CN ASIA CORPORATION BHD · HSBC Bank Malaysia Berhad ... energy and heavy engineering industries...

www.cnasia.com

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Lot 7907, Batu 11, Jalan Balakong43300 Seri Kembangan

Selangor Darul Ehsan, Malaysia

T: 603-8942 6888F: 603-8942 3365

E: [email protected]

CN ASIA CORPORATION BHD(399442-A) (Incorporated In Malaysia)


A N N U A L R E P O R T

2014

CONTENTSNotice of Annual General Meeting 02

Corporate Information 04

Group Structure 05

Certification and Accreditation 06

The Group’s Business 07

Profile of Directors 08

Audit Committee Report 10

Statement on Corporate Governance 13

Statement of Directors’ Responsibilities 19

Statement on Corporate Social Responsibility 20

Additional Compliance Information 21

Statement on Risk Management and Internal Control 22

Chairman’s Statement 24

Financial Statements 25

Properties of the Group 87

Analysis of Shareholdings 88

Form of Proxy

Notice of ANNuAl GeNerAl MeetiNG

AGENDA

1. To receive the Audited Financial Statements for the financial year ended 31 December 2014 together with the Reports of the Directors and the Auditors thereon.

(Resolution 1)

2. To approve the payment of Directors’ fees in respect of the financial year ended 31 December 2014.

(Resolution 2)

3. To re-elect Mr. Chong Ying Choy who is retiring in accordance with Article 84 of the Company’s Articles of Association and being eligible has offered himself for re-election.

(Resolution3)

4. To consider and, if thought fit, to pass the following resolution:-

“THAT pursuant to Section 129(6) of the Companies Act, 1965, Dato’ Hilmi bin Mohd Noor, who is over the age of seventy (70) years, be and is hereby re-appointed as Director to hold office until the conclusion of the next Annual General Meeting of the Company.”

(Resolution 4)

5. To re-elect Mr. Yoong Nim Chee who is retiring in accordance with Article 91 of the Company’s Articles of Association and being eligible has offered himself for re-election.

(Resolution 5)

6. To re-appoint Messrs SJ Grant Thornton as Auditors of the Company for the ensuing year and to authorise the Board of Directors to fix their remuneration.

(Resolution 6)

As Special Business

To consider, and if thought fit, to pass the following resolution:-

7. ORDINARY RESOLUTION

Continuation in office as Independent Non-Executive Director pursuant to Recommendation 3.3 of the Malaysian Code on Corporate Governance 2012.

(Resolution 7)

“THAT approval be and is hereby given to Mr. Chong Ying Choy, who has served as an Independent Non-Executive Director of the Company for a cumulative term of more than nine (9) years, to continue to act as an Independent Non-Executive Director of the Company.”

8. ORDINARY RESOLUTION

Authority to allot and issue shares pursuant to Section 132D of the Companies Act, 1965 (Resolution 8)

“THAT pursuant to Section 132D of the Companies Act, 1965 and subject to the approval of the relevant governmental and/or regulatory authorities, the Directors be and are hereby empowered to allot and issue shares in the Company at any 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 percentum (10%) of the issued share capital of the Company for the time being and the Directors be and are hereby also empowered to obtain the approval from 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 Annual General Meeting of the Company.”

9. To transact any other business for which due notice shall have been given.

BY ORDER OF THE BOARD

LIM PAIK GOOT (MIA 13304)KOH MUI TEE (LS 03057)Company Secretaries

Selangor Darul Ehsan29 May 2015

NOTICE IS HEREBY GIVEN that the Nineteenth Annual General Meeting of CN Asia Corporation Bhd will be held at Meeting Room Livia 1, UG Level, ibis Styles Kuala Lumpur Cheras, C180 Hotel Sdn Bhd, Jalan C180/1, Dataran C180, 43200 Cheras, Selangor Darul Ehsan on Wednesday, 24 June 2015 at 10.00 a.m. for the following purposes:-

02 CN ASIA CorporAtIoN Bhd (399442-A) • AnnuAl RepoRt 2014

NOTiCE Of ANNuAl GENErAl MEETiNG(CONT’d)

Notes:

1. Only depositors whose names appear in the Record of Depositors as at 16 June 2015 shall be regarded as Members and entitled to attend, speak and vote at the meeting.

2. A Member entitled to attend and vote at the meeting is entitled to appoint one (1) or more proxies to attend and vote instead of him. A proxy may but need not be a Member of the Company and the provision of Section 149(1)(b) of the Companies Act, 1965 shall not apply to the Company. A proxy appointed to attend and vote at the meeting shall have the same rights as the Member to speak at the meeting.

3. Where a Member appoints more than one (1) proxy, the appointment shall be invalid unless the Member specifies the proportion of his shareholdings to be represented by each proxy.

4. The instrument appointing a proxy in the case of an individual shall be under the hand of the appointor or of his attorney duly authorised or if the appointor is a corporation, either under seal or under the hand of an officer or attorney duly authorised.

5. The Proxy Form must be deposited at the Registered Office of the Company at Lot 7907, Batu 11, Jalan Balakong, 43300 Seri Kembangan, Selangor Darul Ehsan, not less than forty eight (48) hours before the time set for holding the meeting or any adjournment thereof.

Explanatory Notes on Ordinary and Special Business

(i) Resolution 7 - Continuation in office as Independent Non-Executive Director

The Nomination Committee and the Board have assessed the independence of Mr. Chong Ying Choy who served as Independent Non-Executive Directors of the Company for a cumulative term of more than nine (9) years, and has recommended that he continues to act as Independent Non-Executive Director of the Company based on the following justifications:

a) His vast experience, expertise and independent judgment contributed to the effective discharging of his duties.

b) He has been with the Company for more than 18 years where he has familiarised himself with the business and provide element of objectivity to the Board of Directors.

c) He continues to be independent as there are no circumstances and relationships that create threats to his independence.

d) He actively participated in board meetings and possess the appropriate competencies to enable him to apply his professional judgment.

In addition, Mr Chong is subject to assessment by the Board in regards to his independence.

(ii) Resolution 8 - Authority to allot and issue shares pursuant to Section 132D of the Companies Act, 1965

The Resolution 8 proposed under item 8 of the agenda, if passed, will renew the authority given to the Directors of the Company to issue and allot shares in the Company at any time, to such person or persons, upon such terms and conditions and for such purposes as the Directors may, in their absolute discretion, deem fit (“General Mandate”), provided that aggregate number of shares issued pursuant to this General Mandate does not exceed 10% of the total issued share capital of the Company at the time of issue. This renewed General Mandate, unless revoked or varied at a general meeting, will expire at the conclusion of the next Annual General Meeting (“AGM”) of the Company.

Pursuant to Section 132D of the Companies Act 1965, the Company has not issued any new shares under the general mandate approved in the Eighteenth AGM held on 27 May 2014 and which will expire at the forthcoming Nineteenth AGM of the Company to be held on 24 June 2015.

The authority will provide flexibility to the Company for any possible fund raising activities, including but not limited to further placing of shares, for purpose of funding future investment project(s), working capital and/or acquisitions.

03CN ASIA CorporAtIoN Bhd (399442-A) • AnnuAl RepoRt 2014

Dato’ Hilmi bin Mohd Noor(Independent Non-Executive Chairman)

Ho Cheng San(Managing Director)

Ir. Lee Lam(Executive Director)

BOARD OF DIRECTORS

corporAte iNforMAtioN

AUDIT COMMITTEE

Chong Ying Choy (Chairman)Dato’ Hilmi bin Mohd NoorYoong Nim Chee (appointed with effect from 4 December 2014)Charles Ross Mckinnon (resigned with effect from 9 September 2014)

NOMINATION COMMITTEE

Dato’ Hilmi bin Mohd Noor (Chairman)Chong Ying ChoyYoong Nim Chee (appointed with effect from 4 December 2014)Charles Ross Mckinnon (resigned with effect from 9 September 2014)

REMUNERATION COMMITTEE

Chong Ying Choy (Chairman)Ho Cheng SanYoong Nim Chee (appointed with effect from 4 December 2014)Charles Ross Mckinnon (resigned with effect from 9 September 2014)

COMPANY SECRETARIES

Lim Paik Goot (MIA 13304)Koh Mui Tee (LS 03057)

REGISTERED OFFICE

Lot 7907, Batu 11, Jalan Balakong43300 Seri KembanganSelangor Darul EhsanTel : +603-8942 6888Fax : +603-8942 3365

AUDITORS

SJ Grant Thornton (Firm No.: AF 0737)(Member of Grant Thornton International Ltd.)Chartered AccountantsLevel 11 Sheraton Imperial CourtJalan Sultan Ismail50250 Kuala LumpurTel : +603-2692 4022Fax : +603-2691 5229

PRINCIPAL BANKERS

Public Bank BerhadAmbank (M) BerhadHSBC Bank Malaysia BerhadAlliance Bank Malaysia BerhadCIMB Bank BerhadSeychelles International Mercantile Banking Corp. Ltd.

SOLICITORS

Iza Ng Yeoh & KitDennis Nik & Wong

INVESTOR RELATIONS

Kathy Lim Paik GootLot 7907, Batu 11, Jalan Balakong43300 Seri Kembangan, Selangor Darul EhsanTel : +603-8942 6888Fax : +603-8942 3365Email : [email protected]

REGISTRARS

Tricor Investor Services Sdn Bhd (Co. No: 118401-V)Level 17, The Gardens North TowerMid Valley CityLingkaran Syed Putra59200 Kuala LumpurTel : +603-2264 3883Fax : +603-2282 1886

STOCK EXCHANGE LISTING

Main MarketBursa Malaysia Securities Berhad

Chong Ying Choy(Independent Non-Executive Director)

Yoong Nim Chee(Independent Non-Executive Director)(appointed with effect from 4 December 2014)

Charles Ross Mckinnon(Non-Independent Non-Executive Director)(resigned with effect from 9 September 2014)


(Company No.: 399442-A)(Incorporated In Malaysia)

Investment Holding &Providing Management Services

CN ASIA CORPORATION BHD

Group Structure

100%Chip Ngai Engineering

Works Sdn Bhd(Incoporated in Malaysia)

Manufacturing and trading of underground

and skid tanks, dish ends, pressure vessels, road tankers, piping for the petroleum industry and that of specialised engineering works and

fabrication works

100%Zhuhai CN Engineering

Works Co., Ltd.(Incoporated in People’s

Republic of China)

Manufacturing and trading of tanks for specialised

industries

49%PICN Engineering

Sdn Bhd(Incoporated in Malaysia)

Fabrication and trading of tanks for specialised

industries

100%Asia Tank Containers (Malaysia) Sdn Bhd

(Incoporated in Malaysia)

Manufacturing, repairing and renting of transportable containers for hazardous chemicals

100%CN Asia Capital

Sdn Bhd(Incoporated in Malaysia)

Investment Holding

100%Douwin Sdn Bhd

(Incoporated in Malaysia)

Investment Holding


iSo 9001:2008

ul 58 & ul 1746

u Stamp u2 Stamp S Stamp

NB Stamp r Stamp

ciDB petronas - Special license,registration certificate

certificAtioN AND AccreDitAtioN


CN Asia Corporation Bhd was incorporated in Malaysia on 23 August 1996 as an investment holding company. The main activities of the Group can be categorized under 6 divisions as follows:

1. Manufacturing of underground and aboveground storage tanks for the petroleum and general process industries for the local and global market.

2. Manufacturing of dish heads and provision of plate rolling services for the food and beverage, petrochemical, energy and heavy engineering industries worldwide.

3. Manufacturing of all types of transportation equipment such as:

• Co2 Road Tankers• VacuumTankers• CombinationUnits• HighPressureCleanersandJetters• LPGandChemicalTankers

4. Provision of engineering, procurement and construction (EPC) services for the following industries:-

• Petrochemical : carbon and cladded steel pressure vessels and heat exchangers

• FoodandBeveragePlant : stainless steel vessels, sterilizers, and etc

• PowerGeneration : supply and erection of flue stacks and heat recovery steam generator (HRSG) pressure vessels

• BulkingTerminal : API 620,650 bulk vertical storage tanks inclusive of

- piling works

- civil foundation

- laying of pipes

- pigging and pump system

- loading station

- office and warehouse

• Civilengineeringandconstructionworksiscarriedoutinconjunctionwiththeaboveproducts.

5. Provision of heat treatment services to a varied range of vessel design and fabrication codes, be they ASME, PD, AS etc complete with the necessary heat treatment reports and charts.

6. IMO Type 1 stainless steel transportable tanks

• Manufacturing

• Repairs

• LeasingtoInternationalMaritimeOperators

the Group’S BuSiNeSS


DATO’ HILMI BIN MOHD NOOR

HO CHENG SAN

profile of DirectorS

A Malaysian, aged 73, is the Independent Non-Executive Chairman of the Company. He was appointed to the Board on 1 January 1999 as a Non-Executive Chairman and was redesignated as an Independent Non-Executive Chairman on 28 November 2012. He is the Chairman of the Nomination Committee and a member of the Audit Committee. He graduated with aBachelorofArts (Hons.)degree fromtheUniversityof Malaya in 1966 and obtained his MBA from Marshall University,USA.Inaddition,heispresentlyamemberof the Chartered Institute of Purchasing and Supply (United Kingdom). Upon graduation, he joined theMinistry of Finance where he held various positions until 1986 when he was appointed the Deputy Director GeneraloftheEconomicPlanningUnit,PrimeMinister’sDepartment. From 1989 to 1994, he served as Secretary General, Ministry of Energy, Telecommunications and Post, and later as Secretary General, Ministry of Rural Development until his retirement in May 1997. Between

1970 and 1997, he served as a Board Member of several companies/organisations such as Lembaga Letrik Negara (Chairman), Tenaga Nasional Berhad (Founder Director), Telekom Malaysia Berhad, Bank Pertanian Malaysia Berhad, Keretapi Tanah Melayu, Lembaga Pelabuhan Bintulu and Heavy Industries Corporation of Malaysia Berhad.

Dato’ Hilmi attended all five (5) Board Meetings and all five (5) Audit Committee Meetings held during the financial year ended 31 December 2014.

Dato’ Hilmi does not hold any interest, directly or indirectly in the securities of the Company or its subsidiaries nor have any family relationship with any other Directors and/or major shareholders of the Company. He has not entered into any transaction, whether directly or indirectly, which has a conflict of interest with the Company. He has not been convicted of any offences within the past 10 years.

A Malaysian, aged 62, is the Managing Director of the Company and was appointed to the Board on 5 April 1997. He is currently a member of the Remuneration Committee and Chairman of the Option Committee. He obtained his Diploma in Mechanical Engineering in 1978. He has more than 35 years of experiences in the Engineering, Procurement, Construction and Commissioning of Palm Oil Mills, Petrochemical, Food and Beverage Plants and Manufacturing of Process Plant Equipment World wide with Comprehensive after Sales Services and Maintenance of its equipment at its installation.

Mr Ho has been involved in housing and property development and has wide experience in the commercial and industrial property sectors. He is the

Chief Executive Officer and one of the founder of Cantik Realty Sdn Bhd and Tai Seng Housing Development Co Sdn Bhd. He has more than 35 years of management experience in the field of marketing and property development.

Mr Ho attended all five (5) Board Meetings held during the financial year ended 31 December 2014.

Mr Ho does not have any family relationship with any other Directors of the Company. He is a substantial shareholder of the Company and his securities holding is set out in Analysis of Directors’ Shareholdings on page 88 of the Annual Report. There is no conflict of interest with the Company except for those disclosed in Note 30 to the Financial Statements of this Annual Report. He has not been convicted of any offences within the past 10 years.


IR. LEE LAM

CHONG YING CHOY

YOONG NIM CHEE

PrOfilE Of dirECTOrS(CONT’d)

A Malaysian, aged 67, the Executive Director of the Company, was appointed to the Board on 1 August 2009. He graduated with a Bachelor of Engineering (Hons.) degreeinMechanicalEngineeringfromtheUniversityofMalaya in 1973 and obtained his Professional Engineering certification from Lembaga Jurutera Malaysia in 1982. He is also a Fellow of the Institution of Engineers, Malaysia since 1986. Upon his graduation in 1973, he held theposition of Shift Engineer in a large foreign owned tin mining company and later joined other companies that are involved in management consultancy, project development and product support. Between 1990 to 1999, he served as the Deputy General Manager of Manufacturing and Engineering in Wagon Engineering Sdn Bhd. Thereafter, he joined the Company’s subsidiary

A Malaysian, aged 60, is an Independent Non-Executive Director of the Company and was appointed to the Board on 5 April 1997. He is the Chairman of the Audit Committee as well as the Remuneration Committee and is a member of the Nomination Committee and the Option Committee. He has been an associate member of the Institute of Chartered Secretaries And Administrators since 1982, a fellow of the Chartered Association of Certified Accountants since 1987, a member of the Malaysian Association of Certified Public Accountants since 1988, member of Certified Practicing Accountant, Australia and associate member of Chartered Tax Institute of Malaysia since 2008. He is also a chartered accountant having been registered with the Malaysian Institute of Accountants since 1982. He has many years of experience in auditing, taxation and financial advisory. From 1980 to

company, Chip Ngai Engineering Works Sdn Bhd (“CNEW”) as Production Manager until 2003, as Senior Manager and Head of Engineering between 2003 to 2005 and as an Executive Director of CNEW since 2006.

Mr Lee attended all five (5) Board Meetings held during the financial year ended 31 December 2014.

Mr Lee does not have any family relationship with any other Directors and/or major shareholders of the Company. His securities holding is set out in Analysis of Directors’ Shareholdings on page 88 of the Annual Report. He has not entered into any transaction, whether directly or indirectly, which has a conflict of interest with the Company. He has not been convicted of any offences in the last 10 years.

1988, he was attached with a firm of public accountants, Hanafiah Raslan & Mohamad. Thereafter, he set up his own practice under the name of Y C Chong & Co.

Mr Chong attended all five (5) Board Meetings and all five (5) Audit Committee Meetings held during the financial year ended 31 December 2014.

Mr Chong does not hold any interest, directly or indirectly in the securities of the Company or its subsidiaries nor have any family relationship with any other Directors and/or major shareholders of the Company. He has not entered into any transaction, whether directly or indirectly, which has a conflict of interest with the Company. He has not been convicted of any offences within the past 10 years.

A Malaysian, aged 56, is an Independent Non-Executive Director of the Company and was appointed to the Board on 4 December 2014. He is also appointed as the member of Audit Committee, Remuneration Committee and Nomination Committee on 4 December 2014. Mr. Yoong graduated with a Bachelor of Economy (Hons.) degreefromUniversityMalayain1981.

He has extensive experience in the corporate sector, having worked for various banks in Malaysia and Singapore where he specialized in raising equity and debt capital as well as corporate restructuring. Prior to this, he had also served in the Boards of several public listed companies. He served as the Chief Executive Officer of a property development company, Magna

Prima Berhad until 2011. Currently, he is involved in his own projects in the property sector.

