Envair AR2012 Cover FA - Straits Inter Logistics · Dato’ Malek Radzuan pursued his career in...

C O N T E N T S

Corporate Information

Directors’ Profile

Chairman’s Statement

Corporate Governance Statement

Audit Committee Report

Statement on Risk Management and Internal Control

Other Compliance Information

Financial Statements

• Directors’ Report

• Statement by Directors and Statutory Declaration

• Independent Auditors’ Report

• Statements of Comprehensive Income

• Consolidated Statement of Financial Position

• Company Statement of Financial Position

• Statements of Changes in Equity

• Statements of Cash Flows

• Notes to Financial Statements

List of Properties

Analysis of Shareholdings

Notice of Sixteenth Annual General Meeting

Statement Accompanying Notice of Sixteenth Annual General Meeting

Appendix I

Form of Proxy

2

3

6

7

12

16

17

18

22

23

25

26

27

28

29

31

62

63

65

68

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Envair Holding Berhad (412406-T)2

Corporate Information

BOARD OF DIRECTORS

SHARE REGISTRAR

Tricor Investor Services Sdn. Bhd. Level 17, The Gardens North Tower Mid Valley City, Lingkaran Syed Putra 59200 Kuala Lumpur Tel : 603-2264 3883 Fax : 603-2282 1886 Email : [email protected] PRINCIPAL BANKERS

Public Bank Berhad CIMB Bank Berhad STOCK EXCHANGE LISTING

ACE Market of Bursa MalaysiaSecurities Berhad STOCK NAME

ENVAIR

STOCK CODE

0080

Dato’ Malek Radzuan Bin SaharinChairman, Independent Non-Executive Director

Ezrul Ehsan Bin IsmailExecutive Director

Deepak Jaikishan A/L Jaikishan RewachandNon-Independent Non-Executive Director

Arulampalam A/L S MariampillaiIndependent Non-Executive Director

Mohd Shukri Bin AbdullahIndependent Non-Executive Director

Poh Hou Liang

Independent Non-Executive Director

AUDIT COMMITTEE

Dato’ Malek Radzuan Bin SaharinChairman

Arulampalam A/L S MariampillaiMember

Mohd Shukri Bin AbdullahMember

Poh Hou LiangMember SECRETARY

Ng Yim Kong (LS 0009297) REGISTERED OFFICE & CORPORATE OFFICE

2nd Floor, Lot 107, Jalan 6 Off Jalan Chan Sow Lin, Sungai Besi 55200 Kuala Lumpur Tel : 603-9235 9899 Fax : 603-9235 9989 AUDITORS

STYL Associates AF1929 Chartered Accountants No. 107B, Jalan Aminuddin Baki Taman Tun Dr. Ismail 60000 Kuala Lumpur Tel : 603-7727 5573 Fax : 603-7727 0771

Annual Report 2012 3

Directors’ Profile

DATO’ MALEK RADZUAN BIN SAHARINIndependent Non-Executive ChairmanChairman of Audit Committee and Nomination CommitteeMember of Remuneration Committee

Dato’ Malek Radzuan Bin Saharin, aged 54, a Malaysian, was appointed to the Board on 27 August 2012.

Dato’ Malek Radzuan Bin Saharin, holds a degree of arts from College University Octawa Florida. After graduation, Dato’ Malek Radzuan pursued his career in music, his first album was launched in 1980 and the subsequent album was launched in 1981. As of todate, Dato’ Malek has launched a total of 23 albums.

In 2003, Dato’ Malek Radzuan became a member of PAPITA (Persatuan Penyanyi-Pemuzik Penulis Lagu Tanahair). With his vast experience in music industry, Dato’ Malek was appointed as Deputy President of PAPITA and he is still serving in the association. Dato’ Malek has possessed more than 30 years of experience in music and singing.

In 2006, Dato’ Malek became a member of Association/ Pertubuhan Perniagaan Melayu. Dato’ Malek also own a tourism company which has been operating for the past five years.

With his vast experience in the industry, Dato Malek was appointed as the Director of Yayasan of Artis 1 Malaysia in May 2012.

Dato’ Malek has no family relationship with other Directors or major shareholders of the Company. There is no conflict of interest with the Company. Within the last 10 years, he has not been convicted for any offences, other than traffic offence, if any. He does not hold any shares in the Company.

EZRUL EHSAN BIN ISMAILExecutive DirectorMember of Remuneration Committee

Encik Ezrul Ehsan Bin Ismail, aged 34, a Malaysian, was appointed to the Board on 28 August 2012.

Encik Ezrul Ehsan Bin Ismail, holds a certificate in Information Technology from Canberra Institute of Technology, Australia. Encik Ezrul Ehsan Bin Ismail started his career as an IT Executive with Linkos Network Sdn Bhd. In 2003 he was involved in planning and organizing the operation of the information system, developed and implements policies for electronic data processing, maintaining hardware and software system.

