obtain benefits from their activities. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group has such power over another entity.

In the Company’s separate financial statements, investments in subsidiaries are stated at cost less impairment losses. On disposal of such investments, the difference between net disposal proceeds and their carrying amounts is included in the income statements.

(d) Joint venture

(i) Jointly-controlled entities

Joint ventures are those entities over whose activities the Group has joint control, established by contractual agreement and requiring unanimous consent for strategic financial and operating decisions.

Joint ventures are accounted for in the consolidated financial statements using the equity method unless it is classified as held for sale (or included in a disposal group that is classified as held for sale). The consolidated financial statements include the Group’s share of the profit or loss of the equity accounted joint ventures, after adjustments to align the accounting policies with those of the Group, from the date that joint control commences until the date that joint control ceases.

When the Group’s share of losses exceeds its interest in an equity accounted joint venture, the carrying amount of that interest (including any long-term investments) is reduced to nil and the recognition of further losses is discontinued except to the extent that the Group has an obligation or has made payments on behalf of the joint venture.

In the Company’s separate financial statements, investments in joint ventures are stated at cost less impairment losses, unless the investment is classified as held for sale.

(ii) Jointly-controlled operation and assets

The interest of the Company and of the Group in unincorporated joint ventures and jointly-controlled assets are brought to account by recognising in the financial statements the assets it controls and the liabilities that it incurs, and the expenses it incurs and its share of income that it earns from the sale of goods or services by the joint venture.

(e) Property, plant and equipment

All items of property, plant and equipment are initially recorded at cost. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to the income statements during the financial year which they are incurred.

Subsequent to recognition, property, plant and equipment except for freehold land and capital-in-progress are stated at cost less accumulated depreciation and any accumulated impairment losses. The policy for the recognition and measurement of impairment losses is in accordance with Note 2.4(h).





(e) Property, plant and equipment (cont’d)

Freehold land has an unlimited useful life and therefore is not depreciated. Capital-in-progress are not depreciated as these assets are not available for use. Depreciation of other property, plant and equipment is provided for on a straight-line basis to write off the cost of each asset to its residual value over the estimated useful life, at the following annual rates:

Leasehold land Over lease period Building, renovation and electrical installation 2% - 20% Cranes, parts and forklifts 4% - 20% Plant and machinery 4% - 10% Factory equipment 10% - 30% Furniture, fittings, computer and office equipment 10% - 30% Motor vehicles 20%

The residual values, useful life and depreciation method are reviewed at each financial year-end to ensure that the amount, method and period of depreciation are consistent with previous estimates and the expected pattern of consumption of the future benefits embodied in the items of property, plant and equipment.

All item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. The difference between the net disposal proceeds, if any and the net carrying amount is recognised in the income statements.

(f) Investment properties

Investment properties are properties which are held either to earn rental income or for capital appreciation or for both. Such properties are measured initially at cost, including transaction costs. Following initial recognition, investment properties are carried at cost less any accumulated depreciation and accumulated impairment losses. Freehold land is not subject to depreciation while the building on the freehold land is depreciated at 2% per annum on a straight line method.

Investment properties are derecognised when either they have been disposed of or when the investment property is permanently withdrawn from use and no future economic benefit is expected from its disposal. Any gain or losses on the retirement or disposal of an investment property are recognised in income statements in the year in which they arise.

A property interest under an operating lease is classified and accounted for as an investment property on a property by property basis when the Group holds it to earn rentals or for capital appreciation or both. Any such property interest under an operating lease classified as an investment property is carried at cost less accumulated depreciation and any accumulated impairment losses.

(g) Intangible assets

(i) Goodwill

Goodwill acquired in a business combination is initially measured at cost being the excess of the cost of business combination over the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities. Following the initial recognition, goodwill is measured at cost less any accumulated impairment losses. Goodwill is not amortised but instead, it is reviewed for impairment, annually or more frequently if events or changes in circumstances indicate that the carrying value may be impaired. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.

(ii) Software

Software is recognised on a cost model basis where the asset is to be carried at cost less any accumulated amortisation and accumulated impairment loss. The software is amortised over 5 years.

The carrying value is reviewed for impairment annually when the asset is not yet in use or more frequently when an indication of impairment arises during the reporting year.





(g) Intangible assets (cont’d)

(iii) Research and development costs

All research costs are recognised in the income statements as incurred.

Expenditure incurred on projects to develop new products is capitalised and deferred only when the Group can demonstrate the technical feasibility of completing the intangible asset so that it will be available for use or sale, its intention to complete and its ability to use or sell the asset, how the asset will generate future economic benefits, the availability of resources to complete the project and the ability to measure reliably the expenditure during the development. Product development expenditures which do not meet these criteria are expensed when incurred.

Development costs, considered to have finite useful lives, are stated at cost less any impairment losses and are amortised using the straight-line basis over five years. Impairment is assessed whenever there is an indication of impairment and the amortisation period and method are also reviewed at least at each reporting date.

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”)).

(h) Impairment of non-financial assets

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 income statements.

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 income statements 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) 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 (cont’d)

(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 income statements. 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 income statements as part of administrative expenses or other income.

Financial assets at fair value through profit or loss could be presented as current or non-current. Financial assets that is held primarily for trading purposes are presented as current whereas financial assets that is not held primarily for trading purposes are presented as current or non-current based on the settlement date.

The Group’s and the Company’s financial assets at fair value through profit or loss is disclosed in Note 17.

(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.

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 did not have any held-to-maturity investments during the year ended 31 December 2011.

(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 income statements. The cumulative gain or loss previously recognised in other comprehensive income is reclassified from equity to income statements as a reclassification adjustment when the financial asset is derecognised.





(i) Financial assets (cont’d)

(iv) Available-for-sale financial assets (cont’d)

Interest income calculated using the effective interest method is recognised in income statements. Dividends on an available-for-sale equity instrument are recognised in income statements 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.

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 and the Company did not have any available-for-sale financial assets during the year ended 31 December 2011.

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 income statements.

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, the date that the Group and the Company commit to purchase or sell the asset.

(j) 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, receivables that are assessed not to be impaired individually are subsequently assessed for impairment on a collective basis based on similar risk characteristics. Objective evidence of impairment for a portfolio of receivables could include the 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 income statements.

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 income statements.





(j) Impairment of financial assets (cont’d)

(ii) Unquoted equity securities carried at cost

If there is objective evidence (such as significant adverse changes in the business environment where the issuer operates, probability of insolvency or significant financial difficulties of the issuer) that an impairment loss on financial assets carried at cost has been incurred, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the current market rate of return for a similar financial asset. Such impairment losses are not reversed in subsequent periods.

(iii) 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 income statements, is transferred from equity to income statements.

Impairment losses on available-for-sale equity investments are not reversed in income statements 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 income statements 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 income statements.

(k) Cash and cash equivalents

Cash and cash equivalents comprise cash in hand, balances and deposits with banks and highly liquid investments that are readily convertible to known amount of cash and which are subject to an insignificant risk of changes in value. For the purpose of the statements of cash flows, cash and cash equivalents are presented net of bank overdrafts and pledged deposits.

(l) Inventories

Inventories are stated at the lower of cost and net realisable value.

Cost is determined using the first-in, first-out method. The cost of raw materials comprise costs of purchase. The cost of finished goods and work-in-progress comprises cost of raw materials, direct labour, other direct costs and appropriate proportion of production overheads.

Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs to completion and the estimated costs necessary to make the sale.

(m) Provisions

Provisions for liabilities are recognised when the Group has a present obligation as a result of a past event and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate of the amount can be made. Provisions are reviewed at each reporting date and adjusted to reflect the current best estimate. Where the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, where appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.





(n) Financial liabilities

Financial liabilities are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability.

Financial liabilities, within the scope of FRS 139, are recognised in the 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 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 income statements. Net gains or losses on derivatives include exchange differences.

The Group and the Company did not have any financial liabilities at fair value through profit or loss during the year ended 31 December 2011.

(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 income statements 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 income statements.

(o) Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use are added to the cost of those assets, until such time as the assets are substantially ready for their intended use.

All other borrowing costs are recognised in income statements in the period in which they are incurred.





(p) Employee benefits

(i) Short term benefits

Wages, salaries, bonuses and social security contributions are recognised as an expense in the year in which the associated services are rendered by employees. Short term accumulating compensated absences such as paid annual leave are recognised when services are rendered by employees that increase their entitlement to future compensated absences and short term non-accumulating compensated absences such as sick leave are recognised when the absences occur.

(i) Defined contribution plans

Defined contribution plans are post-employment benefit plans under which the Group pays fixed contributions into separate entities or funds and will have no legal or constructive obligation to pay further contributions if any of the funds do not hold sufficient assets to pay all employee benefits relating to employee services in the current and preceding financial years. Such contributions are recognised as an expense in the income statements as incurred. As required by law, companies in Malaysia make such contributions to the Employees Provident Fund (“EPF”).

(q) Leases

(i) Classification

A lease is recognised as a finance lease if it transfers substantially to the Group all the risks and rewards incidental to ownership. Leases of land and buildings are classified as operating or finance leases in the same way as leases of other assets and the land and buildings elements of a lease of land and buildings are considered separately for the purpose of lease classification. All leases that do not transfer substantially all the risks and rewards are classified as operating leases.

(ii) Finance Leases - the Group as Lessee

Assets acquired by way of hire purchase or finance leases are stated at an amount equal to the lower of their fair values and the present value of the minimum lease payments at the inception of the leases, less accumulated depreciation and impairment losses. The corresponding liability is included in the statements of financial position as loans and borrowings. In calculating the present value of the minimum lease payments, the discount factor used is the interest rate implicit in the lease, when it is practicable to determine; otherwise, the Group’s incremental borrowing rate is used. Any initial direct costs are also added to the carrying amount of such assets.

Lease payments are apportioned between the finance costs and the reduction of the outstanding liability. Finance costs, which represent the difference between the total leasing commitments and the fair value of the assets acquired, are recognised in the income statements over the term of the relevant lease so as to produce a constant periodic rate of charge on the remaining balance of the obligations for each accounting period.

The depreciation policy for leased assets is in accordance with that for depreciable property, plant and equipment as described in Note 2.4(e).

(iii) Operating Leases - the Group as Lessee

Operating lease payments are recognised as an expense on a straight-line basis over the term of the relevant lease. 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.

In the case of a lease of land and buildings, the minimum lease payments or the up-front payments made are allocated, whenever necessary, between the land and the buildings elements in proportion to the relative fair values for leasehold interests in the land element and buildings element of the lease at the inception of the lease. The up-front payment represents prepaid lease payments and are amortised on a straight-line basis over the lease term.





(q) Leases (cont’d)

(iv) Operating Lease - Group as Lessor

Assets leased out under operating lease are presented on the statements of financial position according to the nature of the assets. Contingent rent is recognised as income in the period in which they are earned as stated in Note 2.4(s).

Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased assets and recognised on a straight line basis over the lease term.

(r) Revenue recognition

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and to the Company and the revenue can be reliably measured. The following specific recognition criteria must also be met before revenue is recognised.

(i) Sale of goods

Revenue is recognised net of discounts upon transfer of significant risks and rewards of ownership to the buyer. Revenue is not recognised to the extent where there are significant uncertainties regarding recovery of the consideration due, associated costs or the possible return of goods.

(ii) Management fees

Management fees are recognised when services are rendered.

(iii) Dividends income

Dividends income is recognised when the Group’s and the Company’s right to receive payment is established.

(iv) Contract revenue

Where the outcome of a construction contract can be reliably estimated, contract revenue and contract costs are recognised as revenue and expenses respectively by using the stage of completion method. The stage of completion is measured by reference to the proportion of contract costs incurred for work performed to date to the estimated total contract costs.

Where the outcome of a construction contract cannot be reliably estimated, contract revenue is recognised to the extent of contract costs incurred that it is probable will be recoverable. Contract costs are recognised as expenses in the period in which they are incurred.

When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognised as an expense immediately.

When the total of costs incurred on construction contracts plus, recognised profits (less recognised losses), exceeds progress billings, the balance is classified as amount due from customers on contracts. When progress billings exceed costs incurred plus, recognised profits (less recognised losses), the balance is classified as amount due to customers on contracts.

(v) Services

Revenue from services rendered is recognised net of service taxes and discounts as and when the services are performed.

(vi) Interest income

Interest income is recognised on an accrual basis using the effective interest method.





(s) Rental income

Rental income from investment property and certain of its property, plant and equipment where only an insignificant portion is held to earn rentals or for capital appreciation is recognised in the income statements on a straight-line basis over the term of the lease. Lease incentives granted are recognised as an integral part of the total rental income, over the term of the lease.

(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 at the reporting date.

Current taxes are recognised in income statements except to the extent that the tax relates to items recognised outside income statements, 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 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 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.





(u) Share capital

An equity instrument is any contract that evidences a residual interest in the assets of the Group and of 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.

(v) Treasury shares

When shares of the Company, that have not been cancelled, recognised as equity are reacquired, the amount of consideration paid is recognised directly in equity. Reacquired shares are classified as treasury shares and presented as a deduction from total equity. No gain or loss is recognised in income statements on the purchase, sale, issue or cancellation of treasury shares. When treasury shares are reissued by resale, the difference between the sales consideration and the carrying amount is recognised in equity.

(w) Foreign currencies

(i) Functional and presentation currency

The 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

In preparing the financial statements of the individual entities, transactions in currencies other than the entity’s functional currency (“foreign currencies”) are recorded in the functional currencies using the exchange rates prevailing at the dates of the transactions. At each reporting date, monetary items denominated in foreign currencies are translated at the rates prevailing on the reporting date. Non-monetary items carried at fair value that are denominated in foreign currencies are translated at the rates prevailing on the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not translated.

Exchange differences arising on the settlement of monetary items, and on the translation of monetary items, are included in income statements for the period except for exchange differences arising on monetary items that form part of the Group’s net investment in foreign operation. These are initially taken directly to the foreign currency translation reserve within equity until the disposal of the foreign operations, at which time they are recognised in income statements. Exchange differences arising on monetary items that form part of the Company’s net investment in foreign operation are recognised in income statements in the Company’s separate financial statements or the individual financial statements of the foreign operation, as appropriate.

Exchange differences arising on the translation of non-monetary items carried at fair value are included in income statements 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.

(x) Segment reporting

For management purposes, the Group is organised into operating segments according to the nature of the products and services provided 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 chief operating decision makers, which in this case is the Executive Committee of the Group who regularly review the segment results in order to allocate resources to the segments and to assess the segment performances.





(y) Financial guarantee contracts

During the current and prior years, the Company provided financial guarantees to banks in connection with bank loans and other banking facilities granted to its subsidiaries. The Company did not provide for such guarantees in the income statements unless it was more likely than not that the guarantees would be called upon. Upon the adoption of FRS 139, all unexpired financial guarantees issued by the Company are recognised as financial liabilities and are measured at their initial fair value less accumulated amortisation as at 1 January 2010.

At the reporting date, the Company has reassessed the financial guarantee contracts in accordance with FRS 139. There is no fair value adjustment required for the financial guarantee granted to its subsidiaries.

2.5 Significant accounting estimates and judgements

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 goodwill

The Group determines whether goodwill is impaired at least on an annual basis. This requires an estimation of the value-in-use of the cash-generating units (“CGUs”) to which goodwill is allocated. Estimating a value-in-use amount requires management to make an estimate of the expected future cash flows from the CGUs and also to choose a suitable discount rate in order to calculate the present value of those cash flows. The carrying amounts of goodwill as at 31 December 2010 and 31 December 2011 were RM83,490,527. Further details are disclosed in Note 11(b).

(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 trade and other receivables at the reporting date is disclosed in Note 14.

(c) Construction contract

The Group recognises construction contract revenue and expenses in the income statements by using the stage of completion method. The stage of completion is measured by reference to the proportion of contract costs incurred for work performed to date to the estimated total contract costs.

Significant judgement is required in determining the stage of completion, the extent of the construction contract costs incurred, the estimated total construction contract revenue and costs, as well as the recoverability of the construction contract costs. In making the judgement, the Group evaluates based on past experience and by relying on the work of specialists.

The carrying amounts of assets and liabilities of the Group arising from construction activities are disclosed in Note 16.

(d) Provision for defect liability cost

The Group recognises provision for defect liability for future work expected to be carried out subsequent to the projects completion as part of their defect liability obligations. In making the judgement, the Group evaluates based on past experience and by relying on the work of specialists.

The carrying amount of the Group’s provision for defect liability cost at the reporting date and further details are disclosed in Note 24. If the actual defect liability cost differ by 10% from management estimates, the Group’s provision for defect liability cost will increase by RM170,928 (2010: RM232,073).



