TOMEI AnnualReport2013

8/11/2019 TOMEI AnnualReport2013

1/134

Tomei Consolidated Berhad Annual Report 2013


2/134

TABLE OF

CONTENTS

1

2

7

15

Table of Contents

Financial Highlights

Corporate Information

Corporate Structure

Corporate Profile

Profile of the Board of Directors

Chairmans Statement

Statement on Corporate

Governance

Statement on Corporate

Social Responsibilities

Audit Committee Report

Statement on Risk Management

& Internal Control

Additional Compliance Information

Directors' Responsibility Statement

Financial Statements

List of PropertiesShareholdings Analysis

Notice of Annual General Meeting

Statement Accompanying Notice

of Annual General Meeting

Proxy Form

03

04

06

09

21

22

25

30

31

123

28

120121

127

129


3/134

5 YEARS FINANCIAL

HIGHLIGHTS

5 Years Financial Highlights

Revenue (RM ' 000)

Profit / (Loss) Before Tax (RM ' 000)

Profit / (Loss) Attributable to Owners

of the Parent (RM ' 000)

Total Shareholders' Fund (RM ' 000)

Net Tangible Assets Per Share (RM)

Net Earnings / (Loss) Per Share (Sen)

Gross Dividend Per Share (Sen)

2009

300,890

26,318

18,239

128,712

1.02

14.48

3.00

2010

356,286

30,446

21,381

152,312

1.10

15.63

3.30

2011

505,387

45,705

31,198

183,131

1.32

22.51

3.50

2012

583,157

21,669

14,242

192,397

1.39

10.28

2.00

2013

701,907

(3,736)

(4,405)

186,490

1.35

(3.18)

1.00

TOMEI CONSOLIDATED BERHAD (692959-W)

ANNUAL REPORT 2013

Page2

RM'

00

0

2009Year

2010 2011 2012 2013(10,000)

-

10,000

20,000

30,000

40,000

50,000

Profit / (Loss)

Before Tax

(5.00)

-

5.00

10.00

15.00

20.00

25.00

Sen

Net Earnings / (Loss)Per Share

2009 2010 2011 2012 2013Year

(5,000)

-

5,000

10,000

15,000

20,000

25,000

30,000

35,000

RM'

00

0

2009 2010 2011 2012 2013Year

Profit / (Loss) Attributableto Owners of the Parent

-

200,000

400,000

600,000

800,000

2009Year

2010 2011 2012 2013

RM'

000

Revenue

2009 2010 2011 2012 2013Year

Total Shareholders'Fund

-

50,000

100,000

150,000

200,000

RM'

000

-

0.20

0.40

0.60

0.80

1.00

1.20

1.40

RM

Net Tangible AssetsPer Share

2009 2010 2011 2012 2013Year

2009 2010 2011 2012 2013Year

-

0.50

1.00

1.50

2.00

2.50

3.00

3.50

4.00

Sen

Gross DividendPer Share


4/134

CORPORATE

INFORMATIONBOARD OF DIRECTORS

Tan Sri Datuk Ng Teck FongGroup Executive Chairman

Datuk Ng Yih PyngGroup Managing Director

Raja Dato Seri Aman Bin Raja Haji AhmadSenior Independent Non-Executive Director

Datin Nonadiah Binti Abdullah

Independent Non-Executive Director

M Chareon Sae Tang @ Tan Whye AunIndependent Non-Executive Director

Lau Tiang HuaIndependent Non-Executive Director

Datin Choong Chow MooiGroup Executive Director

Ng Yih ChenGroup Executive Director

Ng Sheau Chyn

Group Executive Director

Ng Sheau YuenGroup Executive Director

AUDIT COMMITTEE

Lau Tiang HuaChairman, Independent Non-Executive Director



RISK MANAGEMENT COMMITTEE

Lau Tiang HuaChairman, Independent Non-Executive Director




REMUNERATION COMMITTEE

M Chareon Sae Tang @ Tan Whye AunChairman, Independent Non-Executive Director



NOMINATION COMMITTEE

M Chareon Sae Tang @ Tan Whye AunChairman, Independent Non-Executive Director

Datin Nonadiah Binti AbdullahIndependent Non-Executive Director


COMPANY SECRETARY

Teoh Kok Jong (LS 04719)

REGISTERED OFFICE

Suite B13A-4, Tower B, Level 13A,

Northpoint Offices, Mid Valley City,

No. 1, Medan Syed Putra Utara,

59200 Kuala Lumpur.

Tel: 03-2287 1608

Fax: 03-2287 6608

PRINCIPAL PLACE OF BUSINESS

8-1, Jalan 2/131A,

Project Jaya Industrial Estate,

Batu 6, Jalan Kelang Lama,

58200 Kuala Lumpur.Tel: 03-7784 8136

Fax: 03-7784 8140

Website: www.tomei.com.my

AUDITOR

BDO (AF 0206)

12th Floor, Menara Uni.Asia,

1008, Jalan Sultan Ismail,

50250 Kuala Lumpur.

PRINCIPAL BANKERS

United Overseas Bank (M) Berhad (271809-K)

Level 2, Menara UOB,

Jalan Raja Laut,50350 Kuala Lumpur.

HSBC Bank Malaysia Berhad (127776-V)

3rdFloor, North Tower,

No 2, Jalan Ampang,

50100 Kuala Lumpur.

RHB Bank Berhad (6171-M)

Level 7, Tower 3, RHB Centre,

Jalan Tun Razak,

50400 Kuala Lumpur.

Ambank (M) Berhad (8515-D)

Level 12A, Menara Dion,

Jalan Sultan Ismail,

50250 Kuala Lumpur.

Hong Leong Bank Berhad (97141-X)

Ground Floor, Tower A,

PJ City Development,

15A, Jalan 219, Section 51A,

46100 Petaling Jaya,

Selangor.

SHARE REGISTRAR

Bina Management (M) Sdn. Bhd. (50164-V)

Lot 10, The Highway Centre,Jalan 51/205,

46050 Petaling Jaya,

Selangor.

STOCK EXCHANGE LISTING

Main Market,

Bursa Malaysia Securities Berhad (30632-P)

Stock Code: 7230

Stock Name: TOMEI


ANNUAL REPORT 2013

Page 3


5/134

CORPORATE

STRUCTURE


ANNUAL REPORT 2013


100% Tomei Gold & Jewellery Manufacturing Sdn. Bhd. (184348-V)

100% Yi Xing Goldsmith Sdn. Bhd. (164963-M)

100% Tomei Marketing Sdn. Bhd. (16772-K)

100% Tomei Retail Sdn. Bhd. (701040-P)

100% Emas Assayer Sdn. Bhd. (513267-X)

100% Tomei International Limited (1069099)

100% Wealthy Concept Limited (1159171)

61% Gemas Precious Metals Industries Sdn. Bhd. (426096-W)

55% O M Design Sdn. Bhd. (925204-T)70% Tomei TI Sdn. Bhd. (763238-K)(under members voluntary winding up)

TOMEI RETAIL SDN. BHD. (701040-P)

100% My Diamond Sdn. Bhd. (555881-V)

100% TH Jewelry Sdn. Bhd. (590949-K)

100% Le Lumiere Sdn. Bhd. (758734-W)

100% De Beers Diamond Jewellers Sdn. Bhd. (1026561-M)

100% Cindai Permata Sdn. Bhd. (586915-X)

100% Tomei Gold & Jewellery Holdings (M) Sdn. Bhd. (33551-H)

100% Tomei Gold & Jewellery (MJ) Sdn. Bhd. (477070-V)

100% MyTomei Sdn. Bhd. (597346-T)100% Tomei Worldwide Franchise Sdn. Bhd. (649283-T)

100% Goldheart Jewelry (M) Sdn. Bhd. (924359-X)

100% Goldheart (M) Sdn. Bhd. (924360-H)

100% J & G Collections Sdn. Bhd. (380123-X)

100% Tomei Gold & Jewellery (WM) Sdn. Bhd. (526519-X) (under members voluntary winding up)

TOMEI GOLD & JEWELLERY HOLDINGS (M) SDN. BHD. (33551-H)

100% Tomei Gold & Jewellery (M.V.) Sdn. Bhd. (480795-A)

100% Tomei (Vietnam) Company Limited (473042000013)

100% Tomei Gold & Jewellery (K.P.) Sdn. Bhd. (559613-P) (under members voluntary winding up)

100% Tomei Gold & Jewellery (Klang) Sdn. Bhd. (176665-W)(under members voluntary winding up)

TOMEI GOLD & JEWELLERY (MJ) SDN. BHD. (477070-V)

100% Tomei Gold & Jewellery (S.A.) Sdn. Bhd. (180429-D) (under members voluntary winding up)

TOMEI GOLD & JEWELLERY MANUFACTURING SDN. BHD. (184348-V)

100% Lumiere 2006 Limited (1068733)

WEALTHY CONCEPT LIMITED (1159171)

100% Wealthy Concept Jewellery (Shenzhen) Company Limited (440301503321095)

Page4


6/134


7/134

CORPORATE

PROFILE

Today, Tomei Group is an Integrated

Manufacturer and Retailer of Gold &

Jewellery. The needs to cater for the

demand of young and trendy lifestyle

propelled the Group to introduce My

Diamond, specializing in trendy white gold

and diamond collections to the market in

year 2002. The following year, the Group

set up its own boutique under the name

T.H. Jewelry to display its high end range

of collections. Following the successful

acquisition of Le Lumiere, a renownedinternational brand for Hearts & Arrows

Diamond in year 2007, the Group set up its

first Le Lumiere boutique in 2008. In 2011,

the Group further added on another brand

into its fold with the acquisition of

Goldheart displaying unique jewellery

series for wedding collections. In 2013, the

first De Beers Diamond retail outlet in

Malaysia was opened to the public and

managed exclusively by the Group.

