DAYA AnnualReport2012

DA

YA M

AT

ER

IALS

BE

RH

AD

(636357-W)

DAYA MATERIALS BERHAD (636357-W)

D5-1-10, Solaris DutamasNo. 1, Jalan Dutamas 1, 50480 Kuala LumpurTel: 03 6205 3170 Fax: 03 6205 3171

AN

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20

12

w w w . d m b . c o m . m y

annual report

2012

Contents

we deliverwe C.A.R.E. At DMB, we work hand in hand with our clients to deliver the best solutions any where, any time.

CommittedAccountableResoluteEthical

Corporate Information

Corporate Structure

Financial Information

The Team

Pro�le of Directors

Chairman’s Statement

Corporate Social Responsibility

Corporate Governance Statement

Statement on Risk Management and Internal Control

Audit Committee Report

02

04

07

08

10

14

23

25

33

35

39

134

135

138

140

143

Financial Statements

Directors’ Responsibilities Statement on Financial Statements

Analysis of Shareholdings

Additional Compliance Information

List of Properties 2012

Notice of Tenth Annual General Meeting

Form of Proxy

2 DAYA MATERIALS BERHAD (636357-W)

Committed

CORPORATE INFORMATION

BOARD OF DIRECTORS

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

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

Nathan Tham Jooi LoonGroup Managing Director

Fazrin Azwar bin Md. NorSenior Independent Non-Executive Director

Dato’ Sri Koh Kin Lip JPIndependent Non-Executive Director

Lim Soon FooIndependent Non-Executive Director

Ronnie Lim Hai LiangAlternate Director to Mr Lim Soon Foo

AUDIT COMMITTEE

ChairmanFazrin Azwar bin Md. Nor(Independent Non-Executive Director)

Members

Dato’ Azmil Khalili Bin Dato’ Khalid (Independent Non-Executive Director)

Dato’ Sri Koh Kin Lip JP(Independent Non-Executive Director)

COMPANY SECRETARIES

Chin Ngeok Mui (MAICSA 7003178)Chen Bee Ling (MAICSA 7046517)

REGISTERED OFFICE

Level 8, Symphony House Pusat Dagangan Dana 1Jalan PJU 1A/4647301 Petaling Jaya Selangor Darul EhsanTel : 03-7841 8000Fax : 03-7841 8199

HEAD/MANAGEMENT OFFICE

D5-1-10, Solaris DutamasNo.1, Jalan Dutamas 1 50480 Kuala LumpurMalaysiaTel : 03-6205 3170Fax : 03-6205 3171 Email : [email protected] Website : www.dmb.com.my

PRINCIPAL BANKERS

Hong Leong Bank Berhad AmIslamic Bank BerhadAmBank (M) Berhad Malayan Banking Berhad

AUDITORS

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

SHARE REGISTRAR

Symphony Share Registrars Sdn Bhd Level 6, Symphony HousePusat Dagangan Dana 1Jalan PJU 1A/4647301 Petaling Jaya Selangor Darul EhsanTel : 03-7841 8000Fax : 03-7841 8150/8151

STOCK EXCHANGE LISTING

Main Market of Bursa Malaysia Securities BerhadStock short name : DAYAStock Code : 0091

3ANNUAL REPORT 2012 3ANNUAL REPORT 2012

Committed


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

Subsidiary Companies

Date and Place of

Incorporation

Issued and Paid-up

Share Capital

Effective Equity

Interest Principal Activities

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

21-11-1994/ Malaysia

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

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


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

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


RM100,000 100.00% Investment holding.

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


RM1,008,000 67.00% Trading in petrochemicals products and investment holding.

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


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

6 DMB International Limited (“DINL”)

13-8-2008/ Hong Kong

HKD 3,000,000 100.00% Center for regional procurement and trading as well as international investments.

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

24-8-1988/ Malaysia

RM1,650,000 67.00% Ownership and hiring of forklifts, cranes and heavy machineries and provision of related manpower services in the onshore and offshore oil & gas industry.

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

3-7-2009/ Malaysia

RM100,000 100.00% Property investment holding.

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

2-3-1994/ Malaysia

RM5,000,000 67.00% Supplying of equipment and specialty chemicals for oil & gas process plants, a provider of installation and maintenance services for air-conditioning and ventilation system, a provider for automatic welding services for offshore pipeline installation, a provider for maintenance services for both onshore plants and offshore facilities, a provider for warehousing and forwarding agency.

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


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

11 Daya Offshore Construction Sdn Bhd (651398-P) (formerly known as SD Equipment Sdn. Bhd. ) (“DOCSB”)


RM10,000 100.00% Dealing in project management, installation and design engineering, fabrication, procurement and logistics, vessel operations, survey and diving operations.

12 Daya Petroleum Venture Sdn. Bhd. (736674-D) (formerly known as Metriwell Sdn. Bhd. ) (“DPV”)


RM350,000 51.00% Provision of drilling services, geological, petroleum engineering, subsea and deep -water support services and operations and maintenance services.

13 Daya Land & Development Sdn. Bhd. (524602-D) (“DLDSB”)


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

Held through subsidiaries

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


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

CORPORATE STRUCTURE

5ANNUAL REPORT 2012

Subsidiary Companies

Date and Place of

Incorporation

Issued and Paid-up Share

Capital

Effective Equity

Interest Principal Activities

Held through subsidiaries

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


RM100,000 67.00% Providing engineering and manpower services.

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


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

17 Daya FMM Sdn. Bhd. (418776-U) (“DFMM”)


RM350,004 100.00% General contractors and related services.

18 PT Daya Secadyme Indonesia (“PTDSI”)

14-01-2010/ Indonesia

USD100,000 67.00% Trading in petrochemicals products.

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


RM450,002 67.00% Ownership and hiring of forklifts, cranes and heavy machineries and provision of related manpower services in the onshore and offshore oil & gas industry.

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


RM500,000 100.00% Property development.

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


RM2.00 100.00% Investment holding.

22 Daya E&C Sdn. Bhd. (1024254-V ) (“DECSB”)

9-11-2012/ Malaysia

RM2.00 100.00% Provision of electrical, mechanical engineering and construction works.

23 Daya OCI (Labuan) Limited. (LL09292 ) (formerly Known As Daya OCI (Labuan) Berhad.) (“DOCIL”)


USD2.00 67.00% Shipping leasing business and other related services to the oil and gas industry.

24 Daya Maxflo Sdn Bhd (681714-M) (formerly known as Maxflo Energy Products Sdn Bhd)(“DMSB”)

21/02/2005/Malaysia

RM1,420,000 25.86% Providing instrumentation and pipelines products specifically for oil & gas, refining, petro-chemical and energy industry.

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


RM2.00 100.00% Property development.

Joint Venture Company

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

26-8-2010/ Hong Kong

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

27 Daya Sheffield Sdn. Bhd. (919845-U) (“DSFSB”)


RM100,000 34.17% Recruiting and providing specialised, qualified and professional personnel for the onshore and offshore oil and gas industries.

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

22-2-2011/ Malaysia

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

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

9-8-2011/ Malaysia

RM10,000 40.20% Investment holding.

30 Semangat Global Sdn. Bhd. (802160-P) (“SGSB”)

8-1-2008/ Malaysia

RM200,000 51.00% Construction and development of industrial, commercial and housing project and other related industry.

CORPORATE STRUCTURE(cont’d)


SCCSB100%

DOCSB100%

DPV51%

DMSB50.7% DPRO

67%

DPROS100%

DSSB67%

SEMSSB100%

PTDSI100%

DOCIL100%

DCSB60%*

DSFSB51%*

DOCI67%

DMTSB100%

DUSB100%

DINL100%

DNIL60%*MOSB

100%

DCLX100%

DNSB60%*

DCMT100%

DECSB100%

DFMM100%

DLDSB100%

USB100%

ZPSB100%

THDSB100%

SGSB51%*

REVENUE(RM’000)

‘08 ‘09 ‘10 ‘11 ‘12

22

4,3

45

18

8,2

44

17

4,2

23

28

1,7

46

27

6,9

29

PAT(RM’000)

‘08 ‘09 ‘10 ‘11 ‘12

12

,14

8

13

,66

4 16

,96

6

17

,44

3

20

,11

6

SHAREHOLDERS' FUNDS(RM’000)

‘08 ‘09 ‘10 ‘11 ‘12

11

3,3

93

14

3,4

81

17

7,1

56

21

0,6

28

23

0,9

14

TOTAL ASSETS(RM’000)

‘08 ‘09 ‘10 ‘11 ‘12

20

4,2

73

22

1,9

20 2

92

,05

0

37

8,1

15

39

9,2

17

EBITDA(RM’000)

‘08 ‘09 ‘10 ‘11 ‘12

19

,88

3

24

,03

2 29

,20

6

30

,85

3 35

,70

4

PBT(RM’000)

‘08 ‘09 ‘10 ‘11 ‘12

18

,28

4

20

,37

7

22

,73

3

23

,76

0 28

,38

7

* Joint Venture Company

DPSB100%

MOSB100%

DCMT

DINL

MOSBDPRO67%

DSSB

DOCSB100%

DPV51%

DPRO

Polymer

Oil

& G

asTech

nical Services

DHSB100%

CORPORATE STRUCTUREcont’d


7ANNUAL REPORT 2012

SCCSB100%

DOCSB100%

DPV51%

DMSB50.7% DPRO

67%

DPROS100%

DSSB67%

SEMSSB100%

PTDSI100%

DOCIL100%

DCSB60%*

DSFSB51%*

DOCI67%

DMTSB100%

DUSB100%

DINL100%

DNIL60%*MOSB

100%

DCLX100%

DNSB60%*

DCMT100%

DECSB100%

DFMM100%

DLDSB100%

USB100%

ZPSB100%

THDSB100%

SGSB51%*

REVENUE(RM’000)

‘08 ‘09 ‘10 ‘11 ‘12

22

4,3

45

18

8,2

44

17

4,2

23

28

1,7

46

27

6,9

29

PAT(RM’000)

‘08 ‘09 ‘10 ‘11 ‘12

12

,14

8

13

,66

4 16

,96

6

17

,44

3

20

,11

6

SHAREHOLDERS' FUNDS(RM’000)

‘08 ‘09 ‘10 ‘11 ‘12

11

3,3

93

14

3,4

81

17

7,1

56

21

0,6

28

23

0,9

14

TOTAL ASSETS(RM’000)

‘08 ‘09 ‘10 ‘11 ‘12

20

4,2

73

22

1,9

20 2

92

,05

0

37

8,1

15

39

9,2

17

EBITDA(RM’000)

‘08 ‘09 ‘10 ‘11 ‘12

19

,88

3

24

,03

2 29

,20

6

30

,85

3 35

,70

4PBT(RM’000)

‘08 ‘09 ‘10 ‘11 ‘12

18

,28

4

20

,37

7

22

,73

3

23

,76

0 28

,38

7

* Joint Venture Company

DPSB100%

Polymer

Oil

& G

as

Techn

ical Services

DHSB100%

FINANCIAL INFORMATION

7ANNUAL REPORT 2012

2008 2009 2010 2011 2012

RM’000 RM’000 RM’000 RM’000 RM’000

Revenue 224,345 188,244 174,223 281,746 276,929

EBITDA 19,883 24,032 29,206 30,853 35,704

PBT 18,284 20,377 22,733 23,760 28,387

PAT 12,148 13,664 16,966 17,443 20,116

Total Equity 113,393 143,481 177,156 210,628 230,914

Total Assets 204,273 221,920 292,050 378,115 399,217


THE TEAM

From left to right:Dato’ Azmil Khalili Bin Dato’ Khalid, Ronnie Lim Hai Liang, Fazrin Azwar bin Md. Nor, Lim Soon Foo,

Dato’ Sri Koh Kin Lip JP, Dato’ Mazlin Bin Md.Junid, Nathan Tham Jooi Loon


9ANNUAL REPORT 2012

THE TEAM

From left to right:Dato’ Azmil Khalili Bin Dato’ Khalid, Ronnie Lim Hai Liang, Fazrin Azwar bin Md. Nor, Lim Soon Foo,

Dato’ Sri Koh Kin Lip JP, Dato’ Mazlin Bin Md.Junid, Nathan Tham Jooi Loon

9ANNUAL REPORT 2012


Dato’ Azmil Khalili bin Dato’ KhalidMalaysian, aged 52

He is an Independent Non-Executive Chairman of DMB. He was appointed to the Board on 19 September 2007.

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

Dato’ Azmil is currently the President & Chief Executive O�cer of AlloyMtd, following the rationalisation exercise between MTD Capital Bhd and its holding company, Alloy Consolidated Sdn Bhd. He concurrently holds the same position in the listed subsidiary of MTD Capital Bhd namely MTD ACPI Engineering Berhad and is also the Chairman of MTD Walkers PLC, a foreign subsidiary of MTD Capital Bhd listed on the Colombo Stock Exchange in the Republic of Sri Lanka. Dato’ Azmil holds directorships in other public companies namely, MTD Infraperdana Berhad and Metacorp Berhad, both are subsidiaries of MTD Capital Bhd; and ANIH Berhad, a toll concession company. Dato’ Azmil is also a director of Environment Idaman Sdn. Bhd., a solid waste concession company; and a Trustee of the Perdana Leadership Foundation. Dato’ Azmil also sits on the board of several private limited companies.

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

Dato’ Azmil attended �ve out of seven Board meetings held during the �nancial year ended 31 December 2012.

Dato’ Mazlin bin Md JunidMalaysian, aged 51

He is DMB’s Executive Vice Chairman, President & Group Chief Executive O�cer. He was appointed to the Board on 16 August 2007.

Dato’ Mazlin holds a Bachelor of Science in Mechanical Engineering from Brighton Polytechnic, Sussex, England and a Master in Business Administration from Cran�eld University, England. He has extensive experience in corporate management, business and �nance after serving Sime Darby Berhad and Aspac Executive Search Sdn. Bhd. as the Group Manager and the Managing Director respectively.

Dato’ Mazlin was formerly an Independent, Non-Executive Director of Sapura Industrial Berhad and Sapura Technology Berhad. He was also formerly an Independent Non-Executive Director and Chairman of the Audit Committee of MTD Infraperdana Berhad. He is also a director of several private limited companies which he owns.

Dato’ Mazlin attended all seven Board meetings held during the �nancial year ended 31 December 2012.

Nathan Tham Jooi LoonMalaysian, aged 47

He is DMB’s Group Managing Director. He was appointed to the Board on 30 May 2005.

Mr. Tham joined DPSB in 2003 as a Director. He graduated from McGill University in Montreal, Canada in 1988 with a Master of Business Administration specialising in corporate �nance. He is also a quali�ed Chartered Financial Analyst. He started his career as a credit analyst with Chase Manhattan Bank in Kuala Lumpur in 1989. In 1995, he joined UBS and later became its Executive Director responsible for Malaysian investment banking and Asia-Paci�c Mergers and Acquisitions practices. In 2003, Mr. Tham was appointed as a Director of Tradewinds Corporation Berhad and PIHP (Selangor) Berhad, both posts he held until 2005. Presently, he is a Director of several private companies in Malaysia, Hong Kong and British Virgin Islands.

Mr. Tham is the Chairman of the Risk Management Committee and a member of the Executive Committee (”EXCO”) of the Company.

Mr. Tham attended all seven Board meetings held during the �nancial year ended 31 December 2012.

Fazrin Azwar Bin Md NorMalaysian, aged 46

He is the Senior Independent Non-Executive Director of DMB. He was appointed to the Board on 30 May 2005.

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

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

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

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

En. Fazrin is the Chairman of the Audit Committee and a member of the Nomination and Remuneration Committees of the Company.

En. Fazrin attended all seven Board meetings held during the �nancial year ended 31 December 2012.

PROFILE OF DIRECTORS

11ANNUAL REPORT 2012

Dato’ Azmil Khalili bin Dato’ KhalidMalaysian, aged 52

He is an Independent Non-Executive Chairman of DMB. He was appointed to the Board on 19 September 2007.

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

Dato’ Azmil is currently the President & Chief Executive O�cer of AlloyMtd, following the rationalisation exercise between MTD Capital Bhd and its holding company, Alloy Consolidated Sdn Bhd. He concurrently holds the same position in the listed subsidiary of MTD Capital Bhd namely MTD ACPI Engineering Berhad and is also the Chairman of MTD Walkers PLC, a foreign subsidiary of MTD Capital Bhd listed on the Colombo Stock Exchange in the Republic of Sri Lanka. Dato’ Azmil holds directorships in other public companies namely, MTD Infraperdana Berhad and Metacorp Berhad, both are subsidiaries of MTD Capital Bhd; and ANIH Berhad, a toll concession company. Dato’ Azmil is also a director of Environment Idaman Sdn. Bhd., a solid waste concession company; and a Trustee of the Perdana Leadership Foundation. Dato’ Azmil also sits on the board of several private limited companies.

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

Dato’ Azmil attended �ve out of seven Board meetings held during the �nancial year ended 31 December 2012.

Dato’ Mazlin bin Md JunidMalaysian, aged 51

He is DMB’s Executive Vice Chairman, President & Group Chief Executive O�cer. He was appointed to the Board on 16 August 2007.

Dato’ Mazlin holds a Bachelor of Science in Mechanical Engineering from Brighton Polytechnic, Sussex, England and a Master in Business Administration from Cran�eld University, England. He has extensive experience in corporate management, business and �nance after serving Sime Darby Berhad and Aspac Executive Search Sdn. Bhd. as the Group Manager and the Managing Director respectively.

Dato’ Mazlin was formerly an Independent, Non-Executive Director of Sapura Industrial Berhad and Sapura Technology Berhad. He was also formerly an Independent Non-Executive Director and Chairman of the Audit Committee of MTD Infraperdana Berhad. He is also a director of several private limited companies which he owns.

Dato’ Mazlin attended all seven Board meetings held during the �nancial year ended 31 December 2012.

Nathan Tham Jooi LoonMalaysian, aged 47

He is DMB’s Group Managing Director. He was appointed to the Board on 30 May 2005.

Mr. Tham joined DPSB in 2003 as a Director. He graduated from McGill University in Montreal, Canada in 1988 with a Master of Business Administration specialising in corporate �nance. He is also a quali�ed Chartered Financial Analyst. He started his career as a credit analyst with Chase Manhattan Bank in Kuala Lumpur in 1989. In 1995, he joined UBS and later became its Executive Director responsible for Malaysian investment banking and Asia-Paci�c Mergers and Acquisitions practices. In 2003, Mr. Tham was appointed as a Director of Tradewinds Corporation Berhad and PIHP (Selangor) Berhad, both posts he held until 2005. Presently, he is a Director of several private companies in Malaysia, Hong Kong and British Virgin Islands.

Mr. Tham is the Chairman of the Risk Management Committee and a member of the Executive Committee (”EXCO”) of the Company.

Mr. Tham attended all seven Board meetings held during the �nancial year ended 31 December 2012.

Fazrin Azwar Bin Md NorMalaysian, aged 46

He is the Senior Independent Non-Executive Director of DMB. He was appointed to the Board on 30 May 2005.

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

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

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

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

En. Fazrin is the Chairman of the Audit Committee and a member of the Nomination and Remuneration Committees of the Company.

En. Fazrin attended all seven Board meetings held during the �nancial year ended 31 December 2012.

PROFILE OF DIRECTORS(cont’d)


Dato’ Sri Koh Kin Lip JPMalaysian, aged 64

He is an Independent Non-Executive Director of DMB. He was appointed to the Board on 22 December 2008.

Dato’ Sri Koh graduated from Plymouth Polytechnic, UK with a Higher National Diploma in Business Studies and a Council’s Diploma in Management Studies. He began his career in Standard Chartered Bank, Sandakan in 1977 as a trainee assistant. In 1978, he joined his family business and was principally involved in administrative and �nancial matters. In 1985, he assumed the role as a Chief Executive O�cer of the family business. In 1987, he was pivotal and instrumental in the formation of Rickoh Holdings Sdn. Bhd., the �agship company of the family business which involves in activities ranging from properties investments, properties letting and property development, securities investments, oil palm plantations, sea and land transportation for crude palm oil and palm kernel, IT, hotel business, trading in golf equipment and accessories, and quarry operations.

Presently, Dato’ Sri Koh is also a Director of NPC Resources Berhad and Cocoaland Holdings Berhad. Dato’ Sri Koh was formerly a Director of Malaysian AE Models Holdings Berhad. Dato’ Sri Koh is the Chairman of the Remuneration Committee and a member of the Audit Committee and Nomination Committee of the Company.

Dato’ Sri Koh attended six out of seven Board meetings held during the �nancial year ended 31 December 2012.

Lim Soon FooMalaysian, aged 57

He is an Independent Non-Executive Director of DMB. He was appointed to the Board on 15 August 2011.

Mr. Lim was admitted as member of The Chartered Institute of Shipbrokers, London since 1979 and currently serving as Chairman and Principal Advisor to Wajah Nichiei Sdn. Bhd., Optic Marine Services International Limited (Hongkong) and Optic Marine Engineering International Limited, providing highly specialized services in the optic �bre submarine cable industry which extend into many countries in Asia Paci�c region. The Companies also worked alongside many Global Partners in the optic �bre submarine industry. Mr. Lim also sits in the board of several other private companies involved in plantation, logging and real estates.

Mr. Lim is a member of the Remuneration Committee of the Company.

Mr. Lim is the father of Mr. Ronnie Lim Hai Liang, who acts as his Alternate and a shareholder of the Company.

Mr. Lim attended �ve out of seven Board meetings held during the �nancial year ended 31 December 2012.

Ronnie Lim Hai LiangMalaysian, aged 32

He is an Alternate Director to Mr. Lim Soon Foo. He was appointed to the Board on 15 August 2011 as Alternate Director to Mr. Lim Soon Foo.

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

Mr. Ronnie Lim is the son of Mr. Lim Soon Foo, an Independent Non-Executive Director and a substantial shareholder of the Company.

Mr. Ronnie Lim attended two out of seven Board meetings held during the �nancial year ended 31 December 2012.

Family Relationship and Major Shareholders

Save as disclosed, none of the Directors of the Company have any family relationship with any director and/or major shareholders of the Company.

Con�ict of Interest

None of the Directors of the Company has entered into any transaction, whether directly or indirectly, which has a con�ict of interest with the Company.

Conviction of O�ences

All the Directors have not been convicted of any o�ence within the past ten (10) years other than tra�c o�ences, if any.



Dato’ Sri Koh Kin Lip JPMalaysian, aged 64

He is an Independent Non-Executive Director of DMB. He was appointed to the Board on 22 December 2008.

Dato’ Sri Koh graduated from Plymouth Polytechnic, UK with a Higher National Diploma in Business Studies and a Council’s Diploma in Management Studies. He began his career in Standard Chartered Bank, Sandakan in 1977 as a trainee assistant. In 1978, he joined his family business and was principally involved in administrative and �nancial matters. In 1985, he assumed the role as a Chief Executive O�cer of the family business. In 1987, he was pivotal and instrumental in the formation of Rickoh Holdings Sdn. Bhd., the �agship company of the family business which involves in activities ranging from properties investments, properties letting and property development, securities investments, oil palm plantations, sea and land transportation for crude palm oil and palm kernel, IT, hotel business, trading in golf equipment and accessories, and quarry operations.

Presently, Dato’ Sri Koh is also a Director of NPC Resources Berhad and Cocoaland Holdings Berhad. Dato’ Sri Koh was formerly a Director of Malaysian AE Models Holdings Berhad. Dato’ Sri Koh is the Chairman of the Remuneration Committee and a member of the Audit Committee and Nomination Committee of the Company.

Dato’ Sri Koh attended six out of seven Board meetings held during the �nancial year ended 31 December 2012.

Lim Soon FooMalaysian, aged 57

He is an Independent Non-Executive Director of DMB. He was appointed to the Board on 15 August 2011.

Mr. Lim was admitted as member of The Chartered Institute of Shipbrokers, London since 1979 and currently serving as Chairman and Principal Advisor to Wajah Nichiei Sdn. Bhd., Optic Marine Services International Limited (Hongkong) and Optic Marine Engineering International Limited, providing highly specialized services in the optic �bre submarine cable industry which extend into many countries in Asia Paci�c region. The Companies also worked alongside many Global Partners in the optic �bre submarine industry. Mr. Lim also sits in the board of several other private companies involved in plantation, logging and real estates.

Mr. Lim is a member of the Remuneration Committee of the Company.

Mr. Lim is the father of Mr. Ronnie Lim Hai Liang, who acts as his Alternate and a shareholder of the Company.

Mr. Lim attended �ve out of seven Board meetings held during the �nancial year ended 31 December 2012.

Ronnie Lim Hai LiangMalaysian, aged 32

He is an Alternate Director to Mr. Lim Soon Foo. He was appointed to the Board on 15 August 2011 as Alternate Director to Mr. Lim Soon Foo.

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

Mr. Ronnie Lim is the son of Mr. Lim Soon Foo, an Independent Non-Executive Director and a substantial shareholder of the Company.

Mr. Ronnie Lim attended two out of seven Board meetings held during the �nancial year ended 31 December 2012.

Family Relationship and Major Shareholders

Save as disclosed, none of the Directors of the Company have any family relationship with any director and/or major shareholders of the Company.

Con�ict of Interest

None of the Directors of the Company has entered into any transaction, whether directly or indirectly, which has a con�ict of interest with the Company.

Conviction of O�ences

All the Directors have not been convicted of any o�ence within the past ten (10) years other than tra�c o�ences, if any.



CHAIRMAN’S STATEMENT


Dear Shareholders,

2012 was a successful year for our Group. Despite various challenges in some of our businesses, our core operations collectively achieved a solid performance.


CHAIRMAN’S STATEMENT


CHAIRMAN’S STATEMENT(cont’d)

We generated record pretax profi ts of RM28.4 million, representing a 19% increase from 2011, on the back of RM276.9 million in sales. Oil & Gas (“O&G”) continued to be the main earnings driver, accounting for almost 63% of our group profi ts. As O&G takes on ever greater signifi cance,the strategy we set out a decade ago to venture into the business has been all but validated. Then, as the market leader in domestic specialised polymer sector, venturing into a new area such as O&G was neither easy nor clear-cut. As it turned out, that was the most epiphanous decision we had ever made.

Fast forward to now – and we have another milestone under our belt. 2012 was the seventh consecutive year in which we have posted unbroken earnings growth. Since our listing in 2005, we have achieved average compound growth rate of 38% in pretax earnings per annum.

Looking ahead, we are quietly confi dent of yet another year of solid growth. Intensive marketing eff orts have swelled our order book steadily over the past 12 months to almost RM1.5 billion. Barring any unforeseen circumstances, most of our order book will be completed within the next three years. If indeed all of these projects are executed smoothly and on schedule, 2013 will no doubt see the further crystallisation of our upstream strategy. To ensure that this happens, we have signifi cantly built up our senior management ranks as well as project execution teams. On behalf of the Board, I would like to take this opportunity to warmly welcome Shahul Hamid, Mark Midgley, Jay Dorfman, Gan Boon Cheong, James Klopper, Patrick Gossett, Alan Broxson and all of our new colleagues to the fast-expanding Daya family.

REVIEW OF RESULTS

For the fi nancial year ended December 2012, our Group achieved consolidated sales of RM276.9 million and profi ts before tax for FY2012 of RM28.4 million. Our fully diluted net earnings per share stood at 1.63 sen againts 1.45 sen in 2011, representing a growth of 12.4%.

SEGMENTAL ANALYSIS

Allow me to give you a more detailed evaluation of the operating performance of our three business divisions. To facilitate comparisons, all profi tability and cash fl ow fi gures provided in this section are before management fees and corporate guarantee fees paid by the Divisions to the holding company.


Accountable



OIL & GAS DIVISION

After a robust 2011 in which our O&G sales expanded 97%, 2012 was another incrementally successful year for us. While our topline was fl at, O&G PBT and PAT grew comfortably by 22% and 15% respectively in 2012. We achieved a good balance of growth in both our downstream and upstream businesses. On the downstream side, sale of chemicals and services remained strong as we continued to cement our market positions. On the upstream sector, the successful fi nalisation of several off shore projects contributed to 88% and 51% increase in upstream revenue and profi tability respectively.

The success of our upstream business has fortifi ed our resolve to further invest and expand our capabilities, particularly in the areas of off shore construction, upstream production and well services. Since the middle of last year, we had set up two new entities to focus solely on such upstream opportunities. The fi rst was Daya Petroleum Ventures Sdn Bhd (“DPV”). DPV’s main aim is to secure and develop marginal fi elds under Petronas’ Risk Sharing Contract (“RSC”) framework and provide core upstream oilfi eld services. We partnered with Hydra Energy Private Limited of Australia in May 2012 to bid for a cluster of gas fi elds (a tender which was subsequently deferred) from Petronas. We have again been invited recently to jointly tender for new marginal fi elds in the latest round of RSC tenders. Through DPV, we also recently acquired a 50.7% stake in Daya Maxfl o Sdn. Bhd., a niche but fast expanding player involving in well intervention and related upstream services.

The second entity is Daya Off shore Construction Sdn Bhd (“DOC”). This unit is designed to carry out specialised subsea engineering, construction, installation, inspection, maintenance and repair activities. DOC operates a fl eet of vessels, remotely operated vehicles and modulated diving systems, complemented by a fully-integrated in-house engineering and project management capabilities. Already we have secured a sizeable subsea installation contract which forms an integral part of the Tapis Enhanced Oil Recovery & Rejuvenation project off the coast of Terengganu and is now in the midst of implementing it. This project is slated for completion by the 4th quarter of 2013.

Overall, our tender book in the off shore installation & construction business now stands at over RM800 million, and we have good reasons to believe that some of these tenders will be converted into actual order book and realisable revenue streams over the next few months.

