(MALAYSIA) CORPORATION BHD

IDEA

L JAC

OB

S (MA

LAYSIA) C

OR

POR

ATION

BH

D 捷卡（马）控股有限公司

AN

NU

AL REPO

RT 2012

(857363 U)

2 Corporate Information

3 Corporate Structure

4 Directors’ Profile

7 Chairman’s Statement

9 Corporate Governance Statement

16 Audit Commmittee Report

18 Statement on Risk Management and Internal Control

20 Financial Statements

82 Analysis of Shareholdings

84 List of Properties

85 Notice of Annual General Meeting

89 Other Disclosure Requirements

Form of Proxy Enclosed

Contents

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2

CORPORATE INFORMATION

BOARD OF DIRECTORS

Andrew Conrad JacobsExecutive Chairman

Meng BinChief Executive Officer /Managing Director

Chen Shien YeeExecutive Director

Koong Lin LoongIndependent Non-Executive Director

Hing Kim Tat Independent Non-Executive Director

Tan Kean Huat Independent Non-Executive Director

Eugene Lee Cheng Hoe Independent Non-Executive Director

COMPANY SECRETARIES

Lim Seck Wah (MAICSA 0799845)Tang Chi Hoe (Kevin) (MAICSA 7045754)

AUDIT COMMITTEE

Eugene Lee Cheng Hoe Chairman Independent Non-Executive Director

Hing Kim TatMemberIndependent Non-Executive Director

Koong Lin Loong MemberIndependent Non-Executive Director

Tan Kean Huat MemberIndependent Non-Executive Director

NOMINATION COMMITTEE

Koong Lin Loong ChairmanIndependent Non-Executive Director

Hing Kim Tat MemberIndependent Non-Executive Director

Tan Kean HuatMemberIndependent Non-Executive Director

REMUNERATION COMMITTEE

Tan Kean HuatChairmanIndependent Non-Executive Director

Hing Kim Tat MemberIndependent Non-Executive Director

Koong Lin Loong MemberIndependent Non-Executive Director

REGISTERED OFFICE

Level 15-2, Bangunan Faber Imperial CourtJalan Sultan Ismail50250 Kuala LumpurTel : 03-2692 4271 Fax : 03-2732 5388

PRINCIPAL PLACE OF BUSINESS

Office Suite 19-11-2,11th Floor, UOA Centre,No 19 Jalan Pinang,50450 Kuala Lumpur.

REGISTRAR

Mega Corporate Services Sdn BhdLevel 15-2, Bangunan Faber Imperial CourtJalan Sultan Ismail50250 Kuala LumpurTel : 03-2692 4271 Fax : 03-2732 5388

AUDITORS

Messrs SJ Grant ThorntonLevel 11, Sheraton Imperial CourtJalan Sultan Ismail50250 Kuala LumpurTel : 03-2692 4022 Fax : 03-2691 5229

CURRENT SPONSOR

M & A Securities Sdn BhdNo 45-3, The BoulevardMid Valley CityLingkaran Syed Putra59200 Kuala Lumpur, MalayisaTel : 03-2284 2911 Fax : 03-2284 2718

STOCK EXCHANGE LISTING

Bursa Malaysia Securities Berhad, ACE MarketStock name : IJACOBSStock code : 0162

PRINCIPAL BANKERS

HSBC Bank (Malaysia) BerhadAmbank (M) BerhadUnited Overseas Bank (Malaysia) BerhadChina Merchants Bank

IDEAL JACOBS (MALAYSIA)

C O R P O R AT I O N B H D

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CORPORATE STRUCTURE

Ideal Jacobs (Xiamen) Corporation

Xiamen Ideal Jacobs International Ltd Company

Ideal Jacobs (HK) Corporation Ltd Lumimark Sdn Bhd Ideal Laminar Pte Ltd

(857363-U)

100% owned

100% owned 100% owned

(350200400008183)

(350203100007163) (320594000239619)

(1617573) (950329-X) (201224524N)

Suzhou Ideal Jacobs Corporation

100% owned

(320594400033220)

Ideal Laminar (Suzhou) Ltd Co

51% owned100% owned 51% owned

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DIRECTORS’ PROFILE

Andrew Conrad JacobsExecutive Chairman, American, Aged 57

Mr Jacobs was appointed to the Board of Ideal Jacobs (Malaysia) Corporation Bhd (“Ideal Jacobs”) as our Non-Independent Non-Executive Chairman on 8 June 2010 and re-designated as Executive Chairman of Ideal Jacobs on 15 December 2011.

He graduated from University of Delaware with a degree in Speech Communications. He is the co-founder of Ideal Jacobs (Xiamen) Corporation in 2005 and also the President of Ideal Jacobs Corporation (“IJUS”) in New Jersey, The United States of America (“USA”). IJUS is a major shareholder of Ideal Jacobs.

Mr Jacobs has more than thirty years of experiences in the printing industry and has been involved in the marketing, production, quality control and other related fields in this industry. He is responsible for the rise of IJUS as one of the established suppliers in the printing industries among the multinational companies. He has also established “Ideal Jacobs” as a reputable supplier to various multinational companies worldwide. In addition, he is also actively involved in the environmental, health and safety movements in the USA. Ideal Jacobs is a Charter Member of the newly formed Stewardship Action Council.

He has also been a public speaker and author of several books including “Memoirs of a Sales Warrior: My Life, My Way” , “How to Start and Run Your Own Company -Or- Sex, Money and Power...It’s All The same Thing” and “Say Yes or I will Keep Calling”.

Mr Jacobs is a major shareholder of Ideal Jacobs by virtue of his interest in IJUS. He does not hold any directorship in any other public company. He has no family relationship with any Director and/or other major shareholder of Ideal Jacobs and has no conflict of interest other than disclosed under Note 30 to the Financial Statements which appears on page 72 in this Annual Report. He has not been convicted for any offence within the past ten years, other than traffic offences.

Meng BinChief Executive Officer/Managing Director, Chinese, Aged 46

Mr Meng was appointed as Company Director on 18 May 2009 and became our Chief Executive Officer/Managing Director of Ideal Jacobs and its group of companies on 8 June 2010.

He graduated from University of Utah with a degree in Finance. He is the co-founder of Ideal Jacobs (Xiamen) Corporation (“IJX”) in 2005 and is the Chairman of the Board of IJX. Mr. Meng is also the legal representative of IJX, Xiamen Ideal Jacobs International Limited Company (“IJIntl”) and Suzhou Ideal Jacobs Corporation (IJSZ), both are indirect wholly-owned subsidiaries of Ideal Jacobs in the People’s Republic of China (“PRC”) and the legal representative of Ideal Laminar (Suzhou) Ltd. Co.(ILSZ), indirect owned subsidiary of Ideal Jacobs in the People’s Republic of China (“PRC”). He is the Executive Director of IJSZ and ILSZ. He is also the chairman of IJIntl and General Manager of Ideal Jacobs (HK) Corporation Limited, wholly owned subsidiary of Ideal Jacobs in Hong Kong, China.

Prior to the establishment of IJX together with Mr Jacobs, Mr Meng started his career as the General Manager in Sanbor Xiamen Corporation. After eight (8) years of experience in manufacturing fields, he joined Space Diversity Limited Co. as a Director for the company’s trading operation in Peoples’ Republic of China and abroad. With his extensive industry experience accumulated for the past nineteen (19) years in the management of business operation, marketing, sales and development of new business, Mr Meng has been instrumental in the growth and development of IJX and the commencement of the Ideal Jacobs Group’s business operation in Thailand, Suzhou of Peoples’ Republic of China and Hong Kong. Being an integral part of the management team, Mr Meng is responsible for implementation of Ideal Jacobs Group’s broad operational strategies and policies. He also oversees the day-to-day operations and performance of the Ideal Jacobs Group.

Mr Meng is a major shareholder of Ideal Jacobs by virtue of his spouse, Foo Chong Lee’s interests in Ideal Jacobs. He does not hold any directorship in any other public company. He has no family relationship with any Director and/or other major shareholder of Ideal Jacobs and has no conflict of interest with Ideal Jacobs. He has not been convicted for any offence within the past ten years, other than traffic offences



5

Chen Shien YeeExecutive Director, Malaysian, Aged 48

Chen Shien Yee was appointed to the Board of Ideal Jacobs as our Executive Director on 23 January 2013.

He is a Fellow Member of the Association of Chartered Certified Accountants, and a Member of the Malaysian Institution of Accountants, CA(M).

Mr Chen has vast experience in auditing, consultancy, secretarial and financial accounting advisory. He was the Finance Director of Medilink Global UK Limited, a consulting partner in FKL & Associates (Chartered Accountants), Chief Finance Officer of Rhythm Consolidated Bhd, General Manager in finance and accounts and Company Secretary of Dataprep Holdings Berhad, Head of Finance and Accounts in L&M Corporation and Group Accountant of Taman Industri Selangor Sdn Bhd. Mr Chen is also currently the Chief Finance Officer of the Company.

Mr Chen does not hold any directorship in any other public company. He has no family relationship with any Director and/or major shareholder of Ideal Jacobs and has no conflict of interest with Ideal Jacobs. He has not been convicted for any offence within the past ten years, other than traffic offences.

Hing Kim TatIndependent Non-Executive Director, Malaysian, Aged 46

Mr Hing was appointed to the Board of Ideal Jacobs as our Independent Non-Executive Director on 8 June 2010. He was the Chairman of the Audit Committee, and subsequently on 4 March 2013, he resigned from the post of Chairman to become member of Audit Committee. He is also the member of Remuneration Committee and the Nomination Committee.

He graduated from Nottingham Trent University with an LL.B (Hons). Upon admission to the Law Society of England & Wales as a solicitor, he worked as an assistant solicitor with a firm in London, United Kingdom. He is a lawyer by profession and a member of the Malaysian Bar and the Law Society of England and Wales

He has more than 16 years of experience in corporate and commercial legal matters, and business laws in Malaysia and Peoples’ Republic of China. He is also a Notary Public and Malaysian Trade Mark Agent.

He does not hold any directorship in any other public company. He has no family relationship with any Director and/or major shareholder of Ideal Jacobs and has no conflict of interest with Ideal Jacobs. He has not been convicted for any offence within the past ten years.

Koong Lin LoongIndependent Non-Executive Director, Malaysian, Aged 49

Mr Koong was appointed to the Board of Ideal Jacobs as our Independent Non-Executive Director on 8 June 2010. He is also the Chairman of Nomination Committee, a member of the Audit Committee and Remuneration Committee.

He is qualified as a Chartered Management Accountant in the United Kingdom; a member of the Malaysia Institute of Accountant (“MIA”) and Chartered Tax Institute of Malaysia; Certified Practising Accountants Australia; Certified Management Accountants Australia; and Associate Member of Malaysian Association of Company Secretaries, the Institute of Internal Auditors (“IIA”) Malaysia and Kampuchea Institute of Certified Public Accountants and Auditors.

He has extensive cross-border experiences in various industries which include internal audit and control, corporate finance, feasibility study for joint venture assignments particularly in Hong Kong and China. Amongst others, he is the National Council Member of the Associated Chinese Chambers of Commerce and Industry of Malaysia (“ACCCIM”) and Chairman of its Small and Medium Enterprises (SMEs); Audit Committee Member of SME Corp, Ministry of International Trade and Industry of Malaysia; and member of Franchise Advisory Board, Ministry of Domestic Trade, Cooperatives and Consumerism.

He is the Managing Partner of REANDA LLKG INTERNATIONAL, Chartered Accountants and Executive Director of K-Konsult Taxation Sdn. Bhd. and its group of companies. He is currently an Independent Non-Executive Director of Oversea Enterprise Berhad.

He has no family relationship with any Director and/or major shareholder of Ideal Jacobs and has no conflict of interest with Ideal Jacobs. He has not been convicted for any offence within the past ten years, other than traffic offences.

DIRECTORS’ PROFILE(cont’d)

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Tan Kean HuatIndependent Non-Executive Director, Malaysian, Aged 55

Tan Kean Huat was appointed to the Board of Ideal Jacobs as our Independent Non-Executive Director on 23 January 2013. He is the Chairman of Remuneration Committee, member of Nomination Committee and Audit Committee.

He is a graduate in Diploma in Electronic Engineering.

Mr. Tan Kean Huat was the Executive Director of NV Multi Corporation Berhad (“NV Multi”), a company listed on the main board of Bursa Malaysia Securities Berhad (“Bursa”) on 26 June 2008 and delisted from the main board of Bursa on 9 May 2012. He has retired as Executive Director and became Non-Independent Non-Executive Director of NV Multi on 1 August 2008. Currently he is the Director of Nirvana Memorial Park (Shah Alam) Sdn Bhd since 1 June 2012, a subsidiary of NV Multi Asia Sdn Bhd, a company involve in bereavement care business.

Apart from being in the insurance business for the past 20 years he is also active in the cosmetic trade. He has substantial interest in property investment as well as in food outlets.

Besides business, he is actively involved in charitable organizations. He is currently the President of Children Literature Recitation Center Malaysia, Vice Chairman of NV Foundation, Trustee of Confucian Culture & Education Foundation, and Vice Finance of Malaysia Chinese Cultural Society.

Mr Tan does not hold any directorship in any other public company. He has no family relationship with any Director and/or major shareholder of Ideal Jacobs and has no conflict of interest with Ideal Jacobs. He has not been convicted for any offence within the past ten years, other than traffic offences.

Eugene Lee Cheng HoeIndependent Non-Executive Director, Malaysian, Aged 44

Eugene Lee Cheng Hoe was appointed to the Board of Ideal Jacobs as our Independent Non-Executive Director and Chairman of the Audit Committee on 4 March 2013.

He is a Chartered Accountant of Malaysian Institute of Accountants and also a member of CPA, Australia. He also holds a Bachelor of Economics (majoring in Accounting), Macquarie University, Australia.

Mr Eugene has extensive corporate and financial advisory and strategy consulting experience. He is currently a Principal at Atreus Consulting Sdn Bhd, a strategy and corporate advisory firm. He was formerly Senior Manager, Corporate Affairs at Hong Leong Group, Director / Executive Vice President at BinaFikir Sdn Bhd (a subsidiary of Maybank Investment Bank), General Manager, Corporate Planning & Development at MISC Berhad (a subsidiary of PETRONAS), Associate Director, Corporate Finance at Aminvestment Bank Berhad and Audit Semi-Senior at Coopers & Lybrand (now PricewaterhouseCoopers).

Mr Eugene does not hold any directorship in any other public company. He has no family relationship with any Director and/or major shareholder of Ideal Jacobs and has no conflict of interest with Ideal Jacobs. He has not been convicted for any offence within the past ten years, other than traffic offences.

The details of attendance of each Director at Board meetings are set out on page 12 of the Annual Report.

DIRECTORS’ PROFILE(cont’d)



7

CHAIRMAN’S STATEMENT

Dear Shareholders,

On behalf of the Board of Directors, I have the pleasure of presenting to you the second Annual Report and the Audited Financial Statements of Ideal Jacobs (Malaysia) Corporation Bhd for the financial year ended 31 December, 2012.

Overview

There was moderate improvement in the overall Group’s performance where higher revenue and lower operating cost resulted in marginal net profit for the year under review as opposed to loss in the prior year. The increase in revenue was mainly generated from the trading of non-core products which had increased by 400% as compared to prior year. The Group had also ventured into the business of photoluminescent paint and now we

are at the preliminary stage of developing the market. Photoluminescent paint absorbs energy from various light emitting sources like solar and fluorescent lighting and releases the energy in the form of glow when the surrounding turn dark.

Industry Trends & Developments

Our customers are the manufacturers of electronics and electrical products, medical devices and telecommunication devices and our core products form an integral part of their finished goods. In the first quarter of 2013, we had seen a minor uptrend in demand from customers across the industries of electronics and electrical, medical devices and telecommunication. We are expecting customers from telecommunication industries to increase their order for plastic fabrication parts in the second half of 2013.

Financial Performance

The Group registered revenue of RM24.39 million (2011: 20.05 million) and profit before tax of RM0.99 million (2011: RM1.98 million loss before tax) for the financial year ended 31 December 2012. The Group’s revenue for 2012 had increased by 21.7% as compared to 2011 mainly due to sales from trading of non-core products. 16.8% increase in revenue was contributed by the trading of non-core products of which the electrical powered vehicles sales were the main contributor. The balance 4.9% increase was contributed by the sales of core products which were below our expectation.

In spite of higher revenue, the gross profit margin of 42.4% for the year under review (2011: 46.7%) was lower as compared to 2011. This was due to the sales mix in 2012, which comprised higher sales of non-core products as compared to 2011. The gross profit margin from trading of non-core products was much lower compared to the core products. As compared to loss in 2011, the profit for the year under review was the result of higher revenue coupled with lower operating cost.

Operation review

Thailand

Ideal Jacobs Corporation (Thailand) Limited (“IJT”) operation was adversely affected by the political tumult and the flood in the previous year. Consequently, proactive measure was implemented where the entire production facilities in Thailand was relocated to China in the first quarter of 2012. We have also aborted the initial plan to setup a new production line in Thailand for engineered thermoplastic composite product as the product and application has not been commercialized. The voluntary winding up proceeding of IJT pursuant to Section 1236 of the civil and commercial code of the Thailand Act and Article 19 of the Articles of Association of IJT was completed on 17 April 2013. However, IJX has engaged a sales representative in Thailand to carry out the marketing function and to serve the existing customer in Thailand.

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CHAIRMAN’S STATEMENT(cont’d)

Malaysia

On 6 June 2012, the Company had acquired 51% equity interest in Lumimark Sdn Bhd (formerly known as Awan Idaman Sdn Bhd). Lumimark is a photoluminescent technology company that produces the photoluminescent paint and we are at the preliminary stage of developing the market. The photoluminescent paint can be widely used in the health and safety environment especially for emergency evacuation egress pathway indicator.

Singapore

On 4 Oct 2012, we had incorporated a 51% owned subsidiary in Singapore, Ideal Laminar Pte Ltd (“ILPL”), for marketing and trading purposes. ILPL will concentrate on telecommunication sector and has been actively engaged with global renowned smartphone producer.

China

The existing Xiamen and Suzhou operations are to concentrate on business development to expand the domestic and export market. Meanwhile research and development activities will continue as and when customers require new products.On 14 Jan 2013, we had incorporated a subsidiary in Suzhou, PRC China namely Ideal Laminar (Suzhou) Ltd Co (“ILSZ”). ILSZ is 100% owned by ILPL thus, effectively ILSZ is our 51% owned subsidiary. ILSZ was setup especially to manufacture smartphone components and has commenced operation in the first quarter on 2013.

Future Prospects

Our well-diversified customer base and vast variety of products and services has enabled us to weather the persistent downward pressure on China and global economy. With the establishment of the new factory in Suzhou, PRC China for the manufacturing of smartphone component and our new venture in photoluminescent technology in Malaysia, we are confident to ensuring sustainable growth.

The sales support from our major shareholder, Ideal Jacobs Corporation, United Sates of America, has showed positive results through the year and is expected to continue.

Barring any unforeseen circumstances, the Group is positive that its current fiscal year is expected to be better than FY2012.

Corporate Governance

The Board is committed to ensuring that the Malaysian Code of Practice on Corporate Governance is adhered to in the conduct of activities of the Group. The Board’s statement pertaining to the implementation of the guidelines of the Code during the year under review is contained in the Statement on Corporate Governance on pages 9 through 15 of this Annual Report.

Appreciation and Acknowledgement I am grateful to my esteemed colleagues who have served with me on the Board for their vast experience, depth of knowledge and business acumen. It is indeed a privilege to lead, and be part of such an insightful team.

On behalf of our Board, I would like to publicly thank our management and our staff for the commitment, loyalty and dedication to the Company and our future which will continue to be a joint effort for us all. In addition I would like to thank our Sponsor, MIDF Amanah Investment Bank Berhad who had resigned on 24 Apr 2013 for their support and guidance and of course to our shareholders for their belief in our company and their willingness to invest in our future.

I would like to welcome our new Sponsor, M&A Securities Sdn Bhd who had come on board on 24 Apr 2013.

Andrew Conrad JacobsExecutive Chairman

Kuala Lumpur29 May 2013



9

The Board of Ideal Jacobs (Malaysia) Corporation Bhd is dedicated to ensuring that good corporate governance practices are applied throughout the Group in order to safeguard stakeholders’ interest as well as for enhancing shareholders’ value.

The Board is committed in adopting the principles and recommendations of corporate governance prescribed by Malaysian Code on Corporate Governance 2012 (“the Code”) and Bursa Malaysia ACE Market Listing Requirements.

1. ESTABLISH CLEAR ROLES AND RESPONSIBILITIES

Clear functions of the Board and Management

The Board has the overall responsibility to protect and enhance shareholders’ value. The Board is explicitly responsible, amongst others, for establishing and communicating the strategic plan and overseeing the proper conduct of the Group’s businesses, and for supervising its affairs to ensure its success within a framework of acceptable risks and effective control and in compliance with relevant laws, regulations, guidelines and directives in the countries which it operates in. The Board reviews management performances and ensures that the necessary financial and human resources are available to meet the Group’s objectives. The Board is also responsible for succession planning, including appointing and fixing the remuneration of, and where appropriate, to train and groom the senior management and staff.

The Board delegates the responsibility and day to day operation of the Company to Management. The Board has also delegated certain responsibilities to the Board Committees which operate within defined terms of reference approved by the Board to assist the Board in discharging its fiduciary duties and responsibilities. The Board Committees include the Audit Committee, Nomination Committee and Remuneration Committee. The Board Committees exercise transparency and full disclosure in their proceedings. Where necessary, issues deliberated by the Board Committees are presented to the Board with appropriate recommendations. The ultimate responsibility for the final decision on all matters however, lies with the Board.