3. REVENUE

Group Company

2011 2010 2011 2010

Note RM RM RM RM

Sale of goods 71,519,086 58,131,284 - -

Management fees 26 - - 8,044,910 3,913,291

Dividends income 6,26 5,400 1,000 15,447,271 4,325,165

Contract revenue 149,060,365 78,324,174 - -

Service revenue 61,127,650 37,735,303 - -

Others 33,430 31,155 - -

281,745,931 174,222,916 23,492,181 8,238,456

4. COST OF SALES

Group

2011 2010

RM RM

Cost of inventories sold 53,828,950 41,268,675

Contract costs 145,938,674 69,297,324

Cost of services rendered 39,267,130 16,682,763

239,034,754 127,248,762

5. FINANCE COSTS

Group Company

2011 2010 2011 2010

Note RM RM RM RM

Interest expense on advances from subsidiaries 26 - - 155,237 429,219

Interest expense on loans and borrowings 3,511,004 2,443,652 1,185,707 1,061,649

Coupon interest expense on RCSLN 22 445,589 600,986 445,589 600,986

Others 16,744 104,008 - 26,314

28 3,973,337 3,148,646 1,786,533 2,118,168



6. PROFIT BEFORE TAX The following amounts have been included in arriving at profit before tax:

Group Company

2011 2010 2011 2010

Note RM RM RM RM

Amortisation of intangible assets 11 5,270 60,004 948 -

Discount on convertible loan notes 22 74,170 114,315 74,170 114,315

Auditors’ remuneration:

- Statutory audit:

- current year 252,147 209,662 38,000 38,000

- overprovision in prior year - - - (1,500)

252,147 209,662 38,000 36,500

- Other services:

- current year 38,000 13,000 38,000 13,000

Allowance for impairment loss 14 230,439 1,598,391 - -

Bad debts written off - 160,162 - -

Depreciation:

- property, plant and equipment 9 4,442,883 4,037,094 215,721 178,859

- investment properties 10 14,995 15,274 - -

Property, plant and equipment written off 17,731 32,934 - -

Remuneration for the Company’s directors 26 2,077,360 4,168,024 1,691,220 3,114,452

Remuneration for the Company’s past directors 26 534,505 - 334,505 -

Directors’ fees for the Company’s directors 26 165,000 159,000 141,000 144,000

Directors’ fees for the Company’s past directors 26 15,000 - 15,000 -

Directors’ benefits in kind 47,900 - 47,900 -

Employees benefit expense 27 17,652,506 22,960,430 3,411,084 3,840,882

Foreign exchange loss

- realised - 3,459 - -

- unrealised - 308,949 - 228,421

Rental expense 2,099,682 43,150 81,600 -

and after crediting:

Gain on disposal of property, plant and equipment 3,408,144 1,206,043 118,000 -

Gain on disposal of subsidiaries 12 496 88,558 - -

Foreign exchange gain

- realised 34,619 22,970 - -

- unrealised 161,011 37,021 80,303 -

Fair value gain on marketable securities 17 18,428 18,600 - -

Gain on disposal of marketable securities 13,800 - - -

Interest income 1,343,461 787,489 1,189,891 1,151,457

Dividends income from subsidiaries 3,26 - - 15,447,271 4,325,165

Dividends income 3 5,400 1,000 - -

Reversal of allowance for impairment loss 14 1,140,470 - - -

Rental income 10 329,063 50,400 - -



7. INCOME TAX EXPENSE

The major components of income tax expense for the years ended 31 December 2011 and 31 December 2010 are:

Group Company

2011 2010 2011 2010

RM RM RM RM

Malaysian income tax

Current income tax 6,464,650 7,130,984 4,375,195 632,419

(Over)/Underprovision in prior years (31,782) (443,409) 45,713 (10,646)

6,432,868 6,687,575 4,420,908 621,773

Deferred tax

Relating to origination and reversal of temporary differences 760,149 (841,519) 101,218 (84,442)

(Over)/Underprovision in prior years (875,353) (78,833) (77,352) 1,236

21 (115,204) (920,352) 23,866 (83,206)

6,317,664 5,767,223 4,444,774 538,567

Reconciliation between tax expense and accounting profit

The reconciliation between tax expense and the product of accounting profit multiplied by the appplicable corporate tax rate for years ended 31 December 2011 and 31 December 2010 is as follows:

Group Company

2011 2010 2011 2010

RM RM RM RM

Profit before tax 23,760,266 22,732,874 17,422,290 1,604,376

Taxation at Malaysian statutory tax rate of 25% (2010: 25%) 5,940,067 5,683,218 4,355,573 401,094

Different tax rates in other countries 70,948 60,206 - -

Income not subject to tax (91,946) (1,680,127) (75,970) (55,819)

Expenses not deductible for tax purposes 1,146,885 2,028,329 196,810 202,702

Deferred tax assets not recognised during the year 21,262 136,772 - -

Deferred tax assets not utilised during the year 137,722 - - -

Effect of control transfer of property, plant and equipment - 61,067 - -

Utilisation of current year’s capital allowances (139) - - -

(Over)/Underprovision of deferred tax in prior years (875,353) (78,833) (77,352) 1,236

(Over)/Underprovision of income tax in prior years (31,782) (443,409) 45,713 (10,646)

6,317,664 5,767,223 4,444,774 538,567

Domestic income tax is calculated at the Malaysian statutory tax rate of 25% (2010: 25%) of the estimated assessable profit for the year. Taxation for other jurisdictions is calculated at the rates prevailing in the respective jurisdictions. The above reconciliation is prepared by aggregating separate reconciliations for each national jurisdiction.



8. EARNINGS PER SHARE

(a) Basic Earnings Per Share

Basic earnings per share is calculated by dividing profit for the year attributable to ordinary equity holders of the Company by the weighted average number of ordinary shares in issue during the financial year.

Group

2011 2010

Profit attributable to ordinary equity holders of the Company (RM) 17,381,905 16,908,270

Weighted average number of ordinary shares in issue 1,161,920,542 1,029,903,820

Basic earnings per share (sen) 1.50 1.64

The comparative basis earnings per share has been restated to take into account the effect of the bonus shares as disclosed in Note 19.

(b) Diluted Earnings Per Share

Group

2011 2010

Profit attributable to ordinary equity holders of the Company (RM) 17,381,905 16,908,270

Effect of dilution (RM) 94,328 170,761

Adjusted net profit for the period attributable to ordinary equity holders of the Company (RM) 17,476,233 17,079,031

Weighted average number of ordinary shares in issue 1,161,920,542 1,029,903,820

Effect of dilution 40,507,215 75,138,537

Adjusted weighted average number of shares in issue 1,202,427,757 1,105,042,357

Diluted earnings per share (sen) 1.45 1.55



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9. PROPERTY, PLANT AND EQUIPMENT (cont’d)

Furniture, fittings,

computer and office

equipment Motor

vehicles Total

Company Note RM RM RM

2011

Cost

At 1 January 58,530 827,594 886,124

Additions 9,044 898,729 907,773

Disposals (17,655) (648,000) (665,655)

At 31 December 49,919 1,078,323 1,128,242

Accumulated depreciation

At 1 January 32,186 558,332 590,518

Charge for the year 6 11,887 203,834 215,721

Disposals (17,655) (486,000) (503,655)

At 31 December 26,418 276,166 302,584

Net carrying amount

At 31 December 23,501 802,157 825,658

2010

Cost

At 1 January 35,193 827,594 862,787

Additions 23,337 - 23,337

At 31 December 58,530 827,594 886,124


At 1 January 18,846 392,813 411,659

Charge for the year 6 13,340 165,519 178,859

At 31 December 32,186 558,332 590,518

Net carrying amount

At 31 December 26,344 269,262 295,606

(a) Capitalisation of borrowing costs

Included in the Group’s property, plant and equipment is interest capitalised amounting to RM499,051 (2010: RM246,748).



9. PROPERTY, PLANT AND EQUIPMENT (cont’d)

(b) Assets pledged as security

The net book value of the Group’s property, plant and equipment pledged to financial institutions as securities for bank facilities as disclosed in Note 22 are as follows:

Group

2011 2010

RM RM

Freehold land 1,549,010 1,549,010

Leasehold land 5,081,691 5,163,078

Building, renovation and electrical installation 21,966,211 17,186,401

Cranes, parts and forklifts 24,984,389 21,385,925

Plant and machinery 304,767 3,200,193

Factory equipment 331,024 342,633

Furniture, fittings, computer and office equipment 163,819 203,322

Motor vehicles 2,719,917 1,510,760

Capital in progress 10,068,697 -

67,169,525 50,541,322

(c) Assets held under finance lease

The net book value of the Group’s and of the Company’s assets held under finance lease as at the reporting date is as follows:

Group Company

2011 2010 2011 2010

RM RM RM RM

Cranes, parts and forklifts 840,533 921,013 - -

Plant and machinery - 545,133 - -

Motor vehicles 2,680,381 1,352,117 730,814 39,532

3,520,914 2,818,263 730,814 39,532



10. INVESTMENT PROPERTIES

Freehold land Building Total

Group Note RM RM RM

2011

Cost

At 1 January/31 December 113,446 1,246,750 1,360,196


At 1 January - 134,801 134,801

Charge for the year 6, 28 - 14,995 14,995

At 31 December - 149,796 149,796

Net carrying amount

At 31 December 113,446 1,096,954 1,210,400

Investment properties, at fair value

At 31 December 279,851 1,406,783 1,686,634

2010

Cost

At 1 January 113,446 226,892 340,338

Acquisition of subsidiaries - 1,019,858 1,019,858

At 31 December 113,446 1,246,750 1,360,196


At 1 January - 36,303 36,303

Acquisition of subsidiaries - 83,224 83,224

Charge for the year 6, 28 - 15,274 15,274

At 31 December - 134,801 134,801

Net carrying amount

At 31 December 113,446 1,111,949 1,225,395

Investment properties, at fair value

At 31 December 279,851 1,406,783 1,686,634

Investment properties comprise commercial properties which are leased out for rental income. Each of the leases contains an initial non-cancellable leases of the period between 1 to 5 years. All leases include a clause to enable upward revision of the rental charge on an annual basis based on prevailing market conditions.

The following are recognised in income statements in respect of investment properties:

Group

2011 2010

Note RM RM

Rental income 6 329,063 50,400

Depreciation on investment properties 6 14,995 15,274



11. INTANGIBLE ASSETS

Goodwill Software Development

costs Total

Group Note RM RM RM RM 2011

Cost

At 1 January 83,490,527 - 360,022 83,850,549

Additions 28 - 399,925 - 399,925

At 31 December 83,490,527 399,925 360,022 84,250,474

Accumulated amortisation

At 1 January - - 360,022 360,022

Amortisation during the year 6, 28 - 5,270 - 5,270

At 31 December - 5,270 360,022 365,292

Net carrying amount

At 31 December 83,490,527 394,655 - 83,885,182

2010

Cost

At 1 January 61,460,625 - 360,022 61,820,647

Acquisition of subsidiaries 12 22,029,902 - - 22,029,902

At 31 December 83,490,527 - 360,022 83,850,549


At 1 January - - 300,018 300,018

Amortisation during the year 6, 28 - - 60,004 60,004

At 31 December - - 360,022 360,022

Net carrying amount

At 31 December 83,490,527 - - 83,490,527



11. INTANGIBLE ASSETS (cont’d)

Software Total

Company Note RM RM

2011

Cost

At 1 January - -

Additions 56,871 56,871

At 31 December 56,871 56,871


At 1 January - -

Amortisation during the year 6 948 948

At 31 December 948 948

Net carrying amount

At 31 December 55,923 55,923

(a) Impairment loss recognised

The Group has not recognised any impairment loss on goodwill during the year.

(b) Impairment tests for goodwill

Allocation of goodwill

Goodwill has been allocated to the Group’s cash generating units (”CGUs”) identified according to the business segments as follows:

Group

2011 2010

RM RM

Oil and gas 72,850,883 72,850,883

Technical services 10,639,644 10,639,644

83,490,527 83,490,527

Key assumptions used in value-in-use calculations

The recoverable amount of the CGU is determined based on value-in-use calculations using cash flow projections approved by management covering a five year period. Cash flows beyond the five year period are extrapolated using a growth rate of 3.38% per annum.

The following describes each key assumption on which management has based its cash flow projections to undertake impairment testing of goodwill:

i. Budgeted Gross Margin

The basis used to determine the value assigned to the budgeted gross margin is the average gross margin achieved in the year immediately before the budgeted year increased for expected efficiency improvements.



11. INTANGIBLE ASSETS (cont’d)

(b) Impairment tests for goodwill (cont’d)

Key assumptions used in value-in-use calculations (cont’d)

ii. Selling Price

The selling price used to calculate the cash inflows from operations was determined after taking into consideration price trends of the industries which the CGU is exposed. Values assigned are consistent with the external sources of information.

iii. Discount rate and growth rate

The discount rate applied to the cash flow projections is based on the cost of borrowings of the Group throughout the calculation period. The growth rate used is consistent with the projected growth rate of the CGU’s industry and economy. Following are the rates for the calculations of the value-in-use for each of the business segments for the next five years.

Business segments

Oil and gas Technical

service

Discount rate 10.40% 9.31%

Growth rate 5.00% 5.00%-84.00%

Sensitivity to changes in assumptions

Barring any unforeseen circumstances, the management believes that no reasonable change in the above assumptions would cause the net carrying amount of goodwill to materially exceed its recoverable amount.

12. INVESTMENT IN SUBSIDIARIES

Company

2011 2010

Note RM RM

Unquoted shares at cost

At 1 January 171,740,329 141,402,383

Acquisition of subsidiaries a - 30,337,946

Increase in investment in subsidiaries b 1,111,438 -

At 31 December 172,851,767 171,740,329

Certain of the Company’s investment in subsidiaries with total carrying amounts of RM112,308,946 (2010: RM112,308,946) and RM28,488,131 (2010: RM28,488,131) have been pledged to a financial institution for banking facilities granted to the Company and for the issuance of the Redeemable Convertible Secured Loan Notes (“RCSLN”) respectively as disclosed in Note 22.



12. INVESTMENT IN SUBSIDIARIES (cont’d)

Details of subsidiaries are as follows:

Effective equity

interestCountry of

incorporation Principal activities

2011 2010

Held by the Company:

Daya Polymer Sdn. Bhd. 100% 100% Malaysia Manufacturing of semi-conductive compounds and cross-linkable polyethylene compounds for cables and wires and trading of specialty chemicals, related polymer compounds and hardware.

DMB Marketing & Trading Sdn. Bhd. 100% 100% Malaysia General trading, marketing and investment holding.

Meridian Orbit Sdn. Bhd. 100% 100% Malaysia Investment holding. Daya Secadyme Sdn. Bhd. 100% 100% Malaysia Trading in petrochemicals products and investment

holding.

Daya CMT Sdn. Bhd. 100% 100% Malaysia Providing industrial facilities management including builder works, facility operation and maintenance services, upgrade, retrofit, design and build plant facilities.

Daya Proffscorp Sdn. Bhd. 100% 100% Malaysia Principally engaged in ownership and hiring of forklifts, cranes and heavy machinery and provision of related manpower services in the onshore and offshore oil and gas industry.

Daya Urusharta Sdn. Bhd. 100% 100% Malaysia Property investment holding.

DMB International Limited * 100% 100% Hong Kong Center for regional procurement and trading as well as international investments.

Daya OCI Sdn. Bhd. 100% 100% Malaysia Supplying of equipment and specialty chemicals for

oil and gas process plants, a provider of installation and maintenance services for air-conditioning and ventilation system, a provider for automatic welding services for offshore pipeline installation, a provider for maintenance services for both onshore plants and offshore facilities, a provider for warehousing and forwarding agency.




Details of subsidiaries are as follows (cont’d):

Effective equity

interestCountry of

incorporation Principal activities

2011 2010

Held through subsidiaries:

Daya Hightech Sdn. Bhd. 100% 100% Malaysia Manufacturer of polymer compounds for cables and wires.

Seca Chemicals and Catalysts Sdn.

Bhd.100% 100% Malaysia Dealing in petroleum, oil and gas products and

consulting services.

SD Equipment Sdn. Bhd. 100% 100% Malaysia Providing safety equipment and apparels. Seca Engineering and Manpower

Services Sdn. Bhd.100% 100% Malaysia Providing engineering and manpower services.

Metriwell Sdn. Bhd. 80% 80% Malaysia Dormant.

Daya FMM Sdn. Bhd. (formerly known as CMT Industry (Kulim) Sdn. Bhd.)

100% 100% Malaysia General contractors and related services.

Daya Land & Development Sdn. Bhd.(formerly known as IHP Supply Sdn. Bhd.)

100% 60% Malaysia Trader of all kinds of building material, hardware equipment and other related products.

Daya Clarimax Sdn. Bhd. 100% 100% Malaysia Providing recycling of waste solvent and

manufacturing high purity electronics and technical solvent.

Daya NCHO International Limited

(formerly known as Daya Clarimax International Limited)

- 100% Hong Kong Investment holding to invest in tank services regionally.

PT Daya Secadyme Indonesia* 100% 100% Indonesia Trading in petrochemicals products. Daya Proffscorp (Sabah) Sdn. Bhd. 100% 100% Malaysia Ownership and hiring of forklifts, cranes and heavy

machinery and provision of related manpower services in the onshore and offshore oil and gas industry.

Ultrafest Sdn. Bhd.** 100% - Malaysia Investment holding.

* Audited by firms of auditors other than Ernst & Young.** The Company was incorporated on 20 November 2011 and will prepare its first set of audited financial statements for the year ending

on 31 December 2012.





(a) Acquisition of subsidiaries

i. On 15 December 2011, the Group via its sub-subsidiary, Daya Land & Development Sdn. Bhd. (formerly known as IHP Supply Sdn. Bhd.) (“DLD”), a wholly-owned subsidiary of Daya CMT Sdn. Bhd., acquired two (2) ordinary shares of RM1.00 in Ultrafest Sdn. Bhd (“USB”), representing 100% equity interest from Hasniza Binti Wazer and Fatimah Binti Sulaiman, for a total consideration of RM2.

ii. On 22 February 2011, the Group, via its sub-subsidiary, Daya Clarimax Sdn. Bhd. (“DCLX”), a wholly owned subsidiary of Meridian Orbit Sdn. Bhd., acquired one (1) ordinary share of RM1.00 in Daya NCHO Sdn. Bhd. (“DNSB”), for a total cash consideration of RM1 from Chai Churn Hwa. On 15 March 2011, DCLX has further subscribed 599,999 ordinary shares of RM1.00 each in DNSB through capitalisation of an amount of RM599,999 out of the total fixed assets transferred from DCLX.

iii. The Company had, on 14 June 2010, acquired 5,000,000 ordinary shares of RM1.00 each in Daya OCI Sdn. Bhd. (“DOCI”) representing 100% of the issued and paid-up share capital of DOCI from Ja’afar bin Chik and Sapiah @ Safiah Hussin (collectively “Group A Vendors”), Kamalukhair bin Abdullah, Yacob bin Chik and Zaidi bin Ayub (collectively “Group B Vendors”) for a cash consideration of RM28,000,000.

The Group B Vendors have also given jointly and severally guarantee under the conditional Sale and Purchase Agreement (“SPA”) that DOCI shall achieve audited consolidated profit after tax of RM4,000,000 (“Guaranteed Profits”) for the financial year ended 31 December 2010, RM5,000,000 for the financial year ended 31 December 2011 and RM6,000,000 for the financial year ending 31 December 2012. Should DOCI be unable to achieve the guaranteed profits, the Group B Vendors are required to make payment to the Company on the shortfall between the actual consolidated profit after tax and the guaranteed profits.

The acquired subsidiaries has contributed the following results to the Group:

2011 2010

RM RM

Revenue - 19,290,305

Profit for the year - 6,907,485

If the acquisitions for the year had occurred on 1 January, management estimates that consolidated revenue and consolidated profit for the financial year ended 31 December 2010 would have been RM188,138,274 and RM16,692,429 respectively.





(a) Acquisition of subsidiaries (cont’d)

The assets and liabilities arising from the acquisition of the subsidiaries are as follows:

2011 2010

Fair value recognised on

acquisition Acquiree’s

carrying value

Fair value recognised on

acquisition Acquiree’s

carrying value

Note RM RM RM RM

Property, plant and equipment - - 3,715,291 3,158,519

Investment property - - 936,634 439,651

Investment in jointly controlled entities 13 - - 750,000 750,000

Trade and other receivables - - 6,644,482 6,644,482

Cash and cash equivalents 3 3 4,054,406 4,054,406

Trade and other payables - - (5,469,643) (5,469,643)

Tax payable - - (448,098) (448,098)

Loans and borrowings - - (1,778,068) (1,778,068)

Deferred tax liabilities 21 - - (696) (696)

Fair value of net assets 3 3 8,404,308 7,350,553

Non-controlling interests - (96,264)

Goodwill on acquisitions 11 - 22,029,902

Consideration paid, satisfied in cash 3 30,337,946 *

Cash and cash equivalents acquired (3) (4,054,406)

Net cash outflows - 26,283,540

* Including the costs attributable to the acquisition for the financial year ended 31 December 2010 amounted to RM2,337,946.