In 2006, Encik Ezrul joined Carpet Raya Sdn. Bhd. as a Credit Controller. In 2010, Encik Ezrul joined a public listed company, Equine Capital Berhad as Sales and Marketing Executive to promote products to customers, source for clients and potential project to the Company and responsible for collection of payment.

Encik Ezrul has no family relationship with other Directors or major shareholders of the Company. There is no conflict of interest with the Company. Within the last 10 years, he has not been convicted for any offences, other than traffic offence, if any. He does not hold any shares in the Company.


DEEPAK JAIKISHAN A/L JAIKISHAN REWACHANDNon-Independent Non-Executive Director

Mr. Deepak Jaikishan A/L Jaikishan Rewachand, aged 41, a Malaysian. He was firstly appointed to the Board on 1 March 2012 and resigned on 28 August 2012. He was subsequently re-appointed to the Board on 10 May 2013.

Mr. Deepak Jaikishan A/L Jaikishan Rewachand is from a family pioneering in the Property Development and Investment and Carpet Manufacturing with fifteen (15) years experience in the industry.

He has initiated the marketing and distribution operations in 1997. With his leadership, both Carpet Raya Sdn. Bhd. and Tek Holdings Sdn. Bhd., have been contributing a billion ringgit revenue todate.

Through his vision and foresight of the carpet industry in Malaysia, Mr. Deepak initiated and successfully acquired the largest carpet manufacturing plant in Malaysia known as Nobel Carpet Sdn. Bhd. in the year 2000 whereby this manufacturing unit is the only carpet manufacturer that extruded its own carpet yarn. In addition in the year 2003, Mr. Deepak embarked on the biggest manufacturing plant (Premier Weavers) with the latest weaving technology in Malaysia.

From years 2000 to 2009, Mr. Deepak had completed a few property investment projects, totalling about RM3 billion.

Mr. Deepak Jaikishan has no family relationship with other Directors or major shareholders of the Company. There is no conflict of interest with the Company. Within the last 10 years, he has not been convicted for any offences, other than traffic offence, if any. He has a direct shareholding of 19,997,900 ordinary shares of RM0.10 each and an indirect interest in 530,000 ordinary shares of RM0.10 each in the Company.

ARULAMPALAM A/L S MARIAMPILLAIIndependent Non-Executive DirectorChairman of Remuneration CommitteeMember of Audit Committee and Nomination Committee

Mr. Arulampalam A/L S Mariampillai, aged 51, a Malaysian, was appointed to the Board on 27 August 2012.

Mr. Arulampalam A/L S Mariampillai, holds bachelor of Law from University of London and possesses the Certificate of Legal Practice. Mr. Arulampalam has over 20 years of experience in legal practice and was admitted to the Malaysian Bar in 1992 and thereafter commenced practice with Messrs. Nordin Hamid & Co. In 1994 he was a partner in Silveter, Pillai & Co. In 2002 Mr. Arulampalam started his own firm by the name of Arulampalam, & Co.

Mr. Arulampalam has no family relationship with other Directors or major shareholders of the Company. There is no conflict of interest with the Company. Within the last 10 years, he has not been convicted for any offences, other than traffic offence, if any. He has a direct shareholding of 100,000 ordinary shares of RM0.10 each in the Company.

Directors’ Profilecont’d


Directors’ Profilecont’d

MOHD SHUKRI BIN ABDULLAHIndependent Non-Executive DirectorMember of Audit Committee

Encik Mohd Shukri Bin Abdullah, aged 46, a Malaysian, was appointed to the Board on 1 March 2012.

Encik Mohd Shukri started his career with Shell Malaysia Trading Sdn. Bhd. as a Forecourt Executive in the Marketing Retail Development Division in 1990. Three years later he joined Panmart Development Sdn. Bhd.

In 1998, he was appointed as the Contracts & Promotions Manager for Carpet Raya Sdn. Bhd. (“Carpet Raya”). With his vast experience, Encik Mohd Shukri contributed tremendously to the overall growth of the Company to become one of the leading companies in the industry. At present, he is appointed director for Carpet Raya.

Besides Carpet Raya, he is also a director in a number of companies such as Asia Canggih Sdn. Bhd., Affluent Corridor Sdn. Bhd., Radiant Splendour Sdn. Bhd., Dekad Darat Sdn. Bhd. and Prudent Plus Sdn. Bhd. Through these companies, he oversees the acquisition and sale of landmark properties in Kuala Lumpur such as Angkasaraya, Glomac Tower, offices and residences within KLCC vicinity.