Mr Yoong had not attended any Meeting held during the financial year ended 31 December 2014 since his date of appointment.

Mr Yoong does not have any family relationship with any other Directors and/or major shareholders of the Company. His securities holding is set out in the Analysis of Directors’ Shareholdings on page 88 of the Annual Report. He has not entered into any transaction, whether directly or indirectly, which has a conflict of interest with the Company. He has not been convicted of any offences within the past 10 years.


MEMBERS OF THE AUDIT COMMITTEE

Chong Ying Choy (Chairman) (Independent Non-Executive Director)Dato’ Hilmi bin Mohd. Noor (Member) (Independent Non-Executive Chairman)Yoong Nim Chee (Appointed on 4 December 2014) (Member) (Independent Non-Executive Director)Charles Ross Mckinnon (Resigned on 9 September 2014) (Member) (Non-Independent Non-Executive Director)

TERMS OF REFERENCE

Composition

The Committee must comprise at least three (3) members and all members must be Non-Executive Directors, with the majority of whom are independent, including the Chairman. Any vacancy, resulting in there being no majority of independent Directors or number of members reduced to below three (3), shall be filled within three (3) months. All members of the Audit Committee must be financially literate and at least one (1) member shall be a professional or qualified accountant.

No alternate director shall be appointed as an Audit Committee member.

Authority

The Committee is authorised by the Board to investigate any activity within its terms of reference. It is authorised to seek any information it requires from any employees and all employees are directed to co-operate with any request made by the Committee. The Committee shall also have the authority to consult independent experts where they consider it necessary to carry out their duties.

Meeting

The Committee shall meet at least four (4) times a year or at such meetings as the Chairman shall decide in order to fulfill its duties. The Secretary of the Committee shall be responsible, in conjunction with the Chairman, for drawing up the agenda and circulating to the Committee prior to each meeting.

The Secretary will also be responsible for keeping the minutes of the meetings of the Committee, and circulating them to committee members and to other members of the Board of Directors.

A quorum shall consist of a majority of Committee members and in order to form a quorum, the majority of members present must be independent directors.

Functions

The functions of the Committee are as follows:-

1. review the following and report the same to the Board of Directors:-

(a) with the external auditor, the audit plan;

(b) with the external auditor, his evaluation of the system of internal controls and in particular review the external auditor’s management letter and management’s response;

(c) with the external auditor, his audit report;

(d) the assistance given by the employees to the external auditors;

(e) the adequacy of the scope, functions and resources of the internal audit functions and that it has the necessary authority to carry out its work;

(f) the internal audit programme, processes, the results of the internal audit programme, processes or investigation undertaken and whether or not appropriate action is taken on the recommendations of the internal audit function;

AuDit coMMittee report


(g) the quarterly results and year end financial statements, prior to the approval by the board of directors, focusing particularly on:-

• changesinorimplementationofmajoraccountingpolicy;

• significantandunusualevents;and

• compliancewithaccountingstandardsandotherlegalrequirements;

(h) any related party transaction and conflict of interest situation that may arise within the Company or Group including any transaction, procedure or course of conduct that raises questions of management integrity;

(i) any letter of resignation from the external auditors; and

(j) whether there is reason (supported by grounds) to believe that the external auditor is not suitable for re-appointment.

2. recommend the nomination of a person or persons as external auditors.

3. recommend for approval of the Board the external audit fee.

MEETINGS

There were five (5) Audit Committee meetings held during the financial year ended 31 December 2014. Details of the members’ attendances are as follows:-

Audit Committee Member Number of Meetings Attended

Chong Ying Choy 5/5

Yoong Nim Chee (Appointed on 4.12.2014) -

Dato’ Hilmi bin Mohd Noor 5/5

Charles Ross Mckinnon (Resigned on 9.9.2014) 4/4

UponinvitationbytheCommittee,theGroupFinancialControllerattendedallthesemeetingsandtheoutsourcedinternal auditors, Messrs. Lefis Consulting Sdn Bhd, attended all except the first and second Audit Committee Meetings. The current external auditors, Messrs. SJ Grant Thornton were invited to attend the first, second and fifth Audit Committee Meetings during the year.

SUMMARY OF ACTIVITIES

A summary of the main activities carried out by the audit committee during the financial year included the following:-

• Reviewed the quarterly unaudited financial results of the Group and ensure compliance with approvedaccounting standards, other legal and regulatory requirements prior to recommending to the Board for approval.

• Reviewedthemanagementlettersandtheauditreportsoftheexternalauditors.

• ReviewedtheannualauditedfinancialstatementsoftheGroupandrecommendedtotheBoardforapproval.

• Revieweddeliberatedinternalauditreportsandmonitored/followeduponremedialactionsasrecommendedby the Internal Auditors.

• Reviewed internal auditplanandconsidered theproposedaudit feesof the InternalAuditors and the re-appointment of the Internal Auditors for recommendation to the Board for their approval.

• DiscussedandconsideredtheauditfeeswiththeExternalAuditorsforthefinancialyearended31December2014.

• Reviewedtheriskmanagementreportonkeyriskprofilesandriskmanagementactivities.

• Reviewed the Audit Committee Report and Statement on Risk Management and Internal Control andrecommended to the Board for approval prior to the inclusion in the company’s annual report.

AudiT COMMiTTEE rEPOrT(CONT’d)


INTERNAL AUDIT FUNCTIONS

The Group’s internal audit function is outsourced to an independent professional consulting firm, Messrs. Lefis Consulting Sdn Bhd who reports administratively to the Managing Director and functionally to the Audit Committee. The professional fees paid to the outsourced Internal Auditors during the financial year ended 31 December 2014 was amounted to RM19,500 (2013:RM9,500). The scope of internal audit covers the examination and evaluation of the adequacy and effectiveness of the Group’s system of internal control, the efficiency of operations and the quality of performance in carrying out assigned responsibilities. The Internal Auditors’ primary function is to submit audit reports that highlight risk and control weaknesses and provide suitable recommendations for improvement to reassure senior management and the Audit Committee on the state of internal control of the Group. The activities of the internal audit function during the financial year are summarised as follows:-

• PreparedtheannualinternalauditplanforapprovalbytheAuditCommittee.

• Performedinternalauditreviewstoevaluatetheadequacyoftheinternalcontrolsystemontheoverallcontrolenvironment within the Group.

• Performedriskbasedauditsonthepurchase,control,record,maintenanceandstorageoftoolsoftheGroupbased on the annual internal audit plan.

• Undertook investigation and special reviews on issues arising from the audits and / or requested by themanagement and / or Audit Committee and issued reports accordingly to the management and / or Audit Committee.

• Reviewed current system and key risk areas covering business process and reported the significant riskmanagement control to the Audit Committee on a quarterly basis to ensure proper internal controls are embedded in these process.

Further details on the internal audit functions are set out in the Statement on Risk Management and Internal Control of this Annual Report.

AudiT COMMiTTEE rEPOrT(CONT’d)


The Board of Directors of CN Asia Corporation Bhd (the “Board”) is pleased to report on the manner in which the Group has applied the principles and extent of compliance with the best practices of corporate governance as set out in the Malaysian Code On Corporate Governance 2012 (the “Code”) and pursuant to paragraph 15.25 of the Main Market Listing Requirement (“MMLR”) of Bursa Malaysia Securities Berhad. (“Bursa Securities”).

The Board recognizes that the practice of high standards of corporate governance throughout the Group as a fundamental part of discharging its responsibilities to safeguard the interests of the shareholders and to enhance shareholders’ value.

The Board is of the view that it has complied with the Code, except for the recommendations on the tenure of its independent directors that should not exceed a cumulative term of nine years. However, the definitions of independent directors under the MMLR has been complied with.

DIRECTORS

i. The Board

The Board has the overall responsibility for corporate governance, strategic direction and overseeing and evaluating the business operation of the Group. It is also entrusted with the responsibility of exercising reasonable care of the Company and Group’s resources in the best interests of its shareholders.

ii. Composition of the Board

Currently, the Board has five (5) members, comprising an Independent Non-Executive Chairman, a Managing Director, an Executive Director, and two (2) Non-Executive Independent Directors. Dato’ Hilmi, the Chairman of the Board, an Independent Director, is able to provide strong leadership leading the Board’s priority more objectively. Together, the Directors with their different backgrounds and specialisation, collectively bring with them a wide range of business, management, financial and technical experiences. The profile of each Director is set out on pages 8 to 9 of this Annual Report.

There is a clear division of responsibilities between the Chairman and the Managing Director to ensure that there is a balance of power and authority. The Chairman is responsible for running the Board and lead the discussion at the Board level whilst the Managing Director is responsible for managing the Company and the Group and the implementation of the Board’s policies and decisions to achieve the short term and long term objectives and day-to-day management of the Company and the Group.The Non-Executive Independent Directors bring to bear objective and independent judgment to the decision making of the Board in order to provide an efficient check and balance for the Executive Directors.

iii. Board Meetings

Board meetings are held at quarterly intervals with additional meetings convened when necessary.

There were five (5) Board Meetings held during the financial year ended 31 December 2014 with details of the attendance of each member of the Board at the Board Meetings as follows:-

Name of Directors Status of Directorship Independent Attendance of Meeting

Percentage (%)

Dato’ Hilmi bin Mohd Noor Non-Executive Chairman Yes 5/5 100

Ho Cheng San Managing Director No 5/5 100

Ir. Lee Lam Executive Director No 5/5 100

Chong Ying Choy Non Executive Director Yes 5/5 100

Yoong Nim Chee* Non Executive Director Yes - NA

Charles Ross Mckinnon** Non Executive Director No 4/4 100

*Appointed on 4 December 2014**Resigned on 9 September 2014

StAteMeNt oN corporAte GoverNANce


The agenda and Board papers for consideration are circulated to all Directors prior to the Board Meetings to enable the Directors to obtain and access further information and clarification in order to be well informed of the matters before the Meetings. The Company Secretary was available at all times to provide the Directors with the appropriate advice and services and also to ensure that the relevant proceedings are complied with in accordance with the rules and regulations of the relevant authorities. All decisions and conclusions of the Board are duly recorded in the Board minutes. Besides Board meetings, the Board exercises control on matters that require Board’s approval through circulation of Directors’ Resolution.

iv. Board Charter

The Board is guided by its Term of Reference (“Charter”) which set out the roles and responsibilities of the Board. The Charter has been adopted and will be reviewed periodically by the Board to ensure it is kept up-to-date with changes in regulations and best practice and ensure its effectiveness and relevance to the Board’s objective. The Board Charter is available in the Company’s website at www.cnasia.com.

v. Code of Ethics and Conduct

The Directors observe the Code of Ethics and Conduct (“COE”) in discharging their responsibilities. The COE of the Company governs the conduct of all employees in the Group including the Board. This COE has been adopted and will be reviewed periodically by the Board and is available in the Company’s website at www.cnasia.com.

vi. Appointment & Re-election To The Board

New candidate will be considered and evaluated by the Nomination Committee. Suitable candidate will then be nominated for appointment to the Board.

In accordance with the Company’s Articles of Association, newly appointed Directors shall hold office until the next following annual general meeting and shall then be eligible for re-election by shareholders in the next Annual General Meeting subsequent to their appointment. The Articles also provide that one third of the Board are required to retire at every annual general meeting and be subject to re-election by shareholders and all directors shall retire from office once at least in each three (3) years, but shall be eligible for re-election. Directors over seventy (70) years of age are required to submit themselves for re-appointment annually in accordance with Section 129 (6) of the Companies Act, 1965.

vii. Access To Information And Advice

All members of the Board have full and unlimited access to the advice and services of the Company Secretary, and where necessary, independent professional advisers may be engaged by the Directors at the Company’s expense to enable the Board to discharge their duties.

viii. Board Independence

The Code recommends that the tenure of an Independent Director should not exceed a cumulative term of nine (9) years. However, an Independent Director may continue to serve the Board upon reaching the nine (9) years limit subject to the Independent Director re-designated as Non-Independent Director. In the event the Board intends to retain the Director as Independent after the Independent Director has served a cumulative term of nine (9) years, the Board must justify the decision and seek for shareholders’ approval at the Annual General Meeting.

The Board recognizes the importance of independence and objective in its decision making process. Nevertheless, the Board is of the view that the Independent Director of the Company, Mr. Chong Ying Choy, who has served as Independent Director for a cumulative tenure exceeding nine (9) years, has over the time developed increased insight into the Company of which his experience and exposure to the Company over the years has provided an increasing contribution to the effectiveness of the Board. Thus, the Board has elected to retain Mr. Chong as Independent Director after due consideration of his experience and contribution to the Board. The Board will continuously review and evaluate independent director annually, through its Nomination Committee, as recommended by the Code.

STATEMENT ON COrPOrATE GOvErNANCE(CONT’d)


ix. Directors’ Remuneration

The Remuneration Committee is responsible to recommend the remuneration at levels which are sufficient to attract and retain the Directors needed to run the Company successfully taking into consideration all relevant factors including the functions, workload and responsibilities involved. The remuneration of Director is in line with the Group’s overall policy on compensation and benefits with due consideration to compensation levels which is comparable among other similar Malaysian Public Listed Companies. The Board as a whole determines the remuneration of Non-Executive Directors.

The aggregate Directors’ remuneration paid or payable to all directors of the Company by the Group and categorised into appropriate components for the financial year ended 31 December 2014 are as follows:-

Type of Remuneration Executive Directors Non-Executive Directors TotalRM RM RM

Fees 24,000 62,000 86,000Salaries 494,000 - 494,000Benefit-in-kind 96,472 - 96,472Other Emoluments 74,495 - 74,495Total 688,967 62,000 750,967

The number of Directors of the Company who served during the financial year and whose total remuneration from the Group falling within the respective bands are as follows:-

Number of DirectorsRange of Remuneration Executive Non-ExecutiveRM100,000 and below - 3RM100,001-RM200,000 - -RM200,001-RM300,000 1 -RM300,001-RM400,000 - -RM400,001-RM500,000 1 -

x. Directors’ Training

All Directors, except Mr. Yoong Nim Chee, have successfully completed the Mandatory Accreditation Programme (“MAP”) as prescribed by Bursa Securities as at 31 December 2014. The Board has undertaken an assessment of the training needs of each director and the Directors will continue to undergo relevant training programmes, seminars, workshops, talks and conferences to keep abreast with new regulatory developments and relevant changes in business environment on a continuous basis in compliance with paragraph 15.08 of the MMLR of Bursa Securities.

During the financial year ended 31 December 2014, the Directors have attended seminars and trainings as follows:-

Training/ Seminars Title Date

• AdvocacySessionsonCorporateDisclosureforDirectors 18 March 2014• IRB–CTIMTaxForum2014 27 March 2014• MFRSandMPERS:TheChangingLandscapeofFinancialReporting 2 & 3 April 2014• GoodsandServiceTax(GST)TrainingCourse 9-11,17-19,23-26April2014• ComparativeAnalysisofPERS,MPERSandMERSFramework 24 September 2014• WhatDirectorsNeedtoKnowaboutGST 12 September 2014• 2015BudgetSeminar 29 October 2014• UnderstandingandPreparationForGST 2 December 2014• GoodsandServiceTaxforPropertyDevelopmentandConstructionIndustry 8 December 2014



BOARD COMMITTEES

The Board has established the following Board Committees to assist the Board in discharging its duties with specific terms of reference:-

• AuditCommittee• NominationCommittee• RemunerationCommittee.

i. Audit Committee

The Company has an Audit Committee whose composition meets the MMLR, where the majority member comprises of Independent Directors. The terms of reference and further information of the Audit Committee are set out on pages 10 to 11 of this Annual Report in the Audit Committee Report.

ii. Nomination Committee

The Nomination Committee comprises entirely Non-Executive Directors, the majority of whom are independent and chaired by an Independent Director. The Nomination Committee is responsible for proposing new nominees for the Board appointments and assessing directors on an annual basis, the contribution of each individual director and the overall effectiveness of the Board. In making these recommendations, the Nomination Committee will consider the required mix of skills and experience of each member. The final decision as to who shall be nominated should be the responsibility of the full Board after considering the recommendations of the Committee.

The members of the Nomination Committee are:-

(1) Dato’ Hilmi bin Mohd Noor - Independent Non-Executive - Chairman

(2) Chong Ying Choy - Independent Non-Executive - Member

(3) Yoong Nim Chee* - Independent Non-Executive - Member

(3) Charles Ross Mckinnon** -Non-IndependentNon-Executive–Member

*Appointed on 4 December 2014** Resigned on 9 September 2014

The term of reference of the Nomination Committee are as follows:-

• Toidentify,assessandrecommendtotheBoardsuitablyqualifiedcandidatesfordirectorshipontheBoardas well as members of the Board Committees.

• Toreviewandassessannually theoverallcompositionof theBoard in termsofappropriatebalanceofskills, expertise, attributes and core competencies among executives, non executives and independent directors.

• Toreviewandassessannuallytheindependenceofdirectors.

• ToperformtheformalassessmentoftheeffectivenessofindividualDirectorsandtheannualappraisalofthe Executive Directors’ performance based on the selected performance criterias.

• ToensurenewDirectorsgothroughproperinductionprogram.

The Committee should meet as and when deemed necessary and at least once a year. There was one (1) Nomination Committee Meeting held during the financial year ended 31 December 2014 with full attendance registered by all members. The Board, through the recent review and assessment of the Nomination Committee, confidently believe that the size of the Board is appropriate and that there is appropriate mix of experience and expertise in the composition of the Board.



iii. Remuneration Committee

The Remuneration Committee comprises a majority of Non-Executive Directors, is responsible for making recommendations to the Board on remuneration packages and benefits extended to the Managing Director and Executive Director and to review their remuneration packages on an annual basis. Remuneration package of Non-Executive Directors will be a matter to be decided by the Board as a whole with the Directors concerned abstaining from deliberations and voting on decisions in respect of his individual remuneration. Fees payable to Non-Executive Directors is determined by the Board with the approval from shareholders at the Annual General Meeting.

In establishing the remuneration packages and benefits for the Managing Director and Executive Director, the Remuneration Committee has regarded the packages offered by comparable companies, and may obtain independent advice, where necessary. The remuneration of the Managing Director and the Executive Director comprises a fixed salary and allowance approved by the Board, which is in line with the Group’s performance. The term of reference of the Remuneration Committee are as follows:-

• Toestablishaformalandtransparentremunerationpolicy.

• ToreviewannuallyandmakerecommendationtotheBoardtheremunerationpackagesandbenefitsforall Executive Directors to ensure that the reward commensurate with their contributions to the Group’s profitability.

• ToreviewannuallytheperformanceoftheManagingDirectorandExecutiveDirectorandrecommendtothe Board specific adjustments in remuneration and reward structures; if any, to reflect their contributions and link to their level of responsibilities undertaken to the effective functioning of the Board.