Exciting prospects aside, I would also like to remind our shareholders that the road ahead in off shore construction business remains a daunting one. Subsea operations are invariably complex, with the risks involved typically several times larger than those in the downstream space which we have grown accustomed to. To manage these risks, we have beefed up our off shore resources considerably in scale, scope and headcount. We have also assembled a select group of proven international players to further strengthen our core engineering competencies. The additional of two new and technologically advance off shore subsea construction vessels, namely Siem Daya 1 and Bourbon Evolution 380on term charters has signifi cantly enhanced our marine capabilities. To drive growth over the next 3 years, more resources will no doubt be committed in this area to enable us to realize our regional and global upstream aspirations.


Accountable



Resolute



TECHNICAL SERVICES DIVISION

Our Technical Services (“TS”) Division, which consists of engineering & construction as well as recycling & tank cleaning business, had another stellar year in 2012. PBT and PAT increased 50% and 46% respectively in 2012 despite a marginal decline in sales. Our profi t margin expanded to a healthy 9% as compared to 6% during the previous fi nancial period. Another key performance metric is the build up in our order book which more than quadrupled to almost RM900 million.

As we take on larger and longer gestation projects, our ability to control costs, manage our subcontractors, hedge price risks, and select quality clients becomes even more important. Our strategy in this business has never been to grow sales alone. Our main focus is about choosing the right clients, maintaining comfortable project margins while minimizing our risk exposure.

While engineering & construction had performed strongly, our waste oil recycling unit, Daya Clarimax Sdn Bhd, had suff ered from an extended delay in licensing and implementation. In fact, it only came on stream towards the 4th quarter of 2012. We are now ramping up its operations and 2013 will see its fi rst full year of commercial operations. Ultimately, the key to the success of this business will be the amount of feedstock that we can secure to fully utilise our plant capacity.

There have been questions about our decision to retain TS, in particular construction & engineering, in our portfolio as our core business is emphatically O&G. The truth is we happen to like this business despite its relatively thin margin and cyclicality. Our rationale is a simple one. It is a business that we do not have to commit new capital even as we take on bigger and bigger projects. The scalability of this business and the inherent quality of most of our multinational clients enable us to earn proportionately larger income stream with practically the same level of resource base. So long as we are able to manage and mitigate most of the risks I highlighted earlier, the income earned from this business can be readily redeployed into our core O&G business.Having said that, when the time is right and the opportunity presents itself, we are certainly open to explore other strategic initiatives such as a spinoff via public listing or a trade sale.


Resolute



Ethical

Segmental Revenue2011

Segmental EBITDA2011

Segmental PBT2011

Segmental PAT2011



Segmental PBT2012

Segmental PAT2012

OG38%

SP7%

TS55%

OG62%

SP0%

TS38%

OG64%

SP5%

TS31%

OG64%

SP5%

TS31%

OG65%

SP1%

TS35%

OG63%

SP-1%

TS37%

OG36%

SP7%

TS57%

OG66%

SP6%

TS28%



SPECIALIZED POLYMER DIVISION

If you have been following our business, you will probably notice that Specialized Polymer (“SP”) has underperformed over the past few years. Unfortunately 2012 was no diff erent. The reality is that the domestic cable polymer market in currently under a consolidation phase characterized by ultra thin margins and severe price competition. This diffi cult transformation is exacerbated by the infl ux of cheap imports. It is vital that we fi gure out a structural solution and explore ways where we can grow our structural position. The only consolation for us, if at all, is that SP is no longer our core business. Since our listing in 2005, our focus has largely shifted away from polymer into O&G. In 2012, SP accounted for only 7% of group sales (compared to over 30% some 3 years ago) and contributed virtually nothing to profi tability. Notwithstanding this, our aim is to continue to explore ways to restore this business into the cash cow that it once was and spin it off .

Segmental Contribution

Revenue EBITDA PBT PAT

2012 OG 104,519 38% 28,759 65% 24,463 63% 18,748 62%

TS 152,843 55% 15,496 35% 14,389 37% 11,658 38%

SP 19,561 7% 323 1% (245) -1% (53) 0%

276,923 100% 44,577 100% 38,606 100% 30,353 100%

2011 OG 101,615 36% 24,064 66% 20,090 64% 16,288 64%

TS 160,782 57% 10,369 28% 9,607 31% 7,983 31%

SP 19,310 7% 2,279 6% 1,673 5% 1,358 5%

281,707 100% 36,712 100% 31,370 100% 25,629 100%


Ethical



Segmental PBT2011

Segmental PAT2011



Segmental PBT2012

Segmental PAT2012

OG38%

SP7%

TS55%

OG62%

SP0%

TS38%

OG64%

SP5%

TS31%

OG64%

SP5%

TS31%

OG65%

SP1%

TS35%

OG63%

SP-1%

TS37%

OG36%

SP7%

TS57%

OG66%

SP6%

TS28%




LIQUIDITY & FINANCING

Strong fi nancial platform is the key to future growth. We monitor our fi nancial requirement on a short to medium term basis and seek refi nancing as and when appropriate. As at the end of 2012, the Group’s borrowings amounted to RM81.3 million, consisting of RM40.3 million short-term loans and trade lines, and RM40.9 million in long-term fi nancing. The Group’s net debt to total shareholders’ funds stood at 6.1% as compared to 1.8% in 2011. With cash and cash equivalent of RM66.4 million as well as signifi cant untapped debt capability, the Group’s liquidity position remains strong. We would like to caution however that in the coming years as the projects we take on grow in scale and size, the amount of borrowings, especially those of the short-term nature, will invariably increase. Our considerable and expanding order book necessitates a signifi cant ramp-up in working capital facilities, revolving credit and trade lines during the project execution phase. Barring unforeseen circumstances, these borrowings will be naturally and progressively extinguished during the completion phase.

SHARE BUYBACK

In line with our share buyback strategy announced in the last Annual Report, we bought back a total of 13,888,600 shares from the market at an average price of 19.7 sen in 2012. None of these treasury shares have been cancelled or resold. As at 31 December 2012, we held a total of 15,675,700 shares as treasury shares. Given our growth prospects, we will continue to execute selective share buybacks at attractive price levels, balancing our desire to enhance the Group’s long-term EPS and ongoing liquidity requirements.

DIVIDEND

In line with our Group’s dividend policy, the Board has proposed a single tier fi nal dividend of 2.5% for the fi nancial year ended 31 December 2012 of 0.25 sen per share. This dividend will be paid in August 2013.

FUTURE PROSPECTS

The global economic landscape will be ever-changing with new challenges abound in the coming year. Malaysia’s economic performance will inevitably be shaped by external factors. As a whole, while the European situation remains a big concern, we expect positive economic growth both domestically and globally as a whole.

Achieving a fi ne balance between operational growth and fi nancial stability is always central to our strategy. Signifi cant eff orts have been made in our O&G business to ensure that we are well-positioned to capitalize on the opportunities arising from market. Petronas’ 5-year capital expenditure program of RM300 billion presents exciting opportunities for us. Our strategic expansion in the off shore construction and well services, among others, is designed to leapfrog us into the forefront of this arena.

2013 is shaping up to be “a year of execution” for us. If all our projects were to be clinically executed, signifi cant growth in business volume and profi tability can be realized. We are indeed on the precipice of a cataclysmic transformation. Time will tell.

As always, we will be vigilant in our pursuit for growth.



CORPORATE SOCIAL RESPONSIBILITY

“Social responsibility is neither a fad nor an optional extra. The interest in it is refl ective of a deeper change in the relationship between companies and their stakeholders, including consumers. Faith in the benefi ts of profi ts to consumers has halved since the Seventies, as a viable basics of a relationship; that faith has been replace by a desire to see companies acting as active and responsible citizens. Healthy businesses require a healthy community and should be contributing to its creation and maintenance”

- Stewart Lewis, Measuring Corporate Reputation, 1999

In ensuring the company’s principle in delivering CARE, the DMB group of companies continued its eff orts towards enriching the local communities. The year in review saw the various CSR activities within the DMB group.

On 18 November 2012, the employees of DCMT led by their Chief Executive Offi cer participated in the Penang Bridge Marathon in an eff ort to raise funds for their CSR program. Together with the contributions from their business associates, they managed to raise RM24,480. Cash totaling to RM22,000 plus the balance of the which were utilized to purchase necessities and essential items, were thereafter channeled to four deserving homes. The team in DCMT together with the business associates spent over two days on the 30th& 31st January 2013, visiting these charitable organizations to send the donations and also to spend some time with them.

The four organizations which were recipients of their contributions are:

(i) Charis Hospice, a charitable organization which provides free medical support home care services to patients with terminal and advance illness, and also free loan of medical equipment.

(ii) Persatuan Kebajikan Kanak-Kanak Cacat Yee Ran Jing Sheh, a center which houses about more than 60 handicapped residents aged between 5 to 40 years of age.



(iii) St. Joseph’s Orphanage, which has about 34 children aged between 5 to 17 years of age. This home provides children who reside in and also children who are non-residents who are of poor social economic background, with vocational training so that they can be independent in the future.

(iv) Persatuan Kebajikan Anak-Anak Islam, an orphanage that houses children aged between 4 to 17 years of age.

Circa December 2012, DPRO continued their CSR towards Pusat Pemulihan Dalam Komuniti (PDK) Kompleks Penyayang Kemaman for the second year. Activities carried out this time around were:

(i) renovation works in the classrooms (ii) repair works replacing the doors in the hall and to replace 2 signage signs(iii) contribution of sports equipments and a PA system

These contributions were channeled to ensure that the students are not confi ned to the classroom but are also active in out of classroom activities. It is hoped that with the betterment of facilities in the center, the occupants of the center feel a sense of belonging and are being appreciated.

CORPORATE SOCIAL RESPONSIBILITY(cont’d)


CORPORATE GOVERNANCE STATEMENT

The Board of Directors of Daya Materials Berhad (the “Board”) is committed towards achieving excellence in corporate governance and acknowledges that the prime responsibility for good corporate governance lies with the Board. The Board, in carrying out their roles and responsibilities, is fi rmly committed to ensuring that the highest standards of corporate governance and corporate conduct are adhered to, in order that the Group achieves strong fi nancial performance for each fi nancial year, and more importantly delivers long-term and sustainable value to shareholders.

The Malaysian Code on Corporate Governance 2012 (“the Code”) sets out principles and recommendations on structures and processes that companies should adopt in making good corporate governance an integral part of their business dealings and culture. The Board reaffi rms its support to the Code and believes that good corporate governance is fundamental in achieving the Group’s objectives. To ensure that the best interests of shareholders and other stakeholders are eff ectively served, the Board continues to play an active role in improving governance practice and constantly monitors the development in corporate governance including in the Code.

The Board is pleased to report to the shareholders, the manner in which the Group has applied and complied with the Principles and Recommendations of the Code for the fi nancial year ended 31 December 2012.

1. DIRECTORS

1.1 Board Composition and Balance

As at the date of this statement, the Board consists of six (6) members, comprising two (2) Executive Directors and four (4) Independent Non-Executive Directors with the appropriate mix of skills and experience. With this Board composition, the Company has thus complied with paragraph 15.02(1) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad (“Bursa Securities”) which requires that at least two (2) Directors or one-third (1/3) of the Board of Directors, whichever is the higher, to be Independent Directors.

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

In maintaining the independence of the Independent Directors of the Company, annual assessment is performed in order to mitigate risks arising from any possible confl ict of interest situations or undue infl uence aff ecting their independence. In line with the recommendations of the Code, the tenure of an Independent Director of the Company should not exceed a cumulative term of nine (9) years. As at the date of this statement, none of the Independent Directors of the Company have exceeded their nine (9)-year term.

The roles of the Chairman, the Vice Chairman and the Managing Director are separate with clear distinction of responsibilities between them to ensure balance of power and authority. The Chairman, who is a Non-Executive Director, is primarily responsible for the orderly conduct and working of the Board whilst the Vice Chairman and the Managing Director are responsible for the running of the business and operations and implementation of the Board’s policies and decisions.

The brief profi les of each Board member are set out under Profi le of Directors on pages 10 to 13 of this Annual Report.

1.2 Duties and Responsibilities

The Board is overall responsible for the corporate governance structure of the Group. Its primary responsibilities pursuant to the recommendations of the Code include:

• review and adopt a strategic plan for the Group;• oversee the conduct of the Group’s business to evaluate whether the business is being properly

managed;• identify principal risk and ensure the implementation of appropriate systems to manage these risks;• implement succession planning, including appointing, training, fi xing the compensation of and where

appropriate, replacing senior management;• develop and implement an investor relations program or shareholders communications policy for the

Group; and• review the adequacy and the integrity of the Group’s internal control systems and management

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


CORPORATE GOVERNANCE STATEMENTcont’d

1. DIRECTORS (cont’d)

1.2 Duties and Responsibilities (cont’d)

The Board has delegated certain responsibilities to the Board Committees, such as the Audit Committee, Nomination Committee and Remuneration Committee, which operate within clearly defined terms of reference. These Board Committees have the authority to examine specific issues and forward their recommendations to the Board. At each Board meeting, minutes of the Board Committees meetings are presented to the Board. The respective Chairman of the Board Committees will also report to the Board on key issues deliberated by the Board Committees. The final decisions on all matters, however, rest with the Board.

To ensure the effective discharge of its function and responsibilities, the Board also delegates some of the Board’s authorities to the Executive Committee (“EXCO”), which represents the Management. The EXCO is entrusted with the responsibility of carrying out tasks which are assigned by the Board. The EXCO acts on behalf of the Board on matters concerning administrations, operations, capital expenditure, debt approvals and investments. It meets at regular intervals to review and decide on administrative and operational matters, budgets and investment strategies of the Group.

The Board Charter is currently being drafted and will be posted on the Company’s website after the Board’s approval.

1.3 Supply of Information

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

The Chairman, with the assistance of the Management, undertakes primary responsibility for organising information necessary for the Board to deal with the agenda and in ensuring all Directors have full and timely access to the information relevant to the matters that will be deliberated at the Board meeting. Certain reports, such as those relating to the Company’s financial results for statutory announcements, are submitted to the Audit Committee for their review and recommendation to the Board for approval thereafter.

All proceedings from the Board meetings are recorded by way of minutes. The minutes are then confirmed by the Board and signed as correct records of the proceedings thereat by the Chairman of the meeting.

All the Directors have access to the advice and services of the Company Secretary on procedural and regulatory requirements. If required, the Directors may seek independent external professional advice at the Group’s expense, in the furtherance of their duties.

During the financial year ended 31 December 2012, the Board met seven (7) times where it deliberated on and considered matters relating to the Group’s financial performance, significant investments, change to management and control structure of the Group, corporate development, strategic issues and business plan. The attendance of each Director at Board meetings held during the financial year ended 31 December 2012 is set out below.

Name of DirectorsNo. of Board meetings

attendedPercentage of

attendance (%)

Dato’ Azmil Khalili bin Dato’ Khalid 5/7 71

Dato’ Mazlin bin Md. Junid 7/7 100

Nathan Tham Jooi Loon 7/7 100

Fazrin Azwar bin Md. Nor 7/7 100

Dato’ Sri Koh Kin Lip JP 6/7 86

Lim Soon Foo (or Alternate, Ronnie Lim Hai Liang) 7/7 100




1.3 Supply of Information (cont’d)

None of the Directors was absent for more than 50% of the total Board meetings held under the financial year under review, hence complying with paragraph 15.05 of the Main Market Listing Requirements of Bursa Securities.

1.4 Board Committees

1.4.1 Audit Committee

The Board established the Audit Committee on 1 June 2005. The Audit Committee comprises of three (3) members, all of whom are Independent Non-Executive Directors. The composition, terms of reference and summary of activities of the Audit Committee during the financial year under review are disclosed in the Audit Committee Report as set out on pages 35 to 37 of this Annual Report.

1.4.2 Nomination Committee

The Nomination Committee comprises three (3) members, all of whom are Independent Non-Executive Directors:

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

The Board was of the view that the Board Committees should be chaired by different Independent Non-Executive Directors. Hence, the Board agreed that Dato’ Azmil Khalili bin Dato’ Khalid to remain as Chairman of the Nomination Committee, while Encik Fazrin Azwar bin Md. Nor, who is the Senior Independent Non-Executive Director of the Company to continue to act as Chairman of the Audit Committee.

The functions of the Nomination Committee are as follows:

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

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

Committees and the contribution of each individual Director as well as the Chief Executive Officer;

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

competencies which non-executive Directors should bring to the Board; vi) To develop the criteria to assess independence of the Independent Directors of the Company;vii) To determine annually whether or not a Director is Executive, Non-Executive or Independent;viii) To recommend to the Board for continuation (or not) in service of executive Director(s) and

Directors who are due for retirement by rotation;ix) To consider, in making its recommendations, candidates for directorships proposed by the Chief

Executive Officer and, within the bounds of practicability, by any other senior executive or any Director or shareholder; and

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

During the financial year ended 31 December 2012, the Nomination Committee met two (2) times and the attendance of each member are as follows:

Nomination CommitteeNo. of Nomination Committee

meetings attended

Dato’ Azmil Khalili bin Dato’ Khalid 2/2

Fazrin Azwar bin Md. Nor 2/2

Dato’ Sri Koh Kin Lip JP 2/2




1.4 Board Committees (cont’d)

1.4.3 Remuneration Committee

The Remuneration Committee comprises of four (4) members, all of whom are Independent Non-Executive Directors:

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

The duties and functions of the Remuneration Committee are as follows:

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

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

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

to fulfill its functions.

During the financial year ended 31 December 2012, the Remuneration Committee met three (3) times and the attendance of each member are as follows:-

Remuneration CommitteeNo. of Remuneration Committee

meetings attended




Lim Soon Foo (appointed on 20.11.2012) -

1.5 Appointments to the Board

The Board recognises its responsibility to carefully appraise and consider the appointment of new and existing Directors so as to continue functioning effectively. Thus, whilst the initial appraisal of new candidates is delegated to the Nomination Committee, the Board will assess and review the appointment or re-appointment of each Director to ensure a good balance of skills and experience in the Board composition. The decision on appointment of new Directors rests with the Board after considering the recommendations of the Nomination Committee.

As at the date of this statement, the Company has not established a policy formalising its approach to boardroom diversity. Hence, no gender diversity policies, targets and measures have been set. The Board, through the Nomination Committee will take the necessary steps to ensure that women candidates are sought as part of its recruitment exercise.

1.6 Re-election of Directors

In accordance with the Company’s Articles of Association, one-third (1/3) or the number nearest to one-third (1/3) of the Directors shall retire from office and be eligible for re-election at the Annual General Meeting. Furthermore, each Director shall retire from office at least once in every three (3) years but shall be eligible for re-election. The Directors to retire each year are the Directors who have been longest in office since their last election.




1.7 Directors’ Trainings

All members of the Board have completed the Mandatory Accreditation Programme (“MAP”) which was conducted by the Research Institute of Investment Analysts Malaysia as required by Bursa Securities. The Board will undertake an assessment of the training needs of each Directors annually and the Directors will continue to undergo further Continuous Education Program to keep themselves abreast with the latest developments in the market place and enhance their professionalism in the discharge of their duties and responsibilities.

Save for the under mentioned Directors who have attended the trainings as follows, the other Directors have not attended any training during the financial year ended 31 December 2012 due to their respective conflicting schedule and travel commitments:

Dato’ Mazlin Bin Md. Junid

5 January 2012 – “Balance Scorecards Development” – organised by Daya Materials Berhad

Nathan Tham Jooi Loon

5 January 2012 – “Balance Scorecards Development” – organised by Daya Materials Berhad

Fazrin Azwar bin Md. Nor

14 March 2012 – “The Case For Diversity In The Boardroom” – round panel talk organised by CSR Asia and Bursa Malaysia

05 April 2012 – “Latest Developments In Technologies On Biomass Utilisation” – Prof Dr Ing Volker Thole - talk organised by Malaysian Palm Oil Board

05 April 2012 – “Potential Threat To The Oil Palm Industry In South East Asia” – Prof Dr Richard Martin Cooper - talk organised by Malaysian Palm Oil Board

22 May 2012 – “Role of the Audit Committee in Assuring Audit Quality” – talk organised by Malaysian Institute of Accountants and Bursa Malaysia

18 June 2012 – “Corporate Governance Blueprint and Malaysian Code of Corporate Governance 2012” – talk organised by Institute of Internal Auditors Malaysia and Bursa Malaysia

04 July 2012 – “Making The Most of The Chief Financial Office Role: Everyone’s Responsibility?” – talk organised by ICAEW and Bursa Malaysia.

25 October 2012 – “Times Offset (M) Sdn Bhd Manufacturing Seminar”– organised by Times Publishing

23 November 2012 – “Prime Minister’s 1Malaysia Economic Transformation Programme” – organised by Archer Consulting Group Sdn Bhd

Dato’ Sri Koh Kin Lip JP

23 October 2012 – “2013 Budget Proposals and Recent Tax Development” – organised by Ernst & Young Tax Consultants Sdn. Bhd.




1.8 Number of Directorship

Pursuant to the Main Market Listing Requirements of Bursa Securities, Directors of the Company shall not hold more than (5) directorship in public listed companies by 1 June 2013. Prior to acceptance to new directorship in other public listed companies, the Directors are required to first notify the Chairman, including the estimated time commitment required, to ensure that such appointment would not affect their commitments and focus for an effective input to the Board.

None of the Directors of the Company hold more than (5) directorship in public listed companies. The directorships of each Director are set out in the Profile of Directors on pages 10 to 13 of this Annual Report.

1.9 Qualified and Competent Company Secretary

The Board is satisfied with the performances and support rendered by the Company Secretary to the Board in the discharge of its functions. The Company Secretary plays an advisory role to the Board in relation to the Company’s constitution, Board’s policies and procedures and compliance with the relevant regulatory requirements, codes or guidance and legislations. The Company Secretary supports the Board in managing the Company’s governance model, ensuring it’s effective and relevant. The Company Secretary also ensures the deliberations and decisions made at the Board meetings are well captured and minuted.

1.10 Code of Ethics

The Board is currently looking at formalising ethical standards through a code of conduct.

The Group is committed in maintaining the highest standards of honesty, integrity and ethical conduct and is in the progress of establishing a code of conduct and Anti-Fraud and Whistle-Blower Protection Policy to ensure consistent and effective investigation, reporting and disclosure of fraud occurrence within the Group.

2. DIRECTORS’ REMUNERATION

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

The details of the remuneration for Directors during the financial year ended 31 December 2012 are as below:

Aggregate remuneration categorised into components:

Executive Directors

Non-Executive Directors Total

RM RM RM

Fees 58,000 108,000 166,000

Salaries & other emoluments 3,138,290 53,500 3,191,790

Total 3,196,290 161,500 3,357,790

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

RangeExecutive Directors

Non-Executive Directors

Below RM50,000 - 4

RM1,100,001 – RM1,150,000 1 -

RM2,050,001 – RM2,100,000 1 -



3. INVESTORS RELATION AND SHAREHOLDERS COMMUNICATION

The Company recognises the value of transparent, consistent and coherent communications with investment community consistent with commercial confidentiality and regulatory considerations. The Company aims to build long-term relationships with shareholders and potential investors through appropriate channels for the management and disclosure of information. These investors are provided with sufficient business, operations and financial information on the Group to enable them to make informed investment decisions.

3.1 Dialogue with shareholders and investors

In maintaining the commitment to effective communication with the shareholders, the Company adopts the practice of comprehensive, timely and continuing disclosures of information to its shareholders as well as to the general investing public.

Where possible and applicable, the Company also provides additional disclosure of information on a voluntary basis. The Company 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.

The primary tools of communication with the shareholders of the Company are through the annual report, quarterly reports, announcements through Bursa Securities and circulars. The Company’s website at www.dmb.com.my contains vital information concerning the Group which is updated on a regular basis and shareholders are able put questions to the Company through the website.

The Board considers it is essential that investors are kept informed of all the latest financial results and developments of the Company and the Group and where appropriate, will provide disclosure that is in the best interest of the Company and also of the shareholders. All such reporting information can be obtained from the websites of the Company and Bursa Securities.

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

3.2 General Meetings

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

The Company would conduct poll voting if demanded by shareholders at the general meetings.

4. ACCOUNTABILITY AND AUDIT

4.1 Financial Reporting

The Board is responsible for presenting a balanced and meaningful assessment of the Group’s financial performance and prospects primarily through the annual report, financial statements and quarterly announcements of the Group’s results. The Audit Committee assists the Board in ensuring accuracy, adequacy and completeness of information for disclosure. The Statement by Directors pursuant to Section 169 of the Companies Act, 1965 is set out on page 44 of this Annual Report and the Statement explaining the responsibility for preparing the annual audited financial statements is set out on page 134 of this Annual Report.

4.2 Internal Control and Risk Management

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

Further details relating to internal control are set out in the Statement on Risk Management and Internal Control on pages 33 and 34 and the Audit Committee Report on pages 35 to 37 of this Annual Report.


4. ACCOUNTABILITY AND AUDIT (cont’d)

4.3 Relationship with Auditors

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

Key features underlying the relationship of the Audit Committee with the external auditor and internal auditor are included in the Audit Committee Report on pages 35 to 37 of this Annual Report.

5. SUSTAINABILITY POLICY

The Board promotes good corporate governance in the application of sustainability practices throughout the Group, the benefits of which are believed to translate into better corporate performance.

A detailed report on sustainability activities, demonstrating the Company’s commitment to the global environmental, social, governance and sustainability agenda, appears in the Corporate Responsibility Statement on pages 23 and 24 of this Annual Report.



STATEMENT ON RISK MANAGEMENTAND INTERNAL CONTROL

INTRODUCTION

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

BOARD RESPONSIBILITY

The Board acknowledges its responsibility to maintain a sound system of internal control in the Group and to review the adequacy and integrity of the system to safeguard the shareholders’ investments and the Group’s assets. As with the inherent limitations in any system of internal control, the Group’s system too is designed to manage rather than eliminate the risk of failure to achieve its business objectives. The system of internal control is designed to provide reasonable assurance against material misstatement or loss.

The Board confirms that there is an ongoing process for identifying, evaluating, monitoring and managing the significant risks faced by the Group. This process has been in place throughout the year. Such process is also applied consistently throughout the Group and is regularly reviewed by the Board.

THE GROUP’S SYSTEM OF INTERNAL CONTROL

The Board has established an internal audit function which is carried out in-house via the Group Internal Audit Department. This audit function covers all principal areas of operations and continuously offers assurances on the system of internal control. The internal audit function is independent of the activities it audits and audits are performed with impartiality, proficiently and with due professional care. The internal audit function reports to the Audit Committee whose members are all independent and non-executive members of the Board. All reports are presented to the Audit Committee whom shall ensure that all risks identified are satisfactorily dealt with. It is the practice of the Board to review the internal audit function’s scope of work, authority and resources as and when required.

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

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

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

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

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

iv) Major investments, acquisitions and disposals are appraised prior to approval by the EXCO or the Board;v) Regular training and development programs are being attended by employees with the objective of enhancing

their knowledge and competency; andvi) Management accounts and reports are prepared monthly for monitoring of actual performance versus budget. In

this instance, material variances are explained and corrective actions, where necessary, are taken.

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

The internal audit expense costs incurred for the financial year ended 31 December 2012 was RM129,932.50.


STATEMENT ON RISK MANAGEMENTAND INTERNAL CONTROL (cont’d)

RISK MANAGEMENT

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

The management is responsible for identifying, analyzing, managing and reporting on significant risks on an ongoing basis. These functions were carried out continuously during the year and significant risk matters together with the relevant systems of controls to manage those risks are reported to the Board for discussion on quarterly basis.

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

CONTROL WEAKNESS

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

CONCLUSION

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

22 April 2013


AUDIT COMMITTEE REPORT

COMPOSITION

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

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

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

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

MEMBERSHIP

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

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

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

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

AUTHORITY

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

MEETINGS

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

The Committee may regulate its own procedures, in particular:

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

The Company Secretary shall act as Secretary of the Audit Committee and shall, with the concurrence of the Chairman, draw up the agenda of meetings. The notice of meetings and the meeting papers or explanatory documentation will be circulated to the Audit Committee members prior to each meeting.

The Secretary shall also be responsible for recording the proceedings of the Audit Committee.


AUDIT COMMITTEE REPORT(cont’d)

DUTIES

The duties of the Audit Committee include the following:

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

Changes in or implementation of accounting policies and practices; Significant adjustments or unusual events; Going concern assumption; and Compliance with applicable approved financial reporting standards, regulatory and other legal requirements;

ii) To review with the external auditor, the audit scope and plan, including any changes to the planned scope of the audit plan, and to discuss to ensure co-ordination where more than one audit firm is involved;

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

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

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

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

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

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

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

resigning; xiii) To consider any related party transaction and conflict of interest situation that may arise within the Group including

any transaction, procedure or course of conduct that raises questions of management integrity;xiv) To verify the allocation of Employees’ Share Option Scheme (“ESOS”) in compliance with criteria as stipulated in the

By laws of ESOS of the Company, if any;xv) To direct and, where appropriate, supervise any special projects or investigation considered necessary, and review

investigation reports on any major defalcations, frauds and thefts; and xvi) Such other responsibilities as may be agreed to by the Audit Committee and the Board.

SUMMARY OF ACTIVITIES

During the financial year ended 31 December 2012, the Audit Committee met five (5) times and the attendance of each member is as follows:

Name of Director No. of meetings attended





AUDIT COMMITTEE REPORT(cont’d)

SUMMARY OF ACTIVITIES (cont’d)

During the financial year ended 31 December 2012, the Audit Committee have considered, reviewed and discussed the following:

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

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

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

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

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

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

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

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

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

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

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

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

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

The Company has implemented an Employees’ Share Option Scheme (“ESOS”) of up to 10% of its issued and paid-up share capital for the eligible directors and employees of the DMB Group on 26 February 2009. However, to date, no ESOS options have been granted. Therefore, no verification by the Audit Committee on the allocation of options granted to employees pursuant to the ESOS.