(b) Increase in investment in subsidiaries

i On 15 November 2011, the Company increased investment in its wholly owned subsidiary, DMB International Limited (“DINL”) via the subscription of an additional 2,500,000 ordinary shares of HKD1.00 each. The new ordinary shares subscribed in DINL ranked pari passu in all respects with the existing ordinary shares of DINL.

On the same date, an amount of HKD2,500,000 (equivalent to RM1,011,440) due from DINL was applied in paying up in full 2,500,000 ordinary shares of HKD1.00 each which were allotted and distributed as fully paid to the Company.

ii On 27 January 2011, the Company increased investment in its wholly owned subsidiary, Daya Urusharta Sdn. Bhd. (“DUSB”) via the subscription of an additional 99,998 ordinary shares of RM1.00 each at par for working capital purposes. The new ordinary shares subscribed in DUSB ranked pari passu in all respects with the existing ordinary shares of DUSB.




(c) Acquisition of non-controlling interests

i. On 30 November 2011, the Group, via its direct wholly-owned subsidiary, Daya CMT Sdn. Bhd. (“DCMT”) acquired a total of 200,000 ordinary shares of RM1.00 each of Daya Land & Development Sdn. Bhd. (formerly known as IHP Supply Sdn. Bhd.) (“DLD”) representing 40% of the total issued and paid-up share capital of DLD, from Soon Kok Lum, Ruby A/P Gnanabaranamand and Hor Ching Siew, respectively for a total cash consideration of RM550,000. Subsequent to the acquisition, DLD had becomed a 100% wholly owned subsidiary of DCMT. The Group recognised a decrease in non-controlling interests of RM538,180.

ii. On 2 June 2010, the Group, via its direct wholly-owned subsidiary, Daya CMT Sdn. Bhd. acquired additional four (4) ordinary shares of RM1.00 each representing 0.01% of the issued and paid-up share capital of CMT Industry (Kulim) Sdn. Bhd. from Goo Bak Hoo @ Goh Bak Hoe and Bong Hock Kim, both Malaysians for a cash consideration of RM4. The Group recognised a decrease in non-controlling interests of RM4.

(d) Incorporation of subsidiaries

i. The Group had, on 14 January 2010, via its direct wholly owned subsidiary, Daya Secadyme Sdn. Bhd. incorporated a private limited liability company known as PT Daya Secadyme Indonesia (“PTDSI”) in Indonesia with an authorised and fully paid-up share capital of USD100,000 divided into 100,000 ordinary shares of USD1.00 each. The principal activity of PTDSI is trading of petrochemical products.

ii. The Group had, on 26 August 2010, via its direct wholly owned subsidiary, DMB International Limited, incorporated a limited liability company known as Daya NCHO International Limited (formerly known as Daya Clarimax International Limited) (“DNIL”) in Hong Kong. The principal activity of DNIL is as investment holding for the tank services regionally.

iii. The Group had, on 15 November 2010, via its direct wholly owned subsidiary, Daya Proffscorp Sdn. Bhd., incorporated a private limited liability company known as Daya Proffscorp (Sabah) Sdn. Bhd. The principal activities of Daya Proffscorp (Sabah) Sdn. Bhd. is in ownership and hiring of forklifts, cranes and heavy machinery and provision of related manpower services in the onshore and offshore oil and gas industry.

iv. The Group had, on 15 November 2011, via its direct wholly owned subsidiary company, Daya Proffscorp Sdn. Bhd., incorporated a limited liability company known as Daya Proffscorp (Sabah) Sdn. Bhd.

(e) Disposal of subsidiaries

i. On 8 November 2011, Daya NCHO Sdn. Bhd. (“DNSB”) issued an additional 320,000 ordinary shares at RM1.00 each to NCHO Sdn. Bhd. (“NSB”) through capitalisation of an amount of RM320,000 out of advances owing to NSB (“Shares Issuance”). Upon the completion of Shares Issuance, the authorised share capital of DNSB is to increase to RM1,000,000 comprising 1,000,000 ordinary shares of RM1.00 each of which 1,000,000 ordinary shares of RM1.00 each have been issued and fully subscribed by its shareholders, Daya Clarimax Sdn. Bhd. (“DCLX”) (60%) and the joint venture partner, NSB (40%) in accordance with the provisions of the Joint Venture Agreement dated 27 January 2011 entered into between DCLX and NSB.

ii. On 15 September 2011, the Group via its direct wholly owned subsidiary, DMB International Limited disposed of 40,000 ordinary shares of HKD1.00 each in Daya NCHO International Limited (formerly known as Daya Clarimax International Limited) (“DNIL”) representing 40% of the issued and paid-up share capital of DNIL to NCHO Sdn. Bhd. for a total consideration of HKD40,000. Subsequent to the disposal, DNIL had ceased to be a subsidiary and become a jointly controlled entity.

iii. On 18 August 2010, the Group, via its direct wholly owned subsidiary, Daya OCI Sdn. Bhd. disposed of 1,800 ordinary shares of RM1.00 each in OCI Energy Services Sdn. Bhd. (“OCIES”) representing 56% of the issued and paid-up share capital of OCIES to Ombak Marine Group Sdn. Bhd. for a total cash consideration of RM201,529.




(e) Disposal of subsidiaries (cont’d)

The assets and liabilities disposed are as follows:

Group

2011 2010

Note RM RM

Property, plant and equipment 3,238,562 3,881

Inventories 178,991 -

Tax recoverable - 200,000

Trade and other receivables 1,028,404 1,000,000

Cash and bank balances 82,282 -

Trade and other payables (3,806,295) (1,000,000)

Deferred tax liabilities 21 - (696)

721,944 203,185

Less : Transfer to investment in jointly controlled entities 13 (625,166) -

Non-controlling interests (81,573) (90,214)

15,205 112,971

Gain on disposal of subsidiaries 6 496 88,558

Consideration received, satisfied in cash 15,701 201,529

Cash disposed of (82,282) -

Net cash (outflows)/inflows (66,581) 201,529

13. INVESTMENT IN JOINTLY CONTROLLED ENTITIES

Group

2011 2010

Note RM RM

Unquoted shares, at cost

At 1 January 750,000 -

Acquisition of subsidiaries 12 - 750,000

Acquisition of a joint venture company a 2 -

Increase in investment in a jointly controlled entity a 5,998 -

Incorporation of a joint venture company b 51,000 -

Distribution of profits from a jointly controlled entity (250,000) -

Transfer from investment in subsidiaries 12 625,166 -

At 31 December 1,182,166 750,000



13. INVESTMENT IN JOINTLY CONTROLLED ENTITIES (cont’d)

Group

2011 2010

Note RM RM

Shares of post acquisition reserve


Share of results of jointly controlled entities 28 1,394,943 310,692

Reversal of provision on foreseeable losses 240,836 -

At 31 December 1,946,471 310,692

Share of net assets 28 3,128,637 1,060,692

The aggregate amounts of each of the current assets, non-current assets, current liabilities, non-current liabilities, income and expenses related to the Group’s interests in the jointly-controlled entities are as follows:

Group

2011 2010

RM RM

Assets and liabilities

Current assets 5,372,602 1,751,732

Non-current assets 2,185,787 -

Total assets 7,558,389 1,751,732

Current liabilities 3,019,337 691,040

Non-current liabilities 1,461,414 -

Total liabilities 4,480,751 691,040

Income and expenses

Income 8,092,138 3,143,513

Expenses (6,697,195) (2,832,821)

Share of results of jointly controlled entities 1,394,943 310,692



13. INVESTMENT IN JOINTLY CONTROLLED ENTITIES (cont’d)

Details of the jointly controlled entities are as follows:

Effective equity interest

Country of incorporation Principal activities

2011 2010

Held through subsidiaries:

Daya Sheffield Sdn. Bhd. (formerly known as Daya OCI-Ascent Sdn. Bhd.)

51% 51% Malaysia Recruiting and providing specialised, qualified and professional personel for the onshore and offshore oil and gas industries.

DOCI-KWH 50% 50% Unincorporated Provision of repair for Sour Crude Tank and Slop Tank.

Terengganu Crude Oil Terminal 34% 34% Unincorporated Installation of pipeline from Angsi field, offshore Terengganu to Terengganu Crude Oil Terminal in Kerteh.

Daya NCHO International Limited (formerly known as Daya Clarimax International Limited)

60% - Hong Kong Investment holding to invest in tank services regionally.

Daya NCHO Sdn. Bhd. 60% - Malaysia Providing of ISO tank cleaning, repair and maintenance services.

Daya Campo (Sabah) Sdn. Bhd. 60% - Malaysia Investment holding.

(a) Acquisition of a joint venture company

On 28 September 2011, the Group, via its direct wholly owned subsidiary, Daya OCI Sdn. Bhd. (“DOCI”) acquired two (2) ordinary shares of RM1.00 in Daya Campo (Sabah) Sdn. Bhd. (“DCSB”) representing 100% of the issued and paid-up share capital of DCSB from Kamalukhair Abdullah and Dato’ Mazlin Bin Md. Junid, for a total consideration of RM2 only.

On 5 October 2011, DOCI entered into a Joint Venture Agreement with Campo Sdn. Bhd. (“Campo”) (“The Joint Venture”). The Joint Venture was undertaken through DCSB. The initial proposed capital outlay shall be RM10,000 and the equity sharing ratio under the Joint Venture is DOCI 60% and Campo 40%. DOCI will finance its 60% equity stake in DCSB from its internally generated funds.

(b) Incorporation of a joint venture company

On 26 October 2010, the Group, via its direct wholly owned subsidiary, Daya OCI Sdn. Bhd. (“DOCI”) incorporated a joint venture company under the name of Daya OCI-Ascent Sdn. Bhd. (“DASB”) with Ascent Offshore (Singapore) Pte Ltd. DASB was incorporated on 26 October 2010 as a private limited liability company with an authorised and fully paid-up share capital of RM100,000 divided into 100,000 ordinary shares of RM1.00 each. DASB’s issued and fully paid-up share capital is 51% owned by DOCI and 49% owned by Ascent Offshore (Singapore) Pte. Ltd. The principal activities of DASB are in supplying of services and equipments to exploration and extraction companies in the oil and gas industry.

On 10 November 2011, DOCI entered into a Supplemental Joint Venture Agreement to the Joint Venture Agreement (“JVA”) dated 25 August 2010 between DOCI, Sheffield Offshore Services Pte. Ltd. (“Sheffield”) and Ascent Offshore (Singapore) Pte. Ltd. (“Ascent”). Ascent shall cease to be a party and Sheffield shall take the place of Ascent as a party to the JVA. Sheffield shall pay to Ascent the sum of RM49,000 only in consideration of the transfer by Ascent to Sheffield of 49,000 ordinary shares of par value RM1.00 each in DASB. DASB’s name shall now be changed to “Daya Sheffield Sdn. Bhd.” and all cost incidental to this change of name shall be borne by DASB.



14. TRADE AND OTHER RECEIVABLES

Group Company

2011 2010 2011 2010

Note RM RM RM RM

Non-current

Non-trade

Staff loan a 1,271,456 1,809,111 - -

Current

Trade

Trade receivables 74,982,630 48,937,399 - -

Amount due from subsidiaries b - - 2,908,444 2,588,831

c 74,982,630 48,937,399 2,908,444 2,588,831

Less: Allowance for impairment loss (386,217) (1,296,248) - -

29 74,596,413 47,641,151 2,908,444 2,588,831

Non-trade

Deposits 2,529,969 5,063,342 182,350 458,120

Staff loans a 550,740 542,515 - -

Sundry receivables 9,186,638 4,358,970 716,953 27,404

Less: Allowance for impairment loss (350,000) (350,000) - -

d 8,836,638 4,008,970 716,953 27,404

Amount due from subsidiaries b - - 21,188,080 10,588,073

11,917,347 9,614,827 22,087,383 11,073,597

Total current trade and other receivables 86,513,760 57,255,978 24,995,827 13,662,428

Total trade and other receivables 29 87,785,216 59,065,089 24,995,827 13,662,428

Add: Cash and cash equivalents 18 62,840,884 34,152,997 5,224,754 7,400,676

Total loans and receivables 150,626,100 93,218,086 30,220,581 21,063,104

(a) Staff loans

Staff loans are unsecured and non-interest bearing except for the amount of RM1,809,111 (2010: RM2,317,578) which is a housing loan to a director and subject to interest rate at 5.55% (2010: 5.55%) per annum.

(b) Amount due from subsidiaries

The amounts due from the subsidiaries are unsecured, bear interest at 8.3% to 8.6% (2010: 7.55% to 8.3%) per annum and repayable on demand.

Further details on related party transactions are disclosed in Note 26.



14. TRADE AND OTHER RECEIVABLES (cont’d)

(c) Aging analysis of trade receivables

The ageing analysis of the Group’s and of the Company’s trade receivables is as follows:

Group Company

2011 2010 2011 2010

RM RM RM RM

Neither past due nor impaired 66,367,345 23,604,853 2,618,405 1,847,740

Past due not impaired:

- 1 to 30 days 3,499,941 8,691,258 - -

- 31 to 60 days 1,465,861 5,353,285 - -

- 61 to 90 days 1,876,821 3,933,575 - -

- 91 to 120 days 1,133,526 1,679,969 134,156 741,091

- More than 121 days 252,919 4,378,211 155,883 -

8,229,068 24,036,298 290,039 741,091

Impaired 386,217 1,296,248 - -

74,982,630 48,937,399 2,908,444 2,588,831

Receivables that are neither past due nor impaired

Trade receivables that are neither past due nor impaired are creditworthy debtors with good payment records with the Group and the Company.

None of the Group’s and of the Company’s trade receivables that are neither past due nor impaired have been renegotiated during the financial year.

Receivables that are past due but not impaired

The Group and the Company has trade receivables amounting to RM8,229,068 (2010: RM24,036,298) and RM290,039 (2010: RM741,091) respectively that are past due at the reporting date but not impaired.

No allowance for impairment is made as in the opinion of the management, significant portions of the outstanding debts is in line with the norm in the construction industry and would be collected in full within the next twelve months.



14. TRADE AND OTHER RECEIVABLES (cont’d)

(c) Aging analysis of trade receivables (cont’d)

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

Individually impaired

2011 2010

RM RM

Trade receivables - nominal amounts 386,217 1,296,248

Less: Allowance for impairment loss (386,217) (1,296,248)

- -

Movement in allowance accounts:

Group

2011 2010

Note RM RM

At 1 January 1,646,248 47,857

Allowance for impairment loss 6 230,439 1,598,391

Reversal of allowance for impairment loss 6 (1,140,470) -

At 31 December 736,217 1,646,248

Group

2011 2010

RM RM

The Group’s allowance accounts arise from:

Trade receivables 386,217 1,296,248

Sundry receivables 350,000 350,000

736,217 1,646,248

There is no allowance for impairment made for the Company during the year and prior year.

Trade receivables that are impaired relate to individually determined debtors that are in significant financial difficulties and have defaulted on payment. These receivables are not secured by any collateral or credit enhancements.

(d) Sundry receivables

Included in sundry receivables of the Group are amount due from a jointly controlled entity and receivables from legal suit against Mohd Akbar B Hj. Johari, AJ Premier Holdings Sdn. Bhd., Aims Mission Sdn. Bhd., Global Max Trading Sdn. Bhd. and Azrul Bin Mohd Nasir representative of Rasa Indah Trading amounted to RM3,538,459 (2010: Nil) and RM1,942,250 (2010: RM1,942,250) respectively.



15. INVENTORIES

Group

2011 2010

RM RM

At cost:

Raw materials 5,102,660 5,823,165

Work-in-progress 74,466 65,706

Finished goods 5,736,952 6,941,227

Goods in-transit 116,152 -

Consumables 3,151,306 598,008

14,181,536 13,428,106

Assets pledged as security

The Group’s inventories amounted to RM6,835,341 (2010: RM6,973,789) have been pledged to a licensed bank as securities for the bank facilities as disclosed in Note 22.

16. OTHER CURRENT ASSETS

Group Company

2011 2010 2011 2010

Note RM RM RM RM

Amount due from customers on contracts a 22,074,506 4,168,865 - -

Prepayments b 540,535 871,800 174,000 136,014

22,615,041 5,040,665 174,000 136,014 (a) Amount due from customers on contracts

Group Company

2011 2010 2011 2010

RM RM RM RM

Aggregate costs incurred to date 305,500,193 189,986,322 - -

Add: Attributable profits 61,919,970 50,314,762 - -

367,420,163 240,301,084 - -

Less: Progress billings (345,345,657) (236,132,219) - -

22,074,506 4,168,865 - -

Included in the construction contract costs during the year is the hiring costs of plant and machinery amounting to RM2,249,736 (2010: RM2,319,402).

(b) Prepayments Included in prepayments of the Group in the prior year are advance payments made to suppliers for the purchase of raw

materials amounting to RM101,163.



17. MARKETABLE SECURITIES

Group

2011 2010

Note RM RM

Financial assets at fair value through profit or loss

Shares quoted in Malaysia

Cost

At 1 January 140,000 29,600

Additions 114,900 110,400

Disposals (48,200) -

At 31 December 206,700 140,000

Accumulated fair value gains


Fair value gain on marketable securities 6 18,428 18,600

At 31 December 37,028 18,600

Market value of quoted shares 243,728 158,600

18. CASH AND CASH EQUIVALENTS

Group Company

2011 2010 2011 2010

Note RM RM RM RM

Short term investments 29, a 3,707,582 2,422,352 680,155 2,341,905

Fixed deposits with licensed banks 29, b 41,231,219 21,115,259 4,070,225 2,198,627

Cash and bank balances 17,902,083 10,615,386 474,374 2,860,144

14,30 62,840,884 34,152,997 5,224,754 7,400,676

(a) Short term investments

The information on financial risks of short term investments are disclosed in Note 29.

(b) Fixed deposits with licensed banks

The Group and the Company’s fixed deposits amounted to RM24,732,529 (2010: RM17,603,031) and RM2,262,725 (2010: RM2,198,627) respectively have been pledged to licensed banks for banking facilities granted to the Company and its subsidiaries.

Included in the Group’s fixed deposits in the prior year is an amount of RM1,144,936 which is registered in the name of a subsidiary’s director and held in trust on behalf of the Group.