The members of the Remuneration Committee are:-

(1) Chong Ying Choy - Independent Non-Executive - Chairman

(2) Ho Cheng San - Managing Director - Member

(3) Yoong Nim Chee* - Independent Non-Executive - Member

(3) Charles Ross Mckinnon** -Non-IndependentNon-Executive–Member

*Appointed on 4 December 2014**Resigned on 9 September 2014

The Remuneration Committee shall meet at least once a year or at such other times as the Chairman of the committee deemed necessary.

During the financial year, the Remuneration Committee held two (2) meeting to review the performance and remuneration package for Executive and Non-Executive Directors which were attended by all committee members. The remuneration package of the Managing Director and Executive Director were approved by the Board with recommendation of the Remuneration Committee.

INVESTOR RELATIONS AND SHAREHOLDERS COMMUNICATION

The Board acknowledges the need for shareholders to be informed of the developments and performance of the Company and the Group. The distribution of annual report, announcements and release of financial results on a quarterly basis provide the shareholders and the investing public with an overview of the Group’s performance and operations. The principal forum for dialogue with shareholders remains at the Annual General Meeting. Shareholders are encouraged to ask questions and seek clarification at Annual General Meeting of the Company on both the resolutions being proposed and the Group’s business and performance. Alternatively, shareholders can seek additional information and divert queries to the Company through the Group’s website: www.cnasia.com which was enhanced during the year to include corporate financial as well as non-financial information. The Share Registrar is available to attend to matters relating to shareholders’ interest.



ACCOUNTABILITY AND AUDIT

i. Financial Reporting

The Board aims to provide and present a balanced, clear and meaningful assessment of the Group’s financial performance and prospects at the end of the financial year, primarily through the annual financial statements, quarterly announcement of results to shareholders as well as the Chairman Statement in the annual report. The Board is assisted by the Audit Committee to ensure accuracy and adequacy of all information for disclosure.

A statement by the Directors of their responsibilities in respect of the audited financial statements is set out on page 19 of this Annual Report.

ii. Internal Control

The Statement On Risk Management and Internal Control set out on pages 22 to 23 of this Annual Report provides an overview of the Group’s state of internal control.

iii. Relationship With Auditors

The Company maintains a transparent relationship with the auditors in seeking their professional advice and towards ensuring compliance with the accounting standards.

The key features underlying the relationship between the Audit Committee and the external auditors are included in the Audit Committee’s terms of reference as detailed on pages 10 to 11 of this Annual Report.


This Statement on Corporate Governance was made in accordance with a resolution of the Board of Directors at a meeting held on 15 April 2015.


StAteMeNt of DirectorS’ reSpoNSiBilitieSfor prepAriNG the fiNANciAl StAteMeNtS

The Directors are responsible for the preparation of the financial statements of the Group that give a true and fair view of the state of affairs of the Group and of the Company as at 31 December 2014 and of the results and cash flows of the Group and of the Company for the financial year then ended in accordance with Malaysia Financial Reporting Standards, International Financial Reporting Standards, the Companies Act, 1965 in Malaysia and the Main Market Listing Requirements of Bursa Malaysia Securities Berhad.

In preparing the financial statements, the Directors have:-

• adoptedappropriateaccountingpoliciesandappliedtheseaccountingpoliciesconsistently;

• madejudgementsandestimatesthatareprudentandreasonable;and

• preparedthefinancialstatementsonagoingconcernbasis,unlesstheyconsiderthattobeinappropriate.

The Directors have the responsibility for ensuring that the Company and the Group keep accounting records which disclose with reasonable accuracy at any time the financial position of the Group and of the Company and which enable them to ensure the financial statements comply with the provisions of the Companies Act, 1965.

The Directors have overall responsibility for taking such steps that are reasonably open to them to safeguard the assets of the Group and of the Company to prevent and detect fraud and other irregularities.

This Statement of Directors’ Responsibilities was made in accordance with a resolution of the Board of Directors at a meeting held on 15 April 2015.


The Board of Directors acknowledges that Corporate Social Responsibility (“CSR”) is the basis for building positive relationship towards the community, environment, its employees, customers, suppliers, shareholders and other stakeholders. Therefore, the continuance practice of CSR activities is strongly encouraged to ensure that people within and outside the Group benefited from the existence of the organization.

At present, the Group continues to focus on improving the health and safety as well as welfare of the employees and workers within the organization. The Group’s Health, Safety, Security and Environment (“HSSE”) committee has been actively promoting health & safety activities in order to provide a safe and healthy work environment for its employees.

Various CSR activities carried out during the financial year ended 31 December 2014 are as follows:-

A) COMMUNITY

• Offerpracticalorindustrialtrainingtoundergraduatesfromlocalcolleges,universitiesandinstitution.

• Contributionintheformofbookstolibrariesoflocaluniversities.

B) EMPLOYEES’ WELFARE

• Regulartrainingandseminartoitsemployeesandin-housetrainingsinvariousrelevantfieldswerebeingconducted to enhance their technical competency, productivity, leadership and management qualities.

• TheCompany recognizes loyalty of its staffs and award its long service staff a special gift at its annualgathering dinner held at the beginning of the year.

• Regulargatheringeventsarebeingorganizedbytheeventcommitteetocelebratefestiveseasonsofeachrace and promote harmonize work environment in the Company.

• Organizesportsactivitiesforstafftofosterteamspiritamongemployees.

C) HEALTH, SAFETY, SECURITY AND ENVIRONMENT (“HSSE”)

The HSSE committee is chaired by the Managing Director and it regularly reviews the Group’s HSSE policies to ensure a safe and healthy work environment for its employees.

HSSE matters are also being scrutinized through internal audits review and recommendations were duly endorsed and implemented by the Management. The HSSE Committee is committed to ensure the continuous compliance of all safety measures at all time.

The HSSE committee has carried out the following activities to ensure its objectives are being fulfilled:-

• RegularlyequipandreplenishappropriatePersonalProtectionEquipment(“PPE”)forworkers.

• FirstAidDrillandregularbriefingforworkersonhealthandsafetyprocedures.

• “Gotong-Royong” within the factory compound was carried out to ensure clean and healthy workenvironment for its employees.

• Continuoustrainingandsupervisionwereprovidedtoalllevelsofemployeestopromoteasafeandhealthywork-environment in compliance with legislative requirements.

StAteMeNt oN corporAte SociAl reSpoNSiBility

This Statement on Corporate Social Responsibility was made in accordance with a resolution of the Board of Directors at a meeting held on 15 April 2015.


UTILISATION OF PROCEEDS

No proceeds were raised by the Company from any corporate proposal during the financial year.

SHARE BUYBACKS

There were no share buyback programme in place during the financial year.

OPTIONS, WARRANTS OR CONVERTIBLE SECURITIES

The Company did not issue any options, warrants or convertible securities during the financial year.

AMERICAN DEPOSITORY RECEIPT (ADR) OR GLOBAL DEPOSITORY RECEIPT (GDR) PROGRAMME

The Company has not sponsored any ADR or GDR programme during the financial year.

IMPOSITION OF SANCTIONS/PENALTIES

There were no material sanction and/or penalty imposed on the Company and its subsidiaries, Directors or management by any relevant regulatory bodies during the financial year.

NON-AUDIT FEES

The non-audit fees paid to the external auditors, Messrs SJ Grant Thornton during the financial year ended was amended to RM3,180 (2013:NIL).

PROFIT ESTIMATE, FORECAST OR PROJECTION

The Company did not release any profit estimates, forecasts or projections for the financial year. There were no variances of 10 percent or more between the audited results for the financial year and the unaudited results previously announced.

PROFIT GUARANTEE

The Company did not give any profit guarantee to any parties during the financial year.

MATERIAL CONTRACTS OR LOANS INVOLVING DIRECTORS OR MAJOR SHAREHOLDERS

There were no material contracts of the Company and subsidiaries involving Directors’ and major shareholders’ interests during the financial year. There were no contracts relating to loans entered into by the Company and its subsidiaries which involve the Directors’ and major shareholders’ interest during the financial year.

RECURRENT RELATED PARTY TRANSACTIONS STATEMENT

The Company did not incur any significant recurrent related party transactions of a revenue / trading nature during the financial year ended 31 December 2014. The details of related party transactions are disclosed in Note 30 to the accompanying Financial Statements.

ADDitioNAl coMpliANce iNforMAtioN


The Board of Directors of CN Asia Corporation Bhd (“the Board”) is pleased to present the Statement on Risk Management and Internal Control pursuant to Paragraph 15.26 (b) of the MMLR of Bursa Securities.

BOARD RESPONSIBILITY

The Board acknowledges its responsibilities for maintaining a sound system of internal control and an effective risk management and in order to safeguard shareholders’ investments and the Group’s assets and for reviewing its adequacy and integrity. Due to the limitations that are inherent in any systems of risk management and internal control, the system adopted by the Group is designed to manage rather than eliminate the risk of failure to achieve business objectives. Thus it can only provide reasonable and not absolute assurance against material misstatement, fraud or loss.

RISK MANAGEMENT

Risk management is a firmly embedded process for identifying, evaluating, prioritizing and reporting the major business risks within the Group with the objective of maintaining a sound system of internal control. Regular reviews, evaluation and update of the risk profile and the corresponding action plans have been reported to the Board. The Board through its Audit Committee will continue its effort to further enhance its risk management practices to ensure that the Group’s assets and shareholders’ interest are well protected and shareholders’ value is enhanced.

The Group‘s risk management framework is maintained and monitored by its Risk Management Committee, which is administrated by an independent consulting firm, to achieve its risk management objectives. In order to attain this objective, the Group has:-

• adoptedastructuredandsystematicriskassessment,monitoringandreportingframework;and

• enhancedthecultureofriskawarenessinthebusinessprocessesthroughriskowners’accountabilityandsign-off for action plans and continuous monitoring by the various departments within the Group.

Hence, the Group has in place the necessary implementation, reviewing and reporting processes of its risk profile to cultivate the appropriate discipline and control to continuously improvising its risk management capabilities among the respective risk owner.

INTERNAL CONTROL PROCESS

The Group’s system of internal control comprises the following key elements:-

• Organization structurewith clear linesof rolesand responsibilities includingdelegationofdutiesarewell-defined to ensure enhancement of the Group’s performance.

• Delegationsofauthorityincludingauthorizationlimitsatappropriatelevelsofmanagementareclearlydefinedto ensure accountabilities and responsibilities.

• Documented standard operating procedures and policies are regularly reviewed and revised to meetoperational needs and made available and accessible by all employees.

• SystematicandregularauditsarecarriedouttoensurecomplianceoftheISO9001:2008QualityManagementSystems of its subsidiary company, Chip Ngai Engineering Works Sdn Bhd.

• Centralisedhumanresourcefunctionthatsetsoutthepoliciesforrecruitment,trainingandappraisaloftheemployees within the Group.

• The outsourced internal auditor assists the Audit Committee in discharging its duties inmaintaining andmonitoring the internal control systems within the Group.

StAteMeNt oN riSk MANAGeMeNt AND iNterNAl coNtrol


• RegularBoardandAuditCommitteeMeetingsarecarriedouttoreviewandassesstheoverallperformanceand internal controls of the Group.

• Adequatereportsaregeneratedonaconsistentbasisforreviewontheoperationalandfinancialperformanceof the Group.

• Scheduled and ad-hoc operation and management meetings were held and attended by the ManagingDirector, Executive Director and head of departments to discuss and resolve business and operational issues.

• Traininganddevelopmentprogrammesareconductedtoensurethestaffarecompetentincarryingouttheirduties and responsibilities to achieve the Group’s objectives.

INTERNAL AUDIT FUNCTION

The Group’s internal audit functions have been outsourced to an independent consulting firm to review and evaluate the adequacy and effectiveness of the Group’s systems of internal control and risk management processes. Periodic reviews of the Group’s business processes and visits to the Group’s active business operations based on the Internal Audit Plan as approved by the Audit Committee. The audit findings and recommendations were reported to the Audit Committee and communicated to the management for remedial actions.

The outsourced internal audit function provides the Audit Committee with periodic internal audit reports identifying risks and internal control gaps of existing state of internal control, highlighting observations and providing recommendations with management action plans to improve the system of internal control. Regular follow-up audits were carried out to ensure that the remedial actions in respect of internal control deficiencies, as highlighted in the internal audit reports, have been adequately addressed by the management.

During the financial year under review, the outsourced Internal Auditors reviewed the purchase, controls, recording, maintenance and storage of major raw material within the Group and follow up on issues arising from the previous audit reviews.

CONCLUSION

The Board has received assurance from the Managing Director and the Financial Controller that the Company’s risk management and internal control system are operating adequately and effectively, in all material aspects, based on the risk management and internal control system of the Company.

The Board believes that the above frameworks are considered appropriate for the Group’s business operations to provide reasonable assurance of their integrity of the Group’s risk management and systems of internal control and that the risks are at the acceptable level throughout the Group’s business operations. There were no material losses incurred during the financial year under review as a result of weaknesses in the Group’s risk management and system of internal control.

The Board together with the management will continue to take preventive measures and appropriate actions in order to strengthen the Group’s control environment.

STATEMENT ON riSk MANAGEMENT ANd iNTErNAl CONTrOl (CONT’d)

This Statement on Risk Management and Internal Control has been duly reviewed by the External Auditors pursuant to Paragraph 15.23 of the MMLR of Bursa Securities.


Dear Valued Shareholders,On behalf of the Board of Directors, I am pleased to present the Annual Report and Audited Financial Statements of CN Asia Corporation Bhd (“CNASIA”) for the financial year ended 31 December 2014.

chAirMAN’S StAteMeNt

PERFORMANCE REVIEW

It was a challenging year for CNASIA throughout the year 2014. For the financial year ended 31 December 2014, CNASIA’s revenue reduced to RM15.6 million as compared to RM18.4 million in the preceding year. Consequently, the Group recorded a loss before taxation of RM4.2 million as compared to a loss before taxation of RM0.7 million for the year 2013. The Group loss also impacted by the lower margin on projects executed during the year, the increased administrative expenses and weakening of Ringgit Malaysia against other major foreign currencies. The Group’s net assets per ordinary share reduced to RM0.52 per share as opposed to RM0.61 per share in the preceding year.

The Group’s reduction in turnover during the year under review was caused by the decrease in demand of pressure vessels and dish end supply which were closely related to the slowdown in oil and gas business as a result of the dropping of crude oil prices. This unexpected situation had caused CNASIA to be burdened with the additional administrative cost incurred as a result of recruitment of a team of competent, skilled and experienced workforce in CNASIA. Revenue from pressure vessels and dish end supply reduced from RM9.2 million and RM5.1 million in 2013 to RM6.7 million and RM2.9 million in 2014 respectively, representing a total reduction of 33% during the year.

However, the Group was able to secure higher revenue from its storage tank and road tanker business. In 2014, the storage tank and road tanker divisions recorded a remarkable increase of 44% and 48% respectively as compared to the preceeding year.

DIVIDEND

The Board does not propose any payment of dividend for the financial year ended 31 December 2014.

INDUSTRY TREND AND PROSPECTS

The outlook on the oil and gas industry appeared to be quite erratic in 2015 owing to the drastic plunge in crude oil prices since July 2014. The volatile aspect of the oil and gas business is so massive and even the industry leaders have not able to react to the change spontaneously. The global economic turmoil and fierce competition had further dampened theoilandgasbusiness. Inaddition, theU.S.Energy Information Administration estimated that the increase in the global supply of petroleum and other liquid fuels were almost doubled the increase in consumption. In this supply exceeding demand situation, it means lower prices and shredding profits, which denotes an uncertain outlook for the oil and gas industry.

In Malaysia, the first quarterly loss in the fourth quarter of 2014 as recorded by the Malaysia Petroleum Company

(Petronas), signifies a subdued outlook for 2015 in the oil and gas industry as its profitability will be significantly impacted by the lower global oil prices. Thus, the outlook for pressure vessel business, which contribute significantly to the revenue of CNASIA, may not be so promising as it was previously. In order to overcome the situation, the Group is transforming its business model to diversify for better prospect and sustainable business.

Nevertheless, the Group will continue to focus on its storage tanks and road tanker business to enhance the Group’s performance. In addition, the Petronas RAPID project is expected to contribute positively to the pressure vessel and dish end divisions in CNASIA by the third quarter of 2015.

GST READINESS

With the Goods and Services Tax (GST) becoming effective from 1 April 2015, the Group has set up a dedicated working committee to oversee comprehensive implementation of this new requirement. Computing applications have been configured and customised and all our systems are compliant and GST ready. The implementation of GST is the first stage in our long term programme to broadly upgrade our systems and processes.

BOARD CHANGES

On behalf of the Board, I would like to take this opportunity to welcome Mr. Yoong Nim Chee, who joined the Board as an Independent Non-Executive Director on 4 December 2014.

On the other hand, I would like to express our gratitude to Mr. Charles Ross Mckinnon, our former Non-Independent Non-Executive Director, who resigned from the Board on 9 September 2014 for his support and contribution to the Group.

ACKNOWLEDGEMENT

On behalf of the Board of Directors, I would like to express my sincere appreciation to our valued shareholders, customers, suppliers, bankers, advisors, business associates, management, staff at all levels, the relevant authorities and government agencies for their continued support, commitment, contribution and confidence in the Group.

Last but not least, I would like to place on record my appreciation and thanks of the valued counsel, guidance and continued support I have received from my fellow Board members for the past year.

DATO’ HILMI BIN MOHD NOORCHAIRMAN22 May 2015


FINANCIALSTATEMENTSDirectors’ Report 26

Statement by Directors 30

Statutory Declaration 30

Independent Auditors’ Report 31

Statements of Financial Position 33

Statements of Profit or Loss and Other Comprehensive Income

34

Statements of Changes in Equity 35

Statements of Cash Flows 36

Notes to the Financial Statements 38

DIRECTORS’ REPORT

The Directors hereby submit their report together with the audited financial statements of the Group and of the Company for the financial year ended 31 December 2014.

PRINCIPAL ACTIVITIES

The principle activities of the Company are those of investment holding and providing management services. The principal activities of the subsidiaries are disclosed in Note 7 to the financial statements.

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

RESULTS

Group CompanyRM RM

Net loss for the financial year 4,237,935 3,258,217

Attributable to:Owners of the Company 4,237,935 3,258,217

RESERVES AND PROVISIONS

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

DIVIDENDS

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

DIRECTORS

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

Dato’ Hilmi Bin Mohd. Noor Ho Cheng SanLee LamChong Ying ChoyYoong Nim Chee (Appointed on 4.12.2014)Charles Ross Mckinnon (Resigned on 9.9.2014)


DIRECTORS’ REPORT (CONT’D)

DIRECTORS’ INTERESTS

According to the Register of Directors’ Shareholdings, the interest and deemed interest in the shares shareholding in the Company and its related corporations (other than wholly-owned subsidiaries) of those who were Directors at financial year end (including their spouse or children) are as follows:-

Ordinary shares of RM1.00 eachBalance as

at 1.1.14 Bought (Sold)Balance as

at 31.12.14

Direct InterestHo Cheng San 16,093,535 - - 16,093,535Lee Lam 11,750 - - 11,750Yoong Nim Chee - 155,000 - 155,000

Indirect InterestHo Cheng San (i) 2,619,759 - - 2,619,759Lee Lam (ii) 13,000 - (13,000) -

(i) Deemed interests by virtue of his substantial shareholdings in CN Asia Engineering Sdn. Bhd..