SUMMARY OF ACTIVITIES OF THE INTERNAL AUDIT FUNCTION

During the financial year ended 31 December 2012, the internal audit function carried out two (2) risk-based audit engagements involving Daya Polymer Sdn Bhd and Daya CMT Sdn Bhd and three (3) follow-up audits involving Daya Proffscorp Sdn Bhd, Daya OCI Sdn Bhd and Daya Secadyme Sdn Bhd. In addition, the internal audit function also conducted special audit review on the business operation in Indonesia involving P.T. Daya Secadyame (Indonesia). The results of the review were presented in the forms of reports to the Audit Committee during the quarterly Audit Committee meetings. The reports set out audit findings and recommendations for improvements and status of prior audit findings. The internal auditors also presented the internal audit plan for the financial year ending 31 December 2013 during one of the meetings. The internal audit plan will be revised and amended during the year (if required) to accommodate with the environmental changes within the Group.


Directors' Report

Statement by Directors

Statutory Declaration

Independent Auditors' Report

Income Statements

Statements of Comprehensive Income

Statements of Financial Position

Statements of Changes in Equity

Statements of Cash Flows

Notes to the Financial Statements

Supplementary Information

40

44

44

45

47

48

49

51

53

56

133


Directors' Report

Statement by Directors

Statutory Declaration

Independent Auditors' Report

Income Statements

Statements of Comprehensive Income

Statements of Financial Position

Statements of Changes in Equity

Statements of Cash Flows

Notes to the Financial Statements

Supplementary Information

40

44

44

45

47

48

49

51

53

56

133


DIRECTORS’ REPORT

The directors have pleasure in presenting their report together with the audited financial statements of the Group and of the Company for the financial year ended 31 December 2012. PrinciPal activities The principal activities of the Company are investment holding and provision of management services to its subsidiaries. The principal activities of the subsidiaries are set out in Note 13 to the financial statements. There have been no significant changes in the nature of the principal activities during the financial year. results

Group company

rM rM

Profit for the year 20,116,201 2,010,046

Attributable to:

Equity holders of the Company 20,170,784 2,010,046

Non-controlling interests (54,583) -

20,116,201 2,010,046 There were no material transfers to or from reserves or provisions during the financial year. In the opinion of the directors, the results of the operations of the Group and of the Company during the financial year were not substantially affected by any item, transaction or event of a material and unusual nature. DiviDenDs The amount of dividends paid by the Company since 31 December 2011 in respect of the financial year ended 31 December 2011 as reported in the directors’ report of that year was as follows:

rM

Final tax exempt (single-tier) dividends of 2.5% 3,074,022 At the forthcoming Annual General Meeting, a single tier dividends of 2.5% in respect of the financial year ended 31 December 2012 will be proposed for shareholders’ approval. The financial statements for the current financial year do not reflect this proposed dividends. Such dividends, if approved by the shareholders, will be accounted for in equity as an appropriation of retained profits in the financial year ending 31 December 2013. Directors The names of the directors of the Company in office since the date of the last report and at the date of this report are: Dato’ Azmil Khalili Bin Dato’ Khalid Dato’ Mazlin Bin Md. Junid Nathan Tham Jooi Loon Fazrin Azwar Bin Md. Nor Dato’ Sri Koh Kin Lip J.P. Lim Soon Foo Ronnie Lim Hai Liang (Alternate director to Lim Soon Foo)


DIRECTORS’ REPORT(cont’d)

Directors’ benefits Neither at the end of the financial year, nor at any time during that year, did there subsist any arrangement, to which the Company was a party, whereby the directors might acquire benefits by means of acquisition of shares in or debentures of the Company or any other body corporate. Since the end of the previous financial year, no director has received or become entitled to receive any benefits (other than benefits included in the aggregate amount of emoluments received or due and receivables by the directors as shown in the financial statements) by reason of a contract made by the Company or a related corporation with any director or with a firm of which the director is a member, or with a company in which the director has a substantial financial interest, except as disclosed in Note 27 to the financial statements. Directors’ interests According to the register of directors’ shareholdings, the interests of directors in office at the end of the financial year in shares in the Company during the financial year were as follows:

number of ordinary shares of rM0.10 each

1.1.2012 acquired Disposed 31.12.2012

the company

Direct interest

Dato’ Mazlin Bin Md. Junid 198,859,386 7,500,000 (68,000,000) 138,359,386

Nathan Tham Jooi Loon 59,500,198 13,870,000 (4,000,000) 69,370,198

Fazrin Azwar Bin Md. Nor 2,099,998 - (1,700,000) 399,998

Dato’ Sri Koh Kin Lip J.P. 78,115,098 - - 78,115,098

Lim Soon Foo 60,829,098 500,000 - 61,329,098

Deemed interest

Dato’ Mazlin Bin Md. Junid (1) 18,000,720 2,000,000 - 20,000,720

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

Lim Soon Foo (3) 279,000 - - 279,000 (1) Deemed interest through his son and daughter. (2) Deemed interest through his spouse. (3) Deemed interest through his son. 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. issue of shares During the financial year, the Company increased its issued and paid-up share capital from RM119,915,854 to RM123,400,175 by way of the issuance of 34,843,206 new ordinary shares of RM0.10 each in the Company pursuant to the conversion of RM6 million Redeemable Convertible Secured Loan Notes at a conversion price of RM0.172 per share. The new ordinary shares issued during the year ranked pari passu in all respects with the existing ordinary shares of the Company.


eMPloyee share oPtion scheMe At an Extraordinary General Meeting held on 26 February 2009, the shareholders of the Company approved the proposed establishment of an Employee Share Option Scheme (“ESOS”) for the eligible directors and employees of the Company and its subsidiaries. The ESOS will be administered by the ESOS Committee to be duly appointed and approved by the Board of Directors. The aggregate number of ESOS Options exercised and ESOS Options offered and to be offered under the scheme shall not exceed 10% of the issue and paid-up ordinary share capital of the Company at any point during the duration of the scheme. No options have been granted since the date of the establishment of the ESOS and at the date of reporting. other statutory inforMation (a) Before the income statements, statements of comprehensive income and statements of financial position of the Group and of the

Company were made out, the directors took reasonable steps:

(i) to ascertain that proper action has been taken in relation to the writing off of bad debts and the making of allowance for doubtful debts and satisfied themselves that all known bad debts had been written off and that adequate allowance for doubtful debts has been made; and

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

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

(i) the amount of the allowance for doubtful debts in the financial statements of the Group and of the Company or the amount

written off for bad debts inadequate to any substantial extent; and

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

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

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

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

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

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

(f ) In the opinion of the directors:

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

(ii) no item, transaction or event of a material and unusual nature has arisen in the interval between the end of the financial year

and the date of this report which is likely to affect substantially the results of the operations of the Group and of the Company for the financial year in which this report is made.

siGnificant anD subsequent events Details of significant and subsequent events are disclosed in Note 32 and Note 34 to the financial statements.



auDitors The auditors, Ernst & Young, have expressed their willingness to continue in office. Signed on behalf of the Board in accordance with a resolution of the directors dated 22 April 2013.

Dato’ Mazlin bin MD. JuniD nathan thaM Jooi loon



STATEMENT BY DIRECTORSPursuant to Section 169(15) of the Companies Act, 1965

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

We, Dato’ Mazlin Bin Md. Junid and Nathan Tham Jooi Loon, being two of the directors of Daya Materials Berhad, do hereby state that, in the opinion of the directors, the accompanying financial statements set out on pages 47 to 132 are drawn up in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the Companies Act, 1965 in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company as at 31 December 2012 and of their financial performance and cash flows for the year then ended. The information set out in Note 36 to the financial statements on page 133 have been prepared in accordance with the Guidance on Special Matter No.1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants and presented based on the format prescribed by Bursa Malaysia Securities Berhad. Signed on behalf of the Board in accordance with a resolution of the directors dated 22 April 2013.

Dato’ Mazlin bin MD. JuniD nathan thaM Jooi loon

I, Nathan Tham Jooi Loon, being the director primarily responsible for the financial management of Daya Materials Berhad, do solemnly and sincerely declare that the accompanying financial statements set out on pages 47 to 133 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 Nathan Tham Jooi Loon at Kuala Lumpur in the Federal Territory on 22 April 2013. nathan thaM Jooi loon Before me,


rePort on financial stateMents We have audited the financial statements of Daya Materials Berhad, which comprise the statements of financial position as at 31 December 2012 of the Group and of the Company, and the income statements, statements of comprehensive income, statements of changes in equity and statements of cash flows of the Group and of the Company for the year then ended, and a summary of significant accounting policies and other explanatory information, as set out on pages 47 to 132. 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 controls as the directors determine are necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. auditors’ responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with approved standards on auditing in Malaysia. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance 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 judgement, including the assessment of risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal 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 controls. 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 of the Company as at 31 December 2012 and of their financial performance and cash flows for the 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 (“Act”) in Malaysia, we also report the followings: (a) In our opinion, the accounting and other records and the registers required by the Act to be kept by the Company and its subsidiaries

of which we have acted as auditors have been properly kept in accordance with the provisions of the Act. (b) We have considered the financial statements and the auditors’ reports of all the subsidiaries of which we have not acted as auditors,

which are indicated in Note 13 to the financial statements, being financial statements that have been included in the consolidated financial statements.

(c) We are satisfied that the financial statements of the subsidiaries that have been consolidated with the financial statements of

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

(d) The auditors’ reports on the financial statements of the subsidiaries were not subject to any qualification and did not include any

comment required to be made under Section 174(3) of the Act. other rePortinG resPonsibilities The supplementary information set out in Note 36 to the financial statements on page 133 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.

INDEPENDENT AUDITORS’ REPORTto the members of Daya Materials Berhad (Incorporated in Malaysia)


other Matters

As stated in Note 2.2 to the financial statements, Daya Materials Berhad adopted Malaysian financial Reporting Standards on 1 January 2012 with a transition date of 1 January 2011. These standards were applied retrospectively by directors to the comparative information in these financial statements, including the statements of financial position as at 31 December 2011 and 1 January 2011, and the income statements, statements of comprehensive income, statements of changes in equity and statements of cash flows for the year ended 31 December 2011 and related disclosures. We were not engaged to report on the comparative information and it is unadited. Our responsibilities as part of our audit of the financial statements of the Group and of the Company for the year ended 31 December 2012 have, in these circumstances, included obtaining sufficient apporporiate audit evidence that the opening balances as at 1 January 2012 do not contain misstatements that materially affect the financial position as of 31 December 2012 and financial performance and cash flows for the year then ended. This report is made solely to the members of the Company, as a body, in accordance with Section 174 of the Companies Act, 1965 in Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of this report.

ernst & younG Kua choh leanG AF : 0039 No. 2716/01/15(J) Chartered Accountants Chartered Accountant

Kuala Lumpur, Malaysia 22 April 2013

INDEPENDENT AUDITORS’ REPORTto the members of Daya Materials Berhad (Incorporated in Malaysia)(cont’d)


INCOME STATEMENTSfor the financial year ended 31 December 2012

Group company

2012 2011 2012 2011

note rM rM rM rM

Revenue 3 276,929,368 281,745,931 11,644,887 23,492,181

Cost of sales 4 (221,486,285) (239,034,754) - -

Gross profit 55,443,083 42,711,177 11,644,887 23,492,181

Other income 5,723,257 6,432,415 1,498,729 1,307,891

Selling and distribution expenses (980,368) (626,169) - -

Administrative expenses (29,211,612) (22,178,763) (8,757,292) (5,591,249)

Operating profit 30,974,360 26,338,660 4,386,324 19,208,823

Finance costs 5 (4,067,968) (3,973,337) (1,448,136) (1,786,533)

Share of results of jointly controlled entities 14 1,480,297 1,394,943 - -

Profit before tax 6 28,386,689 23,760,266 2,938,188 17,422,290

Income tax expense 7 (8,270,488) (6,317,664) (928,142) (4,444,774)

Profit for the year 20,116,201 17,442,602 2,010,046 12,977,516

Attributable to:

Equity holders of the Company 20,170,784 17,381,905 2,010,046 12,977,516

Non-controlling interests (54,583) 60,697 - -

20,116,201 17,442,602 2,010,046 12,977,516

Earnings per share (sen)

- Basic 8 1.65 1.50

- Diluted 8 1.63 1.45

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


STATEMENTS OF COMPREHENSIVE INCOME for the financial year ended 31 December 2012

Group company

2012 2011 2012 2011

rM rM rM rM

Profit for the year 20,116,201 17,442,602 2,010,046 12,977,516

Other comprehensive income:

Foreign currency translation differences for foreign subsidiaries 106,714 (20,539) - -

Total comprehensive income for the year, net of tax 20,222,915 17,422,063 2,010,046 12,977,516

Total comprehensive income for the year attributable to:

Equity holders of the Company 20,277,498 17,361,366 2,010,046 12,977,516

Non-controlling interests (54,583) 60,697 - -

20,222,915 17,422,063 2,010,046 12,977,516



STATEMENTS OF FINANCIAL POSITIONas at 31 December 2012

2012 2011 1.1.2011

note rM rM rM

Group

non-current assets

Property, plant and equipment 9 105,582,004 100,018,297 90,865,694

Land held for property development 10 10,474,825 - -

Investment properties 11 1,195,405 1,210,400 1,225,395

Intangible assets 12 83,896,892 83,885,182 83,490,527

Investment in jointly controlled entities 14 2,390,589 3,128,637 1,060,692

Other receivables 16 728,096 1,271,456 1,809,111

204,267,811 189,513,972 178,451,419

current assets

Inventories 17 14,097,906 14,181,536 13,428,106

Trade and other receivables 16 72,593,540 86,513,760 57,255,978

Other current assets 18 40,125,499 22,615,041 5,040,665

Tax recoverable 1,611,576 2,205,869 3,561,848

Marketable securities 19 108,188 243,728 158,600

Cash and cash equivalents 20 66,412,033 62,840,884 34,152,997

194,948,742 188,600,818 113,598,194

total assets 399,216,553 378,114,790 292,049,613

equity and liabilities

equity

Share capital 21 123,400,175 119,915,854 109,673,694

Reserves 22 107,568,235 90,711,850 66,923,155

230,968,410 210,627,704 176,596,849

Non-controlling interests (54,583) - 559,056

total equity 230,913,827 210,627,704 177,155,905

non-current liabilities

Deferred tax liabilities 15 199,570 951,306 1,085,732

Loans and borrowings 23 40,980,826 48,861,621 53,947,433

Other payables 24 - 3,000,000 5,000,000

41,180,396 52,812,927 60,033,165

current liabilities


Trade and other payables 24 85,637,534 94,473,588 35,578,465

Provisions 25 324,694 1,709,277 2,320,733

Tax payable 811,789 629,094 2,393,469

127,122,330 114,674,159 54,860,543

total liabilities 168,302,726 167,487,086 114,893,708

total equity and liabilities 399,216,553 378,114,790 292,049,613


STATEMENTS OF FINANCIAL POSITIONas at 31 December 2012(cont’d)

2012 2011 1.1.2011

note rM rM rM

company

non-current assets

Property, plant and equipment 9 841,573 825,658 295,606

Intangible assets 12 44,549 55,923 -

Investment in subsidiaries 13 172,852,567 172,851,767 171,740,329

Deferred tax assets 15 44,313 - -

173,783,002 173,733,348 172,035,935

current assets

Trade and other receivables 16 32,323,788 24,995,827 13,662,428

Other current assets 18 124,249 174,000 136,014

Tax recoverable 1,086,077 633,112 1,900,530

Cash and cash equivalents 20 11,798,484 5,224,754 7,400,676

45,332,598 31,027,693 23,099,648

total assets 219,115,600 204,761,041 195,135,583

equity and liabilities

equity

Share capital 21 123,400,175 119,915,854 109,673,694

Reserves 22 51,892,003 53,303,070 33,966,405

total equity 175,292,178 173,218,924 143,640,099

non-current liabilities

Deferred tax liabilities 15 - 45,201 40,557


Other payables 24 - 3,000,000 5,000,000

9,475,945 22,082,042 35,023,710

current liabilities


Trade and other payables 24 18,416,037 3,426,074 10,064,707

34,347,477 9,460,075 16,471,774

total liabilities 43,823,422 31,542,117 51,495,484

total equity and liabilities 219,115,600 204,761,041 195,135,583



STATEMENTS OF CHANGES IN EQUITYfor the financial year ended 31 December 2012

att

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STATEMENTS OF CHANGES IN EQUITYfor the financial year ended 31 December 2012(cont’d)

non

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sha

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STATEMENTS OF CASH FLOWSfor the financial year ended 31 December 2012

Group company

2012 2011 2012 2011

note rM rM rM rM

cash flows from operating activities

Profit before tax 28,386,689 23,760,266 2,938,188 17,422,290

Adjustments for:

Depreciation of property, plant and equipment 6, 9 4,359,491 4,442,883 242,959 215,721

Depreciation of investment properties 6, 11 14,995 14,995 - -

Amortisation on intangible assets 6, 12 86,715 5,270 11,374 948

Allowance for impairment loss 6, 16 743,339 230,439 - -

Reversal of allowance for impairment loss 6, 16 (90,008) (1,140,470) - -

(Reversal of discount)/Discount on convertible loan notes 6 (30,178) 74,170 (30,178) 74,170

Finance cost 5 4,067,968 3,973,337 1,448,136 1,786,533

Gain on disposal of property, plant and equipment 6 (2,962,299) (3,408,144) - (118,000)

Fair value changes on marketable securities 6 11,540 (18,428) - -

Property, plant and equipment written off 6 7,854 17,731 - -

Dividends income 3, 6 (6,085) (5,400) (3,676,020) (15,447,271)

Gain on disposal of marketable securities 6 (7,034) (13,800) - -

Gain on disposal of subsidiaries 6, 13 - (496) - -

Share of results of jointly controlled entities 14 (1,480,297) (1,394,943) - -

Interest income 6 (1,211,827) (1,343,461) (1,498,763) (1,189,891)

Development expenditures incurred 10 (90,071) - - -

Unrealised foreign exchange loss/(gain) 90,624 (161,011) 87,029 (80,303)

Operating profit/(loss) before working capital changes 31,891,416 25,032,938 (477,275) 2,664,197

Changes in working capital:

Inventories 83,630 (932,421) - -

Trade and other receivables 13,719,631 (28,677,489) (7,414,990) (11,253,096)

Other current assets (17,510,458) (17,574,376) 49,751 (37,986)

Trade and other payables (11,836,054) 60,540,583 11,989,963 (8,638,633)

Provisions (1,384,583) (611,456) - -

Cash generated from/(used in) operations 14,963,582 37,777,779 4,147,449 (17,265,518)

Finance cost paid 5 (4,067,968) (3,973,337) (1,448,136) (1,786,533)

Tax (paid)/refund (8,221,745) (6,841,264) (1,447,130) 708,327

Net cash generated from/(used in) operating activities 2,673,869 26,963,178 1,252,183 (18,343,724)

cash flows from investing activities

Purchase of property, plant and equipment (a) (6,502,496) (16,725,054) (138,874) (288,473)

Proceeds from disposal of property, plant and equipment 3,483,443 4,600,314 - 280,000

Purchase of land held for property development 10 (10,384,754) - - -

Purchase of intangible assets 12 (98,425) (399,925) - (56,871)

Purchase of marketable securities 19 - (114,900) - -

Proceeds from disposal of marketable securities 131,034 62,000 - -

Net cash outflow from disposal of subsidiaries 13 - (66,581) - -


Group company

2012 2011 2012 2011

note rM rM rM rM

cash flows from investing activities cont’d

Decrease/(Increase) in pledged deposits placed with licensed banks 1,483,161 (7,129,498) (1,070,185) (64,098)

Decrease/(Increase) in deposits placed with licensed banks more than three months 1,807,500 (1,807,500) 1,807,500 (1,807,500)

Acquisition of subsidiaries 13 (6) - (800) -

Increase in investment in subsidiaries 13 - - - (1,111,438)

Acquisition of a joint venture company 14 - (2) - -

Increase in investment in a jointly controlled entity 14 - (5,998) - -

Incorporation of a joint venture company 14 - (51,000) - -

Distribution of profits from a jointly controlled entity 14 2,218,345 - - -

Acquisition of non-controlling interest 13 - (550,000) - -

Dividends received 3, 6 6,085 5,400 3,676,020 11,585,454

Interest received 6 1,211,827 1,343,461 1,498,763 1,189,891

Net cash (used in)/generated from investing activities (6,644,286) (20,839,283) 5,772,424 9,726,965

cash flows from financing activities

Repayment of loans and borrowings (9,808,911) (15,536,098) (5,907,220) (9,110,295)

Proceeds from loans and borrowings 27,274,411 13,706,195 12,000,000 -

Proceeds from issuance of shares - 18,725,000 - 18,725,000

Purchase of treasury shares (2,732,320) (317,049) (2,732,320) (317,049)

Capital distribution from an investment in a jointly controlled entity 14 - 250,000 - -

Transaction costs paid for issuance of shares 22 - (1,850,435) - (1,850,435)

Dividends paid to owners of the Company 33 (3,074,022) (2,877,982) (3,074,022) (2,877,982)

Net cash generated from financing activities 11,659,158 12,099,631 286,438 4,569,239

net changes in cash and cash equivalents 7,688,741 18,223,526 7,311,045 (4,047,520)

Effect of exchange rate fluctuations on cash held 106,714 (20,539) - -

cash and cash equivalents at the beginning of the year 32,561,386 14,358,399 1,154,529 5,202,049

cash and cash equivalents at the end of the year 40,356,841 32,561,386 8,465,574 1,154,529

the cash and cash equivalents comprise:

Short term investments 20 3,620,798 3,707,582 3,620,798 680,155

Fixed deposits with licensed banks 20 29,781,427 41,231,219 3,332,910 4,070,225

Cash and bank balances 20 33,009,808 17,902,083 4,844,776 474,374

Bank overdraft 23 (2,805,824) (3,739,469) - -

63,606,209 59,101,415 11,798,484 5,224,754

Less: Deposits pledged 20 (23,249,368) (24,732,529) (3,332,910) (2,262,725)

Fixed deposits with maturity more than three months 20 - (1,807,500) - (1,807,500)

40,356,841 32,561,386 8,465,574 1,154,529

STATEMENTS OF CASH FLOWSfor the financial year ended 31 December 2012(cont’d)


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

Group company

2012 2011 2012 2011

note rM rM rM rM

Cash 6,502,496 16,725,054 138,874 288,473

Hire purchase 3,949,700 1,318,895 120,000 619,300

9 10,452,196 18,043,949 258,874 907,773

STATEMENTS OF CASH FLOWSfor the financial year ended 31 December 2012

(cont’d)



NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 31 December 2012

1. corPorate inforMation

The Company is a public limited liability company, incorporated and domiciled in Malaysia and is listed on the Main Market of Bursa Malaysia Securities Berhad.

The registered office of the Company is located at Level 8, Symphony House, Pusat Dagangan Dana 1, Jalan PJU 1A/46, 47301

Petaling Jaya, Selangor Darul Ehsan. The principal place of business of the Company is located at D5-1-10, Solaris Dutamas, No.1, Jalan Dutamas 1, 50480 Kuala Lumpur.

The consolidated financial statements of the Company as at and for the financial year ended 31 December 2012 comprise the

Company and its subsidiaries (together referred to as “the Group”) and the Group’s interest in joint ventures. The principal activities of the Company are investment holding and provision of management services to its subsidiaries. The principal activities of the subsidiaries are set out in Note 13. There have been no significant changes in the nature of the principal activities during the financial year.

2. siGnificant accountinG Policies

2.1 basis of preparation

(a) Statement of compliance

The financial statements of the Group and of the Company have been prepared in accordance with Malaysian Financial Reporting Standards (“MFRSs”), International Financial Reporting Standards and the Companies Act, 1965 in Malaysia. These are the Group’s and the Company’s first financial statements prepared in accordance with MFRSs and MFRS 1, First-time Adoption of Malaysian Financial Reporting Standards has been applied.

In the previous financial years, the financial statements of the Group and of the Company were prepared in accordance with Financial Reporting Standards (“FRSs”) in Malaysia. The adoption of MFRSs has no impact on the income statements, statements of comprehensive income, statements of financial position, statements of changes in equity and statements of cash flows of the Group and of the Company.

The reclassification adjustments on the statements of financial position and statements of cash flows arising from the transition to MFRSs, are discussed in Note 2.2 (a).

(b) Basis of measurement

The financial statements have been prepared on the historical cost basis unless otherwise as disclosed below.

(c) Functional and presentation currency

The financial statements of each entity in the Group are measured using the currency of the primary economic environment in which the entity operates (“the functional currency”). The consolidated financial statements are presented in Ringgit Malaysia (RM), which is also the Company’s functional currency.

(d) Use of estimates and judgements

The preparation of the financial statements in conformity with MFRSs requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected.



(cont’d)

2. siGnificant accountinG Policies (cont’d)

2.1 basis of preparation (cont’d)

(d) Use of estimates and judgements (cont’d)

Key sources of estimation uncertainty

The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below:

(i) Impairment of goodwill

The Group determines whether goodwill is impaired at least on an annual basis. This requires an estimation of the value-in-use of the cash-generating units (“CGUs”) to which goodwill is allocated. Estimating a value-in-use amount requires management to make an estimate of the expected future cash flows from the CGUs and also to choose a suitable discount rate in order to calculate the present value of those cash flows. The carrying amounts of goodwill as at 31 December 2011 and 31 December 2012 were RM83,490,527. Further details are disclosed in Note 12(b).

(ii) Impairment of loans and receivables

The Group assesses at each reporting date whether there is any objective evidence that a financial asset is impaired. To determine whether there is objective evidence of impairment, the Group considers factors such as the probability of insolvency or significant financial difficulties of the debtor and default or significant delay in payments.

Where there is objective evidence of impairment, the amount and timing of future cash flows are estimated based on historical loss experience for assets with similar credit risk characteristics. The carrying amount of the Group’s trade and other receivables at the reporting date is disclosed in Note 16.

(iii) Construction contract

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

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

The carrying amounts of assets and liabilities of the Group arising from construction activities are disclosed in Note 18.

(iv) Provision for defect liability cost

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

The carrying amount of the Group’s provision for defect liability cost at the reporting date and further details are disclosed in Note 25. If the actual defect liability cost differ by 10% from management estimates, the Group’s provision for defect liability cost will increase by RM32,469 (2011: RM170,928).



2.2 first-time adoption of Malaysian financial reporting standards (“Mfrss”)

(a) Transition to MFRSs

As stated in Note 2.1(a), these are the first financial statements of the Group and of the Company prepared in accordance with MFRSs.

The accounting policies set out in Note 2.1 have been applied in preparing the financial statements of the Group and of the Company for the financial year ended 31 December 2012, the comparative information presented in these financial statements for the financial year ended 31 December 2011 and in the preparation of the opening MFRSs statement of financial position at 1 January 2011 (the Group’s date of transition to MFRSs).

MFRS 1: First-time Adoption of Malaysian Financial Reporting Standards allows first-time adopters certain exemptions from the retrospective application of certain MFRSs and the Group and the Company have applied the following exemptions:

(a) MFRS 1 provides the option to apply MFRS 3 Business Combinations prospectively from the date of transition or from a specific date prior to the date of transition. This provides relief from full retrospective application of MFRS 3 which would require restatement of all business combinations prior to the date of transition. The Group has elected to apply MFRS 3 prospectively from the date of transition. In respect of acquisitions prior to the date of transition:

(i) The classification of former business combinations under FRSs is maintained;

(ii) There is no re-measurement of original fair values determined at the time of business combination (date of acquisition); and

(iii) The carrying amount of goodwill recognised under FRSs is not adjusted.

(b) The estimates at 1 January 2011 and at 31 December 2011 are consistent with those made for the same dates in accordance with FRSs and the estimates used by the Group and the Company to present these amounts in accordance with MFRSs reflect conditions at 1 January 2011, and as of 31 December 2011.

The adoption of MFRSs has no impact on the financial statements of the Group and of the Company. Accordingly, no notes related to the statements of financial position as at the date of transition to MFRSs are presented, except as discussed below:

(i) First-time adoption of MFRS 107: Statement of Cash Flows

In accordance with MFRS 107, cash and cash equivalents are held for the purpose of meeting short-term cash commitments (such as cash in hand, at banks and deposits with a maturity of three months or less) rather than investment. In the previous financial year, the Group designated its cash in hand and bank balances and all its deposits as cash and cash equivalents. The Group and the Company have applied this standard retrospectively. Consequently, certain comparatives have been restated. The following are reclassification effects to the notes to the statements of cash flows for the year ended 31 December 2012 arising from the change in accounting policy stated above.

