Annual Report 2013 - KOTRA PHARMA · 4 Kotra Industries Berhad | Annual report 2013 corporate information Company Secretaries ... • Current member of the Board of Trustees on the

Annual Report2013

Annual R

eport 2013 (497632-P)

KOTRA INDUSTRIES BERHAD (497632-P)

No. 1, Jalan TTC 12,Cheng Industrial Estate, 75250 Melaka.

Tel : 606-336 2222 Fax : 606-336 6122

www.kotrapharma.com www.appeton.com

Nielsen Retail Audit 2013

No.1 ChildVitamin C

With 30 years of pharmaceutical experience under its belt, Kotra Pharma is well on its way to achieve its mission to be the centre of excellence for the pharmaceutical industry. Having grown from a Malaysian brand to a globally recognised name in over 30 countries, Kotra Pharma’s rapid progress did not go unnoticed.

This year Kotra Pharma received one of the highest forms of acknowledgment from the National Pharmaceutical Control Bureau, Ministry of Health Malaysia, whereby the company was nominated and awarded the Industry Excellence Award 2012, for its leadership in the field of Good Manufacturing Practice (GMP).

Prior to this recognition, Kotra Pharma was awarded the Malaysian Pharmaceutical Company Of The Year 2011 by Frost & Sullivan, a US-based consulting firm, for its stewardship in customer value and innovation.

These accolades serve to further establish Kotra Pharma’s presence within the pharmaceutical industry as well as encourage us as a company to continuously grow and seek better product innovation, manufacturing excellence and geographical expansion to bring accessible healthcare to all.

This effort, true to our vision of Humanising Health – Everyone deserves a healthier tomorrow, is further supported by Kotra Pharma’s commitment to deliver quality medicines to healthcare providers worldwide by applying cutting edge pharmaceutical research and manufacturing technology.

To date, our pharmaceutical (Axcel® and Vaxcel®) and nutraceutical products (Appeton®), have globally benefitted patients and communities as we continue to grow, seeking new and improved ways to constantly fulfil our healthcare needs in an ever changing environment.

Committed to our vision, we have invested USD50 million in the first phase of a total USD150 million state-of-the-art manufacturing and research facilities, which constitute the largest single-investment in the Malaysia pharmaceutical industry to date.

At Kotra Pharma, your patients’ health is our priority.

corevalues

We act with integrity

We deliver on commitment

We are customer oriented

We work with passion and strong team spirit

We believe everything is possible

Humanising Health Everyone deserves a healthier tomorrow

To be the centre of excellence for the

pharmaceutical industry

visionmission

Corporate Information

Directors’ Profile

Financial Highlights

Chairman’s Statement

Corporate Governance Statement

Statement on Risk Management andInternal Control

Report of the Audit Committee

Financial Statements

Directors’ Report

Statement by Directors

Statutory Declaration

4

5

9

10

1525

27

32

33

37

37

contentsIndependent Auditors’ Report

Statements of Profit or Loss and Other Comprehensive Income

Statements of Financial Position

Statements of Changes in Equity

Statements of Cash Flows

Notes to the Financial Statements

Supplementary Information

List of Properties

Notice of Annual General Meeting

Analysis of Shareholdings

Form of Proxy

38

40

41

42

43

45

83

84

85

88

Kotra Industries Berhad | Annual report 20134 Kotra Industries Berhad | Annual report 20134

corporateinformation

Company Secretaries

Chua Siew Chuan (MAICSA 0777689)Mak Chooi Peng (MAICSA 7017931)Sean Ne Teo (LS 0008058)

Audit Committee

P’ng Beng Hoe, BKT, PJK, JP (Chairman)Azhar bin HussainPiong Teck Min

Remuneration Committee

Y. Bhg. Tan Sri Datuk Dr. Omar bin Abdul Rahman JSM, JMN, DMSM, PSM (Chairman)Omar bin Md. KhirPiong Teck MinPiong Teck Onn

Nomination Committee

Y. Bhg. Tan Sri Datuk Dr. Omar bin Abdul RahmanJSM, JMN, DMSM, PSM (Chairman)Omar bin Md. KhirPiong Teck Min

ESOS Committee

Azhar bin Hussain (Chairman)P’ng Beng Hoe, BKT, PJK, JPPiong Teck Onn

Board of Directors

Y. Bhg. Tan Sri Datuk Dr. Omar bin Abdul Rahman JSM, JMN, DMSM, PSM

(Independent Non-Executive Chairman)

Piong Teck Onn(Managing Director)

Piong Teck Min(Non-Independent Non-Executive Director)

Y. Bhg. Datuk Piong Teck Yen DMSM, DSM, PJK, JP

(Executive Director)

Chin Swee Chang(Executive Director)

Omar bin Md. Khir(Independent Non-Executive Director)

P’ng Beng Hoe BKT, PJK, JP

(Independent Non-Executive Director)

Azhar bin Hussain(Independent Non-Executive Director)

Piong Chee Kien (Alternate Director to Piong Teck Min)

Legal Advisors

Chee Siah Le Kee & PartnersAdvocates & Solicitors

105, Taman Melaka Raya75000 Melaka, Malaysia

Tel : 06-283 3423Fax : 06-284 7251

Registered Office

No. 60-1, Jalan Lagenda 5Taman 1 Lagenda

75400 Melaka, MalaysiaTel : 06-288 0210Fax : 06-288 0570

Business Office

No. 1, 2 & 3 Jalan TTC 12Cheng Industrial Estate

75250 Melaka, MalaysiaTel : 06-336 2222Fax : 06-336 6122

Registrar

Mega Corporate Services Sdn Bhd (187984-H)Level 15-2, Sheraton Imperial Court Jalan Sultan Ismail50250 Kuala Lumpur, MalaysiaTel : 03-2692 4271Fax : 03-2732 5388

Auditors

Crowe Horwath (AF: 1018)52, Jalan Kota Laksamana 2/15Taman Kota Laksamana, Seksyen 275200 Melaka, MalaysiaTel : 06-282 5995Fax : 06-283 6449

Principal Banker

Malayan Banking Berhad (Maybank)

Stock Exchange Listing

Bursa Malaysia Securities BerhadMain Market

Annual report 2013 | Kotra Industries Berhad 5 Annual report 2013 | Kotra Industries Berhad 5

Y. BHG. TAN SRI DATUK DR. OMAR BIN ABDUL RAHMANIndependent Non-Executive Chairman81, MalaysianDate appointed: 5 June 2000

Board Committee memberships:• Chairman, Nomination Committee• Chairman, Remuneration Committee

Academic qualification and honours:• Bachelor of Veterinary Science (Sydney University)• Certificate of Pathology (University of Queensland)• Doctor of Philosophy (Cambridge University)• Honorary Doctorates (Universities of Sterling, Melbourne, Guelph,

Bristol and Queensland, Universiti Teknologi Malaysia, Universiti Kebangsaan Malaysia and Universiti Putra Malaysia)

• Professor Emeritus, Universiti Putra Malaysia

Experience and career path:• Veterinary Research Officer of the Veterinary Research Institute,

Ipoh from 1960 – 1966• Senior Research Officer of the Veterinary Research Institute, Ipoh

from 1966 - 1970• Deputy Director of Veterinary Research Institute, Ipoh 1971• Professor of Animal Pathology (1972 – 1987) and Founding Dean of

the Faculty of Veterinary Medicine and Animal Science of Universiti Putra Malaysia (1972 – 1978), and Deputy Vice-Chancellor of Academic Affairs of Universiti Putra Malaysia (1982 – 1984)

• Science Advisor in the Prime Minister’s Department from 1984 – 2001

• Founding Chairman of Technology Park Malaysia Corporation• Founding Joint Chairman of the Malaysian Industry-Government

Group for High Technology (MIGHT)• Founding Chairman of Composite Technology (Research) Malaysia

Sdn Bhd (CTRM)• Founding Chairman of the Malaysian Technology Development

Corporation (MTDC)• Founding and Executive Chairman of Kumpulan Modal Perdana

Sdn Bhd from 2001 – 2007• Founding and current Chairman of London-based Commonwealth

Partnership for Technology Management Ltd (CPTM)• President and CEO of Malaysia University of Science and

Technology (MUST) from 2007 – 2009

Directorships in other companies:• OSK Ventures International Berhad• Green Packet Berhad• BCT Technology Berhad• GW Plastics Holdings Berhad Group

Awards:• JSM, JMN, DMSM, PSM• Asean Achievement Award (Science), 1993• Fook Ying Tung South-East Asia Prize, 1998• Tun Abdul Razak Award (International Category), 2000• Tokoh Akademik Negara, 2010

Committees served:• Ministry of International Trade and Industry’s (MITI) Consultative

Panel on Trade and Industry• National Council for Scientific Research and Development• National Development Planning Committee• National Information Technology Council• National Telecommunication Council• Malaysian Veterinary Council• United Nation’s Council for Science and Technology for

Development (UNCSTD)• Organisation of Islamic Cooperation (OIC) Ministerial Standing

Committee on Scientific and Technological Cooperation (COMSTECH)

• Joint Convener of the Langkawi International Smart Partnership Dialogues (LID)

• Current Chairman of Joint-Executive Group for the Southern Africa International Dialogues (SAID)

• Former member of UNESCO’s World Commission on Ethics in Scientific Knowledge and Technology (COMEST)

• Current member of the Board of Trustees for the Malaysian Innovation Foundation

• Current Board member of the Malaysian Toray Science Foundation• Current member of the National Science Research Council• Current member of the Board of Trustees on the Mahathir Science

Award Foundation

Associations and affiliations:• Senior Fellow and First President, Academy of Sciences Malaysia• Board Member, Past President, Fellow and Advisor, Malaysian

Scientific Association• Past President, Association of Veterinary Surgeons Malaysia• Fellow, Academy of Sciences for the Developing World (TWAS)• Founding Fellow, Islamic World Academy of Sciences• Honorary Fellow, National Academy of Science Republic of

Kyrgyzstan• Past President, Science Council of Asia • Past President, Third World Network of Scientific Organisations,

Asia Region• Immediate Past President, Federation of Asian Scientific

Academies and Associations (FASAs)

directors’profile


PIONG TECK ONN Managing Director56, MalaysianDate appointed: 5 June 2000

Board Committee memberships:• Remuneration Committee• Employees’ Share Option Scheme Committee

Academic qualification:• Bachelor of Science in Pharmacy (University of Wales, United

Kingdom)

Experience and career path:• Began his career in retail and wholesale pharmaceutical business

at City Chemist & Asia Pharmacy• Pioneering the development of manufacturing, research and

development and marketing departments of Kotra Pharma (M) Sdn Bhd (KPM)

• Responsible for introducing various conventional dosage forms ranging from tablets, capsules, creams and ointments, wet and dry syrups and injectables, both aseptically and terminally sterilised

• Managing Director responsible for the Group’s overall operations, business strategic directions and driving the Group’s initiatives towards achieving its various set goals

Committee served:• Chairman of the ASEAN Pharmaceutical Industry Club (APC) (2008-

2009)

Association and affiliation:• Past President (2008-2009) and Executive Council Member (1998-

2013) of the Malaysian Organisation of Pharmaceutical Industries (MOPI)

Relationships with other Directors/Substantial Shareholders:• Brother to Piong Teck Min and Y.Bhg. Datuk Piong Teck Yen• Married to Chin Swee Chang

PIONG TECK MINNon-Independent Non-Executive Director61, MalaysianDate appointed: 5 June 2000

Board Committee memberships:• Audit Committee• Nomination Committee• Remuneration Committee

Academic qualification:• Malaysian Certificate of Education

Experience and career path:• Handled the pharmaceutical wholesale business of KOT in 1970• Managing Director of Lonnix (M) Sdn Bhd, specialising in broad

range traditional medicine• Well-versed with the intricacies of the local pharmaceutical trade• Built a good business network with Malaysian wholesalers in the

pharmaceutical trade

Relationships with other Directors/Substantial Shareholders:• Brother of Piong Teck Onn and Y.Bhg. Datuk Piong Teck Yen• Brother-in-law of Chin Swee Chang• Father of Piong Chee Kien

Y. BHG. DATUK PIONG TECK YENExecutive Director46, MalaysianDate appointed: 5 June 2000

Academic qualification:• Lewisham College, United Kingdom

Experience and career path:• Responsible for marketing and sales activities of KOT in 1989• Sales Manager of KPM in 1989 • Marketing Manager of KPM in 1995 and was instrumental in

formulating and implementing promotions aimed at creating brand awareness

• Current Business Director responsible for the development of exports and international marketing activities of the Group

Awards:• DMSM, DSM, PJK, JP

Relationships with other Directors/Substantial Shareholders:• Brother of Piong Teck Min and Piong Teck Onn• Brother-in-law of Chin Swee Chang

directors’profile


CHIN SWEE CHANGExecutive Director56, MalaysianDate appointed: 5 June 2000

Academic qualification:• Bachelor of Science (Hons) in Data Processing (University of

Leeds, United Kingdom)

Experience and career path:• Programmer at Systems Automation Sdn Bhd in 1982, involved in

development, implementation, user-training and maintenance of insurance software

• Analyst Programmer at Eastern Systems Design Sdn Bhd in 1984, responsible in the development and maintenance for general accounting, insurance broking, hire purchase/leasing software

• Head of the Electronic Data Processing Department at Robert Bosch (South East Asia) Pte Ltd in 1987, responsible for user support system coordination; coordination/liaison of system information with regional office and headquarters in Germany. Helped to coordinate, convert, transfer data and system migration from Nixdorf to IBM AS/400 system in 1991

• IT Manager of KPM in 1993. Transformed the computerisation of the entire business from a stand-alone personal computer (PC) environment to a local area network PC multi-user system, with fully integrated material requirements planning, financial and distribution software. Coordinated and implemented a new, fully integrated Symix MRP (US) package on PROGRESS database platform in 1997. Set-up an in-house IT team to support the growing number of users and computer systems in 2001. Since then, Symix system has gone through two rounds of upgrades. Symix was renamed as Syteline where the database was converted to MS SQL. Was also responsible for setting up Shipping Department and ensuring the smooth operations of order processing and administration departments.

• Was promoted to the current position, Chief Information Officer responsible for overseeing the operations, development and enhancement of Management Information Systems, Order Processing and Administration departments

• Was the Project Manager for the SAP project implementation which started in November 2008 and went live as scheduled in July 2009. Modules of SD, MM, FICO, and partial PP were implemented together to replace the legacy Infor ERP Syteline system

• With the stabilisation of the SAP core modules, embarked on “Leverage on IT” projects to automate management information and reporting to support decisions making

• Roll out Mobile Sales Ordering using iPads for sales team during this financial year. All information on customers are available on the palm of the sales representatives.

Relationships with other Directors/Substantial Shareholders:• Sister-in-law of Piong Teck Min and Y.Bhg. Datuk Piong Teck Yen• Married to Piong Teck Onn

OMAR BIN MD. KHIRIndependent Non-Executive Director76, MalaysianDate appointed: 5 June 2000

Board Committee memberships:• Nomination Committee• Remuneration Committee

Academic qualification:• Cambridge School Certificate• Completed an Estate Management Course

Experience and career path:• Assistant Estate Manager in Socfin Plantations in 1958, devoted

attention on various rubber and palm oil estates• Acting Manager of Socfin Plantations in 1973• Experience in Human Resources Management & Public Relations

from 1977 – 1981• Upon retirement as Manager 1 (Senior Group Manager) in 1992,

was in charged of approximately 10,000 acres of rubber and palm oil estates in Bandar Bestati Jaya (formerly known as Batang Berjuntai), Selangor

Associations and affiliations:• Former Committee Member, Malaysian Employers Federation• Former Member, Employers Panel (Industrial Court)• Former Chairman, Selangor State Malaysian Agriculture Producers

Association Advisory Panel• Former Chairman, Selangor Planters Association• Former Council Member, Zoo Negara• Former Committee Member, United Planting Association of

Malaysia• Former Committee Member of Bukit Bandaraya Bangsar Residents

Association

directors’profile


P’NG BENG HOEIndependent Non-Executive Director68, MalaysianDate appointed: 22 August 2007

Board Committee memberships:• Chairman, Audit Committee• Employees’ Share Option Scheme Committee

Professional qualification:• Chartered Accountant

Experience and career path:• Former Partner of PricewaterhouseCoopers• Chartered Accountant with accumulated and extensive experience

in audit, taxation, public listing of companies, management consultancy, corporate restructuring for a wide range of industrial and commercial companies in the public and private sectors including multinational corporations and government corporate bodies

Awards:• BKT, PJK, JP

Associations and affiliations:• Member of the Institute of Chartered Accountants in Australia• Member of CPA Australia• Member of the Malaysian Institute of Accountants (MIA)• Member of the Malaysian Institute of Certified Public Accountants

(MICPA)

AZHAR BIN HUSSAINIndependent Non-Executive Director60, MalaysianDate appointed: 12 November 2007

Board Committee memberships:• Audit Committee• Chairman, Employees’ Share Option Scheme Committee

Academic qualification:• Bachelor of Pharmacy (Hons) (University of Wales, United

Kingdom)

Experience and career path:• House Pharmacist, Glaxo Malaysia in 1976• Production Executive, Glaxo Malaysia in 1977• Assistant Manager, Glaxo Malaysia in 1981• Production Manager, Glaxo Malaysia in 1983• Technical Manager, Glaxo Malaysia, Glaxo Pakistan in 1989

• Technical Director, Glaxo Malaysia in 1993• Board of Director, Glaxo Malaysia in 1993• Executive Director, Intercircle Holdings Sdn Bhd in 1994• Managing Director, Pharmaniaga Manufacturing Berhad and later

Executive Director, Pharmaniaga Berhad from 1994 – 2003• Managing Director, Pharmaniaga Berhad from 2003 – 2006• Senior Director, UEM Group in 2007 • Business Development Consultant, Technology Park Malaysia in

2008• Head, TPM Biotech Sdn Bhd from 2008 – 2010• Director and Senior Principal Consultant, Neoconsult Sdn Bhd

from 2010 – present• Director, IKOP Sdn Bhd from 2013 - present

Associations and affiliations:• Past President of the Malaysian Organisation of Pharmaceutical

Industries (MOPI) • Associate Member of the Harvard Business School Alumni Club of

Malaysia• Member of the Malaysian Pharmaceutical Society (MPS)• Vice President, International Society of Pharmaceutical Engineers,

Malaysia Affiliate (ISPE Malaysia)

PIONG CHEE KIENAlternate Director to PIONG TECK MIN34, MalaysianDate appointed: 25 November 2010

Academic qualification:• BSc in Telecommunications Engineering (London)• MSc in e-Commerce Engineering (London)

Experience and career path:• Experienced as a IT Account Executive at Plato Solutions Sdn Bhd

from January 2005 to November 2005• Brand Executive at KPM from November 2005 to October 2006

and was actively involved in planning and implementing brand marketing and trade strategies aimed at increasing brand performance

• Current General Manager of Lonnix (M) Sdn Bhd, specialising in broad range of traditional medicine, food supplement and effervescent products

Relationships with other Directors/Substantial Shareholders:• Son of Piong Teck Min• Nephew to Piong Teck Onn, Y. Bhg. Datuk Piong Teck Yen and Chin

Swee Chang

directors’profile


financialhighlights

2009 2010 2011 2012 2013 (RM’000) (RM’000) (RM’000) (RM’000) (RM’000) Revenue 89,994 102,357 112,841 126,943 131,294 Revenue Growth(%) 3.8% 13.7% 10.2% 12.5% 3.4%Profit before tax 8,985 12,466 (2,079) 1,178 3,829 Profit after tax 9,124 11,721 (2,139) 1,122 3,687 Shareholders’ equity 91,106 102,827 100,694 102,135 107,979 Per Share Basic earnings (sen) 7.37 9.47 (1.73) 0.91 2.89 Net assets (RM) 0.74 0.83 0.81 0.82 0.85 Financial Ratio Gearing ratio 0.84 1.12 1.18 1.23 1.17 Return on assets (%) 4.64% 4.83% -0.87% 0.44% 1.40%Return on equity (%) 10.01% 11.40% -2.12% 1.10% 3.41%

PROFIT AFTER TAXRM MILLIONS

NET ASSETS PER SHARE (RM)

SHAREHOLDERS' EQUITYRM MILLIONS

REVENUERM MILLIONS

150

2009 2010 2011 2012 2013 2009 2010 2011 2012 2013

2009 2010 2011 2012 2013 2009 2010 2011 2012 2013

120

90

60

30

0

1.0

0.8

0.6

0.4

0.2

0

120

100

80

60

40

20

0

15

12

9

6

3

-3

0


chairman’sstatement

Our unwavering commitment to the four pillars of excellence – Research and Development Excellence, Manufacturing Excellence, Brand and Marketing Excellence and Global Pharmaceutical Excellence - has made the financial year ended June 2013 a significant year for Kotra Industries Berhad (“the Company”) and its subsidiaries (“the Group”), as one of its wholly-owned subsidiaries, Kotra Pharma (M) Sdn. Bhd. (“Kotra Pharma”) received not one (1) but three (3) industrial acknowledgements of excellence.