As part of the Group continuous effort and

commitment to quality, the Group is

accredited with ISO in Quality

Management System for its retailing in

jewellery from Lloyds Register Quality

Assurance Kuala Lumpur since year 2003.

In the year 2003, the Group was awarded

with the status Superbrands Malaysia

2003/2004, being the first jeweller in

Malaysia to receive the award. Since year

2004, the Group has been consistently

awarded with the Fair Price Shop Awards

by the Ministry of Domestic Trade and

Consumer Affairs, Malaysia for its

excellent customer service at its retail

outlets. In 2010, the Group acclaimed its

position as a reputable brand in Malaysia

when it clinched the title Malaysian Brand

Certification awarded by SIRIM QAS

International Sdn. Bhd. and later the

Enterprise 50 awards in the year 2011. The

Groups reputation as among the most

trusted business enterprise was further

reinforced with the awarding of the 11thAsia Pacific International Honesty

Enterprise-Keris Award 2012. In 2013, the

Group won several awards under the Sin

Chew Business Excellence Awards 2013

including the much coveted Lifetime

Achievement Awards. During the same

year, it won the Eminent Eagle category for

the Golden Eagle Award 2013 and

managed to clinch both the MBA Industry

Excellence Awards (Retail) 2013 and the

Top 10 Asian Icon Award 2013.

Currently, the Group holds the exclusive

distribution right to sell 24k gold jewellery

under the brand Prima Gold and Batar

Jewellery in Malaysia. In line with the

increasing demand for gold investment

products and general acceptance to the

concept of e-commerce, the Group

introduces GoldSilver2u.com, an e-portal

specializing in gold and silver investment

since 2011. Tomei also has the licence to

manufacture, distribute and sell gold

products under Baby Looney Tunes and

Super Heroes copyright character in

Malaysia from Warner Bros. Consumer

Product Inc., USA.

Year 2006 opened up a new chapter in the

Groups history with the quotation of Tomei

Consolidated Berhad on the Main Market,

Bursa Malaysia Securities Berhad.

The Group was granted an Investment

licence to set up its manufacturing

activities in Socialist Republic of Vietnamin the year 2006, marking its maiden

overseas venture and currently has 1 retail

outlet and 5 retail kiosks in Vietnam

located in various shopping complexes.

The Group manufacturing facilities in

Vietnam produces jewellery for local

consumption as well as for export.

In the year 2008, the Group was granted a

Certificate of Approval to establish an

Enterprise in Peoples Republic of China

by Shenzhen Registrar of Trading and

Industries. Following the approval, the

Group commenced its own Tomei retail

kiosks, retailing various type of jewellery

and currently has 7 retail kiosks in China.

To date, the Group has 71 jewellery retail

outlets in Malaysia and 13 jewellery retail

presence overseas within 6 major umbrella

brands namely Tomei, My Diamond, T.H.

Jewelry, Le Lumiere, Goldheart and De

Beers.

Tomei was founded way back in 1968 with the commencement of business

in design and manufacturing of jewellery, supplying to local jewellers. As

the business grew, Tomei ventured into the establishment of first retail

outlet under the brand name TOMEI in Campbell Shopping Complex in

Kuala Lumpur in the early seventies and subsequently commenced the

business of wholesale and distribution of jewellery.


ANNUAL REPORT 2013

Page6


8/134

PROFILE OF THE BOARD OF

DIRECTORSTan Sri Datuk Ng Teck Fong

Malaysian, 76 years of age, was appointed as Executive Chairman on 21 April 2006. He graduated with a Bachelor of Science degree inChemistry from the Taiwan National Cheng Kung University, Taiwan and was conferred the Honorary Professor title by the YunnanUniversity of Finance and Economics in 2008.

As the founder and Executive Chairman, he has been instrumental in the growth and development of the Group and is responsible for itsoverall strategic business direction. He brings with him more than 40 years of experience in the jewellery industry including preciousmetals and gemstones and is a respected authority in gold, silver, platinum and their alloys as well as other precious stones.

In his dedication to assure products of the highest quality, Tan Sri Datuk Ng assisted the establishment of the Fedmas Assay Office Sdn.Bhd. in Penang, Kuala Lumpur and Johor Bahru for the sole purpose of testing the precious metal content of jewellery and ensuringcompliance with national and international standards. He was the President of the Federation of Goldsmiths and Jewellers Association

for six years since 1996 and continues to serve as an advisor till now. He is also currently serving several other associations in variouscapacities. Tan Sri Datuk Ng received the recognition of a Lifetime Achievement presented by the Sin Chew Business Excellence Award2013 in recognition to his extensive contribution to the business and society.

Tan Sri Datuk Ng does not have any directorship in other public companies. His sons, Datuk Ng Yih Pyng and Mr Ng Yih Chen,daughters, Ms Ng Sheau Chyn and Ms Ng Sheau Yuen and daughter-in-law, Datin Choong Chow Mooi are also members of the Board.

Datin Nonadiah Binti Abdullah

Malaysian, 56 years of age, was appointedas Independent Non-Executive Director on21 April 2006. She graduated with aBachelor of Business (Administration) fromthe Royal Melbourne Institute ofTechnology in Australia in 1981 and

thereafter obtained a Diploma inMontessori Method of Education, St.Nicholas, London, United Kingdom. Shebegan her career in 1980 with the PublicWorks Department, Melbourne, Australiaas an Accounts Executive. She has alsoserved Bumiputra-Commerce BankBerhad from 1982 to 1989 and her lastposition was Manager in CorporateBanking Division. In 1991, she became alicensed Dealers Representative and wasattached to a stockbroking firm until 1997.

Datin Nonadiah does not have anydirectorship in other public companies.

She also does not have any familyrelationship with any director of theCompany.

Datuk Ng Yih Pyng

Malaysian, 42 years of age, was appointedas Managing Director on 21 April 2006. Heholds a Bachelor of Business

Administration degree in Finance in 1990from Iowa State University in the UnitedStates of America (USA) and received a

Master in Business Administration inCorporate Finance in 1991 from Iowa StateUniversity in the USA. Upon graduation, he

joined the Group as a Director and isresponsible for the overall managementand business development of the Group. Inaddition to his role as Director, he iselected as the President of Federation ofGoldsmiths and Jewellers Association ofMalaysia and Chairman of the Fedmas

Assay Office. Datuk Ng is the councilmember of The Associated ChineseChamber of Commerce & IndustryMalaysia and serves as the Chairman of itsYoung Entrepreneurs Committee. In

addition he is also elected the councilmember of the Chinese Chamber ofCommerce & Industry of Kuala Lumpur &Selangor and holds the position of YouthChairman. Datuk Ng also serves as thecommittee member for the SMECorpYoung Entrepreneurship panel.

Datuk Ng does not have any directorship inother public companies. He is the son toTan Sri Datuk Ng Teck Fong. His siblings,Mr Ng Yih Chen, Ms Ng Sheau Chyn andMs Ng Sheau Yuen and spouse DatinChoong Chow Mooi are also members ofthe Board.

Raja Dato Seri Aman Bin Raja Haji Ahmad

Malaysian, 68 years of age, was appointedas Independent Non-Executive Director on21 April 2006. He is a member of theMalaysian Institute of Accountants (MIA),a Certified Public Accountant and Fellow ofthe Institute of Chartered Accountant

England and Wales. He is also a Fellow ofthe Institute of Bankers Malaysia. He heldvarious positions in Maybank Group from1974 to 1985 prior to joining Affin BankBerhad in 1985 as an ExecutiveDirector/Chief Executive Officer (CEO).He left Affin Bank Berhad in 1992 to joinPerbadanan Usahawan Nasional Berhadas the CEO for one year. He wasreappointed as CEO of Affin Bank Berhadin 1995 and retired in 2003.

Raja Dato Seri Aman also sits on theboard of Ahmad Zaki Resources Berhad,

Affin Holdings Berhad and Affin Investment

Bank Berhad and sit on the governmentconsultative committee, Pemudah. Hedoes not have any family relationship withany director of the Company.


ANNUAL REPORT 2013

Page 7


9/134


10/134

TAN SRI DATUK NG TECK FONG

GROUP EXECUTIVE CHAIRMAN


ANNUAL REPORT 2013

Page 9


11/134

On behalf of the Board of Directors of Tomei Consolidated Berhad, it is my pleasure topresent you the Annual Report and Audited Financial Statements of our Group and of ourCompany for the financial year ended 31 December 2013.

Tomei celebrated its 45th year anniversary in the year 2013. It is a significant milestone forthe Group as during this period, it managed to transform itself from a small jewellerymanufacturer into a major player in the jewellery industry. Over these years, the Group has

come across and survived many turbulence such as the oil crisis in the 70s, the worldrecession in the 80s, the Asian financial crisis in the 90s and the recently sub-prime crisis inthe US to the sovereign debt problem in the European countries. The Group has beenprudence in managing its business affairs and emerged stronger from all those difficult time.It also served as a valuable lesson for the Group to continue and grow in its businessdealings. In the year 2013, the gold and jewellery industry suffered yet from anothersetback, this time come from an unprecedented drop in gold price by almost 30% within theyear. Tomei being a leading player in the gold and jewellery industry is no exception andsuccumbed to this volatility.