The following comparatives have been restated:

frs as at adjustments Mfrs as at

rM rM rM

Group

31 December 2011

notes to the statements of financial position

Cash and cash equivalents 34,368,886 (1,807,500) 32,561,386

NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 31 December 2012 (cont’d)



2.2 first-time adoption of Malaysian financial reporting standards (“Mfrss”) (cont’d)

(a) Transition to MFRSs (cont’d)

(i) First-time adoption of MFRS 107: Statement of Cash Flows (cont’d)

The following comparatives have been restated: (cont’d)

frs as at adjustments Mfrs as at

rM rM rM

Group

31 December 2011

statements of cash flows

Net, movement in fixed deposits with licensed banks - 1,807,500 1,807,500

Cash and cash equivalents at end of year 34,368,886 (1,807,500) 32,561,386

1 January 2011

notes to the statements of financial position

Cash and cash equivalents 14,358,399 - 14,358,399

statements of cash flows

Net, movement in fixed deposits with licensed banks - - -

Cash and cash equivalents at end of year 14,358,399 - 14,358,399

company

31 December 2011

notes to the statement of financial position

Cash and cash equivalents 2,962,029 (1,807,500) 1,154,529

statement of cash flows

Net, movement in fixed deposits with licensed banks - 1,807,500 1,807,500

Cash and cash equivalents at end of year 2,962,029 (1,807,500) 1,154,529

1 January 2011

notes to the statement of financial position

Cash and cash equivalents 5,202,049 - 5,202,049

statement of cash flows

Net, movement in fixed deposits with licensed banks - - -

Cash and cash equvalents at end of year 5,202,049 - 5,202,049


(cont’d)




(b) MFRSs and Amendments to MFRSs issued but not yet effective

The standards and interpretations that are issued but not yet effective up to the date of issuance of the Group’s and the Company’s financial statements are disclosed below. The Group and the Company intend to adopt these standards, if applicable, when they become effective.

Description

effective for annual periods

beginning on or after

MFRS 101: Presentation of Items of Other Comprehensive Income (Amendments to MFRS 101) 1 July 2012

Amendments to MFRS 101: Presentation of Financial Statements (Annual Improvements 2009-2011 Cycle)

1 January 2013

MFRS 3: Business Combinations (IFRS 3 Business Combinations issued by IASB in March 2004) 1 January 2013

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: Investment in Associate and Joint Ventures 1 January 2013

MFRS 127: Consolidated and Separate Financial Statements (IAS 127 revised by IASB in December 2003)

1 January 2013

Amendments to IC Interpretation 2: Members’ Shares in Co-operative Entities and Similar Instruments (Annual Improvements 2009-2011 Cycle)

1 January 2013

IC Interpretation 20: Stripping Costs in the Production Phase of a Surface Mine 1 January 2013

Amendments to MFRS 7: Disclosures - Offsetting Financial Assets and Financial Liabilities 1 January 2013

Amendments to MFRS 1: First-time Adoption of Malaysian Financial Reporting Standards - Government Loans

1 January 2013

Amendments to MFRS 1: First-time Adoption of Malaysian Financial Reporting Standards (Annual Improvements 2009-2011 Cycle)

1 January 2013

Amendments to MFRS 116: Property, Plant and Equipment (Annual Improvements 2009-2011 Cycle)

1 January 2013

Amendments to MFRS 132: Financial Instruments: Presentation (Annual Improvements 2009-2011 Cycle)

1 January 2013

Amendments to MFRS 134: Interim Financial Reporting (Annual Improvements 2009-2011 Cycle) 1 January 2013

Amendments to MFRS 10: Consolidated Financial Statements: Transition Guidance 1 January 2013

Amendments to MFRS 11: Joint Arrangements: Transition Guidance 1 January 2013

Amendments to MFRS 12: Disclosure of Interests in Other Entities: Transition Guidance 1 January 2013

Amendments to MFRS 132: Offsetting Financial Assets and Financial Liabilities 1 January 2014

Amendments to MFRS 10, MFRS 12 and MFRS 127: Investment Entities 1 January 2014

MFRS 9: Financial Instruments 1 January 2015





(b) MFRSs and Amendments to MFRSs issued but not yet effective (cont’d)

The initial application of the standards and interpretations is not expected to have any material financial impacts to the current and prior periods financial statements upon their first adoption, except as discussed below:

(i) MFRS 3 Business Combinations (IFRS 3 Business Combinations issued by IASB in March 2004) and MFRS 127 Consolidated and Separate Financial Statements (IAS 27 as revised by IASB in December 2003)

An entity shall apply these earlier versions of MFRS 3 and MFRS 127 only if the entity elected to do so as allowed in MFRS 10 Consolidated Financial Statements. The adoptions of these standards are not expected to have any significant impact to the Group and the Company.

(ii) MFRS 9 Financial Instruments

MFRS 9 reflects the first phase of the work on the replacement of MFRS 139 Financial Instruments: Recognition and Measurement and applies to classification and measurement of financial assets and financial liabilities as defined in MFRS 139 Financial Instruments: Recognition and Measurement. The adoption of the first phase of MFRS 9 will have an effect on the classification and measurement of the Group’s financial assets. The Group will quantify the effect in conjunction with the other phases, when the final standard including all phases is issued.

(iii) MFRS 10 Consolidated Financial Statements

MFRS 10 replaces part of MFRS 127 Consolidated and Separate Financial Statements that deals with consolidated financial statements and IC Interpretation 112 Consolidation - Special Purpose Entities.

Under MFRS 10, an investor controls an investee when:

(i) the investor has power over an investee,

(ii) the investor has exposure, or rights, to variable returns from its involvement with the investee, and

(iii) the investor has ability to use its power over the investee to affect the amount of the investor’s returns.

Under MFRS 127 Consolidated and Separate Financial Statements, control was defined as the power to govern the financial and operating policies of an entity so as to obtain benefits from its activites.

MFRS 10 includes detailed guidance to explain when an investor has control over the investee. MFRS 10 requires the investor to take into acocunt all relevant facts and circumstaces.

(iv) MFRS 11 Joint Arrangements

MFRS 11 replaces MFRS 131 Interests in Joint Ventures and IC Interpretation 113 Jointly-Controlled Entities – Non-monetary Contributions by Venturers.

The classification of joint arrangements under MFRS 11 is determined based on the rights and obligations of the parties to the joint arrangements by considering the structure, the legal form, the contractual terms agreed by the parties to the arrangement and when relevant, other facts and circumstances. Under MFRS 11, joint arrangements are classified as either joint operations or joint ventures.

A joint operation is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the assets, and obligations for the liabilities, relating to the arrangement. A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the arrangement.

MFRS 11 removes the option to account for jointly controlled entities (“JCE”) using proportionate consolidation. Instead, JCE that meet the definition of a joint venture must be accounted for using the equity method.


(cont’d)




(b) MFRSs and Amendments to MFRSs issued but not yet effective (cont’d)

(v) MFRS 12 Disclosures of Interests in Other Entities

MFRS 12 includes all disclosure requirements for interests in subsidiaries, joint arrangements, associates and structured entities. A number of new disclosures are required. This standard affects disclosures only and has no impact on the Group’s financial position or performance.

(vi) MFRS 13 Fair Value Measurement

MFRS 13 establishes a single source of guidance under MFRSs for all fair value measurements. MFRS 13 does not change when an entity is required to use fair value, but rather provides guidance on how to measure fair value under MFRS when fair value is required or permitted.

Upon adoption of MFRS 13, the Group will take into consideration the highest and best use of certain properties in measuring the fair value of such properties. The adoption of MFRS 13 is expected to result in higher fair value of certain properties of the Group.

(vii) Amendments to MFRS 101 Presentation of Financial Statements (Annual Improvements 2009 - 2011 Cycle)

The amendments to MFRS 101 change the grouping of items presented in other comprehensive income. Items that could be reclassified (or recycled) to profit or loss at a future point in time (for example, exchange differences on translation of foreign operations and net loss or gain on available-for-sale financial assets) would be presented separately from items which will never be reclassified (for example, actuarial gains and losses on defined benefits plan and revaluation of land and buildings). The amendment affects presentation only and has no impact on the Group’s financial position and performance.

(viii) MFRS 127 Separate Financial Statements

As a consequence of the new MFRS 10 and MFRS 12, MFRS 127 is limited to accounting for subsidiaries, jointly controlled entities and associates in separate financial statements.

2.3 summary of significant accounting policies (a) Basis of consolidation

The consolidated financial statements comprise the financial statements of the Company and its subsidiaries as at the reporting date. The financial statements of the subsidiaries used in the preparation of the consolidated financial statements are prepared for the same reporting date as the Company. Consistent accounting policies are applied to like transactions and events in similar circumstances.

Income and expenses of subsidiaries acquired or disposed of during the year are included in the consolidated income statement from the effective date of acquisition and up to the effective date of disposal, as appropriate. The total comprehensive income of subsidiaries is attributed to the owners of the Company and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance.

All intra-group balances, income and expenses and unrealised gains and losses resulting from intra-group transactions are eliminated in full.

Subsidiaries are consolidated from the date of acquisition, being the date on which the Group obtain control, and continue to be consolidated until the date that such control ceases.

Acquisition under Group re-organisation

One of the subsidiaries, Daya Polymer Sdn. Bhd., is consolidated using the merger method of accounting as the combination is an internal group reorganisation. Under the merger method of accounting, shares acquired, the cost of investment on the Company’s financial statements is recorded at the fair value of shares issued and the difference between the carrying value of the investment and the nominal value of shares acquired is treated as merger reserve or merger deficit. Where the carrying value of investment is less than the nominal value of shares acquired, the merger reserve should be treated as reserve on consolidation.




2.3 summary of significant accounting policies (cont’d) (a) Basis of consolidation (cont’d)

(i) Business combinations

Business combinations are accounted for using the acquisition method from the acquisition date, which is the date on which control is transferred to the Group.

Acquisitions on or after 1 January 2011 For acquisitions on or after 1 January 2011, the Group measures the cost of goodwill at the acquisition date as:

- the fair value of the consideration transferred; plus- the recognised amount of any non-controlling interests in the acquiree; plus- if the business combination is achieved in stages, the fair value of the existing equity interest in the

acquiree; less- the net recognised amount (generally fair value) of the identifiable assets acquired and liabilities

assumed.

When the excess is negative, a bargain purchase gain is recognised immediately in profit or loss.

For each business combination, the Group elects whether it measures the non-controlling interests in the acquiree either at fair value or at the proportionate share of the acquiree’s identifiable net assets at the acquisition date.

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

Acquisitions before 1 January 2011

As part of its transition to MFRS, the Group elected not to restate those business combinations that occurred before the date of transition to MFRSs, which is 1 January 2011. Goodwill arising from acquisitions before 1 January 2011 has been carried forward from the previous FRS framework as at the date of transition.

Upon the loss of control of a subsidiary, the Group derecognises the assets and liabilities of the subsidiary, any non-controlling interests and the other components of equity related to the subsidiary. Any surplus or deficit arising on the loss of control is recognised in income statements. If the Group retains any interest in the previous subsidiary, then such interest is measured at fair value at the date that control is lost.

(b) Transaction with non-controlling interests

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

(c) Subsidiaries

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

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


(cont’d)



2.3 summary of significant accounting policies (cont’d)

(d) Joint venture

(i) Jointly-controlled entities

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

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

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

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

On disposal of such investment, the difference between net disposal proceeds and the carrying amount is included in profit or loss.

(ii) Jointly-controlled operations and assets

A jointly controlled operation is a joint venture carried on by each venturer using its own assets in pursuit of the joint operations. The consolidated financial statements include the assets that the Group controls and the liabilities that it incurs in the course of pursuing the joint operation, and the expenses that the Group incurs and its share of the income that it earns from the joint operation.

(e) Property, plant and equipment

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

Subsequent to recognition, property, plant and equipment except for freehold land and capital-in-progress are stated at cost less accumulated depreciation and any accumulated impairment losses. The policy for the recognition and measurement of impairment losses is in accordance with Note 2.3(h).

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

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





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

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

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

(f) Investment properties

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

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

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

(g) Intangible assets

(i) Goodwill

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

(ii) Software

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

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

(iii) Research and development costs

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

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

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


(cont’d)




(h) Impairment of non-financial assets

The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, or when an annual impairment assessment for an asset is required, the Group makes an estimate of the asset’s recoverable amount.

An asset’s recoverable amount is the higher of an asset’s fair value less costs to sell and its value in use. For the purpose of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units (“CGU”)).

In assessing value in use, the estimated future cash flows expected to be generated by the asset are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Where the carrying amount of an asset exceeds its recoverable amount, the asset is written down to its recoverable amount. Impairment losses recognised in respect of a Cash Generating Unit (“CGU”) or groups of CGUs are allocated first to reduce the carrying amount of any goodwill allocated to those units or groups of units and then, to reduce the carrying amount of the other assets in the unit or groups of units on a pro-rata basis. Impairment losses are recognised in income statements.

An assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognised. If that is the case, the carrying amount of the asset is increased to its recoverable amount. That increase cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised previously.

Such reversal is recognised in income statements unless the asset is measured at revalued amount, in which case the reversal is treated as a revaluation increase. Impairment loss on goodwill is not reversed in a subsequent period.

(i) Financial assets

Financial assets are recognised in the statements of financial position when, and only when, the Group and the Company become a party to the contractual provisions of the financial instrument.

When financial assets are recognised initially, they are measured at fair value, plus, in the case of financial assets not at fair value through profit or loss, directly attributable transaction costs.

The Group and the Company determine the classification of their financial assets at initial recognition, and the categories include financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments and available-for-sale financial assets.

(i) Financial assets at fair value through profit or loss

Financial assets are classified as financial assets at fair value through profit or loss if they are held for trading or are designated as such upon initial recognition. Financial assets held for trading are derivatives (including separated embedded derivatives) or financial assets acquired principally for the purpose of selling in the near term.

Subsequent to initial recognition, financial assets at fair value through profit or loss are measured at fair value. Any gains or losses arising from changes in fair value are recognised in income statements. Net gains or net losses on financial assets at fair value through profit or loss do not include exchange differences, interest and dividend income. Exchange differences, interest and dividend income on financial assets at fair value through profit or loss are recognised separately in income statements as part of administrative expenses or other income.

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

The Group’s and the Company’s financial assets at fair value through profit or loss is disclosed in Note 19.





(i) Financial assets (cont’d)

(ii) Loans and receivables

Financial assets with fixed or determinable payments that are not quoted in an active market are classified as loans and receivables.

Subsequent to initial recognition, loans and receivables are measured at amortised cost using the effective interest method. Gains and losses are recognised in profit or loss when the loans and receivables are derecognised or impaired, and through the amortisation process.

Loans and receivables are classified as current assets, except for those having maturity dates later than 12 months after the reporting date which are classified as non-current.

(iii) Held-to-maturity investments

Financial assets with fixed or determinable payments and fixed maturity are classified as held-to-maturity when the Group has the positive intention and ability to hold the investment to maturity.

Subsequent to initial recognition, held-to-maturity investments are measured at amortised cost using the effective interest method. Gains and losses are recognised in profit or loss when the held-to-maturity investments are derecognised or impaired, and through the amortisation process.

Held-to-maturity investments are classified as non-current assets, except for those having maturity within 12 months after the reporting date which are classified as current.

The Group and the Company did not have any held-to-maturity investments during the year ended 31 December 2012.

(iv) Available-for-sale financial assets

Available-for-sale financial assets are financial assets that are designated as available for sale or are not classified in any of the three preceding categories.

After initial recognition, available-for-sale financial assets are measured at fair value. Any gains or losses from changes in fair value of the financial assets are recognised in other comprehensive income, except that impairment losses, foreign exchange gains and losses on monetary instruments and interest calculated using the effective interest method are recognised in income statements. The cumulative gain or loss previously recognised in other comprehensive income is reclassified from equity to income statements as a reclassification adjustment when the financial asset is derecognised.

Interest income calculated using the effective interest method is recognised in income statements. Dividends on an available-for-sale equity instrument are recognised in income statements when the Group’s and the Company’s right to receive payment is established.

Investments in equity instruments whose fair value cannot be reliably measured are measured at cost less impairment loss.

Available-for-sale financial assets are classified as non-current assets unless they are expected to be realised within 12 months after the reporting date.

The Group and the Company did not have any available-for-sale financial assets during the year ended 31 December 2012.

A financial asset is derecognised when the contractual right to receive cash flows from the asset has expired. On derecognition of a financial asset in its entirety, the difference between the carrying amount and the sum of the consideration received and any cumulative gain or loss that had been recognised in other comprehensive income is recognised in income statements.


(cont’d)




(i) Financial assets (cont’d)

Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the period generally established by regulation or convention in the marketplace concerned. All regular way purchases and sales of financial assets are recognised or derecognised on the trade date, the date that the Group and the Company commit to purchase or sell the asset.

(j) Impairment of financial assets

The Group and the Company assess at each reporting date whether there is any objective evidence that a financial asset is impaired.

(i) Trade and other receivables and other financial assets carried at amortised cost

To determine whether there is objective evidence that an impairment loss on financial assets has been incurred, the Group and the Company consider factors such as the probability of insolvency or significant financial difficulties of the debtor and default or significant delay in payments. For certain categories of financial assets, such as trade receivables, receivables that are assessed not to be impaired individually are subsequently assessed for impairment on a collective basis based on similar risk characteristics. Objective evidence of impairment for a portfolio of receivables could include the Group’s and the Company’s past experience of collecting payments, an increase in the number of delayed payments in the portfolio past the average credit period and observable changes in national or local economic conditions that correlate with default on receivables.

If any such evidence exists, the amount of impairment loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the financial asset’s original effective interest rate. The impairment loss is recognised in income statements.

The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables, where the carrying amount is reduced through the use of an allowance account. When a trade receivable becomes uncollectible, it is written off against the allowance account.

If in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed to the extent that the carrying amount of the asset does not exceed its amortised cost at the reversal date. The amount of reversal is recognised in income statements.

(ii) Unquoted equity securities carried at cost

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

(iii) Available-for-sale financial assets

Significant or prolonged decline in fair value below cost, significant financial difficulties of the issuer or obligor, and the disappearance of an active trading market are considerations to determine whether there is objective evidence that investment securities classified as available-for-sale financial assets are impaired.

If an available-for-sale financial asset is impaired, an amount comprising the difference between its cost (net of any principal payment and amortisation) and its current fair value, less any impairment loss previously recognised in income statements, is transferred from equity to income statements.





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

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

Impairment losses on available-for-sale equity investments are not reversed in income statements in the subsequent periods. Increase in fair value, if any, subsequent to impairment loss is recognised in other comprehensive income. For available-for-sale debt investments, impairment losses are subsequently reversed in income statements if an increase in the fair value of the investment can be objectively related to an event occurring after the recognition of the impairment loss in income statements.

(k) Cash and cash equivalents

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

(l) Inventories

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

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

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

(m) Provisions

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

(n) Financial liabilities

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

Financial liabilities, within the scope of MFRS 139, are recognised in the statements of financial position when, and only when, the Group and the Company become a party to the contractual provisions of the financial instrument. Financial liabilities are classified as either financial liabilities at fair value through profit or loss or other financial liabilities.

(i) Financial liabilities at fair value through profit or loss

Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition at fair value through profit or loss.

Financial liabilities held for trading include derivatives entered into by the Group and the Company that do not meet the hedge accounting criteria. Derivative liabilities are initially measured at fair value and subsequently stated at fair value, with any resultant gains or losses recognised in income statements. Net gains or losses on derivatives include exchange differences.

The Group and the Company did not have any financial liabilities at fair value through profit or loss during the year ended 31 December 2012.


(cont’d)




(n) Financial liabilities (cont’d)

(ii) Other financial liabilities

The Group’s and the Company’s other financial liabilities include trade payables, other payables and loans and borrowings.

Trade and other payables are recognised initially at fair value plus directly attributable transaction costs and subsequently measured at amortised cost using the effective interest method.

Loans and borrowings are recognised initially at fair value, net of transaction costs incurred, and subsequently measured at amortised cost using the effective interest method. Loans and borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the reporting date.

For other financial liabilities, gains and losses are recognised in income statements when the liabilities are derecognised, and through the amortisation process.

A financial liability is derecognised when the obligation under the liability is extinguished. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in income statements.

(o) Borrowing costs

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

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

(p) Employee benefits

(i) Short term benefits

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

(ii) Defined contribution plans

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

(q) Leases

(i) Classification

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





(q) Leases (cont’d)

(ii) Finance leases - the Group as Lessee

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

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

The depreciation policy for leased assets is in accordance with that for depreciable property, plant and equipment as described in Note 2.3(e).

(iii) Operating leases - the Group as Lessee

Operating lease payments are recognised as an expense on a straight-line basis over the term of the relevant lease. The aggregate benefit of incentives provided by the lessor is recognised as a reduction of rental expense over the lease term on a straight-line basis.

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

(iv) Operating leases - the Group as Lessor

Assets leased out under operating lease are presented on the statements of financial position according to the nature of the assets. Contingent rent is recognised as income in the period in which they are earned as stated in Note 2.3(s).

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

(r) Revenue recognition

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

(i) Sale of goods

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

(ii) Management fees

Management fees are recognised when services are rendered.

(iii) Dividends income

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


(cont’d)



2.3 summary of significant accounting policies (cont’d) (r) Revenue recognition (cont’d)

(iv) Contract revenue

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

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

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

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

(v) Services

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

(vi) Interest income

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

(s) Rental income

Rental income from investment property is recognised in the income statements on a straight-line basis over the term of the lease. Lease incentives granted are recognised as an integral part of the total rental income, over the term of the lease.

(t) Income taxes

(i) Current tax

Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted at the reporting date.

Current taxes are recognised in income statements except to the extent that the tax relates to items recognised outside income statements, either in other comprehensive income or directly in equity.

(ii) Deferred tax

Deferred tax is provided using the liability method on temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred tax liabilities are recognised for all temporary differences, except:

- where the deferred tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and





(t) Income taxes (cont’d)

(ii) Deferred tax (cont’d)

Deferred tax liabilities are recognised for all temporary differences, except: (cont’d)

- in respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

Deferred tax assets are recognised for all deductible temporary differences, carry forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised except:

- where the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and

- in respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, deferred tax assets are recognised only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised.

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are reassessed at each reporting date and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax assets to be utilised.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted at the reporting date.

Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.

(u) Share capital

An equity instrument is any contract that evidences a residual interest in the assets of the Group and of the Company after deducting all of its liabilities. Ordinary shares are equity instruments.

Ordinary shares are recorded at the proceeds received, net of directly attributable incremental transaction costs. Ordinary shares are classified as equity. Dividends on ordinary shares are recognised in equity in the period in which they are declared.

(v) Treasury shares

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


(cont’d)




(w) Redeemable convertible secured loan notes

The redeemable convertible secured loan notes are regarded as compound instruments, consisting of a liability component and an equity component. The component of redeemable convertible secured loan notes that exhibits characteristics of a liability is recognised as a financial liability in the statements of financial position, net of transaction costs. On issuance of the redeemable convertible secured loan notes, the fair value of the liability component is determined using a market rate for an equivalent non-convertible debt and this amount is carried as a financial liability in accordance with the accounting policy for financial liabilities as set out in Note 2.3(n).

The residual amount, after deducting the fair value of the liability component, is recognised and included in shareholder’s equity, net of transaction costs.

Transaction costs are apportioned between the liability and equity components of the redeemable convertible secured loan notes based on the allocation of proceeds to the liability and equity components when the instruments were first recognised.

(x) Foreign currency transactions

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

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

Exchange differences arising on the translation of non-monetary items carried at fair value are included in income statements for the period except for the differences arising on the translation of non-monetary items in respect of which gains and losses are recognised directly in equity. Exchange differences arising from such non-monetary items are also recognised directly in equity.

(y) Segment reporting

For management purposes, the Group is organised into operating segments according to the nature of the products and services provided which are independently managed by the respective segment managers responsible for the performance of the respective segments under their charge. The segment managers report directly to the chief operating decision makers, which in this case is the Executive Committee of the Group who regularly review the segment results in order to allocate resources to the segments and to assess the segment performances.

(z) Financial guarantee contracts

A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due.

Financial guarantee contracts are recognised initially as a liability at fair value, net of transaction costs. Subsequent to initial recognition, financial guarantee contracts are recognised as income in profit or loss over the period of the guarantee. If the debtor fails to make payment relating to financial guarantee contract when it is due and the Group, as the issuer, is required to reimburse the holder for the associated loss, the liability is measured at the higher of the best estimate of the expenditure required to settle the present obligation at the reporting date and the amount initially recognised less cumulative amortisation.



3. revenue

Group company

2012 2011 2012 2011

note rM rM rM rM

Sale of goods 86,141,013 71,519,086 - -

Management fees 27 - - 7,944,867 8,044,910

Dividends income 6,27 6,085 5,400 3,676,020 15,447,271

Contract revenue 153,378,871 149,060,365 - -

Service revenue 37,403,399 61,127,650 - -

Others - 33,430 24,000 -

276,929,368 281,745,931 11,644,887 23,492,181

4. cost of sales

Group

2012 2011

rM rM

Cost of inventories sold 53,000,160 53,828,950

Contract costs 149,162,526 145,938,674

Cost of services rendered 19,323,599 39,267,130

221,486,285 239,034,754

5. finance costs

Group company

2012 2011 2012 2011

note rM rM rM rM

Interest expense on advances from subsidiaries 27 - - 431,097 155,237

Interest expense on loans and borrowings 3,762,393 3,511,004 752,316 1,185,707

Coupon interest expense on RCSLN 220,671 445,589 220,671 445,589

Others 84,904 16,744 44,052 -

29 4,067,968 3,973,337 1,448,136 1,786,533


(cont’d)


6. Profit before tax The following amounts have been included in arriving at profit before tax:

Group company

2012 2011 2012 2011

note rM rM rM rM

Amortisation of intangible assets 12 86,715 5,270 11,374 948

(Reversal of discount)/Discount on convertible loan notes (30,178) 74,170 (30,178) 74,170

Auditors’ remuneration:

- Statutory audit 242,402 252,147 38,000 38,000

- Other services 14,029 38,000 14,029 38,000

Allowance for impairment loss 16 743,339 230,439 - -

Fair value changes on marketable securities 19 11,540 - - -

Depreciation:

- Property, plant and equipment 9 4,359,491 4,442,883 242,959 215,721

- Investment properties 11 14,995 14,995 - -

Property, plant and equipment written off 7,854 17,731 - -

Remuneration for the Company’s directors 27 3,191,790 2,077,360 2,766,519 1,691,220

Remuneration for the Company’s past directors 27 - 534,505 - 334,505

Directors’ fees for the Company’s directors 27 166,000 165,000 156,000 141,000

Directors’ fees for the Company’s past directors 27 - 15,000 - 15,000

Directors’ benefits in kind 23,950 47,900 23,950 47,900

Employees benefit expense 28 22,190,428 17,652,506 5,249,197 3,411,084

Foreign exchange loss

- realised 709,048 - 100 -

- unrealised 92,485 - 87,029 -

Rental expense 2,154,056 2,099,682 177,000 81,600

and after crediting:

Gain on disposal of property, plant and equipment 2,962,299 3,408,144 - 118,000

Gain on disposal of subsidiaries 13 - 496 - -

Foreign exchange gain

- Realised - 34,619 - -

- Unrealised 1,861 161,011 - 80,303

Fair value changes on marketable securities 19 - 18,428 - -

Gain on disposal of marketable securities 7,034 13,800 - -

Interest income 1,211,827 1,343,461 1,498,763 1,189,891

Dividends income from subsidiaries 3,27 - - 3,676,020 15,447,271

Dividends income 3 6,085 5,400 - -

Reversal of allowance for impairment loss 16 90,008 1,140,470 - -

Rental income 11 348,118 329,063 24,000 -



7. incoMe tax exPense The major components of income tax expense for the years ended 31 December 2012 and 2011 are:

Group company

2012 2011 2012 2011

note rM rM rM rM

Malaysian income tax

Current income tax 9,017,775 6,464,650 1,043,951 4,375,195

(Over)/Underprovision in prior years (19,042) (31,782) (49,786) 45,713

8,998,733 6,432,868 994,165 4,420,908

Deferred tax

Relating to origination and reversal of temporary differences (449,327) 760,149 (59,946) 101,218

Overprovision in prior years (278,918) (875,353) (6,077) (77,352)

15 (728,245) (115,204) (66,023) 23,866

8,270,488 6,317,664 928,142 4,444,774

Reconciliation between tax expense and accounting profit

The reconciliation between tax expense and the product of accounting profit multiplied by the appplicable corporate tax rate for years ended 31 December 2012 and 2011 is as follows:

Group company

2012 2011 2012 2011

rM rM rM rM

Profit before tax 28,386,689 23,760,266 2,938,188 17,422,290

Tax at Malaysian statutory tax rate of 25% (2011: 25%) 7,096,672 5,940,067 734,547 4,355,573

Different tax rates in other countries 62,788 70,948 - -

Income not subject to tax (122,371) (91,946) (74,282) (75,970)

Expenses not deductible for tax purposes 1,680,170 1,392,609 323,740 254,097

Deferred tax assets not recognised during the year 83,480 21,262 - -

Utilisation of current year’s capital allowances (7,873) (139) - -

Utilisation of previously unrecognised tax losses (224,418) (108,002) - (57,287)

Overprovision of deferred tax in prior years (278,918) (875,353) (6,077) (77,352)

(Over)/Underprovision of income tax in prior years (19,042) (31,782) (49,786) 45,713

8,270,488 6,317,664 928,142 4,444,774

Domestic income tax is calculated at the Malaysian statutory tax rate of 25% (2011: 25%) of the estimated assessable profit for the year. Taxation for other jurisdictions is calculated at the rates prevailing in the respective jurisdictions. The above reconciliation is prepared by aggregating separate reconciliations for each national jurisdiction.


(cont’d)


7. incoMe tax exPense (cont’d)

Tax savings during the financial year arising from:

Group company

2012 2011 2012 2011

rM rM rM rM

Utilisation of current year tax losses 274,593 - 274,593 -

Utilisation of previously unrecognised tax losses 224,418 108,002 - 57,287

499,011 108,002 274,593 57,287

8. earninGs Per share (a) basic earnings per share

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

Group

2012 2011

Profit attributable to ordinary equity holders of the Company (RM) 20,170,784 17,381,905

Weighted average number of ordinary shares in issue 1,220,349,464 1,161,920,542

Basic earnings per share (sen) 1.65 1.50

(b) Diluted earnings per share

Diluted earnings per share amounts are calculated by dividing profit for the year, net of tax, attributable to owners of the parent (after adjusting for interest expense on redeemable convertible secured loan notes) by the weighted average number of ordinary shares outstanding during the financial year plus the weighted average number of ordinary shares that would be issued on the conversion of all the dilutive potential ordinary shares into ordinary shares.