The interest rates and maturity profile of the fixed deposits are disclosed in Note 29.



19. SHARE CAPITAL

Group and Company

Number of ordinary

shares of RM0.10 each Amount

Note 2011 2010 2011 2010

RM RM

Authorised:

At 1 January/31 December 2,000,000,000 2,000,000,000 200,000,000 200,000,000

Issued and fully paid:

At 1 January 1,096,736,941 826,300,330 109,673,694 82,630,033

Ordinary shares issued during the year:

Issued for bonus shares a - 176,122,823 - 17,612,282

Issued for cash b 85,000,000 79,800,000 8,500,000 7,980,000

Conversion of RCSLN c 17,421,603 14,513,788 1,742,160 1,451,379

At 31 December 1,199,158,544 1,096,736,941 119,915,854 109,673,694

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.

On 26 February 2009, the shareholders of the Company had approved the proposed establishment of an Employee Share Option Scheme for the eligible directors and employees of the Company and its subsidiaries. However, no options have been awarded at the date of reporting.

(a) Ordinary shares issued pursuant to bonus issue

In prior year, the Company had issued 176,122,823 ordinary shares of RM0.10 each in the Company (“DMB Shares”) pursuant to the bonus issue of 176,122,823 DMB Shares (“Bonus Shares”), on the basis of one (1) Bonus Share for every five (5) DMB Shares held by shareholders of DMB whose names appeared in the Record of Depositors of the Company at the close of business at 5.00 p.m. on 2 July 2010 (“Bonus Issue”). The share issue costs of RM76,246 have been included in the share premium account.

(b) Ordinary shares issued for cash

The issuance of 85,000,000 new ordinary shares of RM0.10 each in the Company through a private placement to identified investors.

The shares premium of RM10,225,000 arising from the issuance of ordinary shares and the share issue costs of RM1,850,435 have been included in the share premium account. The new ordinary shares rank pari passu in all respects with the existing ordinary shares of the Company.

(c) Conversion of Redeemable Convertible Secured Loan Notes

The issuance of 17,421,603 new ordinary shares of RM0.10 each in the Company pursuant to the conversion of RM3 million Redeemable Convertible Secured Loan Notes at a conversion price of RM0.1722 per share.



20. RESERVES

Group Company

2011 2010 2011 2010

Note RM RM RM RM

Distributable reserve:

Retained profits 35, a 70,940,064 56,367,961 16,446,837 6,347,303

Non-distributable reserves:

Capital reserve b - - 17,256,197 17,256,197

Foreign translation reserve c 171,750 192,289 - -

Treasury shares d (317,049) - (317,049) -

Equity component of

Redeemable Convertible

Secured Loan Notes e 286,824 365,049 286,824 365,049

Share premium f 19,630,261 9,997,856 19,630,261 9,997,856

90,711,850 66,923,155 53,303,070 33,966,405

(a) Retained profits

Prior to the year of assessment 2009, Malaysian companies adopt the full imputation system. In accordance with the Finance Act 2007 which was gazetted on 28 December 2007, companies shall not be entitled to deduct tax on dividends paid, credited or distributed to its shareholders, and such dividends will be exempted from tax in the hands of the shareholders (“single tier system”). However, there is a transitional period of six years, expiring on 31 December 2013, to allow companies to pay franked dividends to their shareholders under limited circumstances. Companies also have an irrevocable option to disregard the 108 balance and opt to pay dividends under the single tier system. The change in the tax legislation also provides for the 108 balance to be locked-in as at 31 December 2007 in accordance with Section 39 of the Finance Act 2007.

As at 31 December 2011, the 108 balance of the Company is nil (2010: RM245,596). The Company may distribute dividends out of its entire retained profits as at 31 December 2011 under the single tier system.

The Company has, pending agreement with the tax authorities, tax-exempt income of approximately RM145,000 (2010: RM145,000) as at 31 December 2011 available for distribution by way of tax-exempt dividends.

(b) Capital reserve

This reserve is used to record the increase in the cost of investments in a subsidiary to the fair value of the consideration given as a result of adopting FRS 127.

(c) Foreign translation reserve

The translation reserve comprises all foreign currency differences arising from the translation of the financial statements of the Group entities with functional currencies other than RM.

(d) Treasury shares

The shareholders of the Company, by a special resolution passed in a general meeting held on 20 June 2011, approved the Company’s plan to repurchase its own shares. The Directors of the Company are committed to enhance the value of the Company to its shareholders and believe that the repurchase plan can be applied in the best interests of the Company and its shareholders.

For the year ended 31 December 2011, the Company repurchased 1,787,100 (2010: Nil) of its issued share capital from the open market. The average price paid for the shares repurchased was RM0.18 per share. The repurchase transactions were financed by internally generated funds. The shares repurchased were retained as treasury shares.

As at 31 December 2011, the issued and paid up capital of the Company comprising 1,199,158,544 ordinary shares of RM0.10 each of which 1,787,100 (2010: Nil) ordinary shares of RM0.10 each are held as treasury shares.



20. RESERVES (cont’d)

(e) Equity component of Redeemable Convertible Secured Loan Notes

Group and Company

2011 2010

Note RM RM

At 1 January 365,049 443,273

Conversion to share capital (78,225) (78,224)

At 31 December 22(c) 286,824 365,049

This reserve represents the fair value of the equity component of the Redeemable Convertible Secured Loan Notes, net of deferred tax, as determined on the date of issue.

(f) Share premium

This amount arose from premium on the issue of ordinary shares above par value.

The movement in share premium account is as follows:

Group and Company

2011 2010

RM RM

At 1 January 9,997,856 18,184,346

Ordinary shares issued during the year:

Issued for cash 10,225,000 8,956,000

Pursuant to conversion of RCSLN 1,257,840 1,548,621

Transaction cost (1,850,435) (1,078,829)

Issued for bonus shares - (17,612,282)

At 31 December 19,630,261 9,997,856

21. DEFERRED TAX

Assets Liabilities Net

2011 2010 2011 2010 2011 2010

Group Note RM RM RM RM RM RM

At 1 January 1,301,871 62,698 2,387,603 2,092,404 (1,085,732) (2,029,706)

Acquisition of subsidiaries 12 - - - 696 - (696)

Recognised in income statements 7 (103,026) 1,239,173 (218,230) 318,821 115,204 920,352

Recognised in equity 22 - - (19,222) (23,622) 19,222 23,622

Disposal of a subsidiary 12 - - - (696) - 696

At 31 December 28 1,198,845 1,301,871 2,150,151 2,387,603 (951,306) (1,085,732)

Company

At 1 January 73,433 16,330 113,990 163,715 (40,557) (147,385)

Recognised in income statements 7 (28,573) 57,103 (4,707) (26,103) (23,866) 83,206

Recognised in equity 22 - - (19,222) (23,622) 19,222 23,622

At 31 December 44,860 73,433 90,061 113,990 (45,201) (40,557)



21.

DEF

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At 3

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Reco

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At 3

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RM

R

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RM

R

M

RM

Def

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21. DEFERRED TAX (cont’d)

At 1 January

2010

Recognised in income

statements

Recognised in equity (Note 22)

At 31 December

2010/ 1 January

2011


statements

Recognised in equity (Note 22)

At 31 December

2011

Company RM RM RM RM RM RM RM

Deferred Tax Liabilities

Property, plant and equipment 18,589 4,316 - 22,905 18,975 - 41,880

RCSLN 145,126 (30,419) (23,622) 91,085 (23,682) (19,222) 48,181

163,715 (26,103) (23,622) 113,990 (4,707) (19,222) 90,061

At 1 January 2010


statements

At 31 December

2010/ 1 January

2011


statementsRecognised

in equity

At 31 December

2011

Company RM RM RM RM RM RM

Deferred Tax Assets

Deductible temporary differences (16,330) (57,103) (73,433) 28,573 - (44,860)

22. LOANS AND BORROWINGS

Group Company

2011 2010 2011 2010

Note RM RM RM RM

Secured

Non-current

Term loans a 36,142,404 38,504,294 7,757,500 16,347,500

Hire purchase payables b 1,911,947 1,807,486 472,071 -

Redeemable Convertible Secured Loan Notes 29, c 10,807,270 13,635,653 10,807,270 13,635,653

48,861,621 53,947,433 19,036,841 29,983,153

Current

Term loans a 10,099,036 9,123,562 5,950,348 6,394,922

Hire purchase payables b 753,695 1,074,747 83,653 12,145

Bankers’ acceptance 29 3,270,000 2,178,000 - -

Bank overdraft 29 3,739,469 2,191,567 - -

17,862,200 14,567,876 6,034,001 6,407,067

Total loans and borrowings

23, 28 29, 30 66,723,821 68,515,309 25,070,842 36,390,220



22. LOANS AND BORROWINGS (cont’d)

(a) Term loans

Included in the term loans is an amount of RM6,050,207 (2010: RM1,648,448) which is the term loan approved under the Green Technology Financing Scheme (“GTFS”). Under the GTFS’s approved term loan, the Government of Malaysia is to bear 2.00% of the total interest rate and a guarantee of 60% on the term loan via Credit Guarantee Corporation Malaysia Berhad.

The securities given for the term loans are disclosed in Note 22 (d).

(b) Hire purchase payables

Group Company

2011 2010 2011 2010

Note RM RM RM RM

Minimum lease payment

Not later than 1 year 885,480 1,228,256 108,576 12,560

Later than 1 year and not later than 2 years 986,591 1,183,422 108,576 -

Later than 2 years and not later than 5 years 1,091,594 795,306 419,381 -

2,963,665 3,206,984 636,533 12,560

Future finance charges (298,023) (321,207) (80,809) (415)

Present value of hire purchase liabilities 2,665,642 2,885,777 555,724 12,145

Present value of hire purchase liabilities

Not later than 1 year 753,963 1,074,747 83,653 12,145

Later than 1 year and not later than 2 years 896,239 1,063,117 88,276 -

Later than 2 years and not later than 5 years 1,015,440 744,369 383,795 -

2,665,642 2,882,233 555,724 12,145

Analysed as

Due within 12 months 753,695 1,074,747 83,653 12,145

Due after 12 months 1,911,947 1,807,486 472,071 -

29 2,665,642 2,882,233 555,724 12,145




(c) Redeemable Convertible Secured Loan Notes (“RCSLN”)

On 3 December 2009, the Company issued RM20,000,000 of 4-year Redeemable Convertible Secured Loan Notes for the funding on future synergistic acquisitions of the Group, meet the working requirements of the Group, and to defray the expenses incidental to the RCSLN issue. The terms of the RCSLN are as follows:

(i) The registered holder(s) of the RCSLN will have the option to convert the nominal value of the RCSLN into new ordinary shares of RM0.10 each in the Company at any time during the conversion period, in the following manner:

- Within the first two (2) years from the issue date of the RCSLN, up to RM3 million nominal value of the RCSLN per month; and

- Thereafter, all or part of the outstanding RCSLN at the registered holder(s)’ discretion.

(ii) The RCSLN are convertible into new ordinary shares of RM0.10 each in the Company (“DMB Shares”) at a conversion price of RM0.31 per new DMB share. The conversion price of the RCSLN of RM0.31 was arrived at based on a premium of approximately 22% to the 30-day volume weighted average closing price of DMB Shares of RM0.2537 up to and including 16 April 2009 being the date the terms of the RCSLN were mutually agreed upon. On 25 June 2009, the conversion price of the RCSLN of RM0.31 was adjusted to RM0.2067 pursuant to the bonus issue of 270,595,514 DMB shares, credited as fully paid up, on the basis of 1 DMB Share for every 2 DMB Shares held on 24 June 2009.

(iii) Unless previously redeemed or converted, upon the close of business on the maturity date, all outstanding RCSLN (excluding the RCSLN to be converted on the maturity date) will be redeemed at par by cash and in one lump sum.

(iv) The Company shall have the option to either repurchase or nominate another party to purchase up to RM3 million nominal value of the RCSLN in each calendar month from the registered holder(s) at any time after the second anniversary of the issue date of the RCSLN at a price of 130% of the RCSLN’s nominal value.

(v) The RCSLN bear interest at 4.00% per annum payable quarterly in arrears during the tenure of the RCSLN applicable to those RCSLN which have not been converted prior to the maturity of the RCSLN.

(vi) The RCSLN constitute direct, unconditional, unsubordinated and secured obligations of the issuer ranking pari passu without discrimination, preference or priority with other secured obligations of the issuer, in priority to all present and future unsecured obligations of the issuer from time to time subject to those preferred by law.

(vii) The RCSLN is secured by way of a pledge of 100% unquoted shares over the entire issued and paid up capital of one of its subsidiaries with a carrying amount of RM28,488,131 (2010: RM28,488,131) as disclosed in Note 12.

(viii) On 3 July 2010, the conversion price of the RCSLN of RM0.2067 was adjusted to RM0.1722 pursuant to the bonus issue of 176,122,823 new DMB shares, credited as fully paid up, on the basis of 1 DMB Share for every 5 DMB Shares held on 2 July 2010.

The proceeds received from the issue of the RCSLN have been split between the liability component and the equity component, representing the fair value of the conversion option. The RCSLN are accounted for in statements of financial position of the Group and of the Company as follows:

2011 2010

Note RM RM

Nominal value

At 1 January 14,000,000 17,000,000

Less: Conversion to new ordinary shares (3,000,000) (3,000,000)

At 31 December 11,000,000 14,000,000

Less: Unamortised discount (192,730) (364,347)

29 10,807,270 13,635,653




(c) Redeemable Convertible Secured Loan Notes (“RCSLN”) (cont’d)

The amounts recognised in the statements of financial position of the Group and of the Company may be analysed as follows:

2011 2010

Note RM RM

Liability component as at 31 December:

Nominal value of the convertible loan notes 11,000,000 14,000,000

Add: Discount on convertible loan notes

At 1 January 124,837 10,522

Discount during the year 6 74,170 114,315

At 31 December 199,007 124,837

11,199,007 14,124,837

Equity component, net of deferred tax 20(e) (286,824) (365,049)

Deferred tax liabiliy recognised in equity

At 1 January (124,135) (147,757)

Deferred tax liability recognised during the year 21 19,222 23,622

At 31 December (104,913) (124,135)

10,807,270 13,635,653

Interest expense recognised in income statements during the year 5 445,589 600,986

Interest paid during the year (445,589) (600,986)

Interest expense on the convertible notes is calculated on the effective yield basis by applying the coupon interest rate of 4.00% per annum.

(d) Security

Group

The loans and borrowings are secured by way of:

(i) legal charges over subsidiaries freehold land and buildings;

(ii) corporate guarantee by the Company;

(iii) a debenture over all assets of certain subsidiaries;

(iv) a pledge on the Company and subsidiaries’ fixed deposits; and

(v) a pledge of 100% unquoted shares over the entire issued and paid-up share capital of certain subsidiaries with a carrying amount of RM112,308,946 (2010: RM112,308,946) and RM28,488,131 (2010 : RM28,488,131) as disclosed in Note 12.

Company The loans and borrowings are secured by way of:

(i) a facility agreement to be executed between the Company and the bank;

(ii) a pledge of 100% unquoted shares over the entire issued and paid-up capital of certain subsidiaries with a carrying

amount of RM112,308,946 (2010: RM112,308,946) and RM28,488,131 (2010 : RM28,488,131) as disclosed in Note 12.

(iii) third party secured legal charge over a subsidiary’s freehold land and building; and

(iv) a pledge on the Company’s fixed deposits.

Other information on financial risks of loans and borrowings are disclosed in Note 29.



23. TRADE AND OTHER PAYABLES

Group Company

2011 2010 2011 2010

Note RM RM RM RM

Non-current

Other payables

Deposits a 3,000,000 5,000,000 3,000,000 5,000,000

Current

Trade payables

Third parties b 51,728,769 10,372,504 - -

Other payables

Accruals 3,193,328 9,481,918 994,625 2,658,493

Deposits a 2,000,000 2,000,000 2,000,000 2,000,000

Other payables 37,551,491 13,724,043 580 1,768

Amount due to subsidiaries c - - 430,869 5,404,446

42,744,819 25,205,961 3,426,074 10,064,707

Total current trade and other payables 94,473,588 35,578,465 3,426,074 10,064,707

Total trade and other payables 29 97,473,588 40,578,465 6,426,074 15,064,707

Add: Loans and borrowings 22 66,723,821 68,515,309 25,070,842 36,390,220

Total financial liabilities carried at amortised cost 164,197,409 109,093,774 31,496,916 51,454,927

(a) Deposits

Included in deposits are sums placed by vendors in lieu of the profit guarantees amounted to RM5,000,000 (2010: RM7,000,000) given of the acquired subsidiaries as disclosed in Note 12.

(b) Trade payables

The normal trade credit terms granted to the Group from the trade payables are ranging from 30 to 90 days (2010: 30 to 90 days).

(c) Amount due to subsidiaries

Included in amounts due to subsidiaries in the prior year are loan and advances amounting to RM5,404,446 which bear interest at 4.00% to 7.50% per annum. The amounts are repayable on demand.



24. PROVISIONS

Group

2011 2010

RM RM

Defect liability

At 1 January 2,320,733 667,860

Arose during the year 995,551 2,398,734

Utilised / Reversal (1,607,007) (745,861)

At 31 December 1,709,277 2,320,733

The provision for defect liability relates to the construction works done by the technical services segment. The provision is based on estimates made from historical defect claims data from the past construction works.

25. COMMITMENTS

(a) Capital commitments

Capital expenditure as at the reporting date is as follows:

Group Company

2011 2010 2011 2010

RM RM RM RM

Contracted and not provided for

Property, plant and equipment 1,501,687 9,673,724 321,793 665,234

Approved but not contracted for

Property, plant and equipment 1,606,902 9,062,920 - -

(b) Operating lease commitments - as lessee

As at 31 December, the Group had future minimum lease payments payable under non-cancellable operating leases in respect of its buildings which fall due as follows:

Group

2011 2010

RM RM

Not later than 1 year 83,800 47,550

Later than 1 year but not later than 5 years 86,250 102,600

170,050 150,150



25. COMMITMENTS (cont’d)

(c) Operating lease commitments - as lessor

The Group has entered into commercial property leases on its investment properties and certain of its property, plant and equipment where only an insignificant portion is held to earn rentals or for capital appreciation. These non-cancellable leases have remaining lease terms of between 1 to 10 years. All leases include a clause to enable upward revision of the rental charge on an annual basis based on prevailing market conditions.

Future minimum rentals receivable under non-cancellable operating leases at the reporting date are as follows:

Group

2011 2010

RM RM

Not later than 1 year 339,892 134,100

Later than 1 year but not later than 5 years 1,348,760 142,200

More than 5 years 819,270 -

2,507,922 276,300

(d) Finance lease commitments

The Group has finance lease for certain of its property, plant and equipment. The future minimum lease payments under

finance leases together with the present value of the net minimum lease payments are disclose in Note 22.