Clear roles and responsibilities

The Board consists of seven (7) members comprising one (1) Executive Chairman, two (2) Executive Directors and four (4) Independent Non-Executive Directors. The profile of each Director is presented on pages 4 to 6 of this Annual Report. The composition of Independent Non-Executive Directors is in compliance with the minimum prescribed by the Code and Listing Requirements.

There is a clear division of responsibility between the Executive Chairman and the Chief Executive Officer / Managing Director (“CEO/ MD”) so as to ensure that there is a balance of power and authority. The Board is led by Mr. Andrew Conrad Jacobs who is the Executive Chairman, whilst the executive management of the Company is helmed by Mr. Meng Bin, the CEO/ MD. The Chairman is primarily responsible for ensuring Board effectiveness whilst the CEO/ MD is responsible for business plan and growth, operations and efficient management.

The Board has not appointed a Senior Independent Non-Executive Director, to whom concerns can be conveyed. The Board is of the view that there is no such necessity for the time being because all members of the Board actively and freely participate during Board meetings and the Board has unrestricted and timely access to the management as well as any information that the Board requires in discharging their duties and responsibilities. The management and staff can access and reach the Independent Directors anytime.

The Board is satisfied that the current Board composition fairly reflects the interest of all shareholders.

The Board assumes the following key responsibilities:

• ReviewingandadoptingtheCompany’sstrategicplans• OverseeingtheconductoftheCompany’sbusiness• Identifyingprincipalrisksandensuringtheimplementationofappropriateinternalcontrolsandmitigationmeasures• Successionplanning• OverseeingthedevelopmentandimplementationofashareholdercommunicationspolicyfortheCompany• Reviewingtheadequacyandtheintegrityofthemanagementinformationandinternal controls system of the

Company.

CORPORATE GOVERNANCE STATEMENT

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The Group is led by an effective Board which comprises members with skills from a diverse blend of professional backgrounds ranging from business, legal, finance and accounting experience. The Board views its current composition encompasses a balance mix of skills and strength in qualities which are relevant to enable the Board to discharge its responsibilities in an effective and competent manner.

Directors’ Code of Ethics

The Board of Directors has conducted themselves in an ethical manner while executing their duties and functions, and complied with the Company Directors’ Code of Ethics recommended by the Companies Commission of Malaysia.

Strategies promoting sustainability

The Board of Directors regularly review the strategic direction of the Company and the progress of the Company’s operations, taking into account changes in the business and political environment and risk factors such as level of competition.

Access to information and advice

The Directors have full and unrestricted access to all information pertaining to the Company’s business and affairs so as to enable them to discharge their responsibilities. Prior to the Board meetings, the Directors are provided with the agenda together with the Board papers on issues to be discussed. A record of the Board’s deliberation of issues discussed and conclusion reached are recorded in the minutes of the meeting by the company secretary.

The Board, whether as a full Board or in their individual capacity, has the right to engage independent professional advice, if necessary, at the Group’s expense. In addition, all Directors have access to the advice and services of the Company Secretary, who is responsible for ensuring that the Board meeting procedures and applicable rules and regulations are adhered to.

Qualified and competent Company Secretary The Directors have the unrestricted access to the advice and services of the Company Secretary to enable them to

discharge their duties effectively. The Board is regularly updated and advised by the Company Secretary on new regulatory requirements and directives from time to time.

Board Charter

The Board has formalised and made its Board Charter in the website of the Company. The Board Charter sets out the Board roles and responsibilities.

2. STRENGTHEN COMPOSITION

Nomination Committee

The Nomination Committee (“NC”) is responsible for identifying and recommending new nominees to our Board as well as committees of the Board. For new appointments to the Board, the NC shall consider diversity of skills, expertise, background and experience in evaluating the appointment of Directors. Currently, the Company does not have a policy on boardroom diversity but believes in providing equal opportunity to all candidates based on merit.

In addition, the Nomination Committee assesses the effectiveness of the Board as a whole and the Board Committees, and also the contribution of each Director. The Board, through the Nomination Committee, reviews periodically its required mix of skills and experience and other qualities, including core competencies, which Non-Executive Directors should bring to the Board. All assessments and evaluations carried out by the Nomination Committee in the discharge of all its functions are properly documented.

The Committee is satisfied with the current size of the Board and with the mix of qualifications, skills and experience among the Board members.

CORPORATE GOVERNANCE STATEMENT(cont’d)



11

The members of the Nomination Committee whom are Independent Non-Executive Directors are as follows:-

Position

Koong Lin Loong Chairman Hing Kim Tat Member Tan Kean Huat (appointed on 23.01.2013) MemberWee Hock Kee (resigned on 23.01.2013)

During the financial year 2012, there was no new appointment of Directors.

The Committee met twice during the financial year, attended by all members.

Remuneration Committee

The Remuneration Committee (“RC”) reviews and proposes, subject to the approval of our Board the remuneration policy and term of conditions of service of each Director for his services as member of the Board as well as Committees of the Board. Nevertheless, the remuneration of Non-Executive Directors is a matter for the Board decision as a whole. Relevant directors are required to abstain from deliberation and voting decisions in respect of his individual remuneration. The remuneration of Directors is generally based on market conditions, responsibilities held and the overall financial performance of our Group. Decisions and recommendations by RC shall be reported back to our Board for approval.

The members of the Remuneration Committee whom are Independent Non-Executive Directors are as follows:-

Position

Tan Kean Huat (appointed on 23.01.2013) Chairman Hing Kim Tat Member Koong Lin Loong MemberWee Hock Kee (resigned on 23.01.2013)

The Committee met twice during the financial year, attended by all its members.

Remuneration policy and procedures

The Directors’ remuneration package is linked to the experience, scope of duty and responsibility, seniority, performance and industrial practices. The remuneration of Executive Directors consists of basic salary and bonus whereby the Non-Executive Directors receive fixed director fees. Details of the Directors’ remuneration in aggregate for financial year ended 2012 are tabulated as below:

Salaries, Bonuses & other Benefits- emoluments in-kind Fees (RM) (RM) (RM)

Executive Directors 962,993 94,608 Nil Non-Executive Directors Nil Nil 264,000

The number of Directors whose remuneration falls within the following bands is tabulated as below:

Executive Non-ExecutiveRemuneration bands per annum Director Director

Below RM50,000 Nil NilRM50,001 to RM100,000 1 3RM 150,001 to RM 200,000 1 NilRM 800,001 to RM 850,000 1 Nil

The Remuneration Committee reviews and recommends the Executive Directors’ remuneration package by assessing their KPI and contribution to the Group and also refers to market of similar industry and its size as a benchmark. An appropriate remuneration package is designed to retain and attract calibre directors to discharge their duty with integrity, to grow and lead the Company.


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3. REINFORCE INDEPENDENCE

The Independent Non-Executive Directors are not employees of the Group and do not participate in the day to day management of the Group.

The Board reviews the independence of its Independent Directors annually. All the Independent Directors confirm that the appointment is in compliance with the ACE Market Listing Requirements.

None of the Independent Non-Executive Directors had served the Company for more than 9 years.

4. FOSTER COMMITMENT

Time Commitment

The Board is satisfied with the level of time commitment given by the Directors towards fulfilling their roles and responsibilities as Directors. During the financial year ended 2012, the Board met 5 times to deliberate on a variety of matters, including the quarterly financial results, major investment decisions, business plans and the overall direction of the Company. Additional meetings may be convened on an ad-hoc basis when urgent and important decisions are required to be made in between scheduled meeting. The attendance record of each director is as follows:

Name and Designation Attendance

Andrew Conrad Jacobs Executive Chairman

3 of 5

Meng BinChief Executive Officer/ Managing Director

4 of 5

Chen Shien YeeExecutive Director(appointed on 23.01.2013)

Nil

Du Xi XiExecutive Director (resigned on 23.01.2013)

4 of 5

Koong Lin LoongIndependent Non-Executive Director

5 of 5

Hing Kim TatIndependent Non-Executive Director

5 of 5

Tan Kean HuatIndependent Non-Executive Director(appointed on 23.01.2013)

Nil

Eugene Lee Cheng HoeIndependent Non-Executive Director(appointed on 04.03.2013)

Nil

Wee Hock KeeIndependent Non-Executive Director(resigned on 23.01.2013)

4 of 5

The agenda for each Board meeting and papers relating to the agenda items are circulated to all Directors at least 5 days before the meeting so as to provide sufficient time for the Directors to review the Board papers and seek clarification, if any.

None of the Board members has more than 5 directionship in public listed companies.




13

Directors’ Training

All the directors have completed the Mandatory Accreditation Programme within the stipulated timeframe required in the Listing Requirements.

Name Training Course Date

Andrew Conrad Jacobs Humintel – Microexpression Recognition Training (Lite)

6 August 20125 September 2012

Meng Bin Tai Wan Univerisity and Xiamen University: The Executive Development Programs for Human Resource Management and Leading Strategy

4 June 20128 June 2012

Chen Shien Yee(appointed on 23.01.2013)

Mandatory Accreditation Programme 6 March 20137 March 2013

Koong Lin Loong National Tax Conference 2012

Advanced Practical AccountingPrinciples and Practices

2013 Budget Seminar

Budget 2013 - Highlights on Tax Changesand Its Implications on Business

17 July 201218 July 2012

4 September 20125 September 2012

4 October 2012

12 October 2012

Hing Kim Tat The Malaysian Code on Corporate Governance 2012 – The Implication and Challenges to

Public Listed Companies

Listing Requirement of Bursa Malaysia Securities Berhad, Malaysian Code on

Corporate Governance 2012& Improving Financial Governance

3 July 2012

7 November 2012

Tan Kean Huat(appointed on 23.01.2013)

Mandatory Accreditation Programme 22 April 200823 April 2008

Eugene Lee Cheng Hoe(appointed on 04.03.2013)

Mandatory Accreditation Programme 10 April 201311 April 2013

Since the Company was listed with Bursa Malaysia Securities Berhad on 18 May 2011, the Directors are aware of their obligation and will attend suitable training to equip and update themselves with the necessary knowledge to discharging their duties and responsibilities as Directors.

Re-election

Under Article 90 of the Company’s Articles of Association, the Directors appointed during the year shall retire at the Annual General Meeting (“AGM”) and be eligible for re-election. According to Article 83 of the Company’s Article of Association of the Company one-third of the Board members shall retire from office at the AGM. Further, all the Directors are required to retire from office at least once in every three (3) years. However, the retiring Directors are eligible for re-election at the meeting at which they retire.


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5. UPHOLD INTERGRITY IN FINANCIAL REPORTING

Financial Reporting

The Directors strive to ensure that a balanced, clear and meaningful assessment of the financial position and prospects of the Group are made in all disclosures to shareholders, investors and the regulatory authorities timely. All financial statements are reviewed by the Audit Committee and approved by the Board of Directors to ensure accuracy, adequacy and completeness of information prior to release to regulatory authorities.

The Directors are responsible for ensuring that the annual financial statements of the Group and the Company are prepared with reasonable accuracy from accounting records of the Group and the Company so as to give a true and fair view of the state of affairs of the Group and the Company as at 31 December 2012, and of the results of their operations and cash flows for the year ended on that date.

In preparing the annual audited financial statements the Directors have:-

• appliedtheappropriateandrelevantaccountingpoliciesonaconsistentbasis;• madejudgmentsandestimatesthatarereasonableandprudent;and• preparedtheannualauditedfinancialstatementsonagoingconcernbasis.

The Directors are also responsible for taking reasonable steps to safeguard the assets of the Group and the Company and to prevent and detect fraud and other irregularities.

Assessment of Suitability and Independence of External Auditors

The Board has established a formal and transparent arrangement for maintaining an appropriate relationship with the external auditors. The Audit Committee has been explicitly accorded with access to communicate directly with both the internal and external auditors, and the details of such communications are minuted.

6. RECOGNISE AND MANAGE RISKS

Internal Audit Function

The Board has overall responsibility for maintaining a sound system of internal control and risk management that provide a reasonable assurance of effective and efficient operations, and compliance with the relevant laws and regulations,as well as with internal procedures and guidelines. The Statement on Risk Management and Internal Control as included on page 18 to 19 of this Annual Report provides the overview of the internal control framework adopted by the Company for the current financial year.

7. ENSURE TIMELY AND HIGH QUALITY DISCLOSURE

Leverage on information technology for effective dissemination of information

The Company’s website (http://www.idealjacobs.com.my/) provides meaningful information to the stakeholders such as the Board Charter. The Investor Relations section includes share price information, all announcement made to Bursa Malaysia Securities Berhad as well as the latest Annual Report of the Company.



15


8. STRENGTHEN RELATIONSHIP BETWEEN COMPANY AND SHAREHOLDERS

The Company value dialogues with the investors and is constantly striving to improve the communication with the public. The Board believes that an effective investor relation is essential in enhancing shareholders’ value and therefore ensures that shareholders are kept well informed of major development of the Company. Such information is disseminated via the Company’s Annual Report, various disclosures and announcements to Bursa Securities and the Company’s website (http://www.idealjacobs.com.my/).

The AGM is the principal forum for dialogue between the Company and the shareholders. The Board provides the opportunity for shareholders to raise questions pertaining issues in the financial performance and business plan. The Board takes the opportunity to present a comprehensive review of the progress and performance of the Company, and provides answers to the questions raised by the shareholders during the meeting.

The Chairman would ensure that shareholders were informed of their rights to demand a poll vote at the commencement of the AGM.

STATEMENT OF DIRECTORS’ RESPONSIBILITIES FOR PREPARING THE FINANCIAL STATEMENTS

The Directors are required by the Companies Act, 1965 (the “Act”) to prepare financial statements for each financial year which gives a true and fair view of the financial position of the Group and of the Company at the end of the financial year and of the results and cash flows of the Group and of the Company for the financial year.

The Directors are of the opinion that the Group uses the appropriate accounting policies that are consistently applied and supported by reasonable as well as prudent judgments and estimates, and that the financial statements have been prepared in accordance with Financial Reporting Standards in Malaysia, the provisions of the Act and the Bursa Malaysia Securities’ Berhad ACE Market Listing Requirements.

The Directors are satisfied that the Group and the Company keep accounting records which disclose with reasonable accuracy the financial position of the Group and the Company which enable proper financial statements to be prepared. They have also taken necessary steps to ensure that appropriate systems are in place to safeguard the assets of the Group, and to detect and prevent fraud as well as other irregularities. The systems, by their nature can only provide reasonable and not absolute assurance against material misstatements, loss and fraud.

COMPLIANCE STATEMENT

The Board strives to ensure that the Company complies with the Principles and Best Practise of the Code. The Board will endeavour to improve and enhance the procedures from time to time.

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The principle objective of the Audit Committee is to assist the Board in discharging certain of its statutory duties and responsibilities in relation to financial, accounting and reporting practices and to ensure proper disclosure to the shareholders of the Company.

COMPOSITION AND DESIGNATION OF AUDIT COMMITTEE

The Audit Committee (“the Committee”) comprises of the following members:

Eugene Lee Cheng Hoe Chairman; Independent Non-Executive Director (appointed on 04.03.2013)

Hing Kim Tat Independent Non-Executive Director (re-designated as member on 04.03.2013)

Koong Lin Loong Independent Non-Executive Director

Tan Kean Huat Independent Non-Executive Director (appointed on 23.01.2013)

Wee Hock Kee Independent Non-Executive Director (resigned on 23.01.2013)

AUTHORITY

The Committee shall have unlimited access to financial and other relevant information and documents, to the external and internal auditors and to senior management of the Company. The Committee shall also have the authority to investigate any matter within its term of reference.

MEETINGS

Meetings shall be held at least 4 times a year or a frequency to be decided by the Committee. The quorum for each meeting shall be at least 2 members. The Committee may invite any person to be in attendance to assist in its deliberations.

There were five (5) meetings held during the financial year ended 31 December 2012 and the attendance record is as follows:

Meetings attended

Eugene Lee Cheng Hoe (appointed on 04.03.2013) –Hing Kim Tat 5/5Wee Hock Kee (resigned on 23.01.2013) 4/5Koong Lin Loong 5/5Tan Kean Huat (appointed on 23.01.2013) –

KEY FUNCTIONS AND RESPONSIBILITIES

The key functions and responsibilities of the Committee are as follows:

• ToreviewthequarterlyandannualfinancialstatementspriortosubmissiontotheBoard,focusingon:- going concern assumption- compliance with the latest accounting standards, statutory and regulatory disclosure requirements- any changes in accounting policies and practices- significant adjustments arising from the audit

• Tooverseemattersrelatingtoexternalauditincludingthereviewsoftheauditplan,auditor’smanagementletterandtheaudit report;

• Toreviewtheadequacyofthescope,functions,competencyandresourcesoftheinternalauditfunctions;• ToreviewanyrelatedpartytransactionsthatmayarisewithintheCompanyortheGroup;• TorecommendtotheBoardtheappointmentofexternalauditors, theaudit feeandanyquestionsofresignationor

dismissal including the nomination of person or persons as external auditors; and • Toconsiderotherissues,asauthorizedbytheBoard.

AUDIT COMMITTEE REPORT



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AUDIT COMMITTEE REPORT (cont’d)

SUMMARY OF ACTIVITIES DURING THE YEAR

The activities of the Committee for the financial year under review were as follows:

• ReviewedtheunauditedquarterlyreportsandannualfinancialstatementspriortosubmissiontotheBoardforconsiderationand approval and subsequent release to Bursa Malaysia Securities Berhad;

• Reviewedtheexternalauditor’sscopeofworkandauditplanfortheGroup;• Reviewedtheinternalauditreportsanddiscussedthefindingsandrecommendationsbytheinternalauditors;• ReviewedtherelatedpartytransactionsenteredintobytheGroupandtheCompanyandthedisclosureofsuchtransactions

in the annual report of the Company;• Reviewedthecirculartoshareholders inconnectionwithrecurrentrelatedpartytransactionsofarevenueortrading

nature; and• ReviewedandrecommendedtotheBoardforapprovaloftheAuditCommitteeReport,StatementonRiskManagement

and Internal Control and the Corporate Governance Statement for inclusion in the Annual Report.

INTERNAL AUDIT FUNCTION

The Company has outsourced the internal audit function of the Group to Audex Governance Sdn Bhd (“Audex”). Audex reports directly to the Committee. Its primary responsibility is to carry out periodic reviews of the systems of internal controls so as to provide reasonable assurance to the Audit Committee that such systems are adequate and effective.

During the financial year ended 31 December 2012, Audex carried out a review in accordance with the risk based internal audit plan approved by the Audit Committee . The internal audit findings, recommendation and management response were tabled to the Audit Committee at its quarterly meeting.

The professional fees incurred for the internal audit function in respect of financial year ended 31 December 2012 amounted to RM46,402.40

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STATEMENT ON RISK MANAGEMENTAND INTERNAL CONTROL

Introduction

The Board is committed to maintaining a sound system of internal control in the Group and is pleased to provide the following Risk Management and Internal Control Statement (the “Statement”), which outlines the nature and scope of risk management and internal control of the Group during the financial year ended 31 December 2012. For the purpose of disclosure, this Statement takes into account the Guidelines for Directors of Listed Issuers (“Guidelines”) issued by Bursa Malaysia Securities Berhad (“Bursa Securities”) on the issuance of Internal Control Statement pursuant to Paragraph 15.26(b) of the ACE Market Listing Requirements.

Board’s Responsibility

The Board is responsibility for the Group’s internal control and risk management system to safeguard shareholders’ investment and the Group’s assets as well as reviewing the adequacy and effectiveness of the said system.

In view of the limitations inherent in any system of risk management and internal control, the system is designed to manage, rather than eliminate, the risk of failure to achieve the Group’s business and corporate objectives. The system can therefore only provide reasonable, but not absolute assurance, against material misstatement or loss.

The Group has an on-going process for identifying, evaluating and managing the significant risks it faces. The Board regularly reviews the results of this process, including measures taken by Management to address areas of key risks as identified. This process has been in place for the financial year under review and up to the date of approval of this Statement.

Risk Management

The Board is dedicated to strengthening the Group’s risk management to manage its key business risks within the Group and to implement appropriate controls to manage these risks. During the year, Senior Management reviews the existence of new risks and assesses the relevance of the Group’s existing risk profile. Significant risks that may affect the Group’s business objectives have been continually monitored and any new significant risk identified are subsequently evaluated and managed. Whilst the Board maintains ultimate control over risk and control issues, it has been delegated to the executive management the implementation of the system of risk management and internal control within an established framework. The responsibility of managing the risks of each department lies with the respective Heads of Department and it is during the periodic management meetings, implemented risk management activities that manage the significant risks identified are communicated to Executive Directors and Senior Management.

Risk Management is regarded by the Board to be an integral part of the business operations. Key management staff and Heads of Department are delegated with the responsibility to manage identified risks within defined parameters and standards.

Monthly Management Meetings are held to discuss key risks and the appropriate mitigating control. Significant risks affecting the Group’s strategic and business plans are escalated to the Board at their scheduled meetings. This ongoing process is undertaken at all the major subsidiaries of the Group, as well as collectively at the Group level.

Internal Audit Function

The Audit Committee evaluates the internal audit function to assess its effectiveness in the discharge of its responsibilities. The independent internal audit function is outsourced to a professional services firm, namely Audex Governance Sdn Bhd. Observations from these audits are presented, together with Management’s response and proposed action plans, to the Audit Committee for its review. The internal audit function also follows up and reports to the Audit Committee on the status of implementation of action plans by Management on the recommendations highlighted in the internal audit reports, especially on areas where material internal control deficiencies or lapses have been noted.