Group

2012 2011

Profit attributable to ordinary equity holders of the Company (RM) 20,170,784 17,381,905

Effect of dilution (RM) 8,539 94,328

Adjusted net profit for the period attributable to ordinary equity holders of the Company (RM) 20,179,323 17,476,233

Weighted average number of ordinary shares in issue 1,220,349,464 1,161,920,542

Effect of dilution 14,994,003 40,507,215

Adjusted weighted average number of shares in issue 1,235,343,467 1,202,427,757

Diluted earnings per share (sen) 1.63 1.45



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Writ

ten

off -

- -

(35,

961)

(12,

643)

(47,

067)

(10,

164)

- -

(105

,835

)

As

at 3

1 D

ecem

ber

1,6

00,9

74

8,3

45,8

33

37,

019,

035

57,

530,

102

6,7

81,6

19

2,9

04,9

14

2,7

75,8

75

6,9

12,5

83

11,

648,

264

135

,519

,199

acc

umul

ated

dep

reci

atio

n

As

at 1

Janu

ary

- 6

41,2

88

3,6

77,3

14

14,

183,

435

5,0

92,0

11

1,3

72,4

18

1,4

49,0

57

3,3

28,4

42

- 2

9,74

3,96

5

Char

ge fo

r the

yea

r6,

29

- 1

17,4

46

811

,738

1

,639

,762

2

87,5

53

199

,703

2

56,7

64

1,0

46,5

25

- 4

,359

,491

Dis

posa

ls -

- -

(3,4

11,6

29)

- -

- (6

56,6

51)

- (4

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)

Recl

assi

ficat

ion

- -

- -

- -

- -

- -

Writ

ten

off -

- -

(30,

915)

(10,

325)

(47,

067)

(9,6

74)

- -

(97,

981)

As

at 3

1 D

ecem

ber

- 7

58,7

34

4,4

89,0

52

12,

380,

653

5,3

69,2

39

1,5

25,0

54

1,6

96,1

47

3,7

18,3

16

- 2

9,93

7,19

5

net

car

ryin

g am

ount

As

at 3

1 D

ecem

ber

1,6

00,9

74

7,5

87,0

99

32,

529,

983

45,

149,

449

1,4

12,3

80

1,3

79,8

60

1,0

79,7

28

3,1

94,2

67

11,

648,

264

105

,582

,004


(cont’d)


9.

Pro

Pert

y, P

lan

t a

nD

eq

uiP

Men

t (

cont

’d)

fre

ehol

d la

nd

lea

seho

ld

land

bui

ldin

g,

reno

vati

on

and

e

lect

rica

l in

stal

lati

on

cra

nes,

p

arts

and

fo

rklif

ts

Pla

nt a

nd

mac

hine

ry

fac

tory

e

quip

men

t

fur

nitu

re,

fitt

ings

, c

ompu

ter

and

offi

ce

equ

ipm

ent

Mot

or

veh

icle

s c

apit

al in

p

rogr

ess

tot

al

Gro

upn

ote

rM

r

M

rM

r

M

rM

r

M

rM

r

M

rM

r

M

2011

cost

As

at 1

Janu

ary

1,6

00,9

74

8,3

45,8

33

32,

174,

153

56,

012,

890

9,6

11,4

17

1,7

73,2

91

2,1

95,0

86

7,2

36,0

92

3,4

14,9

22

122

,364

,658

Addi

tions

29 -

- 3

,401

,130

5

,003

,737

1

45,0

68

440

,167

1

35,9

86

1,9

22,9

93

6,9

94,8

68

18,

043,

949

Dis

posa

ls o

f sub

sidi

arie

s -

- (8

47,8

68)

- (2

,415

,681

) (6

6,21

2) (5

8,81

2) -

- (3

,388

,573

)

Dis

posa

ls -

- (1

33,0

81)

(3,5

64,5

93)

(621

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) (4

,256

) (1

2,41

5) (2

,788

,193

) -

(7,1

24,2

92)

Writ

ten

off -

- -

(133

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) -

- (1

18)

- -

(133

,480

)

As

at 3

1 D

ecem

ber

1,6

00,9

74

8,3

45,8

33

34,

594,

334

57,

318,

672

6,7

19,0

50

2,1

42,9

90

2,2

59,7

27

6,3

70,8

92

10,

409,

790

129,

762,

262

acc

umul

ated

dep

reci

atio

n

As

at 1

Janu

ary

- 5

32,5

97

2,9

17,7

53

16,

278,

787

5,0

11,6

42

1,0

73,0

86

1,3

20,7

90

4,3

64,3

09

- 3

1,49

8,96

4

Char

ge fo

r the

yea

r6,

29

- 1

08,6

91

782

,680

1

,464

,518

5

46,5

80

202

,653

2

63,2

35

1,0

74,5

26

- 4

,442

,883

Dis

posa

ls o

f sub

sidi

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s -

- (9

,274

) -

(130

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) (3

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) (5

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) -

- (1

50,0

11)

Dis

posa

ls -

- (1

3,84

5) (3

,444

,133

) (3

35,4

11)

(7,9

43)

(20,

397)

(2,1

10,3

93)

- (5

,932

,122

)

Recl

assi

ficat

ion

- -

- -

- 1

08,5

81

(108

,581

) -

- -

Writ

ten

off -

- -

(115

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) -

- (1

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- (1

15,7

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As

at 3

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- 6

41,2

88

3,6

77,3

14

14,

183,

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5,0

92,0

11

1,3

72,4

18

1,4

49,0

57

3,3

28,4

42

- 2

9,74

3,96

5

net

car

ryin

g am

ount

As

at 3

1 D

ecem

ber

1,6

00,9

74

7,7

04,5

45

30,

917,

020

43,

135,

237

1,6

27,0

39

770

,572

8

10,6

70

3,0

42,4

50

10,

409,

790

100

,018

,297



9. ProPerty, Plant anD equiPMent (cont’d)

furniture, fittings,

computer and office

equipment Motor

vehicles total

company note rM rM rM

2012

cost

As at 1 January 49,919 1,078,323 1,128,242

Additions 113,600 145,274 258,874

As at 31 December 163,519 1,223,597 1,387,116

accumulated depreciation

As at 1 January 26,418 276,166 302,584

Charge for the year 6 24,873 218,086 242,959

As at 31 December 51,291 494,252 545,543

net carrying amount

As at 31 December 112,228 729,345 841,573

2011

cost

As at 1 January 58,530 827,594 886,124

Additions 9,044 898,729 907,773

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

As at 31 December 49,919 1,078,323 1,128,242


As at 1 January 32,186 558,332 590,518

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

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

As at 31 December 26,418 276,166 302,584

net carrying amount

As at 31 December 23,501 802,157 825,658


(cont’d)


9. ProPerty, Plant anD equiPMent (cont’d)

(a) capitalisation of borrowing costs

Included in the Group’s property, plant and equipment is interest capitalised amounting to RM878,885 (2011: RM499,051).

(b) assets pledged as security

The net book value of the Group’s and of the Company’s property, plant and equipment pledged to financial institutions as securities for bank facilities as disclosed in Note 23 are as follows:

Group company

2012 2011 2012 2011

rM rM rM rM

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

Leasehold land 6,478,931 5,081,691 - -

Building, renovation and electrical installation 27,313,440 21,966,211 - -

Cranes, parts and forklifts 22,862,036 24,984,389 - -

Plant and machinery 237,229 304,767 - -

Factory equipment 283,003 331,024 - -

Furniture, fittings, computer and office equipment 140,856 163,819 - -

Motor vehicles 3,010,679 2,719,917 693,921 730,814

Capital in progress 11,648,264 10,068,697 - -

73,523,448 67,169,525 693,921 730,814

(c) assets held under finance lease

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

Group company

2012 2011 2012 2011

rM rM rM rM

Cranes, parts and forklifts 4,309,853 840,533 - -

Motor vehicles 3,007,032 2,680,381 693,921 730,814

7,316,885 3,520,914 693,921 730,814



10. lanD helD for ProPerty DeveloPMent

Group

2012 2011

note rM rM

cost

Freehold land, at cost 10,384,754 -

Development expenditures 90,071 -

10,474,825 -

As at 1 January - -

Acquisition of freehold lands 10,384,754 -

Development expenditure incurred 90,071 -

As at 31 December 29 10,474,825 -

11. investMent ProPerties

freehold land building total

Group note rM rM rM

2012

cost

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


As at 1 January - 149,796 149,796

Charge for the year 6, 29 - 14,995 14,995

As at 31 December - 164,791 164,791

net carrying amount

As at 31 December 113,446 1,081,959 1,195,405

investment properties, at fair value

As at 31 December 279,851 1,406,783 1,686,634


(cont’d)


11. investMent ProPerties (cont’d)

freehold land building total

Group note rM rM rM

2011

cost

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


As at 1 January - 134,801 134,801

Charge for the year 6, 29 - 14,995 14,995

As at 31 December - 149,796 149,796

net carrying amount

As at 31 December 113,446 1,096,954 1,210,400

investment properties, at fair value

As at 31 December 279,851 1,406,783 1,686,634

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

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

Group

2012 2011

note rM rM

Rental income 6 348,118 329,063

Depreciation on investment properties 6 14,995 14,995



12. intanGible assets

Goodwill software Development

costs total

Group note rM rM rM rM

2012

cost

As at 1 January 83,490,527 399,925 360,022 84,250,474

Additions 29 - 98,425 - 98,425

As at 31 December 83,490,527 498,350 360,022 84,348,899

accumulated amortisation

As at 1 January - 5,270 360,022 365,292

Amortisation during the year 6, 29 - 86,715 - 86,715

As at 31 December - 91,985 360,022 452,007

net carrying amount

As at 31 December 83,490,527 406,365 - 83,896,892

2011

cost

As at 1 January 83,490,527 - 360,022 83,850,549

Additions 29 - 399,925 - 399,925

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


As at 1 January - - 360,022 360,022

Amortisation during the year 6, 29 - 5,270 - 5,270

As at 31 December - 5,270 360,022 365,292

net carrying amount

As at 31 December 83,490,527 394,655 - 83,885,182


(cont’d)


12. intanGible assets (cont’d)

software total

company note rM rM

2012

cost

As at 1 January/31 December 56,871 56,871


As at 1 January 948 948

Amortisation during the year 6 11,374 11,374

As at 31 December 12,322 12,322

net carrying amount

As at 31 December 44,549 44,549

2011

cost

As at 1 January - -

Additions 56,871 56,871

As at 31 December 56,871 56,871


As at 1 January - -

Amortisation during the year 6 948 948

As at 31 December 948 948

net carrying amount

As at 31 December 55,923 55,923

(a) impairment loss recognised

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



12. intanGible assets (cont’d)

(b) impairment tests for goodwill

Allocation of goodwill

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

Group

2012 2011

rM rM

Oil & gas 72,850,883 72,850,883

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

83,490,527 83,490,527

Key assumptions used in value-in-use calculations

The recoverable amount of the CGU is determined based on value-in-use calculations using cash flow projections approved by management covering a five years period. Cash flows beyond the five years period are extrapolated using a growth rate of 3.20% (2011: 3.38%) per annum.

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

i. Budgeted gross margin

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

ii. Selling price

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

iii. Discount rate and growth rate

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

business segments

oil & gas technical

services

Discount rate 10.12% 10.72%

Growth rate 5.00% 5.00% Sensitivity to changes in assumptions

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


(cont’d)


13. investMent in subsiDiaries

company

2012 2011

note rM rM

unquoted shares at cost

As at 1 January 172,851,767 171,740,329

Acquisition of subsidiaries a 800 -

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

At 31 December 172,852,567 172,851,767

Certain of the Company’s investment in subsidiaries with total carrying amounts of RM112,308,946 (2011: RM112,308,946) and RM28,488,131 (2011: RM28,488,131) have been pledged to a financial institution for banking facilities granted to the Company and for the issuance of the Redeemable Convertible Secured Loan Notes (“RCSLN”) respectively as disclosed in Note 23.

Details of subsidiaries as at 31 December 2012 and 2011 are as follows:

effectiveequity

interest country of2012 2011 incorporation Principal activities

held by the company

Daya Polymer Sdn. Bhd. 100% 100% Malaysia Manufacturer of semicon and XLPE compounds for cable and wire and trading in specialty chemicals, related polymer compounds and hardware.

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

Meridian Orbit Sdn. Bhd. 100% 100% Malaysia Investment holding.

Daya Secadyme Sdn. Bhd.*** 75.1% 100% Malaysia Trading in petrochemicals products and investment holding.

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

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

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

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

Daya OCI Sdn. Bhd.*** 75.1% 100% Malaysia Supplying of equipment and specialty chemicals for oil and gas process plants, a provider of installation and maintenance services for air-conditioning and ventilation system, a provider for automatic welding services for offshore pipeline installation, a provider for maintenance services for both onshore plants and offshore facilities, a provider for warehousing and forwarding agency.



13. investMent in subsiDiaries (cont’d)

Details of subsidiaries as at 31 December 2012 and 2011 are as follows: (cont’d)

effectiveequity


held by the company (cont’d)

Daya Petroleum Ventures Sdn. Bhd. (Formerly known as Metriwell Sdn. Bhd.)

80% - Malaysia Provision of drilling services, geological, petroleum engineering, subsea and deep-water support services, and operations and maintenance services.

held through subsidiaries

Daya Hightech Sdn. Bhd. 100% 100% Malaysia Manufacturer of compounds for cable and wire.

Seca Chemicals and Catalysts Sdn. Bhd.***

75.1% 100% Malaysia Dealing in petroleum, oil and gas products, and consulting services.

Daya Offshore Construction Sdn. Bhd. (Formerly known as SD Equipment Sdn. Bhd.)***

75.1% 100% Malaysia Dealing in project management, installation and design engineering, fabrication, procurement and logistics, vessel operations, survey and diving operations.

Seca Engineering and Manpower Services Sdn. Bhd.***

75.1% 100% Malaysia Providing engineering and manpower services.

Daya FMM Sdn. Bhd. 100% 100% Malaysia General contractors and related services.

Daya Land & Development Sdn. Bhd. 100% 100% Malaysia Trader of all kinds of building materials, hardware equipment and other related products.

Daya Clarimax Sdn. Bhd. 100% 100% Malaysia Providing recycling of waste solvent and manufacturing high purity electronics and technical solvent.

Daya Petroleum Ventures Sdn. Bhd. (Formerly known as Metriwell Sdn. Bhd.)

- 80% Malaysia Provision of drilling services, geological, petroleum engineering, subsea and deep-water support services, and operations and maintenance services.

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

Ultrafest Sdn. Bhd. 100% 100% Malaysia Property development.

Zen Projects Sdn. Bhd. 100% - Malaysia Investment holding.

Terra Hill Development Sdn. Bhd. 100% - Malaysia Property development.

Daya E&C Sdn. Bhd.** 100% - Malaysia Provision of electrical, mechanical engineering and construction works.

Daya OCI (Labuan) Limited. (Formerly known as Daya OCI (Labuan) Berhad)**

100% - Malaysia Shipping leasing business and other related services to the oil and gas industry.

PT Daya Secadyme Indonesia* 75.1% 100% Indonesia Trading in petrochemicals products. * Audited by firms of auditors other than Ernst & Young.** These companies were incorporated on November 2012 and will prepare its first set of audited financial statements for the year ending on 31

December 2013.*** The interests in Daya OCI Sdn. Bhd. (“DOCI”) and Daya Secadyme Sdn. Bhd. (“DSSB”) were remained consolidated at 100%. Accordingly, the Group

has not recognized any share of non-controlling interest in the income statements and statements of financial position.


(cont’d)



(a) acquisition of subsidiaries

i. On 2 August 2012, through the Internal Group Re-Organisation Plan, the Company acquired 800 ordinary shares of RM1.00 each in Daya Petroleum Ventures Sdn. Bhd. (formerly known as Metriwell Sdn. Bhd.) (“DPV”), a sub-subsidiary of a subsidiary of the Company, Daya Secadyme Sdn. Bhd. representing 80% of the issued and paid-up share capital of DPV for a cash consideration of RM800 from a wholly-owned sub-subsidiary of the Company, Seca Engineering and Manpower Services Sdn. Bhd.

ii. On 14 February 2012, the Group, via its direct wholly owned subsidiary, Daya CMT Sdn. Bhd. acquired 2 ordinary shares of RM1 each in Zen Projects Sdn. Bhd. (“ZPSB”) and Terra Hill Development Sdn. Bhd. (“THDSB”) for a total consideration of RM2 each, representing 100% equity interest in ZPSB and THDSB.

iii. On 30 November 2012, the Group, via its direct wholly owned subsidiary, Daya CMT Sdn. Bhd. acquired 2 ordinary shares of RM1 each in Daya E&C Sdn. Bhd. (“DECSB”), for a total cash consideration of RM2 from Mr. Nathan Tham Jooi Loon and Mr. Tham Wooi Loon, representing 100% equity interest in DECSB.

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

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

(b) increase in investment in subsidiaries

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

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

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

(c) acquisition of non-controlling interests

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

(d) incorporation of subsidiaries

The Group had on 19 November 2012, via its subsidiary, Daya OCI Sdn. Bhd. incorporated a limited liability company known as Daya OCI (Labuan) Limited (formerly known as Daya OCI (Labuan) Berhad) (“DOCIL”). The principal activities of DOCIL is to involve in the shipping leasing business and other related services to the oil and gas industry.




(e) Partial disposal of shares in subsidiaries

The Company had on 21 September 2012 completed its disposal of 250,992 ordinary shares of RM1.00 each in Daya Secadyme Sdn. Bhd. (“DSSB”) and 1,245,000 ordinary shares of RM1.00 each in Daya OCI Sdn. Bhd. (“DOCI”) representing 24.9% of the issued and paid-up share capital of DSSB and DOCI respectively to Rancak Nikmat Sdn. Bhd. for a total cash consideration of RM19,000,000 and RM11,500,000 respectively.

The non-controlling interests in DOCI and DSSB by way of the Sales and Purchases Agreement dated 25 May 2012 has agreed to forgo its claim on the assets and profits of DOCI and DSSB. Accordingly, the Group has not recognized any share of non-controlling interest in the income statement and statement of financial position.

(f) Disposal of subsidiaries

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

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

The assets and liabilities disposed are as follows:

Group

2011

note rM

Property, plant and equipment 3,238,562

Inventories 178,991

Trade and other receivables 1,028,404

Cash and bank balances 82,282

Trade and other payables (3,806,295)

721,944

Less : Transfer to investment in jointly controlled entities 14 (625,166)

Non-controlling interests (81,573)

15,205

Gain on disposal of subsidiaries 6 496

Consideration received, satisfied in cash 15,701

Cash disposed of (82,282)

Net cash outflows (66,581)


(cont’d)


14. investMent in Jointly controlleD entities

Group

2012 2011

note rM rM

unquoted shares, at cost

At 1 January 1,182,166 750,000

Acquisition of a joint venture company a - 2

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

Incorporation of a joint venture company b - 51,000

Capital distribution from an investment in a jointly controlled entity - (250,000)

Transfer from investment in subsidiaries 13 - 625,166

At 31 December 1,182,166 1,182,166

shares of post acquisition reserve

At 1 January 1,946,471 310,692

Share of results of jointly controlled entities 29 1,480,297 1,394,943

Reversal of provision on foreseeable losses - 240,836

Distribution of profits from a jointly controlled entity (2,218,345) -

As at 31 December 1,208,423 1,946,471

Share of net assets 29 2,390,589 3,128,637 The aggregate amounts of each of the current assets, non-current assets, current liabilities, non-current liabilities, income and

expenses related to the Group’s interests in the jointly-controlled entities are as follows:

Group

2012 2011

rM rM

assets and liabilities

Current assets 3,452,890 5,423,601

Non-current assets 2,111,241 2,185,787

Total assets 5,564,131 7,609,388

Current liabilities 1,966,891 3,019,337

Non-current liabilities 1,206,651 1,461,414

Total liabilities 3,173,542 4,480,751

income and expenses

Income 6,592,532 8,092,138

Expenses (5,112,235) (6,697,195)

Share of results of jointly controlled entities 1,480,297 1,394,943



14. investMent in Jointly controlleD entities (cont’d)

Details of the jointly controlled entities as at 31 December 2012 and 2011 are as follows:

effective equity


held through subsidiaries

Daya-Sheffield Sdn. Bhd. 38.3%* 51% Malaysia Supplying of services and equipments to exploration and extraction companies in the oil and gas industry.

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

Terengganu Crude Oil Terminal** 25.5%* 34% Unincorporated Installation of pipeline from Angsi field, offshore Terengganu to Terengganu Crude Oil Terminal in Kerteh.

Daya NCHO International Limited** 60% 60% Hong Kong Investment holding to invest in tank services regionally.

Daya NCHO Sdn. Bhd.** 60% 60% Malaysia Provision of ISO tank cleaning, repair and maintenance services.

Daya Campo (Sabah) Sdn. Bhd. 45%* 60% Malaysia Investment holding. * The effective shareholdings of these jointly controlled entities reduced following the shares disposal in Daya OCI Sdn. Bhd. on 21 September 2012.** Audited by firms of auditors other than Ernst & Young

(a) acquisition of a joint venture company

(i) On 28 September 2011, the Group, via its direct wholly owned subsidiary, Daya OCI Sdn. Bhd. (“DOCI”) acquired two

(2) ordinary shares of RM1.00 in Daya Campo (Sabah) Sdn. Bhd. (“DCSB”) representing 100% of the issued and paid-up share capital of DCSB from Kamalukhair Abdullah and Dato’ Mazlin Bin Md. Junid, for a total consideration of RM2 only.

On 5 October 2011, DOCI entered into a Joint Venture Agreement with Campo Sdn. Bhd. (“Campo’) (“The Joint Venture”). The Joint Venture was undertaken through DCSB. On 3 February 2012, DCSB had further issued additional 5,998 and 4,000 ordinary shares of RM1.00 each in DCSB to DOCI and Campo.

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

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

(b) incorporation of a joint venture company

On 26 October 2010, the Group, via its subsidiary, Daya OCI Sdn. Bhd. (“DOCI”) incorporated a joint venture company under the name of Daya OCI-Ascent Sdn. Bhd (“DASB”) with Ascent Offshore (Singapore) Pte Ltd. DASB was incorporated on 26 October 2010 as a private limited liability company with an authorised and fully paid-up share capital of RM100,000 divided into 100,000 ordinary shares of RM1.00 each. DASB’s issued and fully paid-up share capital is 51% owned by DOCI and 49% owned by Ascent Offshore (Singapore) Pte. Ltd. The principal activities of DASB are in supplying of services and equipments to exploration and extraction companies in the oil and gas industry.


(cont’d)


14. investMent in Jointly controlleD entities (cont’d)

(b) incorporation of a joint venture company (cont’d)

On 10 November 2011, DOCI entered into a Supplemental Joint Venture Agreement to the Joint Venture Agreement (“JVA”) dated 25 August 2010 between DOCI, Sheffield Offshore Services Pte. Ltd. (“Sheffield”) and Ascent Offshore (Singapore) Pte. Ltd. (“Ascent”). Ascent shall cease to be a party and Sheffield shall take the place of Ascent as a party to the JVA. Sheffield shall pay to Ascent the sum of RM49,000 only in consideration of the transfer by Ascent to Sheffield of 49,000 ordinary shares of par value RM1.00 each in DASB. Daya OCI-Ascent Sdn. Bhd was subsequently changed to “Daya Sheffield Sdn. Bhd.” and all cost incidental to this change of name shall be borne by DASB.

(c) completion of a jointly controlled operation

On 26 April 2012, the Group via its subsidiary, Daya OCI Sdn. Bhd. (“DOCI”) concluded a mutual agreement with KWH Technologies Sdn. Bhd to close their jointly controlled operation known as DOCI-KWH. The assets of DOCI-KWH has been distributed by way of capital distribution in cash to DOCI amounted to RM250,000 in the prior year.

15. DeferreD tax

assets liabilities net

2012 2011 2012 2011 2012 2011

Group note rM rM rM rM rM rM

At 1 January 1,198,845 1,301,871 2,150,151 2,387,603 (951,306) (1,085,732)

Recognised in income statements 7 112,792 (103,026) (615,453) (218,230) 728,245 115,204

Recognised in equity - - (23,491) (19,222) 23,491 19,222

At 31 December 29 1,311,637 1,198,845 1,511,207 2,150,151 (199,570) (951,306)

assets liabilities net

2012 2011 2012 2011 2012 2011

company note rM rM rM rM rM rM

At 1 January 44,860 73,433 90,061 113,990 (45,201) (40,557)

Recognised in income statements 7 50,759 (28,573) (15,264) (4,707) 66,023 (23,866)

Recognised in equity - - (23,491) (19,222) 23,491 19,222

At 31 December 95,619 44,860 51,306 90,061 44,313 (45,201)

The components and movements of deferred tax liabilities and deferred tax assets during the financial year prior to offsetting are as follows:

Group

at1 January

2011recognised

in equity

recognisedin income

statements

at 31 December

2011/1 January

2012 recognised

in equity

recognisedin income

statements

at31 December

2012

rM rM rM rM rM rM rM

Deferred tax liabilities

Property, plant and equipment 2,307,502 - (205,532) 2,101,970 - (602,881) 1,499,089

RCSLN 93,716 (19,222) (26,313) 48,181 (23,491) (13,950) 10,740

Others (13,614) - 13,614 - - 1,378 1,378

2,387,604 (19,222) (218,231) 2,150,151 (23,491) (615,453) 1,511,207



15. DeferreD tax (cont’d)

Group

at 1 January

2011

recognised in income

statements

December 2011/

1 January 2012

recognised in income

statements

at 31 December

2012

rM rM rM rM rM

Deferred tax assets

Deductible temporary differences 569,721 (236,562) 333,159 153,454 486,613

Tax losses 297,200 287,000 584,200 159,650 743,850

Provisions 434,950 (153,464) 281,486 (200,312) 81,174

1,301,871 (103,026) 1,198,845 112,792 1,311,637

company

at1 January

2011

recognisedin income

statementsrecognised

in equity

at 31 December

2011/1 January

2012

recognisedin income

statementsrecognised

in equity

at 31 December

2012

rM rM rM rM rM rM rM

Deferred tax liabilities

Property, plant and equipment 22,905 18,975 - 41,880 (1,314) - 40,566

RCSLN 91,085 (23,682) (19,222) 48,181 (13,950) (23,491) 10,740

113,990 (4,707) (19,222) 90,061 (15,264) (23,491) 51,306

Deferred tax assets

Deductible temporary differences (73,433) 28,573 - (44,860) (50,759) - (95,619)

Deferred tax assets have not been recognised in respect of the following items:

Group

2012 2011

rM rM

Unutilised tax losses 1,143,048 821,328

Unabsorbed capital allowances 36,200 24,000

Other temporary differences 7,000 7,000

1,186,248 852,328


(cont’d)


16. traDe anD other receivables

Group company

2012 2011 2012 2011

note rM rM rM rM

non-current

non-trade

Staff loan a 728,096 1,271,456 - -

current

trade

Trade receivables 48,605,287 74,982,630 - -

Amount due from subsidiaries b - - 3,459,992 2,908,444

c 48,605,287 74,982,630 3,459,992 2,908,444

Less: Allowance for impairment loss (464,609) (386,217) - -

30 48,140,678 74,596,413 3,459,992 2,908,444

non-trade

Deposits d 7,312,717 2,529,969 57,490 182,350

Staff loans a 560,900 550,740 - -

Sundry receivables 16,929,245 9,186,638 510,296 716,953

Less: Allowance for impairment loss (350,000) (350,000) - -

e 16,579,245 8,836,638 510,296 716,953

Amount due from subsidiaries b - - 28,296,010 21,188,080

24,452,862 11,917,347 28,863,796 22,087,383

Total current trade and other receivables 72,593,540 86,513,760 32,323,788 24,995,827

total trade and other receivables 30 73,321,636 87,785,216 32,323,788 24,995,827

Add: Cash and cash equivalents 20 66,412,033 62,840,884 11,798,484 5,224,754

total loans and receivables 139,733,669 150,626,100 44,122,272 30,220,581

(a) staff loans

Staff loans are unsecured and non-interest bearing except for the amount of RM1,271,695 (2011: RM1,809,111) which is a housing loan to a director and subject to interest rate at 5.55% (2011: 5.55%) per annum.

(b) amount due from subsidiaries

The amount due from the subsidiaries is unsecured, repayable on demand and non-interest bearing except for the amount of RM27,492,209 (2011: RM20,806,947) which subject to interest rate at 8.60% (2011: 8.30-8.60%) per annum.

Further details on related party transactions are disclosed in Note 27.



16. traDe anD other receivables (cont’d) (c) aging analysis of trade receivables

The ageing analysis of the Group’s and of the Company’s trade receivables is as follows:

Group company

2012 2011 2012 2011

rM rM rM rM

Neither past due nor impaired 30,775,695 66,367,345 2,436,955 2,618,405

Past due not impaired:

- 1 to 30 days 8,505,580 3,499,941 - -

- 31 to 60 days 3,858,612 1,465,861 - -

- 61 to 90 days 2,548,121 1,876,821 - -

- 91 to 120 days 850,291 1,133,526 153,877 134,156

- More than 121 days 1,602,379 252,919 869,160 155,883

17,364,983 8,229,068 1,023,037 290,039

Impaired 464,609 386,217 - -

48,605,287 74,982,630 3,459,992 2,908,444

Receivables that are neither past due nor impaired

Trade receivables that are neither past due nor impaired are creditworthy debtors with good payment records with the Group and the Company.