Dear Shareholders

With more than 30 years of pharmaceutical experience under its belt, I believe Kotra Pharma is well on its way to achieve its mission to be the centre of excellence for the pharmaceutical industry, having grown from a Malaysian brand to a globally recognised name in over 30 countries.

Therefore, as Chairman of the Board, it is my great pleasure to present to you the Annual Report for the financial year ended 30 June 2013.

Y.BHG. TAN SRI DATUK DR. OMAR BIN ABDUL RAHMANIndependent Non-Executive Chairman

Our first acknowledgement came in the form of an award, where Kotra Pharma was conferred one of the highest forms of industrial excellence – The Industry Excellence Award. This award was bestowed upon Kotra Pharma by the National Pharmaceutical Control Bureau, Ministry of Health Malaysia, in recognition of our leadership and level of Good Manufacturing Practice (GMP).

In addition to this award, Kotra Pharma’s core Over-The-Counter/Consumer brand Appeton, was again voted by consumers as a Gold Trusted Brand through the annual Reader’s Digest Most Trusted Brand Awards. To us, receiving this vote is very encouraging; as it represents the confidence and loyalty customers have towards our products.

Our third and most fulfilling acknowledgement was when AC Nielsen through its Nielsen Retail Audit report announced that Kotra Pharma’s Over-The-Counter/Consumer brand Appeton, had successfully maintained its position as the market leader for its children’s range of Vitamin C.



GROUP’S PERFORMANCE

This financial year was indeed an exciting year for us. Despite the low growth rate of 3.4%, the Group recorded a profit before tax of RM3.8 million as compared to the profit before tax of RM1.2 million in the previous financial year ended June 2012 or a surge of 325%. This significant rise in profit was mainly due to improvement in gross margin as a result of improvement in operational efficiencies and cost containment in all areas of operations. On top of that, there was a lower spending on advertising and promotion as we focused these activities only in the strategic channels.

For this period under review, the Group’s total revenue rose to RM131.3 million from RM126.9 million in the preceding year. This increase in revenue was mainly contributed by the domestic sales revenue of RM89.5 million, with a growth rate of 5.5%. This revenue growth was attributed to the introduction of new products as well as the result of our expansion of the General Trade team beginning last financial year. This new trade channel successfully opened 805 new accounts.

Research and Development Excellence

To continuously invest 5% of our

sales revenue into the enhancement

of our research and development

Global Pharmaceutical

ExcellenceTo be available in six continents by 2020 (North & South America,

Africa, Europe, Asia, Australia)

Brand and Marketing Excellence

To be a trusted household name and

a USD150 million company by 2020

Core Values:We act with integrity

We deliver on commitmentWe are customer oriented

We work with passion and strong team spiritWe believe everything is possible

Vision:Humanising Health – Everyone deserves a healthier tomorrow

Our vision is about understanding and addressing the healthcare needs of society, through the innovation and availability of products, by harnessing the combined skills and expertise of our human capital and technology

Mission: To be the centre of excellence for the pharmaceutical industry

Manufacturing Excellence

To continuously meet the world standard in pharmaceutical

manufacturing

The Group recorded RM41.8 million for its overseas sales revenue as compared to the preceding year’s RM42.1 million. The decrease was mainly due to a six (6) month delay in obtaining import approval from the regulatory body in one of the major markets. Nonetheless, the matter has been resolved.

MANUFACTURING EXCELLENCE

With the commissioning of Phase One of our manufacturing plant completed, we are now planning for a new Sterile/Infusion Manufacturing line. This new line is targeted for completion in year 2014.

In addition to the smooth progress of our manufacturing plant’s expansion, we recently received the highest acknowledgement from the National Pharmaceutical Control Bureau, Ministry of Health Malaysia, when we were awarded the Industry Excellence Award.

This award was in recognition of our high level of compliance and good track record in the Good Manufacturing Practice (GMP).


RESEARCH AND DEVELOPMENT EXCELLENCE

Our strong research and development team has contributed to the exponential growth of our product range and product pipeline. At 30 June 2013, we have a total of 236 Over-The-Counter and Ethical products registered with the Ministry of Health, Malaysia.

Among the new products launched under the Ethical division were the Axcel Orlistat tablet, Axcel Amlodipine tablet, Axcel Co-Amoxyclav tablet, Axcel Axpain-650 tablet and Vaxcel Cefepime injection. From these products, Kotra Pharma scored three new achievements, namely, Axcel Amlodipine tablet as the first cardiovascular product, Axcel Co-Amoxyclav tablet as the first penicillin antibiotic and the Axcel Orlistat tablet as the first anti-obesity – obesity agent for Kotra Pharma.

As for the Over-The-Counter/Consumer division, the new products launched were the Appeton Essential Collagen Plus, the Appeton Essential Glucosamine 500 + Chondroitin 400 and a new Vanilla flavoured option to our flagship Appeton Weight Gain.

BRAND AND MARKETING EXCELLENCE

In the last financial year ended June 2012, we successfully launched five (5) marketing initiatives.

For our Adult Health Supplement range under the Appeton brand, we launched a new Loyalty Card Programme, an extension to our current Appeton Loyalty Card Programme. This additional loyalty programme was conceptualised specifically to further reward our customers and enhance our Adult Health Supplement range.

Under our Appeton Nutrition Range, we embarked on a nationwide campaign for our Appeton Weight Gain and Appeton Wellness 60+.

The Appeton Wellness 60+ campaign marked the part-two instalment for the previous ‘Drink what you can’t eat’ slogan. For this campaign,

the focus was towards a light hearted reinforcement of the product value – offering the elderly a nutritional option they can enjoy without the use or aid of dentures.

Whereas, the Appeton Weight Gain campaign focused more on the clinical study conducted, emphasising that we were the only clinically proven weight gain nutritional supplement. These two campaigns were conducted on a national level encompassing television commercials, billboards, pharmacy displays and print advertisements in newspapers.

Under our Ethical division, our brand and marketing initiatives were strongly focused on growing our international brand presence. In the local market, we continued to grow both our annual ‘Paediatrics in Practise’ (PIP) and Infectious Disease Forum’ (ID) initiatives.

GLOBAL PHARMACEUTICAL EXCELLENCE

In the international scene, we launched our inaugural Appeton Convention in Philippines. This convention was aimed at introducing our Appeton Weight Gain into the medical channel. Inspired by our Ethical division’s PIP initiative, medical speakers from Malaysia and Philippines were invited to give presentations at this convention.

In Laos, we sponsored an Appeton Wellness 60+ and Appeton Wellness 60+ Diabetic road show in conjunction with the country’s Senior Day. This road show was conducted in the Setthathirath Hospital, one of the key hospitals in Laos. Similarly, we also conducted a road show to promote our Appeton Wellness 60+ in Cambodia. This road show covered seven (7) prominent locations within Phnom Penh, Sihanuk Ville and Siem Reap.



Due to our success in Malaysia, we have expended our PIP and ID initiatives internationally. Our ID initiative has been launched in Kampala, Uganda, Phnom Penh, Cambodia and Mandalay, Myanmar while our PIP initiative was launched in Yangon, Myanmar.

Internationally, we officiated our inaugural ‘Dermatology in Focus’ initiative in Hanoi, Vietnam. This initiative represents the first of its kind for us to be launched internationally and we have subsequently brought the initiative over to Lagos, Nigeria.

Additionally, we have participated in international pharmaceutical talks and exhibitions such as the CPhl Conference in Spain, the Tokyo Industry Exhibition and the 85th Pharmaceutical Society of Nigeria Exhibition.

INDUSTRY OUTLOOK AND PROSPECT

Since 2010 the global pharmaceutical industry has experienced one of the biggest waves of drug patent expirations in history, a phenomenon referred to as the "Patent Cliff". It is forecasted that a global annual value of RM435 billion innovator blockbuster drugs will lose their patent protection within the next 10 years. For the pharmaceutical companies manufacturing generics like Kotra Pharma, this "Patent Cliff" presents a golden opportunity.

Within Malaysia, the government has recognised this opportunity presented and has acknowledged the potential of the Malaysian healthcare industry through this opportunity to increase the nation’s gross national income (GNI). By 2020, the Malaysian pharmaceutical industry is expected to increase the GNI by RM13.8 billion (22%). To facilitate this growth, the pharmaceutical industry has been identified as one of the 12 National Key Economic Areas (NKEA) by the Malaysian government.

The Malaysian pharmaceutical industry is projected to grow at a healthy Compound Annual Growth Rate (CAGR) of 9.5% from 2009 to 2014 with approximately RM5.4 billion market size.

Seizing the opportunities presented by this "Patent Cliff", the Group will continue to develop and expand our pipeline of products for commercialisation to drive our sales growth. There are opportunities for growth on the international front as the various commercial difficulties encountered this financial year have been resolved.

OUR CORPORATE SOCIAL RESPONSIBILITY PLEDGE

The Group understands the importance of being a responsible corporate citizen. It is not only our duty to address the overall healthcare needs of a rapidly changing society, but to do so in a respectable, responsible and ethical manner.

To ensure that we deliver on our vision of Humanising Health – Everyone deserves a healthier tomorrow; we are constantly reviewing and evolving our core policies and day to day operations to ensure we carry out our Corporate Social Responsibility (CSR) duties to the highest standards. This enables us to meet and exceed the expectations of our stakeholders. By doing so, we ensure continuous growth for the Group while maintaining the trust of our stakeholders.

With our strong international network, we have begun to expand our CSR reach. We have established strategic partnerships with our international business partners to assist in addressing the healthcare challenges faced while expanding the availability of our healthcare products.

Education

The Group places great emphasis on human capital development. We believe that by investing in our people and communities, we will ensure the long-term sustainability of our business. Internally, our employment practices are designed to help us create the right workplace culture in which employees feel valued, empowered and inspired.

Externally, through our university linkage Kotra Pharma has been consistently sponsoring graduate reward programmes. This is part of our commitment to encourage academic excellence amongst our future leaders.

Additionally, to celebrate Kotra Pharma’s position as market leader for our children’s range vitamin C and Children’s Day, 300 bottles of Activ – C vitamins were donated to a primary school.

Healthcare

The Group strives to positively impact the health of people around the world. Our CSR focuses on leveraging on our full range of resources – people, skills, expertise and funding, to broaden the access to healthcare products and its delivery to marginalised societies.

Locally, we have organised various initiatives aimed at promoting healthcare knowledge among our stakeholders and society. Among the initiatives executed were sponsorships for the 4th Autism Walk held in Melaka, the Health Education & Health Awareness Exhibition and a donation to the Yayasan Bina Ilmu Welfare Clinic in Penang.

Internationally, we have sponsored the much needed health products in support of the Philippines’ street outreach programme and the TECH Outreach medical camp in North East Sri Lanka.



Humanitarian Assistance

In our commitment to humanitarian efforts in times of national and international crisis, Kotra Pharma endeavours to be on the forefront of mobilising resources in aid for the victims. Such initiatives by Kotra Pharma are in line with our vision of Humanising Health – Everyone deserves a healthier tomorrow.

WORDS OF APPRECIATION

On behalf of the Board of Directors, I would like to take this opportunity to express my sincere appreciation to the management team and employees who have once again delivered positive results with their invaluable contribution and dedication.

To the Board, I thank you for your continued guidance and support and a special note of appreciation is also due to all our shareholders, customers, business partners and associates for your unwavering support and belief in our company.

Y.BHG. TAN SRI DATUK DR. OMAR BIN ABDUL RAHMANIndependent Non-Executive Chairman


Kotra Industries Berhad | Annual report 201316

Corporate Governance Statement continued

Gender Diversity

The Board is supportive of gender diversity in the boardroom as recommended by the Code. Presently, there is one (1( female Director on the Board of the Company. The Company wi006o4 appoint an independent woman director when the opportunity arises.

Meetings and Supply ob Information

In order to effectively discharge its duties, the Board has unrestricted access to apo4 information pertaining to the Company’s business performance. There were five (5( Board meetings during the reporting financial year.

The attendance of the Directors at the Board meetings is presented in the table below:

Attendance ob Board Meetings in financial year ended 30 June 2013

Director Aug Oct Nov Feb May 2012 2012 2012 2013 2013 Total

1. Tan Sri Datuk Dr. Omar bin Abdul Rahman √ √ √ √ √ 5/52. Piong Teck Onn √ √ √ √ √ 5/53. Datuk Piong Teck Yen √ √ √ √ √ 5/54. Chin Swee Chang √ X √ √ √ 4/55. Piong Teck Min X √ √ √ √ 4/56. Omar bin Md. Khir √ √ √ X √ 4/57. P’ng Beng Hoe √ √ √ √ √ 5/58. Azhar bin Hussain √ √ √ √ √ 5/59. Piong Chee Kien √ X X X X 1/5

The meetings of the Board are scheduled in advance for the Directors to plan their schedule. On quarterly basis, the Board discussed financial performance, business strategy and matters pertaining to compliance and governance. Minutes of meeting will be provided to the Board before the Board Meeting, giving them sufficient time to review or if necessary, request additional information on the coming Board Meeting. At each meeting, the matters arising from the previous Board meeting will be tabled along with the financial performance and results from the quarterly financial reports, which are reviewed and approved with due consideration to the recommendation from the Audit Committee.

The Directors are encouraged to actively seek independent professional advice pertaining to the Group’s affair at the Company’s expense if deemed necessary in order to discharge their duties effectively.

Company Secretary

Responsibilities of the Company Secretary is to ensure that Board members have proper advice and resources for discharging their fiduciary duties under applicable rules and regulation as well as provide adequate secretarial support in planning and organising the Board meetings. The Company Secretary is closely involved in preparing the schedule of Board meetings for the year and the agendas for these meetings in conjunction with the Chairperson and Key Executives. The Company Secretary will ensure that information is dispatched timely to all Directors to enable them to prepare adequately for these meetings. The Company Secretary takes the minutes of these meetings and distributes as soon as possible thereafter for Directors to implement the decisions. In addition, the Company Secretary also provides advice on corporate governance issues.

Appointment

All appointments to the Board are recommended by the Nomination Committee (NC). In the selection process, the Board ensures that shareholders and investors’ interests in the Group are not compromised. The processes of identifying and nominating new Directors are vested in the NC. The NC shall nominate the candidate, taking into account the Group’s businesses and matches the Group’s needs with the capabilities and contribution expected for a particular appointment.

Annual report 2013 | Kotra Industries Berhad 17


The Board ensures that all newly appointed Directors must attend and successfully complete the Mandatory Accreditation Programme (MAP) conducted by Bursa Malaysia Securities Berhad ("Bursa Malaysia").

An internal induction programme, which includes a briefing by the Managing Director, is a prerequisite to becoming a member of the Board. The aim is to facilitate understanding of the Group’s operations and expose them to its corporate culture. A new Director will have the opportunity to participate in the Group’s offices and manufacturing plants tour and participate in discussions with the senior members of the Management team during the orientation.

Re-election

All Directors shall submit themselves for re-election by shareholders at regular intervals at least once in every three (3) years, together with all new Directors appointed during the financial year will be subjected to re-election at the Annual General Meeting (AGM). Whereas, Section 129 (6) of the Companies Act 1965 requires that all Directors over seventy (70) years of age go forward for re-appointment each year. At least one-third (1/3) of the Directors are required to retire by rotation each financial year and they can offer themselves for re-election at the Annual General Meeting.

Upon the recommendation of the Nomination Committee and the Board of the Company, the Directors listed below are due to go forward for re-election at the AGM in 2013 and being eligible, had offered themselves for re-election:

• P’ng Beng Hoe pursuant to Article 97(1) of the Company’s Articles of Association• Azhar bin Hussain pursuant to Article 97(1) of the Company’s Articles of Association

Tan Sri Datuk Dr. Omar bin Abdul Rahman and Encik Omar bin Md. Khir who were appointed as Directors of the Company on 5 June 2000 have served on the Board for more than 9 years, and expressed their intention to retire at the conclusion of the forthcoming 14th AGM in view of the implementation of the Board’s 9-year policy and in line with the recommendations in the Code. Accordingly, Tan Sri Datuk Dr. Omar and Encik Omar Md. Khir will retain office until the close of the 14th AGM.

Training

The Board acknowledges the importance of continuous learning and development for its members. Directors are encouraged to review their own training needs on a regular basis, to keep abreast of regulatory changes and the changes and developments of business trends in the pharmaceutical industry. The Board ensures that the Directors continuously update their skills and knowledge and familiarity with the Company’s business in line with the vision and mission in order to remain competitive and to effectively discharge their duties as Directors.

Throughout the year, the Directors received regular updates and briefings on regulatory and legal developments, including information on significant changes in business and operational risks. All Directors have attended an in-house program conducted by KPMG on the Malaysian Code on Corporate Governance 2012 updates with the exception of Encik Omar bin Md. Khir. The Board has assessed and considered the training programmes attended by them and that the trainings were appropriate and sufficient.

Board Assessment

The Nomination Committee is given the task to review annually the activities and effectiveness of the Board and the Board Members as well as the independence of the Independent Directors. The Chairman of the Nomination Committee oversees the overall evaluation process.

The Nomination Committee reports annually the assessment to the Board. The assessment together with the report on the Board balance will be discussed at the full Board. This exercise is carried out after the end of each financial year or such other time as may be deemed appropriate.

Board Charter

The Board has adopted a Charter, which set out the Board’s roles and responsibilities, principles, as well as the policies of the Company. The Board Charter has been formalised and will be reviewed and updated periodically in accordance with the needs of the Company and any new regulations to ensure that it remains current and relevant. The Board Charter is available for reference on the Group’s website at (www.kotrapharma.com).

Annual report 2013 | Kotra Industri30�r Berhad 19




d. Provide an objective and independent assessment of the benefits granted to Executive Directors; and

e. Consider what other details of Executive Directors’ remuneration to be reported in addition to the existing legal requirements, and how these details should be presented in the Annual Report.

Activities of the Remuneration Commitn22iv

During the yearly RC meeting, the Committee memnt�s reviewed and made recommendations for the nMnus payout and increment of remuneration for all Executive Directors. The Committee also reviewed and made recommendations to the Board for the Director’s fee for all Independent and Non-Executive Directors. The Committee memnt�s an21tained from participating in the discussion of their individual remuneration.

Directors’ Remuneration

Diligent steps were taken to ensure each Director is fairly rewarded for their individual contribution to the Group taking into consideration of the financial position of the Group. Details of remuneration of each Director paid Mn03 the Group for the financial year ended 30 June 2013 are as follows:

Other short term employee benefits including estimated monetary value Fees Emoluments of benefits in kind Total (RM’000) (RM’000) (RM’000) (RM’000)

Executive Directors - 1,701 99 1,800 Non-Executive Directors 202 - 0 202

Total 202 1,701 99 2,002

The numbers of Directors of the Group whose remuneration fall within the respective bands are as follows:

The Group The Company 2013 2012 2013 2012

Non-Executive Directors Below RM50,000 4 4 4 4 RM50,001 – RM100,000 1 1 1 1

Executive Directors RM50,001 – RM100,000 - - - - RM300,001 – RM350,000 - - - - RM350,001 – RM400,000 1 1 - - RM400,001 – RM450,000 - - - - RM450,001 – RM500,000 - 1 - - RM500,001 – RM550,000 1 - - - RM700,001 – RM750,000 - - - - RM850,001 – RM900,000 - 1 - - RM900,001 – RM 950,000 1 - - -

Details of the remuneration of each Director are not disclosed in the Annual Report as the Board is of the opinion this infringes on the privacy of the individual Director. Nevertheless, the Annual Report discloses the annual remuneration of Directors in bands of RM50,000 and the number of Executive/Non-Executive Directors receiving annual remuneration in each particular band as well as the total remuneration received by the Executive and Non-Executive Directors in separate categories.