(ii) Deemed interests by virtue of shares of the Company held by his spouse. By virtue of their interests in shares in the Company, Ho Cheng San is also deemed to have interest in the shares of all the subsidiaries to the extent that the Company has in interest under Section 6A of the Companies Act, 1965.

None of the other Directors in office at the end of the financial year had any interest in the shares of the Company or its related corporations during the financial year.

DIRECTORS’ BENEFITS

During and at the end of the financial year, no arrangements 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 24 and 27 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 of which the Director has a substantial financial interest.

ISSUE OF SHARES AND DEBENTURES

There were no changes in the authorised, issued and paid-up capital of the Company during the financial year.

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


OTHER STATUTORY INFORMATION

Before the financial statements 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 there were no known bad debts to be written off and adequate provision had been made for doubtful debts; 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.

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

(a) which would render it necessary to write off any bad debts or the amount of the provision for doubtful debts in the financial statements of the Group and of the Company 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 would 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 will or may affect the ability of the Group and of the Company to meet their 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 the operations of the Group and of the Company for the current financial year in which this report is made.

SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR AND EVENT AFTER THE REPORTING PERIOD

The significant events during the financial year and event after the reporting period are disclosed in Note 34 to the financial statements.



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.

HO CHENG SAN(Director)

LEE LAM(Director)

Kuala Lumpur15 April 2015



In the opinion of the Directors, the financial statements set out on pages 33 to 84 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 2014 and of their financial performance and cash flows for the financial year then ended.

In the opinion of the Directors, the information set out on page 85 has been complied in accordance with the Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosures Persuant to Bursa Malaysia Securites Berhad Listing Requirements, issued by the Malaysian Institute of Accountants, and presented based on the format prescribed by Bursa Malaysia Securities Berhad.

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

HO CHENG SAN

LEE LAM

Kuala Lumpur15 April 2015

STATUTORY DECLARATION

I, Ho Cheng San, being the Director primarily responsible for the financial management of CN Asia Corporation Bhd, do solemnly and sincerely declare that to the best of my knowledge and belief, the financial statements set out on pages 33 to 84 and the financial information set out on page 85 are correct and I make this solemn declaration conscientiously believing the same to be true and by virtue of the Statutory Declarations Act 1960.

Subscribed and solemnly declared by the abovenamed at Kuala Lumpur in the Federal Territory this day of 15 April 2015 HO CHENG SAN Before me:

S. ARULSAMY (W490)Commissioner for Oaths

Kuala Lumpur

STATEMENT BY DIRECTORS


Report on the Financial Statements

We have audited the financial statements of CN Asia Corporation Bhd, which comprise Statements of Financial Position as at 31 December 2014 of the Group and of the Company, and Statements of Profit or Loss and Other Comprehensive Income, Statements of Changes in Equity and Statements of Cash Flows of the Group and of the Company for the financial year then ended, and a summary of significant accounting policies and other explanatory information, as set out on pages 33 to 84.

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 Company’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 Company’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 of 31 December 2014 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.

Emphasis of Matter

Without qualifying our opinion, we wish to highlight that the Group had incurred a net loss of RM4,237,935 for the financial year ended 31 December 2014 and as of that date, the total current liabilities of the Group exceeded its total current assets by RM3,646,700.

These conditions indicate the existence of a material uncertainty which may cast doubt about the Group’s abilities to continue as going concerns. The ability of the Group to continue as going concerns is dependent on the future profitable operations, obtaining additional financial support from other sources and successful extension of credit repayment terms by financial institutions. The financial statements of the Group does not include any adjustments relating to the amount and classification of assets and liabilities that might be necessary should the Group unable to continue as going concerns. In view of the fact that the preparation of the financial statements is on a going concern basis, we consider that this disclosure should be brought to your attention.

INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF CN ASIA CORPORATION BHD

(INCORPORATED IN MALAYSIA)COMPANY NO: 399442 - A


Report on Other Legal and Regulatory Requirements

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

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

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

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

Other Reporting Responsibilities

The supplementary information set out on page 85 is disclosed to meet the requirement of Bursa Malaysia Securities Berhad and is not part of the financial statements. The Directors are responsible for the preparation of the supplementary information in accordance with Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants ("MIA Guidance") and the directive of Bursa Malaysia Securities Berhad. In our opinion, the supplementary information is prepared, in all material respects, in accordance with the MIA Guidance and the directive of Bursa Malaysia Securities Berhad.

Other Matters

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 LIAN TIAN KWEE (NO. AF: 0737) (NO: 2943/05/15(J))CHARTERED ACCOUNTANTS CHARTERED ACCOUNTANT Kuala Lumpur 15 April 2015

INDEPENDENT AUDITORS’ REPORT (CONT’D)TO THE MEMBERS OF CN ASIA CORPORATION BHD

(INCORPORATED IN MALAySIA)COMPANy NO: 399442 - A


Group CompanyNote 2014 2013 2014 2013

RM RM RM RMASSETS

Non-current assets Property, plant and equipment 5 27,493,947 27,694,109 - - Intangible assets 6 - - - - Investment in subsidiaries 7 - - 14,416,461 14,416,461 Investment in associate 8 29,842 29,686 - - Goodwill on consolidation 9 76,609 76,609 - -

Total non-current assets 27,600,398 27,800,404 14,416,461 14,416,461

Current assets Inventories 10 3,962,593 4,955,761 - - Trade receivables 11 3,530,728 3,298,659 - - Amount due from contract customers 12 1,938,322 3,439,267 - - Other receivables, deposits and prepayments 13 806,634 692,930 70,533 1,000 Amount due from subsidiaries 14 - - 15,140,831 18,364,625 Tax recoverable 5,658 41,931 5,658 5,658 Fixed deposit with licensed bank 15 231,289 224,335 - - Cash and bank balances 388,960 628,382 6,319 37,340

Total current assets 10,864,184 13,281,265 15,223,341 18,408,623

Non-current asset classified as held for sale 16 - 380,000 - -

Total assets 38,464,582 41,461,669 29,639,802 32,825,084

EQUITY AND LIABILITIESEquity

Share capital 17 45,382,500 45,382,500 45,382,500 45,382,500 Share premium 17 3,491,965 3,491,965 3,491,965 3,491,965 Translation reserve 102,129 14,183 - - Accumulated losses (25,511,397) (21,273,462) (19,335,412) (16,077,195)

Total Equity 23,465,197 27,615,186 29,539,053 32,797,270

LIABILITIESNon-current liability

Finance lease liabilities 18 488,501 418,022 - -

Total non-current liability 488,501 418,022 - -

Current liabilities Trade payables 19 1,886,708 1,530,936 - - Other payables and accruals 20 595,332 657,211 100,749 27,814 Amount due to associate 21 55,800 60,302 - - Finance lease liabilities 18 97,607 79,075 - - Bank borrowings 22 11,875,437 11,100,937 - -

Total current liabilities 14,510,884 13,428,461 100,749 27,814

Total liabilities 14,999,385 13,846,483 100,749 27,814

Total equity and liabilities 38,464,582 41,461,669 29,639,802 32,825,084

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

STATEMENTS OF FINANCIAL POSITIONAS AT 31 DECEMBER 2014



RM RM RM RM

Revenue 23 15,592,700 18,414,559 60,000 60,000

Cost of sales (15,845,911) (15,471,275) - -

Gross (loss)/profit (253,211) 2,943,284 60,000 60,000

Other income 324,262 31,795 - -

Selling and distribution expenses (125,996) (105,546) - -

Administration expenses (3,377,115) (2,852,030) (168,423) (178,286)

Other expenses (95,585) (122,575) (3,149,794) -

Loss from operation (3,527,645) (105,072) (3,258,217) (118,286)

Finance costs (710,446) (621,040) - -

Share of result of associate 156 149 - -

Loss before tax 24 (4,237,935) (725,963) (3,258,217) (118,286)

Tax expense 25 - - - -

Loss for the financial year (4,237,935) (725,963) (3,258,217) (118,286)

Other comprehensive incomeItem that will be reclassified subsequently to profit or lossExchange translation differences 87,946 6,236 - -

Total comprehensive loss for the financial year (4,149,989) (719,727) (3,258,217) (118,286)

Loss for the financial year attributable to:- Owners of the Company (4,237,935) (725,963)

Total comprehensive loss attributable to:- Owners of the Company (4,149,989) (719,727)

Loss per share (sen) - basic 26 (9.34) (1.60)


STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2014


Attributable to owners of the Company Non-distributable

Share Share Translation Accumulated capital premium reserve losses Total

RM RM RM RM RM

Group

Balance at 1 January 2013 45,382,500 3,491,965 7,947 (20,547,499) 28,334,913

Total comprehensive loss for the financial year - - 6,236 (725,963) (719,727)

Balance at 31 December 2013 45,382,500 3,491,965 14,183 (21,273,462) 27,615,186

Total comprehensive loss for the financial year - - 87,946 (4,237,935) (4,149,989)

Balance at 31 December 2014 45,382,500 3,491,965 102,129 (25,511,397) 23,465,197

Attributable to owners of the Company Non-distributable

Share Share Accumulatedcapital premium losses Total

RM RM RM RM

Company

Balance at 1 January 2013 45,382,500 3,491,965 (15,958,909) 32,915,556

Total comprehensive loss for the financial year - - (118,286) (118,286)

Balance at 31 December 2013 45,382,500 3,491,965 (16,077,195) 32,797,270

Total comprehensive loss for the financial year - - (3,258,217) (3,258,217)

Balance at 31 December 2014 45,382,500 3,491,965 (19,335,412) 29,539,053


STATEMENTS OF CHANGES IN EQUITYFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2014



RM RM RM RM

CASH FLOWS FROM OPERATING ACTIVITIESLoss before tax (4,237,935) (725,963) (3,258,217) (118,286)

Adjustments for:-Amortisation of intangible assets - 18,744 - -Amortisation of long term leasehold land 83,280 83,280 - -Depreciation of property, plant and equipment 1,131,509 1,033,811 - -Impairment loss on amount due from

subsidiaries - - 3,149,794 -Impairment loss on trade receivables 18,000 39,000 - -Inventories written off 84,432 2,958 - -Interest expenses 710,446 621,040 - -Interest income (7,164) (6,996) - -Unrealised (gain)/loss on foreign exchange (85,452) 12,033 - -(Gain)/Loss on disposal of property, plant and

equipment (36,892) 26,286 - -Gain on disposal of asset held for sale (92,789) - - -Share of results of associate (156) (149) - -

Operating (loss)/profit before working capital changes (2,432,721) 1,104,044 (108,423) (118,286)

Changes in working capital:-Inventories 908,736 (803,527) - -Receivables (280,182) (483,182) 4,467 -Amount due from customers 1,500,945 (2,363,826) - -Bankers' acceptance 1,169,000 2,735,000 - -Payables 293,893 (278,302) 72,935 12,673

Cash generated from/(used in) operations 1,159,671 (89,793) (31,021) (105,613)

Interest paid (710,446) (621,040) - -Interest received 7,164 6,996 - -Tax refund 36,273 20,751 - 20,751

Net cash flows from/(used in) operating activities 492,662 (683,086) (31,021) (84,862)

CASH FLOWS FROM INVESTING ACTIVITIESPlacement of fixed deposit with licensed bank (6,954) (6,831) - -Purchase of property, plant and equipment A (795,992) (240,047) - -Proceeds from disposal of property,

plant and equipment 63,700 62,000 - -Net proceeds from disposal of asset

held for sale 472,789 - - -Repayment from subsidiaries - - - 83,354

Net cash (used in)/from investing activities (266,457) (184,878) - 83,354

Balance carried down 226,205 (867,964) (31,024) (1,508)

STATEMENTS OF CASH FLOWSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2014



RM RM RM RM

Balance brought down 226,205 (867,964) (31,024) (1,508)

CASH FLOWS FROM FINANCING ACTIVITIESRepayment (to)/from associate (4,502) 11,829 - -Payments of finance lease liabilities (95,989) (123,007) - -

Net cash used in financing activities (100,491) (111,178) - -

CASH AND CASH EQUIVALENTSNet changes 125,714 (979,142) (31,021) (1,508)Brought forward (4,368,555) (3,383,616) 37,340 38,848Effect of exchange translation differences on

cash and cash equivalents 29,364 (5,797) - -

Carried forward B (4,213,477) (4,368,555) 6,319 37,340

NOTES TO THE STATEMENTS OF CASH FLOWS

A. PURCHASE OF PROPERTY, PLANT AND EQUIPMENT

Group

The Group acquired property, plant and equipment with an aggregate cost of RM980,992 (2013: RM730,047) of which RM185,000 (2013: RM490,000) was acquired by means of finance lease. Cash payments of RM795,992 (2013: RM240,047) was made to purchase property, plant and equipment.

B. CASH AND CASH EQUIVALENTS COMPRISE:-

GROUP COMPANY 2014 2013 2014 2013

RM RM RM RM Fixed deposits with licensed bank 231,289 224,335 - - Bank overdrafts (4,602,437) (4,996,937) - - Cash and bank balances 388,960 628,382 6,319 37,340

(3,982,188) (4,144,220) 6,319 37,340

Less: Fixed deposits pledged to licensed bank (231,289) (224,335) - -

(4,213,477) (4,368,555) 6,319 37,340


STATEMENTS OF CASH FLOWS (CONT’D)FOR THE FINANCIAL yEAR ENDED 31 DECEMBER 2014


1. GENERAL INFORMATION

The Company is a public limited liability company, incorporated and domiciled in Malaysia and is listed on the Main Market of the Bursa Malaysia Securities Berhad. The registered office and principal place of business of the Company are located at Lot 7907, Batu 11, Jalan Balakong, 43300 Seri Kembangan, Selangor Darul Ehsan.

The principal activities of the Company are those of investment holding and providing management services. The principal activities of the subsidiaries are disclosed in Note 7 to the financial statements. There have been no significant changes in the nature of these activities of the Company and its subsidiaries 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 15 April 2015.

2. GOING CONCERN

The Group had incurred a net loss of RM4,237,935 for the financial year ended 31 December 2014 and as of that date, the total current liabilities of the Group exceeded its total current assets by RM3,646,700.

The basis for the preparation of the financial statements of the Group dependents upon the profitable operations of the Group to generate sufficient cash in the future to fulfill their obligations as and when they fall due and financial support from the lenders and shareholders. The Directors are of the opinion that the Group will be able to operate profitably in the foreseeable future, and obtain continuing financial support from the lenders and shareholders and therefore continue as going concerns and accordingly, realise their assets and discharge their liabilities in the normal course of business.

In view of the foregoing, the Directors consider that it is appropriate to prepare the financial statements of the Group on a going concern basis, and accordingly, the financial statements do not include any adjustments relating to the amount and classification of assets and liabilities that may be necessary should the going concerns basis for the preparation of the financial statements of the Group be not appropriate.

3. BASIS OF PREPARATION

3.1 Statement of Compliance

The financial statements of the Group and of the Company have been prepared in accordance with Malaysian Financial Reporting Standards (“MFRS”), International Financial Reporting Standards (“IFRS”) and the requirements of the Companies Act, 1965 in Malaysia.

3.2 Basis of Measurement

The financial statements of the Group and of the Company are prepared under the historical cost convention.

Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.

3.3 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.

NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2014


NOTES TO THE FINANCIAL STATEMENTS (CONT’d)31 dECEMBER 2014

3. BASIS OF PREPARATION (CONT’D)

3.4 Adoption of Amendments to MFRSs and IC Interpretations (“IC Int”)

The Group and the Company have consistently applied the accounting policies set out in Note 4 to all periods presented in these financial statements.

At the beginning of the current financial year, the Group and the Company adopted amendments to MFRSs and IC Int which are mandatory for the financial periods beginning on or after 1 January 2014.

Initial application of the amendments to the standards and IC Int did not have material impact to the financial statements.

3.5 Standards Issued But Not Yet Effective

The Group and the Company have not applied the following new standards and amendments to standards that have been issued by the Malaysian Accounting Standards Board (“MASB”) but are not yet effective for the Group and the Company:-

Amendments to MFRSs effective 1 July 2014 :

Amendments to MFRS 119 Employee Benefits: Defined Benefit Plans – Employee ContributionsAnnual Improvements to MFRSs 2010 – 2012 Cycle, including the amendments to:

MFRS 2 Share-based Payment Definition of vesting conditionMFRS 3 Business Combination: Accounting for contingent consideration in a business combinationMFRS 8 Operating Segments: Aggregation of operating segmentsMFRS 8 Operating Segments: Reconciliation of the total of the reportable segments’ assets to the

entity’s assetsMFRS 13 Fair Value Measurement: Short-term receivables and payablesMFRS 116 Property, Plant and Equipment and MFRS 138 Intangible Assets: Revaluation method –

proportionate restatement of accumulated depreciationMFRS 124 Related Party Disclosures: Key Management Personnel

Annual improvements to MFRSs 2011-2013 Cycle, including the amendments to:

MFRS 1 First-time Adoption of Malaysian Financial Reporting Standards: Meaning of “Effective MFRSs”MFRS 3 Business Combinations: Scope exceptions for joint venturesMFRS 13 Fair Value Measurement: Scope of paragraph 52 (portfolio exception)MFRS 140 Investment Property: Clarifying the interrelationship between MFRS 3 and MFRS 140 when

classifying property as investment property or owner-occupied property.

MFRS and Amendments to MFRSs effective 1 January 2016:-

MFRS 14 Regulatory Deferral AccountsAmendments to MFRS 10 Consolidated Financial Statements and MFRS 128 Investments in Associates

and Joint Ventures: Sale or contribution of assets between an investor and its associate or joint-venture

Amendments to MFRS 10 Consolidated Financial Statements, MFRS 12 Disclosure of Interests in Other Entities and MFRS 128 Investment in Associates and Joint Ventures: Investment Entities – Applying the Consolidation Exception

Amendments to MFRS 11 Joint Arrangements: Accounting for acquisitions of interests in joint operationsAmendments to MFRS 101 Presentation of Financial Statements: Disclosure InitiativeAmendments to MFRS 116 Property, Plant and Equipment and MFRS 138 Intangible Assets: Clarification of

acceptable methods of depreciation and amortisation




3.5 Standards Issued But Not Yet Effective (cont’d)

The Group and the Company have not applied the following new standards and amendments to standards that have been issued by the Malaysian Accounting Standards Board (“MASB”) but are not yet effective for the Group and the Company (cont’d):-

MFRS and Amendments to MFRSs effective 1 January 2016 (cont’d):-

Amendments to MFRS 116 Property, Plant and Equipment and MFRS 141 Agriculture: Agriculture-Bearer Plants

Amendments to MFRS 127 Consolidated and Separate Financial Statements: Equity Method in Separate Financial Statements

Annual Improvements to MFRSs 2012-2014 Cycle, including the amendments to:

MFRS 5 Non-current Assets Held for Sale and Discontinued Operations: Changes in methods of disposalMFRS 7 Financial Instruments – Disclosures: Servicing contractsMFRS 7 Financial Instruments – Disclosures: Applicability of the amendments to MFRS 7 to condensed

interim financial statementsMFRS 119 Employee Benefits: Discount rate – regional market issueMFRS 134 Interim Financial Reporting: Disclosures of information “elsewhere in the interim financial

report”

MFRS effective 1 January 2017:-

MFRS 15 Revenue from contracts with customers

MFRS and Amendments to MFRS effective 1 January 2018:-

MFRS 9 Financial Instruments (IFRS 9 issued by IASB in July 2014)Amendments to MFRS 7 Financial Instruments – Disclosures: Mandatory effective date of MFRS 9 and transitional disclosures

MFRS 1, 2, 3, 5, 7, 8, 10, 11, 14, 127, 128, 134 and 140 are not applicable to the Group and the Company’s operations.