The sudden drop in gold price especially during the first half of the year has triggered a goldrush among consumers to purchase gold and gold related items creating a healthy demandfor the Groups sales. However as the euphoria died off and the retail market softenedtowards the year end, demand started to dwindle. The volatility of gold price on the otherhand has resulted the Group to report lower profit margin on its business. This challengingenvironment has dictated the performance of the Group for financial year 2013. During thecurrent financial year, the Group reported total revenue of RM701.907 million and a lossbefore tax of RM3.736 million.

and raising proceed of RM6.095 million.

We also wound up a few subsidiary

companies which were dormant to create a

much leaner corporate structure.

Recognizing on the changing consumer

buying pattern, the Group also introduces

alternative channel in delivering sales to its

customers. The introduction of

GoldSilver2u.com, the first e-portal of its

kind in Malaysia continues to reach out to

customers using web base services in

securing sales. Tomeis Jewel Club, the

Groups customer loyalty programme

which was introduced in 2011 has

managed to register a large number of

membership while Tomeis Facebook page

managed to garnered a large group of

followers.

The Group took cognizance of the present

market condition and continues to vigilantly

monitor its situation. It also took steps to

restructure and rebalance its portfolio

including closing certain retail outlets that

is not performing up to expectation while

certain non-core assets are being

disposed of. During the year, the Group

disposed of its subsidiary company, Tomei

Gold & Jewellery (Subang) Sdn. Bhd.

which is a property management company


ANNUAL REPORT 2013

Page10

CHAIRMANSSTATEMENT


12/134

Tomei continues to innovate and offer

various offerings and designs to

customers. The introduction of

Ana-stasia, our very own gold jewellery

master piece design adds on the glitter to

our existing collections. In complementing

these collections, Tomei also has the

exclusive distributorship rights for therenowned Batar Jewellery from China

and Prima Gold from Thailand. The

Group also has the licence to manufacture

and sell Baby Looney Tunes and Super

Heroes gold character in Malaysia from

Warner Bros. Consumer Products Inc.,

USA.

In February 2013, the first De Beers

diamond retail outlets in Malaysia opened

its door to the public and exclusively

managed by the Group. This marked a

significant achievement for the Group as

De Beers is always synonymous with the

best diamond in the world. It also

reinforces the Group standing as among

the best in its league in the diamond and

jewellery industry. In addition, the Group is

also granted the option for the franchise

right to set up and operate De Beers retail

outlets in Singapore, Indonesia, Thailand

and Vietnam.

The Group is committed to improve on its

retail business in Malaysia by continueupgrading and refurbishing its retail stores

to provide a fresh and condusive shopping

experience for its customers. Despite the

challenging environment, the Group is still

discussing with mall operators to set up

new stores in the new prominent and

upcoming retail locations. In addition to De

Beers, the Group is currently operating

another 70 retail outlets in Malaysia under

various brand, namely Tomei, My

Diamond, Le Lumiere, Goldheart and T.H.

Jewelry.

Tomei continues to build its branding in

both the Peoples Republic of China and

the Socialist Republic of Vietnam.

Currently Tomei has 7 retail kiosks in

China while in Vietnam, it has 1 retail outlet

and 5 retail kiosks. It also has a

manufacturing facilitiy in the AMATA

Industrial Park, Vietnam which produces

jewellery for its own consumption as well

as for export.

AWARDS

In recognition of our excellent

achievements and contribution to the

industry, our Group has received

numerous accolades and recognitions.

During the year 2013, the Group receivedmultiple recognitions from the Sin Chew

Business Excellence Awards 2013 ranging

from the prestigious Lifetime Achievement

Award to the Retail Excellence Award and

Products and Service Quality Excellence

Award. It won the Eminent Eagle category

for the Golden Eagle Award 2013

presented to Malaysia 100 Excellent

Enterprise. The Group also received the

MBA Industry Excellence Awards (Retail)

2013 from the ASEAN BAC and Top 10

Asian Icon Award 2013 in recognition of

the Group excellent achievement in the

retail business.

Tomei is also among the few in Malaysia to

clinch the Malaysian Brand Certification

awarded by SIRIM QAS International Sdn.

Bhd. since year 2010. In line with our

Groups emphasis and commitment on

quality, our Group is certified with the ISO

accreditations in quality management

system for our retailing in gold and

jewellery products from the Lloyds

Register Quality Assurance, KualaLumpur.

CORPORATE SOCIAL RESPONSIBILITY

Tomei always committed to play its role as

a responsible corporate citizen. Every

year, the Group takes initiative to launch

various programmes to assist different

targeted groups irrespective of their

colours, creeds and beliefs.

During the year 2013, the Group in itsbelief to advance the cause of education

has contributed RM30,000 to The Star

Step Up School Sponsorship Programme

2013.

DIVIDEND

Your Board is pleased to recommend a

first and final single tier dividend of 1.0 sen

per ordinary share for the financial year

ended 31 December 2013 for

shareholders approval at the forthcoming

Annual General Meeting.

OUTLOOK

With the stable Malaysian economy, the

recent recovery in gold price and theongoing cost rationalization exercise, the

Group is cautiously optimistic that it will

perform better in the year 2014.

APPRECIATION

On behalf of the Board of Directors, I would

like to express our sincere appreciation

and thanks to all our invaluable customers,

bankers, suppliers, government

authorities, business associates and

shareholders for your continuous support.

My thanks also go to the management and

staff of the Group for your utmost

commitment, dedication and hard work in

ensuring our success.

Last but not least, to my fellow Directors, I

thank you for your invaluable advice and

support.


GROUP EXECUTIVE CHAIRMAN

CHAIRMANS STATEMENT (continued)


ANNUAL REPORT 2013

Page 11


13/134


ANNUAL REPORT 2013

Page12

20131231

201345708090

2013

2013719073736

6095

-GoldSilver2u.com2011- Tomei Jewel Club

Ana-stasiaPrima GoldWarnerBros. Consumer Products Inc.Baby Looney TunesSuper Heroes

20132De BeersDe Beers

De Beers

De Beers

70TomeiMy DiamondLe LumiereGoldheartT.H. Jewelry

751AMATA

20132013100

-Top10

2010 - SIRIM QASInternational Sdn. Bhd.

Lloyds Register QualityAssuranceISO

20133The Star StepUp School Sponsorship Programme

201312311

2014


14/134


ANNUAL REPORT 2013

Page 13

Bagi pihak Lembaga Pengarah Tomei Consolidated Berhad, saya dengan sukacitanyamembentangkan Laporan Tahunan dan Penyata-penyata Kewangan Teraudit Kumpulandan Syarikat kami bagi tahun kewangan yang berakhir pada 31 Disember 2013.

Tomei merayakan ulang tahun penubuhannya yang ke-45 pada tahun 2013. Ini merupakansatu perkembangan yang amat penting bagi Kumpulan kerana dalam tempoh yang sama,ia berjaya mentransformasi dari sebuah pengeluar barangan kemas secara kecil-kecilankepada pemain utama dalam industri barangan kemas. Dalam jangka masa ini, Kumpulan

telah melalui dan berjaya menangani pelbagai pergolakan, antaranya termasuklah krisisbekalan minyak pada tahun 70-an, kemelesetan ekonomi dunia pada tahun 80-an, krisiskewangan Asia pada tahun 90-an, dan baru-baru ini, krisis sub prima yang berlaku diAmerika Syarikat, dan krisis hutang kerajaan di negara-negara Eropah. Melalui pengurusanperniagaan yang berhemah, prestasi Kumpulan kian mantap melalui detik-detik gentingtersebut. Ia turut memberi satu pengajaran yang amat berharga kepada Kumpulan untukterus berkembang di dalam perniagaannya. Pada tahun 2013, industri emas dan barangankemas mengalami satu lagi kemunduran akibat kemerosotan harga emas sebanyak 30% didalam tempoh satu tahun. Tomei sebagai pemain utama di industri emas dan barangan

kemas juga tidak terkecuali dan turut mengalami ketidaktentuan ini.

Penurunan harga emas secara mendadak terutamanya pada separuh tahun pertama telahmencetuskan permintaan tinggi pengguna terhadap emas serta barangan berkaitan emasdan menghasilkan permintaan sihat terhadap penjualan Kumpulan. Walaubagaimanapun,sejak keghairahan itu hilang dan pasaran runcit merosot menjelang hujung tahun,permintaan mula menyusut. Ketidaktentuan harga emas juga menyebabkan Kumpulanmencatat margin keuntungan perniagaan yang lebih rendah. Suasana mencabar ini telahmempengaruhi pencapaian Kumpulan untuk tahun kewangan 2013. Dalam tahun

kewangan semasa, Kumpulan mencatat jumlah jualan sebanyak RM701.907 juta dan rugisebelum cukai sebanyak RM3.736 juta.

Kumpulan mengambil perhatian keadaan

pasaran semasa dan sentiasa mengawal

situasi dengan teliti. Kami turut mengambil

langkah untuk menstruktur dan

menyeimbang semula portfolio, antaranya

termasuk menutup kedai jualan runcit yang

gagal menunjukkan prestasi yang dijangka

manakala sesetengah aset bukan teras

dilupuskan. Pada tahun semasa,

Kumpulan melupuskan syarikat

subsidiarinya, Tomei Gold & Jewellery

(Subang) Sdn. Bhd., sebuah syarikat

pengurusan hartanah dan berjaya

mengumpul dana sebanyak RM6.095 juta.