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STATEMENT ON RISK MANAGEMENTAND INTERNAL CONTROL (cont’d)

Internal Control

The key elements of the Group’s internal control system are described below:

• Limits of authority and responsibility Clearly defined and documented lines and limits of authority, responsibility and accountability have been established

through the relevant charters/terms of reference, organizational structures and appropriate authority limits.

• Written policies and procedures Clearly defined internal policies and procedures as set out in the Group’s Standard Operating Procedures Manual are

regularly updated to reflect changing risks or to address operational deficiencies.

• Planning, monitoring and reportingo The Audit Committee reviews the Group’s quarterly financial performance together with Management, which is

subsequently reported to the Board;

o Comprehensive information, which includes the monthly management reports covering all key financial and operational indicators, is provided to Senior Management for the monitoring of performance against strategic plan; and

Assurance provided by the Group Chief Executive Officer and Chief Financial Officer

In line with the Guidelines, the Group Chief Executive Officer and Chief Financial Officer have provided assurance to the Board in writing stating that the Group’s risk management and internal control systems have operated adequately and effectively, in all material aspects, to meet the Group’s objectives during the financial year under review.

The Board is of the view that the risk management and internal control systems are satisfactory and have not resulted in any material losses, contingencies or uncertainties that would require disclosure in the Group’s annual report. The Board continues to take pertinent measures to sustain and, where required, to improve the Group’s risk management and internal control systems in meeting the Group’s strategic objectives.

Pursuant to paragraph 15.23 of the ACE Market Listing Requirements of Bursa Securities, the external auditors have reviewed this Statement for inclusion in the Annual Report of the Group for the year ended 31 December 2012 and reported to the Board that nothing has come to their attention that caused them to believe that the statement is inconsistent with their understanding of the processes adopted by the Board in reviewing the adequacy and integrity of the systems of risk management internal controls.

Financial Statements

(857363 U)

• Directors’Report 21• StatementbyDirectorsandStatutoryDeclaration 25• IndependentAuditors’Report 26• StatementsofFinancialPosition 28• StatementsofComprehensiveIncome 30• StatementsofChangesinEquity 31• StatementsofCashFlows 33• NotestotheFinancialStatements 35• SupplementaryInformation 81



21

DIRECTORS’ REPORT

The Directors have pleasure in submitting 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 Company is principally engaged in investment holding.

The principal activities of its subsidiary companies are disclosed in Note 8 to the Financial Statements.

There have been no significant changes in the nature of these activities of the Company and of its subsidiary companies during the financial year.

RESULTS

Group Company RM RM Profit / (Loss) for the financial year 272,433 (5,601,189)

Attributable to: Owners of the Company 314,326 (5,601,189)Non-controlling interests (41,893) – 272,433 (5,601,189)

DIVIDENDS

There were no dividends proposed, declared or paid by the Company since the end of the previous financial year.

RESERVES AND PROVISIONS There were no material transfers to or from reserves or provisions during the financial year other than as disclosed in the financial statements.

DIRECTORS

The Directors in office since the date of last report are as follows:-

Andrew Conrad Jacobs (Executive Chairman) Meng Bin (Chief Executive Officer/Managing Director)Chen Shien Yee (Chief Finance Officer/Executive Director) (appointed on 23.1.2013)Hing Kim Tat (Independent Non-Executive Director)Koong Lin Loong (Independent Non-Executive Director)Tan Kean Huat (Independent Non-Executive Director) (appointed on 23.1.2013)Eugene Lee Cheng Hoe (Independent Non-Executive Director) (appointed on 4.3.2013)Du Xixi (Executive Director) (resigned on 23.1.2013)Wee Hock Kee (Independent Non-Executive Director) (resigned on 23.1.2013)

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DIRECTORS’ REPORT(cont’d)

DIRECTORS’ INTERESTS

According to the Register of Directors’ Shareholdings, the beneficial interests of those who were Directors at the end of financial year in shares of the Company are as follows:-

Ordinary shares of RM0.10 each At At 1.1.2012 Bought Sold 31.12.2012

Andrew Conrad Jacobs- Deemed interest 48,654,600 – (12,200,000) 36,454,600

Meng Bin - Deemed interest 32,436,400 – (5,000,000) 27,436,400

Hing Kim Tat - Deemed interest 4,455,000 – (4,455,000) –

By virtue of their interests in the share of the Company, Andrew Conrad Jacobs and Meng Bin are also deemed interested in the shares of all the subsidiary companies during the financial year to the extent that the Company has an interest under Section 6A of the Companies Act, 1965.

No other Directors at the end of the financial year held any interest in the shares of the Company or its related corporation during the financial year.

DIRECTORS’ BENEFITS

During and at the end of the financial year, no arrangement subsisted to which the Company is a party, with the object or objects of enabling Directors of the Company to acquire benefits by means of the 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 benefit (other than as disclosed in Notes to the Financial Statements) by reason of a contract made by the Company or a related corporation with the 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.

ISSUE OF SHARES AND DEBENTURES

There was no issuance of shares or debentures during the financial year.

OTHER STATUTORY INFORMATION

Before the statements of comprehensive income and statements of financial position of the Group and of the Company were made out, the Directors took reasonable steps:-

(a) to ascertain that action had been taken in relation to the writing off of bad debts and the making of provision for doubtful debts and satisfied themselves that all known bad debts had been written off and no provision for doubtful debts was required; and

(b) to ensure that any current assets which were unlikely to be realised in the ordinary course of business including their values as shown in the accounting records of the Group and of the Company have been written down to an amount which they might be expected so to realise.



23

OTHER STATUTORY INFORMATION (CONT’D)

At the date of this report, the Directors are not aware of any circumstances:-

(a) which would render it necessary to make any provision 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; or

(b) which would render the values attributed to current assets in the financial statements of the Group and of the Company misleading; or

(c) which have arisen which render adherence to the existing method of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate; or

(d) not otherwise dealt with in this report or the financial statements which would render any amount stated in the financial statements misleading.

At the date of this report, there does not exist:-

(a) 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 liability of any other person; or

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

In the opinion of the Directors:-

(a) no contingent liability 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, in the opinion of the Directors, will or may affect the ability of the Group and of the Company to meet its obligations as and when they fall due;

(b) the results of 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; and

(c) there has not arisen in the interval between the end of the financial year and the date of this report any item, transaction or event of a material and unusual nature likely to affect substantially the results of operations of the Group and of the Company for the current financial year in which this report is made.

SIGNIFICANT EVENTS

The significant events during the financial year and subsequent to the reporting date are disclosed in Note 34 and 35 to the Financial Statements.


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AUDITORS

The Auditors, Messrs SJ Grant Thornton, have expressed their willingness to continue in office.

Signed on behalf of the Board of Directors in accordance with a resolution of the Board of Directors.

..................................................... )MENG BIN )Xiamen )29 March 2013 ) ) ) DIRECTORS ) ) ) )..................................................... )ANDREW CONRAD JACOBS )New Jersey27 March 2013




25

In the opinion of the Directors, the financial statements set out on pages 28 to 80 are drawn up in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company as at 31 December 2012 and of their financial performance and cash flows for the financial year then ended.

In the opinion of the Directors, the supplementary information set out on page 81 to the financial statements had been complied with the Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosures Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, issued by the Malaysian Institute of Accountants and presented based on the format prescribed by Bursa Malaysian Securities Berhad.

Signed on behalf of the Board of Directors in accordance with a resolution of the Board of Directors.

................................................................. .................................................................MENG BIN ANDREW CONRAD JACOBSXiamen New Jersey29 March 2013 27 March 2013

STATUTORy DECLARATION

I, Chen Shien Yee, being the Director primarily responsible for the financial management of Ideal Jacobs (Malaysia) Corporation Bhd., do solemnly and sincerely declare that to the best of my knowledge and belief, the financial statements set out on pages 28 to 80 are correct and I make this solemn declaration conscientiously believing the same to be true and by virtue of the Statutory Declaration Act, 1960.

Subscribed and solemnly declared by )the above named at Kuala Lumpur in )the Federal Territory this day of )29 March 2013 ) ................................................................... CHEN SHIEN YEE

Before me:

Commissioner for Oaths

STATEMENT BY DIRECTORS

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Report on the Financial Statements We have audited the financial statements of Ideal Jacobs (Malaysia) Corporation Bhd., which comprise the statements of financial position as at 31 December 2012 of the Group and of the Company, and statements of comprehensive income, statements of changes in equity and statements of cash flows of the Group and of the Company for the financial year then ended, and a summary of significant accounting policies and other explanatory information, as set out on pages 28 to 80.

Directors’ Responsibility for the Financial Statements

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

Auditors’ Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with approved standards on auditing in Malaysia. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgement, including the assessment of risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity’s preparation of financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of 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 financial year then ended in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia.

Report on Other Legal and Regulatory Requirements

In accordance with the requirements of the Companies Act, 1965 in Malaysia, we also report the following:-

a) In our opinion, the accounting and other records and the registers required by the Act to be kept by the Company and its Malaysian subsidiary company of which we have acted as auditors have been properly kept in accordance with the provisions of the Act.

b) We have considered the accounts and the auditors’ reports of all the subsidiary companies of which we have not acted as auditors, which are indicated in Note 8 to the Financial Statements.

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

d) The audit reports on the accounts of the subsidiary companies did not contain any qualification or any adverse comment made under Section 174 (3) of the Act.

INDEPENDENT AUDITORS’ REPORTTo The Members of Ideal Jacobs (Malaysia) Corporation Bhd.



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Other Reporting Responsibilities

The supplementary information set out on page 81 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 respect, in accordance with the MIA Guidance and the directive of Bursa Malaysia Securities Berhad.

Other Matters

1) As stated in Note 37 to the Financial Statements, Ideal Jacobs (Malaysia) Corporation Bhd. 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 statement of comprehensive income, statement of changes in equity and statement of cash flows for the financial year ended 31 December 2011 and related disclosures. We were not engaged to report on the restated comparative information and it is unaudited. Our responsibilities as part of our audit of the financial statements of the Group and of the Company for the financial year ended 31 December 2012 have, in these circumstances, included obtaining sufficient appropriate 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 financial year then ended.

2) This report is made solely to the members of the Company, as a body, in accordance with Section 174 of the Companies Act, 1965 in Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of this report.

SJ GRANT THORNTON TAN CHEE BENG(NO. AF: 0737) CHARTERED ACCOUNTANTCHARTERED ACCOUNTANTS (NO: 2664/02/15(J))

Kuala Lumpur 29 March 2013

INDEPENDENT AUDITORS’ REPORTTo the Members of Ideal Jacobs (Malaysia) Corporation Bhd. (cont’d)

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STATEMENTS OF FINANCIAL POSITIONAs at 31 December 2012

Group Company Note 2012 2011 1.1.2011 2012 2011 1.1.2011 RM RM RM RM RM RM

ASSETS

Non-current assetsProperty, plant and equipment 6 5,234,483 5,658,764 3,831,153 64,771 38,844 57,816 Goodwill on consolidation 7 – – 146,779 – – –Investment in subsidiary companies 8 – – – 9,000,127 9,000,000 10,000,000 Other investment 9 108,821 – – 108,821 – – Deferred tax assets 10 – – 250,221 – – –

Total non-current assets 5,343,304 5,658,764 4,228,153 9,173,719 9,038,844 10,057,816

Current assetsInventories 11 3,187,931 2,576,341 1,402,039 – – –Trade receivables 12 8,107,097 6,421,569 3,993,834 – – – Other receivables 13 1,805,112 509,776 2,375,282 48,726 88,150 2,012,259 Tax recoverable 14,201 – – 14,201 – – Amount due from subsidiary companies 14 – – – 7,560 2,633,044 786,658 Amount due from a corporate shareholder 15 142,320 – – – – – Fixed deposits with licensed banks 16 1,601,234 2,300,000 2,266,890 200,000 2,300,000 – Cash and bank balances 2,068,714 3,123,327 2,668,784 63,645 459,230 34,120

Total current assets 16,926,609 14,931,013 12,706,829 334,132 5,480,424 2,883,037

Total assets 22,269,913 20,589,777 16,934,982 9,507,851 14,519,268 12,890,853

EQUITY AND LIABILITIES

EQUITYShare capital 17 12,000,100 12,000,100 9,000,100 12,000,100 12,000,100 9,000,100 Statutory reserve 18 1,351,739 898,608 544,006 – – –Translation reserve 18 432,570 746,759 (183,365) – – – Share premium 19 3,965,718 3,965,718 – 3,965,718 3,965,718 –(Accumulated losses)/ Retained earnings (114,196) 24,609 3,290,089 (7,206,314) (1,605,125) (483,685)

Equity attributable to owners of the Company 17,635,931 17,635,794 12,650,830 8,759,504 14,360,693 8,516,415 Non-controlling interests (42,037) – – – – –

Total equity 17,593,894 17,635,794 12,650,830 8,759,504 14,360,693 8,516,415



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

Group Company Note 2012 2011 1.1.2011 2012 2011 1.1.2011 RM RM RM RM RM RM

LIABILITIES

Non-current liabilityHire purchase creditor 20 – – 91,566 – – – Total non-current liability – – 91,566 – – –

Current liabilitiesTrade payables 21 2,152,608 1,553,709 858,828 – – – Other payables 22 1,533,855 1,064,759 1,014,596 748,347 149,731 493,644 Amount due to a Director 23 – – 196,740 – – 150,000 Amount due to a subsidiary company 14 – – – – – 1,610,037 Amount due to a corporate shareholder 15 – 25,204 1,988,762 – – 2,120,757 Tax payable 304,166 310,311 133,660 – 8,844 – Bank borrowing 24 685,390 – – – – –

Total current liabilities 4,676,019 2,953,983 4,192,586 748,347 158,575 4,374,438

Total liabilities 4,676,019 2,953,983 4,284,152 748,347 158,575 4,374,438

Total equity and liabilities 22,269,913 20,589,777 16,934,982 9,507,851 14,519,268 12,890,853

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

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STATEMENTS OF COMPREHENSIVE INCOMEFor the Financial Year Ended 31 December 2012


Group Company Note 2012 2011 2012 2011 RM RM RM RM

Revenue 25 24,387,938 20,047,382 – 4,425,971

Cost of sales (14,047,066) (10,684,204) – –

Gross profit 10,340,872 9,363,178 – 4,425,971

Other income 303,509 276,479 46,359 217,832

Selling and distribution expenses (797,216) (951,652) – –

Administration expenses (8,308,957) (10,396,980) (2,297,732) (4,735,431)

Other expenses (413,587) (263,158) (3,349,656) (1,020,968)

Finance costs (131,059) (12,384) – –

Profit/(Loss) before tax 26 993,562 (1,984,517) (5,601,029) (1,112,596)

Tax expense 27 (721,129) (926,361) (160) (8,844)

Profit/(Loss) for the financial year 272,433 (2,910,878) (5,601,189) (1,121,440)

Other comprehensive (loss)/income- Exchange differences on translating foreign operations (314,245) 930,124 – –

Other comprehensive (loss)/income for the financial year, net of tax (314,245) 930,124 – –

Total comprehensive loss for the financial year (41,812) (1,980,754) (5,601,189) (1,121,440)

Profit/(Loss) for the financial year attributable to: Owners of the Company 314,326 (2,910,878) (5,601,189) (1,121,440)Non-controlling interests (41,893) – – –

272,433 (2,910,878) (5,601,189) (1,121,440)

Total comprehensive income/(loss) for the financial year attributable to:Owners of the Company 137 (1,980,754) (5,601,189) (1,121,440)Non-controlling interests (41,949) – – –

(41,812) (1,980,754) (5,601,189) (1,121,440)

Earnings/(Losses) per share

Basic (sen) 28 0.26 (2.67)



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STATEMENTS OF CHANGES IN EQUITYFor the Financial Year Ended 31 December 2012

Attributable to owners of the Company Non - distributable Distributable Retained earnings/ Non- Share Share Statutory Translation (Accumulated controlling Total capital premium reserve reserve losses) Total interests equity RM RM RM RM RM RM RM RM

Group

Balance at 1 January 2011 9,000,100 – 544,006 (183,365) 3,290,089 12,650,830 – 12,650,830

Transactions with owners:Issuance of shares 3,000,000 5,100,000 – – – 8,100,000 – 8,100,000 Shares issuance expenses – (1,134,282) – – – (1,134,282) – (1,134,282)

3,000,000 3,965,718 – – – 6,965,718 – 6,965,718

Total comprehensive income/ (loss) for the financial year – – 354,602 930,124 (3,265,480) (1,980,754) – (1,980,754) Balance at 31 December 2011 12,000,100 3,965,718 898,608 746,759 24,609 17,635,794 – 17,635,794

Transactions with owners:Acquisition of a subsidiary company (Note 31) – – – – – – (1,387) (1,387)Subsciption of new shares in a subsidiary company (Note 31) – – – – – – 1,176 1,176 Incorporation of a subsidiary company (Note 31) – – – – – – 123 123

– – – – – – (88) (88)

Foreign currency translation – – – 56 – 56 (56) – Profit/(Loss) for the financial year – – 453,131 (314,245) (138,805) 81 (41,893) (41,812)

Total comprehensive income/ (loss) for the financial year – – 453,131 (314,189) (138,805) 137 (41,949) (41,812)

Balance at 31 December 2012 12,000,100 3,965,718 1,351,739 432,570 (114,196) 17,635,931 (42,037) 17,593,894

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STATEMENTS OF CHANGES IN EQUITYFor the Financial Year Ended 31 December 2012 (cont’d)

Non - distributable Distributable Share Share Statutory Translation Accumulated capital premium reserve reserve losses Total RM RM RM RM RM RM

Company

Balance at 1 January 2011 9,000,100 – – – (483,685) 8,516,415

Transactions with owners:Issuance of shares 3,000,000 5,100,000 – – – 8,100,000 Shares issuance expenses – (1,134,282) – – – (1,134,282)

3,000,000 3,965,718 – – – 6,965,718

Total comprehensive loss for the financial year – – – – (1,121,440) (1,121,440)

Balance at 31 December 2011 12,000,100 3,965,718 – – (1,605,125) 14,360,693

Total comprehensive loss for the financial year – – – – (5,601,189) (5,601,189)

Balance at 31 December 2012 12,000,100 3,965,718 – – (7,206,314) 8,759,504




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STATEMENTS OF CASH FLOWSFor the Financial Year Ended 31 December 2012


CASH FLOWS FROM OPERATING ACTIVITIESProfit/(Loss) before tax 993,562 (1,984,517) (5,601,029) (1,112,596)

Adjustments for:- Depreciation 650,530 607,608 11,910 10,224 Interest expenses 131,059 12,384 – –Interest income (95,114) (76,907) (46,359) (50,519)Goodwill written off 51,493 146,779 – – Bad debts written off 10,184 – – – Inventories written down 90,066 27,234 – – Waiver of debts on amount due to a director (2,300) – – – Impairment loss on amount due from subsidiary companies – – 3,034,165 – Impairment loss on investment in subsidiary companies – – 51,274 1,000,000 Loss on disposal of property, plant and equipment 39,921 – – –Property, plant and equipment written off 130,517 23,424 1,181 20,968 Unrealised gain/(loss) on foreign exchange 76,034 (32,354) 246,738 (93,997)

Operating profit/(loss) before working capital changes 2,075,952 (1,276,349) (2,302,120) (225,920)

Changes in working capital:-Corporate shareholder (171,098) (1,943,469) – (2,120,757)Director – (197,430) – (150,000)Inventories (760,995) (1,036,330) – –Payables 1,258,434 599,977 598,616 (343,913)Receivables (3,242,126) (169,849) 39,424 1,924,109 Subsidiary companies – – (661,439) (3,354,904)

Cash used in operations (839,833) (4,023,450) (2,325,519) (4,271,385)

Tax paid (733,977) (514,507) (23,205) – Interest received 95,114 76,907 46,359 50,519 Interest paid (131,059) (12,384) – –

Net cash used in operating activities (1,609,755) (4,473,434) (2,302,365) (4,220,866)

CASH FLOWS FROM INVESTING ACTIVITIESPurchase of property, plant and equipment (572,715) (2,108,226) (33,000) (12,220)Purchase of other investment (108,821) – (108,821) –Proceeds from disposal of property, plant and equipment 58,025 – – – Acquisition and incorporation of subsidiary companies 31 (49,950) – (51,401) –

Net cash used in investing activities (673,461) (2,108,226) (193,222) (12,220)

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STATEMENTS OF CASH FLOWSFor the Financial Year Ended 31 December 2012 (cont’d)


CASH FLOWS FROM FINANCING ACTIVITIESDrawdown of term loan 3,243,153 – – – Repayment of term loan (2,556,322) – – –Repayment of hire purchase creditor (95,518) (91,394) – –Proceeds from issuance of shares, net of listing expenses – 6,965,718 – 6,965,718

Net cash from financing activities 591,313 6,874,324 – 6,965,718

CASH AND CASH EQUIVALENTSNet change (1,691,903) 292,664 (2,495,587) 2,732,632 Brought forward 5,423,327 4,935,674 2,759,230 34,120 Effects of exchange rate changes (61,476) 194,989 2 (7,522)

Carried forward A 3,669,948 5,423,327 263,645 2,759,230

NOTE TO THE STATEMENTS OF CASH FLOWS

A. CASH AND CASH EQUIVALENTS

Cash and cash equivalents included in the statements of cash flows comprise the following statements of financial position items:-

Group Company 2012 2011 2012 2011 RM RM RM RM

Fixed deposits with licensed banks 1,601,234 2,300,000 200,000 2,300,000 Cash and bank balances 2,068,714 3,123,327 63,645 459,230

3,669,948 5,423,327 263,645 2,759,230




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1. GENERAL INFORMATION

The Company is a public limited liability company, incorporated and domiciled in Malaysia and is listed on the ACE Market of Bursa Malaysia Securities Berhad. The registered office of the Company is located at Level 15-2, Bangunan Faber Imperial Court, Jalan Sultan Ismail, 50250 Kuala Lumpur and the principal place of business is located at Office Suite 19-11-2, 11th Floor, UOA Centre, No 19, Jalan Pinang, 50450 Kuala Lumpur.