The initial application of the above standards, amendments and interpretation are not expected to have any financial impacts to the financial statements, except for:-

MFRS 9 Financial Instruments

MFRS 9 is issued during the financial year, which reflects all phases of the financial instruments project and replaces MFRS 139 Financial Instruments: Recognition and Measurement and all previous version of MFRS 9. The new standard introduces extensive requirements and guidance for classification and measurement of financial assets and financial liabilities which fall under the scope of MFRS 9, new “expected credit loss model” under the impairment of financial assets and greater flexibility has been allowed in hedge accounting transactions.

The Group and the Company are currently examining the financial impact of adopting MFRS 9.




3.5 Standards Issued But Not Yet Effective (cont’d)

MFRS 15 Revenue from Contracts with Customers

MFRS 15 presents new requirements for the recognition of revenue, replacing the guidance of MFRS 111 Construction Contracts, MFRS 118 Revenue, IC Int 13 Customer Loyalty Programmes, IC Int 15 Agreements for Construction of Real Estate, IC Int 18 Transfers of Assets from Customers and IC Int 131 Revenue – Barter Transaction Involving Advertising Services. The principles in MFRS 15 provide a more structured approach to measuring and recognising revenue. It establishes a new five-step model that will apply to revenue arising from contracts with customers. Under MFRS 15 revenue is recognised at an amount that reflects the consideration to which an entity expects to be entitled in exchange for transferring goods or services to a customer.

The Group and the Company are currently assessing the impact of MFRS 15 and plans to adopt the new standards on the required effective date.

3.6 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 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 management, and will seldom equal the estimated results.

3.6.1 Estimation Uncertainty

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

Useful lives of depreciable assets

Management estimates the useful lives of the property, plant and equipment to be within 5 to 99 years and reviews the useful lives of depreciable assets at end of each reporting period. At 31 December 2014, management assesses that the useful lives represent the expected utility of the assets to the Group. 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 assets.

The carrying amount of the Group’s property, plant and equipment at the end of the reporting period is disclosed in Note 5 to the financial statements.

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, 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 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.




3.6 Significant Accounting Estimates and Judgements (cont’d)

3.6.1 Estimation Uncertainty (cont’d)

Deferred tax assets

Deferred tax assets are recognised for all deductible temporary differences to the extent that it is probable that taxable profit will be available against which all the deductible temporary differences 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.

Inventories

Inventories are measured at the lower of cost and net realisable value. In estimating net realisable values, 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 and technology changes which may cause selling price to change rapidly, and the Group’s loss to change.

The carrying amount of the Group’s inventories at the end of the reporting period is disclosed in Note 10 to the financial statements.

Impairment of loans and receivables

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

Where there is objective evidence of impairment, the amount and timing of future cash flows are estimated based on historical loss experience of assets with similar credit risk characteristics.

The carrying amount of the Group’s and the Company’s loans and receivables at the end of the reporting period is as summarised in Notes 11, 12 and 13 to the financial statements.

3.6.2 Significant Management Judgement

The following is significant management judgement in applying the accounting policies of the Group and the Company that have the most significant effects on the financial statements.

Leases

In applying the classification of leases in MFRS 117, management considers some of its leases of leasehold land as finance lease arrangements. The lease transaction is not always conclusive, and management uses judgement in determining whether the lease is a finance lease arrangement that transfers substantially all the risks and rewards incidental to ownership, whether the lease term is for the major part of the economic life of the asset even if title is not transferred and others in accordance with MFRS 117 Leases.



4. 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.

4.1 Consolidation

4.1.1 Subsidiaries

Subsidiaries are entities, including structured entities, controlled by the Group and the Company. Control exists when the Group is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Potential rating rights are considered when assessing control only when such rights are substantive. Besides, the Group considers it has de fecto power over an investee when, despite not having the majority of voting rights, it has the current ability to direct the activities of the investee that significantly affect the investee’s return.

Investment in subsidiaries is stated at cost less any impairment losses in the Company’s financial position, unless the investment is held for sale or distribution. The cost of investment includes transaction costs.

Upon the disposal of investment in a subsidiary, the difference between the net disposal proceeds and its carrying amount is included in profit or loss.

4.1.2 Basis of Consolidation

The Group financial statements consolidate the audited financial statements of the Company and all of its subsidiaries, which have been prepared in accordance with the Group’s accounting policies. Amounts reported in the financial statements of subsidiaries have been adjusted where necessary to ensure consistency with the accounting policies adopted by the Group. The financial statements of the Company and its subsidiaries are all drawn up to the same reporting date.

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

Subsidiaries are consolidated from the date on which control is transferred to the Group and are no longer consolidated from the date that control ceases.

Changes in the Company owners’ ownership interest in a subsidiary 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. 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 parent.

4.1.3 Business Combinations and Goodwill

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.



4. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

4.1 Consolidation (cont’d)

4.1.3 Business Combinations and Goodwill (cont’d)

If the business combination is achieved in stages, the acquisition date fair value of the acquirer’s previously held 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.

Goodwill in initially measured at cost, being the excess of the aggregate of the consideration transferred and the amount recognised for non-controlling interest over the net identifiable assets acquired and liabilities assumed. If this consideration is lower than the fair value of the net assets of the subsidiary acquired, the difference is recognised in profit or loss.

After initial recognition, goodwill is measured at cost less any accumulated impairment losses. 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 that are expected to benefit from the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units.

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

4.1.4 Associate

Associate is entity in which the Group has significant influence, but no control, over its financial and operating policies.

The Group’s investment in its associate is accounted for using the equity method. Under the equity method, investment in an associate is carried in the statement of financial position at cost plus post acquisition changes in the Group’s share of net assets of the associate since the acquisition date. Goodwill relating to the associate is included in the carrying amount of the investment and is neither amortised nor individually tested for impairment.

The share of the result of an associate is reflected in profit or loss. Any change in other comprehensive income of those investees is presented as part of the Group’s other comprehensive income. In addition, where there has been a change recognised directly in the equity of an associate, the Group recognises its share of any changes and discloses this, when applicable, in the statement of changes in equity. Unrealised gains and losses resulting from transactions between the Group and the associate are eliminated to the extent of the interest in the associate.

The aggregate of the Group’s share of profit or loss of an associate is shown on the face of the statement of profit or loss and other comprehensive income outside operating profit and represents profit or loss after tax and non-controlling interests in the subsidiaries of the associate.




4.1 Consolidation (cont’d)

4.1.4 Associate (cont’d)

When the Group’s share of losses exceeds its interest in an associate, the carrying amount of that interest including any long-term investment is reduced to zero, and the recognition of further losses is discontinued except to the extent that the Group has an obligation or has made payments on behalf of the associate.

The financial statements of the associate are prepared as of the same reporting period as the Company. Where necessary, adjustments are made to bring the accounting policies of the associate in line with those of the Group.

After application of the equity method, the Group determines whether it is necessary to recognise an additional impairment loss on the Group’s investment in its associate. The Group determines at each end of the reporting period whether there is any objective evidence that the investment in the associates is impaired. If there is such evidence, the Group calculates the amount of impairment as the difference between the recoverable amount of the associate and its carrying value, then recognises the amount in the “share of profit of investments accounted for using the equity method” in profit or loss. Upon loss of significant influence over the associate, the Group measures and recognises any retained investment at its fair value. Any difference between the carrying amount of the associate upon loss of significant influence and the fair value of the retained investment and proceeds from disposal is recognised in profit or loss.

When the Group’s interest in an associate decreases but does not result in a loss of significant influence, any retained interest is not re-measured. Any gain or loss arising from the decrease in interest is recognised in profit or loss. Any gains or losses previously recognised in other comprehensive income are also reclassified proportionately to the profit or loss if that gain or loss would be required to be reclassified to profit or loss on the disposal of the related assets or liabilities.

In the Company’s separate financial statements, investment in associate is stated at cost less impairment losses. On disposal of such investment, the difference between net disposal proceeds and its carrying amount is included in profit or loss.

4.2 Foreign Currency Translation

The Group’s consolidated financial statements are presented in RM, which is also the Company’s functional currency.

4.2.1 Foreign Currency Transactions and Balances

Transactions in foreign currencies are initially recorded at the functional currency rates prevailing at the date of the transaction.

Monetary assets and liabilities denominated in foreign currencies are retranslated at the functional currency spot rate of exchange ruling at the reporting date.

All differences are taken to the profit or loss with the exception of all monetary items that forms part of a net investment in a foreign operation. These are recognised in other comprehensive income until the disposal of the net investment, at which time they are reclassified to profit or loss. Tax charges and credits attributable to exchange differences on those monetary items are also recorded in other comprehensive income.




4.2 Foreign Currency Translation (cont’d)

4.2.1 Foreign Currency Transactions and Balances (cont’d)

Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates as at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value is determined. The gain or loss arising in translation of non-monetary items is recognised in line with the gain or loss of the item that gave rise to the translation difference (translation differences on items whose gain or loss is recognised in other comprehensive income or profit or loss is also recognised in other comprehensive income or profit or loss respectively).

4.2.2 Foreign Operations

The assets and liabilities of operations denominated in functional currencies other than RM, including goodwill and fair value adjustments arising on acquisition, are translated to RM at exchange rates at the end of the reporting period, except for goodwill and fair value adjustments arising from business combination before 1 January 2011 (the date when the Group and the Company first adopted MFRSs) which are treated as assets and liabilities of the Company. The income and expenses of foreign operations are translated to RM at exchange rates at the date of the transactions.

Foreign currency differences are recognised in other comprehensive income and accumulated in the foreign currency translation reserve in equity. However, if the operation is a non-wholly-owned subsidiary, then the relevant proportionate share of the translation difference is allocated to the non-controlling interests. When a foreign operation is disposed of such that control, significant influence or joint control is lost, the cumulative amount in the foreign currency translation reserve related to that foreign operation is reclassified to profit or loss as part of the profit or loss on disposal.

When the Group disposes of only part of its interest in a subsidiary that includes a foreign operation, the relevant proportion of the cumulative amount is reattributed to non-controlling interests. When the Group disposes of only part of its investment in an associate or joint venture that includes a foreign operation while retaining significant influence or joint control, the relevant proportion of the cumulative amount is reclassified to profit or loss.

In the consolidated financial statements, when settlement of a monetary item receivable from or payable to a foreign operation is neither planned nor likely in the foreseeable future, foreign exchange gains and losses arising from such a monetary item are considered to form part of a net investment in a foreign operation and are recognised in other comprehensive income, and are presented in foreign currency translation reserve in equity.

4.3 Property, Plant and Equipment

All property, plant and equipment are measured at cost less accumulated depreciation and less any impairment losses. The cost of an item of property, plant and equipment is recognised as an asset if, and only if, it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably.

Costs includes expenditures that are directly attributable to the acquisition of the assets any other costs directly attributable to bringing the asset to working condition for its intended use, cost of replacing component parts of the assets, and the present value of the expected cost for the decommissioning of the assets after their use. The cost of self-constructed assets also includes the cost of materials and direct labour. For qualifying assets, borrowing costs are capitilised in accordance with the accounting policy on borrowing costs. All other repair and maintenance costs are recognised in profit or loss as incurred.




4.3 Property, Plant and Equipment (cont’d)

Capital work-in-progress is not depreciated as this assets is not yet available for the use. Depreciation is recognised on the reducing balance method in order to write off the cost of each asset over its estimated useful life.

Property, plant and equipment are depreciated based on the estimated useful lives of the assets as follows:- Long-term leasehold land Over the remaining period of lease ranged from 88 to 99 yearsBuilding Over the remaining period of lease ranged from 88 to 92.5 yearsPlant and machinery 5% - 10%Furniture, fittings and equipments 20%Motor vehicles 5% - 10%

The residual values, useful lives and depreciation method are reviewed for impairment when events or changes in circumstances indicate that the carrying amount may not be recoverable, or at least annually 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.

Property, plant and equipment are derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Gains or losses arising on the disposal of property, plant and equipment are determined as the difference between the disposal proceeds and the carrying amount of the assets and are recognised in profit or loss.

4.4 Leases

The determination of whether an arrangement is, or contains, a lease is based on the substance of the arrangement at the inception date, whether fulfilment of the arrangement is dependent on the use of a specific asset or asset or the arrangement conveys a right to use the asset, even if that right is not explicitly specific in an arrangement.

4.4.1 Finance Lease

Leases in terms of which the Group or the Company assumes substantially all the risks and rewards of ownership are classified as finance lease. Upon initial recognition, the leased asset is measured at an amount equal to the lower of its fair value and the present value of the minimum lease payments.

Minimum lease payments made under finance leases are apportioned between finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are recognised in finance costs in the profit or loss. Contingent lease payments are accounted for by revising the minimum lease payments over the remaining term of the lease when the lease adjustment is confirmed.

A leased asset is depreciated over the useful life of the asset. However, if there is no reasonable certainty that the Group will obtain ownership by the end of the lease term, the asset is depreciated over the shorter of the estimated useful life of the asset and the lease term.

Leasehold land which in substance is a finance lease is classified as a property, plant and equipment.




4.4 Lease (cont’d)

4.4.2 Operating Lease

Leases, where the Group or the Company does not assume substantially all the risks and rewards of ownership are classified as operating leases and, except for property interest held under operating lease, the leased assets are not recognised on the statement of financial position. Property interest held under an operating lease, which is held to earn rental income or for capital appreciation or both, is classified as investment property.

Payments made under operating leases are recognised in profit or loss on a straight-line basis over the term of the lease. Lease incentives received are recognised in profit or loss as an integral part of the total lease expense, over the term of the lease. Contingent rentals are charged to profit or loss in the reporting period in which they are incurred.

Leasehold land which in substance is an operating lease is classified as prepaid land lease payments.

4.5 Investment Properties

Investment properties are properties which are owned or held under a leasehold interest to earn rental income or for capital appreciation or both, but not for sale in the ordinary course of business, use in the production or supply of goods or services or for administration purposes.

Investment property are initially measured at cost including transaction cost.

Cost includes expenditures that are directly attributable to the acquisition of the investment property. The cost of self-constructed investment property includes the cost of material and direct labour, any other costs directly attributable to bringing the investment property to a working condition for their intended use and capitalised borrowing costs.

Subsequent to initial recognition, investment properties are measured at fair value and are revalued annually and are included in the statement of financial position at their open market values. Any gain or loss resulting from either a change in the fair value or the sale of an investment property is immediately recognised in profit or loss in which they arise. The fair values are determined by external professional valuers with sufficient experience with respect to both the location and the nature of the investment property and supported by market evidence.

Investment properties are derecognised when either they are disposed off or when they are permanently withdrawn from use and no future economic benefits is expected from the disposal. Any gain or loss on the retirement or disposal of an investment property is recognised in the profit or loss in the financial year of retirement or disposal.

Transfer are made to or from investment property only when there is a change in use. For a transfer from investment property to owner-occupied property, the deemed cost for subsequent accounting is the fair value at the date of change. If owner-occupied property becomes an investment property, the Group accounts for such property in accordance with the policy stated under property, plant and equipment up to the date of change.

4.6 Intangible Assets

Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business combination is their fair values as at the date of acquisition. Following initial recognition, intangible assets are carried at cost less accumulated amortisation and any accumulated impairment losses. Internally generated intangible assets, excluding capitalised development costs, are not capitalised and expenditure is reflected in the profit or loss in the period in which it incurred.




4.6 Intangible Assets (cont’d)

The useful life of intangible assets is assessed to be either finite or indefinite. Intangible assets with finite life are amortised on straight-line basis over the estimated economic useful life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method for an intangible asset with a finite useful life are reviewed at least at each financial year end. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset is accounted for by charging the amortisation period or method, as appropriate, and are treated as changes in accounting estimates. The amortisation expense on intangible assets with finite useful life is recognised in the profit or loss in the expense category consistent with the function of the intangible asset.

Intangible assets with indefinite useful life are tested for impairment annually or more frequently if the events or changes in circumstances indicate that the carrying value may be impaired either individually or at cash-generating unit level. Such intangibles are not amortised. The useful life of an intangible asset with an indefinite life is reviewed annually to determine whether the useful life assessment continues to be supportable. If not, the change in useful life from indefinite to finite is made on a prospective basis.

Gain or losses arising from derecognition of an intangible assets is measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in the profit or loss when the asset is derecognised.

4.6.1 Research and Development Costs

Expenditure on research activities, undertaken with the prospects of gaining new scientific or technical knowledge and understanding is recognised in the profit or loss.

Expenditure on development activities, whereby research findings are applied to a plan or design for the production of new or substantially improved products and process, is capitalised if the product or process is technically and commercially feasible and the Company has sufficient resources to complete development and use or sell it.

The expenditure capitalised includes the cost of materials and services used in generating the intangible asset and fees to register a legal right. Other development expenditure is recognised in profit or loss as an expense as incurred. Capitalised development expenditure is stated at cost less accumulated amortisation and impairment loss.

Subsequent expenditure on capitalised intangible assets is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure is expensed as incurred.

4.7 Inventories

Inventories comprise raw materials, consumables, work-in-progress and finished goods are stated at the lower of cost and net realisable value.

Cost of raw material and consumables include the original purchase price and the incidentals expense incurred in bringing the inventories to their present location and condition. The cost of raw material and consumables are determined on a first-in-first-out basis. Cost of work-in-progress and finished goods include the costs of materials, direct labour and appropriate proportion of the manufacturing overheads.

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




4.8 Financial Instruments

4.8.1 Initial Recognition and Measurement

Financial assets and financial liabilities are recognised when the Group or the Company becomes 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. Financial assets and financial liabilities are measured subsequently as described below.

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.

4.8.2 Financial Assets – Categorisation and Subsequent Measurement

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

The category determines subsequent measurement and whether any resulting income and expense is recognised in profit or less 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 at each end of the 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.