26. RELATED PARTY DISCLOSURES

(a) In addition to the transactions detailed elsewhere in the financial statements, the Group and the Company have the following transactions with related parties during the financial year:

2011 2010

Note RM RM

Group

Purchases of raw materials from a company in which a director of a subsidiary has an interest

- Oticom Corporation 2,409,775 926,944

- Cominet Corporation - 2,925,360

Housing loan to a director - 2,720,314

Interest income charged on housing loan to a director 99,344 117,503

Company

Subsidiaries:

- Dividends received 3, 6 15,447,271 4,325,165

- Management fees received/receivable 3 8,044,910 3,913,291

- Interest received/receivable 996,631 1,035,196

- Interest paid/payable 5 155,237 429,219

- Advances received - 9,500,000

- Advances given 4,738,168 10,635,511

The directors are of the opinion that these transactions have been entered into in the normal course of business and have been established under negotiated terms.

The information on outstanding balances in respect of the above transactions is disclosed in Note 14 and 23.



26. RELATED PARTY DISCLOSURES (cont’d)

(b) Compensation of key management personnel

The remuneration of directors and other members of key management personnel during the year was as follow:

Group Company

2011 2010 2011 2010

Note RM RM RM RM

Short term employee benefits 6,397,232 11,306,966 2,775,370 3,359,928

Pension costs

- Defined contribution plan 554,939 1,206,898 300,733 373,084

6,952,171 12,513,864 3,076,103 3,733,012

Included in the total compensation of key management personnel are:

- Remuneration for the Company’s directors 6 2,077,360 4,168,024 1,691,220 3,114,452

- Remuneration for the Company’s past directors 6 534,505 - 334,505 -

- Directors’ fees for the Company’s directors 6 165,000 159,000 141,000 144,000

- Directors’ fees for the Company’s past directors 6 15,000 - 15,000 -

The key management personnel comprise persons having authority and responsibility for planning, directing and controlling the activities of the Group entities either directly or indirectly.

27. EMPLOYEE BENEFIT EXPENSE

Group Company

2011 2010 2011 2010

Note RM RM RM RM

Wages and salaries 14,955,988 20,007,693 2,945,119 3,365,665

Social security costs 134,376 119,342 6,395 2,265

Pension costs - defined contribution plans 1,498,437 2,198,222 344,531 390,952

Overtime and allowances 1,063,705 635,173 115,039 82,000

6 17,652,506 22,960,430 3,411,084 3,840,882

28. SEGMENTAL REPORTING

(a) Reporting format

The primary segment reporting format is determined to be business segments as the Group’s risks and rates of return are affected predominantly by differences in the products and services produced. Secondary information is reported geographically. The operating businesses are organised and managed separately according to the nature of the products and services provided, with each segment representing a strategic business unit that offers different products and serves different markets.



28.

SEG

MEN

TAL

REPO

RTIN

G (

cont

’d)

(b)

Busi

ness

seg

men

ts

Th

e fo

llow

ing

tabl

e pr

ovid

es a

n an

alys

is o

f the

Gro

up’s

reve

nue,

resu

lts, a

sset

s an

d lia

bilit

ies

and

othe

r inf

orm

atio

n by

bus

ines

s se

gmen

ts:

P

olym

er

Oil

& G

as

Tec

hnic

al S

ervi

ces

O

ther

s

G

roup

201

1 2

010

201

1 2

010

201

1 2

010

201

1 2

010

201

1 2

010

Not

e R

M

RM

R

M

RM

R

M

RM

R

M

RM

R

M

RM

Reve

nue

Reve

nue

from

ext

erna

l cu

stom

ers

19,

309,

692

30,

632,

016

10

1,61

5,01

1 5

1,47

5,94

1

160,

817,

456

92,

108,

472

420

,030

5

76,6

07

28

2,16

2,18

9

174,

793,

036

Inte

rseg

men

t rev

enue

- -

- -

(35,

058)

(25,

668)

(381

,200

) (5

44,4

52)

(416

,258

) (5

70,1

20)

19,

309,

692

30,

632,

016

101,

615,

011

51,

475,

941

160,

782,

398

92,

082,

804

38,

830

32,

155

281,

745,

931

174,

222,

916

Resu

lts

Segm

ent r

esul

ts 1

,130

,425

2

,756

,902

1

6,86

2,25

0 1

5,61

3,33

4 6

,232

,685

9

,483

,105

(6

40,3

82)

(677

,958

) 2

3,58

4,97

8 2

7,17

5,38

3

Una

lloca

ted

resu

lts 2

,753

,682

(1

,604

,555

)

Profi

t fro

m o

pera

tions

26,

338,

660

25,

570,

828

Fina

nce

cost

s5

(3,9

73,3

37)

(3,1

48,6

46)

Shar

e of

resu

lts o

f joi

ntly

co

ntro

lled

entit

ies

13 1

,394

,943

3

10,6

92

Profi

t bef

ore

tax

23,

760,

266

22,

732,

874

Inco

me

tax

expe

nse

7 (6

,317

,664

) (5

,767

,223

)

Profi

t for

the

year

17,

442,

602

16,

965,

651

Ass

ets a

nd li

abili

ties

Segm

ent a

sset

s 2

1,58

1,99

3 2

2,54

4,86

3 12

8,88

9,34

6 10

0,78

1,34

5 12

6,90

6,18

4 7

2,04

9,85

0 4

,718

,635

2

42,6

68 2

82,0

96,1

58 1

95,6

18,7

26

Inve

stm

ent i

n jo

intly

co

ntro

lled

entit

ies

13 3

,128

,637

1

,060

,692

Tax

reco

vera

ble

2,2

05,8

69

3,5

61,8

48

Una

lloca

ted

asse

ts 9

0,68

4,12

6 9

1,80

8,34

7

Tota

l ass

ets

378,

114,

790

292,

049,

613



28.

SEG

MEN

TAL

REPO

RTIN

G (

cont

’d)

(b)

Busi

ness

seg

men

ts (

cont

’d)

Th

e fo

llow

ing

tabl

e pr

ovid

es a

n an

alys

is o

f the

Gro

up’s

reve

nue,

resu

lts, a

sset

s an

d lia

bilit

ies

and

othe

r inf

orm

atio

n by

bus

ines

s se

gmen

ts (c

ont’d

):

P

olym

er

Oil

& G

as

Tec

hnic

al S

ervi

ces

O

ther

s

G

roup

201

1 2

010

201

1 2

010

201

1 2

010

201

1 2

010

201

1 2

010

Not

e R

M

RM

R

M

RM

R

M

RM

R

M

RM

R

M

RM

Ass

ets a

nd li

abili

ties

(con

t’d)

Segm

ent l

iabi

litie

s 6

40,7

56

1,3

19,0

02

26,

992,

794

7,8

19,5

21

65,

390,

020

23,

806,

789

387

,139

2

93,6

26

93,

410,

709

33,

238,

938

Corp

orat

e lia

bilit

ies

5,7

72,1

56

9,6

60,2

60

Loan

s and

bor

row

ings

bo

rrow

ings

22 6

6,72

3,82

1 6

8,51

5,30

9

Tax

paya

ble

6

29,0

94

2,3

93,4

69

Def

erre

d ta

x lia

bilit

ies

21

951

,306

1

,085

,732

Tota

l lia

bilit

ies

16

7,48

7,08

6 11

4,89

3,70

8

Oth

er in

form

atio

n

Capi

tal e

xpen

ditu

re

Prop

erty

, pla

nt a

nd

equi

pmen

t9

250

,863

4

42,4

97

6,7

44,7

34

20,

549,

831

6,9

51,5

86

10,

215,

893

4,0

96,7

66

23,

337

18,

043,

949

31,

231,

558

Inta

ngib

le a

sset

s 11

86,

842

- -

- 2

56,2

13

- 5

6,87

0 -

399

,925

-

337

,705

4

42,4

97

6,7

44,7

34

20,

549,

831

7,2

07,7

99

10,

215,

893

4,1

53,6

36

23,

337

18,

443,

874

31,

231,

558

Dep

reci

atio

n an

d am

ortis

atio

n

Prop

erty

, pla

nt a

nd

equi

pmen

t9

528

,696

6

50,7

79

2,7

13,8

72

2,3

53,7

67

955

,680

8

53,2

67

244

,635

1

79,2

81

4,4

42,8

83

4,0

37,0

94

Inve

stm

ent p

rope

rtie

s 10

- -

10,

457

10,

736

4,5

38

4,5

38

- -

14,

995

15,

274

Inta

ngib

le a

sset

s 11

1,4

47

60,

004

- -

2,8

75

- 9

48

- 5

,270

6

0,00

4

530

,143

7

10,7

83

2,7

24,3

29

2,3

64,5

03

963

,093

8

57,8

05

245

,583

1

79,2

81

4,4

63,1

48

4,1

12,3

72



28. SEGMENTAL REPORTING (cont’d)

(c) Geographical segments:

Revenue, segment assets and capital expenditures based on geographical location of customers and assets are as follows:

Total revenue from external customers Segment assets Capital expenditure

2011 2010 2011 2010 2011 2010

RM RM RM RM RM RM

Malaysia 280,961,616 174,222,916 282,029,260 195,618,726 18,376,976 31,231,558

Other Asian countries 784,315 - 66,898 - 66,898 -

Consolidated 281,745,931 174,222,916 282,096,158 195,618,726 18,443,874 31,231,558

The Group’s operations are mainly located in Malaysia.

29. FINANCIAL INSTRUMENTS

(a) 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 interest rate risk, foreign currency risk, liquidity risk and credit risk.

The Group’s financial risk management policy seeks to ensure that adequate financial resources are available for the development of the Group’s business whilst managing its interest rate risk, foreign currency risk, liquidity risk and credit risk. The policies for managing each of these risks are summarised below. It is the Group’s policy that no trading in derivative financial instruments shall be undertaken.

The following sections provide details regarding the Group’s and the Company’s exposure to the above-mentioned financial risks and the objectives, policies and processes for the management of these risks.

(b) 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. The Group’s and the Company’s exposure to interest rate risk arises primary from their loans and borrowings and advances at floating rates given to related companies as the Group and the Company had no substantial long-term interest-bearing assets as at 31 December 2011. The investments in financial assets are mainly short term in nature and they are not held for speculative purposes.

The Group manages its interest rate exposure by maintaining a prudent mix of fixed and floating rate borrowings. The Group reviews its debt portfolio, taking into account the investment holding period and nature of its assets. This strategy allows it to capitalise on cheaper funding in a low interest rate environment and achieve a certain level of protection against rate hikes.

At the reporting date, the Group and the Company does not have significant interest risk exposure except as disclosed below.

Sensitivity analysis for interest rate risk

At the reporting date, if interest rates had been 100 basis points lower/higher, with all other variables held constant, the Group’s and the Company’s profit before tax would have been RM473,484 (2010: RM495,751) and RM110,688 (2010: RM126,281) higher/lower, arising mainly as a result of lower/higher interest expense on floating rate loan and borrowings and higher/lower interest income from floating rate loans to related parties. The assumed movement in basis points for interest rate sensitivity analysis is based on the currently observable market environment.



29.

FIN

AN

CIA

L IN

STRU

MEN

TS (

cont

’d)

(b)

Inte

rest

rate

risk

(co

nt’d

)

Th

e fo

llow

ing

tabl

es se

t out

the

carr

ying

am

ount

s, th

e in

tere

st ra

tes a

s at t

he re

port

ing

date

and

the

rem

aini

ng m

atur

ities

of t

he G

roup

’s an

d of

the

Com

pany

’s fin

anci

al

inst

rum

ents

that

are

exp

osed

to in

tere

st ra

te ri

sk:

Inte

rest

rate

W

ithi

n1

year

1

-2 y

ear

2-3

yea

rs

3-4

yea

rs

4-5

yea

rs

Mor

e th

an5

year

s T

otal

Not

e %

R

M

RM

R

M

RM

R

M

RM

R

M

Gro

up

At 3

1 D

ecem

ber 2

011

Fixe

d ra

te

Fina

ncia

l ass

ets

Fixe

d de

posi

ts18

2.50

- 3.

29 4

1,23

1,21

9 -

- -

- -

41,

231,

219

Fina

ncia

l lia

bilit

ies

Term

loan

s 7.

60 2

80,5

40

302

,620

3

26,4

37

352

,129

3

79,8

43

553

,362

2

,194

,931

Hire

pur

chas

e22

2.34

- 4.

00 7

53,6

95

896

,239

6

55,5

01

156

,136

1

08,3

12

95,

759

2,6

65,6

42

RCSL

N

224.

00 -

- 1

0,80

7,27

0 -

- -

10,

807,

270

Floa

ting

rate

Fina

ncia

l ass

ets

Shor

t ter

m in

vest

men

ts18

1.00

- 3.

10 3

,707

,582

-

- -

- -

3,7

07,5

82

Hou

sing

loan

to a

dire

ctor

5.55

537

,655

5

68,0

13

600

,352

1

03,0

91

- -

1,8

09,1

11

Fina

ncia

l lia

bilit

ies

Term

loan

s3.

15 -

7.60

9,8

18,4

96

14,

620,

684

3,7

30,6

49

3,4

09,0

75

3,3

97,4

86

9,0

70,1

19

44,

046,

509

Bank

ove

rdra

ft22

7.00

- 8.

00 3

,739

,469

-

- -

- -

3,7

39,4

69

Bank

ers’

acce

ptan

ce22

2.97

- 4.

47 3

,270

,000

-

- -

- -

3,2

70,0

00



29.

FIN

AN

CIA

L IN

STRU

MEN

TS (

cont

’d)

(b)

Inte

rest

rate

risk

(co

nt’d

)

Th

e fo

llow

ing

tabl

es se

t out

the

carr

ying

am

ount

s, th

e in

tere

st ra

tes a

s at t

he re

port

ing

date

and

the

rem

aini

ng m

atur

ities

of t

he G

roup

’s an

d of

the

Com

pany

’s fin

anci

al

inst

rum

ents

that

are

exp

osed

to in

tere

st ra

te ri

sk (

cont

’d): Inte

rest

rate

W

ithi

n1

year

1

-2 y

ear

2-3

yea

rs

3-4

yea

rs

4-5

yea

rs

Mor

e th

an5

year

s T

otal

Not

e %

R

M

RM

R

M

RM

R

M

RM

R

M

Gro

up

At 3

1 D

ecem

ber 2

010

Fixe

d ra

te

Fina

ncia

l ass

ets

Fixe

d de

posi

ts18

2.50

- 3.

70 2

1,11

5,25

9 -

- -

- -

21,

115,

259

Fina

ncia

l lia

bilit

ies

Term

loan

7.

60 4

38,1

92

438

,192

4

38,1

92

438

,192

4

38,1

92

876

,384

3

,067

,344

Hire

pur

chas

e22

2.34

- 4.

75 1

,074

,747

9

09,0

20

635

,004

2

26,5

72

31,

486

5,4

04

2,8

82,2

33

RCSL

N

224.

00 -

- -

13,

635,

653

- -

13,

635,

653

Floa

ting

rate

Fina

ncia

l ass

ets

Shor

t ter

m in

vest

men

ts18

1.00

- 3.

10 2

,422

,352

-

- -

- -

2,4

22,3

52

Hou

sing

loan

to a

dire

ctor

5.55

508

,467

5

37,4

16

568

,013

6

00,3

52

103

,330

-

2,3

17,5

78

Fina

ncia

l lia

bilit

ies

Term

loan

s3.

15 -

7.55

8,6

85,3

70

11,

606,

053

10,

438,

770

2,6

40,1

81

2,2

11,9

11

8,9

78,2

27

44,

560,

512

Bank

ove

rdra

ft22

7.00

- 7.

30 2

,191

,567

-

- -

- -

2,1

91,5

67

Bank

ers’

acc

epta

nce

223.

98 -

3.99

2,1

78,0

00

- -

- -

- 2

,178

,000



29.

FIN

AN

CIA

L IN

STRU

MEN

TS (

cont

’d)

(b)

Inte

rest

rate

risk

(co

nt’d

)

Th

e fo

llow

ing

tabl

es se

t out

the

carr

ying

am

ount

s, th

e in

tere

st ra

tes a

s at t

he re

port

ing

date

and

the

rem

aini

ng m

atur

ities

of t

he G

roup

’s an

d of

the

Com

pany

’s fin

anci

al

inst

rum

ents

that

are

exp

osed

to in

tere

st ra

te ri

sk (c

ont’d

):

Inte

rest

rate

W

ithi

n1

year

1

-2 y

ear

2-3

yea

rs

3-4

yea

rs

4-5

yea

rs

Mor

e th

an5

year

s T

otal

Not

e %

R

M

RM

R

M

RM

R

M

RM

R

M

Com

pany

At 3

1 D

ecem

ber 2

011

Fixe

d ra

te

Fina

ncia

l ass

ets

Fixe

d de

posi

ts18

2.85

- 3.

10 4

,070

,225

-

- -

- -

4,0

70,2

25

Fina

ncia

l lia

bilit

ies

Hire

pur

chas

e22

2.50

- 3.

77 8

3,65

3 8

8,27

6 9

2,89

9 9

7,52

2 9

7,61

5 9

5,75

9 5

55,7

24

RCSL

N

224.

00 -

- 1

0,80

7,27

0 -

- -

10,

807,

270

Floa

ting

rate

Fina

ncia

l ass

ets

Am

ount

due

from

sub

sidi

arie

s8.

30-8

.60

24,

096,

524

- -

- -

- 2

4,09

6,52

4

Shor

t ter

m in

vest

men

ts18

1.83

- 2.

95 6

80,1

55

- -

- -

- 6

80,1

55

Fina

ncia

l lia

bilit

ies

Term

loan

s5.

63 -

6.00

5,9

50,3

48

7,7

57,5

00

- -

- -

13,

707,

848



29.

FIN

AN

CIA

L IN

STRU

MEN

TS (

cont

’d)

(b)

Inte

rest

rate

risk

(co

nt’d

)

Th

e fo

llow

ing

tabl

es se

t out

the

carr

ying

am

ount

s, th

e in

tere

st ra

tes a

s at t

he re

port

ing

date

and

the

rem

aini

ng m

atur

ities

of t

he G

roup

’s an

d of

the

Com

pany

’s fin

anci

al

inst

rum

ents

that

are

exp

osed

to in

tere

st ra

te ri

sk (c

ont’d

):

Inte

rest

rate

W

ithi

n1

year

1

-2 y

ear

2-3

yea

rs

3-4

yea

rs

4-5

yea

rs

Mor

e th

an5

year

s T

otal

Not

e %

R

M

RM

R

M

RM

R

M

RM

R

M

Com

pany

At 3

1 D

ecem

ber 2

010

Fixe

d ra

te

Fina

ncia

l ass

ets

Fixe

d de

posi

ts18

2.85

- 3.