The Company is principally engaged in investment holding.

The principal activities of its subsidiary companies are disclosed in Note 8 to the Financial Statements.

There have been no significant changes in the nature of these activities of the Company and of its subsidiary companies during the financial year.

The financial statements were authorised for issue by the Board of Directors in accordance with a resolution of the Directors on 27 March 2013.

2. BASIS OF PREPARATION

2.1 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 (“IFRSs”)and the requirements of the Companies Act, 1965 in Malaysia.

2.2 Basis of measurement

The financial statements of the Group and of the Company are prepared under the historical cost convention, unless otherwise indicated in the summary of significant accounting policies.

2.3 Functional and presentation currency

The financial statements are presented in Ringgit Malaysia (“RM”) which is the Company’s functional currency and all values are rounded to the nearest RM except when otherwise stated.

2.4 First – time adoption of MFRSs

In the previous years, the financial statements of the Group and of the Company were prepared in accordance with Financial Reporting Standards (“FRSs”). 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.

The explanation and financial impacts on transition to MFRSs are disclosed in Note 37 to the Financial Statements.

2.5 Standards issued but not yet effective

At the date of authorisation of these financial statements, certain new standards, amendments and interpretations to existing standards have been published by the Malaysian Accounting Standards Board (“MASB”) but are not yet effective, and have not been early adopted by the Group and the Company.

Management anticipates that all of the relevant pronouncements will be adopted in the Group’s and the Company’s accounting policies for the first period beginning after the effective date of the pronouncement.

Information on new standards, amendments and interpretation that are expected to be relevant to the Group’s and the Company’s financial statements is provided below. Certain other new standards and interpretations have been issued but not expected to have a material impact on the Group’s and the Company’s financial statements.

NOTES TO THE FINANCIAL STATEMENTS– 31 December 2012

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NOTES TO THE FINANCIAL STATEMENTS– 31 December 2012 (cont’d)

2. BASIS OF PREPARATION (CONT’D)

2.5 Standards issued but not yet effective (cont’d)

MFRS 9 Financial Instruments

MFRS 9 addresses the classification, measurement and recognition of financial assets and financial liabilities. It replaces the guidance in MFRS 139 Financial Instruments: Recognition and Measurement. MFRS 9 requires financial assets to be classified into two measurement categories: fair value and amortised cost, determined at initial recognition. The classification depends on the entity’s business model for managing its financial instruments and the contractual cash flow characteristics of the instrument. Most of the requirements for financial liabilities are retained, except for cases where the fair value option is taken, the part of a fair value change due to an entity’s own risk is recorded in other comprehensive income rather than profit or loss, unless this creates an accounting mismatch.

The adoption of MFRS 9 will result in a change in accounting policy. The Group and the Company are currently examining the financial impact of adopting MFRS 9.

2.6 Significant accounting estimates and judgements

Estimates, assumptions concerning the future and judgements are made in the preparation of the financial statements. They affect the application of the Group’s and the Company’s accounting policies and reported amounts of assets, liabilities, income and expenses, and disclosures made. Estimates and underlying assumptions are assessed on an on-going basis and are based on experience and relevant factors, including expectations of future events that are believed to be reasonable under the circumstances. The actual results may differ from the judgements, estimates and assumptions made by the management, and will seldom equal the estimated results.

Information about significant judgements, estimates and assumptions that have the most significant effect on recognition and measurement of assets, liabilities, income and expenses are discussed below:-

2.6.1 Estimation uncertainty

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

Useful lives of depreciable assets

Management estimates the useful lives of the property, plant and equipment to be within 5 to 22 years and reviews the useful lives of depreciable assets at each reporting date. The management assesses that the useful lives represent the expected utility of the assets to the Group and the Company. The carrying amounts are analysed in Note 6 to the Financial Statements. Actual results, however, may vary due to change in the expected level of usage and technological developments, which resulting the adjustment to the Group’s and the Company’s assets.

Impairment of non-financial assets

An impairment loss is recognised for the amount by which the asset’s or cash-generating unit’s carrying amount exceeds its recoverable amount. To determine the recoverable amount, the management estimates expected future cash flows from each cash-generating unit and determines a suitable interest rate in order to calculate the present value of those cash flows. In the process of measuring expected future cash flows, the management makes assumptions about future operating results. The actual results may vary, and may cause significant adjustments to the Group’s assets within the next financial year.

In most cases, determining the applicable discount rate involves estimating the appropriate adjustment to market risk and the appropriate adjustment to asset-specific risk factors.



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2.6 Significant accounting estimates and judgements (cont’d)

2.6.1 Estimation uncertainty (cont’d)

Impairment of non-financial assets (cont’d)

The Group has written off goodwill of RM51,493(2011: RM146,779) in order to reduce the carrying amount of goodwill to its recoverable amount.

Further details of the carrying values, key assumptions applied in the impairment assessment of goodwill and sensitivity analysis to changes in the assumptions are disclosed in Note 7 to the Financial Statements.

An impairment loss recognised for goodwill shall not be reversal in subsequent period.

Inventories

Inventories are measured at the lower of cost and net realisable value. In estimating net realisable values, the management takes into account the most reliable evidence available at the times the estimates are made. The Group’s core business is subject to economical changes which may cause selling prices to change rapidly, and the Group’s profit to change.

The carrying amount of the Group’s inventories at the reporting date is disclosed in Note 11 to the Financial Statements.

Deferred tax assets

Deferred tax assets are recognised for all deductible temporary differences, unutilised tax losses, unabsorbed capital allowances and unused tax credits to the extent that it is probable that taxable profit will be available against which all the deductible temporary differences, unutilised tax losses and unabsorbed capital allowances can be utilised. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and level of future taxable profits together with future tax planning strategies.

Assumptions about generation of future taxable profits depend on the management’s estimates of future cash

flows. These depend on estimates of future production and sales volume, operating costs, capital expenditure, dividends and other capital management transactions. Judgement is also required about application of income tax legislation. These judgements and assumptions are subject to risks and uncertainty, hence there is a possibility that changes in circumstances will alter expectations, which may impact the amount of deferred tax assets recognised in the statements of financial position and the amount of unrecognised tax losses and unrecognised temporary differences.

Fair value of financial instruments

Management uses valuation techniques in measuring the fair value of financial instruments where active market quotes are not available. Details of the assumptions used are given in the notes regarding financial assets and liabilities. In applying the valuation techniques, the management makes maximum use of market inputs, and uses estimates and assumptions that are, as far as possible, consistent with observable data that market participants would use in pricing the instrument. Where applicable data is not observable, the management uses its best estimate about the assumptions that market participants would make. These estimates may vary from the actual prices that would be achieved in an arm’s length transaction at the reporting date.

In view of the Group’s and the Company’s financial instruments are short term in nature hence any differences in the management’s estimation would not have material variance in the Group’s and the Company’s profit for the financial year.

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2.6 Significant accounting estimates and judgements (cont’d)

2.6.1 Estimation uncertainty (cont’d)

Impairment of loans and receivables

The Group and the Company assess 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 and the Company consider factors such as the probability of insolvency or significant financial difficulties of the receivables 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 and of the Company’s receivables at the reporting date is disclosed in Note 12 and 13 to the Financial Statements.

2.6.2 Significant management judgement

The following are significant management judgement in applying the accounting policies of the Group and of the Company that has the most significant effect on the financial statements:

Leases

In applying the classification of leases in MFRS 117, the management considers its leases of motor vehicles as finance lease arrangements. In some cases, the lease transaction is not always conclusive and the management uses judgement in determining whether the lease is a finance lease arrangement that transfers substantially all the risks and rewards incidental to ownership.

3. CAPITAL MANAGEMENT

The primary objective of the Group’s and of the Company’s capital management is to ensure that it maintains a strong credit rating and healthy capital ratio in order to support its business and maximise shareholder value.

The Group and the Company manage its capital structure and make adjustments to it in light of changes in economic conditions. To maintain or adjust the capital structure, the Group and the Company may adjust the dividend payment to shareholders, return capital to shareholders or issue new share capital. No changes were made in the objective, policies or processes during the financial year ended 31 December 2012 and financial year ended 31 December 2011.

The subsidiary companies in The People’s Republic of China(“PRC”) is required by the Foreign Enterprise Law of the PRC to contribute and to maintain a non-distributable statutory reserve fund whose utilisation is subject to approval by the relevant PRC authorities. This externally imposed capital requirement has been complied with by the subsidiary companies in PRC for the financial year ended 31 December 2012 and financial year ended 31 December 2011.

4. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

4.1 Financial risks

The Group and the Company are exposed to financial risks arising from their operations and the use of financial instruments. Financial risk management policy is established to ensure that adequate resources are available for the development of the Group’s and of the Company’s business whilst managing its credit risk, liquidity risk, foreign currency risk and interest rate risk. The Group and the Company operate within clearly defined policies and procedures that are approved by the Board of Directors to ensure the effectiveness of the risk management process.



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4. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONT’D)

4.1 Financial risks (cont’d)

The main areas of financial risks faced by the Group and the Company and the policy in respect of the major areas of treasury activity are set out as follows:-

(a) Credit risk

Credit risk is the risk of a financial loss to the Group and the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations.

The Group’s and the Company’s exposure to credit risk is monitored on an ongoing basis. The credit risk is controlled by monitoring procedures. An internal credit review is conducted if the credit risk is material. The Group and the Company do not require collateral in respect of financial assets.

The areas where the Group and the Company are exposed to credit risk are as follows:

Receivables Concentration of credit risk

The Group and the Company have no significant concentration of credit risk with any single counterparty except for the following:-

Group

2012

20% of trade receivables at the reporting date were due from Revolution Manufacturing Sdn. Bhd., a company in which a director of a subsidiary company has interest.

2011

15% and 10% of trade receivables at the reporting date were due from Celestica (Suzhou) Technology Co. Ltd. and Laminar Labs Pte. Ltd.

1.1.2011

15% of trade receivables at the reporting date were due from Pentair Technical Products China.

Trade receivables ageing analysis

Group 2012 2011 1.1.2011 Gross/Net Gross/Net Gross/Net RM RM RM

Neither past due nor impaired 4,169,552 4,424,743 3,283,527Past due 0 to 1 month but not impaired 1,603,621 1,373,023 484,407Past due 1 to 2 months but not impaired 1,306,362 311,057 167,515Past due 2 to 3 months but not impaired 142,026 266,800 22,051Past due 3 to 4 months but not impaired 122,021 27,028 12,075Past due 4 to 5 months but not impaired 756,203 9,311 1,148Past due 5 to 6 months but not impaired 375 – 23,111Past due more than 6 months but not impaired 6,937 9,607 –

8,107,097 6,421,569 3,993,834

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(a) Credit risk (cont’d)

Receivables (cont’d)

Financial assets that are neither past due nor impaired

Group and Company

Trade and other receivables that are neither past due nor impaired are creditworthy receivables with good payment records with the Group and the Company. None of the Group’s trade receivables that are neither past due nor impaired have been renegotiated during the financial year.

Financial assets that are past due but not impaired

Group and Company

Total trade receivables of RM3,937,545 (2011: RM1,996,826 and 1.1.2011: RM710,307) were past due but not impaired. These related to a number of independent customers from whom there is no recent history of default and directors expect they are recoverable.

Financial assets that are impaired

Group and Company

There are no receivables that are impaired.

Intercompany balances

Concentration of credit risk

Group

The Group has no significant concentration of credit risk with any single intercompany except for amount due from a corporate shareholder.

Company

The Company has no significant concentration of credit risk with any single intercompany except for amount due from subsidiary companies.


Company

Inter companies that are neither past due nor impaired are creditworthy receivables with good payment records with the Company.

As at the reporting date, there was no indication that the intercompany balances are not recoverable.


Company

There are no intercompany balances of the Company that are past due but not impaired.



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(a) Credit risk (cont’d)

Intercompany balances (cont’d)


Company

Intercompany balances of RM3,034,165 (2011: RM Nil and 1.1.2011: RM Nil) were impaired.

Deposits with banks

Concentration of credit risk

Group and Company

The Group and the Company have no significant concentration of credit risk with any single bank.


Group and Company

Deposits with banks that are neither past due nor impaired are placed with reputable financial institutions with high credit ratings and no history of default.

As at the reporting date, there was no indication that the deposits with banks are not recoverable.


Group and Company

There are no deposits with banks of the Group and of the Company that are past due but not impaired.


Group and Company

There are no deposits with banks of the Group and of the Company that are impaired.

(b) Liquidity risk

Liquidity risk is the risk that the Group and the Company will not be able to meet its financial obligations as and when they fall due as a result of shortage of funds. In managing its exposures to liquidity risk arises principally from its various payables, the Group and the Company maintain a level of cash and cash equivalents deemed adequate by the management to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities as and when they fall due.

The Group and the Company aim to maintain a balance of sufficient cash and deposits and flexibility in funding by keeping diverse sources of committed and uncommitted credit facilities from various banks.

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(b) Liquidity risk (cont’d)

The areas where the Group and the Company are exposed to liquidity risk are as follows:

Analysis of financial instruments by contractual maturities

The table below analyses the maturity profile of the Group’s and of the Company’s financial liabilities based on contractual undiscounted cash flows:-

Less than Between 2Group 1 year and 3 years Total RM RM RM

2012Trade payables 2,152,608 – 2,152,608Other payables 1,533,855 – 1,533,855Bank borrowing 685,390 – 685,390

4,371,853 – 4,371,853

2011Trade payables 1,553,709 – 1,553,709Other payables 966,327 – 966,327Hire purchase creditor 110,389 – 110,389Amount due to a corporate shareholder 25,204 – 25,204

2,655,629 – 2,655,629

1.1.2011Trade payables 858,828 – 858,828Other payables 923,378 – 923,378Amount due to a corporate shareholder 1,988,762 – 1,988,762Amount due to a Director 196,740 – 196,740Hire purchase creditor 102,494 102,494 204,988

4,070,202 102,494 4,172,696

Company

2012Other payables 784,347 – 784,347

2011Other payables 149,731 – 149,731

1.1.2011Amount due to a corporate shareholder 2,120,757 – 2,120,757Other payables 493,644 – 493,644Amount due to a Director 150,000 – 150,000Amount due to a subsidiary company 1,610,037 – 1,610,037

4,374,438 – 4,374,438



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(c) Foreign currency risk

The Group and the Company are exposed to foreign currency risk as a result of its normal operating activities, both external and intra-group where the currency denominated in a currency other than the respective functional currencies of the Group’s and of the Company’s activities. The Group’s and the Company’s guidelines are to minimise the exposure of overseas operating activities to transaction risk by matching local currency income against local currency costs.

The Group is also exposed to currency translation risk arising from its net investment in foreign operation in PRC, Thailand, Hong Kong and Singapore. The investments are not hedged as currency position in Renminbi (“RMB”), Thai Baht (“BAHT”), Hong Kong Dollar (“HKD”) and Singapore Dollar (“SGD”) are considered to be long – term in nature.

The Group carries out its business in Malaysia, Singapore, PRC, Hong Kong and Thailand and most of the transactions are denominated in Ringgit Malaysia (“RM”), United States Dollars (“USD”), HKD, SGD, BAHT and RMB. The Group monitors its foreign currency exposure closely and where necessary only considers hedging significant foreign currency exposure.

The RMB is not freely convertible into foreign currencies under the PRC Foreign Control Regulations and Administration of Settlement, Sales and Payment of Foreign Exchange Regulations. The Group is permitted to exchange RMB for foreign currencies through banks that are authorised to conduct foreign exchange business.

Group RM SGD USD RMB BAHT HKD Total RM RM RM RM RM RM RM2012

Financial assets Other investment – – – 108,821 – – 108,821 Amount due from a corporate shareholder – – 142,320 – – – 142,320 Cash and cash equivalents 262,851 488 156,012 3,249,627 – 970 3,669,948 Trade and other receivables 52,978 1,802 3,466,703 6,187,166 127,476 76,084 9,912,209

315,829 2,290 3,765,035 9,545,614 127,476 77,054 13,833,298

Financial liabilities Trade and other payables 714,532 11,640 101,739 2,794,196 48,575 15,781 3,686,463 Bank borrowing – – 430,174 255,216 – – 685,390

714,532 11,640 531,913 3,049,412 48,575 15,781 4,371,853

Add: Net financial liabilities denominated in functional currency 398,703 – – – – – 398,703

Net currency exposure on financial (liabilities)/assets – (9,350) 3,233,122 6,496,202 78,901 61,273 9,860,148

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(c) Foreign currency risk (cont’d)

Group (cont’d) RM USD RMB BAHT HKD Total RM RM RM RM RM RM2011

Financial assetsCash and cash equivalents 2,757,783 320,742 2,023,125 75,069 246,608 5,423,327Trade and other receivables 88,150 110,543 6,280,071 166,674 285,907 6,931,345

2,845,933 431,285 8,303,196 241,743 532,515 12,354,672

Financial liabilitiesAmount due to a corporate shareholder – 25,204 – – – 25,204Trade and other payables 149,731 244,430 2,005,890 64,359 55,626 2,520,036Hire purchase creditor – – 98,432 – – 98,432

149,731 269,634 2,104,322 64,359 55,626 2,643,672

Less: Net financial assets denominated in functional currency 2,696,202 – – – – 2,696,202

Net currency exposure on financial assets – 161,651 6,198,874 177,384 476,889 7,014,798

RM USD RMB BAHT Total RM RM RM RM RM1.1.2011

Financial assetsCash and cash equivalents 33,940 201,957 4,699,190 587 4,935,674Trade and other receivables 1,989,155 712,906 3,508,690 158,365 6,369,116

2,023,095 914,863 8,207,880 158,952 11,304,790

Financial liabilitiesAmount due to a corporate shareholder – 1,988,762 – – 1,988,762Amount due to a Director 150,000 – 46,740 – 196,740Trade and other payables 185,094 419,696 1,087,040 90,376 1,782,206Hire purchase creditor – – 182,784 – 182,784

335,094 2,408,458 1,316,564 90,376 4,150,492 Less: Net financial assets denominated in functional currency 1,688,001 – – – 1,688,001

Net currency exposure on financial (liabilities)/assets – (1,493,595) 6,891,316 68,576 5,466,297



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Company RM USD RMB BAHT HKD SGD Total RM RM RM RM RM RM RM2012

Financial assetsCash and cash equivalents 258,578 4,338 491 – – 238 263,645Other receivables 31,228 – – 17,498 – – 48,726Amount due from subsidiary companies – 7,560 – – – – 7,560

289,806 11,898 491 17,498 – 238 319,931

Financial liabilityOther payables 484,487 215,285 – 48,575 – – 748,347

Add: Net financial liabilities denominated in functional currency 194,681 – – – – – 194,681

Net currency exposure on financial (liabilities)/assets – (203,387) 491 (31,077) – 238 (233,735)

RM USD RMB BAHT HKD Total RM RM RM RM RM RM2011

Financial assetsCash and cash equivalents 2,757,280 1,446 504 – – 2,759,230Other receivables 88,150 – – – – 88,150Amount due from subsidiary companies – 2,580,532 48,374 – 4,138 2,633,044

2,845,430 2,581,978 48,878 – 4,138 5,480,424

Financial liabilityOther payables 149,731 – – – – 149,731 Less: Net financial assets denominated in functional currency 2,695,699 – – – – 2,695,699

Net currency exposure on financial assets – 2,581,978 48,878 – 4,138 2,634,994

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Company (cont’d) RM USD RMB BAHT Total RM RM RM RM RM1.1.2011

Financial assetsCash and cash equivalents 33,940 180 – – 34,120Other receivables 1,989,155 – 5,616 17,488 2,012,259Amount due from a subsidiary company – 765,700 3,471 17,487 786,658

2,023,095 765,880 9,087 34,975 2,833,037

Financial liabilitiesAmount due to a Director 150,000 – – – 150,000Amount due to a corporate shareholder – 2,120,757 – – 2,120,757Amount due to a subsidiary company – – 1,610,037 – 1,610,037Other payables 185,094 308,550 – – 493,644

335,094 2,429,307 1,610,037 – 4,374,438

Less: Net financial assets denominated in functional currency 1,688,001 – – – 1,688,001

Net currency exposure on financial (liabilities)/assets – (1,663,427) (1,600,950) 34,975 (3,229,402)

Foreign currency sensitivity analysis

The following table demonstrates the sensitivity of the Group’s and of the Company’s loss net of tax for the financial year to a reasonably possible change in the USD, RMB and BAHT exchange rates against the respective functional currencies of the Group entities, with all other variables held constant.

Group Company 2012 2012 RM RM Increase/ (Increase)/ (Decrease) Decrease Profit net of Loss net of tax tax

RM/RMB - strengthened 2% (236) 9 - weakened 2% 236 (9) RM/USD - strengthened 3% 6,102 (6,102) - weakened 3% (6,102) 6,102 RMB/USD - strengthened 1% 7,921 – - weakened 1% (7,921) – HKD/USD - strengthened 1% (12,421) – - weakened 1% 12,421 –



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Foreign currency sensitivity analysis (cont’d)

Group Company 2011 2011 RM RM (Increase)/ (Increase)/ Decrease Decrease Loss net of Loss net of tax tax

RM/RMB - strengthened 8% 3,910 3,910 - weakened 8% (3,910) (3,910) RM/USD - strengthened 3% 77,459 77,459 - weakened 3% (77,459) (77,459) RMB/USD - strengthened 3% 124 124 - weakened 3% (124) (124) BAHT/RM - strengthened 4% 87,365 – - weakened 4% (87,365) – BAHT/USD - strengthened 4% 74,099 – - weakened 4% (74,099) –

The assumed movement in the above foreign currency exchange rate for the foreign currency exchange rate sensitivity analysis is based on the prudent estimate at the current market environment.