Kami juga menggulung beberapa syarikat

subsidiari yang tidak aktif demi membina

struktur korporat yang lebih mantap.

Menyedari akan perubahan corak

pembelian pengguna, Kumpulan telah

memperkenalkan saluran jualan alternatif

kepada pelanggan. GoldSilver2u.com,

sebuah e-portal penjualan barangan

kemas yang pertama di Malaysia terus

menghubungkan pelanggan yang

menggunakan perkhidmatan jualan atas

talian dalam menempah jualan.

PENYATA

PENGERUSI


15/134


ANNUAL REPORT 2013

Page14

Tomei Jewel Club, program loyalti

pelanggan Kumpulan yang diperkenalkan

pada tahun 2011 telah menunjukkan

peningkatan keahlian yang ramai

manakala laman Facebook Tomei berjaya

menarik ramai pengikut.

Tomei terus berinovasi dan menawarkanpelbagai tawaran dan rekaan kepada

pelanggan. Pengenalan Ana-stasia,

rekaan barangan kemas emas kami

tersendiri telah menyerikan lagi koleksi

kami yang sedia ada. Demi melengkapkan

koleksi ini, Tomei turut mendapat hak

pengedaran eksklusif untuk Batar

Jewellery yang terkemuka dari China dan

Prima Gold dari Thailand. Kumpulan

kami juga mempunyai lesen untuk

mengilang dan menjual watak barangan

emas Baby Looney Tunes dan Super

Heroes di Malaysia dari Warner Bros.

Consumer Products Inc., USA.

Pada Februari 2013, kedai jualan runcit

berlian De Beers yang pertama di Malaysia

membuka pintu kepada pelanggan dan

diurus secara eksklusif oleh Kumpulan. Ini

menandakan pencapaian ketara untuk

Kumpulan kerana jenama De Beers

adalah sinonim dengan berlian terbaik di

dunia. Pengiktirafan ini turut mengukuhkan

kedudukan Kumpulan sebagai antara yang

terbaik di dalam industri berlian danbarangan kemas. Tambahan pula,

Kumpulan juga diberi opsyen hak francais

untuk memula dan menjalankan operasi

kedai jualan runcit De Beers di Singapura,

Indonesia, Thailand dan Vietnam.

Kumpulan komited untuk terus memajukan

perniagaan jualan runcit di Malaysia

dengan meningkat taraf dan

mengubahsuai semula kedai jualan runcit

demi menyediakan pengalaman

membeli-belah yang segar dan kondusifuntuk pelanggan. Walaupun berada dalam

suasana yang mencabar, Kumpulan masih

berbincang dengan pengendali pusat

membeli-belah untuk membuka kedai

jualan runcit yang baru di lokasi jualan

yang lebih prominen. Selain daripada De

Beers, kini Kumpulan beroperasi 70 lagi

rangkaian kedai jualan runcit di bawah

aneka jenama, khususnya Tomei, My

Diamond, Le Lumiere, Goldheart dan T.H.

Jewelry.

Tomei terus membina jenamanya di

kedua-dua Republik Rakyat China dan

Republik Socialis Vietnam. Kini Tomei

mempunyai 7 kiosk jualan runcit di China,

manakala di Vietnam ia mempunyai 1

kedai jualan runcit dan 5 kiosk jualan

runcit. Tomei juga mempunyai kemudahan

pengilangan di AMATA Industrial Park,Vietnam yang mengeluarkan barangan

kemas untuk kegunaan sendiri mahupun

untuk diekspot.

ANUGERAH-ANUGERAH

Sebagai pengiktirafan kepada pencapaian

yang cemerlang dan sumbangan kepada

industri, Kumpulan kami telah merangkul

aneka anugerah dan pengiktirafan.

Pada tahun 2013, Kumpulan telah

dianugerahkan dengan Anugerah Lifetime

Achievement Award, Retail Excellence

Award dan Products and Service Quality

Excellence Award daripada Sin Chew

Business Excellence Awards 2013.

Kumpulan juga merupakan pemenang

kategori Eminent Eagle untuk Golden

Eagle Award 2013 yang dianugerahkan

kepada 100 syarikat terulung di Malaysia.

Kumpulan turut mendapat Anugerah MBA

Industry Excellence Awards (Retail) 2013

daripada ASEAN BAC dan Top 10 Asian

Icon Award 2013 untuk pengiktirafanpencapaian cemerlang dalam perniagaan

runcit.

Tomei juga merupakan salah satu syarikat

yang dianugerah dengan Malaysian

Brand Certification daripada SIRIM QAS

International Sdn. Bhd. sejak tahun 2010.

Seiring dengan penekanan dan komitmen

terhadap kualiti, Kumpulan kami telah

ditauliah dengan akreditasi ISO dalam

sistem pengurusan kualiti untuk penjualan

runcit produk emas dan barangan kemasdaripada Lloyds Register Quality

Assurance, Kuala Lumpur.

TANGGUNGJAWAB SOSIAL KORPORAT

Tomei sentiasa komited dalam memainkan

peranannya sebagai warga korporat yang

bertanggungjawab. Setiap tahun,

Kumpulan memperkenalkan aneka

program untuk membantu mereka yang

memerlukannya tanpa mengira warna

kulit, perbezaan agama dan kepercayaan.

Pada tahun 2013, Kumpulan dengan

berpaksikan pegangannya untuk

memperkembangkan pendidikan, telah

menyumbang RM30,000 kepada The Star

Step Up School Sponsorship Programme

2013.

DIVIDEN

Lembaga Pengarah dengan sukacitanya

mencadangkan dividen pertama dan akhir

single tier sebanyak 1.0 sen sesaham

bagi tahun kewangan yang berakhir pada

31 Disember 2013 untuk persetujuan

pemegang-pemegang saham dalam

Mesyuarat Agung Tahunan akan datang.

PROSPEK MASA DEPAN

Dengan kestabilan ekonomi Malaysia,

pemulihan harga emas dan rasionalisasi

kos yang berterusan, Kumpulan

berwaspada dan beroptimistik untuk

pencapaian yang lebih baik pada tahun

2014.

PENGHARGAAN

Bagi pihak Lembaga Pengarah, saya ingin

merakamkan penghargaan ikhlas dan

ucapan terima kasih kepada kesemua

pelanggan, jurubank, pembekal, badankerajaan, rakan niaga dan pemegang

saham atas sokongan berterusan anda.

Saya juga berterima kasih kepada pihak

pengurusan dan kakitangan Kumpulan

atas komitmen, dedikasi, dan ketekunan

anda dalam memastikan kejayaan

bersama.

Akhir kata, saya ingin merakamkan terima

kasih kepada rakan-rakan pengarah atas

nasihat dan sokongan mereka.


PENGERUSI EKSEKUTIF KUMPULAN

PENYATA PENGERUSI (sambungan)


16/134

STATEMENT ON

CORPORATEGOVERNANCE

Your Board of Directors recognizes the importance of sound corporate governance and willcontinue to enhance its role in ensuring that the highest standard of corporate governanceis practised throughout the Group. The principles and best practices set out in the MalaysianCode on Corporate Governance 2012 (Code) have been complied by the Group whereverpossible in observing the highest standard of transparency, accountability and integrity

unless otherwise stated.Your Board is pleased to report on the application of the Code by the Group during theperiod under review.

1. BOARD OF DIRECTORS

1.1 Composition and Balance

1.2 Board Responsibilities and Duties

The Group is led by your Board of Directors which comprises of ten (10) members, of whom six (6) are Executive Directors and four(4) are Independent Non-Executive Directors. None of the Independent Directors has held office for a period of more than nine (9)years. Your Board consists of members from a wide range of discipline and background, providing an in-depth and diversity inexperience to the Groups operation. All Independent Non-Executive Directors are free from any material business dealings and

other relationship with the Group and therefore play a crucial role in corporate accountability with their independent, unbiasedviews, advice and judgement in the decision making process. The present Board includes four (4) female directors. None of theDirectors hold more than 5 directorships in listed issuer in Malaysia.

The profiles of the members of your Board are set out on page 7 to 8 of the Annual Report.

Tan Sri Datuk Ng Teck Fong, the Executive Chairman, plays a crucial role in providing overall business direction while theimplementation falls under the leadership and responsibility of your Group Managing Director.

This segregation of role is vital to ensure a balance of power and authority.

When the Chaiman of the Board is not an independent director, the Board must comprise a majority of independent directors.However in our case, we have Tan Sri Datuk Ng Teck Fong as our Executive Chairman. Your Independent Directors haveconsidered this anomaly and are of the opinion that it will not disadvantage your Company as Tan Sri Datuk Ng Teck Fong being

its founder and the single largest shareholder will continue to bring the vision and aspirations to your group of companies. Furtheryour Board is comfortable that there is no undue risk involved as all related party transactions are diligently reviewed by the AuditCommittee in accordance with the Listing Requirements of Bursa Securities before they are tabled to the Board for approval basedon the Audit Committees recommendation.

During the period under review, your Board took full responsibility and retained full and effective control over the affairs of theGroup. The Boards functions are laid out in a Board Charter which is made public through the Groups website to guide your Boardin discharging its duties and responsibilities effectively. Your Boards primary focus is on the overall strategic planning includingbusiness plan and annual budget, performing quarterly review of business and financial performance, reviewing risk management,ensuring effective internal controls are in place as well as ensuring legal and statutory compliance.


ANNUAL REPORT 2013

Page 15


17/134

The Independent Non-Executive Directors further strengthen your Board in providing unbiased and independent view, advice andjudgement. They also contribute to the formulation of policies and decision making through their expertise and experience.