0 2

,198

,627

-

- -

- -

2,1

98,6

27

Fina

ncia

l lia

bilit

ies

Hire

pur

chas

e22

3.77

12,

145

- -

- -

- 1

2,14

5

RCSL

N

224.

00-

- -

13,

635,

653

- -

13,

635,

653

Floa

ting

rate

Fina

ncia

l ass

ets

Am

ount

due

from

sub

sidi

arie

s7.

55 -

8.30

13,

176,

904

- -

- -

- 1

3,17

6,90

4

Shor

t ter

m in

vest

men

ts18

1.00

- 2.

89 2

,341

,905

-

- -

- -

2,3

41,9

05

Fina

ncia

l lia

bilit

ies

Am

ount

due

to s

ubsi

diar

ies

4.00

- 7.

50 5

,404

,446

-

- -

- -

5,4

04,4

46

Term

loan

s4.

98 -

5.72

6,3

94,9

22

8,5

90,0

00

7,7

57,5

00

--

- 2

2,74

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29. FINANCIAL INSTRUMENTS (cont’d)

(c) Foreign exchange 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 has transactional currency exposures arising from sales and purchases that are denominated in a currency other than the respective functional currencies of Group entities, primarily RM, Hong Kong Dollar (“HKD”) and Indonesian Rupiah (“IDR”). The foreign currencies in which these transactions are denominated are mainly United States Dollars (“USD”), European Dollar (“EURO”), Singapore Dollar (“SGD”) and British Pound Sterling (“GBP”).

Exposure to foreign currency risk

The Company’s and the Group’s exposure to foreign currency (a currency which is other than the currency of the Company and of the Group) risk, based on carrying amounts as at the end of the reporting period was:

2011

RM denominated in

USD EURO HKD SGD IDR

Group

Trade receivables 32,273 25,479,628 - - 280,095

Cash and cash equivalents 96,230 - 59,660 - 429,786

Trade and other payables (410,599) (20,037,367) - (430,902) -

Exposure in the statement of financial position (282,096) 5,442,261 59,660 (430,902) 709,881

Approximate sales 450,599 27,856,135 - - 784,315

Approximate purchases 12,999,534 28,845,042 - 193,974 -

(12,548,935) (988,907) - (193,974) 784,315

2010

RM denominated in

USD EURO GBP HKD SGD IDR

Group

Trade receivables 90,224 642,569 74,436 - - -

Cash and cash equivalents 78,197 4,980 - 61,891 - 20,319

Trade and other payables (939,470) (443,100) - - (438,740) -

Exposure in the statement of financial position (771,049) 204,449 74,436 61,891 (438,740) 20,319

Approximate sales 473,855 1,533,993 74,436 - - -

Approximate purchases 14,809,374 1,941,199 - - 170,928 -

(14,335,519) (407,206) 74,436 - (170,928) -




(c) Foreign exchange risk (cont’d)

Company

2011 2010

RM denominated in HKD

Trade and other receivables 1,876,219 1,958,546

The Group is also exposed to currency translation risk arising from its net investments in foreign operations, including Hong Kong and Indonesia. The Group’s net investment in Hong Kong and Indonesia are not hedged as currency position in HKD and IDR are considered to be long term in nature.

At the reporting date, the Group and the Company does not have significant foreign currency risk exposure except as disclosed below.

Sensitivity analysis for foreign currency risk

The following table demonstrates the sensitivity of the Company’s and of the Group’s profit before tax to a reasonably possible change in the USD, EURO, SGD and IDR exchange rates against the respective functional currencies of the Group entities, with all other variables held constant.

Group

2011 2010

Effect onprofit

before tax

Effect on profit

before tax

RM RM

USD/RM - strengthen 10% (2010: 10%) (28,210) (77,105)

USD/RM - weaken 10% (2010: 10%) 28,210 77,105

EURO/RM - strengthen 10% (2010: 10%) 544,226 20,445

EURO/RM - weaken 10% (2010: 10%) (544,226) (20,445)

SGD/RM - strengthen 10% (2010: 10%) (43,090) (43,874)

SGD/RM - weaken 10% (2010: 10%) 43,090 43,874

IDR/RM - strengthen 10% (2010: 10%) 70,988 2,032

IDR/RM - weaken 10% (2010: 10%) (70,988) (2,032)

The financial impact on the changes of the other currencies other than the above is not disclosed as it is not significant to the Group.

Company

2011 2010

Effect onprofit

before tax

Effect on profit

before tax

RM RM

HKD/RM - strengthen 10% (2010: 10%) 187,622 195,855

HKD/RM - weaken 10% (2010: 10%) (187,622) (195,855)




(d) Liquidity risk

Liquidity risk is the risk that the Group and 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 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.

2011

Contractual cash flows

Carrying amount

On demand or withinone year

One to five years

Over five years Total

Note RM RM RM RM RM

Group

Financial liabilities:

Trade and other payables 23 97,473,588 94,473,588 3,000,000 - 97,473,588

Loans and borrowings 22 66,723,821 21,524,313 30,502,600 18,800,719 70,827,632

164,197,409 115,997,901 33,502,600 18,800,719 168,301,220

Company



Loans and borrowings 22 25,070,842 9,389,058 18,567,917 6,483 27,963,458

31,496,916 12,815,132 21,567,917 6,483 34,389,532

2010

Contractual cash flows

Carrying amount

On demand or within one year

One to five years

Over five years Total

Note RM RM RM RM RM

Group



Loans and borrowings 22 68,515,309 16,790,098 51,520,829 10,002,725 78,313,652

109,093,774 52,368,563 56,520,829 10,002,725 118,892,117

Company



Loans and borrowings 22 36,390,220 7,508,044 32,426,773 - 39,934,817

51,454,927 17,572,751 37,426,773 - 54,999,524




(e) 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 and the Company’s exposure to credit risk arises primarily from trade and other receivables. For other financial assets (including short term investments and cash and cash equivalents), the Group and the Company 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.

Exposure to credit risk

The carrying amount of each class of financial assets recognised in the statements of financial position.

Information regarding credit enhancements for trade receivables is disclosed in Note 14(c).

Credit risk concentration profile

The Group determines concentrations of credit risk by monitoring the country of its trade receivables on an ongoing basis. The credit risk concentration profile of the Group’s trade receivables at the reporting date are as follows:

2011 2010

Note RM % of total RM % of total

By country:

Malaysia 74,284,045 100 47,331,691 99

Other countries 312,368 - 309,460 1

14 74,596,413 100 47,641,151 100

Financial assets that are neither past due nor impaired

Information regarding trade receivables that are neither past due nor impaired is disclosed in Note 14. Deposits with banks and short term investments that are neither past due nor impaired are placed with or entered into with reputable financial institutions or companies with high credit ratings and no history of default.

Financial assets that are either past due or impaired

Information regarding financial assets that are either past due or impaired is disclosed in Note 14.




(f) Fair values of financial instruments

(i) Fair value of financial instruments by classes that are not carried at fair value and whose carrying amounts are not reasonable approximation of fair value

2011 2010

NoteCarrying amount

Fairvalue

Carrying amount

Fairvalue

RM RM RM RM

Group

Financial liabilities

Redeemable Convertible Secured Loan Notes 22 10,807,270 10,617,869 13,635,653 13,378,514

Company


Redeemable Convertible Secured Loan Notes 22 10,807,270 10,617,869 13,635,653 13,378,514

The fair value of redeemable convertable secured loan note (“RCSLN”) has been determined using a valuation technique through the discounting of expected future cash flows throughout the terms of RCSLN at the interest rate of 4.00%.

(ii) 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:

Group Company

2011 2010 2011 2010

Note RM RM RM RM

Financial assets

Trade and other receivables 14 87,785,216 59,065,089 24,995,827 13,662,428

Marketable securities 17 243,728 158,600 - -

Cash and cash equivalents 18 62,840,884 34,152,997 5,224,754 7,400,676


Term loans 46,241,440 47,627,856 13,707,848 22,742,422

Hire purchase payables 22 2,665,642 2,882,233 555,724 12,145

Bankers’ acceptance 22 3,270,000 2,178,000 - -

Bank overdraft 22 3,739,469 2,191,567 - -

Trade and other payables 23 97,473,588 40,578,465 6,426,074 15,064,707

As the current interest rates do not differ significantly from the intrinsic value of these financial instruments, the fair values of these financial instruments therefore, closely approximate its carrying values as at the reporting date.



30. CAPITAL MANAGEMENT

The primary objective of the Group’s capital management is to ensure that it maintains a strong credit rating and healthy capital ratios in order to support its business and maximise shareholders value.

The Group manages its capital structure and makes adjustments to it, in light of changes in economic conditions. To maintain or adjust the capital structure, the Group may adjust the dividends payment to shareholders, return capital to shareholders or issue new shares. No changes were made in the objectives, policies or processes during the years ended 31 December 2011 and 31 December 2010.

The Group monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt. Under the requirement of Bursa Malaysia Securities Berhad’s Practice Note No. 17/2005, the Group is required to maintain a consolidated shareholders’ equity equal to or not less than the 25% of the issued and paid-up capital (excluding treasury shares) and such shareholders’ equity is not less than RM40 million. The Group has complied with this requirement. The Group includes within net debt, loans and borrowings, less cash and cash equivalents. Capital includes equity attributable to the owners of the parent.

Group Company

2011 2010 2011 2010

Note RM RM RM RM

Loan and borrowings 22 66,723,821 68,515,309 25,070,842 36,390,220

Less: Cash and cash equivalents 18 (62,840,884) (34,152,997) (5,224,754) (7,400,676)

Net debt 3,882,937 34,362,312 19,846,088 28,989,544

Equity attributable to the owners of the parent 210,627,704 176,596,849 173,218,924 143,640,099

Capital and net debt 214,510,641 210,959,161 193,065,012 172,629,643

Gearing ratio 1.81% 16.29% 10.28% 16.79%

31. SIGNIFICANT EVENTS

Group

(i) Purchase of commercial property

On 13 January 2011, the Group, via its direct wholly owned subsidiary Daya Urusharta Sdn Bhd. (“DUSB”) entered into five Sale and Purchase Agreements (“SPA”) with Koperasi Permodalan Felda Malaysia Berhad (Koop Negara: 39) for the proposed acquisition of five (5) units of office suites of a stratified mixed commercial development in Dutamas, Daerah Kuala Lumpur with a total net area of approximately 466 square meters for a total cash consideration of RM2,757,700.

(ii) Acquisition of Joint Venture Company, Daya NCHO Sdn. Bhd.

On 22 February 2011, the Group, via its direct wholly owned subsidiary, Daya Clarimax Sdn. Bhd. (“DCLX”), acquired one (1) ordinary share of RM1.00 in Daya NCHO Sdn. Bhd. (“DNSB”), for a total cash consideration of RM1 from Chai Churn Hwa. On 15 March 2011, DCLX has further subscribed 599,999 ordinary shares of RM1.00 each in DNSB through capitalisation of an amount of RM599,999 out of the total fixed assets transferred from DCLX.

On 8 November 2011, DNSB issued an additional 320,000 ordinary shares at RM1.00 each to NCHO Sdn. Bhd. (“NSB”) through capitalisation of an amount of RM320,000 out of advances owing to NSB (“Shares Issuance”). Upon the completion of Shares Issuance, the authorised share capital of DNSB is RM1,000,000 comprising 1,000,000 ordinary shares of RM1.00 each of which 1,000,000 ordinary shares of RM1.00 each have been issued and fully subscribed by its shareholders, DCLX (60%) and the joint venture partner, NSB (40%) in accordance with the provisions of the Joint Venture Agreement dated 27 January 2011 entered into between DCLX and NSB.



31. SIGNIFICANT EVENTS (cont’d)

Group (cont’d)

(iii) Disposal of Daya NCHO International Limited (formerly known as Daya Clarimax International Limited)

On 15 September 2011, the Group via its direct wholly owned subsidiary, DMB International Limited disposed of 40,000 ordinary shares of HKD1.00 each in Daya NCHO International Limited (formely known as Daya Clarimax International Limited) (“DNIL”) representing 40% of the issued and paid-up share capital of DNIL to NCHO Sdn. Bhd. for a total consideration of HKD40,000. Subsequent to the disposal, DNIL had ceased to be a subsidiary and become a jointly controlled entity.

(iv) Acquisition of a Joint Venture Company, Daya Campo (Sabah) Sdn. Bhd.

On 28 September 2011, the Group, via its direct wholly owned subsidiary, Daya OCI Sdn. Bhd. (“DOCI”) acquired two (2) ordinary shares of RM1.00 in Daya Campo (Sabah) Sdn Bhd (“DCSB”) representing 100% of the issued and paid-up share capital of DCSB from Kamalukhair Abdullah and Dato’ Mazlin Bin Md Junid, for a total consideration of RM2.

On 5 October 2011, DOCI entered into a Joint Venture Agreement with Campo Sdn. Bhd. (“Campo’) (“The Joint Venture”). The Joint Venture was undertaken through DCSB. The initial proposed capital outlay shall be RM10,000 and the equity sharing ratio under the Joint Venture is DOCI 60% and Campo 40%. DOCI will finance its 60% equity stake for an additional RM5,998 up to RM6,000.00 in DCSB from its internally generated funds.

(v) Supplemental Joint Venture Agreement

On 10 November 2011, the Group, via its direct wholly owned subsidiary, Daya OCI Sdn. Bhd. (“DOCI”) entered into a Supplemental Joint Venture Agreement to the Joint Venture Agreement (“JVA”) dated 25 August 2010 between DOCI, Sheffield Offshore Services Pte. Ltd. (“Sheffield”) and Ascent Offshore (Singapore) Pte. Ltd. (“Ascent”). Ascent shall cease to be a party and Sheffield shall take the place of Ascent as a party to the JVA. Sheffield shall pay to Ascent the sum of RM49,000 only in consideration of the transfer by Ascent to Sheffield of 49,000 ordinary shares of par value RM1.00 each in Daya OCI-Ascent Sdn. Bhd. (“DASB”). DASB’s name shall now be changed to “Daya Sheffield Sdn. Bhd.” and all cost incidental to this change of name shall be borne by DASB.

(vi) Acquisition by Daya CMT Sdn. Bhd. of 40% Interest in Daya Land & Development Sdn. Bhd. (formerly known as IHP Supply Sdn. Bhd.)

On 30 November 2011, the Group, via its direct wholly-owned subsidiary, Daya CMT Sdn. Bhd. (“DCMT”) acquired a total of 200,000 ordinary shares of RM1.00 each of Daya Land & Development Sdn Bhd (formerly known as IHP Supply Sdn Bhd) (”DLD”) representing 40% of the total issued and paid-up share capital of DLD, from Soon Kok Lum, Ruby A/P Gnanabaranamand and Hor Ching Siew, respectively for a total cash consideration of RM550,000. Subsequent to the acquisition, DLD had becomed a 100% wholly owned subsidiary of DCMT.

Company

(i) Conversion of Redeemable Convertible Secured Loan Notes

On 18 January 2011, the Company announced that 17,421,603 new ordinary shares of RM0.10 each in the Company (“DMB Shares”) issued pursuant to the conversion of RM3 million Redeemable Convertible Secured Loan Notes at a conversion price of RM0.1722 per DMB share were listed on Bursa Malaysia Securities Berhad on 19 January 2011.

(ii) Private Placement in 2011

On 11 May 2011, the Board announced that the Company proposes to issue up to 238,000,000 new ordinary shares of RM0.10 each in the Company (“DMB Shares”) representing up to 20.89% of the existing issued and paid-up share capital of the Company through a private placement exercise.

A total of 85,000,000 DMB Shares were placed out to identified investors in three (3) tranches, at an issue price of RM0.225 for the first tranche and RM0.22 per share for the second and third tranches.



31. SIGNIFICANT EVENTS (cont’d)

Company (cont’d)

(iii) Private Placement in 2010

On 16 March 2010, the Board announced that the Company proposes to issue up to 90,854,512 new ordinary shares of RM0.10 each in the Company (“DMB Shares”) representing up to 20.89% of the existing issued and paid-up share capital of the Company through a private placement exercise.

A total of 104,800,000 DMB Shares were placed out to identified investors in sixth tranches, at an issue price of RM0.22 and RM0.23 per share for the first and second tranche respectively, RM0.205 for the third and fouth tranche and RM0.225 and RM0.22 per share for the fifth and sixth tranche respectively.

(iv) Shares Buy Back

The Company acquired 1,787,100 (2010 : Nil) shares in the Company thorugh purchases on the Bursa Malaysia Securities Berhad during the financial year. The total amount paid to acquire the shares was RM317,049 (2010 : Nil) and this was presented as a component within shareholders’ equity.

32. DIVIDENDS

Dividends in respect of year Dividends recognised in year

2011 2010 2011 2010

RM RM RM RM

Proposed:

Single tier dividends of 2.5% on 1,199,158,544 ordinary shares 2,997,896 - - -

Single tier dividends of 2.4% on 1,096,736,940 ordinary shares - 2,632,169 - -

Recognised during the year:

Single tier dividends of 2.4% on 1,199,158,544 ordinary shares - - 2,877,982 -

Final dividends of 3.2% less 25%, on 867,614,118 ordinary shares - - - 2,082,275

2,997,896 2,632,169 2,877,982 2,082,275

At the forthcoming Annual General Meeting, a single tier dividends of 2.5% in respect of the financial year ended 31 December 2011 will be proposed for shareholders’ approval. The financial statements for the current financial year do not reflect this proposed dividends. Such dividends, if approved by the shareholders, will be accounted for in equity as an appropriation of retained profits in the financial year ending 31 December 2012.



33. SUBSEQUENT EVENTS

Group

(i) On 9 January 2012, the Group, via it’s sub-subsidiary, Ultrafest Sdn. Bhd. (“USB”) entered into a Sales and Purchase Agreement to acquire a piece of land in the District of Paper, Sabah for a total consideration of RM2,212,500.

USB has also entered into a Trust Deed on 15 March 2012 with Junior Koh Siew Hui (“Trustee”) whereby the Trustees has purchased four parcels of land in the District of Paper, Sabah on behalf of USB for a total consideration of RM7,272,500.

(ii) On 14 February 2012, the Group, via its direct wholly-owned subsidiary, Daya CMT Sdn. Bhd. acquired 2 ordinary shares of RM1 each in Zen Projects Sdn. Bhd. (“ZPSB”) and Terra Hill Development Sdn. Bhd. (“THDSB”) for a total consideration of RM2 each, representing 100% equity interest in ZPSB and THDSB.