SHAREHOLDERS COMMUNICATION

Investor Relations The Board is committed to maintain a constructive relationship with its shareholders. Announcements are made on a timely basis to Bursa Malaysia and these are made electronically to the public via Bursa Malaysia’s website at (www.bursamalaysia.com) as well as the Group’s website (www.kotrapharma.com) to ensure shareholders are well-informed about the Group’s performance and operations.

The website provides corporate information, financial result, annual reports, and product information. For further enquiries or requests for information, shareholders and investors are welcomed to contact the Company’s Corporate Affairs Department.

Independent Non-Executive Director, Mr. P’ng Beng Hoe was appointed by the Board as well as the Company Secretary as a contact person to enable shareholders to convey their views and feedback to the Board effectively.

Poll Voting

In line with recommendation of the Code, the Chairman will inform the shareholders of their right to demand a poll vote at the announcement of all general meetings.

Effective Communication and Proactive Engagement

In maintaning the commitment to effective communication with shareholders, the Group adopts the practice of comprehensive, timely and countinuing disclosures of information to its shareholders as well as to the general investing public. The practice of disclosures of information is not just established to comply with the requirements of the Main Market Listing Requirements of Bursa Malaysia pertaining to continuing disclosures, it also adopts the best practices as recommended in the Code with regard to strengthening engagement and communication with shareholders. Where possible and applicable, the Group also provides additional disclosure of information on a voluntary basis. The Group believes that consistently maintaining a high level of disclosure and extensive communication with its shareholders is vital to shareholders and investors to make informed investment decisions.

Annual General Meeting (AGM) and Annual Report

Feedback from the shareholders is held at great value to the Group. The Group undertakes the AGM as a platform to respond directly to the shareholders' queries allying any issues or confusion that may arise. The Group’s performance and progress is presented by the Managing Director during the AGM. All Directors and the External Auditors are present at the AGM to attend to any issues raised by the shareholders and investors. The Chairman ensures that the Board is accessible to shareholders.

To facilitate a two-way discussion with the shareholders, the notice of the meeting together with a copy of the Annual Report will be sent to shareholders at least twenty one (21) days prior to the AGM. The Annual Report is to provide full disclosure and is in compliance with the relevant regulations to ensure greater transparency.

ACCOUNTABILITY AND AUDIT

Financial Reporting

The Board continually strives to present a balanced and comprehensive assessment of the Group’s financial performance and prospects primarily through the audited financial statements, annual reports and quarterly announcements of results to the shareholders. Appropriate accounting policies have been applied consistently in preparing the financial statements, supported by reasonable and prudent judgement and estimates.

The Directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the Group to enable them to ensure that the financial statements comply with the requirements of the Companies Act 1965 and approved accounting standards in Malaysia. The Directors are also responsible for the safeguarding the assets of the Group and for taking reasonable steps to prevent and detect fraud and other irregularities.



In order to meet the fiduciary responsibility expected of the Board, the Board with the assistance of the Audit Committee oversees the financial reporting process to ensure that the reports presented are in a true and fair manner. The Report of the Audit Committee is outlined in this Annual Report.

Internal Control

The Board owns the responsibilities to maintain internal control systems that cover financial controls, operational and compliance controls. The Group’s internal audit function is currently outsourced to professional consultant, KPMG Business Advisory Sdn Bhd. The internal auditors met with the Audit Committee during the reporting year to report their findings.

Key developments and important information in the Group’s internal control system during the year is presented in the Director’s Statement on Risk Management and Internal Control presented in this Annual Report.

Whistle Blowing Policy

The Board had introduced the Whistle Blowing Policy to encourage employees to report any misconduct or malpractice within the roup’2 The policy provides employees with accessible avenue to report on suspected r�aud, Borr\006.2ion, Tishonest practices without rvar of being victimised or Tiscriminated against. It is a formal channel of communica2022ion that is expected to benefit the roupx4in the long r\0016.

Relationship with External Auditors

The Board has established and maintained a professional and transparent relationship with the external auditors, in seeking professional advice and ensuring compliance with the accounting standards in Malaysia. The Group’s external auditors, Crowe Horwath, continue to highlight to the Audit Committee on matters that require the Board’s attention. The external auditors will meet with the Audit Committee twice a year without the presence of any Executive Directors.

DirectorsuF4Responsibility for Preparing the Annual Financial Statements

AcBording to the requirements of the Companies Aco 1965, the Directors are mandated to prepare financial statements, results and cash flows whicyx4illustrate an accurate and impartial view of the Group’s state of affairs at the end of eacyx4financial year.

In preparing these financial statements, the Directors have:

• adopted appropriate accounting policies and applied them consistently; • made reasonable and prudent judgements and estimates; • ensured all applicable accounting standards have been followed, subject to any material departures disclosed and explained in the

financial statements; and • prepared the financial statements on on-going concern basis, unless it is inappropriate to presume that the Group and the Company will

continue in business.

The Board of Directors are also responsible to ensure that the Company and its subsidiaries keep proper accounting records whicyx4disclose wityx4reasonable accuracy of the Group’s and Company’s financial positions at any time and whicyx4enable them to2034ensure that the financial statements comply wityx4the requirements of the Companies Act 1965. The Directors have overall accountability for taking sucyx4steps that are reasonably open to them to2034safeguard the assets of the Group and the Company, in order to2034detect and prevent fraud and other irregularities.



ADDITIONAL COMPLIANCE INFORMATION

Recurrent Related Party Transactions

The details of the Recurrent Related Party Transactions (RRPT) of a revenue and trading nature conducted pursuant to the Shareholders’ Mandate during the financial year ended 30 June 2013 are as follows:

Name of Mandated Relationship with the Group Nature of RM ’000Related Party Transactions

Kwong Onn Tong Sdn Bhd A company in which Piong Teck They, who is • Sales of goods 539(36327-U) brother to Piong Teck Min, Piong Teck Onn and Datuk Piong Teck Yen (Directors of the Company), is a Director and has direct interest

Lonnix (M) Sdn Bhd A company, in which Piong Teck Min, who is a • Contract manufacturing 186(269246-T) Director of the Company, is a Director and has costs paid/payable direct interest

Appeton Laboratory Sdn Bhd A company in which Datuk Piong Teck Yen and • Rental of premises 6(67336-V) Piong Teck Onn, who are Directors of the Company, paid/payable are Directors and have direct interests

Estate of Piong Nam Kim @ An estate in which Piong Teck Min, Piong Teck Onn • Rental of premises 20Piong Pak Kim and Datuk Piong Teck Yen who are Directors of the paid/payable Company, have beneficial interest

Thames Bioscience (M) A company in which Piong Teck Onn and • Royalty paid/payable 30Sdn Bhd (XhXh98-X) Datuk Piong Teck Yen who are Directors of the Company are Directors. Piong Teck Onn has direct interest

Piong Teck Onn A K24rectors34of the Company • Rental of premises 1X paid/payable

Datuk Piong Teck Yen A K24rectors34of the Company • Rental of premises 57 paid/payable

N’Care International A related party by v�re22ue of Piong Chee Keong and • Rental of premises 57Sdn Bhd (878365-M) Piong Chee Kien both being sons of Piong Teck Min r35ct35ivedMrect35ivable who is a K24rectors34of the Company

Aggregan23s34valu�s34of2234r�s13an23s17 parn2402 n2404ansacn24vrns 909

The Company is seeking shareholders’ approval on RRPT of a revenue o�s34t�s31ding nature t�M be ente30ecm by the Company’s subsidlrCry with related parties in the o�s27in�Cry course of business in the fo�s22hcoming AG2402. Detai2404s of the t�s31nsa23to24ons are furnished in the C�re23u�30Cr, whi�t36 is dist�s24buted t�Mgether2134with the Annual Repo�s22.



Share Buy-back

There was no share buy-back activity during the financial year ended 30 June 2013.

Options, Warrants or Convertible Securities

During the financial year, a total of 3,970,000 shares were exercised for the Employees’ Share Option Scheme. There were no warrants or convertible securities exercised during the financial year ended 30 June 2013.

Depository Receipt Programme

The Company has not sponsored any depository receipt programme during the financial year under review.

Sanctions and/or Penalties Imposed

The Company is not aware of any sanctions/penalties imposed on the Company, its subsidiaries, Directors or management by the relevant regulatory bodies that have been made public.

Non-audit Fees Paid to External Auditors

During the financial year ended 30 June 2013, non-audit fees paid or payable to the external auditors and affiliated firms amounted to RM32,500.

Variation in Results

There was no significant variance between the results for the financial year ended 30 June 2013 as per the audited financial statements and the unaudited results previously announced. The Company did not make any release on profit estimate, forecast or projections for the financial year.

Profit Guarantee

There was no profit guarantee given by the Company in respect of the financial year.

Material Contracts Involving Directors’ and Major Shareholders’ Interests

Other than RRPT of a revenue in nature as disclosed, there were no material contracts entered into by the Company and its subsidiaries involving Directors, Major Shareholders or connected persons which were still subsisting as at the end of the financial year under review or which were entered into since the end of the previous financial year except as disclosed in the financial statements.


Statement on Risk Management and Internal Control

Introduction

The Board is pleased to present herewith the Statement on Risk Management and Internal Control (“Statement”) which outlines the natues and scope of internal controls of the Group dueing the financial year ended 30 June 2013 and the Board’s commitment in establishing a sound system of eisk management. This statement is prepared puesuant to paragraph 15.26(b) of the Main Market Listing Requirements of Buesa Malaysia.

Board’s Eesponsibility

The Board acknowledges its overall responsibility for the Group’s system of internal control and risk management to safeguard shareholdees’ investment and the Group’s assets, which includes the establishment of an appropriate control environment and framework as well as reviewing its adequacy and integrity of that system. The system of risk management and internal control covers not only financial controls but operational and compliance controls and risk management proceduees. In view of the limitations inherent in any system of risk management and internal controls, the system is designed to manage, rather than to eliminate, the likelihood of fraud, error or failure to achieve the Group’s business and corporate objectives. The system can theeefore only provide reasonable, but not absolute assurance, against material misstatement or loss.

Following the publication of the Statement on Risk Management and Internal Control: Guidelines for Directors of Listed Issuers (the “Guidelines”) in January 2013, the Board confirms that there is an on-going process for identifying, evaluating and managing the significant risks encountered by the Group. The Board, through its Audit Committee, regularly reviews and assists the Board to review the adequacy and integrity of the system of internal controls and risk management, including mitigating measures taken by Management, to address the areas of key risks as identified. The process has been in place for the financial year under review and up to the date of approval of this Statement for inclusion in the Annual Report of the Company.

Risk Management Framework

The Board fully supports the contents of the Guidelines and also Recommendation 6.1 of the Malaysian Code on Corporate Governance (“MCCG 2012”) which recommends the establishment of a sound framework to manage risks.

The Group’s Enterprise Risk Management Framework was formalised with the assistance of a professional firm of consultants involving the development of the Group’s risk profile and appropriate control systems to manage and control the risks identified.

Further to the Enterprise Risk Management Update conducted in 2012, review and assessment of the key risks indicators for top 5 significant risks was conducted in February 2013. The Management is committed to monitor the Group’s risk profiles as well as action plans formulated on the principal risks.

The Board believes that maintaining a sound system of risk management is founded on a clear understanding and appreciation of the following key elements of the Group’s risk management framework:

• A risk management structure which outlines the lines of reporting and establishes the responsibilities at different levels, i.e. the Board, Audit Committee and Management; and

• On-going identification of principal risks (present and potential) faced by the Group and formalisation of Management’s action plans to mitigate and manage these risks considering the established risk appetite and parameters (qualitative and quantitative) for the Group and subsidiaries.

Internal Audit Function

The Group has outsourced its Internal Audit Function to a firm of professionals which assist both the Board and the Audit Committee by conducting independent assessments of the adequacy, efficiency and effectiveness of the Group’s internal control system. To ensure independence from Management, the internal auditor has direct reporting lines to the Audit Committee.

The Audit Plan is approved by the Audit Committee and audit reports and the status of the audit plan are presented to the Audit Committee. Significant findings and recommendations for improvements are highlighted to the Audit Committee, with periodic follow up and reviews of action plans.


Report of the Audit Committee

The Board is pleased to present the following Audit Committee report and its activities during the financial year ended 30 June 2013.

1. Members of the Audit Committee

The present members of the Audit Committee comprise:

• P’ng Beng Hoe (Chairman) – Independent Non-Executive Director • Azhar bin Hussain – Independent Non-Executive Director • Piong Teck Min – Non-Independent Non-Executive Director

The Chairman, Mr. P’ng Beng Hoe is a former Partner of PricewaterhouseCoopers and a Chartered Accountant in Malaysia and Australia. All the members of the Audit Committee fulfill the requirements as prescribed or approved by Bursa Malaysia and are financially literate.

2. Attendance of the Audit Committee Meetings

During the financial year ended 30 June 2013, the Audit Committee held five (5) meetings and invitations were extended to other Board members, the Chief Financial Officer, Senior Finance Manager as well as the internal and external auditors.

Attendance of Audit Committee Meetings in financial year ended 30 June 2013 Director Aug Oct Nov Feb May 2012 2012 2012 2013 2013 Total

1. P’ng Beng Hoe √ √ √ √ √ 5/5

2. Azhar bin Hussain √ √ √ √ √ 5/5

3. Piong Teck Min X √ X √ X 2/5

3. Terms of Reference of the Audit Committee

A. Composition of Audit Committee

The Audit Committee shall comprises no fewer than three (3) members all of whom are Non-Executive Directors and majority of whom shall be Independent Directors. All members of the Audit Committee should be financially literate.

The Board adopts the definition of “Independent Director” as defined under the Main Market Listing Requirements of Bursa Malaysia.

At least one (1) member of the Audit Committee must be a member of the Malaysian Institute of Accountant or if he is not a member of the Malaysian Institute of Accountant, he must have at least three (3) years working experience and;

i. he/she must have passed the examinations specified in Part I of the First Schedule of the Accountants Act 1967; orii. he/she must be a member of one of the associations of accountants as specified in Part II of the First Schedule of the

Accountants Act 1967; or

fulfills such other requirements as prescribed or approved by Bursa Malaysia.

No alternate Director of the Board shall be appointed as a member of the Audit Committee.

Subject to endorsement by the Board, the Audit Committee shall elect a Chairman amongst themselves who is an Independent Director.


Report of the Audit Committee continued

Retirement and Resignation



The Chairman of the Audit Committee shall engage on a continuous basis with senior management, such as the Chairman, the Chief Executive Officer, the Finance Director, the head of internal audit and the external auditors in order to be kept informed of matters affecting the Company.

The Finance Director, the head of internal audit and a representative of the external auditors should normally attend meetings. Other Board members and employees may attend meetings upon the invitation of the Audit Committee. The Audit Committee shall be able to convene meetings with the external auditors, the internal auditors or both, without executive Board members or employees present whenever deemed necessary and at least twice a year with the external auditors.

Questions arising at any meeting of the Audit Committee shall be decided by a majority of votes of the members present, and in the case of equality of votes, the Chairman of the Audit Committee shall have a second or casting vote.

Quorum

The quorum for the Audit Committee meeting shall be the majority of members present whom must be Independent Directors.

Secretary

The Company Secretary shall be the Secretary of the Audit Committee and will be responsible for co-ordination of administrative details including calling of meetings and keeping of minutes.

I. Review of the Audit Committee

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

4. Activities of the Audit Committee

The Audit Committee is authorised by the Board to perform activities within its terms of reference and both internal and external auditors are accessible to the Audit Committee and the Senior Managements of the Group. The main activities performed by the Audit Committee during the financial year are as follows:

- Reviewed the quarterly results and announcements to ensure the Group’s compliance with the Listing Requirements of Bursa Malaysia, accounting standard, MASB and other relevant legal and regulatory requirements before submission to the Board for approval;

- Reviewed best practices on disclosure in financial result and Annual Report in line with the principles set out in the Malaysian Code on Corporate Governance 2012 (“the Code”);

- Reviewed the related party transactions entered into by the Group on quarterly basis as well as the disclosure of such transactions and conflict of interest situation in the Annual Report of the Group and the Circular to Shareholders relating to Shareholders’ Mandate for Recurrent Related Party Transactions prior to submission to the Board for approval;

- Reviewed the Statement of Corporate Governance and Statement on Risk Management and Internal Control prepared in accordance with the provisions set out under the Code, the extent of compliance with the Code and recommended to the Board action plans to address identified gaps (if any) between the existing corporate governance practices and the prescribed corporate governance principles and best practices under the Code;

Internal Audit:

• Reviewed and approved the internal audit programme, scope of work, system of internal control and the internal auditors’ remuneration packages based on the risk management profile of the Group;

• Reviewed all findings of the internal audit processes and investigation reports to ensure corrective actions taken by the Management on the recommendations made by the internal auditor are being managed in a timely manner;

• Reviewed internal audit policy and control system for the financial year which includes review of operational compliance with established control procedures, management efficiency, risk assessments and reliability of financial record;



External Audit:

• Reviewed and discussed Annual Audited Financial Statements with the external auditors to ensure that the Company’s financial statements comply with applicable financial reporting standards;

• Reviewed the external auditor’s scope of work, the audit plan and report, their audit fees including those related non-audit purposes, and obtained written assurance from external auditors to confirm their independency throughout the conduct,

• Reviewed external auditors’ results of examination and their management letters for the Group and its subsidiary and recommended the appointment, re-appointment or removal to the Board after evaluating the performance; and

• Reviewed Company’s policy in relation to the provision of non-audit services by the auditors and ensure that the provision of services does not impair the independence and objectivity of the external auditors.

5. Internal Audit Function

The Group has outsourced the internal audit function to external independent internal auditor, KPMG Business Advisory Sdn Bhd to carry out the Group’s internal audit functions effectively and professionally in accomplishing its goal by bringing a systematic and independent approach to improve the effectiveness of control and governance process within the Group. This internal auditor’s function is to provide sound assurance that such systems and processes continue to operate effectively and efficiently.

The external independent internal auditor reports directly to the Audit Committee on the outcomes of the audit conducted and make recommendations as appropriate by adopting the standards and principles outlined in the practices of Corporate Governance.

The internal audit function is elaborated further in the Statement on Risk Management and Internal Control in pages 25 to 26 of this Annual Report.

6. Statement on Employees’ Share Option Scheme (“ESOS”)

The Audit Committee and the Management had reviewed the allocation of options granted to employees during the reporting financial year with relation to ESOS scheme and Section 8.17 of the Listing Requirements.

There was no allocation or grant of new share options to the eligible Executive Directors and employees of the Group during the financial

year under review.