A financial asset or part of it is derecognised when, and only when the contractual rights to the cash flows from the financial asset expire or the financial asset is transferred to another party without retaining control or substantially all risks and rewards of the asset.

On derecognition of a financial asset, the difference between the carrying amount and the sum of the consideration received (including any new asset obtained less any new liability assumed) and any cumulative gain or loss that had been recognised in equity is recognised in the profit or loss.

At the reporting date, the Group and the Company carried only the loans and receivables on their statements of financial position.




4.8 Financial Instruments (cont’d)

4.8.2 Financial Assets – Categorisation and Subsequent Measurement (cont’d)

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 provision for 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 period which are classified as non-current.

4.8.3 Financial Liabilities – Categorisation and Subsequent Measurement

After the initial recognition, financial liabilities are classified as:-

(a) financial liabilities at fair value through profit or loss; (b) other liabilities measure at amortised cost using the effective interest method; and (c) financial guarantee contracts.

A financial liability or a part of it is derecognised when, and only when, the obligation specified in the contract is discharged or cancelled or expires. On derecognition of a financial liability, the difference between the carrying amount of the financial liability extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss.

Other liabilities measured at amortised cost

The Group’s other liabilities comprise borrowings, trade and other payables.

Other liabilities are subsequently measured at amortised cost using the effective interest method. Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the end of the reporting period.

4.8.4 Offsetting of Financial Instruments

Financial assets and financial liabilities are offset and the net amount reported in the statement of financial position if, and only if, there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, or to realise the assets and settle the liabilities simultaneously.

4.9 Cash and Cash Equivalents

Cash and cash equivalents comprise cash in hand, bank balances, short term demand deposits and bank overdrafts which are readily convertible to known amount of cash and which are subject to an insignificant risk of changes in value.

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




4.10 Non-current Asset Classified as Held for Sale

Non-current assets that are expected to be recovered primarily through sale rather than through continuing use, are classified as held for sale.

Classification of the asset as held for sale occurs only when the asset is available for immediate sale in its present condition subject only to terms that are usual and customary and the sale must be highly probable. Management must be committed to a plan to sell the assets which are expected to qualify for recognition as a completed sale within one year from the date of classification. Action required to complete the plan should indicate that it is unlikely that significant changes to the plan will be made or the plan will be withdrawn.

Immediately before classification as held for sale, the assets are remeasured in accordance with the Group’s accounting policies. Thereafter generally the assets are measured at the lower of their carrying amount and fair value less costs to sell.

4.11 Impairment of Assets

4.11.1 Non-financial Assets

The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Group estimates the asset’s recoverable amount. An asset’s recoverable amount is the higher of an asset’s or cash-generating unit’s (CGU) fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. 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. In determining fair value less costs to sell, recent market transactions are taken into account, if available. If no such transactions can be identified, an appropriate valuation model is used. These calculations are corroborated by valuation multiples, quoted share prices for publicly traded subsidiaries or other available fair value indicators.

Impairment losses of continuing operations, including impairment on inventories, are recognised in the profit or loss in those expense categories consistent with the function of the impaired asset, except for a property previously revalued where the revaluation was taken to other comprehensive income. In this case, the impairment is also recognised in other comprehensive income up to the amount of any previous revaluation.

For assets excluding goodwill, an assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the Group estimates the asset’s or cash-generating unit’s recoverable amount. A previously recognised impairment loss is reversed only if there has been a change in the assumptions used to determine the asset’s recoverable amount since the last impairment loss was recognised. The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for asset in prior years. Such reversal is recognised in the profit or loss unless the asset is carried at a revalued amount, in which case the reversal is treated as a revaluation increase.

Goodwill is tested for impairment annually as at the end of each reporting period, and when circumstances indicate that the carrying value may be impaired. Impairment is determined for goodwill by assessing the recoverable amount of each cash-generating unit (or group of cash-generating units) to which the goodwill relates. Where the recoverable amount of the cash-generating unit is less than their carrying amount, an impairment loss is recognised. Impairment losses relating to goodwill cannot be reversed in future periods.




4.11 Impairment of Assets (cont’d)

4.11.1 Non-financial Assets (cont’d)

Intangible assets with indefinite useful lives are tested for impairment annually as at the end of each reporting period, either individually or at the cash-generating unit level, as appropriate and when circumstances indicate that the carrying value may be impaired.

4.11.2 Financial Assets

The Group assesses at each reporting date whether there is any objective evidence that a financial asset or a group of financial assets is impaired. A financial asset or a group of financial assets is deemed to be impaired if, and only if, there is objective evidence of impairment as a result of one or more events that has occurred after the initial recognition of the asset (an incurred “loss event”) and that loss event has an impact on the estimated future cash flows of the financial asset or the group of financial assets that can be reliably estimated. Evidence of impairment may include indications that the debtors or a group of debtors is experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial reorganisation and where observable date indicate that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults.

Financial assets carried at amortised cost

For financial assets carried at amortised cost, the Group first assesses whether objective evidence of impairment exists individually for financial assets that are individually significant, or collectively for financial assets that are not individually significant. If the Group determines that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, it includes the asset in a group of financial assets with similar credit risk characteristics and collectively assesses them for impairment. Assets that are individually assessed for impairment and for which an impairment loss is, or continue to be, recognised are not included in a collective assessment of impairment.

If there is objective evidence that an impairment loss has been incurred, the amount of the loss is measured as the difference between the assets carrying amount and the present value of estimated future cash flows (excluding future expected credit losses that have not yet been incurred). The present value of the estimated future cash flows is discounted at the financial asset’s original effective interest rate. If a loan has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate.

The carrying amount of the asset is reduced through the use of an allowance account and the amount of the loss is recognised in the profit or loss. Interest income continues to be accrued on the reduced carrying amount and is accrued using the rate of interest used to discount the future cash flows for the purpose of measuring the impairment loss. The interest income is recorded as part of finance income in the profit or loss. Loans together with the associated allowance are written off when there is no realistic prospect of future recovery and all collateral has been realised or has been transferred to the Group. If, in a subsequent year, the amount of the estimated impairment loss increases or decreases because of an event occurring after the impairment was recognised, the previously recognised impairment loss is increased or reduced by adjusting the allowance account. If a future write-off is later recovered, the recovery is credited to finance costs in the profit or loss.




4.12 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 of the reporting period and adjusted to reflect the current best estimate. If it is no longer probable that an outflow of economic resources will be required to settle the obligation, the provision is reversed. Where the effect of the time of money is material, provision are discounted using a current pre tax rate that reflects, where appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.

4.13 Revenue Recognition

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. Revenue is measured at the fair value of consideration received or receivable.

Sales of goods

Revenue from sale of goods is recognised upon the delivery of goods and customer’s acceptance.

Construction revenue

Revenue from contract work-in-progress is recognised on the percentage of completion method when the outcome of the contracts can be reliably estimated. The percentage of completion basis is computed based on proportion of which the contract costs incurred for work performed to-date bear to the estimated total contract costs for each contract respectively.

Tank rental income and management fees

Tank rental income and management fees are reognised on accrual basis interest income is recognised as it accrues using the effective interest method in profit or loss.

Interest income

Interest income recognised as it accrues using the effective interest method in profit or loss.

4.14 Operating Segments

An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses, including revenue and expenses that relate to transactions with any of the Group’s other components. All operating segments’ operating results are reviewed regularly by the chief operating decision maker to make decisions about resources to be allocated to the segment and to assess its performance, and for which discrete financial information is available.




4.15 Tax Expense

Tax expense comprises current and deferred tax. Current tax and deferred tax are recognised in profit or loss except to the extent that it relates to a business combination or items recognised directly in equity or other comprehensive income.

4.15.1 Current Tax

Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively enacted by the end of the reporting period, and any adjustment to tax payable in respect of previous years.

4.15.2 Deferred Tax

Deferred tax is recognised using the liability method, providing for temporary differences between the carrying amounts of assets and liabilities in the statement of financial position and their tax bases. Deferred tax is not recognised for the temporary differences arising from the initial recognition of goodwill, the initial recognition of assets and liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss. Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the end of the reporting period.

Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously.

A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which the temporary difference can be utilised. Deferred tax assets are reviewed at the end of each reporting period and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

Unutilised reinvestment allowance and investment tax allowance, being tax incentives that is not a tax base of an asset, is recognised as a deferred tax asset to the extent that it is probable that the future taxable profits will be available against the unutilised tax incentive can be utilised.

4.16 Equity Instrument

An equity instrument is any contract that evidences a residual interest in the assets of the Group 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 issue of share capital. Any transaction costs associated with the issuing of shares are deducted from share premium, net of any related income tax benefits.

Foreign currency transaction differences arising on the translation of the Group’s foreign entities are included in the exchange translation reserve.

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

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




4.17 Borrowing Costs

Borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset are capitalised as part of the cost of the assets during the period of time that is necessary to complete and prepare the asset for its intended use or sale.

The capitalisation of borrowing costs as part of the cost of a qualifying asset commences when expenditure for the asset is being incurred, borrowing costs are being incurred and activities that are necessary to prepare the asset for its intended use or sale are in progress. Capitalisation of borrowing costs is suspended or ceases when substantially all the activities necessary to prepare the qualifying asset for its intended use or sale are interrupted or completed.

All other borrowing costs are expensed in the period in which they are incurred. Borrowing costs consist of interest and other costs that the Group incurred in connection with the borrowing of funds.

Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation.

4.18 Employee Benefits

4.18.1 Short-term Employee Benefits

Wages, salaries, bonuses and social security contributions are recognised as an expense in the financial year in which the associated services are rendered by the employees of the Group. 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 occurred.

4.18.2 Defined Contribution Plans

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

Such contributions are recongised as expense in the profit or loss as incurred. As required by law, companies in Malaysia makes such contributions to the Employees Provident Fund (“EPF”).

4.19 Contingencies

Where it is not probable that an inflow or an outflow of economic benefits will be required, or the amount cannot be estimated reliably, the asset or the obligation is not recognised in the statements of financial position and is disclosed as a contingent asset or contingent liability, unless the probability of inflow or outflow of economic benefits is remote. Possible obligations, whose existence will only be confirmed by the occurrence or non-occurrence of one or more future events, are also disclosed as contingent assets or contingent liabilities unless the probability of inflow or outflow of economic benefits is remote.




4.20 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;(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.(ii) one entity is an associate or joint venture of the other entity.(iii) both entities are joint ventures of the same third party.(iv) one entity is a joint venture of a third entity and the other entity is an associate of the third entity.(v) the entity is a post-employment benefit plan for the benefits of employees of either the Group

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

key management personnel of the ultimate holding company or the entity.



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

Assets held under finance lease

The details of assets held under finance lease are:-

Group2014 2013

RM RM

Motor vehicles 713,774 628,040Furniture, fittings and equipment 10,930 12,144Capital work-in-progress - 36,087

Net carrying amount 724,704 676,271

Long term leasehold land and buildings are pledged to financial institutions for banking facilities granted to the Group as mentioned in Note 22 to the financial statements.

6. INTANGIBLE ASSETS

Group2014 2013

RM RM

Development costsAt cost:

At 1 January/31 December 409,378 409,378

Less: accumulated amortisation:At 1 January (409,378) (390,634)Amortisation for the financial year - (18,744)

At 31 December (409,378) (409,378)

- -

The Directors are in the opinion that the future economic benefits of the research and development expenditure can be determined with reasonable certainty and accordingly have capitalised these expenditure.



7. INVESTMENT IN SUBSIDIARIES

Company2014 2013

RM RM

At costUnquoted shares 28,298,215 28,298,215

Less: Accumulated impairment lossesAt 1 January/31 December (13,881,754) (13,881,754)

14,416,461 14,416,461

Details of the subsidiaries are as follows:-

Place of Effective interestName incorporation 2014 2013 Principal activities

% %

Direct subsidiary

Asia Tank Containers (Malaysia) Sdn. Bhd.

Malaysia 100 100 Manufacturing, repairing and renting of transportable containers for hazardous chemicals

Chip Ngai Engineering Works Sdn. Bhd. (“CNEW”)

Malaysia 100 100 Manufacturing of tanks and related products, specialised engineering and fabrication works

CN Asia Capital Sdn. Bhd. Malaysia 100 100 Investment holding (Dormant)

Douwin Sdn. Bhd. (“DSB”) Malaysia 100 100 Investment holding

Indirect subsidiary

Zhuhai CN Engineering Works Co., Ltd*#

People’s Republic of China

100 100 Manufacturing and trading of tanks for specialised industries

* Not audited by SJ Grant Thornton

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



8. INVESTMENT IN ASSOCIATE

Group2014 2013

RM RM

At costUnquoted shares in Malaysia 159,301 159,301Share of post acquisition losses (129,459) (129,615)

29,842 29,686

Details of the associate is as follows:-

Place of Effective interestName incorporation 2014 2013 Principal activities

% %

PICN Engineering Sdn. Bhd. Malaysia 49 49 Fabrication and trading of tanks for specialised industries

The following table summarises the information of the Group’s associate:-

Group2014 2013

RM RM

Financial position as at 31 DecemberNon-current assets 30 38Current assets 63,094 62,667Current liability (2,221) (2,120)

Net assets 60,903 60,585

Summary of financial performance for the financial year ended 31 December

Profit for the financial year/Total comprehensive income 318 305

Reconciliation of net assets to carrying amount as at 31 DecemberGroup’s share of net assets/Carrying amount in the statements

of financial position 29,842 29,686

Group’s share of results for the financial year ended 31 December Group’s share of profit or loss 156 149Group’s share of other comprehensive income - -

Group’s share of total comprehensive income 156 149



9. GOODWILL ON CONSOLIDATION

Group2014 2013

RM RM

At cost:-1 January /31 December 136,136 136,136

Less: Accumulated impairment lossesAt 1 January/31 December (59,527) (59,527)

76,609 76,609

10. INVENTORIES

Group2014 2013

RM RM

Raw materials 664,162 591,881Work-in-progress 2,070,971 2,869,458Finished goods 765,649 951,411Consumables 461,811 543,011

At carrying amount 3,962,593 4,955,761

Recognised in profit or loss:-Inventories recognised as cost of sales 5,687,309 5,200,532Inventories written off 84,432 2,958

11. TRADE RECEIVABLES

Group2014 2013

RM RM

Trade receivables 3,643,937 3,393,868Less: Impairment losses (113,209) (95,209)

3,530,728 3,298,659

The movement of impairment losses during the financial year is as follows:-

Group2014 2013

RM RM

At 1 January (95,209) (56,209)Impairment loss for the financial year (18,000) (39,000)

At 31 December (113,209) (95,209)



11. TRADE RECEIVABLES (CONT’D)

Trade receivables are non-interest bearing and are generally on 14 to 60 days (2013: 30 to 90 days) term.

Included in trade receivables is retention sum amounting to RMNil (2013: RM175,000) in respect of completed contract works.

12. AMOUNT DUE FROM CONTRACT CUSTOMERS

Group2014 2013

RM RM

Aggregate cost incurred to-date 6,694,419 3,717,773Add: Attributable profits 244,163 935,394

6,938,582 4,653,167Less: Progress billings (5,000,260) (1,213,900)

1,938,322 3,439,267

Presented as:-Amount due from contract customers 1,938,322 3,439,267

13. OTHER RECEIVABLES, DEPOSITS AND PREPAYMENTS

Group Company2014 2013 2014 2013

RM RM RM RM

Other receivables 323,396 309,330 - -Deposits 152,308 151,377 1,000 1,000Prepayments 330,930 232,223 69,533 -

806,634 692,930 70,533 1,000

14. AMOUNT DUE FROM SUBSIDIARIES

Company2014 2013

RM RM

Amount due from subsidiaries 19,873,425 19,947,425Less: Impairment losses (4,732,594) (1,582,800)

15,140,831 18,364,625



14. AMOUNT DUE FROM SUBSIDIARIES (CONT’D)

The movement of impairment losses during the financial year is as follows:-

Company2014 2013

RM RM

At 1 January (1,582,800) (1,582,800)Impairment losses for the financial year (3,149,794) -

At 31 December (4,732,594) (1,582,800)

The amount due from subsidiaries are non-trade in nature, unsecured, interest free and repayable on demand.

15. FIXED DEPOSIT WITH LICENSED BANK

The fixed deposit with licensed bank is pledged as securities for bank borrowings granted to subsidiaries as mentioned in Note 22 to the financial statements.

16. NON-CURRENT ASSET CLASSIFIED AS HELD FOR SALE

The non-current asset classified as held for sale is as follows:-

Group2014 2013

RM RM

Transferred from investment property - 380,000

On 24 October 2013, the subsidiary company entered into a Sales and Purchase Agreement with third party for the disposal of a piece of land for total consideration of RM479,534. The said transaction has been completed during the financial year.

17. SHARE CAPITAL AND SHARE PREMIUM

Group and Company

Share capitalNo. of ordinary

shares of RM1 each Amount2014 2013 2014 2013

RM RM

Authorised:-At 1 January /31 December 50,000,000 50,000,000 50,000,000 50,000,000

Issued and fully paid:-

At 1 January /31 December 45,382,500 45,382,500 45,382,500 45,382,500



17. SHARE CAPITAL AND SHARE PREMIUM (CONT’D)

Group and Company

Share premiumNo. of ordinary

shares of RM1 each Amount2014 2013 2014 2013

RM RMRM RM

At 1 January /31 December 3,491,965 3,491,965 3,491,965 3,491,965

18. FINANCE LEASE LIABILITIES

Group2014 2013

RM RM

Future minimum lease payments:- within 1 year 121,644 100,284- two to five years 448,656 334,776- more than five years 92,024 135,505

662,324 570,565

Less: Interest-in-suspense (76,216) (73,468)

Present value of minimum lease payments 586,108 497,097

Present value of minimum lease payments:- within 1 year 97,607 79,075- two to five years 398,079 287,178- more than five years 90,422 130,844

586,108 497,097

The effective interest rates of the finance lease liabilities are ranging from 2.38% to 4.35% (2013: 3.98% to 4.55%) per annum.

19. TRADE PAYABLES

Trade payables are non-interest bearing and are generally on 30 days to 90 days (2013: 30 days to 90 days) term.



20. OTHER PAYABLES AND ACCRUALS

Group Company2014 2013 2014 2013

RM RM RM RM

Other payables 260,571 485,414 78,489 6,614Accruals 334,761 171,797 22,260 21,200

595,332 657,211 100,749 27,814

21. AMOUNT DUE TO ASSOCIATE

The amount due to associate is non-trade in nature, unsecured, interest free and repayable on demand.

22. BANK BORROWINGS

Group2014 2013

RM RM

SecuredBankers’ acceptance 6,953,000 5,896,000Bank overdrafts 4,409,418 4,816,080

11,362,418 10,712,080

UnsecuredBankers’ acceptance 320,000 208,000Bank overdrafts 193,019 180,857

513,019 388,857

11,875,437 11,100,937

(i) The secured and unsecured bankers’ acceptance of the Group bear effective interest at rates ranging from 3.50% to 4.10% (2013: 3.50% to 4.10%) per annum.