None of the Group’s and of the Company’s trade receivables that are neither past due nor impaired have been renegotiated during the financial year.

Receivables that are past due but not impaired

The Group and the Company have trade receivables amounting to RM17,364,983 (2011: RM8,229,068) and RM1,023,037 (2011: RM290,039) respectively that are past due at the reporting date but not impaired.

No allowance for impairment is made as in the opinion of the management, significant portions of the outstanding debts is in line with the norm in the construction industry and would be collected in full within the next twelve months.

Receivables that are impaired

The Group’s trade and other receivables that are impaired at the reporting date and the movement of the allowance accounts used to record the impairment are as follows:

Group

individually impaired

2012 2011

rM rM

Trade and other receivables - nominal amounts 814,609 736,217

Less: Allowance for impairment loss (814,609) (736,217)

- -


(cont’d)


16. traDe anD other receivables (cont’d) (c) aging analysis of trade receivables (cont’d)

Receivables that are impaired (cont’d)

Movement in allowance accounts:

Group

2012 2011

note rM rM

At 1 January 736,217 1,646,248

Allowance for impairment loss 6 743,339 230,439

Reversal of allowance for impairment loss 6 (90,008) (1,140,470)

Bad debts written off (574,939) -

At 31 December 814,609 736,217

The Group’s allowance accounts arise from:

Group

2012 2011

rM rM

Trade receivables 464,609 386,217

Sundry receivables 350,000 350,000

814,609 736,217

There is no allowance for impairment made for the Company during the year and prior year.

Trade receivables that are impaired relate to individually determined debtors that are in significant financial difficulties and have defaulted on payment. These receivables are not secured by any collateral or credit enhancements.

(d) Deposits

Included in deposits of the Group is the deposit made for the purchase of commercial properties amounted to RM4,701,322 (2011: Nil).

(e) sundry receivables

Included in sundry receivables of the Group are amount due from a jointly controlled entity and receivables from legal suit against Mohd Akbar B Hj. Johari, AJ Premier Holdings Sdn. Bhd., Aims Mission Sdn. Bhd., Global Max Trading Sdn. Bhd. and Azrul Bin Mohd Nasir representative of Rasa Indah Trading amounted to RM2,454,533 (2011: RM3,538,459) and RM1,922,250 (2011: RM1,942,250) respectively.



16. traDe anD other receivables (cont’d) (f) receivables denominated in foreign currencies

Included in trade and other receivables are the following trade and other receivables amounts denominated in a currency other than the functional currency of the entity to which they relate:

Group company

2012 2011 2012 2011

note rM rM rM rM

Hong Kong Dollar 4,477 - 2,798,027 1,876,219

Indonesian Rupiah 1,694,861 280,095 - -

United States Dollar 915,410 32,273 - -

European Dollar - 25,479,628 - -

30(c) 2,614,748 25,791,996 2,798,027 1,876,219

17. inventories

Group

2012 2011

rM rM

At cost:

Raw materials 5,401,146 5,102,660

Work-in-progress 51,513 74,466

Finished goods 8,245,516 5,736,952

Goods in-transit - 116,152

Consumables 399,731 3,151,306

14,097,906 14,181,536 Assets pledged as security

The Group’s inventories amounted to RM5,674,929 (2011: RM6,835,341) have been pledged to a licensed bank as securities for the bank facilities as disclosed in Note 23.


(cont’d)


18. other current assets

Group company

2012 2011 2012 2011

note rM rM rM rM

Amount due from customers on contracts a 38,765,323 22,074,506 - -

Prepayments 1,360,176 540,535 124,249 174,000

40,125,499 22,615,041 124,249 174,000 (a) amount due from customers on contracts

Group company

2012 2011 2012 2011

rM rM rM rM

Aggregate costs incurred to date 267,751,020 305,500,193 - -

Add: Attributable profits 32,689,305 61,919,970 - -

300,440,325 367,420,163 - -

Less: Progress billings (261,675,002) (345,345,657) - -

38,765,323 22,074,506 - -

Included in the amount due from customers on contracts during the year is the hiring costs of plant and machinery amounting to RM2,183,536 (2011: RM2,249,736).

19. MarKetable securities

Group

2012 2011

note rM rM

financial assets at fair value through profit or loss

Shares quoted in Malaysia

At cost

As at 1 January 206,700 140,000

Additions - 114,900

Disposals (91,800) (48,200)

As at 31 December 114,900 206,700

Accumulated fair value changes

As at 1 January 37,028 18,600

Fair value changes on marketable securities 6 (11,540) 18,428

Disposals (32,200) -

As at 31 December (6,712) 37,028

Market value of quoted shares 108,188 243,728




(cont’d)

19. Marketable securities (cont’d)

Fair value hierarchy

The Group uses the following hierarchy for determining the fair value of all financial instruments carried at fair value:

Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities Level 2 - Inputs that are observable market data, either directly or indirectly Level 3 - Inputs that are not based on observable market data

As at the reporting date, the Group held the following financial assets that are measured at fair value:

level 1 level 2 level 3 total

rM rM rM rM

31 December 2012

Group

Financial assets

Financial assets at fair value through profit or loss Quoted shares 108,188 - - 108,188

31 December 2011

Group

Financial assets

Financial assets at fair value through profit or loss Quoted shares 243,728 - - 243,728

20. cash anD cash equivalents

2012 2011 1.1.2011

note rM rM rM

Group

Short term investments 30, a 3,620,798 3,707,582 2,422,352

Fixed deposits with licensed banks 30, b 29,781,427 41,231,219 21,115,259

Cash and bank balances 33,009,808 17,902,083 10,615,386

16, 31 66,412,033 62,840,884 34,152,997

2012 2011 1.1.2011

note rM rM rM

company

Short term investments 30, a 3,620,798 680,155 2,341,905

Fixed deposits with licensed banks 30, b 3,332,910 4,070,225 2,198,627

Cash and bank balances 4,844,776 474,374 2,860,144

16, 31 11,798,484 5,224,754 7,400,676



20. cash anD cash equivalents (cont’d)

For the purposes of the statements of cash flows, cash and cash equivalents comprise the following as at the reporting date:

2012 2011 1.1.2011

rM rM rM

Group

Cash and cash equivalents 66,412,033 62,840,884 34,152,997

Less: Fixed deposits pledged (23,249,368) (24,732,529) (17,603,031)

Fixed deposits with licensed banks with maturity more than three months - (1,807,500) -

Bank overdraft (2,805,824) (3,739,469) (2,191,567)

40,356,841 32,561,386 14,358,399

company

Cash and cash equivalents 11,798,484 5,224,754 7,400,676

Less: Fixed deposits pledged (3,332,910) (2,262,725) (2,198,627)

Fixed deposits with licensed banks with maturity more than three months - (1,807,500) -

8,465,574 1,154,529 5,202,049 (a) short term investments

The information on financial risks of short term investments are disclosed in Note 30.

(b) Fixed deposits with licensed banks

The Group and the Company’s fixed deposits amounted to RM23,249,368 (2011: RM24,732,529) and RM3,332,910 (2011: RM2,262,725) respectively have been pledged to licensed banks for banking facilities granted to the Company and its subsidiaries.

The interest rates of the fixed deposits are disclosed in Note 30.

(c) cash and cash equivalents denominated in foreign currencies

Included in cash and cash equivalents are the following cash and cash equivalents amounts denominated in a currency other than the functional currency of the entity to which they relate:

Group company

2012 2011 2012 2011

note rM rM rM rM

Hong Kong Dollar 34,931 59,660 - -

Indonesian Rupiah 18,163 429,786 - -

European Dollar 152,051 - - -

United States Dollar 598,657 96,230 1,893 -

30(c) 803,802 585,676 1,893 -



(cont’d)

21. share capital

Group and company

number of ordinary shares of rM0.10 each amount

note 2012 2011 2012 2011

rM rM

Authorised:

At 1 January/31 December 2,000,000,000 2,000,000,000 200,000,000 200,000,000

Issued and fully paid:

At 1 January 1,199,158,544 1,096,736,941 119,915,854 109,673,694

Ordinary shares issued during the year:

Issued for cash a - 85,000,000 - 8,500,000

Conversion of RCSLN b 34,843,206 17,421,603 3,484,321 1,742,160

At 31 December 1,234,001,750 1,199,158,544 123,400,175 119,915,854

The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the Company. All ordinary shares rank equally with regard to the Company’s residual assets.

On 26 February 2009, the shareholders of the Company had approved the proposed establishment of an Employee Share Option Scheme for the eligible directors and employees of the Company and its subsidiaries. However, no options have been awarded at the date of reporting.

(a) Ordinary shares issued for cash

The issuance of 85,000,000 new ordinary shares of RM0.10 each in the Company in the prior year is through a private placement to identified investors.

The shares premium of RM10,225,000 arising from the issuance of ordinary shares and the share issue costs of RM1,850,435 have been included in the share premium account. The new ordinary shares rank pari passu in all respects with the existing ordinary shares of the Company.

(b) conversion of redeemable convertible secured loan notes

On 20 January 2012, the Company announced that 17,421,603 new ordinary shares of RM0.10 each in the Company (“DMB Shares”) were issued pursuant to the conversion of RM3 million Redeemable Convertible Secured Loan Notes at a conversion price of RM0.1722 per DMB share were listed on Bursa Malaysia Securities Berhad on 25 January 2012.

Subsequently, on 14 May 2012, the Company announced that a further 17,421,603 of new DMB Shares were issued pursuant to the conversion of RM3 million Redeemable Convertible Secured Loan Notes at a conversion price of RM0.1722 per DMB share were listed on Bursa Malaysia Securities Berhad on 15 May 2012.



22. reserves

Group company

2012 2011 2012 2011

note rM rM rM rM

Distributable reserve:

Retained profits 36,a 88,036,826 70,940,064 15,382,861 16,446,837

Non-distributable reserves:

Capital reserve b - - 17,256,197 17,256,197

Foreign translation reserve c 278,464 171,750 - -

Treasury shares d (3,049,369) (317,049) (3,049,369) (317,049)

Equity component of Redeemable Convertible Secured Loan Notes e 130,374 286,824 130,374 286,824

Share premium f 22,171,940 19,630,261 22,171,940 19,630,261

107,568,235 90,711,850 51,892,003 53,303,070

(a) retained profits

Prior to the year of assessment 2008, Malaysian companies adopt the full imputation system. In accordance with the Finance Act 2007 which was gazetted on 28 December 2007, companies shall not be entitled to deduct tax on dividends paid, credited or distributed to its shareholders, and such dividends will be exempted from tax in the hands of the shareholders (”single tier system”). However, there is a transitional period of six years, expiring on 31 December 2013, to allow companies to pay franked dividends to their shareholders under limited circumstances. Companies also have an irrevocable option to disregard the 108 balance and opt to pay dividends under the single tier system. The change in the tax legislation also provides for the 108 balance to be locked-in as at 31 December 2007 in accordance with Section 39 of the Finance Act 2007.

The Company may distribute dividends out of its entire retained profits as at 31 December 2012 under the single tier system.

The Company has, pending agreement with the tax authorities, tax-exempt income of approximately RM145,000 (2011: RM145,000) as at 31 December 2012 available for distribution by way of tax-exempt dividends.

(b) capital reserve

The capital reserve represents the fair value adjustments on previously held interest in subsidiaries.

(c) Foreign translation reserve

The translation reserve comprises all foreign currency differences arising from the translation of the financial statements of the Group entities with functional currencies other than RM.

(d) treasury shares

The shareholders of the Company, by a special resolution passed in a general meeting held on 20 June 2011, approved the Company’s plan to repurchase its own shares. The Directors of the Company are committed to enhance the value of the Company to its shareholders and believe that the repurchase plan can be applied in the best interests of the Company and its shareholders.

For the year ended 31 December 2012, the Company repurchased 13,888,600 (2011: 1,787,100) of its issued share capital from the open market. The average price paid for the shares repurchased was RM0.20 (2011: RM0.18) per share. The repurchase transactions were financed by internally generated funds. The shares repurchased were retained as treasury shares.

As at 31 December 2012, the issued and paid up capital of the Company comprising 1,234,001,750 (2011: 1,199,158,544) ordinary shares of RM0.10 each of which 15,675,700 (2011: 1,787,100) ordinary shares of RM0.10 each are held as treasury shares.



(cont’d)

22. reserves (cont’d)

(e) equity component of redeemable convertible secured loan notes

Group and company

2012 2011

note rM rM

At 1 January 286,824 365,049

Conversion to share capital (156,450) (78,225)

At 31 December 23 130,374 286,824

This reserve represents the fair value of the equity component of the Redeemable Convertible Secured Loan Notes, net of deferred tax, as determined on the date of issue.

(f) share premium

This amount arose from premium on the issue of ordinary shares above par value.

The movement in share premium account is as follows:

Group and company

2012 2011

rM rM

At 1 January 19,630,261 9,997,856

Ordinary shares issued during the year:

Issued for cash - 10,225,000

Pursuant to conversion of RCSLN 2,515,679 1,257,840

Transaction cost

Current year - (1,850,435)

Overprovision in prior year 26,000 -

26,000 (1,850,435)

At 31 December 22,171,940 19,630,261



23. lOans anD bOrrOwinGs

Group company

2012 2011 2012 2011

note rM rM rM rM

secured

non-current

Term loans a 36,535,857 36,142,404 9,000,000 7,757,500

Hire purchase payables b 4,444,969 1,911,947 475,945 472,071

Redeemable Convertible Secured Loan Notes 30, c - 10,807,270 - 10,807,270

40,980,826 48,861,621 9,475,945 19,036,841

current

Term loans a 20,118,085 10,099,036 10,858,282 5,950,348

Hire purchase payables b 1,181,371 753,695 116,125 83,653

Bankers’ acceptance 30 11,286,000 3,270,000 - -

Bank overdraft 30 2,805,824 3,739,469 - -

Redeemable Convertible Secured Loan Notes 30, c 4,957,033 - 4,957,033 -

40,348,313 17,862,200 15,931,440 6,034,001

total loans and borrowings24, 29 30, 31 81,329,139 66,723,821 25,407,385 25,070,842

(a) term loans

Included in the term loans is an amount of RM7,874,070 (2011: RM6,050,207) which is the term loan approved under the Green Technology Financing Scheme (“GTFS”). Under the GTFS’s approved term loan, the Government of Malaysia is to bear 2.00% of the total interest rate and a guarantee of 60% on the term loan via Credit Guarantee Corporation Malaysia Berhad.

The securities given for the term loans are disclosed in Note 23 (d).



(cont’d)

23. lOans anD bOrrOwinGs (cont’d) (b) hire purchase payables

Group company

2012 2011 2012 2011

note rM rM rM rM

Minimum lease payment

Not later than 1 year 1,768,954 885,480 141,504 108,576

Later than 1 year and not later than 2 years 1,216,996 986,591 141,504 108,576

Later than 2 years and not later than 5 years 3,323,712 1,091,594 376,661 419,381

6,309,662 2,963,665 659,669 636,533

Future finance charges (683,322) (298,023) (67,599) (80,809)

Present value of hire purchase liabilities 5,626,340 2,665,642 592,070 555,724

present value of hire purchase liabilities

Not later than 1 year 1,181,371 753,963 116,125 83,653

Later than 1 year and not later than 2 years 1,144,834 896,239 122,182 88,276

Later than 2 years and not later than 5 years 3,300,135 1,015,440 353,763 383,795

5,626,340 2,665,642 592,070 555,724

analysed as

Due within 12 months 1,181,371 753,695 116,125 83,653

Due after 12 months 4,444,969 1,911,947 475,945 472,071

30 5,626,340 2,665,642 592,070 555,724

(c) redeemable convertible secured loan notes (“rcsln”)

On 3 December 2009, the Company issued RM20,000,000 of 4-year Redeemable Convertible Secured Loan Notes for the funding on future synergistic acquisitions of the Group to meet the working requirements of the Group, and to defray the expenses incidental to the RCSLN issue. The terms of the RCSLN are as follows:

(i) The registered holder(s) of the RCSLN will have the option to convert the nominal value of the RCSLN into new ordinary shares of RM0.10 each in the Company at any time during the conversion period, in the following manner:

- Within the first two (2) years from the issue date of the RCSLN, up to RM3 million nominal value of the RCSLN per month; and

- Thereafter, all or part of the outstanding RCSLN at the registered holder(s)’ discretion.

(ii) The RCSLN are convertible into new ordinary shares of RM0.10 each in the Company (“DMB Shares”) at a conversion price of RM0.31 per new DMB share. The conversion price of the RCSLN of RM0.31 was arrived at based on a premium of approximately 22% to the 30-day volume weighted average closing price of DMB Shares of RM0.2537 up to and including 16 April 2009 being the date the terms of the RCSLN were mutually agreed upon. On 25 June 2009, the conversion price of the RCSLN of RM0.31 was adjusted to RM0.2067 pursuant to the bonus issue of 270,595,514 DMB shares, credited as fully paid up, on the basis of 1 DMB Share for every 2 DMB Shares held on 24 June 2009.

(iii) Unless previously redeemed or converted, upon the close of business on the maturity date, all outstanding RCSLN (excluding the RCSLN to be converted on the maturity date) will be redeemed at par by cash and in one lump sum.



23. lOans anD bOrrOwinGs (cont’d)

(c) redeemable convertible secured loan notes (“rcsln”) (cont’d)

(iv) The Company shall have the option to either repurchase or nominate another party to purchase up to RM3 million nominal value of the RCSLN in each calendar month from the registered holder(s) at any time after the second anniversary of the issue date of the RCSLN at a price of 130% of the RCSLN’s nominal value.

(v) The RCSLN bear interest at 4% per annum payable quarterly in arrears during the tenure of the RCSLN applicable to those RCSLN which have not been converted prior to the maturity of the RCSLN.

(vi) The RCSLN constitute direct, unconditional, unsubordinated and secured obligations of the issuer ranking pari passu without discrimination, preference or priority with other secured obligations of the issuer, in priority to all present and future unsecured obligations of the issuer from time to time subject to those preferred by law.

(vii) The RCSLN is secured by way of a pledge of 100% unquoted shares over the entire issued and paid up capital of one of its subsidiaries with a carrying amount of RM28,488,131 (2011: RM28,488,131) as disclosed in Note 13.

(viii) On 3 July 2010, the conversion price of the RCSLN of RM0.2067 was adjusted to RM0.1722 pursuant to the bonus issue of 176,122,823 new DMB shares, credited as fully paid up, on the basis of 1 DMB Share for every 5 DMB Shares held on 2 July 2010.

The proceeds received from the issue of the RCSLN have been split between the liability component and the equity component, representing the fair value of the conversion option. The RCSLN are accounted for in the statements of financial position of the Group and of the Company as follows:

2012 2011

note rM rM

Nominal value

As at 1 January 11,000,000 14,000,000

Less: Conversion to new ordinary shares (6,000,000) (3,000,000)

As at 31 December 5,000,000 11,000,000

Less: Unamortised discount (42,967) (192,730)

30 4,957,033 10,807,270

Current 4,957,033 -

Non-current - 10,807,270

4,957,033 10,807,270



(cont’d)

23. lOans anD bOrrOwinGs (cont’d)

(c) redeemable convertible secured loan notes (“rcsln”) (cont’d)

The carrying amount of the liability component of RCSLN at the reporting date is arrived at as follows:

Group and company

2012 2011

note rM rM

Face value of RCSLN 5,000,000 11,000,000

Equity component

- Equity component, net of deferred tax 22 (130,374) (286,824)

- Deferred tax liability (10,740) (48,181)

Liability component at initial recognition 4,858,886 10,664,995

Total interest expense recognised to date 1,522,692 1,302,021

Total interest paid to date (1,424,545) (1,159,746)

Liability component at 31 December 4,957,033 10,807,270

Interest expense on the convertible notes is calculated on the effective yield basis by applying the coupon interest rate of 4.00% (2011: 4.00%) per annum.

(d) security Group

The bank borrowings and other facilities are secured by way of:

(i) legal charges over subsidiaries freehold land and buildings;

(ii) corporate guarantee by the Company;

(iii) a debenture over all assets of certain subsidiaries;

(iv) a pledge on the Company and subsidiaries’ fixed deposits; and

(v) a pledge of 100% unquoted shares over the entire issued and paid-up share capital of certain subsidiaries with a carrying amount of RM112,308,946 (2011: RM112,308,946) as disclosed in Note 13.

company

The term loan are secured by way of:

(i) a facility agreement to be executed between the Company and the bank;

(ii) a pledge of 100% unquoted shares over the entire issued and paid-up capital of certain subsidiaries with a carrying amount of RM112,308,946 (2011: RM112,308,946) as disclosed in Note 13.

(iii) third party secured legal charge over a subsidiary’s freehold land and building; and

(iv) a pledge on the Company’s fixed deposits.

Other information on financial risks of loans and borrowings are disclosed in Note 30.



24. traDe anD Other payables

Group company

2012 2011 2012 2011

note rM rM rM rM

non-current

Other payables

Deposits a - 3,000,000 - 3,000,000

current

trade payables

Third parties b 25,121,106 51,728,769 - -

Other payables

Accruals 5,681,771 3,193,328 490,412 994,625

Deposits a 3,000,000 2,000,000 3,000,000 2,000,000

Other payables c 51,620,704 37,551,491 98,074 580

Amount due to directors 213,953 - 213,953 -

Amount due to subsidiaries d - - 14,613,598 430,869

60,516,428 42,744,819 18,416,037 3,426,074

Total current trade and other payables 85,637,534 94,473,588 18,416,037 3,426,074

total trade and other payables 30 85,637,534 97,473,588 18,416,037 6,426,074

Add: Loans and borrowings 23 81,329,139 66,723,821 25,407,385 25,070,842

total financial liabilities carried at amortised cost 166,966,673 164,197,409 43,823,422 31,496,916

(a) Deposits

Included in deposits are sums placed by vendors in lieu of the profit guarantees amounted to RM3,000,000 (2011: RM5,000,000) meant for the acquired subsidiary.

(b) trade payables

The normal trade credit terms granted to the Group from the trade payables are ranging from 14 to 90 days (2011: 30 to 90 days).

(c) Other payables

Included in other payables are advance payments received from customers amounted to RM11,614,600 (2011: RM23,000,000) and retention sum retained from subcontractors amounted to RM6,100,455 (2011: RM6,849,640).

(d) amount due to subsidiaries

Included in amounts due to subsidiaries are loan and advances amounting to RM14,263,921 (2011: RM222,511) that are subject to interest rate at 5.00% per annum (2011: 4.75% - 5.00%). The amounts are repayable on demand.



(cont’d)

24. traDe anD Other payables (cont’d) (e) trade and other payables denominated in foreign currencies

Included in trade and other payables are the following trade and other payables amounts denominated in a currency other than the functional currencies of the entities to which they relate:

Group company

2012 2011 2012 2011

note rM rM rM rM

Hong Kong Dollar 59,824 - - -

Indonesian Rupiah 8,097 - - -

United States Dollar 612,402 410,599 - -

European Dollar 1,008,785 20,037,367 - -

Singaporean Dollar - 430,902 - -

30(c) 1,689,108 20,878,868 - -

25. prOvisiOns

Group

2012 2011

rM rM

Defect liability

At 1 January 1,709,277 2,320,733

Arose during the year 98,823 995,551

Utilised/Reversal (1,483,406) (1,607,007)

At 31 December 324,694 1,709,277 The provision for defect liability relates to the construction works done by the technical services segment. The provision is based on

estimates made from historical defect claims data from the past construction works.

26. cOMMitMents

(a) capital commitments

Capital expenditure as at the reporting date is as follows:

Group company

2012 2011 2012 2011

rM rM rM rM

Contracted and not provided for Property, plant and equipment 11,738,370 1,501,687 145,970 321,793

Approved but not contracted for Property, plant and equipment 1,209,100 1,606,902 - -



26. cOMMitMents (cont’d)

(b) Operating lease commitments - as lessee

As at 31 December, the Group and the Company had future minimum lease payments payable under non-cancellable operating leases in respect of its buildings which fall due as follows:

Group company

2012 2011 2012 2011

rM rM rM rM

Not later than 1 year 470,096 83,800 204,000 -

Later than 1 year but not later than 5 years 243,938 86,250 238,000 -

714,034 170,050 442,000 -

(c) Operating lease commitments - as lessor

The Group has entered into commercial property leases on its investment properties. These non-cancellable leases have remaining lease terms of between 1 to 5 years. All leases include a clause to enable upward revision of the rental charge on an annual basis based on prevailing market conditions.

Future minimum rentals receivable under non-cancellable operating leases at the reporting date are as follows:

Group

2012 2011

rM rM

Not later than 1 year 326,292 339,892

Later than 1 year but not later than 5 years 1,286,360 1,348,760

More than 5 years 570,378 819,270

2,183,030 2,507,922

(d) Finance lease commitments

The Group and the Company have finance lease for certain of its property, plant and equipment. The future minimum lease payments under finance leases together with the present value of the net minimum lease payments are disclose in Note 23.

27. relateD party DisclOsures

(a) In addition to the transactions detailed elsewhere in the financial statements, the Group and the Company have the following transactions with related parties during the financial year:

2012 2011

rM rM

Group

Purchases of raw materials from a company in which a director of a subsidiary has an has an interest

- Oticom Corporation - 2,409,775

Purchases of commercial properties from a director 3,192,400 -

Interest income charged on housing loan to a director 86,872 99,344



(cont’d)

27. relateD party DisclOsures (cont’d)

(a) In addition to the transactions detailed elsewhere in the financial statements, the Group and the Company have the following transactions with related parties during the financial year: (cont’d)

2012 2011

note rM rM

company

Subsidiaries:

- Dividends received 3, 6 3,676,020 15,447,271

- Management fees received/receivable 3 7,944,867 8,044,910

- Interest received/receivable 1,333,700 996,631

- Interest paid/payable 5 431,097 155,237

- Advances received 17,000,000 -

- Advances given 5,578,641 4,738,168

- Rental received/receivable 24,000 -

- Rental paid/payable 177,000 42,000

The directors are of the opinion that these transactions have been entered into in the normal course of business and have been established under negotiated terms.

The information on outstanding balances in respect of the above transactions is disclosed in Note 16 and 24.

(b) Compensation of key management personnel

The remuneration of directors and other members of key management personnel during the year was as follow:

Group company

2012 2011 2012 2011

note rM rM rM rM

Short term employee benefits 9,189,027 6,397,232 4,120,560 2,775,370

Pension costs

- Defined contribution plan 841,208 554,939 461,646 300,733

10,030,235 6,952,171 4,582,206 3,076,103

Included in the total compensation of key management personnel are:

- Remuneration for the Company’s directors 6 3,191,790 2,077,360 2,766,519 1,691,220

- Remuneration for the Company’s past directors 6 - 534,505 - 334,505

- Directors’ fees for the Company’s directors 6 166,000 165,000 156,000 141,000

- Directors’ fees for the Company’s past directors 6 - 15,000 - 15,000

The key management personnel comprise persons having authority and responsibility for planning, directing and controlling the activities of the Group entities either directly or indirectly.



28. eMplOyee beneFit expense

Group company

2012 2011 2012 2011

note rM rM rM rM

Wages and salaries 18,877,302 14,955,988 4,484,951 2,945,119

Social security costs 120,749 134,376 8,657 6,395

Pension costs - defined contribution plans 1,881,751 1,498,437 542,572 344,531

Overtime and allowances 1,310,626 1,063,705 213,017 115,039

6 22,190,428 17,652,506 5,249,197 3,411,084 29. seGMental repOrtinG

(a) reporting format

For management purposes, the Group’s primary segment is organised into business units based on their business industry and products and services produced, and has three reportable segments as follow:

(i) The polymer segment is involved in manufacturing of advanced materials for the power cables and wires industry and the trading of various other related polymer compounds.

(ii) The oil & gas segment is involved in trading and distribution of specialty chemicals and catalysts, provision of heavy

machineries and related manpower services, maintenance services for air-conditioning and ventilation system, and automatic welding services for offshore pipeline installation to the oil and gas industry.

(iii) The technical services segment is involved in services in the construction, office maintenance and recycling services. This reporting segment has aggregated the construction and maintenance services segment, and recycling services segment, which are regarded by management to exhibit similar economic and business characteristics.

Except as indicated above, no operating segments have been aggregated to form the above reportable operating segments.

Management monitors the operating results of its business units separately for the purpose of making decisions about

resource allocation and performance assessment. Segment performance is evaluated based on operating profit or loss.



(cont’d)

29.

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29. seGMental repOrtinG (cont’d)

(c) Geographical segments:

Revenue, segment assets and capital expenditures based on geographical location of customers and assets are as follows:

total revenue fromexternal customers segment assets capital expenditure

2012 2011 2012 2011 2012 2011

rM rM rM rM rM rM

Malaysia 276,218,426 280,961,616 295,390,060 282,029,260 21,025,446 18,376,976

Other Asian countries 710,942 784,315 2,957,161 66,898 - 66,898

Consolidated 276,929,368 281,745,931 298,347,221 282,096,158 21,025,446 18,443,874

The Group’s operations are mainly located in Malaysia.

30. Financial instruMents

(a) Financial risk management objectives and policies

The Group and the Company are exposed to financial risks arising from their operations and the use of financial instruments. The key financial risks include interest rate risk, foreign currency risk, liquidity risk and credit risk.