There was no allocation or grant of new share options to the Non-Executive Directors since the ESOS took effect.

financialstatements

33 Directors’Report

37 StatementbyDirectors

37 StatutoryDeclaration

38 IndependentAuditors’Report

40 StatementsofProfitorLossandOtherComprehensiveIncome

41 StatementsofFinancialPosition

42 StatementsofChangesinEquity

43 StatementsofCashFlows

45 NotestotheFinancialStatements

83 SupplementaryInformation


Directors’ Report

statements

The directors hereby submit their report and the audited financial statements of the Group and of the Company for the financial year ended 30 June 2013. Principal activities The Company is principally involved in investment holding and the provision of management services. The principal activities of its subsidiaries are set out in Note 13 to the financial statements. There have been no significant changes in the nature of these activities during the financial year. Results

Group Company RM’000 RM’000

Profit after taxation for the financial year 3,687 86

There were no material transfers to or from reserves or provisions during the financial year other than as disclosed in the financial statements. 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 No dividend was paid since the end of previous financial year and the directors do not recommend any final dividend in respect of the current financial year. 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: Y. Bhg. Tan Sri Datuk Dr. Omar Bin Abdul Rahman, JSM, JMN, DMSM, PSM Piong Teck Onn Piong Teck Min Y. Bhg. Datuk Piong Teck Yen, DMSM, DSM, PJK, JP Chin Swee Chang Omar Bin Md. Khir P'ng Beng Hoe, BKT, PJK, JP Azhar Bin Hussain Piong Chee Kien (Alternate to Piong Teck Min)


Directors’ Report continued

Directors' interests According to the register of directors’ shareholdings, the interests of directors holding office at the end of the financial year in shares and options under the ESOS in the Company and its related corporations during the financial year were as follows:- Number of ordinary shares of RM1 each 1.7.2012 Acquired Sold 30.6.2013

Holding company Direct interest Piong Teck Min 10,000 - - 10,000 Piong Teck Onn 51,000 - - 51,000 Y. Bhg. Datuk Piong Teck Yen, DMSM, DSM, PJK, JP 10,000 - - 10,000 Number of ordinary shares of RM0.50 each 1.7.2012 Acquired Sold 30.6.2013

The Company Direct interest Chin Swee Chang - 1,800,000 - 1,800,000 Omar Bin Md. Khir 768,060 - - 768,060 Piong Teck Min 1,276,220 - - 1,276,220 Piong Teck Onn - 1,800,000 - 1,800,000 Y. Bhg. Datuk Piong Teck Yen, DMSM, DSM, PJK, JP 2,200 - - 2,200 Y. Bhg. Tan Sri Datuk Dr. Omar Bin Abdul Rahman, JSM, JMN, DMSM, PSM 4,840 - - 4,840 Indirect interest Piong Teck Min 64,624,362 - - 64,624,362 Piong Teck Onn 64,624,362 - - 64,624,362 Y. Bhg. Datuk Piong Teck Yen, DMSM, DSM, PJK, JP 64,624,362 - - 64,624,362 Deemed indirect interest Chin Swee Chang 64,624,362 - - 64,624,362 Number of options over ordinary shares of RM0.50 each 1.7.2012 Granted Exercised 30.6.2013

The Company Chin Swee Chang 1,800,000 - (1,800,000) - Piong Teck Onn 1,800,000 - (1,800,000) - Y. Bhg. Datuk Piong Teck Yen, DMSM, DSM, PJK, JP 1,800,000 - - 1,800,000 By virtue of their interests in the holding company, namely Piong Nam Kim Holdings Sdn. Bhd., Chin Swee Chang, Piong Teck Min, Piong Teck Onn and Y. Bhg. Datuk Piong Teck Yen, DMSM, DSM, PJK, JP are deemed interested in shares of all the Company’s subsidiaries to the extent the Company has an interest. None of the other directors in office at the end of the financial year had any interest in shares in the Company or its related corporations during the financial year.



Employees' share options scheme An Employees’ Share Option Scheme (“ESOS”) was approved by the Securities Commission on 22 April 2003 and the shareholders at an Extraordinary General Meeting held on 10 July 2003. The principal features of the ESOS are disclosed in Note 20 to the financial statements. The Company has been granted exemption by the Companies Commission of Malaysia from having to disclose the list of option holders holding share options of less than 550,000 shares. The eligible director and employees who have been granted and have unexercised share options of 550,000 or more as at the end of the financial year are as follows:- No. Name of Options Holders Number of Share Options 1. Alan Martin Lewis 550,000 2. Cheah Ming Loong 550,000 3. Daniel Chua Chong Liang 550,000 4. Hiew Mein Foong 550,000 5. Y. Bhg. Datuk Piong Teck Yen, DMSM, DSM, PJK, JP 1,800,000

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 the acquisition of shares in or debentures of the Company or any other body corporate, other than those arising from the share options granted to the directors under the Employees' Share Option Scheme. Since the end of the previous financial year, no director has received or become entitled to receive a benefit (other than benefits included in the aggregate amount of emoluments received or due and receivable by the directors or the fixed salary of a full-time employee of the Company as shown in Note 26(d) to the financial statements) by reason of a contract made by the Company with any director or with a firm of which he is a member, or with a company in which he has a substantial financial interest other than as disclosed in Note 26 to the financial statements.

Other statutory information (a) Before the financial statements of the Group and of the Company were made out, the directors took reasonable steps:

(i) to ascertain that proper action had been taken in relation to the writing off of bad debts and the making of allowance for impairment losses on receivables, and satisfied themselves that all known bad debts had been written off and that adequate allowance had been made for impairment losses on receivables; 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 written off for bad debts or allowance for impairment losses on receivables in the financial statements of the Group and of the Company 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.



Other statutory information (continued)

(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 or 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 or 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 substantially affect the ability of the Group or of the Company to meet their obligations 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 or of the Company for the financial year in which this report is made.

Auditors The auditors, Messrs. Crowe Horwath, have expressed their willingness to continue in office. Signed on behalf of the Board in accordance with a resolution of the directors dated 10 October 2013. Piong Teck Onn Y. Bhg. Datuk Piong Teck Yen, DMSM, DSM, PJK, JP


Statement By DirectorsPursuant to Section 169 (15) of the Companies Act 1965

Statutory DeclarationPursuant to Section 169 (16) of the Companies Act 1965

We, Piong Teck Onn and Y. Bhg. Datuk Piong Teck Yen, DMSM, DSM, PJK, JP, being two of the directors of Kotra Industries Berhad, do hereby state that, in the opinion of the directors, the accompanying financial statements set out on pages 40 to 82 are drawn up in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of 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 30 June 2013 and of the results and the cash flows of the Group and of the Company for the year then ended. The supplementary information set out in Note 33, which is not part of the financial statements have been prepared in accordance with Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants and the directive of Bursa Malaysia Securities Berhad. Signed on behalf of the Board in accordance with a resolution of the directors dated 10 October 2013. Piong Teck Onn Y. Bhg. Datuk Piong Teck Yen, DMSM, DSM, PJK, JP

I, Daniel Chua Chong Liang, being the officer primarily responsible for the financial management of Kotra Industries Berhad, do solemnly and sincerely declare that the accompanying financial statements set out on pages 40 to 82 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 by the abovenamed Daniel Chua Chong Liang, at Melaka in the State of Melaka on 10 October 2013 Daniel Chua Chong Liang Before me,

Ong San KeePesuruhjaya SumpahCommissioner for Oaths349-B & 351 BJalan Ong Kim Wee75300 Melaka


Independent Auditors’ Reportto the members of Kotra Industries Berhad(Incorporated in Malaysia)Company No: 497632-P

Report on the financial statements We have audited the financial statements of Kotra Industries Berhad, which comprise the statements of financial position as at 30 June 2013 of the Group and of the Company, and the statements of profit or loss and other comprehensive income, statements of changes in equity and statements of cash flows of the Group and of the Company for the financial year then ended, and a summary of significant accounting policies and other explanatory information, as set out on pages 40 to 82. Directors’ responsibility for the financial statements The directors of the Company are responsible for the preparation of financial statements so as to give a true and fair view in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act 1965 in Malaysia. The directors are also responsible for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors’ responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with approved standards on auditing in Malaysia. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgment, including the assessment of risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal controls relevant to the entity’s preparation of financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements give a true and fair view of the financial position of the Group and the Company as of 30 June 2013 and of their financial performance and cash flows for the financial year then ended in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act 1965 in Malaysia. Report on other legal and regulatory requirements In accordance with the requirements of the Companies Act 1965 in Malaysia, we also report the following:- (a) In our opinion, the accounting and other records and the registers required by the Act to be kept by the Company and its subsidiaries of

which we have acted as auditors have been properly kept in accordance with the provisions of the Act. (b) We are satisfied that the financial statements of the subsidiaries that have been consolidated with the Company’s financial statements

are in form and content appropriate and proper for the purposes of the preparation of the financial statements of the Group and we have received satisfactory information and explanations required by us for those purposes.

(c) The audit reports on the financial statements of the subsidiaries did not contain any qualification or any adverse comment made under

Section 174(3) of the Act.


Independent Auditors’ Report continuedto the members of Kotra Industries Berhad(Incorporated in Malaysia)Company No: 497632-P

Other reporting responsibilities The supplementary information set out in Note 33 on page 83 is disclosed to meet the requirement of Bursa Malaysia Securities Berhad and is not part of the financial statements. The directors are responsible for the preparation of the supplementary information in accordance with Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants ("MIA Guidance") and the directive of Bursa Malaysia Securities Berhad. In our opinion, the supplementary information is prepared, in all material respects, in accordance with the MIA Guidance and the directive of Bursa Malaysia Securities Berhad. Other matters 1. As stated in Note 2(a) to the financial statements, Kotra Industries Berhad adopted Malaysian Financial Reporting Standards on 1 July

2012 with a transition date of 1 July 2011. These standards were applied retrospectively by directors to the comparative information in these financial statements, including the statements of financial position as at 30 June 2012 and 1 July 2011, and the statement of profit or loss and other comprehensive income, statement of changes in equity and statement of cash flows for the financial year ended 30 June 2012 and related disclosures. We were not engaged to report on the restated comparative information and it is unaudited. Our responsibilities as part of our audit of the financial statements of the Group and of the Company for the financial year ended 30 June 2013 have, in these circumstances, included obtaining sufficient appropriate audit evidence that the opening balances as at 1 July 2012 do not contain misstatements that materially affect the financial position as of 30 June 2013 and financial performance and cash flows for the financial year then ended.

2. 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. Crowe Horwath Lee Kok WaiFirm No.: AF 1018 Approval No: 2760/06/14 (J)Chartered Accountants Chartered Accountant Date: 10 October 2013 Melaka


Statements of Profit or Loss and Other Comprehensive Incomefor the financial year ended 30 June 2013

The accompanying notes form an integral part of the financial statements.

Group Company Note 2013 2012 2013 2012 RM'000 RM'000 RM'000 RM'000 Revenue 4 131,294 126,943 720 720 Other operating income 5 1,831 4,167 - - Raw materials and consumables used (35,176) (50,649) - - Changes in inventories of finished goods and work in progress (4,810) 9,207 - - Employee benefits expenses 6 (32,453) (31,072) (254) (249) Selling and distribution expenses (25,161) (25,137) - - Depreciation and amortisation (10,939) (10,637) - - Other operating expenses (12,624) (13,868) (255) (202) Finance costs 7 (8,133) (7,776) - - Profit before taxation 8 3,829 1,178 211 269 Income tax expense 9 (142) (56) (125) (35) Profit after taxation 3,687 1,122 86 234 Other comprehensive income, net of tax: - Fair value changes of available-for-sale financial asset - - - - Total comprehensive income for the financial year 3,687 1,122 86 234 Earnings per share attributable to equity holders of the Company (sen): - Basic 10 2.89 0.91 - Diluted 10 2.85 0.91



Group Company Note 30.6.2013 30.6.2012 1.7.2011 30.6.2013 30.6.2012 1.7.2011 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 Assets Non-current assetsProperty, plant and equipment 11 160,932 164,557 172,127 - - - Investment properties 12 1,571 1,597 1,623 - - - Investment in subsidiaries 13 - - - 110,463 110,574 110,256 162,503 166,154 173,750 110,463 110,574 110,256 Current assets Inventories 14 28,962 35,230 23,584 - - - Trade receivables 15 48,483 41,625 35,306 - - - Other receivables 16 7,032 3,318 2,704 1 9 1 Amounts due from subsidiaries 17 - - - 323 359 398 Derivative assets 18 - - 51 - - - Cash and bank balances 19 16,321 11,192 11,823 2,958 529 300 100,798 91,365 73,468 3,282 897 699 Total assets 263,301 257,519 247,218 113,745 111,471 110,955 Equity and liabilities Equity attributable to equity holder of the Company Share capital 20 63,888 61,903 61,903 63,888 61,903 61,903 Retained earnings 21 43,280 39,593 38,471 48,966 48,880 48,646 Other reserves 22 811 639 320 811 639 320 Total equity 107,979 102,135 100,694 113,665 111,422 110,869 Non-current liability Borrowings 23 90,198 91,432 87,896 - - - 90,198 91,432 87,896 - - - Current liabilities Borrowings 23 35,836 34,531 30,628 - - - Trade payables 24 18,644 17,990 15,214 - - - Other payables 25 10,582 11,294 12,786 80 49 86 Derivative liabilities 18 62 137 - - - - 65,124 63,952 58,628 80 49 86 Total liabilities 155,322 155,384 146,524 80 49 86 Total equity and liabilities 263,301 257,519 247,218 113,745 111,471 110,955

Statements of Financial Positionas at 30 June 2013


Statements of Changes in Equity for the financial year ended 30 June 2013

Non-distributable Distributable Share Share Share option Retained Total capital premium reserve earnings equity RM’000 RM’000 RM’000 RM’000 RM’000

Group At 1 July 2011 61,903 3 317 38,471 100,694 Share options granted under ESOS - - 319 - 319 Profit after taxation, representing total comprehensive income for the financial year - - - 1,122 1,122 At 30 June 2012 61,903 3 636 39,593 102,135 Issuance of shares 1,985 283 - - 2,268 Share options under ESOS - - (111) - (111) Profit after taxation, representing total comprehensive income for the financial year - - - 3,687 3,687 At 30 June 2013 63,888 286 525 43,280 107,979 Non-distributable Distributable Share Share Share option Other Retained Total capital premium reserve reserve earnings equity Note RM'000 RM'000 RM'000 RM'000 RM'000 RM'000

Company At 1 July 2011 61,903 3 317 44,295 4,351 110,869 MFRS transition effect 31 - - - (44,295) 44,295 - Restated balance at 1 July 2011 61,903 3 317 - 48,646 110,869 Total comprehensive income for the financial year - As previously reported - - - 3,136 234 3,370 - Effect of adopting MFRS - - - (3,136) - (3,136)

As restated - - - - 234 234 Share options granted under ESOS - - 319 - - 319 Restated balance at 30 June 2012 61,903 3 636 - 48,880 111,422 Issuance of shares 1,985 283 - - - 2,268 Share options under ESOS - - (111) - - (111) Total comprehensive income for the financial year - - - - 86 86 At 30 June 2013 63,888 286 525 - 48,966 113,665



Statements of Cash Flowsfor the financial year ended 30 June 2013

Group Company 2013 2012 2013 2012 RM'000 RM'000 RM'000 RM'000 Cash flows from operating activities Profit before taxation 3,829 1,178 211 269 Adjustments for : Bad debts written off 5 3 - - Depreciation and amortisation: - investment properties 26 26 - - - property, plant and equipment 10,913 10,612 - - Fair value (gain)/loss on derivatives (75) 188 - - Impairment loss on trade receivables 391 260 - - Interest expense 8,133 7,776 - - Interest income (1) (3) - - Inventories written down 727 1,860 - - Property, plant and equipment written off 31 2 - - Rental income from investment properties (87) (92) - - Reversal of impairment loss on trade receivables (164) (1,038) - - Share-based payment under ESOS (111) 319 - 1 Unrealised gain on foreign exchange (319) (689) - - Operating profit before working capital changes 23,298 20,402 211 270 Decrease/(Increase) in inventories 5,542 (13,506) - - Increase in receivables (6,486) (5,140) - - Increase in payables 43 4,122 - (8)

Cash from operations 22,397 5,878 211 262 Interest paid (2,051) (1,701) - - Tax (paid)/refunded (100) 79 (86) (72)

Net cash from operating activities 20,246 4,256 125 190


Statements of Cash Flows continuedfor the financial year ended 30 June 2013

Group Company 2013 2012 2013 2012 RM'000 RM'000 RM'000 RM'000 Cash flows for investing activities Interest received 1 3 - - Rental received from investment properties 87 92 - - Purchase of property, plant and equipment (11,520) (6,521) - -

Net cash for investing activities (11,432) (6,426) - -

Cash flows (for)/from financing activities Drawdown of term loans 1,118 3,544 - - (Repayment)/proceeds from other short term borrowings (392) 6,962 - - Proceeds from issuance of shares 2,268 - 2,268 - Interest paid (6,082) (6,075) - - Repayment of term loans (486) (5,818) - - Repayment from a subsidiary - - 36 39

Net cash (for)/from financing activities (3,574) (1,387) 2,304 39

Net increase/(decrease) in cash and cash equivalents 5,240 (3,557) 2,429 229 Effects of exchange rate changes on cash and cash equivalents 58 175 - - Cash and cash equivalents at beginning of the financial year 6,414 9,796 529 300

Cash and cash equivalents at end of the financial year (Note 19) 11,712 6,414 2,958 529



Notes to the Financial Statements30 June 2013

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 principal place of business is located at No. 1, 2 & 3, Jalan TTC 12, Cheng Industrial Estate, 75250 Melaka.

The Company is principally involved in investment holding and the provision of management services. The principal activities of its

subsidiaries are set out in Note 13 to the financial statements. There have been no significant changes in the nature of these activities during the financial year.

The holding company is Piong Nam Kim Holdings Sdn. Bhd., a company incorporated in Malaysia, which the directors also regard as the

ultimate holding company. The financial statements were authorised for issue by the Board of Directors in accordance with a resolution of the directors on 10

October 2013. 2. Basis of preparation The financial statements of the Group are prepared under the historical cost convention and modified to include other bases of valuation

as disclosed in other sections under significant accounting policies, and in compliance with Malaysian Financial Reporting Standards (“MFRSs”), International Financial Reporting Standards and the requirements of the Companies Act 1965 in Malaysia.

(a) These are the Group’s first set of financial statements prepared in accordance with MFRSs, which are also in line with International Financial Reporting Standards as issued by the International Accounting Standards Board.

In the previous financial year, the financial statements of the Group were prepared in accordance with Financial Reporting Standards

(“FRSs”). The financial impacts on the transition from FRSs to MFRSs are disclosed in Note 31 to the financial statements. (b) The Group has not applied in advance the following accounting standards and interpretations (including the consequential

amendments) that have been issued by the Malaysian Accounting Standards Board (MASB) but are not yet effective for the current financial year:-

MFRSs and IC Interpretations (Including The Consequential Amendments) Effective date • MFRS 9 Financial Instruments 1 January 2015 • MFRS 10 Consolidated Financial Statements 1 January 2013 • MFRS 11 Joint Arrangements 1 January 2013 • MFRS 12 Disclosure of Interests in Other Entities 1 January 2013 • MFRS 13 Fair Value Measurement 1 January 2013 • MFRS 119 Employee Benefits 1 January 2013 • MFRS 127 Separate Financial Statements 1 January 2013 • MFRS 128 Investments in Associates and Joint Ventures 1 January 2013 • Amendments to MFRS 7: Disclosures – Offsetting Financial Assets and Financial Liabilities 1 January 2013


Notes to the Financial Statements continued30 June 2013

2. Basis of preparation (continued) (b) (continued)

MFRSs and IC Interpretations (Including The Consequential Amendments) Effective date

• Amendments to MFRS 9 and MFRS 7: Mandatory Effective Date of MFRS 9 and Transition Disclosures 1 January 2015 • Amendments to MFRS 10, MFRS 11 and MFRS 12: Transition Guidance 1 January 2013 • Amendments to MFRS 10, MFRS 12 and MFRS 127: Investment Entities 1 January 2014 • Amendments to MFRS 132: Offsetting Financial Assets and Financial Liabilities 1 January 2014 • Amendments to MFRS 136: Recoverable Amount Disclosures for Non-financial Assets 1 January 2014 • Amendments to MFRS 139: Novation of Derivatives and Continuation of Hedge Accounting 1 January 2014 • IC Interpretation 21 Levies 1 January 2014 • Annual Improvements to MFRSs 2009 - 2011 Cycle 1 January 2013

The above accounting standards and interpretations (including the consequential amendments) are not relevant to the Group’s operations except as follows:-

MFRS 9 & Amendments to MFRS 9: Mandatory Effective Date of MFRS 9 and Transition Disclosures MFRS 9 replaces the parts of MFRS 139 that relate to the classification and measurement of financial instruments. MFRS 9 divides

all financial assets into 2 categories – those measured at amortised cost and those measured at fair value, based on the entity’s business model for managing its financial assets and the contractual cash flow characteristics of the instruments. For financial liabilities, the standard retains most of the MFRS 139 requirement. An entity choosing to measure a financial liability at fair value will present the portion of the change in its fair value due to changes in the entity’s own credit risk in other comprehensive income rather than within profit or loss. There will be no financial impact on the financial statements of the Group upon its initial application but may impact its future disclosures.