In addition to the above, your Boards more specific responsibilities include the followings:-

a)b)

c)d)e)f)

g)h)

4. BOARD COMMITTEES

In order to ensure the effectiveness in the periodic monitoring, deliberating and safeguarding of shareholders interest, your Board has

delegated certain of its responsibilities to the Board Committees which operates within clearly defined terms of reference to carry out

these responsibilities in a supporting role to your Board.

These Committees comprising members of your Board are empowered to deliberate and examine issues delegated to them and report

back to your Board with their recommendations and comments.

Reviewing and approving the strategic business plan of the Group;Monitoring corporate performance and the conduct of the Groups business and ensuring compliance to best practices andprinciples of corporate governance through the Audit Committee;

Identifying and implementing appropriate systems to manage principal risks through the Risk Management Committee;Ensuring succession planning for top management;Ensuring a transparent Board nomination and remuneration process;Reviewing the adequacy and integrity of the Groups internal control system and management information system forcompliance with applicable standards and laws and regulations;Developing and implementing an investor relation program or shareholders communications policy for the Company; andDeveloping an ethical standard for the Group through a Code of Conduct and ensure its compliance.

2. BOARD MEETINGS

3. SUPPLY OF INFORMATION

Your Board meets regularly at least four (4) times a year at quarterly intervals with additional meetings to be convened as and whenrequired. Prior to each meeting, every Director is given the complete agenda and a set of Board Papers for each agenda item well inadvance so that your Directors have ample time to review matters to be deliberated at the meeting and to facilitate informed decisionmaking by your Directors.

During the financial year ended 31 December 2013, there were five (5) Board Meetings held and the details of attendance are asfollows:-

Executive Directors AttendanceTan Sri Datuk Ng Teck Fong 5/5Datuk Ng Yih Pyng 5/5Datin Choong Chow Mooi 5/5Ng Yih Chen 4/5Ng Sheau Chyn 5/5Ng Sheau Yuen 4/5

Independent Non-Executive Directors

Raja Dato Seri Aman Bin Raja Haji Ahmad 5/5Datin Nonadiah Binti Abdullah 5/5M Chareon Sae Tang @ Tan Whye Aun 5/5Lau Tiang Hua 5/5

In addition, the Executive Directors meet regularly to discuss the corporate strategy, the business operations and the results of thebusiness units within the Group.

Your Board has full and unrestricted access to information concerning the Group from the senior management, the external auditorsand services of the Company Secretary to enable them to discharge their duties effectively. Your Board may also seek advice ofexternal independent professionals at the Groups expense.

All information on meetings is disseminated to your Board at least 7 days before the date of meeting to enable your Board to make aninformed decision. Relevant personnel of the Group could be summoned to the Board Meeting to further brief your Board as and whenrequired.

STATEMENT ON CORPORATE GOVERNANCE (continued)


ANNUAL REPORT 2013

Page16


18/134

At present, your Board is assisted by four (4) Board Committees with their respective term of reference as provided below:-

4.1 Audit Committee

4.2 Remuneration Committee

4.3 Nomination Committee

In accordance with the Best Practices under the Code, the Audit Committee comprises three (3) members made up of IndependentNon-Executive Directors:-

Name Designation

Lau Tiang Hua ChairmanRaja Dato Seri Aman Bin Raja Haji Ahmad MemberM Chareon Sae Tang @ Tan Whye Aun Member

The principal function of the Audit Committee is to assist your Board in the effective discharge of its fiduciary responsibilities inrelation to corporate governance, ensure timely and accurate financial reporting, proper implementation of risk managementpolicies and strategies in relation to the Groups business strategies and the development of sound internal control system andeffective risk management framework.

In accordance with the best practices of corporate governance, the Audit Committee presents its report set out on pages 22 to 24of this Annual Report.

In accordance with the Best Practices under the Code, the Remuneration Committee comprises three (3) members, majority ofwhom are independent and have the following term of reference as provided below:-

Name DesignationM Chareon Sae Tang @ Tan Whye Aun ChairmanLau Tiang Hua MemberDatuk Ng Yih Pyng Member

The Committees duties and responsibilities are:-a)

b)

c)

In accordance with the Best Practices under the Code, the Nomination Committee comprises three (3) members made up ofIndependent Non-Executive Directors and have the following term of reference as provided below:-

Name DesignationM Chareon Sae Tang @ Tan Whye Aun ChairmanLau Tiang Hua MemberDatin Nonadiah Binti Abdullah Member (appointed on 21 November 2013)Datuk Ng Yih Pyng Member (resigned on 21 November 2013)

In line with the recommendation by the Code which advocates for the Nomination Committee to consist exclusively of only

non-executive directors, a majority of whom must be independent, Datuk Ng Yih Pyng, your Group Managing Director, has resignedas a member on 21 November 2013 and was replaced by Datin Nonadiah Binti Abdullah, an Independent Non-Executive Director,on the same date.

The Committees duties and responsibilities are:-a)

b)

c)

d)e)f)

To ensure that a transparent and formal procedure is established in the development and assessment of the level ofcompensation that would be sufficient to attract and retain good caliber Directors;To review the composition of the various types of components of remuneration package such as fees, allowances, basicsalaries, bonuses and other benefits-in-kind for Directors; andTo ensure that the components of the Directors remuneration package are linked to performance, responsibility levels and

is comparable with market norm.

To assist your Board in reviewing on an annual basis, or as required, the correct mix of skills, business and professionalexperiences that should be added to your Board;To identify core competencies, skills and other qualities required by Independent Non-Executive Directors that is essentialto contribute towards the effectiveness and balance of your Board;To review and evaluate on an annual basis, the effectiveness of the Board functions and its Committees based on thecorporate governance principles and practices of your Board;To review and evaluate the contributions made by each member of your Board;To assess on annual basis or as and when required, the independence of each independent director; andTo assist and when required by your Board in the review and evaluation of succession planning of top management.


ANNUAL REPORT 2013

STATEMENT ON CORPORATE GOVERNANCE (continued) Page 17


19/134

The Nomination Committee assesses and evaluates the Directors individually to determine on their status of independence, mix setof skills and experience before deciding on the selection and nomination of directors for their respective re-election orre-appointment. The Committee also evaluates on the needs to establish separate Board Committee to assist the Board on itsdecision making and continue to evaluate the effectiveness of such committee.

In accordance with the Best Practices under the Code, the Risk Management Committee comprises four (4) members and have

the following term of reference as provided below:-

Name DesignationLau Tiang Hua ChairmanRaja Dato Seri Aman Bin Raja Haji Ahmad MemberM Chareon Sae Tang @ Tan Whye Aun MemberDatuk Ng Yih Pyng Member

The Committees duties and responsibilities are:-a) To review periodic management report on risk exposure, risk portfolio and management strategies;b) To ensure adequacy of infrastructure, resources and systems for effective risk management;c) To assess adequacy of policies and framework for identifying, measuring, monitoring and controlling risks; andd) To review the extent to which these measures are operating effectively.

The Risk Management Committee shall hold at least 2 meetings in each financial year.

4.4 Risk Management Committee

All Directors of the Group have attended the Mandatory Accreditation Program prescribed by Bursa Securities. In addition, your Boardis regularly being briefed on the Groups operation and takes proactive steps to visit both manufacturing and retailing operation to gainin depth understanding of the business.

Your Board through the Nomination Committee assesses the training needs of all the Directors. The Directors are encouraged to attendtalks, seminars, workshops and conferences to update and enhance their skills and knowledge to enable them to carry out their rolesas director effectively, more specifically in discharging their responsibilities towards corporate governance and regulatory compliances.

On 25 February 2014, your Board together with the senior management team of the Group on the recommendation of the Nomination

Committee has attended a seminar titled Board Leadership and Value Systems The Tone at the Top.

5. DIRECTORS TRAINING

According to the Companys Articles of Association, at least one third of the directors shall retire from office at the Annual GeneralMeeting (AGM), and eligible for re-election provided that each Director shall retire once in every three (3) years.

The Articles also provide that all Directors who are appointed by your Board may only hold office until the next AGM subsequent to theirappointment and shall then be eligible for re-election but shall not be taken into account in determining the Directors who are to retireby rotation at that AGM.

In accordance with Section 129(2) of the Companies Act, 1965, any Directors who have attained the age of seventy (70) years andabove are required to submit themselves for re-appointment by the shareholders annually.

The re-election of Directors provides shareholders an opportunity to reassess the composition of your Board. The NominationCommittee assesses and evaluates Directors individually before recommending for their re-election.

6. RE-ELECTION OF DIRECTORS

The Companys remuneration policy for Directors is tailored towards attracting and retaining Directors with relevant experience andexpertise needed to assist in managing the Group effectively. The Remuneration Committee carries out the annual review of the overallremuneration for Directors and key Senior Management Officers whereupon recommendations are submitted to your Board forapproval.

7. DIRECTORS REMUNERATION



ANNUAL REPORT 2013

Page18


20/134

Remuneration Non-Executive Director Executive Director RM RMSalaries - 2,468,610Fees 203,000 71,000Benefits-in-Kind - 145,250

Remuneration Non-Executive Director Executive DirectorBelow RM 100,000 4 -RM 100,001 - RM 150,000 - -RM 150,001 - RM 200,000 - -RM 200,001 - RM 250,000 - -RM 250,001 - RM 300,000 - -RM 300,001 - RM 350,000 - 1RM 350,001 RM 400,000 - 3RM 400,001 RM 450,000 - -RM 450,001 RM 500,000 - -RM 500,001 RM 550,000 - 1RM 550,001 RM 600,000 - -RM 600,001 RM 650,000 - -RM 650,001 RM 700,000 - -RM 700,001 RM 750,000 - -RM 750,001 RM 800,000 - 1

The Directors fees payable is subject to the approval of the shareholders at the forthcoming AGM of the Company.