The Group’s financial risk management policy seeks to ensure that adequate financial resources are available for the development of the Group’s business whilst managing its interest rate risk, foreign currency risk, liquidity risk and credit risk. The policies for managing each of these risks are summarised below. It is the Group’s policy that no trading in derivative financial instruments shall be undertaken.

The following sections provide details regarding the Group’s and the Company’s exposure to the above-mentioned financial risks and the objectives, policies and processes for the management of these risks.

(b) interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of the Group’s and of the Company’s financial instruments will fluctuate because of changes in market interest rates. The Group’s and the Company’s exposure to interest rate risk arises primarily from their loans and borrowings and advances at floating rates given to related companies as the Group and the Company had no substantial long-term interest-bearing assets as at 31 December 2012. The investments in financial assets are mainly short term in nature and they are not held for speculative purposes.

The Group manages its interest rate exposure by maintaining a prudent mix of fixed and floating rate on its loans and borrowings. The Group reviews its debt portfolio, taking into account the investment holding period and nature of its assets. This strategy allows it to capitalise on cheaper funding in a low interest rate environment and achieve a certain level of protection against rate hikes.

At the reporting date, the Group and the Company do not have significant interest risk exposure except as disclosed below.

Sensitivity analysis for interest rate risk

At the reporting date, if interest rates had been 100 basis points lower/higher, with all other variables held constant, the Group’s and the Company’s profit before tax would have been RM652,106 (2011: RM473,484) and RM30,092 (2011: RM75,567) higher/lower, arising mainly as a result of lower/higher interest expense on floating rate loan and borrowings and higher/lower interest income from floating rate loans to related parties. The assumed movement in basis points for interest rate sensitivity analysis is based on the currently observable market environment.



(cont’d)

30.

Fin

an

cia

l in

stru

Men

ts (

cont

’d)

(b

) in

tere

st ra

te ri

sk (

cont

’d)

Th

e fo

llow

ing

tabl

es se

t out

the

carr

ying

am

ount

s, th

e in

tere

st ra

tes a

s at t

he re

port

ing

date

and

the

rem

aini

ng m

atur

ities

of t

he G

roup

’s an

d of

the

Com

pany

’s fin

anci

al

inst

rum

ents

that

are

exp

osed

to in

tere

st ra

te ri

sk:

inte

rest

ra

te

wit

hin

1 y

ear

1-2

yea

r 2

-3 y

ears

3

-4 y

ears

4

-5 y

ears

M

ore

than

5

yea

rs

tot

al

not

e %

r

M

rM

r

M

rM

r

M

rM

r

M

Gro

up

at 3

1 D

ecem

ber 2

012

Fixe

d ra

te

Fina

ncia

l ass

ets

Fixe

d de

posi

ts20

2.15

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29 2

9,78

1,42

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- -

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29,

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Fina

ncia

l lia

bilit

ies

Term

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s 7.

60 3

02,6

19

326

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3

52,1

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4

09,7

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143

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Hire

pur

chas

e23

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72 1

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1

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9

56,6

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724

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5

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N

234.

00 4

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-

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57,0

33

Floa

ting

rate

Fina

ncia

l ass

ets

Shor

t ter

m in

vest

men

ts20

1.83

- 2.

95 3

,620

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-

- -

- -

3,6

20,7

98

Hou

sing

loan

to a

dire

ctor

5.55

592

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6

00,3

52

78,

916

- -

- 1

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Fina

ncia

l lia

bilit

ies

Term

loan

s4.

40 -

8.35

19,

815,

466

8,9

47,3

96

8,5

81,1

60

5,3

49,4

15

2,8

27,0

74

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19,0

41

54,

739,

552

Bank

ove

rdra

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85 2

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-

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2,8

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Bank

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acce

ptan

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3.21

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49 1

1,28

6,00

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- -

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000



30.

Fin

an

cia

l in

stru

Men

ts (

cont

’d)

(b

) in

tere

st ra

te ri

sk (

cont

’d)

Th

e fo

llow

ing

tabl

es se

t out

the

carr

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am

ount

s, th

e in

tere

st ra

tes a

s at t

he re

port

ing

date

and

the

rem

aini

ng m

atur

ities

of t

he G

roup

’s an

d of

the

Com

pany

’s fin

anci

al

inst

rum

ents

that

are

exp

osed

to in

tere

st ra

te ri

sk: (

cont

’d)

inte

rest

ra

te

wit

hin

1 y

ear

1-2

yea

r 2

-3 y

ears

3

-4 y

ears

4

-5 y

ears

M

ore

than

5

yea

rs

tot

al

not

e %

r

M

rM

r

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rM

r

M

rM

r

M

Gro

up

at 3

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ber 2

011

Fixe

d ra

te

Fina

ncia

l ass

ets

Fixe

d de

posi

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29 4

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- -

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41,

231,

219

Fina

ncia

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ies

Term

loan

7.

60 2

80,5

40

302

,620

3

26,4

37

352

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3

79,8

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553

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2

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00 7

53,9

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896

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6

55,5

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156

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1

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12

95,

491

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234.

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807,

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- -

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807,

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Floa

ting

rate

Fina

ncia

l ass

ets

Shor

t ter

m in

vest

men

ts20

1.00

- 3.

10 3

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-

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Hou

sing

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to a

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ctor

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ncia

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ies

Term

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19

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00



(cont’d)

30.

Fin

an

cia

l in

stru

Men

ts (

cont

’d)

(b

) in

tere

st ra

te ri

sk (

cont

’d)

Th

e fo

llow

ing

tabl

es se

t out

the

carr

ying

am

ount

s, th

e in

tere

st ra

tes a

s at t

he re

port

ing

date

and

the

rem

aini

ng m

atur

ities

of t

he G

roup

’s an

d of

the

Com

pany

’s fin

anci

al

inst

rum

ents

that

are

exp

osed

to in

tere

st ra

te ri

sk: (

cont

’d)

inte

rest

ra

te

wit

hin

1 y

ear

1-2

yea

r 2

-3 y

ears

3

-4 y

ears

4

-5 y

ears

M

ore

than

5

yea

rs

tot

al

not

e %

r

M

rM

r

M

rM

r

M

rM

r

M

com

pany

at 3

1 D

ecem

ber 2

012

Fixe

d ra

te

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ncia

l ass

ets

Fixe

d de

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ts20

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Fina

ncia

l lia

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ies

Hire

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chas

e23

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16,1

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8

8,26

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5

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00 4

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-

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ting

rate

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ncia

l ass

ets

Am

ount

due

from

su

bsid

iarie

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- -

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Shor

t ter

m in

vest

men

ts20

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96 3

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-

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ies

Am

ount

due

to

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idia

ries

5.00

14,

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Term

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4,0

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858,

282



30.

Fin

an

cia

l in

stru

Men

ts (

cont

’d)

(b

) in

tere

st ra

te ri

sk (

cont

’d)

Th

e fo

llow

ing

tabl

es se

t out

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carr

ying

am

ount

s, th

e in

tere

st ra

tes a

s at t

he re

port

ing

date

and

the

rem

aini

ng m

atur

ities

of t

he G

roup

’s an

d of

the

Com

pany

’s fin

anci

al

inst

rum

ents

that

are

exp

osed

to in

tere

st ra

te ri

sk: (

cont

’d)

inte

rest

ra

te

wit

hin

1 y

ear

1-2

yea

r 2

-3 y

ears

3

-4 y

ears

4

-5 y

ears

M

ore

than

5

yea

rs

tot

al

not

e %

r

M

rM

r

M

rM

r

M

rM

r

M

com

pany

at 3

1 D

ecem

ber 2

011

Fixe

d ra

te

Fina

ncia

l ass

ets

Fixe

d de

posi

ts20

2.85

- 3.

10 4

,070

,225

-

- -

- -

4,0

70,2

25

Fina

ncia

l lia

bilit

ies

Hire

pur

chas

e23

2.50

- 3.

77 8

3,65

3 8

8,27

6 9

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9 9

7,52

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5 9

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9 5

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24

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N

234.

00 -

10,

807,

270

- -

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10,

807,

270

Floa

ting

rate

Fina

ncia

l ass

ets

Am

ount

due

from

su

bsid

iarie

s8.

30 -

8.60

20,

806,

947

- -

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7

Shor

t ter

m in

vest

men

ts20

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95 6

80,1

55

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Fina

ncia

l lia

bilit

ies

Am

ount

due

to

subs

idia

ries

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- 5.

00 2

22,5

11

- -

- -

- 2

22,5

11

Term

loan

s5.

63 -

6.00

5,9

50,3

48

7,7

57,5

00

- -

- -

13,

707,

848

Th

e ot

her fi

nanc

ial i

nstr

umen

ts o

f the

Gro

up a

nd o

f the

Com

pany

that

are

not

incl

uded

in th

e ab

ove

tabl

es a

re n

ot s

ubje

ct to

inte

rest

rate

risk

.



(cont’d)

30. Financial instruMents (cont’d)

(c) Foreign exchange risk

Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates.

The Group has transactional currency exposures arising from sales and purchases that are denominated in a currency other than the respective functional currencies of Group entities, primarily RM, Hong Kong Dollar (”HKD”) and Indonesian Rupiah (”IDR”). The foreign currencies in which these transactions are denominated are mainly United States Dollar (“USD”), European Dollar (”EURO”) and Singapore Dollar (”SGD”).

Exposure to foreign currency risk

The Group’s and the Company’s exposure to foreign currency (a currency which is other than the currency of the Group and of the Company) risk, based on carrying amounts as at the end of the reporting period was:

2012

total rM denominated in

note rM usD eurO hkD sGD iDr

Group

Trade receivables 16(f ) 2,614,748 915,410 - 4,477 - 1,694,861

Cash and cash equivalents 20(c) 803,802 598,657 152,051 34,931 - 18,163

Trade and other payables 24(e) (1,689,108) (612,402) (1,008,785) (59,824) - (8,097)

Exposure in the statement of financial position 901,665 (856,734) (20,416) - 1,704,927

Approximate sales 113,000 231,140 - - 710,942

Approximate purchases 6,963,348 681,135 - 15,607 -

(6,850,348) (449,995) - (15,607) 710,942

2011

total rM denominated in

note rM usD eurO hkD sGD iDr

Group

Trade receivables 16(f ) 25,791,996 32,273 25,479,628 - - 280,095

Cash and cash equivalents 20(c) 585,676 96,230 - 59,660 - 429,786

Trade and other payables 24(e) (20,878,868) (410,599) (20,037,367) - (430,902) -

Exposure in the statement of financial position (282,096) 5,442,261 59,660 (430,902) 709,881

Approximate sales 450,599 27,856,135 - - 784,315

Approximate purchases 12,999,534 28,845,042 - 193,974 -

(12,548,935) (988,907) - (193,974) 784,315




(c) Foreign exchange risk (cont’d)

Exposure to foreign currency risk (cont’d)

The Group’s and the Company’s exposure to foreign currency (a currency which is other than the currency of the Group and of the Company) risk, based on carrying amounts as at the end of the reporting period was: (cont’d)

rM denominated in

usD hkD

note 2012 2011 2012 2011

company

Trade and other receivables 16(f ) - - 2,798,027 1,876,219

Cash and cash equivalents 20(c) 1,893 - - -

1,893 - 2,798,027 1,876,219

The Group is also exposed to currency translation risk arising from its net investments in foreign operations, including Hong Kong and Indonesia. The Group’s net investment in Hong Kong and Indonesia are not hedged as currency position in HKD and IDR are considered to be long term in nature.

At the reporting date, the Group and the Company do not have significant foreign currency risk exposure except as disclosed below.

Sensitivity analysis for foreign currency risk

The following table demonstrates the sensitivity of the Group’s and of the Company’s profit before tax to a reasonably possible change in the USD, EURO, SGD and IDR exchange rates against the respective functional currencies of the Group entities, with all other variables held constant.

Group

2012 2011

effect on profit before

tax


tax

rM rM

USD/RM - strengthen 10% (2011: 10%) 90,167 (28,210)

USD/RM - weaken 10% (2011: 10%) (90,167) 28,210

EURO/RM - strengthen 10% (2011: 10%) (85,673) 544,226

EURO/RM - weaken 10% (2011: 10%) 85,673 (544,226)

SGD/RM - strengthen 10% (2011: 10%) - (43,090)

SGD/RM - weaken 10% (2011: 10%) - 43,090

IDR/RM - strengthen 10% (2011: 10%) 170,493 70,988

IDR/RM - weaken 10% (2011: 10%) (170,493) (70,988)

The financial impact on the changes of the other currencies other than the above is not disclosed as it is not significant to the Group.



(cont’d)


(c) Foreign exchange risk (cont’d)

Sensitivity analysis for foreign currency risk (cont’d)

company

2012 2011


tax


tax

rM rM

HKD/RM - strengthen 10% (2011: 10%) 279,803 187,622

HKD/RM - weaken 10% (2011: 10%) (279,803) (187,622)

(d) liquidity risk

Liquidity risk is the risk that the Group and the Company will encounter difficulty in meeting financial obligations due to shortage of funds. The Group’s and the Company’s exposure to liquidity risk arises primarily from mismatches of the maturities of financial assets and liabilities. The Group’s objective is to maintain a balance between continuity of funding and flexibility through the use of stand-by credit facilities.

Analysis of financial instruments by remaining contractual maturities

The table below summarises the maturity profile of the Group’s and the Company’s liabilities at the reporting date based on contractual undiscounted repayment obligations.

2012

contractual cash flows

carrying amount

On demand or within one year

One to five years

Overfive years total

note rM rM rM rM rM

Group

Financial liabilities:

Trade and other payables 24 85,637,534 85,637,534 - - 85,637,534

Loans and borrowings 23 81,329,139 41,893,480 39,157,422 4,162,015 85,212,917

166,966,673 127,531,014 39,157,422 4,162,015 170,850,451

company


Trade and other payables 24 18,416,037 18,416,037 - - 18,416,037

Loans and borrowings 23 25,407,385 16,641,469 9,284,722 - 25,926,191

43,823,422 35,057,506 9,284,722 - 44,342,228




(d) liquidity risk (cont’d)

Analysis of financial instruments by remaining contractual maturities (cont’d)

The table below summarises the maturity profile of the Group’s and the Company’s liabilities at the reporting date based on contractual undiscounted repayment obligations. (cont’d)

2011

contractual cash flows

carrying amount

On demand or within one year

One to five years

Overfive years total

note rM rM rM rM rM

Group


Trade and other payables 24 97,473,588 94,473,588 3,000,000 - 97,473,588

Loans and borrowings 23 66,723,821 21,524,313 30,502,600 18,800,719 70,827,632

164,197,409 115,997,901 33,502,600 18,800,719 168,301,220

company


Trade and other payables 24 6,426,074 3,426,074 3,000,000 - 6,426,074

Loans and borrowings 23 25,070,842 9,389,058 18,567,917 6,483 27,963,458

31,496,916 12,815,132 21,567,917 6,483 34,389,532

(e) credit risk

Credit risk is the risk of loss that may arise on outstanding financial instruments should a counterparty default on its obligations. The Group’s and the Company’s exposure to credit risk arises primarily from trade and other receivables. For other financial assets (including short term investments and cash and cash equivalents), the Group and the Company minimise credit risk by dealing exclusively with high credit rating counterparties.

The Group’s objective is to seek continual revenue growth while minimising losses incurred due to increased credit risk exposure. The Group trades only with recognised and creditworthy third parties. It is the Group’s policy that all customers who wish to trade on credit terms are subject to credit verification procedures. In addition, receivable balances are monitored on an ongoing basis with the result that the Group’s exposure to bad debts is not significant.

Exposure to credit risk

The carrying amount of each class of financial assets recognised in the statements of financial position.

Information regarding credit enhancements for trade and other receivables is disclosed in Note 16(c).



(cont’d)


(e) credit risk (cont’d)

Credit risk concentration profile

The Group determines concentrations of credit risk by monitoring the country of its trade receivables on an ongoing basis. The credit risk concentration profile of the Group’s trade receivables at the reporting date are as follows:

2012 2011

note rM % of total rM % of total

by country:

Malaysia 46,445,817 96 74,284,045 100

Other countries 1,694,861 4 312,368 -

16 48,140,678 100 74,596,413 100

Financial assets that are neither past due nor impaired

Information regarding trade receivables that are neither past due nor impaired is disclosed in Note 16. Deposits with banks and short term investments that are neither past due nor impaired are placed with or entered into with reputable financial institutions or companies with high credit ratings and no history of default.

Financial assets that are either past due or impaired

Information regarding financial assets that are either past due or impaired is disclosed in Note 16.

(f) Fair values of financial instruments

(i) Fair value of financial instruments by classes that are not carried at fair value and whose carrying amounts are not reasonable approximation of fair value

2012 2011

notecarrying amount

Fair value

carrying amount

Fair value

rM rM rM rM

Group

Financial

Redeemable Convertible Secured Loan Notes 23 4,957,033 4,913,155 10,807,270 10,617,869

company

Financial liabilities

Redeemable Convertible Secured Loan Notes 23 4,957,033 4,913,155 10,807,270 10,617,869

The fair value of redeemable convertible secured loan note (“RCSLN”) has been determined using a valuation technique through the discounting of expected future cash flows throughout the terms of RCSLN at the rate of 6.00% (2011: 5.97%).




(f) Fair values of financial instruments (cont’d) (ii) Determination of fair value

Financial instruments that are not carried at fair value and whose carrying amounts are reasonable approximation of fair value

The following are classes of financial instruments that are not carried at fair value and whose carrying amounts are reasonable approximation of fair value:

Group company

2012 2011 2012 2011

note rM rM rM rM

Financial assets

Trade and other receivables 16 73,321,636 87,785,216 32,323,788 24,995,827

Cash and cash equivalents 20 66,412,033 62,840,884 11,798,484 5,224,754

Financial liabilities

Term loans 56,653,942 46,241,440 19,858,282 13,707,848

Hire purchase payables 23 5,626,340 2,665,642 592,070 555,724

Bankers’ acceptance 23 11,286,000 3,270,000 - -

Bank overdraft 23 2,805,824 3,739,469 - -

Trade and other payables 24 85,637,534 97,473,588 18,416,037 6,426,074

As the current interest rates do not differ significantly from the intrinsic value of these financial instruments, the fair values of these financial instruments therefore, closely approximate their carrying values as at the reporting date.

31. capital ManaGeMent

The primary objective of the Group’s capital management is to ensure that it maintains a strong credit rating and healthy capital ratios in order to support its business and maximise shareholders value.

The Group manages its capital structure and makes adjustments to it, in light of changes in economic conditions. To maintain or adjust the capital structure, the Group may adjust the dividends payment to shareholders, return capital to shareholders or issue new shares. No changes were made in the objectives, policies or processes during the years ended 31 December 2012 and 31 December 2011.



(cont’d)

31. capital ManaGeMent (cont’d)

The Group monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt. Under the requirement of Bursa Malaysia Securities Berhad’s Practice Note No. 17/2005, the Group is required to maintain a consolidated shareholders’ equity equal to or not less than the 25% of the issued and paid-up capital (excluding treasury shares) and such shareholders’ equity is not less than RM40 million. The Group includes within net debt, loans and borrowings less cash and cash equivalents. Capital includes equity attributable to the owners of the parent.

Group company

2012 2011 2012 2011

note rM rM rM rM

Loan and borrowings 23 81,329,139 66,723,821 25,407,385 25,070,842

Less: Cash and cash equivalents 20 (66,412,033) (62,840,884) (11,798,484) (5,224,754)

Net debt 14,917,106 3,882,937 13,608,901 19,846,088

Equity attributable to the owners of the parent 230,968,410 210,627,704 175,292,178 173,218,924

capital and net debt 245,885,516 214,510,641 188,901,079 193,065,012

Gearing ratio 6.07% 1.81% 7.20% 10.28%

32. siGniFicant events Group

(a) purchase of commercial properties

(i) On 15 August 2012, the Group, via its direct wholly owned subsidiary, Daya Urusharta Sdn. Bhd. entered into five conditional Sale and Purchase Agreements with Mr. Nathan Tham Jooi Loon, for the proposed acquisition of five office units of a stratified mixed commercial development in Dutamas, Daerah Kuala Lumpur with a total net area of approximately 5,016 square feets for a total consideration of RM3,192,400.

(ii) On 8 November 2012, the Group via its direct wholly owned subsidiary, Daya Urusharta Sdn. Bhd. entered into six Sale and Purchase Agreements with Delight 2000 Holdings Sdn. Bhd. for the acquisition of two units of three storey shop-office and four units of two storey shop office under the leasehold land of under P.N. 48236, Lot No. 42781 in Mukim of Petaling, Kuala Lumpur for a total consideration of RM8,400,000.

(b) purchase of land held for property development

On 9 January 2012, the Group via its sub-subsidiary, Ultrafest Sdn. Bhd. (“USB”) entered into Sale and Purchase Agreement to acquire a piece of land in the District of Paper, Sabah for total consideration of RM2,212,500.

USB has also entered into a Trust Deed on 15 March 2012 with Junior Koh Siew Hui (“Trustee”) whereby the Trustee has purchased four parcels of land in the District of Paper, Sabah on behalf of USB for a total consideration of RM7,272,500.

(c) Group re-organisation on investment in Daya petroleum ventures sdn. bhd.

On 2 August 2012, through the Internal Group Re-Organisation Plan, the Company acquired 800 ordinary shares of RM1.00 each in Daya Petroleum Ventures Sdn. Bhd. (formerly known as Metriwell Sdn. Bhd.) (“DPV”), a sub-subsidiary of a subsidiary of the Company, Daya Secadyme Sdn. Bhd. representing 80% of the issued and paid-up share capital of DPV for a cash consideration of RM800 from a wholly-owned sub-subsidiary of the Company, Seca Engineering and Manpower Services Sdn. Bhd.



32. siGniFicant events (cont’d)

Group (cont’d)

(d) incorporation of a sub-subsidiary

The Group had on 19 November 2012 via its subsidiary, Daya OCI Sdn. Bhd. incorporated a limited liability company known as Daya OCI (Labuan) Limited (formerly known as Daya OCI (Labuan) Berhad) (“DOCIL”). DOCIL is to principally engage in the shipping leasing business and other related services to the oil and gas industry.

(e) acquisition of a sub-subsidiaries

(i) On 14 February 2012, the Group, via its direct wholly owned sub-subsidiary, Daya Land & Development Sdn. Bhd. acquired 2 ordinary shares of RM1 each in Zen Projects Sdn. Bhd. (“ZPSB”) and Terra Hill Development Sdn. Bhd. (“THDSB”) for a total consideration of RM2 each, representing 100% equity interest in ZPSB and THDSB.

(ii) On 30 November 2012, the Group, via its direct wholly owned subsidiary, Daya CMT Sdn. Bhd. acquired 2 ordinary shares of RM1 each in Daya E&C Sdn. Bhd. (“DECSB”), for a total cash consideration of RM2 from Mr. Nathan Tham Jooi Loon and Mr. Tham Wooi Loon, representing 100% equity interest in DECSB. The principal activities of DECSB are provision of electrical, mechanical engineering and construction works. DECSB has yet to commence operation.

(f) Joint venture agreement

On 20 November 2012, the Group, via its direct wholly owned subsidiary, Daya Land & Development Sdn. Bhd. entered into a Shareholders Agreement with Chang Cheng Realty Sdn. Bhd. to jointly develop and construct one block of 28 storey retail/showroom/service suites, forty blocks of four storey shop office and eight blocks of three storey shops on four parcels of empty land held located at Jalan Pintas in the District of Penampang, Sabah, Malaysia to be undertaken by a single-purpose joint venture company, Semangat Global Sdn. Bhd.

company

(a) conversion of redeemable convertible secured loan notes

On 20 January 2012, the Company announced that 17,421,603 new ordinary shares of DMB Shares were issued pursuant to the conversion of RM3 million Redeemable Convertible Secured Loan Notes at a conversion price of RM0.1722 per DMB share and these shares were listed on Bursa Malaysia Securities Berhad on 25 January 2012.

Subsequently, on 14 May 2012, the Company announced that a further 17,421,603 new DMB Shares were issued pursuant to

the conversion of RM3 million Redeemable Convertible Secured Loan Notes at a conversion price of RM0.1722 per DMB share and these shares were listed on Bursa Malaysia Securities Berhad on 15 May 2012.

(b) private placement in 2011

On 11 May 2011, the Board announced that the Company proposes to issue up to 238,000,000 new ordinary shares of RM0.10 each in the Company (“DMB Shares”) representing up to 20.89% of the existing issued and paid-up share capital of the Company through a private placement exercise.

A total of 85,000,000 DMB Shares were placed out to identify investors in three (3) tranches, at an issue price of RM0.225 for the first tranche and RM0.22 per share for the second and third tranches.

On 23 November 2012, the Board announced that the Company does not intend to seek for any further extension of time for the implementation of the private placement which has lapsed on 24 November 2012.

(c) shares buy back

During the financial year, the Company acquired 13,888,600 (2011: 1,787,100) shares in the Company through purchases on the Bursa Malaysia Securities Berhad. The total amount paid to acquire the shares was RM2,732,320 (2011: RM317,049) and this was presented as a component within shareholders’ equity.



(cont’d)

32. siGniFicant events (cont’d)

company (cont’d)

(d) partial disposal of shares in subsidiaries

The Company had on 21 September 2012 completed its disposal of 250,992 ordinary shares of RM1.00 each in Daya Secadyme Sdn. Bhd. (“DSSB”) and 1,245,000 ordinary shares of RM1.00 each in Daya OCI Sdn. Bhd. (“DOCI”) representing 24.9% of the issued and paid-up share capital of DSSB and DOCI respectively to Rancak Nikmat Sdn. Bhd. for a total cash consideration of RM19,000,000 and RM11,500,000 respectively.

33. DiviDenDs

Dividends in respect of year

Dividends recognised in year

2012 2011 2012 2011

rM rM rM rM

proposed:

Single tier dividends of 2.5% on 1,234,001,750 ordinary shares 3,085,004 - - -

Single tier dividends of 2.5% on 1,199,158,544 ordinary shares - 2,997,896 - -

recognised during the year:

Single tier dividends of 2.5% on 1,229,607,650 ordinary shares - - 3,074,022 -

Single tier dividends of 2.4% on 1,199,158,544 ordinary shares - - - 2,877,982

3,085,004 2,997,896 3,074,022 2,877,982

At the forthcoming Annual General Meeting, a single tier dividends of 2.5% in respect of the financial year ended 31 December 2012 will be proposed for shareholders’ approval. The financial statements for the current financial year do not reflect this proposed dividends. Such dividends, if approved by the shareholders, will be accounted for in equity as an appropriation of retained profits in the financial year ending 31 December 2013.

34. subsequent events

Group

(a) acquisition of a sub-subsidiary

The Group, via its subsidiary, Daya Petroleum Ventures Sdn. Bhd. (formerly known as Metriwell Sdn. Bhd.) had on 18 March 2013 entered into a Subscription Agreement with Daya Maxflo Sdn. Bhd. (formerly known as Maxflo Energy Products Sdn. Bhd.) (“Maxflo”), Sales and Purchase Agreement with Jay Dorfman, Shareholders Agreement and Call and Put Option Agreement with Jay Dorfman and Visual Well Solutions Sdn. Bhd. for the proposed acquisition of 50.70% of the issued and paid up share capital of Maxflo for a cash consideration of RM1,900,000.

The acquisition was completed on 5 April 2013.



34. subsequent events (cont’d)

Group (cont’d)

b) acquisition of a joint venture company

On 20 November 2012, the Group, via its direct wholly owned sub-subsidiary, Daya Land & Development Sdn. Bhd. (“DLD”) entered into a Shareholders Agreement with Chang Cheng Realty Sdn. Bhd. to jointly develop and construct one block of 28 storey retail/showroom/service suites, forty blocks of four storey shop office and eight blocks of three storey shops on four parcels of empty land held located at Jalan Pintas in the District of Penampang, Sabah, Malaysia to be undertaken by a single-purpose joint venture company, Semangat Global Sdn. Bhd. (“SGSB”).

On 1 March 2013, the Group, via its direct wholly owned sub-subsidiary, DLD subscribed for 102,000 ordinary shares of RM1.00 each of SGSB for a cash consideration of RM102,000.

(c) Group re-organisation on investment in seca chemicals and catalysts sdn. bhd. and Daya Offshore construction sdn. bhd. (formerly known as sD equipment sdn. bhd.)

On 2 January 2013, through the Internal Group Re-organisation Plan, the Company acquired 100,000 and 10,000 ordinary shares of RM1.00 each in Seca Chemicals and Catalysts Sdn. Bhd. (“SCCSB”) and Daya Offshore Construction Sdn. Bhd. (formerly known as SD Equipment Sdn. Bhd.) (“DOCSB”), sub-subsidiaries of a subsidiary of the Company, Daya Secadyme Sdn. Bhd. (“DSSB”) representing 100% of the issued and paid-up share capital of SCCSB and DOCSB for a cash consideration of RM2,754,855 and RM10,000 respectively from DSSB.

company

(a) conversion of redeemable convertible secured loan notes

On 28 February 2013, the Company announced that 14,518,002 new ordinary shares of RM0.10 each in the Company (“DMB Shares”) were issued pursuant to the conversion of RM2.5 million Redeemable Convertible Secured Loan Notes at a conversion price of RM0.1722 per DMB share and these shares were listed on Bursa Malaysia Securities Berhad on 1 March 2013.