Company

On 20 January 2012, the Company announced that 17,421,603 new ordinary shares of RM0.10 each in the Company (“DMB Shares”) issued pursuant to the conversion of RM3 million Redeemable Convertible Secured Loan Notes at a conversion price of RM0.1722 per DMB share were listed on Bursa Malaysia Securities Berhad on 21 January 2012.

34. AUTHORISATION OF FINANCIAL STATEMENTS FOR ISSUE

The financial statements for the year ended 31 December 2011 were authorised for issue in accordance with a resolution of the directors on 13 April 2012.



35. SUPPLEMENTARY INFORMATION - BREAKDOWN OF RETAINED PROFITS INTO REALISED AND UNREALISED

The breakdown of the retained profits of the Group and of the Company as at 31 December 2011 into realised and unrealised is presented in accordance with the directive issued by Bursa Malaysia Securities Berhad dated 25 March 2010 and prepared in accordance with Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits and Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants.

Realised and unrealised profits/(losses)

Group Company

2011 2010 2011 2010

Note RM RM RM RM

Total retained profits:

- Realised 102,239,534 84,534,345 16,622,273 6,492,516

- Unrealised (2,575,238) 395,738 (175,436) (145,213)

99,664,296 84,930,083 16,446,837 6,347,303

Less: Consolidation adjustments (28,724,232) (28,562,122) - -

Total retained profits 20 70,940,064 56,367,961 16,446,837 6,347,303



on Financial Statements

In accordance with the Companies Act, 1965, the Directors of the Company are required to prepare financial statements for each financial year which shall give a true and fair view of the financial position of the Company and of the Group as at the end of the financial year and of their results and their cash flows of the Company and of the Group for the financial year.

The Directors are responsible to ensure that the Company and the Group keep proper accounting records to enable the Company to disclose, with reasonable accuracy and without any material misstatement in the financial statements, the financial position, the results and the cash flows of the Company and of the Group. The Directors are also responsible to ensure that the financial statements comply with the Companies Act, 1965 and the relevant accounting standards.

In preparing the financial statements for the financial year ended 31 December 2011, the Directors have:-

- adopted the appropriate accounting policies, which are consistently applied ;- made judgements and estimates that are reasonable and prudent;- ensured applicable accounting standards have been followed, subject to any material departures which will be disclosed and

explained in the financial statements ; and- prepared the financial statements on the assumption that the Company and the Group will operate as a going concern.

The Directors have provided the auditors with every opportunity to take all steps, undertake all inspections and seek all explanations they considered to be appropriate for the purpose of enabling them to give their audit report on the financial statements.

Directors’ Responsibilities Statement


As at 30 April 2012Analysis of Shareholdings

Authorized Share Capital : RM200,000,000.00Issued and fully paid-up Share Capital : RM121,658,014.70Class of Shares : Ordinary Shares of RM0.10 eachVoting Rights : One vote per ordinary share

ANALYSIS BY SIZE OF SHAREHOLDINGS

Size of shareholdings No. of holders % No. of shares %

Less than 100 shares 135 2.40 7,285 0.00

100 to 1,000 shares 121 2.15 47,995 0.00

1,001 to 10,000 shares 1,225 21.81 9,303,737 0.77

10,001 to 100,000 shares 3,222 57.36 133,613,045 11.00

100,001 to 60,721,901 shares 913 16.26 1,010,106,599 83.18

60,721,902 shares and above 1 0.02 61,359,386 5.05

Total 5,617 100.00 1,214,438,047 100.00

SUBSTANTIAL SHAREHOLDERS

Name Number of Shares Held

Direct % Indirect %

Dato’ Mazlin Bin Md Junid 161,359,386 13.29 18,000,720 ^ 1.48

Dato’ Sri Koh Kin Lip JP 78,115,098 6.43 - -

Tham Jooi Loon 67,000,198 5.52 4,709,998 # 0.39

Lim Soon Foo 60,829,098 5.01 279,000 * 0.02 ^ Deemed interested through the shareholdings of his son and daughter.# Deemed interested through the shareholdings of spouse.* Deemed interested through the shareholdings of his son.

DIRECTORS’ SHAREHOLDINGS

Name Number of Shares Held

Direct % Indirect %

Dato’ Azmil Khalili Bin Khalid - - - -

Dato’ Mazlin Bin Md Junid 161,359,386 13.29 18,000,720 ^ 1.48

Dato’ Sri Koh Kin Lip JP 78,115,098 6.43 - -

Tham Jooi Loon 67,000,198 5.52 4,709,998 # 0.39

Fazrin Azwar Bin Md. Nor 2,099,998 0.17 - -

Lim Soon Foo 60,829,098 5.01 279,000 * 0.02

Ronnie Lim Hai Liang (Alternate Director to Lim Soon Foo) 279,000 0.02 60,829,098 ** 5.01

^ Deemed interested through the shareholdings of his son and daughter.# Deemed interested through the shareholdings of spouse.* Deemed interested through the shareholdings of his son.** Deemed interested through the shareholdings of his parent.


As at 30 April 2012 (cont’d)


THIRTY LARGEST SHAREHOLDERS

Name of Shareholders No. of Shares% of total

issued capital

1 Kenanga Nominees (Tempatan) Sdn Bhd- Pledged Securities Account For Mazlin Bin Md Junid

61,359,386 5.05

2 RHB Capital Nominees (Asing) Sdn Bhd- Robert Yee Seng Lee

57,579,900 4.74

3 EB Nominees (Tempatan) Sendirian Berhad- Pledged Securities Account For Mazlin Bin Md Junid (SFC)

53,500,000 4.41

4 Capital Nexus Sdn Bhd 48,394,300 3.98

5 HSBC Nominees (Asing) Sdn Bhd- Exempt An For Credit Suisse (SG BR-TST-ASING)

41,767,598 3.44

6 CIMSEC Nominees (Tempatan) Sdn Bhd- CIMB Bank For Tham Jooi Loon (MM1102)

40,547,998 3.34

7 AMSEC Nominees (Tempatan) Sdn Bhd- Pledged Securities Account For Koh Kin Lip

31,461,438 2.59

8 Kenanga Nominees (Tempatan) Sdn Bhd- Pledged Securities Account For Tham Jooi Loon

25,252,200 2.08

9 Kenanga Nominees (Tempatan) Sdn Bhd- Pledged Securities Account For Koh Siew Kong

24,680,000 2.03

10 Kenanga Nominees (Tempatan) Sdn Bhd- Pledged Securities Account For Koh Kin Lip

22,890,000 1.88

11 Kenanga Nominees (Tempatan) Sdn Bhd- Pledged Securities Account For Tham Wooi Loon

20,239,998 1.67

12 Citigroup Nominees (Tempatan) Sdn Bhd- Pledged Securities Account For Mazlin Bin Md Junid (000190663)

18,000,000 1.48

13 CIMSEC Nominees (Tempatan) Sdn Bhd- CIMB Bank For Koh Kin Lip (MY0502)

17,640,000 1.45

14 Mazlin Bin Md Junid 15,000,000 1.24

15 AllianceGroup Nominees (Tempatan) Sdn Bhd- Pledged Securities Account For Mazlin Bin Md Junid (8079781)

13,500,000 1.11

16 Citigroup Nominees (Tempatan) Sdn Bhd- Pledged Securities Account For Tham Wooi Loon (010531334)

12,000,000 0.99

17 RHB Capital Nominees (Tempatan) Sdn Bhd- Pledged Securities Account For Mazlin Bin Md Junid

12,000,000 0.99

18 Cartaban Nominees (Tempatan) Sdn Bhd- COPE-KPF Opportunities 1 Sdn Bhd

11,981,517 0.99

19 RHB Capital Nominees (Tempatan) Sdn Bhd- Ganjaran Lebar Sdn Bhd

10,963,600 0.90

20 RHB Capital Nominees (Tempatan) Sdn Bhd- Lim Soon Foo

10,451,500 0.86

21 Koh Siew Kong 10,293,300 0.85

22 Seow Siew Khoon 10,073,618 0.83

23 Ikhmal Mirza Bin Mazlin 9,000,360 0.74

24 Izreen Natalia Binti Mazlin 9,000,360 0.74


As at 30 April 2012 (cont’d)


THIRTY LARGEST SHAREHOLDERS (cont’d)

Name of Shareholders No. of Shares% of total

issued capital

25 Lim Soon Foo 8,610,000 0.71

26 Song Tae Chin 8,579,198 0.71

27 Kenanga Nominees (Tempatan) Sdn Bhd- Kenanga Capital Sdn Bhd For Mazlin Bin Md Junid

8,000,000 0.66

28 Tan Tuan Shee 7,733,000 0.64

29 Wong Chin Yoong 7,614,998 0.63

30 Mayban Nominees (Tempatan) Sdn Bhd- Pledged Securities Account For Chai Koh Hiung

7,300,000 0.60



Share Buy-back

The details of shares bought back/cancelled for the financial year ended 31 December 2011 are as follows:

Purchase Price Per Share (RM)

Monthly Breakdown Brought Back

Number of shares

purchased retained in Lowest Highest

Average Cost Per Share

(RM)

Total Consideration

(RM)

Number of Treasury

Shares Cancelled

October 2011 1,250,000 0.165 0.180 0.174 216,958.73 -

November 2011 537,100 0.185 0.185 0.186 100,089.49 -

Total 1,787,100 0.177 317,048.22 - During the financial year, the Company purchased 1,787,100 of its issued shares and retained as treasury shares whilst no treasury shares were cancelled. As at 31 December 2011, the Company held a total of 1,787,100 ordinary shares as treasury shares.

Options, Warrants or Convertible Securities

The Company did not issue any options, warrant or convertible securities during the financial year.

American Depository Receipt (ADR)/Global Depository Receipt (GDR)

The Company did not sponsor any ADR/GDR Programme during the financial year.

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 during the financial year. Non-Audit Fees

The amount of non-audit fees payable to the external auditors by the Group for the financial year ended 31 December 2011 amounted to RM38,000 for review of internal control, bonus issue confirmation and assessment on implementation of FRS139 and FRS7.

Profit Estimates, Forecast or Projection

The Company did not issue any profit estimate, forecast or projection for the financial year.

Variation of Actual Basic Earnings per Share (“EPS”) from the Unaudited Results

There was no material variation between audited results for the financial year ended 31 December 2011 and the unaudited results of the Group as previously announced.

Profit Guarantee

The Company did not issue any profit guarantee during the financial year.

Material Contract Involving Directors and Major Shareholders

There are no material contracts involving the interests of its Directors and major shareholders either still subsisting at the end of the financial year ended 31 December 2011 or entered into since the end of the previous financial year.

Recurrent Related Party Transactions of a Revenue or Trading Nature

Details of recurrent related party transactions of a revenue or trading nature is disclosed in Note 26 to the financial statements on page 100.

Material Contract Relating to Loans

There are no material contracts relating to loan involving the interests of its Directors and major shareholders during the financial year.


(cont’d)


Utilisation of Proceeds

Private Placement 2010

(a) Private Placement Proceeds-Year 2010

The Company raised approximately RM22.461 million from its private placement exercise proposed in year 2010.

As at 31 March 2012, the Company has utilised the fund raised as follows:-

Proceeds from

Placement Shares

Actual Utilisation

Intended Time Frame For Utilisation

Deviation Amount Deviation

RM’000(i) RM’000 RM’000 %

Future acquisitions and expansion 21,461 21,066 within 12 months 395 2%

Defraying of expenses incidental to the Proposed Private Placement(ii) 1,000 1,000 within 1 month - 0%

Total 22,461 (iii) 22,066 395 2%

(i) Any difference between the indicative proceeds above and the actual proceeds raised from the Proposed Private Placement (depending on the number of Placement Shares and the issue price of the Placement Shares) shall be adjusted from the future synergistic acquisitions and expansion.

(ii) Any variation to the estimated expenses will be adjusted to/from the working capital.

(iii) As at 31 March 2012, DMB has placed out first tranche of 26,800,000 placement shares, at an issue price of RM0.22 per share, raising RM5,896,000 and second tranche of 13,000,000 placement shares, at an issue price of RM0.23 per share raising RM2,990,000, third tranche of 30,000,000 placement shares, at an issue price of RM0.20 per share, raising RM6,000,000, fourth tranche of 10,000,000 placement shares, at an issue price of RM0.205 per share raising RM2,050,000, fifth tranche of 5,000,000 placement shares, at an issue price of RM0.225 per share raising RM1,125,000 and sixth tranche of 20,000,000 placement shares, at an issue price of RM0.22 per share raising RM4,400,000.

Private Placement 2011

(b) Private Placement Proceeds-Year 2011

The Company raised approximately RM13.2 million from its private placement exercise proposed in year 2011.

As at 31 March 2012, the Company has utilised the funds raised as follows:-

Proceeds from

Proposed Placement

Sares

Proceeds from

Placement Shares

Actual Utilisation

Intended Time Frame For Utilisation

Deviation Amount Deviation

RM’000(i) RM’000 RM’000 RM’000 %

Future synergistic acquisitions and expansion 44,000 4,840 2,300 within 12 months 2,540 52%

Working Capital (ii) 5,610 5,610 5,610 within 12 months - 0%

Defraying of expenses incidental to the Proposed Private Placement (iii) 2,750 2,750 1,550 within 1 month 1,200 44%

Total 52,360 13,200 (iv) 9,460 3,740 28%


(cont’d)


Utilisation of Proceeds (cont’d)

Private Placement 2011 (cont’d)

(b) Private Placement Proceeds-Year 2011 (cont’d)

(i) Any difference between the indicative proceeds above and the actual proceeds raised from the Proposed Private Placement (depending on the number of Placement Shares and the issue price of the Placement Shares) shall be adjusted from the proceeds used for future synergistic acquisitions and expansion.

(ii) Working capital is for the DMB Group’s operating and administrative expenses.

(iii) Any variation to the estimated expenses will be adjusted to/from the proceeds used for working capital.

(iv) As at 31 March 2012, DMB has placed out first tranche of 60,000,000 placement shares, at an issue price of RM0.22 per share, raising RM13,200,000.



Registered Owner/Location

Description And Existing

Use

Land/Built Up

Area (sq ft) Tenure

Approximate Age of

Building

Net Book Value as at 31.12.2011

(RM)Date of Last Revaluation

Daya Polymer Sdn Bhd 1744, Jalan Industri Dua, Taman Industri Bukit Panchor,14300 Nibong Tebal,Penang, Malaysia.

Industrial land with

factory, warehouse

and office

136,389/ 81,628

Freehold 14 years 8,836,915 13 October 2008

Daya Secadyme Sdn BhdLot No. 5410,Kawasan Perindustrian,Teluk Kalong,24007 Kemaman, Terengganu Darul Iman,Malaysia.


warehouse and office

215,280/ 1,680

Leasehold 60 years expiring

7 September 2064

3 years 7,719,665 27 November 2008

Daya Secadyme Sdn BhdSuite B-5-2, Setiawangsa Business Suites, Jalan Setiawangsa 11, Taman Setiawangsa, 54200 Kuala Lumpur,Malaysia.

Business/ Office

N/A/ 3,229

Freehold 5 years 551,724 4 October 2004

Daya Secadyme Sdn BhdLot PT 8052,Kawasan Perindustrian,Teluk Kalong,24007 Kemaman, Terengganu Darul Iman, Malaysia.

Industrial land

20,000/ N/A


5 November 2069

2 year 1,203,500 NIL

Daya CMT Sdn BhdPlot 81 Lebuhraya Kampung Jawa,Bayan Lepas,11900 Pulau Pinang, Malaysia.


warehouseand office

46,478/ 20,748


2 November 2048

12 years 2,175,692 7 July 2008

Daya CMT Sdn Bhd72 Jalan Badlishah, 09100 Baling,Kedah Darul Aman, Malaysia.

3 Storey shophouse

N/A/ 2,314

Freehold 14 years 294,959 7 July 2008

Daya CMT Sdn Bhd16-1-10 Jalan Tun Dr. Awang MK 13,11900 Penang, Malaysia.

Apartment N/A/700


Daya CMT Sdn BhdLot No. 736 Mukim 1, Jalan Pulau Betong, Balik Pulau, Daerah Barat Daya Pulau Pinang, Malaysia.

Vacant Land 23,573/ N/A


Daya Clarimax Sdn BhdLot No. 38,Jalan Sungai Pinang 5/1, Seksyen 5, Phase 2A, Taman Perindustrian Pulau Indah,42920 Port Klang, Selangor Darul Ehsan, Malaysia.



113,053/ 28,364


on 14 February 2104

6 years 9,109,232 2 June 2008


Registered Owner/Location

Description And Existing

Use

Land/Built Up

Area (sq ft) Tenure

Approximate Age of

Building

Net Book Value as at 31.12.2011

(RM)Date of Last Revaluation

Daya Proffscorp Sdn BhdLot 3997,Kawasan Perindustrian,Teluk Kalong,24007 Kemaman, Terengganu Darul Iman,Malaysia.



107,600/ 18,725


26 March 2059

4 years 1,725,738 NIL


Industrial land with workshop

53,908/ 3,720


10 September 2060

10 years 297,969 NIL


Industrial land

53,822/ 1,600

Leasehold 60 years expiring28 January 2063

3 years 307,180 NIL

Daya OCI Sdn BhdNo 9 & 11, Jalan P/8,Kawasan Perindustrian Bangi,Seksyen 13,43650 Bandar Baru Bangi,Selangor, Malaysia.



21,312/ 13,701

99 years lease expiring on

29 Sept 2086

25 years 2,686,228 10 Aug 2010

Daya OCI Sdn BhdUnit No. B-3A-4, Block B, Level 3A,Unit 4, Megan Avenue II,No 12 Jalan Yap Kwan Seng,50450 Kuala Lumpur, Malaysia.

Vacant Business/

Office

N/A/ 2,293

Grant-in-perpetuiti (freehold)

4 years 418,458 27 Aug 2010

Daya Urusharta Sdn BhdD5-1-6, D5-1-7, D5-1-8, D5-1-9, D5-1-10 Solaris Dutamas, No.1, Jalan Dutamas 1, 50480 Kuala Lumpur

Business/Office

N/A/ 5,178

Freehold 1 year 3,160,078 NIL

(cont’d)




NOTICE IS HEREBY GIVEN that the NINTH ANNUAL GENERAL MEETING of the Company will be held at MTD Group Building, Ground Floor, No. 1, Jalan Batu Caves, 68100 Batu Caves, Selangor Darul Ehsan on Tuesday, 26 June 2012 at 10.30 a.m. for the following purposes:

AGENDA

1. To receive and adopt the Audited Financial Statements for the year ended 31 December 2011 and the Reports of the Directors and the Auditors thereon.