Your Board recognizes its role and responsibility to ensure that the Groups and the Companys financial statements present a trueand fair view of the financial positions and of the financial performance and cash flows and are prepared in accordance withMalaysian Financial Reporting Standards (MFRS), International Financial Reporting Standards (IFRS) and the provisions of the

Companies Act, 1965 in Malaysia.

Your Board is also committed to provide the highest possible level of disclosure to ensure integrity and consistency of the financialreports.

The Group publishes full financial statements annually and condensed financial statements quarterly as required by BursaMalaysias Listing Requirements.

The Audit Committee assists your Board in scrutinizing the information for disclosure to ensure its accuracy, adequacy andcompleteness.

8.1 Financial Reporting

8. ACCOUNTABILITY AND AUDIT

Your Board acknowledges its overall responsibility for maintaining a sound system of internal control and risk management to

safeguard shareholders investment and the Groups and the Companys assets.

The Audit Committee through the Internal Audit Department reviews the effectiveness of the system of internal control and of theGroup periodically. The review covers the financial, operational and compliance controls as well as risk management.

The Statement on Risk Management & Internal Control as set out on pages 25 to 27 in this Annual Report provides an overview ofthe risk management and state of internal control within the Group.

8.2 Internal Control and Risk Management

8.3 Relationship with Auditors

The Companys external auditors continue to provide the independent opinion to shareholders on the Groups and the Companysfinancial statements. Your Board maintains a formal and transparent relationship with the auditors to meet their professionalrequirements.


ANNUAL REPORT 2013

STATEMENT ON CORPORATE GOVERNANCE (continued) Page 19

The details of your Directors remuneration paid/payable to all Directors of the Company for the financial year ended 31 December 2013are set out as follows:-


21/134

Your Board recognises the importance of maintaining transparency and accountability to its shareholders and investors.

Your Board keeps shareholders informed via announcements, timely release of quarterly financial results, press releases, annualreports and circulars to shareholders. Your Board also takes effort to meet up with investors on regular basis to provide up to dateinformation about the Group.

Information of the Group is also accessible through the Companys website at www.tomei.com.my which is updated on regular basisand the Directors welcome feedback channeled through this website. Information available in the website includes among others theGroups Annual Reports, quarterly financial announcements, major and significant announcements and press releases on latestcorporate development of the Group. As there may be instances where investors and shareholders may prefer to express theirconcerns to an independent director, the Board has appointed Raja Dato Seri Aman Bin Raja Haji Ahmad as the Senior IndependentNon-Executive Director on 25 February 2014 to whom concerns may be directed.

The AGM serves as the principal forum for dialogue and communication between your Directors and the shareholders. At the AGM,shareholders are given direct access to your Board and are encouraged to participate in its proceedings and seek clarification on theperformance of the Group.

9. COMMUNICATION WITH SHAREHOLDERS AND INVESTORS

Your Board is responsible for ensuring that the financial statements for the financial year which have been drawn up in accordancewith the MFRS, IFRS and the provisions of the Companies Act, 1965 in Malaysia so as to give a true and fair view of the financialposition of the Group and of the Company as at 31 December 2013 and of the financial performance and cash flows of the Groupand of the Company for the financial year then ended.

In preparing the financial statements, your Board has used appropriate and relevant accounting policies that are consistently usedand supported by reasonable as well as prudent judgements and estimates, and that all applicable approved MFRS and IFRS havebeen complied with.

Your Board is responsible for ensuring that the Group and the Company keep proper accounting records which disclose withreasonable accuracy the financial position of the Group and of the Company and which enable them to ensure that the financialstatements comply with MFRS, IFRS and the provisions of the Companies Act, 1965 in Malaysia.

Your Board also has the general responsibility for taking such steps as are reasonably opened to them to safeguard the assets ofthe Group, to detect and prevent fraud and other irregularities.

The Directors Responsibility Statement in relation of the Audited Financial Statements for the year ended 31 December 2013 is setout on page 30 of this Annual Report.

The Board is committed to promote sustainability in its business operation which are aligned and embedded into the Groups day today business activities. In promoting the sustainability, the Group integrates good practices in the area of environmental, social andgovernance into its business culture. Details of programmes in promoting sustainability are provided in the Statement on CorporateSocial Responsibilities on page 21 of this Annual Report.

10. STRATEGIES IN PROMOTING SUSTAINABILITY

11. STATEMENT ON COMPLIANCE WITH THE BEST PRACTICES OF THE MALAYSIAN CODE ON CORPORATE GOVERNANCE

Having reviewed the governance structure and practices of the Group, your Board considers that it has complied with the bestpractices as set out in the Code unless otherwise stated as well as the items set out in Part A of Appendix 9C of the ListingRequirements of Bursa Securities in relation to the requirement of a separate disclosure in the Annual Report.

This Statement on Corporate Governance is made in accordance with the resolution of the Board of Directors dated 9 April 2014.

2012

8.4 Directors Responsibility Statement

The Audit Committee meets up with the external auditors at least two (2) times a year without the presence of the Management todiscuss and obtain feedback on sensitive audit issues. The external auditors are also invited to attend the Companys AnnualGeneral Meeting and are available to take questions from the shareholders on issues pertaining to their audit report.

The detailed role of the Audit Committee in relation to the internal and external auditors is described in the Audit Committee Reportsection on pages 22 to 24 of this Annual Report.



ANNUAL REPORT 2013

Page20


22/134

STATEMENT ON

CORPORATE

SOCIAL

RESPONSIBILITIESThe Group believes in its effort in playing its role as a responsible corporate citizen. With thatin mind, the Group has undertaken various corporate social responsibilities initiativestowards its stakeholders.

1. ENVIRONMENT

1.11.2

2. SOCIAL

2.1

2.2

2.3

3. EMPLOYEE

3.13.2

3.3

4. CUSTOMER

4.1

4.24.3

The Group has been using LED lights in all its retail outlets as an effort to continue conserving and saving energy and electricity.The Group is committed on its stringent measure to ensure that its production waste are properly disposed of and in an orderlymanner as required by the law.

The Group in its belief to advance the cause of education has contributed RM30,000 to The Star Step Up School SponsorshipProgramme 2013.The Group in promoting employment opportunities has provided employment to Malaysians covering almost all states in the countryregardless of colour, creed and gender.The Group has met all minimum wages requirement as required by the law.

The Group provides staff training to its staff to promote ongoing learning and improve efficiency in their day to day work.The Group provides a safe and condusive working environment to its staffs where front liners are provided with appropriate uniformto improve staff appearance and confidence in dealing with customers.The Group provides insurance coverage to its staffs to protect them from any mishap and unforeseen eventuality.

The Group provides its customers ample of product selection through continue introduction of new design and brand into themarket.The Groups ISO accreditation gives assurance of the best customer service in its retail services.The Groups recognition through the Fair Price Shop Award and Malaysian Brand certification attests our commitment to providethe most affordable pricing and quality products to customers.


ANNUAL REPORT 2013

Page 21


23/134

1. COMPOSITION

2. OBJECTIVES

3. FUNCTIONS

AUDIT

COMMITTEEREPORT

The Audit Committee shall comprise at least 3 directors.

The alternate directors shall not be appointed as members of the Audit Committee.

All the Audit Committee members must be non-executive directors, with majority of them being independent directors.

At least one member of the Audit Committee:-

(i)

(ii)

(iii)

Members of the Audit Committee shall elect a Chairman, who shall be an Independent Non-Executive Director from among their

members.

Members of the Audit Committee shall be appointed for a period of 3 years and shall be eligible for re-appointment.

In the event of any vacancy in the Audit Committee resulting in the number of members being reduced to below 3, the vacancy

must be filled within 3 months.

The Audit Committee is to serve as a focal point for communication between your Directors, the external auditors, internal

auditors and the Management on matters in connection with accounting, reporting and controls.The Audit Committee is to assist your Board in fulfilling its fiduciary responsibilities for ensuring quality, integrity and reliability

of the practices of the Group.

The Audit Committee will reinforce the independence of the Groups external and internal auditors.

Must be a member of the Malaysian Institute of Accountants; or

If he is not a member of the Malaysian Institute of Accountants, he must have at least three (3) years working experience;

and

-

-

Fulfils such other requirements as prescribed or approved by Bursa Securities.

He must have passed the examinations specified in Part I of the 1st Schedule of the Accountants Act 1967; or

He must be a member of one of the associations of accountants specified in Part II of the 1st Schedule of the

Accountants Act 1967; or

The Audit Committee is appointed by your Board of Directors from amongst its members. The Audit Committee comprised the

following three (3) members:-

Name DesignationLau Tiang Hua Chairman

Raja Dato Seri Aman Bin Raja Haji Ahmad Member

M Chareon Sae Tang @ Tan Whye Aun Member

a)

b)

c)

d)

e)

f )

g)

a)

b)

c)

The key functions of the Audit Committee are to review the interim quarterly results and the annual audited financial statements and

making the appropriate recommendations to the Board of Directors. In addition, the Audit Committee will review the reports of the

internal auditors as well as those of the external auditors and to instruct management to take the appropriate actions to rectify

whatever shortcomings reported. All significant breaches especially those in contravention of existing rules and regulations and laws

will be reported to the Board of Directors and the regulatory authorities where appropriate.