(ii) The bank overdrafts of the Group bear effective interest at rates ranging from 8.10% to 9.10% (2013: 8.10% to 9.10%) per annum.

(iii) The secured short-term borrowings of the Group are secured by:-

(a) First party legal charge over leasehold land and buildings owned by CNEW.(b) Third party charge over leasehold land owned by DSB.(c) Negative pledge over assets owned by CNEW.(d) Specific debenture over properties and fixtures and fittings attached to the properties owned

by CNEW.(e) First party security deposit of RM200,000 placed by CNEW.(f) Corporate guarantee by the Company.



23. REVENUE

Group Company2014 2013 2014 2013

RM RM RM RM

Sales of goods 12,880,696 10,180,904 - -Contract revenue 2,683,215 8,193,425 - -Tank rental revenue 28,789 40,230 - -Management fee - - 60,000 60,000

15,592,700 18,414,559 60,000 60,000

24. LOSS BEFORE TAX

Loss before tax is determined after charging/(crediting) amongst others, the following items:-

Group Company2014 2013 2014 2013

RM RM RM RM

Auditor’s remuneration- statutory audit 57,000 56,000 21,000 20,000- other external auditor 7,390 3,927 - -

Amortisation of intangible assets - 18,744 - -Amortisation of long-term leasehold land 83,280 83,280 - -Depreciation of property, plant and equipment 1,131,509 1,033,811 - -Directors’ fees 86,000 100,000 86,000 100,000Directors’ remuneration 664,967 443,963 - -Empty cylinder rental 4,049 3,768 - -Finance cost on:

- Finance lease 27,425 11,932 - -- Bankers’ acceptance 300,621 240,734 - -- Bank overdrafts 379,654 366,767 - -- Bank guarantee 2,746 1,607 - -

Impairment loss on amount due from subsidiaries - - 3,149,794 -

Impairment loss on trade receivables 18,000 39,000 - -Inventories written off 84,432 2,958 - -(Gain)/Loss on disposal of property, plant and

equipment (36,892) 26,286 - -Gain on disposal of asset held for sale (92,789) - - -(Gain)/Loss on foreign exchange

- Unrealised (85,452) 12,033 - -- Realised 65,476 (18,537) - -

Rental of office equipment - 7,372 - -Rental of premises 519,200 457,000 - -Interest income (7,164) (6,996) - -



25. TAX EXPENSE

There is no provision of tax as the Group and the Company have no chargeable income.

A reconciliation of income tax expense applicable to loss before tax at the statutory tax rate to income tax expense at the effective tax rate of the Group and of the Company are as follows:-

Group Company2014 2013 2014 2013

RM RM RM RM

Loss before tax (4,237,935) (725,963) (3,258,217) (118,286)

At Malaysian statutory tax rate of 25% (2013: 25%) (1,059,484) (181,491) (814,554) (29,572)

Adjustments:-Expenses not deductible for tax purposes 284,734 125,241 814,554 29,572Deferred tax assets not recognised 774,750 56,250 - -

- - - -

The Group has unutilised business losses, unabsorbed capital allowances and unutilised reinvestment allowance which can be carried forward to offset against future taxable income as follows:-

Group2014 2013

RM RM

Unutilised business losses 20,660,000 17,736,000Unabsorbed capital allowances 6,386,000 5,884,000Unutilised reinvestment allowances 8,907,000 8,907,000

35,953,000 32,527,000

However the above amounts are subject to the approval of the Inland Revenue Board of Malaysia.

Deferred tax assets

Deferred tax assets have not been recognised in respect of the following items due to the uncertainty of its recoverability.

Group2014 2013

RM RM

Temporary differences arising from:-Property, plant and equipment (5,127,000) (5,045,250)Unutilised business losses 5,165,000 4,434,000Unabsorbed capital allowance 1,596,500 1,471,000Unutilised reinvestment allowance 2,226,750 2,226,750

3,861,250 3,086,500

The potential deferred tax assets of the Group is 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.



26. LOSS PER SHARE

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

Loss attributable to ordinary shares:-

Group2014 2013

RM RM

Loss attributable to ordinary equity holder of the Company (4,237,935) (725,963)

Weighted average number of ordinary shares 45,382,500 45,382,500

Basic loss per ordinary share (sen) (9.34) (1.60)

Diluted losses per share are not presented as there are no dilutive potential ordinary shares outstanding during the financial year.

27. EMPLOYEE BENEFITS EXPENSE

Group Company2014 2013 2014 2013

RM RM RM RM

Salaries, wages and other emoluments 3,690,633 2,675,173 86,000 100,000Defined contribution plans 253,122 228,698 - -Social security contributions 17,638 19,106 - -Other benefits 37,620 43,797 - -

3,999,013 2,966,774 86,000 100,000

During the financial year, the Director has the benefit of using the Group’s motor vehicle, which is not included in the Directors’ remuneration, the estimated value of which amounted to RMNil (2013: RM25,000).

Included in the employee benefit expense is the Directors’ remuneration as below:-

Group Company2014 2013 2014 2013

RM RM RM RM

Executive Directors Salaries and other emoluments 590,472 396,000 - -Defined contribution plans 74,052 47,520 - -Social security contributions 443 443 - -Director’s fee 24,000 24,000 24,000 24,000

688,967 467,963 24,000 24,000

Non-executive Directors Directors’ fees 62,000 76,000 62,000 76,000



28. COMMITMENT

Operating lease commitments

The future minimum lease payment payable under cancellable operating lease commitment are:-

Group2014 2013

RM RM

Future minimum lease payments payables:Not later than one year 221,600 191,300Later than one year but not later than two years 24,450 12,000Later than two years but not later than five years - 6,000

246,050 209,300

29. CONTINGENT LIABILITIES

2014 2013Group RM RM

Banker’s guarantee in favour of third parties 151,000 759,237

Company

Corporate guarantee for credit facilities granted to a subsidiary company 12,035,725 11,887,055

The fair value of the corporate facilities is estimated to be insignificant as the subsidiary companies have the ability to generate sufficient cash flows from their operation to finance their continuing operations and repay the bank borrowings.

30. RELATED PARTY DISCLOSURE

The Group and the Company have related party relationship with its subsidiaries and associate, Directors and key management personnel.

(i) The significant related party transactions during the financial year are as follows:-

Company2014 2013

RM RM

SubsidiaryManagement fee income 60,000 60,000

Group2014 2013

RM RM

Rental of premises in which a Director, Ho Cheng San has substantial interest- Crystal Bond Sdn. Bhd. 96,000 96,000- Marvellous Production Sdn. Bhd. 336,000 336,000



30. RELATED PARTY DISCLOSURE (CONT’D)

(ii) Compensation of key management personnel

The remuneration of key management personnel is same with the Directors’ remuneration as disclosed in Notes 24 and 27 to the financial statements. The Group and the Company has no other members of key management personnel apart from the Board of Directors.

31. OPERATING SEGMENT

Business segments

For the management purposes, the Group is organised into business units based on their products and services, which comprises the following:-

Manufacturing Manufacturing tanks and related products, engineering works and fabrication works

Trading Repairing and renting of transportable containers for hazardous chemicals

Investment Investment holdings

Management monitors the operating results of its business units separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on operating profit or loss which, in certain respects as explained in the table below, is measured differently from operating profit or loss in the consolidated financial statements.

GROUP2014

Note Manufacturing Trading Investment

Adjustments and

eliminations

Total as per consolidated

financial statements

RM RM RM RM RMRevenue :External customers 15,563,911 28,789 - - 15,592,700Inter-segment i - - 60,000 (60,000) -

Total revenue 15,563,911 28,789 60,000 (60,000) 15,592,700

Results :Interest income (7,164) - - - (7,164)Interest expense 710,446 - - - 710,446Depreciation of property,

plant and equipment 1,125,354 6,155 - - 1,131,509Amortisation of long term

leasehold land 51,562 - 31,718 - 83,280Share of results of

associate (156) - - - (156)Other non-cash (income)/

expenses ii (197,133) 84,432 - - (112,701)Segment loss iii (3,302,847) (72,229) (159,733) - (3,534,809)



31. OPERATING SEGMENT (CONT’D)

Business segments (cont’d)

GROUP (cont’d)2014


Adjustments and

eliminations



RM RM RM RM RMAssets :Investments in associate 29,842 - - - 29,842Additions to non-current

assets iv 980,992 - - - 980,992Segment assets v 35,113,630 748,952 2,602,000 - 38,464,582

Liabilities :Segment liabilities 14,891,733 2,663 104,989 - 14,999,385

GROUP2013


Adjustments and

eliminations



RM RM RM RM RMRevenue :External customers 18,374,329 40,230 - - 18,414,559Inter-segment i - - 60,000 (60,000) -

Total revenue 18,374,329 40,230 60,000 (60,000) 18,414,559

Results :Interest income (6,996) - - - (6,996)Interest expense 621,040 - - - 621,040Depreciation of property,

plant and equipment 1,027,332 6,479 - - 1,033,811Amortisation of long-term

leasehold land 51,562 - 31,718 - 83,280Amortisation of intangible

assets 18,744 - - - 18,744Share of results of

associate (149) - - - (149)Other non-cash expenses ii 77,319 2,958 - - 80,277Segment profit/(loss) iii 58,593 21,223 (191,884) - (112,068)

Assets :Investments in associate 29,686 - - - 29,686Additions to non-current

assets iv 730,047 - - - 730,047Segment assets v 37,985,769 881,181 2,594,719 - 41,461,669

Liabilities :Segment liabilities 13,811,766 2,663 32,054 - 13,846,483





Notes to the nature of adjustments and eliminations to arrive at amounts reported in the consolidated financial statements:-

i. Inter-segment revenues are eliminated on consolidation.

ii. Other material non-cash (income)/expenses consist of the following items:-

GROUP2014 2013

RM RM

Inventories written off 84,432 2,958(Gain)/Loss on disposal of property, plant and equipment (36,892) 26,286Gain on disposal of asset held for sale (92,789) -Unrealised (gain)/loss on foreign exchange (85,452) 12,033Impairment loss on trade receivables 18,000 39,000

(112,701) 80,277

iii. The following items are added to/(deducted from) segment loss to arrive at “Loss for the financial year” presented in the consolidated statement of profit or loss and other comprehensive income:-

GROUP2014 2013

RM RM

Segment loss (4,237,935) (725,963)Interest income (7,164) (6,996)Interest expenses 710,446 621,040Share of results of associate (156) (149)

(3,534,809) (112,068)

iv. Additions to non-current assets consist of:-

GROUP2014 2013

RM RM

Property, plant and equipment 980,992 730,047

v. The following items are added to segment assets to arrive at total assets reported in the consolidated statement of financial position:-

GROUP2014 2013

RM RM

Investment in associate 29,842 29,686





Geographical information

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

GROUP Revenue Non-current assets

2014 2013 2014 2013RM RM RM RM

Malaysia 15,592,700 18,414,559 27,439,690 27,635,931People’s Republic of China - - 160,708 164,473

15,592,700 18,414,559 27,600,398 27,800,404

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

GROUP2014 2013

RM RM

Property, plant and equipment 27,493,947 27,694,109Investment in associate 29,842 29,686Goodwill on consolidation 76,609 76,609

27,600,398 27,800,404

Information about a major customer

Revenue from one major customer amount to RM1,584,600 (2013: RM3,454,500) arising from sales by the manufacturing segment.

32. FINANCIAL INSTRUMENTS

Categories of financial instruments

The table below provides an analysis of financial instruments categorised as follows:-

(a) Loans and receivables (L&R); and (b) Other liabilities measured at amortised cost (AC).



32. FINANCIAL INSTRUMENTS (CONT’D)

Categories of financial instruments (cont’d)

The table below provides an analysis of financial instruments categorised as follows (cont’d):-

GroupCarrying amount L&R AC

2014 RM RM RM

Financial assetsTrade receivables 3,530,728 3,530,728 -Other receivables and deposit 475,704 475,704 -Fixed deposit with licensed bank 231,289 231,289 -Cash and bank balances 388,960 388,960 -

4,626,681 4,626,681 -

Financial liabilitiesTrade payables 1,886,708 - 1,886,708Other payables and accruals 595,332 - 595,332Amount due to associate 55,800 - 55,800Finance lease liabilities 586,108 - 586,108Bank borrowings 11,875,437 - 11,875,437

14,999,385 - 14,999,385

GroupCarrying amount L&R AC

2013 RM RM RM

Financial assetsTrade receivables 3,298,659 3,298,659 -Other receivables and deposit 460,707 460,707 -Fixed deposit with licensed bank 224,335 224,335 -Cash and bank balances 628,382 628,382 -Non-current asset classified as held for sale 380,000 380,000 -

4,992,083 4,992,083 -

Financial liabilitiesTrade payables 1,530,936 - 1,530,936Other payables and accruals 657,211 - 657,211Amount due to associate 60,302 - 60,302Finance lease liabilities 497,097 - 497,097Bank borrowings 11,100,937 - 11,100,937

13,846,483 - 13,846,483




Categories of financial instruments (cont’d)

The table below provides an analysis of financial instruments categorised as follows (cont’d):-

CompanyCarrying amount L&R AC

2014 RM RM RM

Financial assetsAmount due from subsidiaries 15,140,831 15,140,831 -Deposits 1,000 1,000 -Cash and bank balances 6,319 6,319 -

15,148,150 15,148,150 -

Financial liabilityOther payables and accrual 100,749 - 100,749

CompanyCarrying amount L&R AC

2013 RM RM RM

Financial assetsAmount due from subsidiaries 18,364,625 18,364,625 -Deposits 1,000 1,000 -Cash and bank balances 37,340 37,340 -

18,402,965 18,402,965 -

Financial liabilityOther payables and accrual 27,814 - 27,814

Financial risk management

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 business whilst managing its credit risk, liquidity risk, foreign currency risk and interest rate risk. The Group operates within clearly defined policies and procedures that are approved by the Board of Directors to ensure the effectiveness of the risk management process.

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

Credit risk

Credit risk is the risk of a financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations. It is the Group’s policy to enter into financial instrument with a diversity of creditworthy counterparties. The Group does not expect to incur material credit losses of its financial assets or other financial instruments.



32. FINANCIAL INSTRUMENTS (CONT’D) Financial risk management (cont’d)

Credit risk (cont’d)

Concentration of credit risk exists when changes in economic, industry and geographical factors similarly affect the group of counterparties whose aggregate credit exposure is significant in relation to the Group’s total credit exposure.

Following are the areas where the Group and the Company are exposed to credit risk:-

(i) Receivables

As at the end of the reporting period, the maximum exposure to credit risk arising from receivables is limited to the carrying amounts in the statement of financial position.

With a credit policy in place to ensure the credit risk is monitored on an on-going basis, management has taken reasonable steps to ensure that receivables that are neither past due nor impaired are stated at their realisable values. A significant portion of these receivables are regular customers that have been transacting with the Group. The Group uses aging analysis to monitor the credit quality of the receivables. Any receivables having significant balances past due more than credit terms granted are deemed to have higher credit risk, and are monitored individually.

The credit risk concentration profile of the Group at the reporting date is as follows:-

2014 2013RM % RM %

By countryMalaysia 1,551,995 44 3,029,312 92Singapore 1,328,289 38 240,067 7United States of America - - 29,280 1Brunei 650,444 18 - -

3,530,728 100 3,298,659 100

The ageing analysis of trade receivables is as follow:-

GROUP 2014

GrossIndividually

impaired NetRM RM RM

Not past due 1,533,668 - 1,533,668Past due 1 to 30 days 93,366 - 93,366Past due 31 to 60 days 166,950 - 166,950Past due 61 to 90 days 185,719 - 185,719Past due 91 to 120 days 91,588 - 91,588More than 120 days 1,572,646 (113,209) 1,459,437

3,643,937 (113,209) 3,530,728



32. FINANCIAL INSTRUMENTS (CONT’D) Financial risk management (cont’d)

Credit risk (cont’d)

Following are the areas where the Group and the Company are exposed to credit risk:- (cont’d)

(i) Receivables (cont’d)

GROUP 2013

GrossIndividually

impaired NetRM RM RM

Not past due 371,045 - 371,045Past due 1 to 30 days 216,094 - 216,094Past due 31 to 60 days 844,984 - 844,984Past due 61 to 90 days 1,101,035 - 1,101,035Past due 91 to 120 days 46,663 - 46,663More than 120 days 814,047 (95,209) 718,838

3,393,868 (95,209) 3,298,659

Trade receivables that are neither pass due nor impaired are credit monthly with good payment records with the Group.

As at financial year end, trade receivables of RM1,997,060 (2013: RM2,927,614) were past due but not impaired. These related to a number of independent customers from whom there is no recent history of defaults.

The net carrying amount of receivables is considered a reasonable approximate of fair value. The maximum exposure to credit risk is the carrying value of each class of receivables mentioned above. Trade receivables that are individually determined to be impaired at the end of the reporting period relate to debtors that are in significant financial difficulties and have defaulted on payments. These receivables are not secured by any collateral or credit enhancements.

As at reporting date, approximately 35% (2013: 33%) of trade receivables was due from one major customer.

Liquidity risk

Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due to shortage of funds.

In managing its exposure to liquidity risk arises principally from its various payables, loans and borrowings, the Group maintains a level of cash and cash equivalents and banking facilities deemed adequate by the management to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they fall due.

The Group aims at maintaining a balance of sufficient cash and deposits and flexibility in funding by keeping sources of committed and uncommitted credit facilities from various banks.




Financial risk management (cont’d)

Liquidity risk (cont’d)

The summary of the maturity profile based on the contractual undiscounted repayment obligations is as follow:-

GROUP 2014

Carrying amount

Contractual cash flows

Less than 1 year

Between 1 to 2 years

Between 2 to 5 years

More than 5 years

RM RM RM RM RM RM

Secured:Finance lease liabilities 586,108 662,324 121,644 112,164 336,492 92,024Bankers’ acceptance 6,953,000 6,953,000 6,953,000 - - -Bank overdrafts 4,409,418 4,409,418 4,409,418 - - -

11,948,526 12,024,742 11,484,062 112,164 336,492 92,024

Unsecured :Trade payables 1,886,708 1,886,708 1,886,708 - - -Other payables and

accruals 595,332 595,332 595,332 - - -Bankers’ acceptance 320,000 320,000 320,000 - - -Bank overdrafts 193,019 193,019 193,019 - - -Amount due to

associate 55,800 55,800 55,800 - - -

3,050,859 3,050,859 3,050,859 - - -

Total 14,999,385 15,075,601 14,534,921 112,164 336,492 92,024

2013Secured:Finance lease liabilities 497,097 570,565 100,284 90,804 243,972 135,505Bankers’ acceptance 5,896,000 5,896,000 5,896,000 - - -Bank overdrafts 4,816,080 4,816,080 4,816,080 - - -

11,209,177 11,282,645 10,812,364 90,804 243,972 135,505Unsecured :Trade payables 1,530,936 1,530,936 1,530,936 - - -Other payables and

accruals 657,211 657,211 657,211 - - -Bankers’ acceptance 208,000 208,000 208,000 - - -Bank overdrafts 180,857 180,857 180,857 - - -Amount due to

associate 60,302 60,302 60,302 - - -

2,637,306 2,637,306 2,637,306 - - -

Total 13,846,483 13,919,951 13,449,670 90,804 243,972 135,505





Liquidity risk (cont’d)

The summary of the maturity profile based on the contractual undiscounted repayment obligations is as follow (cont’d):-

COMPANY

Carrying amount

Contractual cash flows

Less than 1 year

RM RM RM

2014Unsecured :Other payables and accruals 100,749 100,749 100,749

2013Unsecured :Other payables and accruals 27,814 27,814 27,814

Foreign currency risk

Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates.