(b) partial disposal of shares in subsidiaries

The Company had on 8 March 2013 entered into four Share Sale Agreements with Wiramas Baiduri Sdn. Bhd. for the disposal of 81,648 ordinary shares of RM1.00 each in Daya Secadyme Sdn. Bhd. (“DSSB”) representing 8.10% of the issued and paid-up share capital of DSSB, 405,000 ordinary shares of RM1.00 each in Daya OCI Sdn. Bhd. (“DOCI”) representing 8.10% of the issued and paid-up share capital of DOCI, 544,500 ordinary shares of RM1.00 each in Daya Proffscorp Sdn. Bhd. (“DPRO”) representing 33% of the issued and paid-up share capital of DPRO and 101,500 ordinary shares of RM1.00 each in Daya Petroleum Ventures Sdn. Bhd. (formerly known as Metriwell Sdn. Bhd.) (“DPV”) representing 29% of the issued and paid-up share capital of DPV at the cash consideration of RM6,500,000, RM3,700,000, RM6,700,000 and RM101,500 respectively.

The disposal was completed on 5 April 2013.

35. authOrisatiOn OF Financial stateMents FOr issue

The financial statements for the year ended 31 December 2012 were authorised for issue in accordance with a resolution of the directors on 22 April 2013.



(cont’d)

36. suppleMentary inFOrMatiOn - breakDOwn OF retaineD prOFits intO realiseD anD unrealiseD

The breakdown of the retained profits of the Group and of the Company as at 31 December 2012 and 2011 into realised and unrealised is presented in accordance with the directive issued by Bursa Malaysia Securities Berhad dated 25 March 2010 and prepared in accordance with Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits and Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants.

realised and unrealised profits/(losses)

Group company

2012 2011 2012 2011

note rM rM rM rM

Total retained profits:

- Realised 117,989,371 102,239,534 15,425,577 16,622,273

- Unrealised (290,195) (2,575,238) (42,716) (175,436)

117,699,176 99,664,296 15,382,861 16,446,837

Less: Consolidation adjustments (29,662,350) (28,724,232) - -

Total retained profits 22 88,036,826 70,940,064 15,382,861 16,446,837


DIRECTORS’ RESPONSIBILITIES STATEMENTon Financial Statements

In accordance with the Companies Act, 1965, the Directors of the Company are required to prepare financial statements for each financial year which shall give a true and fair view of the financial position of the Company and of the Group as at the end of the financial year and of their results and their cash flows of the Company and of the Group for the financial year.

The Directors are responsible to ensure that the Company and the Group keep proper accounting records to enable the Company to disclose, with reasonable accuracy and without any material misstatement in the financial statements, the financial position, the results and the cash flows of the Company and of the Group. The Directors are also responsible to ensure that the financial statements comply with the Companies Act, 1965 and the relevant accounting standards.

In preparing the financial statements for the financial year ended 31 December 2012, the Directors have:-

- adopted the appropriate accounting policies, which are consistently applied;- made judgements and estimates that are reasonable and prudent;- ensured applicable accounting standards have been followed, subject to any material departures which will be disclosed and

explained in the financial statements; and- prepared the financial statements on the assumption that the Company and the Group will operate as a going concern.

The Directors have provided the auditors with every opportunity to take all steps, undertake all inspections and seek all explanations they considered to be appropriate for the purpose of enabling them to give their audit report on the financial statements.


ANALYSIS OF SHAREHOLDINGSas at 30 April 2013

Authorised share capital : 2,000,000,000 ordinary shares of RM0.10 eachIssued and fully paid-up share capital : 1,248,519,752 ordinary shares of RM0.10 each (including 15,720,700 ordinary shares of RM0.10 each retained as Treasury Shares)Class of Shares : Ordinary shares of RM0.10 eachVoting Rights : One vote per ordinary share held

DistributiOn OF sharehOlDinGs

size of shareholdingsno. of

shareholders % of

shareholders no. of shares% of issued

capital

1-99 145 2.71 8,069 0.00

100-1,000 135 2.52 59,820 0.00

1,001-10,000 1,225 22.91 9,231,840 0.75

10,001-100,000 3,016 56.41 122,433,695 9.93

100,001-61,639,951* 826 15.45 1,101,065,628 89.31

61,639,952 and above** 0 0 0 0

tOtal 5,347 100.00 1,232,799,052 100.00

Notes:

* - Less than 5% of issued shares** - 5% and above of issued shares

substantial sharehOlDers as at 30 april 2013

According to the Register of Substantial Shareholders required to be kept under Section 69L of the Companies Act, 1965, the following are the substantial shareholders of the Company:

name of substantial shareholders

number of shares held

Direct % indirect %

Dato’ Mazlin Bin Md Junid 134,359,386 10.90 20,000,720^ 1.62

Dato’ Sri Koh Kin Lip JP 78,115,098 6.34 - -

Nathan Tham Jooi Loon 69,370,198 5.63 4,709,998# 0.38

Lim Soon Foo 61,329,098 4.98 279,000* 0.02

^ Indirect Interest via the shareholdings of his children pursuant to Section 134 (12)(c) of the Companies Act, 1965# Indirect Interest via the shareholdings of his spouse pursuant to Section 134 (12)(c) of the Companies Act, 1965* Indirect Interest via the shareholdings of his son pursuant to Section 134 (12)(c) of the Companies Act, 1965


ANALYSIS OF SHAREHOLDINGSas at 30 April 2013cont’d

DirectOrs’ interest as at 30 april 2013

According to the Register of Directors’ Shareholding required to be kept under Section 134 of the Companies Act, 1965, the Directors’ interest in the ordinary share capital of the Company are as follows:

name of DirectorsDirect

interest %indirect interest %

Dato’ Azmil Khalili Bin Khalid - - - -

Dato’ Mazlin Bin Md Junid 134,359,386 10.90 20,000,720^ 1.62

Dato’ Sri Koh Kin Lip JP 78,115,098 6.34 - -

Nathan Tham Jooi Loon 69,370,198 5.63 4,709,998# 0.38

Fazrin Azwar Bin Md. Nor 199,998 0.02 - -

Lim Soon Foo 61,329,098 4.98 279,000* 0.02

Ronnie Lim Hai Liang (Alternate Director to Lim Soon Foo) 279,000 0.02 61,329,098** 4.98

^ Indirect Interest via the shareholdings of his children pursuant to Section 134 (12)(c) of the Companies Act, 1965# Indirect Interest via the shareholdings of his spouse pursuant to Section 134 (12)(c) of the Companies Act, 1965* Indirect Interest via the shareholdings of his son pursuant to Section 134 (12)(c) of the Companies Act, 1965** Indirect Interest via the shareholdings of his father pursuant to Section 134 (12)(c) of the Companies Act, 1965

thirty larGest sharehOlDers as at 30 april 2013

name of shareholdersno. of

shares% of issued

capital

1 RHB Capital Nominees (Asing) Sdn Bhd- Robert Yee Seng Lee

57,729,900 4.68

2 EB Nominees (Tempatan) Sendirian Berhad- Pledged Securities Account for Mazlin bin Md Junid (SFC)

53,500,000 4.34

3 CIMSEC Nominees (Tempatan) Sdn Bhd- CIMB Bank for Tham Jooi Loon (MM1102)

46,547,998 3.78

4 HSBC Nominees (Asing) Sdn Bhd- Exempt An for Credit Suisse (SG BR-TST-ASING)

41,767,598 3.39

5 Capital Nexus Sdn Bhd 41,028,200 3.33

6 Amsec Nominees (Tempatan) Sdn Bhd- Pledged Securities Account for Koh Kin Lip

31,461,438 2.55

7 Kenanga Nominees (Tempatan) Sdn Bhd- Pledged Securities Account for Mazlin bin Md Junid

29,359,386 2.38

8 RHB Capital Nominees (Asing) Sdn Bhd- Pledged Securities Account for Lim Chai Beng (CEB)

25,325,100 2.05

9 Kenanga Nominees (Tempatan) Sdn Bhd- Pledged Securities Account for Koh Siew Kong

24,680,000 2.00

10 Kenanga Nominees (Tempatan) Sdn Bhd- Pledged Securities Account for Tham Wooi Loon

24,239,998 1.97

11 Kenanga Nominees (Tempatan) Sdn Bhd- Pledged Securities Account for Koh Kin Lip

22,890,000 1.86

12 RHB Capital Nominees (Tempatan) Sdn Bhd- Pledged Securities Account for Tham Jooi Loon

21,252,200 1.72

13 RHB Capital Nominees (Tempatan) Sdn Bhd- Ng Chin San

20,562,200 1.67


ANALYSIS OF SHAREHOLDINGSas at 30 April 2013

cont’d

thirty larGest sharehOlDers as at 30 april 2013 (cont’d)

name of shareholdersno. of

shares% of issued

capital

14 Maybank Securities Nominees (Asing) Sdn Bhd- Maybank Kim Eng Securities Pte Ltd for Firstlink Investments Corporation Limited

19,000,000 1.54

15 Citigroup Nominees (Tempatan) Sdn Bhd- Pledged Securities Account for Mazlin bin Md Junid (000190663)

18,000,000 1.46

16 Cartaban Nominees (Tempatan) Sdn Bhd- COPE-KPF Opportunities 1 Sdn Bhd

17,740,822 1.44

17 CIMSEC Nominees (Tempatan) Sdn Bhd- CIMB Bank for Koh Kin Lip (MY0502)

17,640,000 1.43

18 RHB Capital Nominees (Tempatan) Sdn Bhd- Pledged Securities Account for Mazlin bin Md Junid

14,500,000 1.18

19 RHB Capital Nominees (Tempatan) Sdn Bhd- Ganjaran Lebar Sdn Bhd

13,593,600 1.10

20 HLB Nominees (Tempatan) Sdn Bhd- Pledged Securities Account for Lim Chai Beng

13,000,000 1.05

21 Cartaban Nominees (Asing) Sdn Bhd- Exempt An for BOCI Securities Ltd (Clients A/C)

12,948,600 1.05

22 RHB Capital Nominees (Tempatan) Sdn Bhd- Tee Kiat Ann

12,283,200 1.00

23 Citigroup Nominees (Tempatan) Sdn Bhd- Pledged Securities Account for Tham Wooi Loon (010531334)

12,000,000 0.97

24 Alliancegroup Nominees (Tempatan) Sdn Bhd- Pledged Securities Account for Mazlin bin Md Junid (8079781)

11,000,000 0.89

25 RHB Capital Nominees (Tempatan) Sdn Bhd- Lim Soon Foo

10,951,500 0.89

26 Citigroup Nominees (Tempatan) Sdn Bhd- Pledged Securities Account for Mohd Zaidi bin Razali (005042294)

10,350,000 0.84

27 Lew Yuen Kee @ Lew Ah Kee 10,312,000 0.84

28 Koh Siew Kong 10,293,300 0.83

29 Lim Soon Foo 8,610,000 0.70

30 Song Tae Chin 8,479,198 0.69

tOtal 661,046,238 53.62


ADDITIONAL COMPLIANCE INFORMATION

share buy-back

The details of shares bought back/cancelled for the financial year ended 31 December 2012 are as follows:

purchase price per share (rM)

Monthly breakdown brought back

number of shares

purchased retained

in treasury (units) lowest highest

average cost per share

(rM)

total consideration

(rM)

number of treasury

shares cancelled

April 2012 355,000 0.200 0.200 0.201 71,518 -

May 2012 41,100 0.195 0.195 0.196 8,074 -

June 2012 541,500 0.195 0.195 0.196 106,364 -

July 2012 1,669,400 0.195 0.195 0.196 327,519 -

August 2012 3,296,000 0.195 0.200 0.199 657,019 -

September 2012 6,036,000 0.190 0.200 0.198 1,195,722 -

October 2012 77,900 0.190 0.190 0.191 14,909 -

November 2012 600,000 0.190 0.190 0.191 114,832 -

December 2012 1,271,700 0.180 0.190 0.186 236,363 -

total 13,888,600 0.197 2,732,320.46 - During the financial year under review, the Company purchased in the open market a total of 13,888,600 of its own issued shares and retained as treasury shares. None of the treasury shares has been resold or cancelled. As at 31 December 2012, the Company held a total of 15,675,700 ordinary shares as treasury shares.

OptiOns, warrants Or cOnvertible securities

The Company did not issue any options, warrant or convertible securities during the financial year ended 31 December 2012.

aMerican DepOsitOry receipt (aDr)/GlObal DepOsitOry receipt (GDr) prOGraMMe

The Company did not sponsor any ADR/GDR Programme during the financial year under review.

iMpOsitiOn OF sanctiOns anD/Or penalties

There were no sanctions and/or penalties imposed on the Company and its subsidiaries, directors or management by any relevant regulatory bodies during the financial year under review.

nOn-auDit Fees

Non-audit fees totaling RM55,000 was paid to the external auditors, Messrs Ernst & Young, by the Group for the financial year ended 31 December 2012 for review of internal control and financial due diligence relating to an acquisition of a private limited company.

prOFit estiMates, FOrecast Or prOJectiOn

The Company did not issue any profit estimate, forecast or projection for the financial year ended 31 December 2012.


ADDITIONAL COMPLIANCE INFORMATIONcont’d

variatiOn in results

There was no material variation between the audited results for the financial year ended 31 December 2012 and the unaudited results of the Group as previously announced.

prOFit Guarantee

The Company did not issue any profit guarantee during the financial year under review.

Material cOntract invOlvinG DirectOrs anD MaJOr sharehOlDers

There are no material contracts entered into by the Company and its subsidiaries which involved the interests of the Directors and major shareholders, either still subsisting at the end of the financial year ended 31 December 2012, or which were entered into since the end of the previous financial year.

recurrent relateD party transactiOns OF a revenue Or traDinG nature

Details of the recurrent related party transactions of a revenue or trading nature entered into by the Group is disclosed in Note 27 to the financial statements on pages 112 and 113.

Material cOntract relatinG tO lOans

There are no material contracts relating to loan involving the interests of the Directors and major shareholders during the financial year under review.

utilisatiOn OF prOceeDs

Private Placement 2011

The Company raised approximately RM13.2 million from its private placement exercise proposed in year 2011. As at 31 December 2012, the Company has fully utilised the funds raised.

Private Placement 2010

The Company raised approximately RM22.461 million from its private placement exercise proposed in year 2010. As at 31 December 2012, the Company has fully utilised the funds raised.


LIST OF PROPERTIES 2012

registered Owner/location

Description and existing

use

land/built up

area(sq ft) tenure

approximate age of

building

net book value as at 31.12.2012

(rM)Date of last revaluation

Daya Polymer Sdn Bhd1744, Jalan Industri Dua, Taman Industri Bukit Panchor,14300 Nibong Tebal,Penang, Malaysia.

Industrial land with

factory, warehouse

and office

136,389/ 81,628

Freehold 15 years 8,607,041 13 October 2008

Daya Secadyme Sdn BhdLot No. 5410,Kawasan Perindustrian,Teluk Kalong,24007 Kemaman, Terengganu Darul Iman,Malaysia.

Industrialland with

warehouse and office

215,280/ 1,680

Leasehold60 years expiring

7 September 2064

5 years 8,206,481 27 November 2008

Daya Secadyme Sdn BhdSuite B-5-2, Setiawangsa Business Suites, Jalan Setiawangsa 11,Taman Setiawangsa, 54200 Kuala Lumpur,Malaysia.

Business/ Office

N/A/ 3,229

Freehold 6 years 539,730 4 October 2004

Daya Secadyme Sdn BhdLot PT 8052,Kawasan Perindustrian,Teluk Kalong,24007 Kemaman, Terengganu Darul Iman,Malaysia.

Industrial land

20,000/ N/A


5 November 2069

3 year 1,184,556 NIL

Daya CMT Sdn BhdPlot 81 Lebuhraya Kampung Jawa,Bayan Lepas,11900 Pulau Pinang,Malaysia.

Industrial land with

warehouseand office

46,478/20,748


2 November 2048

13 years 2,116,054 7 July 2008

Daya CMT Sdn Bhd72 Jalan Badlishah,09100 Baling,Kedah Darul Aman,Malaysia.

3 Storeyshophouse

N/A/ 2,314

Freehold 15 years 290,421 7 July 2008

Daya CMT Sdn Bhd16-1-10 Jalan Tun Dr. Awang MK 13,11900 Penang, Malaysia.

Apartment N/A/ 700


Daya CMT Sdn BhdLot No. 736 Mukim 1,Jalan Pulau Betong,Balik Pulau,Daerah Barat Daya Pulau Pinang, Malaysia.

Vacant Land 23,573/N/A





use

land/built up

area(sq ft) tenure

approximate age of

building



Daya Clarimax Sdn BhdLot No. 38,Jalan Sungai Pinang 5/1,Seksyen 5,Phase 2A, Taman Perindustrian Pulau Indah,42920 Port Klang,Selangor Darul Ehsan,Malaysia.

Industrialland with


113,053/28,364

Leasehold99 years

expiring on14 February

2104

7 years 8,941,962 2 June 2008

Daya Proffscorp Sdn BhdLot 3997,Kawasan Perindustrian,Teluk Kalong,24007 Kemaman, Terengganu Darul Iman,Malaysia.

Industrialland with


107,600/ 18,725


26 March 2059

5 years 1,689,368 NIL


Industrialland with

workshop

53,908/ 3,720


10 September

2060

11 years 291,253 NIL


Industrialland

53,822/1,600


28 January 2063

4 years 301,264 NIL

Daya OCI Sdn BhdNo 9 & 11, Jalan P/8,Kawasan Perindustrian Bangi,Seksyen 13,43650 Bandar Baru Bangi,Selangor,Malaysia.

Industrialland with


21,312/13,701

99 years lease

expiring on 29 Sept

2086

26 years 2,311,430 10 Aug 2010

Daya OCI Sdn BhdUnit No. B-3A-4, Block B, Level 3A,Unit 4, Megan Avenue II,No 12 Jalan Yap Kwan Seng,50450 Kuala Lumpur,Malaysia.

VacantBusiness/

Office

N/A/ 2,293

Grant-in-perpetuiti(freehold)

14 years 408,000 27 Aug 2010

Daya Urusharta Sdn BhdD5-1-6, D5-1-7,D5-1-8, D5-1-9, D5-1-10 Solaris Dutamas, No.1, Jalan Dutamas 1, 50480 Kuala Lumpur

Business/Office

N/A/ 5,178

Freehold 6 years 3,471,987 NIL

LIST OF PROPERTIES 2012(cont’d)


LIST OF PROPERTIES 2012(cont’d)



use

land/built up

area(sq ft) tenure

approximate age of

building



Ultrafest Sdn BhdCL 025134883,Kampong Gadong KimanisOff Jalan Kimanis-KeningauDistrict of Papar,Sabah

Proposed developmentof industrial/

factoryunits

385,506/NA

Leasehold NA 2,305,389 NIL

Ultrafest Sdn Bhd(Beneficially owner)NT 023097841NT 023097850NT 023097863NT 023097878Kampong Gadong KimanisOff Jalan Kimanis-KeningauDistrict of Papar, Sabah

Proposed developmentof industrial/

factoryunits

1,267,160/NA

Freehold NA 7,331,869 NIL


NOTICE OF TENTH ANNUAL GENERAL MEETING

NOTICE IS HEREBY GIVEN THAT the Tenth Annual General Meeting of the Company will be held at MTD Group Building, Ground Floor, No. 1, Jalan Batu Caves, 68100 Batu Caves, Selangor Darul Ehsan on Tuesday, 18 June 2013 at 10.30 a.m. for the following purposes:

aGenDa

as Ordinary business

1. To receive the Audited Financial Statements for the financial year ended 31 December 2012 together with the Directors’ and Auditor’s Reports thereon.

2. To approve the payment of a single tier final dividend of 2.5% for the financial year ended 31 December 2012.

3. To approve the payment of Directors’ fees of RM156,000.00 for the financial year ended 31 December 2012.

4. To re-elect the following directors retiring in accordance with Article 104 of the Company’s Articles of Association:

a) Dato’ Azmil Khalili bin Khalid

b) Mr. Nathan Tham Jooi Loon

5. To re-appoint Messrs Ernst & Young as the Company’s auditors for the ensuing year and to authorise the Board of Directors to fix their remuneration.

as special business To consider and, if thought fit, pass the following ordinary and special resolutions: 6. authority for Directors to issue and allot shares in the company pursuant to section 132D of

the companies act, 1965 “that pursuant to Section 132D of the Companies Act, 1965, and subject always to the approval

of the relevant authorities, the Directors be and are hereby empowered to issue and allot shares in the Company, from time to time to such persons and upon such terms and conditions and for such purposes as the Directors may, in their absolute discretion, deem fit, provided that the aggregate number of shares to be issued pursuant to this resolution does not exceed 10% of the issued share capital of the Company for the time being.

anD that the Directors be and are also empowered to obtain the approval for the listing of and quotation for the additional shares on Bursa Malaysia Securities Berhad (“Bursa Securities”) and that such authority shall continue in force until the conclusion of the next Annual General Meeting of the Company.”

7. proposed renewal of authority for the purchase by the company of its own ordinary shares

of up to 10% of the issued and paid up share capital (“share buy-back”)

“that, subject to the Companies Act, 1965 (“the Act”), provisions of the Company’s Articles of Association (“M&A”) and the Listing Requirements of Bursa Securities, the Company be and is hereby authorised to purchase such number of ordinary shares of RM0.10 each in the Company subject to the following:-

(a) the aggregate number of the Company’s shares which may be purchased or held by the Company shall not exceed ten per centum (10%) of the issued and paid-up ordinary share capital of the Company, subject to the restriction that the Company continues to maintain a shareholding spread that is on compliance with the Listing Requirements of Bursa Securities;

(b) the maximum funds to be allocated by the Company for the purpose of purchasing the Company’s shares under the share Buy-Back shall not exceed the latest available audited retained profits and share premium of the Company;

(Please refer to Explanatory Notes to the Agenda)

Ordinary Resolution 1








NOTICE OF TENTH ANNUAL GENERAL MEETINGcont’d

(c) the authority conferred by this resolution to facilitate the Share Buy-Back will commence immediately upon the passing of this ordinary resolution and will continue to be in force until:

(i) the conclusion of the next annual general meeting (“AGM”) of the Company at which time the authority would lapse unless renewed by ordinary resolution, either unconditionally or conditionally; or

(ii) the expiration of the period within which the next AGM of the Company after that date is required by law to be held; or

(iii) the authority is revoked or varied by ordinary resolution passed by the shareholders of the Company in a general meeting,

whichever occurs first; and

(d) upon completion of the purchase(s) of the Company’s shares by the Company, the Directors of the Company be and are empowered to cancel or retain as treasury shares, any or all of the Company’s shares so purchased, resell on Bursa Securities or distribute as dividends to the Company’s shareholders and/or in any manner as prescribed by the Act, rules, regulations and orders made pursuant to the Act and the Listing Requirements of Bursa Securities and any other relevant authorities for the time being in force,

anD that the Directors of the Company be and are hereby authorised to take all such steps as are necessary or expedient to implement, finalise, complete or to effect the Share Buy-Back with full powers to assent to any conditions, modifications, resolutions, variations and/or amendments (if any) as may be imposed by the relevant authorities and/or to do all such acts and things as the Directors may deem fit and expedient in the best interest of the Company to give effect to and to complete the purchase of the Company’s shares.”

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

nOtice OF DiviDenDs entitleMent anD payMent Date

nOtice is alsO Given that a single tier final dividend of 2.5% for the financial year ended 31 December 2012, if approved, will be paid on 15 August 2013 to shareholders whose names appear in the Record of Depositors of the Company at the close of business on 31 July 2013.

A Depositor shall qualify for entitlement to dividend only in respect of:-

a) Shares deposited into the Depositor’s Securities Account before 4.00 p.m. on 31 July 2013 in respect of ordinary transfers; andb) Shares bought on Bursa Malaysia Securities Berhad on a cum entitlement basis according to the Rules of Bursa Malaysia Securities

Berhad.

By Order of the Board

chin nGeOk Mui (MAICSA 7003178)chen bee linG (MAICSA 7046517)Secretaries

Selangor Darul Ehsan20 May 2013


NOTICE OF TENTH ANNUAL GENERAL MEETINGcont’d

Notes:

i) In respect of deposited securities, only members/shareholders whose names appear in the Record of Depositors as at 12 June 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 a proxy to attend and vote at the Meeting on his/her behalf. In the case of a corporation, a duly authorised representative to attend and vote in its stead. The proxy may but need not be a member of the Company and a member may appoint any person to be his/her proxy without limitation. A proxy/representative appointed to attend and vote at the Meeting shall have the same rights as the member to speak at the Meeting.

iii) Where a member appoints more than one (1) proxy, the appointment shall be invalid unless he/she specifies the proportions of his/her holdings to be represented by each proxy.

iv) The instrument appointing a proxy shall be in writing under the hand of the appointer or if such appointer is a corporation, either under its Common Seal or under the hand of an officer or attorney duly authorised.

v) The instrument appointing a proxy must be deposited at the Registered Office of the Company at Level 8, Symphony House, Pusat Dagangan Dana 1, Jalan PJU 1A/46, 47301 Petaling Jaya, Selangor Darul Ehsan not less than forty-eight (48) hours before the time set for holding the Meeting or adjourned meeting.

vi) Where a member 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.

Explanatory Notes to the Agenda:

Item 1 of the Agenda

This item of the Agenda 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 item of the Agenda is not put forward for voting.

Item 6 of the Agenda - Ordinary Resolution 6

Authority for Directors to issue and allot shares in the Company pursuant to Section 132D of the Companies Act, 1965

Ordinary Resolution 6 is a renewal of the previous year mandate and if passed, will empower the Directors of the Company to issue and allot shares up to an aggregate amount not exceeding 10% of the issued share capital of the Company for the time being for such purposes as the Directors consider would be in the best interest of the Company.

This authority unless revoked or varied by the Company at a general meeting will expire at the next Annual General Meeting.

The renewal of this mandate would provide flexibility to the Company for any possible fund raising exercise, including but not limited for further placing of shares, for purpose of funding future investment projects, working capital and/or acquisitions. This authority is to avoid any delay and cost involved in convening a general meeting to approve such issuance if shares.

The Company raised approximately RM13.2 million and RM22.461 million from its private placement exercise proposed in years 2011 and 2010 respectively. As at 31 December 2012, the Company has fully utilised the funds raised. Details of utilisation of proceeds are disclosed in Additional Compliance Information.

Item 7 of the Agenda - Ordinary Resolution 7

Proposed Renewal of Authority for Share Buy Back

Ordinary Resolution 7 if passed, will empower the Directors of the Company to buy-back and/or hold shares of the Company not exceeding ten percent (10%) of the issued and paid-up share capital of the Company from time to time being quoted on the Bursa Securities as may be determined by the Directors of the Company from time to time through Bursa Securities upon such terms and conditions as the Directors may deem fit and expedient in the interest of the Company.

Shareholders are advised to refer to the Statement to Shareholders dated 20 May 2013, which is circulated together with the 2012 Annual Report when considering Ordinary Resolution 7 on the Share Buy Back.


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Daya Materials berhaD(Company Number : 636357-W)(Incorporated in Malaysia under the Companies Act,1965)

I/We

of

being a member/members of the Daya Materials Berhad hereby appoint Mr/Mrs/Ms

NRIC No. of

or failing him/her, Mr/Mrs/Ms 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 Tenth Annual General Meeting of the Company to be held at MTD Group Building, Ground Floor, No. 1, Jalan Batu Caves, 68100 Batu Caves, Selangor Darul Ehsan on Tuesday, 18 June 2013 at 10.30 a.m. and at any adjournment.

In case of vote taken by a show of hands, my/our proxy shall vote on my/our behalf as indicated below :

resolution no. Ordinary business For against

Ordinary Resolution 1 Payment of a single tier final dividend of 2.5%

Ordinary Resolution 2 Payment of Directors’ Fees

Ordinary Resolution 3 Re-election of Dato’ Azmil Khalili bin Khalid as Director

Ordinary Resolution 4 Re-election of Mr. Nathan Tham Jooi Loon as Director

Ordinary Resolution 5 Re-appointment of Messrs Ernst & Young as the Company’s auditors

special business For against

Ordinary Resolution 6 Authority to Directors to issue and allot shares in the Company pursuant to Section 132D of the Companies Act, 1965

Ordinary Resolution 7 Proposed Renewal of Authority for the Share Buy-Back Please indicate with an (X) in the spaces provided above how you wish your vote to be cast. If no specific direction as to voting is given, the proxy will vote or abstain at his/her discretion.

Dated this day of 2013

Signature/Common Seal of Shareholder

NOTES:

i) In respect of deposited securities, only members/shareholders whose names appear in the Record of Depositors as at 12 June 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 a proxy to attend and vote at the Meeting on his/her behalf. In the case of a corporation, a duly authorised representative to attend and vote in its stead. The proxy may but need not be a member of the Company and a member may appoint any person to be his/her proxy without limitation. A proxy/representative appointed to attend and vote at the Meeting shall have the same rights as the member to speak at the Meeting.

iii) Where a member appoints more than one (1) proxy, the appointment shall be invalid unless he/she specifies the proportions of his/her holdings to be represented by each proxy.

iv) The instrument appointing a proxy shall be in writing under the hand of the appointer or if such appointer is a corporation, either under its Common Seal or under the hand of an officer or attorney duly authorised.

v) The instrument appointing a proxy must be deposited at the Registered Office of the Company at Level 8, Symphony House, Pusat Dagangan Dana 1, Jalan PJU 1A/46, 47301 Petaling Jaya, Selangor Darul Ehsan not less than forty-eight (48) hours before the time set for holding the Meeting or adjourned meeting.

vi) Where a member 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.

tenth annual General MeetinG

FOrM OF prOxy

cDs account no.

no. of shares held

AFFIXSTAMP

1st Fold Here

Fold This Flap For Sealing

Then Fold Here

The Secretary

DAYA MATERIALS BERHAD 636357-W

Level 8, Symphony HousePusat Dagangan Dana 1Jalan PJU 1A/4647301 Petaling JayaSelangor Darul Ehsan

Documents

DAYA AnnualReport2012