The exposure to foreign exchange risk vary during the financial year depending on the volume of overseas transactions. Nonetheless, the analysis above is considered to be representative of the Group’s and of the Company’s exposure to foreign currency risk.

(d) Interest rate risk

Interest rate risk is the risk that the fair value of future cash flows of the Group’s and of the Company’s financial instruments will fluctuate because of change in market interest rates.

The Group and the Company manage its interest rate exposure by maintaining a prudent mix of fixed and floating rate borrowings. The objectives for the mix between fixed and floating rate borrowings are set to reduce the impact of an upward changes in interest rates while enabling benefits to be enjoyed if interest rates fall.

Interest rate sensitivity analysis

The Group and Company do not expose to interest rate risk as the Group and the Company maintain fixed rate borrowing.

4.2 Fair values of financial instruments

The carrying amounts of short term receivables and payables, cash and cash equivalents and borrowings approximate their fair values due to the relatively short term nature of these financial instruments and insignificant impact of discounting.

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4.3 Fair value hierarchy

No fair value hierarchy had been disclosed as the Group and the Company do not have financial instruments measured at fair value.

5. SIGNIFICANT ACCOUNTING POLICIES

The Group and the Company apply the significant accounting policies, as summarised below, consistently throughout all periods presented in the financial statements and in preparing their opening MFRS statements of financial position at 1 January 2011 (the transition date to MFRS framework), unless otherwise stated.

(a) Basis of consolidation

The Group’s financial statements consolidate the audited financial statements of the Company and its subsidiary companies, which have been prepared in accordance with the Group’s accounting policies.

All intercompany transactions, balances and unrealised gains on transactions between group companies are eliminated; unrealised losses are also eliminated on consolidation unless cost cannot be recovered.

The financial statements of the Company and its subsidiary companies are all drawn up to the same reporting date.

Changes in the Company owners’ ownership interest in a subsidiary company that do not result in a loss of control are accounted for as equity transactions. In such circumstances, the carrying amounts of the controlling and non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiary company. Any difference between the amount by which the non-controlling interest is adjusted and the fair value of the consideration paid or received is recognised directly in equity and attributed to owners of the Company.

Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate of the consideration transferred, measured at acquisition date fair value and the amount of any non-controlling interest in the acquiree. For each business combination, the Group elects whether it measures the non-controlling interest in the acquiree either at fair value or at the proportionate share of the acquiree’s identifiable net assets. Acquisition costs incurred are expensed and included in administrative expenses.

When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date. This includes the separation of embedded derivatives in host contracts by the acquiree.

If the business combination is achieved in stages, the acquisition-date fair value of existing equity interest in the acquiree is remeasured to fair value at the acquisition date through profit or loss.

Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition date. Subsequent changes in the fair value of the contingent consideration which is deemed to be an asset or liability will be recognised in accordance with MFRS 139 either in profit or loss or as a change to other comprehensive income. If the contingent consideration is classified as equity, it will not be remeasured. Subsequent settlement is accounted for within equity. In instances where the contingent consideration does not fall within the scope of MFRS 139, it is measured in accordance with the appropriate MFRS.

Any excess of the cost of the business combination over the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities represents goodwill. The goodwill is accounted for in accordance with the accounting policy for goodwill stated in Note 5(d) to Financial Statements.

Any excess of the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities over the cost of business combination is recognised as income on the date of acquisition.



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5. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

(a) Basis of consolidation (cont’d)

Subsidiary companies are consolidated using the acquisition method of accounting from the date on which control is transferred to the Group and are no longer consolidated from the date that control ceases.

Upon the loss of control of a subsidiary company, the Group derecognises the assets and liabilities of the subsidiary company, any non-controlling interests and the other components of equity related to the subsidiary company. Any surplus or deficit arising on the loss of control is recognised in profit or loss.

If the Group retains any interest in the previous subsidiary company, then such interest is measured at fair value at the date that control is lost. Subsequently, it is accounted for as an equity accounted investee or as an available-for-sale financial asset depending on the level of influence retained.

Non-controlling interests at the end of the reporting year, being the equity in a subsidiary company not attributable directly or indirectly to the equity holders of the Company, are presented in the consolidated statement of financial position and statement of changes in equity within equity, separately from equity attributable to the owners of the Company. Non-controlling interests in the results of the Group are presented in the consolidated statement of profit or loss and other comprehensive income as an allocation of the profit or loss and the comprehensive income for the year between non-controlling interests and the owners of the Company.

Losses applicable to the non-controlling interests in a subsidiary company are allocated to the non-controlling interests even if that results in a deficit balance.

(b) Property, plant and equipment

Property, plant and equipment are stated at cost less accumulated depreciation and less any impairment losses. 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 Company and the cost of the item can be measured reliably.

All other repair and maintenance are charged to the profit or loss during the financial year in which they incurred.

Depreciation is calculated using the straight-line method to allocate their cost over their estimate useful life as follows:-

Rate Residual value Buildings 4.5% 10%Furniture and fitting 10% - 20% –Motor vehicles 9% 10%Machinery 20% –Office equipment 18% - 20% 10%Plant and machinery 9% 10%Renovation 10% -20% –Tools 20% –Computer and accessories 20% –

Certain depreciated property, plant and equipment are retained in the financial statements at net carrying value of 10% of the cost until they are no longer in use.

Restoration cost relating to an item of property, plant and equipment is capitalised only if such expenditure is expected to increase the future benefits from the existing property, plant and equipment beyond its previously assessed standard of performance.

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

Property, plant and equipment are written down to recoverable amount if, in the opinion of the Directors, it is less than their carrying value. Recoverable amount is the net selling price of the property, plant and equipment i.e. the amount obtainable from the sale of an asset in an arm’s length transaction between knowledgeable, willing parties, less the costs of disposal.

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

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset is included in the profit or loss in the period the asset is derecognised.

(c) Capital work in progress

Capital work in progress is plant and machinery under construction/installation for intended use as facilities. The amount is stated at cost. Plant and machinery under construction is not depreciated until it is completed and ready for its intended use.

(d) Goodwill

Goodwill represents the excess of the cost of acquisition over the Group’s interest in the fair value of the identifiable assets, liabilities and contingent liabilities of a subsidiary company at the date of acquisition.

Goodwill arising on the acquisition of subsidiary company is presented separately in the consolidated statement of financial position.

Following initial recognition, goodwill is measured at cost less any accumulated impairment losses. Goodwill is reviewed for impairment, annually or more frequently if events or changes in circumstances indicate that the carrying values may be impaired.

For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group’s cash-generating units, or groups of cash-generating units, that are expected to benefit from the synergies of the combination, irrespective of whether other assets or liabilities of the Group are assigned to those units or group of units. Each unit or group of units to which the goodwill is so allocated represents the lowest level within the Group at which the goodwill is monitored for internal management purposes.

A cash-generating unit to which goodwill has been allocated are tested for impairment annually and, whenever there is an indication that the unit may be impaired, by comparing the carrying amount of the unit, including goodwill, with the recoverable amount of the unit. Where the recoverable amount of the cash-generating unit is less than the carrying amount, an impairment loss is recognised.

An impairment loss recognised for goodwill should not be reversed in subsequent period. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.

Where goodwill forms part of a cash-generating unit and part of the operations within that unit is disposed off, the goodwill associated with the operations disposed of is included in the carrying amount of the operations when determining the gain or loss on disposal of the operations. Goodwill disposed of in these circumstances are measured based on the relative values of the operations disposed off and portion of the cash-generating unit retained.



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(e) Subsidiary companies

A subsidiary company is a company in which the Company or the Group has the power to exercise control over the financial and operating policies so as to obtain benefits therefrom.

Investment in subsidiary companies is stated at cost less any impairment losses in the Company’s statement of financial position. Where an indication of impairment exists, the carrying amount of the subsidiary company is assessed and written down immediately to their recoverable amount.

(f) Taxation

Current tax

Current tax expense is the expected amount of income taxes payable in respect of the taxable profit for the financial year and is measured using the tax rates that have been enacted or substantively enacted by the reporting date. Current tax for current and prior periods is recognised as liability (or asset) to the extent that it is unpaid (or refundable).

Deferred tax

Deferred tax liabilities and assets are provided for under liability method in respect of all temporary differences at reporting date between carrying amount of an asset or liability in the statements of financial position and its tax base including unused tax losses and capital allowances.

Deferred tax assets are recognised only to the extent that it is probable that taxable profit will be available against which deductible temporary differences can be utilised. The carrying amount of a deferred tax asset is reviewed at each reporting date. If it is no longer probable that sufficient taxable profit will be available to allow the benefit of part or that entire deferred tax asset to be utilised, the carrying amount of the deferred tax asset will be reduced accordingly. When it becomes probable that sufficient taxable profit will be available, such reductions will be reversed to the extent of the taxable profit.

Deferred tax are recognised as an expense or income in the profit or loss, except when it relates to items credited or debited directly to equity, in which case the deferred tax is also recognised directly in equity, or where it arises from the initial accounting for a business combination, in which case it is taken into account in the determination of goodwill or excess.

Deferred tax is measured at the tax rates that are expected to apply in the period when the asset is realised or the liability is settled, based on tax rates that have been enacted or substantively enacted by the reporting date.

Value-added tax (“VAT”)

The Group’s sale of goods in the Thailand and PRC is subjected to VAT at the applicable tax rate of 7% and 17% for Thailand and PRC domestic sales respectively. Input VAT on purchases can be deducted from output VAT. The net amount of VAT recoverable from, or payable to, the taxation authority is included as part of “other receivables” or “other payables” in the statements of financial position.

Revenues, expenses and assets are recognised net of the amount of VAT except:

• wheretheVATincurredonthepurchaseofassetsorservicesisnotrecoverablefromthetaxationauthority,in which case the VAT is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and

• receivablesandpayablesthatarestatedwiththeamountofVATincluded.

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(g) Inventories

Inventories are stated at the lower of cost and net realisable value after adequate write down has been made by Director for deteriorated, obsolete and slow-moving inventories.

Cost of raw materials is determined using the weighted average method.

Cost of finished goods and work in progress includes direct materials, labour and an appropriate proportion of manufacturing overheads.

Net realisable value represents the estimated selling price in the ordinary course of business less selling and distribution costs and all other estimated costs to completion.

(h) Impairment of non-financial assets

At each reporting date, the Group and the Company review the carrying amounts of its assets to determine whether there is any indication of impairment.

If any such indication exists, or when annual impairment testing for an asset is required, the recoverable amount is estimated and an impairment loss is recognised whenever the recoverable amount of the asset or a cash-generating unit is less than its carrying amount. Recoverable amount of an asset or a cash-generating unit is the higher of its fair value less costs to sell and its value in use.

In assessing value in use, the estimated future cash flows 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. Impairment losses of continuing operations are recognised in the profit or loss in those expense categories consistent with the function of the impaired asset.

An impairment loss is recognised as an expense in the profit or loss immediately.

An assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses for an asset other than goodwill may no longer exist or may have decreased. If such indication exists, the recoverable amount is estimated. A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the asset recoverable amount. That increased amount cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years.

All reversals of impairment losses are recognised as income immediately in the profit or loss. After such a reversal, the depreciation charge is adjusted in future periods to allocate the revised carrying amount of the asset, less any residual value, on a systematic basis over its remaining useful life.

(i) Financial instruments

Financial assets and financial liabilities are recognised when the Group and the Company become a party to the contractual provisions of the financial instrument.

Financial assets and financial liabilities are measured initially at fair value plus transactions costs, except for financial assets and financial liabilities carried at fair value through profit or loss, which are measured initially at fair value.

Embedded derivative is recognised separately from the host contract and accounted for as a derivative if, and only if, it is not closely related to the economic characteristics and risks of the host contract and the host contract is not categorised at fair value through profit or loss. The host contract, in the event an embedded derivative is recognised separately, is accounted for in accordance with policy applicable to the nature of the host contract.



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(i) Financial instruments (cont’d)

Financial assets and financial liabilities are measured subsequently as described below:-

Financial assets

For the purpose of subsequent measurement, financial assets other than those designated and effective as hedging instruments are classified into the following categories upon initial recognition:

a) loans and receivables;b) financial assets at fair value through profit or loss; c) held to maturity investments; and d) available-for-sale financial assets.

The category determines subsequent measurement and whether any resulting income and expense is recognised in profit or loss or in other comprehensive income.

All financial assets except for those at fair value through profit or loss are subject to review for impairment at least once at each reporting date. Financial assets are impaired when there is any objective evidence that a financial asset or a group of financial assets is impaired. Different criteria to determine impairment are applied for each category of financial assets, which are described below.

A financial asset is derecognised where the contractual right to receive cash flows from the asset has expired or when the financial assets and all substantial risks and rewards are transferred.

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 market place concerned. All regular way purchases and sales of financial assets are recognised or derecognised on the trade date, i.e. the date that the Group and the Company commit to purchase or sell the asset.

At the reporting date, the Group and the Company have not designated any financial assets at fair value through profit or loss and held to maturity investments. The Group and the Company carry only loans and receivables and available-for-sale financial assets on their statements of financial position.

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. After initial recognition, these are measured at amortised cost using the effective interest method, less impairment. Discounting is omitted where the effect of discounting is immaterial. Gains or losses are recognised in profit or loss when the loans and receivables are derecognised or impaired, and through the amortisation process. The Group’s cash and cash equivalents, trade and most other receivables fall into this category of financial instruments.

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.

Available-for-sale financial assets

Available-for-sale financial assets are non-derivative financial assets that are either designated to this category or do not qualify for inclusion in any of the other categories of financial assets. The Group’s available-for-sale financial assets include investment in equity instruments.

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(i) Financial instruments (cont’d)

Financial assets (cont’d)

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

Available-for-sale financial assets are measured at fair value subsequent to the initial recognition. Gains and losses are recognised in other comprehensive income and reported within the available-for-sale reserve within equity, except for impairment losses and foreign exchange differences on monetary assets, which are recognised in profit or loss. When the asset is disposed of or is determined to be impaired, the cumulative gain or loss recognised in other comprehensive income is reclassified from the equity reserve to profit or loss and presented as a reclassification adjustment within other comprehensive income.

Interest is calculated using the effective interest method and dividends are recognised in profit or loss. Dividends on an available-for-sale equity are recognised in profit or loss when the Group’s right to receive payment is established.

Investment in equity instruments whose fair value cannot be reliably measured is 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.

Financial liabilities

After the initial recognition, financial liability is classified as financial liability at fair value through profit or loss or other financial liabilities measured at amortised cost using the effective interest method.

A financial liability is derecognised when the obligation under the liability is extinguished, discharged, cancelled or expired, or through amortisation process. 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 amount is recognised in profit or loss.

At the reporting date, the Group and the Company have not designated any financial liabilities at fair value through profit or loss. The Group and the Company carry only other financial liabilities on their statements of financial position.

Other financial liabilities

The Group’s and the Company’s financial liabilities include borrowings, trade and other payables, amount due to a Director, amount due to a corporate shareholder and amount due to a subsidiary company.

Other financial liabilities are subsequently measured at amortised cost using the effective interest method.

(j) Cash and cash equivalents

Cash and cash equivalents consist of cash on hand, balances and deposits with banks and highly liquid investments which have an insignificant risk of changes in value. For the purpose of the statements of cash flows, cash and cash equivalents are presented net of bank overdrafts and pledged deposits.

For the purpose of the statements of financial position, cash and cash equivalents restricted to be used to settle a liability of 12 months or more after the reporting date are classified as non-current asset.



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(k) 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.

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 receivable and default or significant delay in payments. For certain categories of financial assets, such as trade receivables, assets that are assessed not to be impaired individually are subsequently assessed for impairment on a collective basis based on similar risk characteristics. 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 flow discounted at the financial asset’s original effective interest rate. The impairment loss is recognised in profit or loss.

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

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

Available-for-sale financial assets

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

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

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

(l) Equity, reserves and dividend payments

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.

Share capital represents the nominal value of shares that have been issued.

Share premium includes any premiums received on issuance of share capital. Any transaction costs associated with the issuing of shares are deducted from share premium, net of any related income tax benefits.

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(l) Equity, reserves and dividend payments (cont’d)

Retained earnings/(Accumulated losses) include all current and prior period retained earnings/(accumulated losses).

Interim dividends are simultaneously proposed and declared, because the articles of association of the Company grants the directors the authority to declare interim dividends. Consequently, interim dividends are recognised directly as a liability when they are proposed and declared.

Final dividends proposed by the directors are not accounted for in shareholders’ equity as an appropriation of retained earnings, until they have been approved by the shareholders in a general meeting. When these dividends have been approved by the shareholders and declared, they are recognsied as a liability.

The distribution of non-cash assets to owners is recognised as dividend payable when the dividend was approved by shareholders. The dividend payable is measured at the fair value of the shares to be distributed. At the end of the financial year and on the settlement date, the Company reviews the carrying amount of the dividend payable, with any changes in the fair value of the dividend payable recognised in equity. When the Company settles the dividend payable, the difference between the carrying amount of the dividend distributed and the carrying amount of the dividend payable is recognised as a separate line item in profit or loss.

All transactions with owners of the Company are recorded separately within equity.

(m) Statutory reserve In accordance with the relevant laws and regulations of the PRC, the subsidiary companies established in the PRC

is required to transfer 10% of its profit after taxation prepared in accordance with the accounting regulation of the PRC to the statutory reserve until the reserve balance reaches 50% of the registered capital. Such reserve may be used to offset unappropriated profit or increase the registered capital of the subsidiary companies, subject to the approval from the PRC authorities, and are not available for dividend distribution to the shareholders.

(n) Foreign currency transactions and balances

The financial statements are presented in Ringgit Malaysia, which is also the functional currency of the Company.

Transactions in foreign currencies are recorded in Ringgit Malaysia at rates of exchange ruling at the date of the transactions. Foreign currency monetary assets and liabilities are translated at exchange rates ruling at reporting date.

The assets and liabilities of the foreign entities, including goodwill and fair value adjustments arising on the acquisitions, are translated to Ringgit Malaysia at the closing rates at the reporting date. The operating results are translated to Ringgit Malaysia at the exchange rates at the average rates during the financial year.

Gains and losses resulting from settlement of such transactions and conversion of monetary assets and liabilities, whether realised or unrealised, are included in the profit or loss as they arise.

Financial statements of foreign consolidated subsidiary companies are translated at year-end exchange rates with respect to the assets and liabilities. All resulting translation differences are included in the foreign exchange reserve in equity.

Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate at the reporting date.

On disposal of a foreign entity, the cumulative amount of exchange differences deferred in equity relating to that foreign entity is recognised in the profit or loss as a component of the gain or loss on disposal.

All other foreign exchange differences are taken to the statements of comprehensive income in the financial year in which they arise.



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(o) Leases

Finance Lease

In accordance with MFRS 117 Leases, the economic ownership of a leased asset is transferred to the lessee if the lessee bears substantially all the risks and rewards related to the ownership of the leased asset. The related asset is then recognised at the inception of the lease at the fair value of the leased asset or, if lower, the present value of the lease payments plus incidental payments, if any. A corresponding amount is recognised as a finance leasing liability, irrespective of whether some of these lease payments are payable up-front at the date of inception of the lease. Leases of land and buildings are classified separately and are split into a land and a building element, in accordance with the relative fair values of the leasehold interests at the date the asset is recognised initially.

Depreciation methods and useful lives for assets held under finance lease agreements correspond to those applied

to comparable assets which are legally owned by the Group. The corresponding finance leasing liability is reduced by lease payments less finance charges, which are expensed as part of finance costs. The interest element of leasing payments represents a constant proportion of the capital balance outstanding and is charged to profit or loss over the period of the lease.

Operating Lease

Leased payments for operating lease, where substantially all the risk and benefits remain with lessor, are charged as expenses in the period in which they incurred.

(p) Provisions

Provisions are recognised when there is a present, legal or constructive obligation that can be estimated reliably, as a result of a past event, when it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions are not recognised for future operating losses.

Any reimbursement that the Group can be virtually certain to collect from a third party with respect to the obligation is recognised as a separate asset. However, this asset may not exceed the amount of the related provision.

Provisions are reviewed at each reporting date and adjusted to reflect the current best estimate. Where the effect of the time of money is material, the amount of a provision is the present value of the expenditure expected to be required to settle the obligation.

(q) Revenue recognition

Revenue from sale of good is recognised when the significant risks and rewards of ownership have been transferred to the buyer, provided that the Group and the Company maintain neither managerial involvement to the degree usually associated with ownership, nor effective control over the goods sold.

Interest income is recognised on time proportion basis, taking into account the principal outstanding and the effective rate over the period to maturity, when it is determined that such income will accrue to the Group and the Company.

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(r) Employee benefits

(i) Short term benefits

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

A provision is made for the estimated liability for leave as a result of services rendered by employees up to the reporting date.

(ii) Defined contribution plans

Defined contribution plans are post-employment benefit plans under which the Group and the Company pay fixed contributions into independent entities of funds and will have no legal or constructive obligations to pay further contribution if any of the funds do not hold sufficient assets to pay all employees benefits relating to employee services in the current and preceding financial year.

Such contributions are recognised as expenses in the profit or loss as incurred. As required by law, companies in Malaysia make such contributions to the Employee Provident Fund (“EPF”). Some of the Group’s foreign subsidiary companies also make contributions to their respective countries’ statutory pension schemes.