2. To approve the payment of a single tier final dividend of 2.5% for the year ended 31 December 2011.

3. To approve the payment of Directors’ Fees of RM156,000.00 for the year ended 31 December 2011.

4. To re-elect the following directors retiring in accordance with Article 104 of the Company’s Articles of Association:-

a) DATO’ MAZLIN BIN MD JUNIDb) FAZRIN AZWAR BIN MD. NOR

5. To re-elect LIM SOON FOO who is retiring in accordance with Article 91 of the Company’s Articles of Association.

6. To re-appoint Ernst & Young as auditors and to authorize the Directors to fix their remuneration.

7. As Special Business:-

To consider and if thought fit, passing the following Ordinary and Special Resolutions:

(A) ORDINARY RESOLUTION - AUTHORITY FOR DIRECTORS TO ALLOT AND ISSUE SHARES PURSUANT TO SECTION 132D OF THE COMPANIES ACT, 1965

“THAT pursuant to Section 132D of the Companies Act, 1965, the Directors be and are hereby empowered to issue new ordinary shares in the Company, from time to time and 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 issued pursuant to this resolution does not exceed 10% of the issued and paid-up share capital of the Company for the time being and the Directors be and are also empowered to obtain the approval for the listing of and quotation for the additional new ordinary shares so issued on the Bursa Malaysia Securities Berhad (“Bursa Securities”) AND THAT such authority shall continue in force until the conclusion of the next Annual General Meeting of the Company.”

(B) ORDINARY RESOLUTION - PROPOSED RENEWAL OF AUTHORITY FOR THE COMPANY TO PURCHASE

UP TO TEN PER CENTUM (10%) OF ITS ISSUED AND PAID-UP SHARE CAPITAL

“THAT subject to the Companies Act, 1965 (“the Act”), rules, regulations and orders made pursuant to the Act, provisions of the Company’s Memorandum and Articles of Association (“M&A”) and the requirements of Bursa Securities and any other relevant authority, the Directors of the Company be and are hereby authorised to purchase the Company’s ordinary shares of RM0.10 each listed on Bursa Securities subject to the following:-

(a) the aggregate number of DMB Shares which may be purchased or held by the Company shall not exceed ten per centum (10%) of the issued and paid-up ordinary share capital of the Company, subject to the restriction that the Company continues to maintain a shareholding spread that is in compliance with the requirements of the Listing Requirements after the share purchase;

(b) the maximum funds to be allocated by the Company for the purpose of purchasing DMB Shares under the Proposed Share Buy-Back shall not exceed the latest available audited retained profits and share premium of the Company;

Resolution 1

Resolution 2

Resolution 3

Resolution 4Resolution 5

Resolution 6

Resolution 7

Resolution 8

Resolution 9


(cont’d)


(c) the authority conferred by this resolution to facilitate the Proposed Share Buy-Back will commence immediately upon the passing of this ordinary resolution and will continue to be in force until:

(i) the conclusion of the next annual general meeting (“AGM”) of the Company at which time the authority would lapse unless renewed by ordinary resolution, either unconditionally or conditionally; or

(ii) the expiration of the period within which the next AGM of the Company after that date is required by law to be held; or

(iii) the authority is revoked or varied by ordinary resolution passed by the shareholders of the Company in a general meeting,

whichever occurs first; and

(d) upon completion of the purchase(s) of the DMB Shares by the Company, the Directors of the Company be and are hereby authorised to retain the DMB Shares so purchased as treasury shares, cancel the DMB Shares and/or in any manner as prescribed by the Act, rules, regulations and orders made pursuant to the Act and the Listing Requirements and any other relevant authorities for the time being in force,

AND THAT the Directors of the Company be and are hereby authorised to take all such steps as are necessary or expedient to implement, finalise, complete or to effect the Proposed Share Buy-Back with full powers to assent to any conditions, modifications, resolutions, variations and/or amendments (if any) as may be imposed by the relevant authorities and/or to do all such acts and things as the said Directors may deem fit and expedient in the best interest of the Company to give effect to and to complete the purchase of the DMB Shares.”

(C) SPECIAL RESOLUTION - PROPOSED AMENDMENT TO ARTICLES OF ASSOCIATION

“THAT the word “MESDAQ Market” and it’s meaning in Article 2 of the Company’s Articles of Association be deleted in its entirely.”

(D) SPECIAL RESOLUTION - PROPOSED AMENDMENT TO ARTICLES OF ASSOCIATION

“THAT the existing Article 83(1) of the Company’s Articles of Association be deleted in its entirety and

replaced thereof by the new Article 83(1):

The existing Article 83(1)

A Member shall, in accordance with the Listing Rules be entitled to appoint not more than two (2) proxies to attend and vote at the same meeting unless the Listing Requirements apply to the Company. Where the Listing Requirements are applicable, a Member who is an Authorised Nominee as defined in accordance with the provision of the Central Depositories Act, may appoint at least one (1) proxy in respect of each securities account it holds with ordinary shares of the Company standing to the credit of the said securities account.

The new Article 83(1)

A Member shall, in accordance with the Listing Rules be entitled to appoint not more than two (2) proxies to attend and vote at the same meeting unless the Listing Requirements apply to the Company. Where a member of the Company is an exempt authorised nominee which holds ordinary shares in the Company for multiple beneficial owners in one securities account (“omnibus account”), there is no limit to the number of proxies which the exempt authorised nominee may appoint in respect of each omnibus account it holds.”

(E) SPECIAL RESOLUTION - PROPOSED AMENDMENT TO ARTICLES OF ASSOCIATION

“THAT Article 83(3) be and is hereby inserted immediately after Article 83(2) of the Company’s Articles of Association which read as follows:

83(3) An exempt authorised nominee refers to an authorised nominee defined under the Securities Industry (Central Depositories) Act 1991 (“SICDA”) which is exempted from compliance with the provision of subsection 25A(1) of SICDA.”

Resolution 10

Resolution 11

Resolution 12


(cont’d)


(F) SPECIAL RESOLUTION - PROPOSED AMENDMENT TO ARTICLES OF ASSOCIATION

THAT the existing Article 164(7) of the Articles of Association of the Company be deleted in its entirety and replaced thereof by the new Article 164(7):

The existing Article 164(7)

For the purpose of this articles, unless the context otherwise requires, “Listing Requirements” means the Listing Requirements of Bursa Malaysia Securities Berhad for the MESDAQ Market including any amendments to the Listing Requirements that may be made from time to time.

The new Article 164(7)

For the purpose of this articles, unless the context otherwise requires, “Listing Requirements” means the Listing Requirements of Bursa Malaysia Securities Berhad for the Main Market including any amendments to the Listing Requirements that may be made from time to time.”

8. To transact any other business for which due notice shall have been given in accordance with the Company’s Articles of Association and the Companies Act, 1965.

NOTICE OF DIVIDENDS ENTITLEMENT AND PAYMENT

NOTICE IS ALSO HEREBY GIVEN that a single tier final dividends of 2.5% for the financial year ended 31 December 2011, if approved, will be paid on 15 August 2012 to depositors registered in the Record of Depositors of the Company on 31 July 2012.

A depositor shall qualify for entitlement to the dividends only in respect of:

a. Shares transferred into the depositor’s securities account before 4.00 p.m. on 31 July 2012 in respect of ordinary transfers; and b. Shares bought on Bursa Malaysia Securities Berhad on a cum entitlement basis according to the Rules of Bursa Malaysia Securities

Berhad.

By Order of the Board

CHAI CHURN HWA (MAICSA 0811600)

Company Secretary

Penang

4 June 2012

NOTES:

1. In respect of deposited securities, only members/shareholders whose names appear in the Record of Depositors on 20 June 2012 (General Meeting Record of Depositors) shall be entitled to attend, speak and vote at the 9th Annual General Meeting or appoint proxy/proxies to attend and vote/or vote on his/her behalf .

2. A member of the Company who is entitled to attend and vote at this meeting is entitled to appoint a proxy, and in the case of a corporation, a duly authorized representative to attend and vote in his stead. A proxy may but need not be a member of the Company.

The instrument appointing a proxy shall be in writing under the hand of the appointer or if such appointer is a corporation, either under its Common Seal or under the hand of an officer or attorney duly authorized.

A member who appoints two or more proxies shall specify the proportion of his shareholdings to be represented by each proxy.

The instrument appointing a proxy must be deposited at the Registered Office of the Company at Suite 18.01, 18th Floor, MWE Plaza, 8 Lebuh Farquhar, 10200 Penang not less than forty-eight (48) hours before the time fixed for holding this meeting or at any adjournment thereof.

Resolution 13


3. Explanatory notes on Special Business

Ordinary Resolution

The proposed Resolution No. 8, is a renewal of the previous year mandate and if passed, will authorize the Directors of the Company to issue shares

up to a maximum ten per cent (10%) of the issued share capital of the Company for the time being for such purposes as the Directors consider would be in the interest of the Company. This authority unless revoked or varied by the Company at a general meeting will expire at the next Annual General Meeting.

On 27 June 2011, the Company completed the issue of 60,000,000 new shares of RM0.10 each in the Company via a private placement pursuant to the authority granted to the Directors at the Eighth AGM held on 20 June 2011. The Company raised approximately RM13.2 million from the private placement exercise proposed in year 2011.

As at 31 March 2012, the Company had utilized the funds raised as follows:-

Proceeds from Proposed

Placement Shares

Proceeds from Placement

SharesActual

Utilisation

Intended Time Frame for

UtilisationDeviation

Amount Deviation

RM’000 RM’000 RM’000 RM’000 %

Future synergistic acquisition and expansion 44,000 4,840 2,300 Within 12 months 2,540 52%

Working Capital 5,610 5,610 5,610 Within 12 months - 0%

Defraying of expenses incidental to the Proposed Private Placement 2,750 2,750 1,550 Within 1 month 1,200 44%

52,360 13,200 9,460 3,740 28%

a) Any difference between the indicative proceeds above and the actual proceeds raised from the Proposed Private Placement (depending on

the number of Placement Shares and the issue price of the Placement Shares) shall be adjusted from the proceeds used for future synergistic acquisitions and expansion.

b) Working capital is for the DMB Group’s operating and administrative expenses.

c) Any variation to the estimated expenses will be adjusted to/from the proceeds used for working capital.

d) As at 31 March 2012, DMB had placed out first trance of 60,000,000 placement shares, at an issue price of RM0.22 per share, raising RM13,200,000.

The renewal of this mandate would provide flexibility to the Company for any possible fund raising exercise, including but not limited to further

placing of shares, for purpose of funding future investment projects, working capital and/or acquisitions. This authority is to avoid any delay and cost involved in convening a general meeting to approve such issuance of shares.

Ordinary Resolution

The proposed Resolution No. 9, if passed, will empower the Directors of the Company to buy back and/or hold from time to time shares of the

Company not exceeding ten percent (10%) of the issued and paid-up share capital of the company from time to time being quoted on the Bursa Malaysia Securities Berhad as may be determined by the Directors of the Company from time to time through the Bursa Malaysia Securities Berhad upon such terms and conditions as the Directors may deem fit and expedient in the interest of the Company.

Further information on the Proposed Renewal of Share Buy-Back authority are set out in the statement to shareholders of the Company which is

despatched together with the Company’s Annual Report for the year ended 2011. Special Resolutions

The proposed adoption of the Special Resolutions will bring the Company’s Articles of Association to be aligned with the amendments made to the Main Market Listing Requirements of Bursa Malaysia Securities Berhad.

(cont’d)


132 DAYA MATERIALS BERHAD (636357-W)

Statement Accompanying Notice of Ninth Annual General Meeting

1. The Directors who are standing for re-election at the Ninth Annual General Meeting are as follows:-

a) DATO’ MAZLIN BIN MD JUNID b) FAZRIN AZWAR BIN MD. NOR

c) LIM SOON FOO

The details of the Directors seeking re-election are set out in their profiles set out in page 8 to 11 this Annual Report. 2. The details of attendance of Directors of the Company at Board meetings held during the financial year ended 31 December 2011

are disclosed in the Corporate Governance Statement set out in pages 24 to 29 of this Annual report.

3. The details of the place, date and hour of the Ninth Annual General Meeting are as follows:

Place : MTD Group Building Ground Floor No. 1, Jalan Batu Caves 68100 Batu Caves Selangor Darul Ehsan

Date : Tuesday, 26 June 2012

Time : 10.30 a.m.

I/We I.C. No.

of

being a member/members of DAYA MATERIALS BERHAD do hereby appoint Mr / Mrs / Ms

I.C. No. of

or failing him the Chairman of the meeting as my/our proxy to attend and vote for me/us on my/our behalf at the Ninth Annual General Meeting of the Company to be held at MTD Group Building, Ground Floor, No. 1, Jalan Batu Caves, 68100 Batu Caves, Selangor Darul Ehsan on Tuesday, 26 June 2012 at 10.30 a.m. and at any adjournment thereof.

In case of vote taken by a show of hands, my/our proxy shall vote on my/our behalf.

Please indicate with an ‘X’ in the spaces provided below how you wish your votes to be cast on the resolutions specified in the Notice of Meeting.

Ordinary Resolutions For Against1. Adoption of Reports and Audited Financial Statements2. Payment of a single tier final dividends of 2.5% for the financial year ended 31 December 20113. Payment of Directors’ Fees4. Re-election of Director, DATO’ MAZLIN BIN MD JUNID5. Re-election of Director, FAZRIN AZWAR BIN MD. NOR6. Re-election of Director, LIM SOON FOO7. Re-appointment of Auditors, ERNST & YOUNG8. Authority to Directors to allot and issue shares pursuant to Section 132D of the Companies Act, 19659 Proposed renewal of the authority for share buy-back

Special Resolutions10 Proposed amendment to Article 2 of the Company’s Articles of Association.11 Proposed amendment to Article 83(1) of the Company’s Articles of Association.12 Proposed amendment to Article 83(3) of the Company’s Articles of Association.13 Proposed amendment to Article 164(7) of the Company’s Articles of Association.

Subject to any voting instruction given, the proxy/proxies will vote, or abstain from voting, on the resolutions as he may thinks fit.

Signed this day of , 2012. Signature:

NOTES:1. In respect of deposited securities, only members/shareholders whose names appear in the Record of Depositors on 16 May 2012 (General Meeting Record of

Depositors) shall be entitled to attend, speak and vote at the 9th Annual General Meeting or appoint proxy/proxies to attend and vote/or vote on his/her behalf. 2. A member of the Company who is entitled to attend and vote at this meeting is entitled to appoint a proxy, and in the case of a corporation, a duly authorized

representative to attend and vote in his stead. A proxy may but need not be a member of the Company. The instrument appointing a proxy shall be in writing under the hand of the appointer or if such appointer is a corporation, either under its Common Seal or

under the hand of an officer or attorney duly authorized. A member who appoints two or more proxies shall specify the proportion of his shareholdings to be represented by each proxy. The instrument appointing a proxy must be deposited at the Registered Office of the Company at Suite 18.01, 18th Floor, MWE Plaza, 8 Lebuh Farquhar, 10200

Penang not less than forty-eight (48) hours before the time fixed for holding this meeting or at any adjournment thereof.3. Explanatory notes on Special Business Ordinary Resolution

• Resolution 8 The proposed Resolution No. 8, is a renewal of the previous year mandate and if passed, will authorize the Directors of the Company to issue shares up to a

maximum ten per cent (10%) of the issued share capital of the Company for the time being for such purposes as the Directors consider would be in the interest of the Company. This authority unless revoked or varied by the Company at a general meeting will expire at the next Annual General Meeting.

On 27 June 2011, the Company completed the issue of 60,000,000 new shares of RM0.10 each in the Company via a private placement pursuant to the authority granted to the Directors at the Eighth AGM held on 20 June 2011. The Company raised approximately RM13.2 million from the private placement exercise proposed in year 2011.

As at 31 March 2012, the Company had utilized the funds raised as follows:-

Proceeds from Proposed

Placement Shares

Proceeds from Placement

SharesActual

Utilisation

Intended Time Frame for

UtilisationDeviation

Amount DeviationRM’000 RM’000 RM’000 RM’000 %

Future synergistic acquisition and expansion 44,000 4,840 2,300 Within 12 months 2,540 52%

Working Capital 5,610 5,610 5,610 Within 12 months - 0%

Defraying of expenses incidental to the Proposed Private Placement 2,750 2,750 1,550 Within 1 month 1,200 44%

52,360 13,200 9,460 3,740 28%

PROXY FORM NO. OF SHARES

AFFIXSTAMP

1st Fold Here

Fold This Flap For Sealing

Then Fold Here

The Secretary

DAYA MATERIALS BERHAD 636357-W

Suite 18.01, 18th Floor, MWE PlazaNo. 8, Lebuh Farquhar10200 Penang, Malaysia

a) Any difference between the indicative proceeds above and the actual proceeds raised from the Proposed Private Placement (depending on the number of Placement Shares and the issue price of the Placement Shares) shall be adjusted from the proceeds used for future synergistic acquisitions and expansion.

b) Working capital is for the DMB Group’s operating and administrative expenses.c) Any variation to the estimated expenses will be adjusted to/from the proceeds used for working capital.d) As at 31 March 2012, DMB had placed out first trance of 60,000,000 placement shares, at an issue price of RM0.22 per share, raising RM13,200,000.

The renewal of this mandate would provide flexibility to the Company for any possible fund raising exercise, including but not limited to further placing of shares, for purpose of funding future investment projects, working capital and/or acquisitions. This authority is to avoid any delay and cost involved in convening a general meeting to approve such issuance of shares.

Ordinary Resolution• Resolution 9

The proposed Resolution No. 9, if passed, will empower the Directors of the Company to buy back and/or hold from time to time shares of the Company not exceeding ten percent (10%) of the issued and paid-up share capital of the company from time to time being quoted on the Bursa Malaysia Securities Berhad as may be determined by the Directors of the Company from time to time through the Bursa Malaysia Securities Berhad upon such terms and conditions as the Directors may deem fit and expedient in the interest of the Company.

Further information on the Proposed Renewal of Share Buy-Back authority are set out in the statement to shareholders of the Company which is despatched together with the Company’s Annual Report for the year ended 2011.

Special Resolutions• Proposed Amendment to the Article 2, Article 83(1), Article 83(3) and Article 164(7) of the Articles of Association of the Company

The proposed adoption of the Special Resolutions will bring the Company’s Articles of Association to be aligned with the amendments made to the Main Market Listing Requirements of Bursa Malaysia Securities Berhad.

Documents

ANNUAL REPORT 2011 1 - dayagroup.com.mydayagroup.com.my/.../07/DMB_Annual_Report_2011.pdf · ANNUAL REPORT 2011 1 Corporate Information Corporate Structure Financial Information Profile