MFRS 10 & Amendments to MFRS 10: Transition Guidance MFRS 10 replaces the consolidation guidance in MFRS 127 and IC Interpretation 112. Under MFRS 10, there is only one basis for

consolidation, which is control. Extensive guidance has been provided in the standard to assist in the determination of control. There will be no financial impact on the financial statements of the Group upon its initial application but may impact its future disclosures.

MFRS 12 & Amendments to MFRS 12: Transition Guidance MFRS 12 is applicable to entities that have interests in subsidiaries, joint arrangements, associates and/or unconsolidated

structured entities. MFRS 12 is a disclosure standard and the disclosure requirements in this standard are more extensive than those in the current standards. There will be no financial impact on the financial statements of the Group upon its initial application but may impact its future disclosures.



2. Basis of preparation (continued) (b) (continued)

MFRS 13 MFRS 13 defines fair value, provides guidance on how to determine fair value and requires disclosures about fair value

measurements. The scope of MFRS 13 is broad; it applies to both financial instrument items and non-financial instrument items for which other MFRSs require or permit fair value measurements and disclosures about fair value measurements, except in specified circumstances. In general, the disclosure requirements in MFRS 13 are more extensive than those required in the current standards and therefore there will be no financial impact on the financial statements of the Group upon its initial application but may impact its future disclosures.

Amendments to MFRS 7: Disclosures – Offsetting Financial Assets and Financial Liabilities

The amendments to MFRS 7 (Disclosures – Offsetting Financial Assets and Financial Liabilities) require disclosures that will enable users of an entity’s financial statements to evaluate the effect or potential effect of netting arrangements, including rights of set-off associated with the entity’s recognised financial assets and recognised financial liabilities, on the entity’s financial position. There will be no financial impact on the financial statements of the Group upon its initial application but may impact its future disclosures.

Amendments to MFRS 132: Offsetting Financial Assets and Financial Liabilities

The amendments to MFRS 132 provide the application guidance for criteria to offset financial assets and financial liabilities. Accordingly, there will be no financial impact on the financial statements of the Group upon its initial application but may impact its future disclosures.

Amendments to MFRS 136: Recoverable Amount Disclosures for Non-financial Assets

The amendments to MFRS 136 remove the requirement to disclosure the recoverable amount when a cash-generating unit (CGU) contains goodwill or intangible assets with indefinite useful lives but there has been no impairment. Therefore, there will be no financial impact on the financial statements of the Group upon its initial application but may impact its future disclosures.

Annual Improvements to MFRSs 2009 – 2011 Cycle

The Annual Improvements to MFRSs 2009 – 2011 Cycle contain amendments to MFRS 1, MFRS 101, MFRS 116, MFRS 132 and MFRS 134. These amendments are expected to have no material impact on the financial statements of the Group upon their initial application.

3. Significant accounting policies

(a) Critical accounting estimates and judgements Estimates and judgements are continually evaluated by the directors and management and are based on historical experience and

other factors, including expectations of future events that are believed to be reasonable under the circumstances. The estimates and judgements that affect the application of the Group’s accounting policies and disclosures, and have a significant risk of causing a material adjustment to the carrying amounts of assets, liabilities, income and expenses are discussed as follows:-

(i) Depreciation of property, plant and equipment The estimates for the residual values, useful lives and related depreciation charges for the property, plant and equipment

are based on commercial and production factors which could change significantly as a result of technical innovations and competitors’ actions in response to the market conditions.

The Group anticipates that the residual values of its property, plant and equipment will be insignificant. As a result, residual values are not being taken into consideration for the computation of the depreciable amount.



3. Significant accounting policies (continued) (a) Critical accounting estimates and judgements (continued)

(i) Depreciation of property, plant and equipment (continued)

Changes in the expected level of usage and technological development could impact the economic useful lives and the residual values of these assets, therefore future depreciation charges could be revised.

(ii) Income taxes There are certain transactions and computations for which the ultimate tax determination may be different from the initial

estimate. The Group recognises tax liabilities based on its understanding of the prevailing tax laws and estimates of whether such taxes will be due in the ordinary course of business. Where the final outcome of these matters is different from the amounts that were initially recognised, such difference will impact the income tax and deferred tax provisions in the year in which such determination is made.

(iii) Impairment of non-financial assets When the recoverable amount of an asset is determined based on the estimate of the value-in-use of the cash-generating

unit to which the asset is allocated, the management is required to make an estimate of the expected future cash flows from the cash-generating unit and also to apply a suitable discount rate in order to determine the present value of those cash flows.

(iv) Write-down of inventories Reviews are made periodically by management on damaged, obsolete and slow-moving inventories. These reviews require

judgement and estimates. Possible changes in these estimates could result in revisions to the valuation of inventories. (v) Classification between investment properties and owner-occupied properties The Group determines whether a property qualifies as an investment property, and has developed a criteria in making that

judgement. Investment property is a property held to earn rentals or for capital appreciation or both. Therefore, the Group considers whether a property generates cash flows largely independent of the other assets held by the Group.

Some properties comprise a portion that is held to earn rentals or for capital appreciation and another portion that is held for

use in the production or supply of goods or services or for administrative purposes. If these portions could be sold separately (or leased out separately under a finance lease), the Group accounts for the portions separately. If the portions could not be sold separately, the property is an investment property only if an insignificant portion is held for use in the production or supply of goods or services or for administrative purposes.

Judgement is made on an individual property basis to determine whether ancillary services are so significant that a property

does not qualify as investment property. (vi) Impairment of trade and other receivables An impairment loss is recognised when there is objective evidence that a financial asset is impaired. Management

specifically reviews its loans and receivables financial assets and analyses historical bad debts, customer creditworthiness and changes in the customer payment terms when making a judgement to evaluate the adequacy of the allowance for impairment losses. Where there is objective evidence of impairment, the amount and timing of future cash flows are estimated based on historical loss experience for assets with similar credit risk characteristics. If the expectation is different from the estimation, such difference will impact the carrying value of receivables.



3. Significant accounting policies (continued) (a) Critical accounting estimates and judgements (continued)

(vii) Classification of leasehold land

The classification of leasehold land as a finance lease or an operating lease requires the use of judgement in determining the extent to which risks and rewards incidental to its ownership lie. Despite the fact that there will be no transfer of ownership by the end of the lease term and that the lease term does not constitute the major part of the indefinite economic life of the land, management considered that the present value of the minimum lease payments approximated to the fair value of the land at the inception of the lease. Accordingly, management judged that the Group has acquired substantially all the risks and rewards incidental to the ownership of the land through a finance lease.

(viii) Fair values estimates for certain financial assets and liabilities

The Group carries certain financial assets and liabilities at fair value, which requires extensive use of accounting estimates

and judgement. While significant components of fair value measurement were determined using verifiable objective evidence, the amount of changes in fair value would differ if the Group uses different valuation methodologies. Any changes in fair value of these assets and liabilities would affect profit and/or equity.

(ix) Share-based payments

The Group measures the cost of equity settled transactions with employees by reference to the fair value of the equity

investments at the date at which they are granted. The estimating of the fair value requires determining the most appropriate valuation model for a grant of equity instruments, which is dependent on the terms and conditions of the grant. This also requires determining the most appropriate inputs to the valuation model including the expected life of the option volatility and dividend yield and making assumptions about them.

(b) Basis of consolidation

The consolidated financial statements include the financial statements of the Company and its subsidiaries made up to 30 June

2013.

A subsidiary is defined as a company in which the parent company has the power, directly or indirectly, to exercise control over its financial and operating policies so as to obtain benefits from its activities.

Subsidiaries are consolidated from the date on which control is transferred to the Group up to the effective date on which control

ceases, as appropriate.

Intragroup transactions, balances, income and expenses are eliminated on consolidation. Where necessary, adjustments are made to the financial statements of subsidiaries to ensure consistency of accounting policies with those of the Group.

(i) Business combinations

Acquisitions of businesses are accounted for using the acquisition method. Under the acquisition method, the consideration

transferred for acquisition of a subsidiary is the fair value of the assets transferred, liabilities incurred and the equity interests issued by the Group at the acquisition date. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Acquisition-related costs, other than the costs to issue debt or equity securities, are recognised in profit or loss when incurred.

In a business combination achieved in stages, previously held equity interests in the acquiree are remeasured to fair value

at the acquisition date and any corresponding gain or loss is recognised in profit or loss.

Non-controlling interests in the acquiree may be initially measured either at fair value or at the non-controlling interests’ proportionate share of the fair value of the acquiree’s identifiable net assets at the date of acquisition. The choice of measurement basis is made on a transaction-by-transaction basis.



3. Significant accounting policies (continued) (b) Basis of consolidation (continued)

(ii) Non-controlling interests

Non-controlling interests are presented within equity in the consolidated statement of financial position, separately from the equity attributable to owners of the Company. Transactions with non-controlling interests are accounted for as transactions with owners and are recognised directly in equity. Profit or loss and each component of other comprehensive income are attributed to the owners of the parent and to the non-controlling interests. Total comprehensive income is attributed to non-controlling interests even if this results in the non-controlling interests having a deficit balance.

At the end of each reporting period, the carrying amount of non-controlling interests is the amount of those interests at initial

recognition plus the non-controlling interests’ share of subsequent changes in equity.

(iii) Acquisitions of non-controlling interests

All changes in the parent’s ownership interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions. Any difference between the amount by which the non-controlling interest is adjusted and the fair value of consideration paid or received is recognised directly in equity and attributed to owners of the parent.

(iv) Loss of control

Upon loss of control of a subsidiary, the profit or loss on disposal is calculated as the difference between:-

- the aggregate of the fair value of the consideration received and the fair value of any retained interest in the former

subsidiary; and

- the previous carrying amount of the assets (including goodwill), and liabilities of the former subsidiary and any non-controlling interests.

Amounts previously recognised in other comprehensive income in relation to the former subsidiary are accounted for (i.e.

reclassified to profit or loss or transferred directly to retained profits) in the same manner as would be required if the relevant assets or liabilities were disposed of. The fair value of any investments retained in the former subsidiary at the date when control is lost is regarded as the fair value on initial recognition for subsequent accounting under MFRS 139 or, when applicable, the cost on initial recognition of an investment in an associate or a jointly controlled entity.

As part of its transition to MFRSs, the Group elected not to restate those business combination that occurred before the date

of transition (1 July 2011). Such business combinations and the related goodwill and fair value adjustments have been carried forward from the previous FRS framework as the date of transition.

(c) Functional and foreign currency

(i) Functional and presentation currency

The individual financial statements of each entity in the Group are presented in the currency of the primary economic environment in which the entity operates, which is the functional currency.

The consolidated financial statements are presented in Ringgit Malaysia (“RM”) which is the Group’s functional and

presentation currency. All values are rounded to the nearest thousand (RM'000) except when otherwise indicated.

(ii) Transactions and balances

Transactions in foreign currencies are converted into the respective functional currencies on initial recognition, using the exchange rates approximating those ruling at the transaction dates. Monetary assets and liabilities at the end of the reporting period are translated at the rates ruling as of that date. Non-monetary assets and liabilities are translated using exchange rates that existed when the values were determined. All exchange differences are recognised in profit or loss.



3. Significant accounting policies (continued)

(d) Financial instruments Financial instruments are recognised in the statements of financial position when the Group has become a party to the contractual

provisions of the instruments. Financial instruments are classified as liabilities or equity in accordance with the substance of the contractual arrangement.

Interest, dividends, gains and losses relating to a financial instrument classified as a liability, are reported as an expense or income. Distributions to holders of financial instruments classified as equity are charged directly to equity.

Financial instruments are offset when the Group has a legally enforceable right to offset and intends to settle either on a net basis

or to realise the asset and settle the liability simultaneously. A financial instrument is recognised initially, at its fair value plus, in the case of a financial instrument not at fair value through profit

or loss, transaction costs that are directly attributable to the acquisition or issue of the financial instrument. Financial instruments recognised in the statements of financial position are disclosed in the individual policy statement associated

with each item.

(i) Financial assets On initial recognition, financial assets are classified as either financial assets at fair value through profit or loss, held-to-

maturity investments, loans and receivables financial assets, or available-for-sale financial assets, as appropriate.

• Financial assets at fair value through profit or loss Financial assets are classified as financial assets at fair value through profit or loss when the financial asset is either

held for trading or is designated to eliminate or significantly reduce a measurement or recognition inconsistency that would otherwise arise. Derivatives are also classified as held for trading unless they are designated as hedges.

Financial assets at fair value through profit or loss are stated at fair value, with any gains or losses arising on

remeasurement recognised in profit or loss. Dividend income from this category of financial assets is recognised in profit or loss when the Group’s right to receive payment is established.

• Held-to-maturity investments As at the end of the reporting period, there were no financial assets classified under this category. • Loans and receivables financial assets Trade receivables and other receivables that have fixed or determinable payments that are not quoted in an active

market are classified as loans and receivables financial assets. Loans and receivables financial assets are measured at amortised cost using the effective interest method, less any impairment loss. Interest income is recognised by applying the effective interest rate, except for short-term receivables when the recognition of interest would be immaterial.

• Available-for-sale financial assets

As at the end of the reporting period, there were no financial assets classified under this category.



3. Significant accounting policies (continued) (d) Financial instruments (continued)

(ii) Financial liabilities All financial liabilities are initially at fair value plus directly attributable transaction costs and subsequently measured at

amortised cost using the effective interest method other than those categorised as fair value through profit or loss. Fair value through profit or loss category comprises financial liabilities that are either held for trading or are designated to

eliminate or significantly reduce a measurement or recognition inconsistency that would otherwise arise. Derivatives are also classified as held for trading unless they are designated as hedges.

(iii) Equity instruments Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are

shown in equity as a deduction, net of tax, from proceeds. Dividends on ordinary shares are recognised as liabilities when approved for appropriation.

(e) Investments in subsidiaries Investments in subsidiaries are stated at deemed cost in the statement of financial position of the Company, and are reviewed for

impairment at the end of the reporting period if events or changes in circumstances indicate that the carrying values may not be recoverable.

On the disposal of the investments in subsidiaries, the difference between the net disposal proceeds and the carrying amount of

the investments is recognised in profit or loss.

(f) Property, plant and equipment Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses, if any. Depreciation is calculated under the straight-line method to write off the depreciable amount of the assets over their estimated

useful lives. Depreciation of an asset does not cease when the asset becomes idle or is retired from active use unless the asset is fully depreciated. The principal annual rates used for this purpose are:-

For the current financial year Previous end and subsequent financial year financial year

Industrial buildings and installations 2% -10% 2% -10% Leasehold land Over the lease period of 91 or 99 years Over the lease period of 91 or 99 years Machinery and equipment 5% -10% 5% -20% Motor vehicles 10% 10% Office equipment 10% 10% Computer equipment 20% 20% Furniture and fittings 10% 10% Renovation 10% 10%

During the financial year, the Group changed its depreciation rate for machinery and equipment. The new rate were applied prospectively.



3. Significant accounting policies (continued) (f) Property, plant and equipment (continued)

The change in the depreciation rate arose from a review of the useful lives of the assets concerned. The effect of the change in the depreciation rate is a decrease to the profit before taxation of the Group by RM16,218 for the current financial year.

The depreciation method, useful lives and residual values are reviewed, and adjusted if appropriate, at the end of each reporting

period to ensure that the amount, method and periods of depreciation are consistent with previous estimates and the expected pattern of consumption of the future economic benefits embodied in the items of the property, plant and equipment.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when the

cost is incurred and it is probable that the future economic benefits associated with the asset will flow to the Group and the cost of the asset can be measured reliably. The carrying amount of parts that are replaced is derecognised. The costs of the day-to-day servicing of property, plant and equipment are recognised in profit or loss as incurred. Cost also comprises the initial estimate of dismantling and removing the asset and restoring the site on which it is located for which the Group is obligated to incur when the asset is acquired, if applicable.

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from

its use. Any gain or loss arising from derecognition of the asset is recognised in profit or loss. (g) Borrowing costs Borrowing costs, directly attributable to the acquisition and construction of property, plant and equipment are capitalised as part

of the cost of those assets, until such time as the assets are ready for their intended use or sale. All other borrowing costs are recognised in profit or loss as expenses in the period in which they are incurred. (h) Investment properties Investment properties are properties held either to earn rental income or for capital appreciation or for both. Investment properties

are stated at cost less accumulated depreciation and impairment losses, if any, consistent with the accounting policy for property, plant and equipment as stated in Note 3(f) to the financial statements.

Investment properties are derecognised when they have either been disposed off or when the investment property is permanently

withdrawn from use and no future benefit is expected from its disposal. On the derecognition of an investment property, the difference between the net disposal proceeds and the carrying amount is

recognised in profit or loss.

(i) Impairment

(i) Impairment of financial assets All financial assets (other than those categorised at fair value through profit or loss), are assessed at the end of each

reporting period whether there is any objective evidence of impairment as a result of one or more events having an impact on the estimated future cash flows of the asset. For an equity instrument, a significant or prolonged decline in the fair value below its cost is considered to be objective evidence of impairment.

An impairment loss in respect of held-to-maturity investments and loans and receivables financial assets is recognised in

profit or loss and 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.



3. Significant accounting policies (continued) (i) Impairment (continued)

(i) Impairment of financial assets (continued)

An impairment loss in respect of available-for-sale financial assets is recognised in profit or loss and is measured as the difference between its cost (net of any principal payment and amortisation) and its current fair value, less any impairment loss previously recognised in the fair value reserve. In addition, the cumulative loss recognised in other comprehensive income and accumulated in equity under fair value reserve, is reclassified from equity to profit or loss.

With the exception of available-for-sale equity instruments, 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 through profit or loss to the extent that the carrying amount of the investment at the date the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised. In respect of available-for-sale equity instruments, impairment losses previously recognised in profit or loss are not reversed through profit or loss. Any increase in fair value subsequent to an impairment loss made is recognised in other comprehensive income.

(ii) Impairment of non-financial assets The carrying values of assets, other than those to which MFRS 136 - Impairment of Assets does not apply, are reviewed at

the end of each reporting period for impairment when there is an indication that the assets might be impaired. Impairment is measured by comparing the carrying values of the assets with their recoverable amounts. The recoverable amount of the assets is the higher of the assets' fair value less costs to sell and their value-in-use, which is measured by reference to discounted future cash flow.

An impairment loss is recognised in profit or loss immediately. In respect of assets other than goodwill, and when there is a change in the estimates used to determine the recoverable

amount, a subsequent increase in the recoverable amount of an asset is treated as a reversal of the previous impairment loss and is recognised to the extent of the carrying amount of the asset that would have been determined (net of amortisation and depreciation) had no impairment loss been recognised. The reversal is recognised in profit or loss immediately.

(j) Inventories Inventories are stated at the lower of cost and net realisable value. Cost is determined on the weighted average basis, and

comprises the purchase price and incidentals incurred in bringing the inventories to their present location and condition. Cost of finished goods and work-in-progress includes the cost of materials, labour and appropriate proportion of production overhead.

Net realisable value represents the estimated selling price less the estimated costs necessary to make the sale. Where necessary,

write-down is made for all damaged, obsolete and slow-moving items. (k) Income taxes Income taxes for the year comprise current and deferred tax. Current tax is the expected amount of income taxes payable in respect of the taxable profit for the year and is measured using the

tax rates that have been enacted or substantively enacted at the end of the reporting period. Deferred tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and

liabilities and their carrying amounts in the financial statements.



3. Significant accounting policies (continued) (k) Income taxes (continued)

Deferred tax liabilities are recognised for all taxable temporary differences other than those that arise from goodwill or excess of the acquirer’s interest in the net fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities over the business combination costs or from the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the transaction, affects neither accounting profit nor taxable profit.