To mitigate the Group’s exposure to foreign currency risk, the Group is exposed to foreign currency risk on sales, purchases and investments that are denominated in a currency other than the respective functional currencies of Group entities. The currency giving rise to this risk is primarily US. Dollar (USD), Singapore Dollar (SGD), Renminbi (RMB), Hong Kong Dollar (HKD), South African Rand (ZAR), Seychelles Rupee (SCR), EURO (EURO) and Brunei Dollar (BND).

The Group’s exposure to foreign currency risk, based on carrying amounts as at the end of the reporting period was:-

Denominated inUSD SGD RMB HKD ZAR SCR EURO BND TotalRM RM RM RM RM RM RM RM RM

2014Cash and bank

balances 357,211 576 598 43 291 60,396 786 - 419,901Trade receivables - 1,328,289 - - - - - 650,444 1,978,733Other receivables 5,826 - - - - - 8,026 - 13,852Trade payables (6,460) (400) - - - - (80,000) - (86,860)

356,577 1,328,465 598 43 291 60,396 (71,188) 650,444 2,325,626





The Group’s exposure to foreign currency risk, based on carrying amounts as at the end of the reporting period was (cont’d):-

Foreign currency risk (cont’d)

Denominated inUSD SGD RMB HKD ZAR SCR EURO BND TotalRM RM RM RM RM RM RM RM RM

2013Cash and bank

balances 175,777 1,392 31,702 208 291 60,396 786 - 270,552Trade receivables 29,280 240,067 - - - - - - 269,347Other receivables 1,861 - - - - - 155,900 - 157,761Trade payables (1,256) - - - - - (200,000) - (201,256)Other payables - (23,813) - - - - - - (23,813)

205,662 217,646 31,702 208 291 60,396 (43,314) - 472,591

The following table demonstrate the sensitivity of the Group’s loss the financial year to a reasonably possible change in the USD, SGD, RMB, HKD, ZAR, SCR, EURO and BND exchange rate against the respective functional currencies of the Group entities will all other various held constant.

Profit/(Loss) for the year Equity

RM RM

2014USD/RM

Strengthened 0.57% 2,045 2,045Weakened 0.57% (2,045) (2,045)

SGD/RMStrengthened 0.19% 2,528 2,528Weakened 0.19% (2,528) (2,528)

RMB/RMStrengthened 0.36% 2 2Weakened 0.36% (2) (2)

ZAR/RMStrengthened 0.26% 1 1Weakened 0.26% (1) (1)

SCR/RMStrengthened 2.21% 1,336 1,336Weakened 2.21% (1,336) (1,336)

EURO/RMStrengthened 0.48% (344) (344)Weakened 0.48% 344 344

BND/RMStrengthened 0.19% 1,226 1,226Weakened 0.19% (1,226) (1,226)





Foreign currency risk (cont’d)

The following table demonstrate the sensitivity of the Group’s loss the financial year to a reasonably possible change in the USD, SGD, RMB, HKD, ZAR, SCR and EURO exchange rate against the respective functional currencies of the Group entities will all other various held constant (cont’d).

Profit/(Loss) for the year Equity

RM RM

2013 USD/RM

Strengthened 0.59% 1,211 1,211Weakened 0.59% (1,211) (1,211)

SGD/RMStrengthened 0.29% 630 630Weakened 0.29% (630) (630)

RMB/RMStrengthened 0.83% 263 263Weakened 0.83% (263) (263)

HKD/RMStrengthened 0.59% 1 1Weakened 0.59% (1) (1)

ZAR/RMStrengthened 1.30% 4 4Weakened 1.30% (4) (4)

SCR/RMStrengthened 0.38% 231 231Weakened 0.38% (231) (231)

EURO/RMStrengthened 0.96% (416) (416)Weakened 0.96% 416 416

Exposures to foreign exchange rates 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 exposures to foreign currency risk.





Interest rate risk

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

The Group’s investments in fixed rate debt securities and its fixed rate borrowings are exposed to a risk of change in their fair value due to changes in interest rates. The Group’s variable rate borrowings are exposed to a risk of change in cash flows due to changes in interest rates. Investments in equity securities and short term receivables and payables are not significantly exposed to interest rate risk.

The Group’s interest rate management objective is to manage the interest expenses consistent with maintaining an acceptable level of exposure to interest rate fluctuation. In order to achieve this objective, the Group targets a mix of fixed and floating debt based on assessment of its existing exposure and desired interest rate profile.

The interest rate profile of the Group’s significant interest-bearing financial instruments, based on carrying amounts as at end of the reporting period were:-

GROUP2014 2013

RM RM

Fixed rate instrument:-Financial assetFixed deposit with licensed bank 231,289 224,335Financial liabilityFinance lease liabilities (586,108) (497,097)

(354,819) (272,762)

Floating rate instruments:-Financial liabilitiesBank overdrafts 4,602,437 4,996,937Bankers’ acceptance 7,273,000 6,104,000

11,875,437 11,100,937

The Group does not account for any fixed rate financial assets and liabilities at fair value through profit or loss and the Group does not designate derivatives as hedging instruments under a fair value hedge accounting model. Therefore, a change in interest rates at the end of the reporting period would not affect profit or loss.

A change in 100 basis point (bp) in interest rates at the end of the reporting period would have increase/(decreased) profit for the year and equity by the amounts shown below. This analysis assumes that all other variables, in particular foreign currency rates, remain constant.





Interest rate risk (cont’d)

GROUP Loss for the financial year Equity

+100bp -100bp +100bp -100bpRM RM RM RM

2014 (118,754) 118,754 (118,754) 118,754

2013 (111,009) 111,009 (111,009) 111,009

Fair value of financial instruments

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

33. CAPITAL MANAGEMENT

The Group’s objectives when managing capital is to maintain a strong capital base and safeguard the Group’s ability to continue as a going concern, so as to maintain investor, creditor and market confidence and to sustain future development of the business.

There were no changes in the Group’s approach to capital management during the financial year.

34. SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR AND EVENT AFTER THE REPORTING PERIOD

i. On 24 October 2013, the subsidiary company entered into a Sales and Purchase Agreements with third party for the disposal of a piece of land for total sales consideration of RM479,534. The said transaction has been completed during the financial year.

ii. On 11 August 2014, the Company proposed to implement a private placement (“Proposed Private Placement”) of up to 4,538,200 new ordinary share of RM1.00 each of the Company to independent third party investors to be identified at a later date

On 7 October 2014, Bursa Malaysia Securities Berhad (“Bursa”) vide its letter approved the Proposed Private Placement subject to the following conditions:-

(a) The Company must fully comply with the relevant provisions under the Bursa Main Market Listing Requirements pertaining to the implementation of the Proposed Private Placement;

(b) The Company to inform Bursa upon the completion of the Proposed Private Placement; and

(c) The Company to furnish Bursa with a written confirmation of its compliance with the terms and conditions of Bursa’s approval once the Proposed Private Placement is completed.

On 6 April 2015, the approval granted by Bursa vide its letter dated 7 October 2014 for the Private Placement has lapsed. The Company was not able to secure any place for the Private Placement due to unforeseen and unfavourable market conditions prior to the expiry of Bursa’ approval. As such, the Company has decided not to proceed with the private placement.



DISCLOSURE OF REALISED AND UNREALISED PROFITS/(LOSSES)

Bursa Malaysia Securities Berhad has on 25 March 2010 and 20 December 2010, issued directives requiring all listed corporations to disclose the breakdown of unappropriated profits or accumulated losses into realised and unrealised on Group and Company basis, as the case may be, in quarterly reports and annual audited financial statements.

The breakdown of accumulated losses as at the reporting date that has been prepared by the Directors in accordance with the directives from Bursa Malaysia Securities Berhad stated above and Guidance on Special Matter No. 1 issued on 20 December 2010 by the Malaysian Institute of Accountants are as follows:-

GROUP COMPANY2014 2013 2014 2013

RM RM RM RM

Total accumulated losses of the Company and its subsidiaries- Realised (18,658,264) (11,170,126) (19,335,412) (16,077,195)- Unrealised 85,452 (12,033) - -

(18,572,812) (11,182,159) (19,335,412) (16,077,195)

Total share of losses of associate- Realised (129,459) (129,615) - -

(18,702,271) (11,311,774) (19,335,142) (16,077,195)

Less : Consolidation adjustments (6,809,126) (9,961,688) - -

Total accumulated losses as per financial statements (25,511,397) (21,273,462) (19,335,142) (16,077,195)

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


PROPERTIES OF THE GROUP

THE PROPERTIES HELD BY THE GROUP AS AT 31 DECEMBER 2014 ARE AS FOLLOWS:

TENURE / LAND / NETOWNER APPROXIMATE DESCRIPTION BUILT-UP BOOKAND AGE OF AND EXISTING AREA VALUELOCATION BUILDINGS USE (SQ.FT.) (RM)

1 CHIP NGAI ENGINEERINGWORKS SDN BHD

PT No. 17040, Mukim 99 years lease Industrial land 104,004.05/ 10,595,948and District of Petaling expiring on constructed with 72,200State of Selangor 11th October 2091 / office block

21 years and plant

2 DOUWIN SDN BHD

PT No. 17041, Mukim and 99 years lease Industrial land 70,596.86/- 2,442,278District of Petaling expiring on used as an openState of Selangor 11th October 2091/- storage yard

Notes:

For all properties held as long term leasehold properties, the Group has elected to apply the optional exemption, upon the transition to MFRS, to use the previous revaluation value of these properties as deemed cost under MFRSs. Thus, no revaluation was done on these properties.


ANALYSIS OF SHAREHOLDINGSAS AT 5TH MAY 2015

Authorised Share Capital : RM50,000,000Issued and Fully Paid-Up Capital : RM45,382,500Class of Shares : Ordinary Shares of RM1.00 eachVoting Rights : One Vote Per RM1.00 Share

DISTURBUTION OF SHAREHOLDINGS

Size of No. of % of No. of % ofShareholdings Shareholders Shareholders Shares Held Issued Capital

1-99 417 19.81 19,884 0.04100-1,000 121 5.75 75,234 0.171,001-10,000 1,291 61.33 3,676,331 8.1010,001-100,000 233 11.07 7,795,300 17.18100,001-less than 5% of issued shares 40 1.90 11,193,957 24.675% and above of issued shares 3 0.14 22,621,794 49.84

Total 2,105 100.00 45,382,500 100.00

THIRTY LARGEST SHAREHOLDERS

Name No. of % ofShares Held Issued Capital

1 Ho Cheng San 16,093,535 35.462 CN Asia Engineering Sdn Bhd 2,619,759 5.773 Charles Ross Mckinnon 1,450,000 3.204 Kenanga Nominees (Asing) Sdn Bhd 1,324,500 2.92

Pledged Securities Account For Charles Ross Mckinnon5 Tengku AB Malek Bin Tengku Mohamed 1,186,900 2.626 Oon Kim Woon 1,110,400 2.457 Lee Hui Leong 632,000 1.398 UOB Kay Hian Nominees (Asing) Sdn Bhd 614,308 1.35

Exempt An For UOB Kay Hian Pte Ltd (A/C Clients)9 Public Nominees (Tempatan) Sdn Bhd 575,100 1.27

Pledged Securities Account For Au Kwan Seng (E-KLC)10 Angeline Chan Kit Fong 502,950 1.1111 Charles Ross Mckinnon 500,000 1.1012 TA Nominees (Asing) Sdn Bhd 500,000 1.10

Pledged Securities Account For Charles Ross Mckinnon13 Yew Siew Choo 451,100 0.9914 Chong Mong Yuen 389,400 0.8615 Goh Chin Chooi 331,000 0.7316 Ang Pek See 310,000 0.6817 HSBC Nominees ( Asing) Sdn Bhd 304,000 0.67

Exempt An For Credit Suisse ( SG BR-TST-Asing)18 Lee Kooi Yin 303,000 0.6719 TA Nominees (Tempatan) Sdn Bhd 300,000 0.66

Pledged Securities Account For Khong Cheng Yee20 Hoo Soot Khing 280,888 0.62


ANALySIS OF SHAREHOLDINgS (CONT’D)AS AT 5TH MAy 2015

THIRTY LARGEST SHAREHOLDERS (CONT’D)

Name No. of % ofShares Held Issued Capital

21 M & A Nominee (Tempatan) Sdn Bhd 266,400 0.59Pledged Securities Account For Fong Kiah Yeow (M & A)

22 M & A Nominee (Tempatan) Sdn Bhd 250,000 0.55Pledged Securities Account For Teo Hock Chuan (M & A)

23 Hoo Shet Wan 233,161 0.5124 Kenanga Nominees (Tempatan) Sdn Bhd 200,000 0.44

Pledge Securities Account For Kew Yuen Ching25 Kew Yuen Cheng 200,000 0.4426 Kew Chin Fah 199,700 0.4427 Kenanga Nominees (Tempatan) Sdn Bhd 187,700 0.41

Pledged Securities Account For Lee Wan Hooi (010)28 Eng Yen Nee 180,000 0.4029 Lee Huck Chee 178,000 0.3930 Kenanga Nominees (Tempatan) Sdn Bhd 160,000 0.35

Pledged Securities Account For Teh Siew Wah (021)Total 31,833,801 70.14

SUBSTANTIAL SHAREHOLDERS

No. of Shares Held % of Issued CapitalName Direct Indirect Direct Indirect

1 Ho Cheng San 16,093,535 2,619,759* 35.46 5.772 Charles Ross Mckinnon 3,908,500 - 8.61 - 3 CN Asia Engineering Sdn Bhd 2,619,759 - 5.77 -

* Deemed interested by virtue of his substantial shareholdings in CN Asia Engineering Sdn Bhd

DIRECTORS' SHAREHOLDINGS

No. of Shares Held % of Issued CapitalName Direct Indirect Direct Indirect

Dato' Hilmi bin Mohd Noor - - - -Ho Cheng San 16,093,535 2,619,759* 35.46 5.77Ir. Lee Lam 11,750 - 0.03 -Chong Ying Choy - - - -Yoong Nim Chee 155,000 - 0.34 -

* Deemed interested by virtue of his substantial shareholdings in CN Asia Engineering Sdn Bhd


(Incorporated In Malaysia)CN ASIA CORPORATION BHD (399442-A)

I/We (shareholder’s name in full) (NRIC/Company No.)

of (full address)

being a Member/Members of CN ASIA CORPORATION BHD hereby appoint

(name of proxy in full) (NRIC No: )

of (full address)

or failing him/her, (name of proxy in full) (NRIC No: )

of (full address)

or the CHAIRMAN OF THE MEETING as my/our proxy to vote for me/us on my/our behalf at the Nineteenth Annual General Meeting of the Company to be held at Meeting Room Livia 1, UG Level, ibis Styles Kuala Lumpur Cheras, C180 Hotel Sdn Bhd, Jalan C180/1, Dataran C180, 43200 Cheras, Selangor Darul Ehsan on Wednesday, 24 June 2015 at 10.00 a.m. and at any adjournment thereof, and to vote as indicated below:-

Resolution For Against Resolution 1 To receive the Audited Financial Statements for the financial

year ended 31 December 2014 together with the Reports of the Directors and the Auditors thereon.

Resolution 2 To approve payment of directors’ fees in respect of the financial year ended 31 December 2014.

Resolution 3 To re-elect as Director – Mr Chong Ying Choy (retires under Article 84 of the Company’s Articles of Association).

Resolution 4 To re-appoint Dato’ Hilmi bin Mohd Noor as Director pursuant to Section 129(6) of the Companies Act, 1965.

Resolution 5 To re-elect as Director – Mr Yoong Nim Chee (retires under Article 91 of the Company’s Article of Association).

Resolution 6 To re-appoint Messrs SJ Grant Thornton as Auditors and to authorise the Director to fix their remuneration.

Resolution 7 To retain Mr. Chong Ying Choy as an Independent Non-Executive Director.

Resolution 8 Authority to allot and issue shares pursuant to Section 132D of the Companies Act, 1965.

(Please indicate with an (X) in the spaces provided whether you wish your votes to be cast for or against the resolution. In the absence of specific directions, your proxy will vote or abstain from voting at his/her discretion.)

No of Shares PercentageProxy 1Proxy 2Proxy 3Total 100%

Dated this day of 2015 Signature/Common Seal of Shareholder

Notes:

1. Only depositors whose names appear in the Record of Depositors as at 16 June 2015 shall be regarded as Members and entitled to attend, speak and vote at the meeting.

2. A Member entitled to attend and vote at the meeting is entitled to appoint one (1) or more proxies to attend and vote instead of him. A proxy may but need not be a Member of the Company and the provisions of Section 149(1)(b) of the Companies Act, 1965 shall not apply to the Company. A proxy appointed to attend and vote at the meeting shall have the same rights as the Member to speak at the meeting.

3. Where a Member appoints more than one (1) proxy, the appointment shall be invalid unless the Member specifies the proportion of his shareholdings to be represented by each proxy.

4. The instrument appointing a proxy in the case of an individual shall be under the hand of the appointor or of his attorney duly authorised or if the appointor is a corporation, either under seal or under the hand of an officer or attorney duly authorised.

5. The Proxy Form must be deposited at the Registered Office of the Company at Lot 7907, Batu 11, Jalan Balakong, 43300 Seri Kembangan, Selangor Darul Ehsan, not less than forty eight (48) hours before the time set for holding the meeting or any adjournment thereof.

Form oF Proxy

Please fold here

AffixStamp

The Company SecretaryCN ASIA CorPorATIoN BHD (399442-A)

Lot 7907, Batu 11Jalan Balakong

43300 Seri KembanganSelangor Darul Ehsan

Please fold here

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www.cnasia.com

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Lot 7907, Batu 11, Jalan Balakong43300 Seri Kembangan

Selangor Darul Ehsan, Malaysia

T: 603-8942 6888F: 603-8942 3365

E: [email protected]



A N N U A L R E P O R T

2014

CN ASIA CORPORATION BHD · HSBC Bank Malaysia Berhad ... energy and heavy engineering industries...

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Transcript of CN ASIA CORPORATION BHD · HSBC Bank Malaysia Berhad ... energy and heavy engineering industries...