Obligations for contributions to defined contribution plans are recognised as expenses in the profit or loss as incurred.

(iii) Retirement benefits scheme

Pursuant to the relevant regulations of PRC government, the subsidiary companies established in PRC participates in a local municipal government retirement benefits scheme (the “Scheme”), whereby the subsidiary companies are required to contribute a certain percentage of the basic salaries of its employees to the Scheme to fund their retirement benefits. The local municipal government undertakes to assume the retirement benefits obligations of all existing and future retired employees of the subsidiary companies. The only obligation of the subsidiary companies with respect to the Scheme is to pay the ongoing required contributions under the Scheme mentioned above. Contributions under the Scheme are charged to the profit or loss as incurred. There is no provision under the Scheme whereby forfeited contributions may be used to reduce future contributions.

(s) Government grants Government grants used for financial support, assistance or to reimburse costs incurred by the Group and the

Company are recognised in the profit or loss of the financial year in which they become receivable.

(t) Borrowings costs

All borrowing costs are recognised as expenses in the profit or loss in the period in which they incurred.



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(u) Contingencies A contingent liability or asset is a possible obligation or asset that arises from past events and whose existence

will be confirmed only by the occurrence or non-occurrence of uncertain future event not wholly within the control of the Group and of the Company.

Contingent liabilities and assets are not recognised in the statements of financial position of the Group and of the Company.

(v) Segment reporting

In identifying its operating segments, the management generally follows the Group’s internal reports regularly reviewed by the Group’s chief operating decision makers in order to allocate resources to the respective segments and to assess their performance.

(w) Intersegment transfers

Segment revenues, expenses and result include transfers between segments. The prices charged on intersegment transactions are the same as those charged for similar goods to parties outside of the Group at a negotiated transaction. These transfers are eliminated on consolidation.

(x) Related parties

A related party is a person or entity that is related to the Group. A related party transaction is a transfer of resources, services or obligations between the Group and its related party, regardless of whether a price is charged.

(a) A person or a close member of that person’s family is related to the Group if that person :

(i) Has control or joint control over the Group; or(ii) Has significant influence over the Group; or(iii) Is a member of the key management personnel of the ultimate holding company of the Group, or the

Group.

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

(i) The entity and the Group are members of the same group; or(ii) The Group is an associate or joint venture of the entity; or(iii) The Group and the entity are joint ventures of the same third party; or(iv) The Group is a joint venture of a third entity and the entity is an associate of the third entity; or(v) The entity is a post-employment benefit plan for the benefits of employees of either the Group or an

entity related to the Group; or(vi) The entity is controlled or jointly-controlled by a person identified in (a) above; or(vii) A person identified in (a)(i) above has significant influence over the Group or is a member of the key

management personnel of the ultimate holding company or the Group.

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6. PROPERTY, PLANT AND EQUIPMENT

Group Capital Computer Furniture Office Plant and Motor work in and and fitting equipment Tools machinery Renovation Buildings vehicles progress accessories Total RM RM RM RM RM RM RM RM RM RMCost At 1 January 2011 82,753 359,681 216,494 1,837,950 338,609 1,975,779 494,800 87,497 10,598 5,404,161Additions 5,226 223,542 1,396 324,162 338,096 981,313 228,782 – 5,709 2,108,226Written off – (15,987) – – (29,954) – – – – (45,941)Translation differences 1,103 35,821 4,287 137,328 34,638 212,385 52,147 6,739 – 484,448 At 31 December 2011 89,082 603,057 222,177 2,299,440 681,389 3,169,477 775,729 94,236 16,307 7,950,894Additions 10,820 46,054 2,940 330,591 125,231 – 57,079 – – 572,715Written off (12,810) (61,728) (1,937) – (172,848) – – – – (249,323)Disposals (51,795) (11,510) (4,313) – – – (72,787) – – (140,405)Translation differences (214) (13,378) (752) (36,210) (12,854) (79,331) (19,489) (2,358) – (164,586)

At 31 December 2012 35,083 562,495 218,115 2,593,821 620,918 3,090,146 740,532 91,878 16,307 7,969,295

Accumulated depreciationAt 1 January 2011 16,640 227,849 38,118 642,131 115,651 489,006 42,443 – 1,170 1,573,008Charge for the financial year 14,633 73,314 44,537 238,264 65,562 112,197 56,090 – 3,011 607,608Written off – (13,531) – – (8,986) – – – – (22,517)Translation differences 182 19,920 555 53,896 8,220 44,548 6,710 – – 134,031

At 31 December 2011 31,455 307,552 83,210 934,291 180,447 645,751 105,243 – 4,181 2,292,130Charge for the financial year 6,832 95,117 4,278 243,585 92,639 138,411 66,271 – 3,397 650,530Written off (6,285) (39,294) (1,083) – (72,144) – – – – (118,806)Disposals (22,277) (5,719) (1,907) – – – (12,556) – – (42,459)Translation differences (81) (6,966) (282) (18,685) (2,676) (15,512) (2,381) – – (46,583)

At 31 December 2012 9,644 350,690 84,216 1,159,191 198,266 768,650 156,577 – 7,578 2,734,812

Net carrying amount31 December 2012 25,439 211,805 133,899 1,434,630 422,652 2,321,496 583,955 91,878 8,729 5,234,483

31 December 2011 57,627 295,505 138,967 1,365,149 500,942 2,523,726 670,486 94,236 12,126 5,658,764

1 January 2011 66,113 131,832 178,376 1,195,819 222,958 1,486,773 452,357 87,497 9,428 3,831,153



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6. PROPERTY, PLANT AND EQUIPMENT (CONT’D)

ComputerCompany Office Furniture and equipment and fitting Renovations accessories Total RM RM RM RM RM

Cost At 1 January 2011 3,515 25,950 29,954 10,598 70,017Additions 6,511 – – 5,709 12,220Written off – – (29,954) – (29,954)

At 31 December 2011 10,026 25,950 – 16,307 52,283Additions – 2,650 30,350 – 33,000Transfer from subsidiary company 5,999 – – 4,061 10,060Written off – (1,687) – – (1,687)

At 31 December 2012 16,025 26,913 30,350 20,368 93,656

Accumulated depreciationAt 1 January 2011 327 4,713 5,991 1,170 12,201Charge for the financial year 1,623 2,595 2,995 3,011 10,224Written off – – (8,986) – (8,986) At 31 December 2011 1,950 7,308 – 4,181 13,439Charge for the financial year 2,787 2,691 3,035 3,397 11,910Transfer from subsidiary company 1,688 – – 2,354 4,042Written off – (506) – – (506)

At 31 December 2012 6,425 9,493 3,035 9,932 28,885

Net carrying amount31 December 2012 9,600 17,420 27,315 10,436 64,771

31 December 2011 8,076 18,642 – 12,126 38,844

1 January 2011 3,188 21,237 23,963 9,428 57,816

The buildings with the carrying amount of RM 2,321,496 (2011: RM2,523,726 and 1.1.2011: RM1,486,773) of the Group located in the PRC are pledged to a bank as a security for a banking facility granted to a subsidiary company.

The net carrying amount of motor vehicle of the Group which is under hire purchase arrangement amounted to RM Nil (2011: RM375,481 and 1.1.2011: RM392,261).

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7. GOODWILL ON CONSOLIDATION

Group 2012 2011 RM RM

At beginning of financial year – 146,779Acquisition of a subsidiary company 51,493 –Goodwill written off (51,493) (146,779)

At end of financial year – –

For the purpose of impairment testing, goodwill is allocated to the Group’s operating divisions which represent the lowest level within the Group at which the goodwill is monitored for internal management purposes.

In the previous financial year, the recoverable amount for the above was based on its value in use and was determined by discounting the future cash flows generated from the continuing use of those units and was based on the following key assumptions:-

- Cash flows were projected based on actual operating results and a 5-year business plan.

- A pre-tax discount rate of 11.5% was applied in determining the recoverable amount of the unit. The discount rate was estimated based on the Market’s existing rate of borrowing.

The values assigned to the key assumptions represent management’s assessment of future trends in the industry. A reasonably possible change in a key assumption does not have any significant difference to the recoverable amount.

The carrying amount of goodwill which related to Lumimark Sdn. Bhd. (formerly known Awan Idaman Sdn. Bhd.) was written off during the financial year as the sustainable growth of the subsidiary company is uncertain at the reporting date.

The carrying amount of goodwill which related to Ideal Jacobs Corporation (Thailand) Limited was written off during the previous financial year in view of negative cash flows were projected as a result of the flood in Thailand.

8. INVESTMENT IN SUBSIDIARY COMPANIES

Company 2012 2011 1.1.2011 RM RM RM

Unquoted investment - at cost 10,051,401 10,000,000 10,000,000Less: Impairment loss (1,051,274) (1,000,000) – 9,000,127 9,000,000 10,000,000



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8. INVESTMENT IN SUBSIDIARY COMPANIES (CONT’D)

Details of subsidiary companies are as follows:-

NameCountry of incorporation Effective interest

Principal activities

Direct interest 2012 2011 1.1.2011

Ideal Jacobs Corporation (Thailand) Limited (“IJT”) #

Thailand 99.99% 99.99% 99.99% *

Ideal Jacobs (Xiamen) Corporation(“IJX”) #/##

PRC 100% 100% 100% ^

Ideal Jacobs (HK) Corporation Limited (“IJHK”) #

Hong Kong 100% 100% – @

Ideal Laminar Pte Ltd # Singapore 51% – – Dormant

Lumimark Sdn Bhd (formerly known as Awan Idaman Sdn Bhd)

Malaysia 51% – – ∆

Indirect interest

Xiamen Ideal Jacobs International Limited Company (“XIJ”) #/##+

PRC 100% 100% – @

Suzhou Ideal Jacobs Corporation #/##+

PRC 100% – – ^

* The principal activities of this subsidiary company were engaged in the manufacturing of Industrial Labels, Nameplates

and Die-cut products. On 15 November 2012, the subsidiary company commenced its members’ voluntary winding up process.

^ The principal activities of this subsidiary company are engaged in manufacturing of Industrial Labels, Nameplates

and Laser/Die-Cut Products and fabrication of Plastic parts.

@ The principal activities of these subsidiary companies are trading in electronic products.

∆ The principal activities of this subsidiary company are engaged in the carrying out of research and development activity, producing and trading in photoluminescent products and services.

# Subsidiary company not audited by SJ Grant Thornton.

## An audit has been carried out by SJ Grant Thornton for the purpose of forming a group opinion.

+ Direct subsidiary companies of IJX.

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9. OTHER INVESTMENT

Group/Company 2012 2011 1.1.2011 RM RM RMAvailable-for-sale investment

At cost 108,821 – –

This represents investment in club membership and is stated at cost less impairment and denominated in RMB. This investment is held in trust by a director.

10. DEFERRED TAX ASSETS


At beginning of financial year – 250,221Recognised in profit or loss – (254,603)Translation differences – 4,382

At end of financial year – –

The Group’s unabsorbed business losses is amounted to RM3,738,756 (2011: RM2,032,580) and this amount is available

indefinitely for offset against future taxable profits of the subsidiary companies in which those items arose.

Deferred tax assets relate to the following:-

Group 2012 2011 1.1.2011 RM RM RM Unabsorbed business losses – – 250,221

The tax effect of timing differences that would give rise to future tax benefits are generally recognised only where there is reasonable expectation of realisation. The estimated amounts of deferred taxation benefits, which have not been recognised in the financial statements are as follow:-


Unabsorbed business losses 3,738,756 2,032,580

The potential future tax benefits of the Group are not provided for in the financial statements as it is anticipated that the

tax effects of such benefits will not reverse in the foreseeable future.

Under the EIT Law of PRC, withholding tax is imposed on dividends declared in respect of profits earned by PRC subsidiary companies from 1 January 2008 onwards. Deferred taxation has not been provided for in the consolidated financial statements in respect of temporary differences associated with undistributed earnings of the PRC subsidiary companies amounting to approximately RM10,407,379 (2011: RM6,521,802 ) as the Group is able to control the timing of the reversal of the temporary differences and it is probable that the temporary differences will not reverse in the foreseeable future.



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11. INVENTORIES

Group 2012 2011 1.1.2011 RM RM RM

Raw materials 1,919,160 1,541,173 797,810Finished goods 1,105,889 1,013,234 583,386Work-in-progress 162,882 21,934 20,843 3,187,931 2,576,341 1,402,039

A total of RM9,009,122 (2011: RM5,606,220) of inventories was included in profit or loss as expense. This includes an amount of RM90,066 (2011: RM27,234) resulting from write down of inventories during the financial year.

12. TRADE RECEIVABLES

Trade receivables are unsecured, bear no interest and the normal trade credit terms granted by the Group to the trade receivables ranging from 10 days to 120 days (2011: 30 days to 90 days and 1.1.2011: 30 days to 90 days).

Included in trade receivables is an amount of RM2,047,688 (2011: RM Nil and 1.1.2011: RM Nil) due from companies in which certain directors of subsidiary companies have interest.

13. OTHER RECEIVABLES

Group Company 2012 2011 1.1.2011 2012 2011 1.1.2011 RM RM RM RM RM RM

Advances to employees 58,726 18,139 51,128 1,058 – –Advances to suppliers 645,054 153,204 98,789 – – –Deposits 68,221 187,229 96,283 21,870 80,135 51,725Non-trade receivables 516,925 5,595 3,305 16,440 – –Value-added tax recoverable 350,169 119,517 93,015 – – –Prepaid listing expenses – – 1,960,534 – – 1,960,534Prepayments 166,017 26,092 72,228 9,358 8,015 –

1,805,112 509,776 2,375,282 48,726 88,150 2,012,259

Other receivables are unsecured, bear no interest and repayable on demand.

14. AMOUNT DUE FROM/(TO) SUBSIDIARY COMPANIES

Amount due from/(to) subsidiary companies is trade in nature, unsecured, bears no interest and repayable on demand.

Individually Company Gross impaired Net RM RM RM

2012 3,041,725 (3,034,165) 7,560

2011 2,633,044 – 2,633,044

1.1.2011 786,658 – 786,658

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15. AMOUNT DUE FROM/(TO) A CORPORATE SHAREHOLDER Amount due from/(to) a corporate shareholder is trade in nature, unsecured, bears no interest and repayable on demand.

16. FIXED DEPOSITS WITH LICENSED BANK

Fixed deposits totalling RM1,339,884 (2011 and 1.1.2011: RM Nil) have been pledged to bank for banking facilities granted to a subsidiary company, and hence, are not available for general use.

17. SHARE CAPITAL

Group and Company 2012 2011 1.1.2011 RM RM RM

Authorised:- Ordinary shares 250,000,000 shares of RM 0.10 each/100,000 shares of RM1.00 each brought forward 25,000,000 25,000,000 100,000 Subdivision of shares, at RM0.10 each – – 100,000 249,000,000 shares of RM0.10 each created during the financial year – – 24,900,000

250,000,000 shares of RM0.10 each carried forward 25,000,000 25,000,000 25,000,000

Issued and fully paid:- Ordinary shares 120,001,000 shares of RM0.10 each/ 100 shares of RM1.00 brought forward 12,000,100 9,000,100 100

Subdivision of shares, at RM0.10 each – – 100 90,000,000 shares of RM0.10 each issued during the financial year – – 9,000,000

30,000,000 shares of RM0.10 each issued during the financial year – 3,000,000 –

120,001,000 shares of RM0.10 each/90,001,000 shares of RM0.10 each carried forward 12,000,100 12,000,100 9,000,100

The holders of ordinary shares are entitled to receive dividends as and when declared by the Company. All ordinary shares carry one vote per share without restriction and rank equally with regard to the Company residual assets.

18. RESERVES

These reserves are not available for distribution as dividend.



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19. SHARE PREMIUM

Group and Company 2012 2011 RM RM

At beginning of financial year 3,965,718 – Arising from issuance of shares during the financial year – 5,100,000 Less: share issuance expense – (1,134,282)

At end of financial year 3,965,718 3,965,718

Share premium represents the excess of the consideration received over the nominal value of shares issued by the Company. It is not to be distributed by way of cash dividends and its utilisation shall be in the manner as set out in Section 60(3) of the Companies Act, 1965.

20. HIRE PURCHASE CREDITOR

Group 2012 2011 1.1.2011 RM RM RM

Minimum lease payments - not later than 1 year – 110,389 102,494- later than 1 year but not later than 5 years – – 102,494

– 110,389 204,988Less: Interest-in-suspense – (11,957) (22,204)

– 98,432 182,784

Present value of hire purchase creditor - not later than 1 year – 98,432 91,218- later than 1 year but not later than 5 years – – 91,566

– 98,432 182,784

The amount payable within 1 year has been included in other payables.

The entire carrying amount of hire purchase creditor is denominated in RMB.

The effective interest rate during the financial year is Nil (2011: 7.6% and 1.1.2011: 7.6%).

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21. TRADE PAYABLES

Trade payables are unsecured, bear no interest and the normal credit terms granted by the trade payables ranging from 30 days to 90 days (2011:30 days to 60 days and 1.1.2011: 30 days to 60 days).

22. OTHER PAYABLES


Non-trade payables 303,847 59,908 327,566 48,653 – 308,550Accrual of expenses 1,166,281 800,220 383,259 699,694 149,731 185,094Advance from customers 46,018 71,337 81,539 – – –Value added tax payable 17,709 34,862 131,014 – – –Hire purchase creditor – 98,432 91,218 – – –

1,533,855 1,064,759 1,014,596 748,347 149,731 493,644

Other payables are unsecured, bear no interest and repayable on demand.

23. AMOUNT DUE TO A DIRECTOR

Amount due to a director is non-trade in nature, unsecured, bears no interest and repayable on demand.

24. BANK BORROWING

The term loan is secured by the followings:-

(a) First party legal charge over the buildings of a subsidiary company;

(b) Jointly and severally guaranteed by a director of the Company; and

(c) Fixed deposits of a subsidiary company as disclosed in Note 16 to the Financial Statements.

The term loan is repayable over 12 months installment and bears interest at Benchmark Interest Rate (“BIR”) in China with the floor of lending rate range from 20% to 80% from the BIR.

The effective interest rate is 7.2% to 10.8% (2011: Nil).

25. REVENUE

Revenue represents the net invoiced value of goods sold, after allowance for trade discounts and sales rebates.



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26. PROFIT/(LOSS) BEFORE TAX

Profit/(Loss) before tax has been determined after charging/(crediting), amongst other items, the following:-


Audit fee- Holding company’s auditors- Statutory audit 126,000 108,000 123,000 108,000- Other 10,000 10,000 10,000 10,000- Other auditors 51,318 37,522 – –Inventories written down 90,066 27,234 – –Depreciation 650,530 607,608 11,910 10,224Directors’ remuneration- Directors’ fee 370,195 320,000 336,000 320,000- Other emoluments 951,406 918,054 18,720 72,300Bad debts written off 10,184 – – –Waiver of debts on amount due to a director (2,300) – – –Impairment loss on investment in subsidiary companies – – 51,274 1,000,000Interest expenses- Term loan 119,456 1,118 – –- Hire purchase 11,603 11,266 – –Loss on disposal of property, plant and equipment 39,921 – – –Property, plant and equipment written off 130,517 23,424 1,181 20,968Goodwill written off 51,493 146,779 – –Rental expenses 358,370 440,312 56,280 163,933Government grant received (13,551) (18,114) – –Interest income (95,114) (76,907) (46,359) (50,519)Gain on foreign exchange- unrealised – (95,649) – (93,997)- realised – (83,340) – (73,316)Loss on foreign exchange- realised 11,126 2,332 16,298 –- unrealised 76,034 63,295 246,738 –Impairment loss on amount due from subsidiary companies – – 3,034,165 –

27. TAX EXPENSE


Current year’s provision 720,969 671,758 – 8,844Underprovision in prior year 160 – 160 –Transfer from deferred tax assets – 254,603 – –

721,129 926,361 160 8,844

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27. TAX EXPENSE (CONT’D)

Reconciliation between the statutory and effective tax expense is as follows:- Group Company 2012 2011 2012 2011 RM RM RM RM

Profit/(Loss) before tax 993,562 (1,984,517) (5,601,029) (1,112,596)

Income tax on rate of 25% 248,391 (496,129) (1,400,257) (278,149)Tax effect in respect of:-Income not taxable (36,891) – – (1,106,493)Non-allowable expenses 516,587 1,287,051 1,400,257 1,393,486Underprovision in prior year 160 – 160 –Deferred tax assets not recognised 426,544 508,145 – –Difference tax rate in other countries of overseas subsidiary companies (433,662) (372,706) – –

Tax expense for the financial year 721,129 926,361 160 8,844

The Group unabsorbed business losses which can be carried forward to offset against future taxable profit amounted to RM3,738,756 (2011: RM2,032,580).

PRC tax

The provision for PRC income tax is calculated based on statutory income tax rate of 15% (2011: 15%) in accordance with the relevant PRC income tax rules.

On 16 March 2007, the National People’s Congress of the PRC passed the Enterprise Income Tax Law of the People’s Republic of China, which took effect on 1 January 2008 (the “New EIT Law”). In accordance with the New EIT Law, a unified Enterprise Income Tax rate of 25% and unified tax deduction standards will be applied equally to both domestic-invested enterprises and wholly foreign-owned enterprise (“WFOE”). In accordance with the Notice concerning implementation of Preference Policy of Enterprise Income Tax in Transition Period issued by the State Council of the PRC on 26 December 2007, the Enterprise Income Tax rate applicable to WFOE which are currently subject to a deducted rate will be gradually increased up to 25% within 5 years commencing from 1 January 2008.