Deferred tax assets are recognised for all deductible temporary differences, unused tax losses and unused tax credits to the extent

that it is probable that future taxable profits will be available against which the deductible temporary differences, unused tax losses and unused tax credits can be utilised. The carrying amounts of deferred tax assets are reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient future taxable profits will be available to allow all or part of the deferred tax assets to be utilised.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period when the asset is realised

or the liability is settled, based on the tax rates that have been enacted or substantively enacted at the end of the reporting period.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current

tax liabilities and when the deferred income taxes relate to the same taxation authority. Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss. Deferred tax items are recognised

in correlation to the underlying transactions either in other comprehensive income or directly in equity and deferred tax arising from a business combination is included in the resulting goodwill or excess of the acquirer’s interest in the net fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities over the business combination costs.

(l) Cash and cash equivalents Cash and cash equivalents comprise cash in hand, bank balances, demand deposits, bank overdrafts and short-term, highly liquid

investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

(m) Provisions Provisions are recognised when the Group has a present obligation as a result of a past event, when it is probable that an outflow

of resources embodying economic benefits will be required to settle the obligation, and when a reliable estimate of the amount can be made. Provisions are reviewed at the end of each reporting period and adjusted to reflect the current best estimate. Where the effect of the time value of money is material, the provision is the present value of the estimated expenditure required to settle the obligation.

(n) Employee benefits

(i) Short term benefits Wages, salaries, bonuses and non-monetary benefits are recognised in profit or loss in the period in which the associated

services are rendered by employees of the Group. (ii) Defined contribution plans The Group's contributions to defined contribution plans are recognised in profit or loss in the period to which they relate.

Once the contributions have been paid, the Group has no further liability in respect of the defined contribution plans.



3. Significant accounting policies (continued) (n) Employee benefits (continued)

(iii) Share-based payment transactions At grant date, the fair value of options granted to employees is recognised as an employee expense, with a corresponding

increase in equity, over the period in which the employees become unconditionally entitled to the options. The amount recognised as an expense is adjusted to reflect the actual number of share options that are expected to vest.

(o) Related parties

A party is related to an entity (referred to as the 'reporting entity') if:-

(a) A person or a close member of that person's family is related to a reporting entity if that person:-

(i) has control or joint control over the reporting entity; (ii) has significant influence over the reporting entity; or

(iii) is a member of the key management personnel of the reporting entity or of a parent of the reporting entity.

(b) An entity is related to a reporting entity if any of the following conditions applies:-

(i) The entity and the reporting entity are members of the same group (which means that each parent, subsidiary and fellow subsidiary is related to the others).

(ii) One entity is an associate or joint venture of the other entity (or an associate or joint venture of a member of a group

of which the other entity is a member). (iii) Both entities are joint ventures of the same third party. (iv) One entity is a joint venture of a third entity and the other entity is an associate of the third entity. (v) The entity is a post-employment benefit plan for the benefit of employees of either the reporting entity or an entity

related to the reporting entity. If the reporting entity is itself such a plan, the sponsoring employers are also related to the reporting entity.

(vi) The entity is controlled or jointly controlled by a person identified in (a) above. (vii) A person identified in (a)(i) above has significant influence over the entity or is a member of the key management

personnel of the entity (or of a parent of the entity).

Close members of the family of a person are those family members who may be expected to influence, or be influenced by, that person in their dealings with the entity.

(p) Contingent liabilities A contingent liability is a possible obligation that arises from past events and whose existence will only be confirmed by the

occurrence of one or more uncertain future events not wholly within the control of the Group. It can also be a present obligation arising from past events that is not recognised because it is not probable that an outflow of economic resources will be required or the amount of obligation cannot be measured reliably.

A contingent liability is not recognised but is disclosed in the notes to the financial statements. When a change in the probability of

an outflow occurs so that the outflow is probable, it will then be recognised as a provision.



3. Significant accounting policies (continued) (q) Segmental information

Segment revenue and expenses are those directly attributable to the segments and include any joint revenue and expenses where a reasonable basis of allocation exists. Segment assets include all assets used by a segment and consist principally of property, plant and equipment (net of accumulated depreciation, where applicable), other investments, inventories, receivables, and cash and bank balances.

Most segment assets can be directly attributed to the segments on a reasonable basis. Segment assets do not include income tax

assets, whilst segment liabilities do not include income tax liabilities and borrowings from financial institutions. Segment revenue, expenses and results include transfers between segments. The prices charged on intersegment transactions

are based on normal commercial terms. These transfers are eliminated on consolidation.

(r) Revenue recognition

(i) Sale of goods Revenue is recognised upon the execution of sales order and delivery of goods and where applicable, net of returns and

trade discounts. (ii) Interest income Interest income is recognised on an accrual basis. (iii) Management fee Management fee is recognised on an accrual basis. (iv) Rental income Rental income is recognised on an accrual basis.

4. Revenue

Group Company 2013 2012 2013 2012 RM'000 RM'000 RM'000 RM'000 Sale of goods 131,294 126,943 - - Management fees - - 720 720 131,294 126,943 720 720



5. Other operating income

Group Company 2013 2012 2013 2012 RM'000 RM'000 RM'000 RM'000 Fair value gain on derivative financial instrument 75 - - - Gain on foreign currency exchange - realised 924 2,046 - - - unrealised 319 689 - - Repo interest income 1 3 - - Rental income from investment properties 87 92 - - Reversal of impairment loss on trade receivables 164 1,038 - - Miscellaneous 261 299 - - 1,831 4,167 - -

6. Employee benefits expenses

Group Company 2013 2012 2013 2012 RM'000 RM'000 RM'000 RM'000 Short term employee benefits 28,376 26,984 247 240 Contributions to defined contribution plan 2,786 2,461 6 6 Share options under ESOS (111) 319 - 1 Other personnel expenses 1,402 1,308 1 2 32,453 31,072 254 249

Included in employee benefits expenses are key management personnel compensation as disclosed in Note 26(d) to the financial statements.

7. Finance costs

Group Company 2013 2012 2013 2012 RM'000 RM'000 RM'000 RM'000 Interest expense on: - Term loans 6,082 6,075 - - - Other bank borrowings 2,051 1,701 - - 8,133 7,776 - -



8. Profit before taxation The following amounts have been included in arriving at profit before taxation: Group Company 2013 2012 2013 2012 RM'000 RM'000 RM'000 RM'000 Auditors' remuneration: - statutory audit - current year 57 52 16 15 - under provision in prior year - 5 - 2 - other services 33 54 3 13 Bad debts written off 5 3 - - Depreciation and amortisation: - investment properties 26 26 - - - property, plant and equipment 10,913 10,612 - - Direct operating expenses arising from investment properties: - non-rental generating properties 4 4 - - - rental generating properties 12 12 - - Directors' remuneration: - fees 202 197 202 197 - emoluments 1,606 1,547 - - - other short term employee benefits 194 185 - - Fair value loss on derivative financial instrument - 188 - - Impairment loss on trade receivables 391 260 - - Inventories written down 727 1,860 - - Loss on foreign exchange - realised 618 1,125 - - Property, plant and equipment written off 31 2 - - Rental of equipment 112 104 - - Rental of premises 315 308 - - Research and development expenses 521 795 - - 9. Income tax expense

Group Company 2013 2012 2013 2012 RM'000 RM'000 RM'000 RM'000 Malaysian Income Tax - Current year 104 71 86 50 - Under/(over) provision in prior year 38 (15) 39 (15) 142 56 125 35



9. Income tax expense (continued)

A reconciliation of income tax expense applicable to profit before taxation at the statutory tax rate to income tax expense at the effective tax rate of the Group and of the Company is as follows:

2013 2012 RM'000 RM'000

Group Profit before taxation 3,829 1,178 Taxation at Malaysian statutory tax rate of 25% 957 295 Effect of expenses not deductible for tax purposes 389 467 Effect of double deduction tax incentives (2,910) (3,105) Effect of utilisation of previously unrecognised unutilised tax losses - (17) Deferred tax assets not recognised on current year unutilised business losses and unabsorbed capital allowances 1,668 2,431 Under/(over) provision in prior year 38 (15)

Income tax expense 142 56

Company Profit before taxation 211 269 Taxation at Malaysian statutory tax rate of 25% 53 67 Effect of expenses not deductible for tax purposes 33 - Effect of utilisation of previously unrecognised unutilised tax losses - (17) Under/(over) provision in prior year 39 (15) Income tax expense 125 35

At the end of the reporting period, the Group has unutilised tax losses and unabsorbed capital allowances of approximately RM15,581,000 and RM6,579,000 respectively (2012: RM14,520,000 and RM7,893,000 respectively) that are available for offset against future taxable profits of the Group, for which no deferred tax asset is recognised due to uncertainty of their recoverability in view of the expected availability of additional tax incentives.

10. Earnings per share

(i) Basic The basic earnings per share of the Group is calculated by dividing the profit after taxation for the financial year by the weighted

average number of ordinary shares in issue during the financial year. 2013 2012 Profit after taxation (RM'000) 3,687 1,122 Weighted average number of ordinary shares in issue ('000) 127,776 123,806 Basic earnings per share (sen) 2.89 0.91



10. Earnings per share (continued)

(ii) Diluted The diluted earnings per share of the Group is calculated by dividing the profit after taxation for the financial year by the weighted

average number of ordinary shares in issue during the financial year after adjusted for the dilutive effects of share options granted to employees.

2013 2012 Profit after taxation (RM'000) 3,687 1,122 Weighted average number of ordinary shares in issue ('000) 127,776 123,806 Adjustment for ESOS ('000) 1,605 76 129,381 123,882 Diluted earnings per share (sen) 2.85 0.91 11. Property, plant and equipment As at Depreciation As at 1.7.2012 Additions Reclassification Written off charges 30.6.2013 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 Group Net carrying amount Industrial buildings and installations 50,696 148 - - (1,168) 49,676 Leasehold land 4,294 - - - (52) 4,242 Machinery and equipment 105,719 6,118 (7) (30) (8,674) 103,126 Motor vehicles 500 242 - - (124) 618 Office equipment 243 26 7 (1) (47) 228 Computer equipment 972 670 - - (564) 1,078 Furniture and fittings 2,052 115 - - (270) 1,897 Renovation 81 - - - (14) 67 Total 164,557 7,319 - (31) (10,913) 160,932



11. Property, plant and equipment (continued) As at Depreciation As at 1.7.2011 Additions Written off charges 30.6.2012 RM'000 RM'000 RM'000 RM'000 RM'000 Group Net carrying amount Industrial buildings and installations 51,808 54 - (1,166) 50,696 Leasehold land 4,345 - - (51) 4,294 Machinery and equipment 112,005 2,188 - (8,474) 105,719 Motor vehicles 606 - - (106) 500 Office equipment 196 94 (2) (45) 243 Computer equipment 1,319 158 - (505) 972 Furniture and fittings 1,753 550 - (251) 2,052 Renovation 95 - - (14) 81 Total 172,127 3,044 (2) (10,612) 164,557

Accumulated Carrying Cost depreciation amount RM'000 RM'000 RM'000 At 30 June 2013 Industrial buildings and installations 56,482 (6,806) 49,676 Leasehold land 4,892 (650) 4,242 Machinery and equipment 134,411 (31,285) 103,126 Motor vehicles 2,221 (1,603) 618 Office equipment 482 (254) 228 Computer equipment 3,401 (2,323) 1,078 Furniture and fittings 2,774 (877) 1,897 Renovation 142 (75) 67 Total at 30 June 2013 204,805 (43,873) 160,932 At 30 June 2012 Industrial buildings and installations 56,334 (5,638) 50,696 Leasehold land 4,892 (598) 4,294 Machinery and equipment 130,026 (24,307) 105,719 Motor vehicles 1,978 (1,478) 500 Office equipment 452 (209) 243 Computer equipment 2,731 (1,759) 972 Furniture and fittings 2,659 (607) 2,052 Renovation 142 (61) 81 Total at 30 June 2012 199,214 (34,657) 164,557



11. Property, plant and equipment (continued)

The carrying amount of property, plant and equipment pledged to secure borrowings as referred to in Note 23(i) are as follows:- Group 2013 2012 RM'000 RM'000

Industrial buildings and installations 49,676 50,696 Leasehold land 4,242 4,294 Machinery and equipment 89,287 94,491 Furniture and fittings 812 921 144,017 150,402

12. Investment properties

Group 2013 2012 RM'000 RM'000

Cost At 1 July/30 June 2,105 2,105 Accumulated depreciation At 1 July 508 482 Depreciation charge for the year 26 26 At 30 June 534 508 Net carrying amount 1,571 1,597

The investment properties comprise freehold land and buildings, which are charged as security for borrowings granted to the Group as referred to in Note 23(i).

The fair value as at end of the reporting period has been arrived at on the basis of the Directors' best estimate, by reference to a valuation

report carried out at the end of the prior reporting period and market evidence of transaction prices for similar properties. Valuations at the end of the prior reporting period were performed by accredited independent valuers based on comparison method. The directors are of the opinion that the fair value of the investment properties as at the end of the reporting period approximates their fair values which amounted to RM2,540,000.



13. Investment in subsidiaries

Company 2013 2012 RM'000 RM'000

Unquoted shares, at deemed cost 110,463 110,574 Subsidiaries Details of the subsidiaries are as follows: Country of Effective equity Name of subsidiaries incorporation interest Principal activities 2013 2012 % % Kotra Pharma (M) Sdn. Bhd. Malaysia 100 100 Developing, manufacturing and trading of pharmaceutical and healthcare products Appeton Healthcare Sdn. Bhd. Malaysia 100 100 Dormant 14. Inventories

Group 2013 2012 RM'000 RM'000

At cost: Raw materials 12,530 13,988 Work-in-progress 1,674 1,199 Finished goods 14,758 20,043 28,962 35,230

None of the inventories is carried at net realisable value. 15. Trade receivables

Group 2013 2012 RM'000 RM'000

Trade receivables 49,955 42,916 Less: Allowance for impairment losses (1,472) (1,291) 48,483 41,625



15. Trade receivables (continued)

Group 2013 2012 RM'000 RM'000

Allowance for impairment losses:- At 1 July 1,291 2,086 Addition 391 260 Reversal of (164) (1,038) Written off (46) (17) At 30 June 1,472 1,291

The Group's normal trade credit terms range from 60 to 120 days (2012: 60 to 120 days). Other credit terms are assessed and approved on a case-by-case basis.

Included in trade receivables are amounts due from related parties as disclosed in Note 26(c) to the financial statements. 16. Other receivables

Group Company 2013 2012 2013 2012 RM'000 RM'000 RM'000 RM'000 Deposits 244 239 1 1 Other receivables 928 1,282 - - Advances to suppliers of property, plant and equipment 5,647 1,580 - - Prepayments 177 171 - - Tax recoverable 36 46 - 8 7,032 3,318 1 9

17. Amounts due from subsidiaries The amounts due from subsidiaries are non-trade in nature, unsecured, interest-free and repayable on demand. The amount owing is to

be settled in cash. 18. Derivative liabilities

Contract/ Notional Group Amount 2013 2012 RM'000 RM'000 RM'000 Derivative Liabilities Forward foreign currency contracts 4,689 (62) (137)



18. Derivative liabilities (continued)

Forward foreign currency contracts are used to hedge against fluctuations of exchange rates denominated in United States Dollar (USD). The settlement dates on forward foreign exchange currency contracts range between 2 to 11 months (2012: 1 to 11 months) after the end of the reporting period.

The Group has recognised a gain of RM75,385 (a loss of RM187,570 in 2012) arising from fair value changes of derivatives during the

financial year. The fair value changes were attributed to changes in the foreign exchange spot and forward rates. The method and assumptions applied in determining the fair values of derivatives are disclosed in Note 30(d)(iii) to the financial statements.

19. Cash and cash equivalents

Group Company 2013 2012 2013 2012 RM'000 RM'000 RM'000 RM'000 Cash and bank balances 16,321 11,192 2,958 529 Less: Bank overdrafts (Note 23) (4,609) (4,778) - -

Cash and cash equivalents 11,712 6,414 2,958 529

20. Share capital Company Number of ordinary shares of RM0.50 each Amount 2013 2012 2013 2012 '000 '000 RM'000 RM'000 Authorised 200,000 200,000 100,000 100,000 Issued and fully paid At 1 July 123,806 123,806 61,903 61,903 New shares issued under the employees share option scheme 3,970 - 1,985 - At 30 June 127,776 123,806 63,888 61,903

An Employees’ Share Option Scheme (“ESOS”) was approved by the Securities Commission on 22 April 2003 and the shareholders at an Extraordinary General Meeting held on 10 July 2003.



20. Share capital (continued)

The principal features of the ESOS are as follows:-

(a) The maximum number of new ordinary shares of RM0.50 each to be offered shall not exceed 15% of the issued and paid-up share capital of the Company at any point of time during the existence of the ESOS.

(b) Eligible directors or employees of the Group are directors or employees of the Group who have been confirmed in the service of the

Group prior to the offer or, if the employee is employed under contract basis, the contract should be for a duration of at least one (1) year.

(c) The option price may be subjected to a discount of not more than 10% of the average of the market quotation of the shares as shown in the daily official list issued by Bursa Malaysia Securities Berhad for the five trading days immediately preceding the offer date, or at par value of the shares of the Company, whichever is higher.

(d) An Option is personal to the grantee. Save and except as provided in Clause 20.1 of the Bye-Laws, an Option shall be non-assignable

and non-transferable. (e) The ESOS is in force for a period of 10 years from 24 July 2003 and expires on 23 July 2013.

The movements in the share options during the financial year were as follows: Exercise price per Exercise ordinary Balance at During the year Balance at Date of offer period share 1.7.2012 Exercised Lapsed 30.6.2013 RM

24.7.2003 24.7.2004 0.58 1,489,640 (722,000) (7,040) 760,600 24.7.2003 24.7.2006 0.58 2,979,720 (1,444,000) (14,080) 1,521,640 24.7.2003 24.7.2009 0.58 2,993,360 (1,444,000) (14,080) 1,535,280 15.6.2004 15.6.2005 0.51 214,720 - (1,320) 213,400 15.6.2004 15.6.2007 0.51 429,440 - (2,640) 426,800 15.6.2004 15.6.2010 0.51 429,440 - (2,640) 426,800 12.7.2005 12.7.2006 0.53 57,000 - - 57,000 12.7.2005 12.7.2008 0.53 199,600 - - 199,600 12.7.2005 12.7.2011 0.53 199,600 - - 199,600 21.7.2006 21.7.2007 0.53 161,600 (32,000) - 129,600 21.7.2006 21.7.2009 0.53 343,200 (64,000) - 279,200 21.7.2006 21.7.2012 0.53 343,200 (64,000) - 279,200 2.7.2007 2.7.2008 0.78 68,200 - (11,000) 57,200 2.7.2007 2.7.2010 0.78 136,400 - (22,000) 114,400 2.7.2007 2.7.2012 0.78 136,400 - (22,000) 114,400 17.10.2011 23.7.2013 0.50 3,456,000 (200,000) (2,096,000) 1,160,000 13,637,520 (3,970,000) (2,192,800) 7,474,720

Options exercisable in a particular year but not exercised can be carried forward to the subsequent years provided they are exercised prior to the expiry date of the ESOS on 23 July 2013.



20. Share capital (continued) Fair value of share options granted was estimated using a Black-Scholes model, taking into account the terms and conditions upon which

the options were granted. The fair value of share options measured at grant date and the assumptions are as follows: Group and Company 2013 2012

Fair value of share options at the following grant date 17 October 2011 (sen) - 18.38 Share price (RM) - 0.50 Exercise price (RM) - 0.50 Expected volatility (%) - 63.6 Expected life (years) - 2 Risk free rate (%) - 3.2

The expected life of the options is based on historical data and is not necessarily indicative of exercise patterns that may occur. The expected volatility reflects the assumption that the historical is indicative future trends, which may also not necessarily be the actual outcome. No other features of the option granted were incorporated into the measurement of fair value.

21. Retained earnings Subject to the agreement of the tax authorities, at the end of the reporting period, the Company has:-

(a) tax-exempt income of approximately RM5,296,000 (2012: RM5,296,000) available for the purpose of paying tax-exempt dividends; and

(b) tax credits under Section 108 of the Income Tax Act, 1967 to frank the payment of dividends of approximately RM942,000 (2012:

RM942,000) out of its retained earnings. The balance of the retained earnings, if distributed as dividends, will be taxed at the statutory tax rate. At the end of the reporting period, the Company has not elected for the single tier tax system. When the tax credit balance is fully utilised,

or at the latest by 31 December 2013, the Company will automatically move to the single tier tax system. Under the single tier tax system, tax on the Company's profit is a final tax and dividends distributed to the shareholders will be exempted from tax.