ANNUAL REPORT 2013

Page22


24/134

The Audit Committee will review related party transactions on a quarterly basis to ensure that such transactions are not at a

disadvantage to the Group and where appropriate, have the prior approval of the disinterested shareholders at a general meeting.

The Audit Committee will also review the adequacy of the internal controls and identified risks to ensure that inadequacies of internal

controls and risks are rectified or mitigated.

The Audit Committee will meet with the external auditors at least twice a year without the presence of the Management.

The Audit Committee shall regulate its procedures as follows:-

a)

b)

c)

d)

e)

f )

The Audit Committee held five (5) meetings during the financial year ended 31 December 2013 and the attendance of each member

is as follows:-

Name Attendance

Lau Tiang Hua 5/5

Raja Dato Seri Aman Bin Raja Haji Ahmad 5/5

M Chareon Sae Tang @ Tan Whye Aun 4/5

The following is a summary of the activities carried out by the Audit Committee during the financial year ended 31 December 2013:-

a)b)

c)

d)

e)

f )

g)

h)

i )

j )

The main role of the internal audit is to review the effectiveness of the Groups system of internal controls and this is performed with

impartiality, proficiency and due professional care. Internal audit adopts a risk based auditing approach by focusing on reviewing

identified high risk areas for compliance with control policies and procedures, identifying business risk which have not been

appropriately addressed and evaluating the adequacy and integrity of controls.

The Audit Committee shall hold at least 4 meetings in each financial year;

A member of the Audit Committee may at any time summon a meeting of the Audit Committee;

Notice calling for a meeting of the Audit Committee shall be given to its members at least 14 days before the meeting or at

shorter notice as the Audit Committee members shall determine or agree;

The quorum necessary for the transaction of business at an Audit Committee meeting shall be two and the majority of members

present must be independent directors;

Questions arising at any Audit Committee meeting shall be decided by the majority vote of its members present. In case of an

equality of votes, the Chairman of the meeting shall have a second or casting vote; and

Minutes of each Audit Committee meeting shall be kept by the Company Secretary.

Reviewed the quarterly results and recommended to your Board for approval and announcement to Bursa Securities;Reviewed the audit findings and recommendations made by the external auditors and the Managements response and follow

up actions where appropriate and report the same to your Board;

Reviewed the annual audited financial statements and recommended to your Board for approval;

Reviewed and approved the internal audit plan as well as the internal audit reports and the recommended actions to be taken

by the Management;

Reviewed the adequacy of the resources of the internal audit function and suggested prioritized audit areas if necessary;

Reported to your Board of Directors significant matters deliberated at the Audit Committee meetings;

Held 2 private meetings with the external auditors without the presence of the Management for the purpose of obtaining

feedback on sensitive audit issues;

Reviewed the impact of new or proposed changes in accounting standards and regulatory requirements to the Group;

Reviewed related party transactions and conflict of interest situation to ensure such transactions/situation did not disadvantage

the Group; andReviewed the risk register compiled by the Head of Risk Management and deliberated on the controls in place to mitigate the

risks identified.

4. PROCEDURES

5. SUMMARY OF ACTIVITIES OF THE AUDIT COMMITTEE

6. INTERNAL AUDIT FUNCTION AND SUMMARY OF ACTIVITIES

AUDIT COMMITTEE REPORT (continued)


ANNUAL REPORT 2013

Page 23


25/134

The Group has in place an internal audit function and is independent of the activities it reviews. The Head of the Internal Audit

Department reports directly to the Audit Committee. The internal audit activities are guided by a detailed annual Audit Plan. The

annual Audit Plan is approved by the Audit Committee and thereafter updated as and when necessary after prior approval of the Audit

Committee.

During the period under review, the Internal Audit Department had undertaken the following activities:-

a)

b)

c)

d)

This Audit Committee Report is made in accordance with the resolution of your Board of Directors dated 25 February 2014.

Physical verification of inventory and cash maintained at the branches (located in Malaysia and Vietnam) and Head Office

Departments (located in Malaysia) which were selected by adopting risk based methodology, reviewing the compliance of laiddown inventory and cash handling procedures, and to check for strict compliance to business processes, risk management

systems, internal controls and statutory requirements at branches and Head Office Departments;

Performed ad hoc reviews of selected internal control system and procedures as requested by top Management;

Discussed audit findings and audit recommendations with Management for resolution and action; and

Tabled the internal audit reports at the Audit Committee meetings for the deliberation by its members, and to follow up on any

suggested actions.

AUDIT COMMITTEE REPORT (continued)


ANNUAL REPORT 2013

Page24


26/134

STATEMENT ON

RISK MANAGEMENT &

INTERNAL

CONTROL

Your Board is pleased to present the Statement on Risk Management & Internal Control (SRMIC) as required by paragraph 15.26(b) ofthe Listing Requirements of Bursa Securities, which outlines the nature and scope of risk management and internal control of the Group

during the period under review. The SRMIC is prepared in accordance to the Statement on Risk Management & Internal Control:

Guidelines for Directors of Listed Issuers issued by Bursa Securities (Guidelines). Pursuant to the Guidelines, your Board is committed

to establish a sound risk management framework and internal control system.

The internal control system is designed to manage rather than to eliminate the risk of failure to meet the Groups business objectives.

Therefore, it can only provide reasonable, but not absolute assurance against material misstatement, operational failures, fraud or loss.

1. ROLES AND RESPONSIBILITIES FOR RISK MANAGEMENT AND INTERNAL CONTROL

1.1 Board responsibilities

1.2 Management responsibilities

1.3 Internal Audit responsibilities

Your Boards responsibilities for the governance of risk and controls include:-

a)

b)

c)

Your Board has delegated the reviewing process to the Audit Committee and the Risk Management Committee which includes

periodic review of the effectiveness of prevailing risk management and internal control in place to mitigate the risks identified,

testing of the effectiveness and efficiency of the internal control procedures to ensure the system is viable and robust and identifying

new risks and the proposed controls to counter such risks identified.

Management responsibilities for the governance of risk and control include:-

a)

b)

c)

The Head of the Internal Audit Department reports directly to the Audit Committee. Your Board, however, is still responsible for

ensuring the adherence of the scope of the internal audit function.

Embedding risk management in all aspects of the Groups activities;

Approving the boards acceptable risk appetite; and

Reviewing the risk management framework, processes, responsibilities and assessing whether they provide reasonable

assurance that risks are managed within tolerable ranges.

Identifying risk relevant to the business of the Group and the achievement of its objectives and strategies;

Designing, implementing and monitoring the risk management framework in accordance with the Groups strategic vision and

overall risk appetite; and

Identifying changes to risk or emerging risk, taking action as appropriate and promptly bringing up these to the attention of

your Board.


ANNUAL REPORT 2013

Page 25


27/134

Your Board puts paramount importance in ensuring that an appropriate risk management and internal control system is established

within the organization to govern the conduct within the Group to manage risk and increase the likelihood that its established goals will

be achieved and the significant adverse impact from any future event or situation is at an acceptable level. The main key elements and

features of risk management and internal control systems are:-

2. ELEMENTS AND FEATURES OF RISK MANAGEMENT AND INTERNAL CONTROL

The functions and responsibilities of the internal audit are in accordance with the Guidelines on Internal Audit Function issued by

The Institute of Internal Auditors, Malaysia and the Listing Requirements of Bursa Securities. The internal audit activities are guided

by a detailed annual Audit Plan which is approved by the Audit Committee and revised as and when necessary.

The internal audit function provides assessments as to whether risks, which may hinder the Group from achieving its objectives are

being adequately evaluated, managed and controlled. It further evaluates and enhances the effectiveness of the governance, risk

management and internal control framework.

The Audit Committee comprises only Independent Non-Executive Directors in order to ensure that it is able to carry out its duty

without any interference from the Executive Directors and to provide an unbiased view. The Audit Committee members who bring

with them a wide variety of experience and expertise in various disciplines reinforce the effectiveness of their role. The Audit

Committee meets on a regular basis and has full and unrestricted access to both the internal and external auditors. The Audit

Committee operates within its Terms of Reference and ensures that there are effective risk management and compliance to control

procedures in order to provide the level of assurance required by your Board.

The Audit Committee will deliberate on the Internal Audits reports issued by the Internal Audit Department at every quarter and

focus on those major findings to ensure corrective actions are taken by Management.

The Audit Committee meets with the external auditors at least twice a year without the presence of the Management and Executive

Directors to provide an opportunity for the external auditors to highlight sensitive issues arising from the interim and final audits.

The Audit Committee will brief your Board on the significant findings raised by internal and external auditors and instruct the

Management to take the appropriate actions to rectify any shortcomings reported.

The Risk Management Committee comprises Independent Non-Executive Directors and the Group Managing Director. The Risk

Management Committee supports your Board in the overall risk management oversight of the Company and the Group. The Risk

Management Committee discharges its functions by reviewing periodic management reports on risk exposure, risk portfolio and

management strategies; ensuring adequacy of infrastructure, resources and systems for effective risk management; assessing

adequacy of policies and framework for identifying, measuring, and monitoring and controlling risks; and reviewing the extent to

which these are operating effectively.