Pursuant to relevant PRC laws and regulations, the subsidiary companies in PRC, being a WFOE, is exempted from the state enterprise income tax, namely, the Enterprise Income Tax, for a period of 2 years from its first profit making year, and is entitled to a 50% reduction in the Enterprise Income Tax (subject to the approval from the relevant PRC tax authorities) for the next 3 years subsequently. Financial Year (“FY”) 2006 was chosen to be the first profit-making year for the subsidiary company in PRC which had been agreed by the authority. Therefore, the subsidiary company in PRC were exempted from the Enterprise Income Tax in FY 2006 and FY 2007, and were subject to the Enterprise Income Tax at a preferential rate of 9%, 10% and 11% in FY 2008, FY 2009 and FY 2010 respectively. The tax rate for FY 2011 will be 24% and from FY 2012 onwards, the tax rate will be 25%.

On 30 June 2011, a subsidiary company in PRC had received a tax incentive from the authority in relation to the high technology whereby the subsidiary company’s tax rate reduced from 24% to 15% for 3 years until 29 June 2014.



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28. EARNINGS/(LOSSES) PER SHARE

Basic earnings/(losses) per ordinary share

The calculation of basic earnings/(losses) per share was based on the profit/(loss) attributable to ordinary equity holders of the parent and a weighted average number of ordinary shares issued calculated as follows:

Group 2012 2011

Profit/(Loss) for the financial year attributable to ordinary equity holders of the parent (RM) 314,326 (2,910,878)

Weighted average number of ordinary shares at 31 December 120,001,000 109,151,685

Basic earnings/(losses) per share (sen) 0.26 (2.67)

Diluted earnings/(losses) per ordinary share

No diluted earnings/(losses) per share is presented as there is no potential dilutive equity instrument.

29. EMPLOYEE BENEFITS EXPENSE


Salaries 5,064,557 3,935,414 511,501 274,395Social security contributions 5,856 1,794 2,977 1,794Contribution to defined contribution plan 213,516 98,282 63,711 34,800Others 691,750 581,388 29,624 15,154

5,975,679 4,616,878 607,813 326,143

Included in the above are directors’ emoluments of the Group and of the Company amounted to RM951,406 (2011: RM918,054) and RM18,720 (2011: RM72,300) respectively.

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30. RELATED PARTY DISCLOSURES

The Group and the Company have the following transactions with the following related parties at negotiated terms agreed between the parties during the financial year:-

2012 2011Group RM RM Sales to a corporate shareholder 661,134 773,091Purchase from a corporate shareholder 44,368 82,624Licensing fee paid to a corporate shareholder 215,285 186,000Commission paid to a corporate shareholder 27,782 35,672Sales to a company in which a director of a subsidiary company has interest 357,200 –

Company

Dividend received from a subsidiary company – 4,425,971Licensing fee paid to a corporate shareholder 215,285 186,000

The outstanding balances arising from related party transactions as at the reporting date were disclosed in Note 12, 14,

15 and 23 to the Financial Statements.

The remuneration of Directors and other members of key management personnel during the financial years are as follow:-

2012 2011Group RM RM

Directors’ fee 370,195 320,000Salaries, wages and other emoluments 1,190,973 909,382Defined contribution plans 40,332 8,672

1,601,500 1,238,054

Company

Directors’ fee 336,000 320,000Salaries, wages and other emoluments 251,907 72,300Defined contribution plans 27,982 –

615,889 392,300

31. SUMMARY EFFECTS OF ACQUISITION AND INCORPORATION OF SUBSIDIARY COMPANIES

During the financial year, the Company and a non-controlling interest had incorporated a subsidiary company, Ideal Laminar Pte. Ltd., for a total consideration of RM127. As a result of the incorporation, the Company owned 51% of paid up capital of Ideal Laminar Pte. Ltd.

During the financial year, the Company had also acquired 51% of the paid-up capital of Lumimark Sdn Bhd (formerly known as Awan Idaman Sdn Bhd) for a total purchase consideration of RM50,050. From the date of the acquisition to 31 December, the subsidiary company contributed net loss of RM75,772.

If the acquisition had occurred on 1 January 2012, the Group’s revenue and profit for the financial year would have been RM24,387,938 and RM273,223 respectively.



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31. SUMMARY EFFECTS OF ACQUISITION AND INCORPORATION OF SUBSIDIARY COMPANIES (CONT’D)

The fair value of the assets acquired and liabilities assumed as at acquisition date were:

Group 2012 2011

RM RMNet liabilities acquired: Cash and bank balances 100 –Payables (630) –Amount due to a Director (2,300) –

Fair value of total net liabilities (2,830) –

Add: Non-controlling interest 1,387 –

Group’s share of net liabilities (1,443) –Goodwill on acquisition 51,493 –

Total cost of acquisition 50,050 –Less: Cash and cash equivalents of a subsidiary company acquired (100) – Net cash outflow from the Group 49,950 –

Subsequent to the acquisition, the Company had further subscribed the new issued share capital of RM1,224 in the

subsidiary company. The subscription of new issued share capital in the subsidiary company does not change the effective interest as the non-controlling interest has subscribed the new issued share capital to maintain the same equity interest.

32. RENTAL COMMITMENTS

The future contractual rental commitments are as follows:- Group Company 2012 2011 2012 2011 RM RM RM RM

Within one year 300,565 320,945 45,600 54,600Later than one year but not more than 5 years 108,200 388,398 – 45,600

408,765 709,343 45,600 100,200

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33. LICENSING FEES COMMITMENTS

The Company enters into a licensing agreement with its corporate shareholder, Ideal Jacobs Corporation, and the payment of the contractual licensing fees commitment are as follows:-

1st payment of USD50,000 to be made before 31.12.2010 2nd payment of USD60,000 to be made before 31.10.2011 3rd payment of USD70,000 to be made before 31.10.2012 4th payment of USD80,000 to be made before 31.10.2013 5th payment of USD90,000 to be made before 31.10.2014

Subsequent to 31 October 2014, an annual payment of USD100,000 shall be made before 31 October of each year until the licensing agreement has been terminated.

The 1st payment of the license fee has been waived by its holding company.

34. SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR

(a) On 8 February 2012, a subsidiary company, IJT, had commenced relocation of its production facilities to IJX as a results of the production in IJT was adversely affected by the flood in Thailand since November 2011.

(b) On 6 June 2012, the Company had acquired 51% of paid-up capital of Awan Idaman Sdn Bhd for a total purchase consideration of RM50,050.

(c) On 4 July 2012, the Company had announced the proposed renounceable rights issue of up to 60,000,500 new ordinary shares of RM0.10 each in the Company (“Rights Shares”) together with up to 60,000,500 free detachable warrants (“Warrants”) on the basis of (1) Rights Share for every two (2) existing ordinary shares of RM0.10 each held in the Company (“IJM Shares”) together with one (1) Warrant for every Rights Shares subscribed at an indicative issue price of RM0.20 per Rights Share and at an entitlement date to be determined later and proposed exemption for Ideal Jacobs Corporation, Andrew Conrad Jacobs and persons acting in concert with them under Practice Note 9, Paragraph 16.1 of the Malaysia Code on Take-Overs and Mergers, 2010 from the obligation to undertake a mandatory general offer for all the remaining IJM Shares not already owned by them pursuant to their subscription of the Rights Shares in relation to the Proposed Rights Issue with Warrants (“Proposal”).

(d) On 8 August 2012, a subsidiary company, IJX had incorporated a wholly-owned subsidiary company, Suzhou Ideal Jacobs Corporation, a company incorporated in PRC.

(e) On 27 August 2012, a subsidiary company, Awan Idaman Sdn Bhd had changed its name to Lumimark Sdn Bhd.

(f) On 13 September 2012, the Company had announced that the Proposal will not be submitted as previously announced and the Company is deliberating on amending certain terms of the Proposal due to changes in the investment climate and the funding requirements of the Company. Further announcement on the amendments to the terms of the Proposal will be announced in due course.

(g) On 4 October 2012, the Company had incorporated a 51% owned subsidiary company, Ideal Laminar Pte Ltd., a company incorporated in Singapore.

(h) On 15 November 2012, a subsidiary company, IJT, had commenced its members’ voluntary winding up proceeding pursuant to Section 1236 of the Civil and Commercial Code of the Thailand Act and Article 19 of the Articles of Association of IJT.



75


35. SIGNIFICANT EVENT SUBSEQUENT TO REPORTING DATE

On 14 January 2013, a subsidiary company, Ideal Laminar Pte Ltd had incorporated a 100% owned subsidiary company, Ideal Laminar (Suzhou) Ltd. Co, a company incorporated in PRC, which in turn is a 51% effective owned subsidiary company of the Company.

36. OPERATING SEGMENT

Business Segment

For management purposes, the Group is organised into business units based on their products, and has four reportable products segments as follows:-

(a) Industrial labels (including nameplates and overlays)

Labels are referred to a function portion of a pressure sensitive construction consisting of the face material and adhesive, and die-cut into various shapes

(b) Laser/die-cut products Laser/die-cut are referred to perform die-cut and laser cut process on various materials

(c) Fabrication of plastic parts Fabrication of plastic parts are referred to complement the core business of the Company in manufacture of industrial labels and nameplates and die-cut products.

(d) Trading of non-core products Trading of non-core products are mainly the supply of metal parts that are manufactured by third parties, trading of information technologies (“IT”) products, electric vehicles and photoluminescent products/services.

The management monitors the operating results of its business units separately for the purpose of making decisions

about resources allocation and performance assessment. Segment performance is evaluated based on operating profit or loss which, in certain respects as explained in the table below, is measured differently from operating profit or loss in the consolidated financial statements.

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36. OPERATING SEGMENT (CONT’D)

Business Segment (cont’d)

Transfer prices between operating segments are on negotiated basis.

Laser/ Fabrication Trading of Industrial die-cut of plastic non-core 2012 labels product parts products Elimination Total RM RM RM RM RM RM

Revenue:-External customers 8,148,347 8,367,655 3,707,036 4,164,900 – 24,387,938Inter-segment 91,184 1,244,327 163,124 524,486 (2,023,121) –

8,239,531 9,611,982 3,870,160 4,689,386 (2,023,121) 24,387,938

Results:Interest income 95,114Finance costs (131,059)Depreciation (650,530)Other non-cash expenses (a) (395,915)Taxation (721,129)Segment profit 272,433

Assets:-Additions to non-current assets (b) 681,536Unallocated corporate assets 22,269,913

Liabilities:-Unallocated corporate liabilities 4,676,019

2011

Revenue:-External customers 7,838,589 5,977,124 5,439,649 792,020 – 20,047,382Inter-segment 18,603 – – – (18,603) –

7,857,192 5,977,124 5,439,649 792,020 (18,603) 20,047,382

Results:Interest income 76,907Finance costs (12,384)Depreciation (607,608)Other non-cash expenses (a) (165,083)Taxation (926,361)Segment loss (2,910,878)

Assets:-Additions to non-current assets (b) 2,108,226Unallocated corporate assets 20,589,777




77



Business Segment (cont’d)

Laser/ Fabrication Trading of Industrial die-cut of plastic non-core 1.1.2011 labels product parts products Elimination Total RM RM RM RM RM RM

Assets:-Unallocated corporate assets 16,934,982


Notes:

(a) Other non-cash (expenses)/income consist of the following items:-


Waiver of debts on amount due from a director 2,300 –Inventories written down (90,066) (27,234)Goodwill written off (51,493) (146,779)Unrealised (loss)/gain on foreign exchange (76,034) 32,354Property, plant and equipment written off (130,517) (23,424)Loss on disposal of property, plant and equipment (39,921) –

Bad debts written off (10,184) –

(395,915) (165,083)

(b) Additions to non-current assets consist of:-


Property, plant and equipment 572,715 2,108,226 Other investment 108,821 –

681,536 2,108,226

(c) It was not practicable to separate out the segment results for its business segments as the Directors of the Company are of the opinion that excessive costs would be incurred.

(d) Unallocated assets and liabilities were jointly used by four products segments.

(e) Inter-segment revenues are eliminated on consolidation.

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Geographical information

Revenue and non-current assets information based on the geographical location of customers and assets respectively are as follows:-

Group 2012 2011 1.1.2011 Non-current Non-current Non-current Revenue assets Revenue assets assets RM RM RM RM RM

PRC 15,526,213 5,142,650 13,976,403 5,026,476 3,067,176Hong Kong 7,947 – 35,953 – –United States America 1,207,290 – 1,464,692 – –England 19,988 – 4,743 – –Thailand 1,580,368 – 1,498,649 593,444 706,161Malaysia 2,283,036 200,654 458,787 38,844 204,595Netherlands 333,334 – 274,257 – –Taiwan 32,290 – 53,422 – –Philippines – – 61,308 – –Singapore 1,755,779 – 1,577,407 – –Korea 6,000 – – – –India 36,903 – 3,011 – –Canada 65,301 – 53,193 – –Brazil 945,468 – 556,288 – –Mexico – – 15,572 – –Germany 1,521 – 3,802 – –France 6,083 – 3,298 – –Japan 75,946 – 6,597 – –Australia 95,262 – – – –New Zealand 91,688 – – – –Sweden 291,946 – – – –Israel 11,166 – – – –Poland 11,951 – – – –Slovenia 2,458 – – – –

24,387,938 5,343,304 20,047,382 5,658,764 3,977,932

Non-current assets information presented above consist of the following items as presented in the consolidated statement

of financial position:-

Group 2012 2011 1.1.2011 RM RM RM

Property, plant and equipment 5,234,483 5,658,764 3,831,153Goodwill on consolidation – – 146,779Other investment 108,821 – –

5,343,304 5,658,764 3,977,932



79



Information about major customers

2012 Revenue from one major customer amounted to RM2,657,341 arising from sales by the industrial labels segment.

2011

No revenue from one major customer during the financial year.

37. EXPLANATION AND FINANCIAL IMPACTS ON TRANSITION TO MFRS

As stated in Note 2.4 to the Financial Statements, 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 5 to the Financial Statements 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 MFRS statements of financial position at 1 January 2011 (the date of transition to MFRSs).

The financial impacts of the transition to MFRS on equity, total comprehensive income and reported cash flows are presented in this section and are further explained in the following notes.

37.1 First-time adoption exceptions and exemptions applied

Upon transition, MFRS 1 permits exceptions and exemptions from full retrospective application of MFRS. The Group and the Company have applied the mandatory exceptions and certain optional exemptions, as set out below.

Mandatory exceptions to the retrospectively application adopted by the Group and the Company:

i. Financial assets and liabilities that have been derecognised before the date of transition to MFRS under FRS have not been recognised under MFRS unless they qualify for recognition as a result of a later transaction or event.

ii. The Group and the Company have only applied hedge accounting in the opening statement of financial position if all the requirements in MFRS 139 were met at the date of transition.

iii. The Group and the Company have used estimates under MFRS that are consistent with those applied under FRS unless there is objective evidence those estimates were in error.

iv. The Group has applied MFRS 127 prospectively in relation to requirements on non-controlling interests.

Optional exemptions applied by the Group and the Company:

i. The Group has elected not to apply MFRS 3 Business Combinations retrospectively to business combinations that occurred before the date of transition. The Group has elected to not restate business combinations that occurred before the date of transition to MFRS. At 1 January 2011, the goodwill under FRS relates to the Thailand operations. Its carrying amount of goodwill has not been adjusted for any intangible assets subsumed within goodwill or for intangible assets that do not qualify for recognition under MFRS. At that date, it was tested for impairment based on cash flow forecasts made at that date. No impairment was identified. Therefore the carrying amount of goodwill under FRS is recognised upon transition to MFRS.

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37. EXPLANATION AND FINANCIAL IMPACTS ON TRANSITION TO MFRS (CONT’D)

37.1 First-time adoption exceptions and exemptions applied (cont’d)

Optional exemptions applied by the Group and the Company (cont’d):

ii. The Group has not applied MFRS 121 retrospectively to fair value adjustments and goodwill from business combinations that occurred before the date of transition to MFRS. Such fair value adjustments and goodwill are treated as assets and liabilities of the parent rather than the assets and liabilities of the acquiree. Therefore, those assets and liabilities are already expressed in the functional currency of the parent or are non-monetary foreign currency items and no further translation difference occurs.

iii. The Group has elected to apply MFRS 123 prospectively to borrowing costs relating to qualifying assets for which the commencement date for capitalisation is on or after the date of transition.

iv. The Group has elected not to reset the cumulative translation differences for all foreign operations as at date of transition to MFRS.

v. The Company has elected to use the carrying amount under FRS as the date of transition as the cost of investment in subsidiary companies.

Other than the adoption of the above mandatory exceptions and optional exemptions, no other mandatory exceptions and optional exemptions that are applicable to the Group and the Company.

37.2 Reconciliation of equity

There is no material differences between the equity presented under MFRSs and the equity presented under FRSs.

37.3 Reconciliation of total comprehensive income for the financial year ended 31 December 2011

There is no material differences between the total comprehensive income presented under MFRSs and the total comprehensive income presented under FRSs.

37.4 Material adjustments to the statements of cash flows for the financial year ended 31 December 2011

There is no material differences between the statements of cash flows presented under MFRSs and the statements of cash flows presented under FRSs.

37.5 Impairment losses recognised at the date of transition

The Group and the Company have applied MFRS 136 in determining whether any impairment losses arose/ reversal at the date of transition to MFRS. No impairment losses were identified/ reversed.



81

Realised and unrealised profits and losses

With the purpose of improving transparency, Bursa Malaysia Securities Berhad had on 25 March 2010, and subsequently on 20 December 2010, issued directives which require all listed corporations to disclose the breakdown of (accumulated losses)/retained earnings into realised and unrealised on Group and Company basis in the annual audited financial statements.

The breakdown of the Group’s and of the Company’s (accumulated losses)/retained earnings into realised and unrealised profits or losses are analysed as follows:-


Total (Accumulated losses)/ Retained profits of the Company and its subsidiary companies - realised (680,876) 2,778,776 6,584,544 (6,959,576) (1,699,122) (651,022) - unrealised (76,034) 32,354 (40,957) (246,738) 93,997 167,337

(756,910) 2,811,130 6,543,587 (7,206,314) (1,605,125) (483,685)

Add: Consolidated adjustment 642,714 (2,786,521) (3,253,498) – – –

(Accumulated losses)/total retained profits as per consolidated statement of financial position (114,196) 24,609 3,290,089 (7,206,314) (1,605,125) (483,685)

The determination of realised and unrealised profits is complied based on Guidance of Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure pursuant to Bursa Malaysia Securities Berhad Listing Requirements, issued by the Malaysian Institute of Accountants on 20 December 2010.

The disclosure of realised and unrealised profits and losses above is solely for complying with the disclosure requirements stipulated in the directive of Bursa Malaysia and should not be applied for any other purposes.

SUPPLEMENTARy INFORMATION– 31 December 2012

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Authorised Share Capital : RM25,000,000.00 divided into 250,000,000 ordinary shares of RM0.10 each

Issued and Paid-Up Capital : RM12,000,100.00 divided into 120,001,000 ordinary shares of RM0.10 each

Class of Shares : Ordinary Shares of RM0.10 each fully paid

Voting Rights : One vote per ordinary share

SIZE OF SHAREHOLDINGSAs at 22 April 2013

Size of Holdings No. of Shareholders Total Holdings % Less than 100 shares 1 99 0.00100 - 1,000 shares 295 276,201 0.231,001 - 10,000 shares 292 2,024,000 1.6910,001 - 100,000 shares 405 16,211,100 13.51100,001 - below 5% of issued shares 84 37,598,600 31.335% and above of issued shares 2 63,891,000 53.24

1079 120,001,000 100.00

DIRECTORS’ SHAREHOLDINGSAs at 22 April 2013

No. of Shares HeldNo. Name Direct % Indirect %

1. Andrew Conrad Jacobs – – 36,454,600 (1) 30.382. Meng Bin – – 27,436,400 (2) 22.863. Chen Shien Yee – – – –4. Hing Kim Tat – – – –5. Koong Lin Loong – – – –6. Tan Kean Huat 32,000 0.0267 – –7. Eugene Lee Cheng Hoe – – – –

Notes(1) Deemed interested by virtue of being the sole shareholder in Ideal Jacobs Corporation pursuant to Section 6A of the

Companies Act, 1965(2) Deemed interested by virtue of the shareholding of his spouse, Foo Chong Lee pursuant to Section 134(12)(c) of the

Companies Act, 1965

SUBSTANTIAL SHAREHOLDERSAs at 22 April 2013

Direct Interest Deemed InterestNo. Name Shares % Shares %

1. Ideal Jacobs Corporation 36,454,600 30.38 – –2. Andrew Conrad Jacobs – – 36,454,600 (1) 30.383. Foo Chong Lee 27,436,400 22.86 – –4. Meng Bin – – 27,436,400 (2) 22.86

Notes(1) Deemed interested by virtue of being the sole shareholder in Ideal Jacobs Corporation pursuant to Section 6A of the

Companies Act, 1965(2) Deemed interested by virtue of the shareholding of his spouse, Foo Chong Lee pursuant to Section 134(12)(c) of the

Companies Act, 1965

ANALySIS OF SHAREHOLDINGSAs at 22 April 2013



83

THIRTY (30) LARGEST SHAREHOLDERSAs at 22 April 2013

NO. OF SHARES PERCENTAGENO. NAME HELD (%)

1. Ideal Jacobs Corporation 36,454,600 30.382. Foo Chong Lee 27,436,400 22.863. Lim Chee Pin 4,455,000 3.714. Foo Chong Ming 2,250,000 1.875. Maybank Securities Nominees (Tempatan) Sdn Bhd - Pledged Securities Account For Teo Ker-Wei 1,752,200 1.466. Foo Chong Ming 1,500,000 1.257. RHB Nominees (Asing) Sdn Bhd - DBS Vickers Secs (S) Pte Ltd For Kris Kittipanachol 1,285,000 1.078. Lee Ah Chuan 1,178,200 0.989. Public Nominees (Tempatan) Sdn Bhd - Pledged Securities Account For Ling Yew Yieng 1,000,000 0.8310. ECML Nominees (Tempatan) Sdn. Bhd - Pledged Securities Account For Kwong Ming Kwei 1,000,000 0.8311. Yoong Sin Kuen 997,800 0.8312. RHB Capital Nominees (Tempatan) Sdn Bhd - Pledged Securities Account For Low Kim Peng 805,000 0.6713. Ho Yoke Chin 700,000 0.5814. Foo Chong Chin 687,000 0.5715. Teo Kwee Hock 667,600 0.5616. Lee Kin Kit 610,800 0.5117. Loong Ding Tong 600,000 0.5018. Maybank Nominees (Tempatan) Sdn Bhd - Pledged Securities Account For Lee Siow Shan 595,000 0.5019. Kong Food Kim 550,000 0.4620. Citigroup Nominees (Asing) Sdn Bhd - Exempt An For Morgan Stanley Smith Barney Llc 525,000 0.4421. Maybank Nominees (Tempatan) Sdn Bhd Ooi Bee Ling 500,000 0.4222. Maybank Securities Nominees (Tempatan) Sdn Bhd - Pledged Securities Account for Ahmad Kamarulzaman Bin Ahmad Badaruddin 500,000 0.4223. Lee Swee Guan 481,400 0.4024. Ong Bok Lim 464,100 0.3925. Seow Chye Hiap 455,000 0.3826. Success Secrets Sdn. Bhd. 450,000 0.3727. Maybank Securities Nominees (Tempatan) Sdn Bhd - Pledged Securities Account For Cheah Weng Loong 430,000 0.3628. Quek Ching Hong 430,000 0.3629. Zainal Abidin Bin Ibrahim 421,200 0.3530. Chaw Thet Hee 400,000 0.33

ANALySIS OF SHAREHOLDINGSAs at 22 April 2013 (cont’d)

ANNUAL REPORT

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85

NOTICE IS HEREBY GIVEN THAT the Fourth Annual General Meeting (“AGM”) of the Company will be held at Tulip Room, 1st Floor, Intercontinental Hotel, 165, Jalan Ampang, 50450 Kuala Lumpur on Thursday, 20 June 2013 at 3.00 p.m. for the purpose of transacting the following businesses:-

AGENDA

1. To receive the Audited Financial Statements of the Company for the financial year ended 31 December 2012 together with the Directors’ and Auditors’ Reports thereon.