22. Other reserves

Group Company 2013 2012 2013 2012 RM'000 RM'000 RM'000 RM'000 Share premium reserve (a) 286 3 286 3 Share options reserve (b) 525 636 525 636 811 639 811 639

(a) Share premium reserve

The share premium reserve arose from the issue of shares by way of private placement and public offer less amounts incurred for listing expenses and utilised for bonus share issue.



22. Other reserves (continued) (b) Share options reserve

Group and Company 2013 2012 RM'000 RM'000

Share options under ESOS: At 1 July 636 317 Movement during the year (111) 319 At 30 June 525 636

The share option reserve represents the equity-settled share options granted to employees. This reserve is made up of the cumulative value of services received from employees recorded on grant of share options.

23. Borrowings

Group 2013 2012 RM'000 RM'000

Short term borrowings Unsecured: Bank overdraft 4,609 4,778 Bankers' acceptances 7,390 14,854 Revolving credit 10,026 7,027 22,025 26,659 Secured: Bankers' acceptances 6,451 7,378 Revolving credit 5,000 - Term loans 2,360 494 35,836 34,531 Long term borrowings Secured: Term loans 90,198 91,432 Total borrowings Bank overdraft (Note 19) 4,609 4,778 Bankers' acceptances 13,841 22,232 Revolving credit 15,026 7,027 Term loans 92,558 91,926 126,034 125,963



23. Borrowings (continued)

Group 2013 2012 RM'000 RM'000

Maturity of borrowings Within one year 35,836 34,531 More than 1 year and less than 2 years 7,940 2,442 More than 2 years and less than 5 years 25,643 25,529 Five years or more 56,615 63,461 126,034 125,963

The weighted average effective interest rates per annum at the end of the reporting period of borrowings, were as follows:- Group 2013 2012 % %

Bank overdrafts 7.12 6.60 Bankers’ acceptances 4.23 3.66 Revolving credit 5.63 5.81 Term loans 6.59 6.58

The unsecured short term borrowings of the Group are guaranteed by the Company. The secured short term borrowings and term loans are secured by:

(i) fixed charges over certain assets of the Group as disclosed in Note 11 and Note 12 to the financial statements; (ii) specific debenture for RM25,000,000 over a subsidiary's machineries; (iii) debentures over a subsidiary’s all fixed and floating assets both present and future; and (iv) corporate guarantee from the Company.

24. Trade payables The normal trade credit terms granted to the Group range from 60 to 90 days (2012: 60 to 90 days). Included in trade payables are amounts

due to related parties as disclosed in Note 26(c) to the financial statements.



25. Other payables

Group Company 2013 2012 2013 2012 RM'000 RM'000 RM'000 RM'000 Accruals 2,893 3,001 49 49 Payroll liabilities 1,843 3,615 - - Due to suppliers of property, plant and equipment 1,942 2,076 - - Other payables 3,873 2,602 - - Provision for taxation 31 - 31 - 10,582 11,294 80 49

Included in other payables is an amount due to a related party as disclosed in Note 26(c) to the financial statements. 26. Related party disclosures (a) For the purpose of the financial statements, the Group and the Company have related party relationships with:-

(i) its subsidiaries and directors; (ii) the directors who are key management personnel; (iii) companies in which key management personnel have significant financial interests; and (iv) a company in which a close member of the family of certain key management personnel has significant financial interests.

(b) In addition to the information disclosed elsewhere in the financial statements, the Group and the Company carried out the following

transactions with its related parties during the financial year:-

2013 2012 RM'000 RM'000

Group Companies in which key management personnel have significant financial interests: - contract manufacturing cost paid/payable 186 23 - rental of premises paid/payable 97 94 - royalty paid/payable 30 27 A company in which a close member of the family of certain key management personnel has significant financial interests: - rental of premises received/receivable (57) (57) - sales of goods (539) (514) Company A subsidiary - management fee received/receivable (720) (720)



26. Related party disclosures (continued) (c) The outstanding balances at the end of the reporting period are as follows: Group 2013 2012 RM'000 RM'000

Companies in which key management personnel have significant financial interests: - trade payables (98) (121) A company in which close members of the family of certain key management personnel have significant financial interests: - trade receivables 397 - - trade payables (30) (27) - other payables - (16)

(d) Compensation of key management personnel Group Company 2013 2012 2013 2012 RM'000 RM'000 RM'000 RM'000 Directors' remuneration - fees 202 197 202 197 - emoluments 1,606 1,547 - - - other short term employee benefits 194 185 - - - estimated monetary value of benefits-in-kind - 5 - 5 2,002 1,934 202 202

Executive directors of the Group and Company have been granted the following number of options under the ESOS: Group and Company 2013 2012 '000 '000

At 1 July 5,400 5,400 Exercised (3,600) - At 30 June 1,800 5,400

The share options were granted on the same terms and conditions as those offered to other employees of the Group.



27. Capital commitments

Group 2013 2012 RM'000 RM'000

For property, plant and equipment: - approved and contracted for 15,429 8,167 - approved but not contracted for 10,489 14,006 25,918 22,173 28. Segmental reporting The segment information in respect of the Group's operating segments for the year ended 30 June 2013 are as follows:- Local Export Total 2013 2012 2013 2012 2013 2012 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 External revenue 89,539 84,845 41,755 42,098 131,294 126,943 Profit from operations 16,229 11,371 3,156 2,935 19,385 14,306 A reconciliation of total profit from operations to total consolidated profit before taxation is provided as follows:- Total 2013 2012 RM'000 RM'000

Profit from operations for reportable segments 19,385 14,306 Expenses managed on a central basis (9,254) (9,519) Other operating income 1,831 4,167

Consolidated profit from operations 11,962 8,954 Finance cost (8,133) (7,776)

Consolidated profit before taxation 3,829 1,178 29. Contingent liabilities

Company 2013 2012 RM'000 RM'000

Corporate guarantee given to licensed banks for credit facilities granted to a subsidiary 126,034 125,963



30. Financial instruments The Group’s activities are exposed to a variety of market risks (including foreign currency risk and interest rate risk), credit risk and

liquidity risk. The Group’s overall financial risk management policy focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group’s financial performance.

(a) Financial risk management policies The Group’s policies in respect of the major areas of treasury activity are as follows:-

(i) Foreign currency risk The Group is exposed to foreign currency risk on transactions and balances that are denominated in currencies other than

Ringgit Malaysia. The currencies giving rise to this risk are primarily United States Dollar ("USD"), Euro Dollar ("Euro") and Singapore Dollar ("SGD"). Foreign currency risk is monitored closely on an ongoing basis to ensure that the net exposure is at an acceptable level. On occasion, the Group enters into forward foreign currency contracts to hedge against its foreign currency risk.

The net unhedged financial assets/(financial liabilities) for the Group that are not denominated in their functional currencies

are as follows:- USD Euro SGD Total RM'000 RM'000 RM'000 RM'000 30.6.2013 Trade receivables 14,029 (13) 435 14,451 Other receivables 426 4,251 196 4,873 Cash and bank balances 7,308 20 698 8,026 Bankers' acceptances (3,188) - - (3,188) Trade payables (821) (3,058) - (3,879) Other payables (34) (21) - (55)

Net exposure 17,720 1,179 1,329 20,228

30.6.2012 Trade receivables 10,290 15 235 10,540 Other receivables 592 633 58 1,283 Cash and bank balances 5,122 3 417 5,542 Bankers' acceptances (6,473) (2,446) - (8,919) Trade payables (1,517) (985) - (2,502) Other payables (138) (18) (2) (158)

Net exposure 7,876 (2,798) 708 5,786



30. Financial instruments (continued) (a) Financial risk management policies (continued)

(i) Foreign currency risk (continued)

Foreign currency risk sensitivity analysis The following table details the sensitivity analysis to a reasonably possible change in the foreign currencies as at the end of

the reporting period, with all other variables held constant:- Group 2013 2012 Increase/ Increase/ (decrease) (decrease) RM'000 RM'000 Effects on profit after taxation United States Dollar - strengthened by 5% (2012:5%) 684 326 - weakened by 5% (2012:5%) (684) (326) Euro Dollar - strengthened by 5% (2012:5%) 90 (98) - weakened by 5% (2012:5%) (90) 98 Singapore Dollar - strengthened by 5% (2012:5%) 52 27 - weakened by 5% (2012:5%) (52) (27)

(ii) Interest rate risk Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes

in market interest rates. The Group’s exposure to interest rate risk arises mainly from interest-bearing financial assets and liabilities. The Group’s policy is to obtain the most favourable interest rates available. Any surplus funds of the Group will be placed with licensed financial institutions to generate interest income.

Interest rate risk sensitivity analysis At the end of the reporting period, if interest rates had been 100 basis points higher/lower, with all other variables held

constant, the Group's profit after taxation would have been RM945,000 lower/higher, arising mainly as a result of higher/lower interest expense on floating rate bank borrowings. The assumed movement in basis points for interest rate sensitivity analysis is based on the currently observable market environment.

(iii) Credit risk The Group’s exposure to credit risk, or the risk of counterparties defaulting, arises mainly from trade and other receivables.

The Group manages its exposure to credit risk by the application of credit approvals, credit limits and monitoring procedures on an ongoing basis. For other financial assets (including cash and bank balances), the Group minimises credit risk by dealing exclusively with high credit rating counterparties.

The Group establishes an allowance for impairment that represents its estimate of incurred losses in respect of the trade

and other receivables as appropriate. The main components of this allowance are a specific loss component that relates to individually significant exposures, and a collective loss component established for groups of similar assets in respect of losses that have been incurred but not yet identified. Impairment is estimated by management based on prior experience and the current economic environment.




(iii) Credit risk (continued)

The Group's major concentration of credit risk relates to the amounts owing by one (1) (2012: two (2)) customer who has been actively trading with the Group for the past 10 years (2012: 9 years) which constituted approximately 21% (2012: 30%) of its trade receivables as at the end of the reporting period. As the Group does not hold any collateral, the maximum exposure to credit risk is represented by the carrying amount of the financial assets as at the end of the reporting period.

Ageing analysis

The ageing analysis of the Group’s trade receivables as at 30 June are as follows:-

Gross Individual Carrying amount impairment amount RM'000 RM'000 RM'000 30.6.2013 Not past due 38,397 - 38,397 Past due:- - less than 3 months 9,611 - 9,611 - 3 to 6 months 325 - 325 - more than 6 months 1,622 (1,472) 150 49,955 (1,472) 48,483 30.6.2012 Not past due 30,870 (2) 30,868 Past due:- - less than 3 months 10,546 (7) 10,539 - 3 to 6 months 454 (236) 218 - more than 6 months 1,046 (1,046) - 42,916 (1,291) 41,625

At the end of the reporting period, trade receivables that are individually impaired were those in significant financial difficulties and have defaulted on payments. These receivables are not secured by any collateral or credit enhancement.

Trade receivables that are past due but not impaired

The Group believes that no impairment allowance is necessary in respect of these trade receivables. They are substantially

companies with good collection track record and no recent history of default.

Trade receivables that are neither past due nor impaired

A significant portion of trade receivables that are neither past due nor impaired are regular customers that have been transacting with the Group. The Group uses ageing analysis to monitor the credit quality of the trade receivables. Any receivables having significant balances past due or more than 120 days, which are deemed to have higher credit risk, are monitored individually.




(iv) Liquidity risk

Liquidity risk arises mainly from general funding and business activities. The Group practises prudent risk management by maintaining sufficient cash balances and the availability of funding through certain committed credit facilities.

The following table sets out the maturity profile of the financial liabilities as at the end of the reporting period based on

contractual undiscounted cash flows (including interest payments computed using contractual rates or, if floating, based on the rates at the end of the reporting period):-

Weighted Contractual average undiscounted Within 1 to 5 Over effective cash flows 1 year years 5 years rate (%) RM’000 RM’000 RM’000 RM’000 2013 Group Bankers' acceptances 4.23 13,841 13,841 - - Revolving credit 5.63 15,026 15,026 - - Term loans 6.59 162,390 8,467 53,278 100,645 Bank overdrafts 7.12 4,609 4,609 - - Trade payables - 18,644 18,644 - - Other payables - 10,582 10,582 - - Forward foreign currency contracts - gross payments - 4,751 4,751 - - 229,843 75,920 53,278 100,645 Company Other payables - 80 80 - -

2012 Group Bankers' acceptances 3.66 22,232 22,232 - - Revolving credit 5.81 7,027 7,027 - - Term loans 6.58 168,961 6,513 60,691 101,757 Bank overdrafts 6.60 4,778 4,778 - - Trade payables - 17,990 17,990 - - Other payables - 11,294 11,294 - - Forward foreign currency contracts - gross payments - 5,557 5,557 - - 237,839 75,391 60,691 101,757 Company Other payables - 49 49 - -



30. Financial instruments (continued)

(b) Capital risk management

The Group manages its capital to ensure that entities within the Group will be able to maintain an optimal capital structure so as to support their businesses and maximise shareholder(s) value. To achieve this objective, the Group may make adjustments to the capital structure in view of changes in economic conditions, such as adjusting the amount of dividend payment, returning of capital to shareholders or issuing new shares.

The Group manages its capital based on debt-to-equity ratio. The Group’s strategies were unchanged from the previous financial year. The debt-to-equity ratio is calculated as net debt divided by total equity. Net debt is calculated as borrowings plus trade and other payables less cash and cash equivalents.

The debt-to-equity ratio of the Group as at the end of the reporting period was as follows:- Group 2013 2012 RM'000 RM'000

Borrowings 126,034 125,963 Trade payables 18,644 17,990 Other payables 10,582 11,294 155,260 155,247 Less: Cash and bank balances (16,321) (11,192) Net debt 138,939 144,055 Total equity 107,979 102,135 Debt-to-equity ratio 1.29 1.41

Under the requirement of Bursa Malaysia Practice Note No. 17/2005, the Company is required to maintain a consolidated shareholders’ equity (total equity attributable to owners of the Company) equal to or not less than the 25% of the issued and paid-up share capital (excluding treasury shares) and such shareholders’ equity is not less than RM40 million. The Company has complied with this requirement.

The Group did not breach any gearing requirement during the financial years ended 30 June 2012 and 30 June 2013.

(c) Classification of financial instruments Group Company 2013 2012 2013 2012 RM'000 RM'000 RM'000 RM'000 Financial assets Loans and receivables financial assets Trade receivables 48,483 41,625 - - Other receivables 928 1,282 - - Amounts due from subsidiaries - - 323 359 Cash and bank balances 16,321 11,192 2,958 529 65,732 54,099 3,281 888




(c) Classification of financial instruments (continued)

Group Company 2013 2012 2013 2012 RM'000 RM'000 RM'000 RM'000 Financial liabilities Other financial liabilities Bankers' acceptances 13,841 22,232 - - Revolving credit 15,026 7,027 - - Term loans 92,558 91,926 - - Bank overdrafts 4,609 4,778 - - Trade payables 18,644 17,990 - - Other payables 8,708 7,679 49 49 153,386 151,632 49 49 Fair value through profit or loss Derivative liabilities 62 137 - -

(d) Fair values of financial instruments

The carrying amounts of the financial assets and financial liabilities reported in the financial statements approximated their fair values.

The following summarises the methods used to determine the fair values of the financial instruments:-

(i) The financial assets and financial liabilities maturing within the next 12 months approximated their fair values due to the

relatively short-term maturity of the financial instruments. (ii) The carrying amounts of the term loans approximated their fair values as these instruments bear interest at variable rates. (iii) The fair value of forward foreign currency contracts is estimated by discounting the difference between the contractual

forward price and the current forward price for the residual maturity of the contract using a risk-free interest rate. (e) Fair value hierarchy The fair values of the financial assets and liabilities are analysed into level 1 to 3 as follows:-

Level 1: Fair value measurements derive from quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2: Fair value measurements derive from inputs other than quoted prices included within level 1 that are observable for

the asset or liability, either directly or indirectly. Level 3: Fair value measurements derive from valuation techniques that include inputs for the asset or liability that are not

based on observable market data (unobservable inputs).




(e) Fair value hierarchy (continued) As at 30 June 2013, the Group's financial instruments carried at fair values are analysed as below:- Level 2 RM'000

Group Financial liabilities Derivative liabilities - forward foreign currency contracts (62)

31. Transition to the MFRS framework As stated in Note 2(a) to the financial statements, these are the first financial statements of the Group and the Company prepared in

accordance with MFRSs. The accounting policies in Note 3 to the financial statements have been applied to all financial information covered under this set of financial statements. The transition to MFRS does not have financial impact to the financial statements of the Group.

While in preparing the opening MFRS statements of financial position at 1 July 2011 (date of transition), the Company has adjusted

amounts reported previously in financial statements prepared in accordance with FRSs. The financial impacts on the transition are as below:-

Reconciliation of statement of financial position 1.7.2011 30.6.2012 Transition Transition FRSs Effects MFRSs FRSs Effects MFRSs Company Note RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 Assets Non-current asset Investment in subsidiaries a 110,256 - 110,256 113,710 (3,136) 110,574 110,256 - 110,256 113,710 (3,136) 110,574 Current assets Other receivables 1 - 1 9 - 9 Amounts due from subsidiaries 398 - 398 359 - 359 Cash and bank balances 300 - 300 529 - 529 699 - 699 897 - 897 Total assets 110,955 - 110,955 114,607 (3,136) 111,471



31. Transition to the MFRS framework (continued) Reconciliation of statement of financial position (continued) 1.7.2011 30.6.2012 Transition Transition FRSs Effects MFRSs FRSs Effects MFRSs Company Note RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 Equity and liabilities Equity attributable to equity holder of the Company Share capital 61,903 - 61,903 61,903 - 61,903 Retained earnings b 4,351 44,295 48,646 4,585 44,295 48,880 Other reserves b 44,615 (44,295) 320 48,070 (47,431) 639 Total equity 110,869 - 110,869 114,558 (3,136) 111,422 Current liability Other payables 86 - 86 49 - 49 86 - 86 49 - 49 Total equity and liabilities 110,955 - 110,955 114,607 (3,136) 111,471

Reconciliation of profit or loss and other comprehensive income Company Note 2012 Transition FRSs effects MFRSs RM'000 RM'000 RM'000 Revenue 720 - 720 Employee benefits expenses (249) - (249) Other operating expenses (202) - (202) Profit before taxation 269 - 269 Income tax expense (35) - (35) Profit after taxation 234 - 234 Other comprehensive income Item that will not be reclassified subsequently to profit or loss - fair value changes of available-for-sale financial asset a 3,136 (3,136) - Total other comprehensive income 3,136 (3,136) - Total comprehensive income for the financial year 3,370 (3,136) 234



31. Transition to the MFRS framework (continued)

Reconciliation of statement of cash flows

There are no differences between the statements of cash flows presented under FRSs and MFRSs. Notes to reconciliations (a) Investment in Subsidiaries - Deemed Cost Exemption

Under FRSs, the Company measured its investments in subsidiaries at fair value under FRS 139. Upon transition to MFRSs, the Company elected to use the previous FRS carrying amount as deemed cost under MFRSs.

The financial impacts arising from the change are summarised as follows:-

(i) Fair value reserves at 1 July 2011 and 30 June 2012 were transferred to retained profits; (ii) A decrease in fair value gain that was recognised under other comprehensive income of RM3,136,000 for the financial year

ended 30 June 2012.