A Risk Management Framework has been approved by the Risk Management Committee that provides the foundations and

arrangements that will embed it throughout the Group. The Framework encompassed the mandate and commitment from the

management/line management, the design of Framework for managing risk, the implementation of Risk Management, themonitoring and review of the Framework and continual improvement of the Framework.

All risks identified in the Group are recorded in a Master Risk Register and they are reviewed on a periodic basis in order to ensure

that the Master Risk Register is continually seen as relevant and useful throughout the life of the risk management process.

Your Board took cognizance that the critical element of a sound risk management system is monitoring to ensure it is performing as

intended. Hence, monitoring are done through on-going activities as it is performed on real-time basis, reacting dynamically to

changing conditions and is ingrained in the Group; and by way of a separate evaluation by the Internal Audit Department.

2.1 The Audit Committee

2.2 The Risk Management Committee

STATEMENT ON RISK MANAGEMENT & INTERNAL CONTROL (continued)


ANNUAL REPORT 2013

Page26


28/134

2.3 Other Key Areas of Risk Management and Internal Control

Your Board through the Audit Committee and the Risk Management Committee has reviewed on the adequacy and effectiveness of

the risk management processes and the internal control system on a periodic basis. In reviewing the above, your Board has identified,

evaluated and managed significant risk faced by the Group for the financial year under review up to the date of approval of this

statement to ensure that its objective and strategies are achieved. In view that all the steps are put in place, your Board is confident

that the risk management and internal control system of the Group are sufficient to address any significant failings or weaknesses

identified and necessary actions are taken to remedy them.

Your Board remains committed towards maintaining a sound risk management policy and system of internal control which continuously

evolves to support both the type of business and size of operation of the Group as well as to cater to the changing external

environment. As such, your Board will, when necessary put in place appropriate action plans to further enhance the Groups system of

internal control and ensure that its risk management policy is effective in managing the Groups risk.

The Chief Executive Officer and the Chief Financial Officer have given assurance to your Board that the Groups risk management and

internal control system is operating adequately and effectively, in all material aspects, based on the risk management framework

adopted by the Group.

As required by paragraph 15.23 of the Bursa Securities Listing Requirements, the external auditors have reviewed this Statement on

Risk Management & Internal Control. As set out in their terms of engagement, the procedures were performed in accordance with

Recommended Practice Guide 5 (Revised) issued by Malaysian Institute of Accountants. Based on their procedures performed, the

external auditor has reported to your Board that nothing has come to their attention that causes them to believe that this Statement is

not prepared in all material respects, in accordance with the disclosures required by paragraph 41 & 42 of the Guidelines

nor is itfactually inaccurate.

This statement is made in accordance with the resolution of the Board of Directors dated 9 April 2014.

The Group has a clearly defined organization structure with clear defined lines of responsibility and accountability aligned to the

current business and operations requirements. Each departmental head reports directly to the Group Managing Director who in turn

reports to your Board under a separate agenda at each Board Meeting. The Group Managing Directors Report will encompass

significant development in the Groups business operations as well as development in the industry as a whole.

The Group also has in place a set of Operation Manual which has been reviewed by the Audit Committee and approved by yourBoard to guide the operation of each business division. The Group maintains a proper and systematic record keeping for a

reasonable period of time to safeguard all information of the Group. All business transactions data are computerized to ensure the

accuracy and timeliness of information and in compliance with law and regulations.

Management is required to prepare its comprehensive business plan and annual budgets for tabling to your Board for its deliberation

and approval. The Audit Committee will monitor the Groups performance against the approved budgets through the review of

quarterly interim financial reports. In their review of quarterly interim financial reports, the Audit Committee will deliberate on all key

financial and operating performance. In addition, your Board may call for a review of the strategic planning, budgeting and

forecasting of revenue and expenses in the light of changes to the business environment.

3. BOARDS STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL

4. ASSURANCE FROM MANAGEMENT

5. REVIEW OF STATEMENT BY EXTERNAL AUDITOR


ANNUAL REPORT 2013

STATEMENT ON RISK MANAGEMENT & INTERNAL CONTROL (continued) Page 27


29/134

ADDITIONAL COMPLIANCE

INFORMATIONUTILIZATION OF PROCEEDSThere was no fund raising exercise implemented during the financial year.

SHARE BUYBACKSThe Company does not have a scheme to buy back its own shares.

OPTIONS, WARRANTS OR CONVERTIBLE SECURITIESThe Company has not issued any options, warrants or convertible securities for the financial year ended 31 December 2013.

DEPOSITORY RECEIPT PROGRAMMEThe Company did not sponsor any depository receipt programme for the financial year ended 31 December 2013.

IMPOSITION OF SANCTIONS AND/OR PENALTIESThere were no sanctions and/or penalties imposed on the Company and its subsidiaries, Directors or Management by relevant regulatory

bodies during the financial year ended 31 December 2013.

NONAUDIT FEEDuring the financial year ended 31 December 2013, RM 36,000 was paid to the external auditors, BDO, for non-audit services.

PROFIT GUARANTEEThe Company did not issue any profit guarantee.

VARIATION OF RESULTSDuring the financial year, there was no variation of results by more than 10% from any profit estimate, forecast or unaudited results thatwere announced.

MATERIAL CONTRACTSOn 2 December 2013, the Group disposed of its entire shareholding in Tomei Gold & Jewellery (Subang) Sdn. Bhd. (TGJ (Subang)) toTeck Fong Property Sdn. Bhd. for a total cash consideration of RM6,095,000. The consideration was based on the net assets value ofTGJ (Subang) as at 30 November 2013 and taking into consideration the market valuation of an investment property owned by TGJ

(Subang).Teck Fong Property Sdn. Bhd. is a company controlled by Tan Sri Datuk Ng Teck Fong and family.

Except for the above, there were no other material contract entered into by the Company and/or its subsidiaries during the financial yearended 31 December 2013, which involves the interest of Directors and/or major shareholders.

RECURRENT RELATED PARTY TRANSACTIONSThe aggregate value of the recurrent related party transactions conducted by the Company and/or its subsidiary companies with relatedparties during the financial year were as follows:-

Amount oftransactions(RM)

1,037,828

1,042,505

54,150

375,882

391,020

660,400

10,540

3,440

Nature ofrelationship

Note 1

Note 2

Note 3

Note 4

Note 5

Note 6

Note 7

Note 8

Nature of transactions

Sales of jewellery

Sales of jewellery and purchase

of manufacturing toolsRental of premises

Rental of premises

Rental of premises

Rental of premises

Staff trainings

Purchase of manufacturing tools

Companies within the Group

YXG

GPM

YXG, GPM, OMD

TGJ (MV)

TGJ (MV)

YXG, GPM, TGJM, OMD,TGJ (MV), TGJH, TR

TGJM

GPM

Transacting parties

Ong Tiong Yee & Sons Sdn. Bhd.

Schofer Germany-The Chain

Company Gmbh & Co. KGUnique Avenue Sdn. Bhd.

Best Arcade Sdn. Bhd.

Teck Fong Property Sdn. Bhd.

Oasis Properties Sdn. Bhd.

Oasis College Sdn. Bhd.

Gexcel Asia Sdn. Bhd.

Yi Xing Goldsmith Sdn. Bhd. (YXG)

Gemas Precious Metals Industries Sdn. Bhd. (GPM)

Tomei Gold & Jewellery Manufacturing Sdn. Bhd. (TGJM)

O M Design Sdn. Bhd. (OMD)

Tomei Gold & Jewellery (M.V.) Sdn. Bhd. (TGJ (MV))

Tomei Gold & Jewellery Holdings (M) Sdn. Bhd. (TGJH)

Tomei Retail Sdn. Bhd. (TR)


ANNUAL REPORT 2013

Page28


30/134

NOTE 1Tan Sri Datuk Ng Teck Fong, Datuk Ng Yih Pyng and Ng Yih Chen are directors and major shareholders of the Company. Ng SheauChyn and Ng Sheau Yuen are directors and shareholders of the Company. Ong Kee Liang, a director and shareholder of Ong Tiong Yee& Sons Sdn. Bhd.,is the spouse of Ng Sheau Chyn, who is a director and shareholder of the Company. Datin Choong Chow Mooi, adirector and a shareholder of the Company is the spouse of Datuk Ng Yih Pyng.

NOTE 2Schofer Germany-The Chain Company Gmbh & Co. KG is a major shareholder of Gemas Precious Metals Industries Sdn. Bhd.

NOTE 3Tan Sri Datuk Ng Teck Fong, Datuk Ng Yih Pyng and Ng Yih Chen are directors and major shareholders of the Company. Ng SheauChyn and Ng Sheau Yuen are directors and shareholders of the Company. Tan Sri Datuk Ng Teck Fong and Ng Sheau Chyn are

directors and major shareholders of Unique Avenue Sdn. Bhd..Datuk Ng Yih Pyng, Ng Yih Chen and Ng Sheau Yuen are directors ofUnique Avenue Sdn. Bhd. Ng Teck Fong Holdings Sdn. Bhd. is a major shareholder of Unique Avenue Sdn. Bhd.. Tan Sri Datuk Ng TeckFong, Datuk Ng Yih Pyng, Ng Yih Chen, Ng Sheau Chyn and Ng Sheau Yuen are directors and major shareholders of Ng Teck FongHoldings Sdn. Bhd.. Datin Choong Chow Mooi, a director and a shareholder of the Company is the spouse of Datuk Ng Yih Pyng.

NOTE 4Tan Sri Datuk Ng Teck Fong, Datuk Ng Yih Pyng and Ng Yih Chen are direc

Documents

TOMEI AnnualReport2013