2. To approve the payment of Directors’ Fees amounting to RM264,000 for the financial year ended 31

December 2012. 3. To re-elect the following Directors retiring in accordance with the Company’s Articles of Association

and being eligible, have offered themselves for re-election:-

(i) Mr. Koong Lin Loong (Article 83)

(ii) Mr. Tan Kean Huat (Article 90)

(iii) Mr. Chen Shien Yee (Article 90)

(iv) Mr. Eugene Lee Cheng Hoe (Article 90)

4. To re-appoint Messrs SJ Grant Thornton as Auditors for the financial year ending 31 December 2013 and to authorise the Board of Directors to fix their remuneration.

AS SPECIAL BUSINESS

To consider, and if thought fit, to pass the following resolutions:- 5. AUTHORITY TO ALLOT AND ISSUE SHARES PURSUANT TO SECTION 132D OF THE

COMPANIES ACT, 1965

“THAT pursuant to Section 132D of the Companies Act, 1965 and subject to the approvals from the relevant governmental and/or regulatory authorities, the Directors be and are hereby empowered to issue shares in the Company from time to time and upon such terms and conditions and for such purposes as the Directors may in their absolute discretion deem fit, provided that the aggregate number of shares issued pursuant to this resolution does not exceed ten (10) per cent of the issued share capital of the Company for the time being,

AND THAT the Directors be and are also hereby empowered to obtain the approval from the Bursa Malaysia Securities Berhad for the listing of and quotation for the additional shares so issued AND THAT such authority shall continue in force until the conclusion of the next AGM of the Company.”

6. PROPOSED RENEWAL OF SHAREHOLDERS’ MANDATE FOR RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING NATURE (“PROPOSED RENEWAL OF SHAREHOLDERS’ MANDATE”)

“THAT subject to the provisions of the ACE Market Listing Requirements of Bursa Malaysia Securities Berhad, approval is hereby given for the Company and/or its subsidiary companies to enter into recurrent related party transactions of a revenue or trading nature as set out in Section 2.2.1 (i) of the Circular to Shareholders dated 29 May 2013, provided that such transactions are necessary for the day-to-day operations and are undertaken in the ordinary course of business, on transaction price, and on normal commercial terms which are not more favourable to the related party than those generally available to the public and are not detrimental to the minority shareholders’ of the Company.

NOTICE OF ANNUAL GENERAL MEETING

Please referNote A.

OrdinaryResolution 1








ANNUAL REPORT

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AND THAT the Proposed Renewal of Shareholders’ Mandate, unless revoke or varied by the Company in general meeting, shall continue in force until the next AGM of the Company or the date by which the next AGM of the Company is required by law to be held, whichever is earlier;

AND THAT the Directors be and are hereby authorised to complete all and do all such acts and things as they may consider expedient or necessary or in the interest of the Company to give effect to the Proposed Renewal of Shareholders’ Mandate.”

7. PROPOSED NEW SHAREHOLDERS’ MANDATE FOR RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING NATURE (“PROPOSED NEW SHAREHOLDERS’ MANDATE”)

“THAT subject to the provisions of the ACE Market Listing Requirements of Bursa Malaysia Securities Berhad, approval is hereby given for the Company and/or its subsidiary companies to enter into recurrent related party transactions of a revenue or trading nature as set out in Section 2.2.1 (ii) of the Circular to Shareholders dated 29 May 2013, provided that such transactions are necessary for the day-to-day operations and are undertaken in the ordinary course of business, on transaction price, and on normal commercial terms which are not more favourable to the related party than those generally available to the public and are not detrimental to the minority shareholders’ of the Company.

AND THAT the Proposed New Shareholders’ Mandate, unless revoke or varied by the Company in general meeting, shall continue in force until the next AGM of the Company or the date by which the next AGM of the Company is required by law to be held, whichever is earlier;

AND THAT the Directors be and are hereby authorised to complete all and do all such acts and things as they may consider expedient or necessary or in the interest of the Company to give effect to the Proposed New Shareholders’ Mandate.”

8. PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION

“THAT the proposed amendments to the Articles of Association of the Company as set out in the Appendix I be and is hereby approved and adopted.”

9. To transact any other business which may properly be transacted at an AGM for which due notice

shall have been given.

By Order of the Board

LIM SECK WAH (MAICSA 0799845)TANG CHI HOE (KEVIN) (MAICSA 7045754)Company Secretaries

Dated: 29 May 2013Kuala Lumpur

Notes:-

A. The agenda 1 is meant for discussion only as the provision in the Company’s Articles of Association does not require a formal approval of the shareholders and hence, is not put forward for voting.

1. For the purpose of determining a member who shall be entitled to attend, speak and vote at the Fourth AGM, the Company

shall be requesting the Record of Depositors as at 17 June 2013. Only a depositor whose name appears on the Record of Depositors as at 17 June 2013 shall be entitled to attend the said meeting or appoint proxies to attend, speak and vote on his/her behalf.

NOTICE OF ANNUAL GENERAL MEETING(cont’d)


SpecialResolution



87

2. A proxy may but need not be a member of the Company and the provisions of Section 149(1)(a) & (b) of the Companies Act, 1965 shall not apply to the Company. A member may appoint up to two (2) proxies to attend and vote at the same meeting. Where a member appoints two (2) proxies, the appointment shall be invalid unless he/she specifies the proportions of his/her holdings to be represented by each proxy in a poll and the first named proxy shall be entitled to vote on a show of hands.

3. Where a member is an authorised nominee as defined under the Central Depositories Act 1991, it may appoint at least

one (1) proxy in respect of each securities account it holds with ordinary shares of the Company standing to the credit of the said securities account.

4. Where a member of the company is an exempt authorised nominee which holds ordinary shares in the company for

multiple beneficial owners in one securities account (“omnibus account”), there is no limit to the number of proxies which the exempt authorized nominee may appoint in respect of each omnibus account it holds.

5. The instrument appointing a proxy, in the case of an individual, shall be signed by the appointer or by his attorney duly

authorised in writing, and in the case of a corporation, shall be executed under its Common Seal or under the hand of an officer or attorney of the corporation duly authorised.

6. The Form of Proxy shall be deposited at the Registered Office of the Company at Level 15-2, Bangunan Faber Imperial

Court, Jalan Sultan Ismail, 50250 Kuala Lumpur not less than forty-eight (48) hours before the time set for holding the meeting or any adjournment thereof.

Explanatory Notes on Special Business

(i) Ordinary Resolution 7 – Authority to allot and issue new shares

The Company wishes to renew the mandate on the authority to issue shares pursuant to Section 132D of the Companies Act 1965 at the Fourth AGM of the Company.

A general mandate has been granted by the shareholders of the Company at the Third AGM on 21 June 2012. The previous mandate granted by the shareholders had not been utilised and hence no proceed was raised therefrom.

The Company continues to consider opportunities to broaden its earnings potential. If any of the expansion/diversification proposals involves the issue of new shares, the Directors, under certain circumstance when the opportunity arises, would have to convene a general meeting to approve the issue of new shares even though the number involved may be less than 10% of the issue capital.

In order to avoid any delay and costs involved in convening a general meeting to approve such issue of shares, it is thus considered appropriate that the Directors be empowered to issue and allot shares at any time to such persons/corporations in their absolute discretion for the purpose of funding future investment(s), working capital and/or acquisitions.

(ii) Ordinary Resolution 8 – Proposed Renewal of Shareholders’ Mandate

(iii) Ordinary Resolution 9 – Proposed New Shareholders’ Mandate

The explanatory notes on the Ordinary Resolutions 8 and 9 are set out in the Circular to Shareholders dated 29 May 2013.

(iv) Special Resolution – Proposed Amendments to the Articles of Association

The proposed amendments to the Articles of Association of the Company are to comply with the amendments to the ACE Market Listing Requirements of Bursa Malaysia Securities Berhad.


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APPENDIX I

Proposed Amendments to the Articles of Association of the Company

Article no. Existing Provisions Amended Provisions

Article 2(Definition)

– “Exempt Authorised Nominee”means an authorized nominee as defined under the Central Depositories Act which is exempted from compliance with the provisions of Section 25A(1) of the Central Depositories Act.

Article 76(Instrument appointing proxy to be in writing)

The instrument appointing a proxy shall be in writing under the hand of the appointor or of his attorney duly authorised in writing or, if the appointor is a corporation, either under the corporation’s common seal or under the hand of an officer or attorney duly authorised. The Directors may but shall not be bound to require evidence of the authority of any such attorney or officer. A proxy may but need not be a Member of the Company and the provisions of Section 149(1)(a)&(b) of the Act shall not apply to the Company. The instrument appointing a proxy shall be deemed to confer authority to demand or join in demanding a poll.

The instrument appointing a proxy shall be in writing under the hand of the appointor or of his attorney duly authorised in writing or, if the appointor is a corporation, either under the corporation’s common seal or under the hand of an officer or attorney duly authorised. The Directors may but shall not be bound to require evidence of the authority of any such attorney or officer. A proxy may but need not be a Member of the Company and the provisions of Section 149(1)(a)&(b) of the Act shall not apply to the Company. There shall be no restriction as to the qualification to the proxy. A proxy appointed to attend and vote at a meeting of the Company shall have the same rights as the member to speak at the meeting. The instrument appointing a proxy shall be deemed to confer authority to demand or join in demanding a poll.

Article 77(Form of Proxy)Note 4

Where a member of the company is an authorised nominee as defined under the Central Depositories Act, it may appoint at least one (1) proxy in respect of each securities account it holds with ordinary shares of the company standing to the credit of the said securities account.

Where a member of the company is an authorised nominee as defined under the Central Depositories Act, it may appoint at least one (1) proxy but not more than two (2) proxies in respect of each securities account it holds with ordinary shares of the company standing to the credit of the said securities account. The appointment of two (2) proxies in respect of any particular securities account shall be invalid unless the authorised nominee specifies the proportion of its shareholding to be represented by each proxy.

Article 77(Form of Proxy) Note 6(new)

– Where a member of the company is an exempt authorised nominee which holds ordinary shares in the company for multiple beneficial owners in one securities account (“Omnibus Account”), there is no limit to the number of proxies which the exempt authorised nominee may appoint in respect of each Omnibus Account it holds. The appointment of two (2) or more proxies in respect of any particular Omnibus Account shall be invalid unless the exemptauthorised nominee specifies the proportion of its shareholding to be presented by each proxy.




89

OTHER DISCLOSURE REQUIREMENTS

1) Utilisation of proceeds

The gross proceeds of RM8.10 million raised from the public issues pursuant to the listing of the Company on the ACE Market of Bursa Securities (“Listing”) has been utilised in the following manner:-

Timeframe Actual for utilisation Original Revised Actual balance from the date proposed IPO utilisation as unutilised as of EGM utilisation Proceeds at 31.12.2012 at 31.12.2012 21.06.2012 (RM’000) (RM’000) (RM’000) (RM’000) Establish an industrial label manufacturing plant in Suzhou, PRC 1,500 (1,500) Nil Nil Nil

Launch a new production line for engineered thermoplastic composite products in our factory located at Samut Prakan Province, Thailand 1,000 (1,000) Nil Nil Nil

Establishment of an industrial label manufacturing plant in the northern region of Malaysia 800 (800) Nil Nil Nil

Working capital for the Group 1,800 3,300 (4,900) 200(1) Within 6 months

Estimated listing expenses 3,000 – (3,000) Nil Nil

Total 8,100 (7,900) 200

(1) Proceeds are placed in fixed deposit with a bank and has yet to be utilised.

2) Share buy-back

The Company does not have a share buy-back programme in place and therefore did not buy back any of its shares during the financial year.

3) Shares Issuance, Options, Warrants or Convertible Securities

There were no shares issuance, options, warrants or convertible securities issued or exercised during the financial year.

4) Employees’ Share Issuance Scheme

The Company has not established an Employees’ Share Issuance Scheme to date.

5) Depository Receipt (“DR”) Programme

The Company did not sponsor any DR Programme during the financial year.

6) Imposition of Sanctions/Penalties

There were no sanctions and/or penalties imposed on the Group, Directors or management by the relevant regulatory bodies during the financial year.

ANNUAL REPORT

2 0 1 2

90

OTHER DISCLOSURE REQUIREMENTS(cont’d)

7) Non-Audit Fees

An amount totaling RM10,000 for non-audit fees was paid to the external auditors, Messrs SJ Grant Thornton during the financial year.

8) Variation in Results

There were no deviation by 10% or more between the profit after taxation in the announced unaudited consolidated income statement for the financial year ended 31 December 2012.

There was no profit estimate, forecast or projection issued by the Company or its subsidiaries during the financial year ended 31 December 2012.

9) Profit Guarantee

The Company did not receive any form of profit guarantee during the financial year.

10) Material Contracts and Contracts relating to Loans

There were no material contracts entered into by the Group which involves directors and substantial shareholders during the financial year.

11) Recurrent related Party Transactions

Breakdown of the aggregate value of transactions conducted pursuant to shareholders mandate during the financial year where the aggregrate value is equal or more than threshold prescribed under Rule 10.09(1).

Transacting party Nature of Recurrent Related Party Transaction with Ideal Jacobs Group

Interested Related Party

Actual value transacted for financial

year ended 31 December 2012

(RM’000)

Ideal Jacobs (Xiamen)Corporation (“IJX”) andIdeal Jacobs Corporation,USA (“IJUS”)(1)

• IJXsellsfinishedproducts,label(screenprint), roll label, gasket, foam, insulator, metal parts, injection parts, assembly, semi-finished printed labels, other semi-finished (components), cable to IJUS

Andrew Conrad Jacobs(2)

RM 661

Ideal Jacobs and IJUS(1) • PaymentoflicensingfeefromIdealJacobsto IJUS for Territorial, Licensing and Technical Assistance Agreements whereby Ideal Jacobs acquired the license to use the specified trademark from IJUS and IJUS agreed to provide technical assistance to Ideal Jacobs for the consideration stated therein

Andrew Conrad Jacobs(2)

RM 215

Notes:(1) IJUS is a Major Shareholder of Ideal Jacobs. The principal activities of IJUS are in the sales of industrial labels,

telecom metal and plastic parts, full product design and engineering services, composite plastics and cable assemblies.

(2) Andrew Conrad Jacobs is the Chairman and an Executive Director of Ideal Jacobs. He is also the President and sole shareholder of IJUS.

12) Corporate Social Responsibility (“CSR”)

Ideal Jacobs recognizes the importance of Corporate Social Responsibility towards the society. Hence, on June 2012, Ideal Jacobs with the collaboration of Nirvana Group invited Mr Hou Bin, a well-known paralympian to give a talk on “Be the Champion of Your Life” in Penang, Johor Bahru and Kuala Lumpur. The event was held over 3 days in Malaysia and it is a successful one. Many of the participants leave the hall with a smile and hopes in their life.

IDEAL JACOBS (MALAYSIA) CORPORATION BHD (Company No: 857363 U)(Incorporated in Malaysia)

FORM OF PROXY(Before completing this form please refer to the notes below)

I/We ................................................................................. I/C No./Co. No./CDS A/C No .............................................. (Full name in block letters)

of ................................................................................................................................................................................. (Full address)

being a member/members of IDEAL JACOBS (MALAYSIA) CORPORATION BHD hereby appoint the following person(s):-

Name of proxy, NRIC No. & Address No. of shares to be represented by proxy

1. .......................................................................... ..............................................................................

..........................................................................

2. .......................................................................... ..............................................................................

..........................................................................

or failing him/her, the Chairman of the Meeting as my/our proxy to vote for me/us on my/our behalf at the Fourth Annual General Meeting (“AGM”) of the Company to be held at Tulip Room, 1st Floor, Intercontinental Hotel, 165, Jalan Ampang, 50450 Kuala Lumpur on Thursday, 20 June 2013 at 3.00 p.m. My/our proxy/proxies is/are to vote as indicated below:-

RESOLUTIONS RELATING TO :-FIRST PROXY SECOND PROXY

For Against For Against

Ordinary Resolution 1 – Payment of Directors’ FeesOrdinary Resolution 2 – Re-election of Director, Mr. Koong Lin LoongOrdinary Resolution 3 – Re-election of Director, Mr. Tan Kean Huat Ordinary Resolution 4 – Re-election of Director, Mr. Chen Shien YeeOrdinary Resolution 5 – Re-election of Director, Mr. Eugene Lee Cheng HoeOrdinary Resolution 6 – Re-appointment of Messrs SJ Grant Thornton as Auditors Ordinary Resolution 7 – Authority to issue sharesOrdinary Resolution 8 – Proposed Renewal of Shareholders’ MandateOrdinary Resolution 9 – Proposed New Shareholders’ Mandate Special Resolution – Proposed Amendments to the Articles of Association

(Please indicate with a “√” or “X” in the space provided how you wish your vote(s) to be cast. If no instruction as to voting is given, the proxy will vote or abstain from voting at his/her discretion.)

Dated this………………..day of……………………………2013 ……………………………...... Signature/Common Seal

Notes:- 1. For the purpose of determining a member who shall be entitled to attend, speak and vote at the Fourth AGM, the Company shall be

requesting the Record of Depositors as at 17 June 2013. Only a depositor whose name appears on the Record of Depositors as at 17 June 2013 shall be entitled to attend the said meeting or appoint proxies to attend, speak and vote on his/her behalf.

2. A proxy may but need not be a member of the Company and the provisions of Section 149(1)(a) & (b) of the Companies Act, 1965 shall not apply to the Company. A member may appoint up to two (2) proxies to attend and vote at the same meeting. Where a member appoints two (2) proxies, the appointment shall be invalid unless he/she specifies the proportions of his/her holdings to be represented by each proxy in a poll and the first named proxy shall be entitled to vote on a show of hands.

3. Where a member is an authorised nominee as defined under the Central Depositories Act 1991, it may appoint at least one (1) proxy in respect of each securities account it holds with ordinary shares of the Company standing to the credit of the said securities account.

4. Where a member of the company is an exempt authorised nominee which holds ordinary shares in the company for multiple beneficial owners in one securities account (“omnibus account”), there is no limit to the number of proxies which the exempt authorized nominee may appoint in respect of each omnibus account it holds.

5. The instrument appointing a proxy, in the case of an individual, shall be signed by the appointer or by his attorney duly authorised in writing, and in the case of a corporation, shall be executed under its Common Seal or under the hand of an officer or attorney of the corporation duly authorised.

6. The Form of Proxy shall be deposited at the Registered Office of the Company at Level 15-2, Bangunan Faber Imperial Court, Jalan Sultan Ismail, 50250 Kuala Lumpur not less than forty-eight (48) hours before the time set for holding the meeting or any adjournment thereof.

✄

AFFIXSTAMP

Fold this flap for sealing

Then fold here

1st fold here

The Company Secretary

IDEAL JACOBS (MALAYSIA)CORPORATION BHD(Company No. 857363-U)

Level 15-2, Bangunan Faber Imperial CourtJalan Sultan Ismail

50250 Kuala Lumpur

Documents

(MALAYSIA) CORPORATION BHD