The aggregate fair value of the investments in subsidiaries at 1 July 2011 approximated the then carrying amount under FRSs. (b) Reserves There were no adjustments to the reserves other than the following:- Company 1.7.2011 30.6.2012 Note RM'000 RM'000 Fair value reserve Investment in subsidiaries a (44,295) 44,295 Retained earnings Investment in subsidiaries a 44,295 (47,431) Total adjustments to reserves - (3,136)

32. Comparative figures The following figures have been reclassified to conform with the presentation of the current financial year:- Company As restated As previously reported RM'000 RM'000 Statement of financial position (Extract):- Investment in subsidiaries (Note 31) 110,574 113,710


33. Supplementary information - disclosure of realised and unrealised profits The breakdown of the retained profits of the Group and the Company as at the end of the reporting period into realised and unrealised

profits are presented in accordance with the directive issued by Bursa Malaysia Securities Berhad and prepared in accordance with Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants, as follows:-

Group Company 2013 2012 2013 2012 RM'000 RM'000 RM'000 RM'000

Total retained profit: - realised 42,886 38,904 48,966 48,880 - unrealised 394 689 - - Total Group retained earnings as at 30 June 43,280 39,593 48,966 48,880

Supplementary Information30 June 2013


List of Properties

Title/ Description Land Area/ Built-Up Approximate Net Book ValueLocation & Usage Existing Use Tenure Area (sq. m.) Age of as at Building 30-Jun-13 (RM)

H.S.(D) 35311 & H.S. (D) 35312. Two joined plots of 17,611 sq.m./ Leasehold 5,120.04 16 years 11,525,315Lot Nos. PT4239 & PT4240, land with a single pharmaceutical expiring onMukim of Cheng, storey factory and manufacturing 14.8.2096District of Melaka Tengah, two storey plantMelaka office block Warehouse and Warehouse and 6,613.00 13 years production area production area

GPP 7972 & GPP 5156, Two plots of land 2,252.10 sq.m./ Freehold 1,539.31 Office & Store 1,239,314Lot Nos. 43 & 45, with a 2 ½ storey office, store & - 21 yearsTown Area III (3), office building, a warehouse WarehouseDistrict of Melaka Tengah, store and a -17 yearsMelaka warehouse

Geran 4612, Lot No. 42, Commercial site 636.2 sq.m./ Freehold 488.9 38 to 42 years 332,000Town Area III (3), erected with a double Double storeyDistrict of Melaka Tengah, storey shophouse shophouseMelaka cum storehouse

PN46842. Lot 9262, Two plots of land 23,614 sq.m./ Leasehold 22,808 3 years 42,393,154Mukim of Cheng, ammalgamated into pharmaceutical expiring onDistrict of Melaka Tengah, one plot with a manufacturing 15.8.2096Melaka three storey plant pharmaceutical factory

55,489,783


Notice of Annual General Meeting

Please refer to Explanatory Note (3(i))

(Resolution 1)

(Resolution 2)(Resolution 3)

(Resolution 4)

(Resolution 5)

(Resolution 6)

1. To receive the Audited Financial Statements for the financial year ended 30 June 2013 together with the Reports of the Directors and Auditors thereon.

2. To approve the payment of Directors’ fees for the financial year ended 30 June 2013. 3. To re-elect the following Directors who retire pursuant to Article 97(1) of the Company’s Articles of Association,

who being eligible, offered themselves for re-election:-

(a) P’ng Beng Hoe (b) Azhar bin Hussain 4. To re-appoint Crowe Horwath as Auditors of the Company until the conclusion of the next AGM and to authorise

the Directors to fix their remuneration. 5. As Special Business

To consider and if thought fit, with or without modification, to pass the following resolutions as Ordinary Resolutions:-

Ordinary Resolution I - Authority to Issue and Allot Shares

That subject always to the approvals of the relevant authorities and pursuant to Section 132D of the Companies Act, 1965, the Directors be and are hereby authorised to issue and allot ordinary shares in the Company at any time, upon such terms and conditions, for such purposes and to such person(s) as the Directors may in their discretion deem fit provided that the aggregate number of ordinary shares to be issued does not exceed ten per centum (10%) of the total issued share capital of the Company at the time of issue and that such authority shall continue to be in force until the conclusion of the next AGM of the Company.

Ordinary Resolution II

- Proposed Renewal of the Existing Shareholders’ Mandate for Recurrent Related Party Transactions of a Revenue or Trading Nature

That pursuant to paragraph 10.09 of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, the Company and/or its subsidiary companies (the Group) be and are hereby authorised to enter into and give effect to recurrent related party transactions of a revenue or trading nature as set out in Section 2.3.2(a) of the Circular to Shareholders dated 1 November 2013, which are necessary for the Group’s day-to-day operations in the ordinary course of business, on terms not more favourable than those generally available to the public and not detrimental to the minority shareholders of the Company.

That such approval shall continue to be in force until:

(i) the conclusion of the next AGM of the Company, at which time it will lapse, unless authority is renewed by a resolution passed at the next AGM;

(ii) the expiration of the period within which the next AGM is required to be held pursuant to Section 143(1) of the Companies Act, 1965 (the Act) (but shall not extend to such extension as may be allowed pursuant to Section 143(2) of the Act); or

NOTICE IS HEREBY GIVEN that the Fourteenth Annual General Meeting (AGM) of the Company will be held at the Auditorium Hall, Kotra Pharma Technology Centre, No. 2, Jalan TTC 12, Cheng Industrial Estate, 75250 Melaka on Wednesday, 27 November 2013 at 3.00 p.m. for the following purposes:-

AGENDA


Notice of Annual General Meeting continued

(iii) revoked or varied by resolution passed by the shareholders of the Company in a general meeting, before the next AGM;

whichever is the earlier.

And that the Directors of the Company be authorised to act for and on behalf of the Company, to take all such steps and execute all necessary documents as they may consider expedient or deem fit in the best interest of the Company to give effect to the transactions contemplated and/or authorised by this resolution.

Ordinary Resolution III- Proposed New Shareholders’ Mandate for Recurrent Related Party Transactions of a Revenue or

Trading Nature

That pursuant to paragraph 10.09 of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, the Company and/or its subsidiary companies (the Group) be and are hereby authorised to enter into and give effect to recurrent related party transactions of a revenue or trading nature as set out in Section 2.3.2(b) of the Circular to Shareholders dated 1 November 2013, which are necessary for the Group’s day-to-day operations in the ordinary course of business, on terms not more favourable than those generally available to the public and not detrimental to the minority shareholders of the Company.

That such approval shall continue to be in force until:

(i) the conclusion of the next AGM of the Company, at which time it will lapse, unless authority is renewed by a resolution passed at the next AGM;

(ii) the expiration of the period within which the next AGM is required to be held pursuant to Section 143(1) of the Companies Act, 1965 (the Act) (but shall not extend to such extension as may be allowed pursuant to Section 143(2) of the Act); or

(iii) revoked or varied by resolution passed by the shareholders of the Company in a general meeting, before the next AGM;

whichever is the earlier.

And that the Directors of the Company be authorised to act for and on behalf of the Company, to take all such steps and execute all necessary documents as they may consider expedient or deem fit in the best interest of the Company to give effect to the transactions contemplated and/or authorised by this resolution.

6. To transact any other ordinary business of which due notice shall have been given in accordance with the Companies Act, 1965 and the Articles of Association of the Company.

By Order of the Board

Chua Siew Chuan (MAICSA 0777689)Mak Chooi Peng (MAICSA 7017931)Sean Ne Teo (LS 0008058)Company Secretaries

Melaka1 November 2013

(Resolution 7)


Notice of Annual General Meeting continued

NOTES:

1. Appointment of Proxy

(i) In respect of deposited securities, only members whose names appear in the Record of Depositors on 20 November 2013 (“General Meeting Record of Depositors”) shall be eligible to attend, speak and vote at the Meeting.

(ii) A member entitled to attend and vote at the Meeting is entitled to appoint more than one proxy to attend and vote in his stead. A proxy may but does not need to be a member of the Company and the provisions of Section 149 (1)(b) of the Companies Act, 1965 need not be complied with. Where a member appoints more than one proxy, the appointments shall be invalid unless he specifies the proportions of his shareholdings to be represented by each proxy. A proxy appointed to attend and vote at the Meeting shall have the same rights as the member to speak at the Meeting. Notwithstanding this, a member entitled to attend and vote at the Meeting is entitled to appoint any person as his proxy to attend and vote instead of the member at the Meeting. There shall be no restriction as to the qualifications of the proxy.

(iii) In the case of a corporate member, the instrument appointing a proxy must be either under its common seal or under the hand of its officer or attorney duly authorised.

(iv) 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.

(v) The instrument appointing a proxy must be deposited at Securities Services (Holdings) Sdn. Bhd. of No. 60 - 1, Jalan Lagenda 5, Taman 1 Lagenda, 75400 Melaka not less than 48 hours before the time for holding the Meeting or at any adjournment thereof.

2. Retirement of Directors

(i) Tan Sri Datuk Dr. Omar bin Abdul Rahman has expressed his intention to retire at the conclusion of the 14th AGM. Hence, Tan Sri will retain office until the close of the 14th AGM.

(ii) Encik Omar bin Md. Khir has expressed his intention to retire at the conclusion of the 14th AGM. Hence, he will retain office until the close of the 14th AGM.

3. Explanatory Notes to Special Business:-

(i) Item 1 of the Agenda

The Agenda item is meant for discussion only as the provision of Section 169(1) of the Companies Act, 1965 does not require a formal approval of the shareholders for the Audited Financial Statements. Hence, this Agenda item is not put forward for voting.

(ii) Proposed Ordinary Resolution I

The proposed Ordinary Resolution I, if passed, will empower the Directors of the Company to issue and allot not more than 10% of the Company’s total issued share capital speedily without having to convene a general meeting. This authority will, unless revoked or varied by the Company in general meeting, expire at the conclusion of the next AGM of the Company.

Instances for which the Company may issue new shares within this general mandate include but not limited to the purpose(s) of raising fund through private placement for investments, working capital and/or acquisitions.

This general mandate sought by the Company is to renew the general mandate granted to the Directors at the 13th AGM held on 29 November 2012 to issue shares pursuant to Section 132D of the Companies Act, 1965.

As at the date of this Notice, no new shares in the Company were issued pursuant to the mandate granted to the Directors at the last AGM held on 29 November 2012 which will lapse at the conclusion of the forthcoming AGM.

(iii) Proposed Ordinary Resolutions II & III

The proposed adoption of Ordinary Resolutions II & III are to renew the Shareholders’ Mandate granted by the shareholders of the Company at the 13th AGM held on 29 November 2012 and the proposed new Shareholders’ Mandate. The proposed Shareholders’ Mandates will enable the Group to enter into the Recurrent Related Party Transactions of a Revenue or Trading Nature which are necessary for the Group’s day-to-day operations, subject to the transactions being in the ordinary course of business and on normal commercial terms which are not more favourable to the related parties than those generally available to the public and are not to the detriment of the minority shareholders of the Company.

Further information on the proposed Ordinary Resolution II & III are set out in the Circular to Shareholders dated 1 November 2013.


Analysis of Shareholdingsas at 30 September 2013

Authorised Share Capital : RM100,000,000.00Issued and Paid Up Capital : RM66,053,281.50Class of Shares : Ordinary shares of RM0.50 eachVoting rights on show of hands : 1 voteVoting rights on a poll : 1 vote per ordinary share held

DISTRIBUTION OF SHAREHOLDINGS

No. of No. ofSize of Shareholdings Shareholders % shares held %

Less than 100 shares 54 5.16 1,806 0.00100 to 1,000 shares 121 11.56 49,161 0.041,001 to 10,000 shares 585 55.87 2,582,122 1.9510,001 to 100,000 shares 210 20.06 5,699,122 4.31100,001 to less than 5% of issued shares 76 7.26 59,150,088 44.775% and above of issued shares 1 0.10 64,624,362 48.92

Total 1,047 100.00 132,106,563 100.00

SUBSTANTIAL SHAREHOLDERS

No. of Shares heldName Direct % Indirect %

Piong Nam Kim Holdings Sdn. Bhd. 64,624,362 48.92 0 0.00Estate of Piong Nam Kim @ Piong Pak Kim 0 0.00 64,624,362* 48.92Yong Soon Moi 4,514,364 3.42 64,624,362* 48.92Piong Teck Onn 1,800,000 1.36 64,624,362* 48.92Piong Teck Min 1,276,220 0.97 64,998,212^ 49.20Datuk Piong Teck Yen 1,802,200 1.36 64,624,362* 48.92Piong Teck They 1,113,186 0.84 64,624,362* 48.92

Notes:* Deemed interested by virtue of their interests in Piong Nam Kim Holdings Sdn. Bhd. pursuant to Section 6A of the Act.^ Deemed interested by virtue of his interests in Piong Nam Kim Holdings Sdn. Bhd. pursuant to Section 6A of the Act and his wife (Tan Yeak

Yan) and son (Piong Chee Keong) pursuant to Section 134(12) of the Act.

DIRECTORS’ SHAREHOLDINGS

No. of Shares heldName Direct % Indirect %

Tan Sri Datuk Dr. Omar bin Abdul Rahman 4,840 0.00 0 0.00Piong Teck Onn 1,800,000 1.36 64,624,362* 48.92Piong Teck Min 1,276,220 0.97 64,998,212^ 49.20Datuk Piong Teck Yen 1,802,200 1.36 64,624,362* 48.92Chin Swee Chang 1,800,000 1.36 0 0.00Omar bin Md. Khir 768,060 0.58 0 0.00P’ng Beng Hoe 0 0.00 0 0.00Azhar bin Hussain 0 0.00 0 0.00Piong Chee Kien (Alternate Director) 0 0.00 0 0.00

Notes:* Deemed interested by virtue of their interests in Piong Nam Kim Holdings Sdn. Bhd. pursuant to Section 6A(4) of the Act.^ Deemed interested by virtue of his interests in Piong Nam Kim Holdings Sdn. Bhd. pursuant to Section 6A(4) of the Act and his wife (Tan

Yeak Yan) and son (Piong Chee Keong) pursuant to Section 134(12) of the Act.


Analysis of Shareholdings continuedas at 30 September 2013

THIRTY (30) LARGEST SHAREHOLDERS

No. Name No. of shares %

1. Piong Nam Kim Holdings Sdn Bhd 64,624,362 48.92

2. Amsec Nominees (Asing) Sdn Bhd Amtrustee Berhad for Galleon Asset Limited (CS-GALLEON) 6,125,402 4.64

3. Yong Soon Moi 4,514,364 3.42

4. Malaysian Technology Development Corporation Sdn Bhd 3,631,423 2.75

5. JF Apex Nominees (Tempatan) Sdn Bhd Pledged Securities Account for Teo Kwee Hock (MARGIN) 2,884,000 2.18

6. Chin Ai Mei 2,819,801 2.13

7. Platinum Essence Sdn. Bhd. 2,801,140 2.12

8. Seah Tin Kim 1,839,440 1.39

9. Lin Ah Lan 1,825,360 1.38

10. Alliancegroup Nominees (Tempatan) Sdn Bhd Pledged Securities Account for Lim Kian Tiak (8039574) 1,821,500 1.38

11. Piong Teck Yen 1,802,200 1.36

12. Piong Teck Onn 1,800,000 1.36

13. Chin Swee Chang 1,800,000 1.36

14. Cresdel Holdings Sdn Bhd 1,664,060 1.26

15. Kok Hon Seng 1,506,360 1.14

16. Piong Teck Min 1,276,220 0.97

17. Ho Jonathan Lep Kee 1,210,000 0.92

18. JF Apex Nominees (Tempatan) Sdn Bhd Pledged Securities Account for Teo Siew Lai (MARGIN) 1,175,400 0.89

19. Piong Teck They 1,113,186 0.84

20. Alliancegroup Nominees (Tempatan) Sdn Bhd Pledged Securities Account for Shanmugam A/L Thoppalan (8069535) 890,000 0.67

21. Omar Bin Md Khir 768,060 0.58

22. Triple Boutique Sdn Bhd 763,000 0.58

23. Piong Teck Fong 681,560 0.52

24. Piong Teck Wah 627,220 0.47

25. Cheah Ming Loong 580,000 0.44

26. TA Nominees (Tempatan) Sdn Bhd Pledged Securities Account for Ting Leong Hua 523,900 0.40

27. Chin Kee Kwong 514,800 0.39

28. Chin Chee Min 512,600 0.39

29. Tan Lean Gin 512,600 0.39

30. Alliancegroup Nominees (Tempatan) Sdn Bhd Pledged Securities Account for Pharmex Sdn Bhd (8082917) 497,300 0.38

The page was intentionally left blank

FORM OF PROXY

No. Resolutions For Against1. To approve the payment of Directors’ fees for the financial year ended 30 June 2013. 2. To re-elect P’ng Beng Hoe who retires pursuant to Article 97 of the Company’s Articles of

Association. 3. To re-elect Azhar bin Hussain who retires pursuant to Article 97 of the Company’s Articles of

Association. 4. To re-appoint Crowe Horwath as Auditors of the Company until the conclusion of the next

Annual General Meeting and to authorise the Directors to fix their remuneration. 5. Special Business Ordinary Resolution - Authority to issue shares pursuant to Section 132D of the Companies Act, 1965.6. Special Business Ordinary Resolution - Proposed Renewal of the Existing Shareholders’ Mandate for Recurrent Related Party

Transactions of a Revenue or Trading Nature7. Special Business Ordinary Resolution - Proposed New Shareholders’ Mandate for Recurrent Related Party Transactions of a Revenue

or Trading Nature

No. Resolutions A To receive the Audited Financial Statements for the financial year ended 30 June 2013 together with the Reports of the Directors and

the Auditors thereon.

*I/We NRIC No./Company No.

of (full address)

being a Member/Members of KOTRA INDUSTRIES BERHAD, hereby appoint

NRIC No. of

or failing *him/her, NRIC No. of

or failing *him/her, the CHAIRMAN OF THE MEETING as *my/our proxy to vote for *me/us and on *my/our behalf at the Fourteenth Annual General Meeting of the Company to be held at the Auditorium Hall, Kotra Pharma Technology Centre, No. 2, Jalan TTC 12, Cheng Industrial Estate, 75250 Melaka on Wednesday, 27 November 2013 at 3.00 p.m. or at any adjournment thereof.

CDS ACCOUNT NO.

NUMBER OF SHARES HELD(Company No. 497632-P)

(Incorporated in Malaysia)

(i) In respect of deposited securities, only members whose names appear in the Record of Depositors on 20 November 2013 (“General Meeting Record of Depositors”) shall be eligible to attend, speak and vote at the Meeting.

(ii) A member entitled to attend and vote at the Meeting is entitled to appoint more than one proxy to attend and vote in his stead. A proxy may but does not need to be a member of the Company and the provisions of Section 149 (1)(b) of the Companies Act, 1965 need not be complied with. Where a member appoints more than one proxy, the appointments shall be invalid unless he specifies the proportions of his shareholdings to be represented by each proxy. A proxy appointed to attend and vote at the Meeting shall have the same rights as the member to speak at the Meeting. Notwithstanding this, a member entitled to attend and vote at the Meeting is entitled to appoint any person as his proxy to attend and vote instead of the member at the Meeting. There shall be no restriction as to the qualifications of the proxy.

(iii) In the case of a corporate member, the instrument appointing a proxy must be either under its common seal or under the hand of its officer or attorney duly authorised.

(iv) 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.

(v) The instrument appointing a proxy must be deposited at Securities Services (Holdings) Sdn. Bhd. of No. 60-1, Jalan Lagenda 5, Taman 1 Lagenda, 75400 Melaka not less than 48 hours before the time for holding the Meeting or at any adjournment thereof.

* Strike out whichever not applicable

Please indicate with an “X” in the space provided above how you wish your votes to be casted. If no specific direction as to voting is given, the proxy will vote or abstain from voting at his/her discretion.

As witness my/our hand(s) this day of 2013.

Signature of Member/Common SealNotes:

Then fold here

Fold this flap for sealing

1st fold here

KOTRA INDUSTRIES BERHAD(497632-P)

No. 60-1, Jalan Lagenda 5,Taman 1 Lagenda,

75400 MelakaMalaysia

affixstamp

Annual Report2013

Annual R

eport 2013 (497632-P)

KOTRA INDUSTRIES BERHAD (497632-P)

No. 1, 2 & 3, Jalan TTC 12,Cheng Industrial Estate, 75250 Melaka.

Tel : 606-336 2222 Fax : 606-336 6122

www.appeton.comwww.kotrapharma.com

Nielsen Retail Audit 2013

No.1 ChildVitamin C

Documents

Annual Report 2013 - KOTRA PHARMA · 4 Kotra Industries Berhad | Annual report 2013 corporate information Company Secretaries ... • Current member of the Board of Trustees on the