He established Shapers Malaysia Sdn. Bhd. in 2000 to focus on his passion to effectively produce promotional activities for organisations by garnering support from their industry partners. His passion for the Halal Industry saw him founding and organising the first Malaysia International Halal Showcase (MIHAS) in 2004 and in 2010, he founded another Halal-related exposition called Halal Fiesta (HALFEST) focusing on Halal certified local products. Encik Mohd Shukri has no family relationship with other Directors or major shareholders of the Company. There is no conflict of interest with the Company. Within the last 10 years, he has not been convicted for any offences, other than traffic offence, if any. He does not hold any shares in the Company.

POH HOU LIANGIndependent Non-Executive DirectorMember of Audit Committee

Mr. Poh Hou Liang, aged 61, a Malaysian, was appointed to the Board on 28 May 2013.

Mr. Poh Hou Liang is a Fellow member of the Association of Chartered Certified Accountants of UK (FCCA), Fellow of the Malaysian Institute of Accountants (FMIA) and a Chartered Member of the Institute of Internal Auditors Malaysia (IIA). Mr. Poh was the Head of the Treasury and Money Market Department in Kewangan Industri Berhad from 1990 to 1993. He then served for 10 years in Bank Industri Malaysia Berhad. He was seconded to assist in the setting up of City Savings and Investment Bank Ltd. in South West Africa in 1995.

Following his return to Malaysia in 1998, he was made the Head of Finance and Administration Division of Global Maritime Ventures Berhad, a subsidiary of Bank Industri Berhad. In 2000, he was transferred back to the parent company, Bank Industri Berhad, to head the Corporate Planning and Monitoring Division.

In 2003, he moved on to Bank Pembangunan Malaysia Berhad as Chief Internal Auditor until his retirement in 2007.

Following his retirement, Mr. Poh was appointed as an Independent and Non- Executive Director and a member of the Audit Committee of Ingenuity Solutions Berhad on 27 February 2008. He had relinquished his position as a member of the Audit Committee, Nomination Committee and Remuneration Committee in Ingenuity Solutions Berhad on 9 July 2010 due to his re-designation from Independent Non-Executive Director to the position of Executive Director on 9 July 2010 to better assist the Group.

He resigned as an Executive Director of Ingenuity Solutions Berhad on 10 February 2011. Mr. Poh Hou Liang has no family relationship with other Directors or major shareholders of the Company. There is no conflict of interest with the Company. Within the last 10 years, he has not been convicted for any offences, other than traffic offence, if any. He does not hold any shares in the Company.


Chairman’s Statement

Dear Shareholders,

On behalf of the Board of Directors, I am pleased to present you the Annual Report and Audited Financial Statements for the financial year ended 31 December 2012 of Envair Holding Berhad (“Envair”).

FINANCIAL REVIEW

The Group made a turnaround from a loss after tax position reported in 2011 of RM3.41 million to a profit after tax of RM73k in the current financial year. The substantial improvement is mainly due to waiver of shareholder’s advance of RM1.1million and the significant drop in impairment loss on receivables as most of the long outstanding debts of the Group have been substantially provided for in the previous financial year. Revenue achieved for the financial year ended December 31, 2012 was RM872k as compared to RM741k registered in 2011, reflecting an increase of about 18% on the back of higher sales in air filter and clean room products.

DIVIDENDS

The Board has decided not to declare any dividends for the financial year ended 31 December 2012. The decision was derived after taking into consideration the Group’s ongoing assessment and future cash requirements.

NOTE OF APPRECIATION

On behalf of the Board, I would like to record my appreciation to our valued shareholders, customers, business associates, financiers, relevant authorities and other stakeholders for their continuous support and trust in our Group during the past year that has enabled the Group to weather out another difficult and challenging year despite the uncertainties in the global and local economy. The gratitude is also extended to all my fellow Directors, Management and staff for their unrelenting trust and unwavering support.

The Board of Directors welcome Mr. Deepak Jaikishan A/L Jaikishan Rewachand, En. Mohd Shukri Bin Abdullah, En. Ezrul Ehsan Bin Ismail, Mr. Arulampalam A/L S Mariampillai and Mr Poh Hou Liang to the Board and with their experiences, they will assist the Group to work toward a sustainable growth in the future.

We look forward to your continuous trust and support for the year 2013.

Dato’ Malek Radzuan Bin SaharinChairman


Corporate Governance Statement

The Board of Directors (“the Board”) of Envair Holding Berhad (“Envair”) recognizes the importance of upholding the highest standards of corporate governance in conducting the Group’s business activities and discharging the Board’s fiduciary responsibilities to protect and enhance the shareholder’s value. Premised on this, the Board is committed to the best of its ability under the present circumstances of the Company to ensure that high standards of corporate governance are practised throughout the Company and to apply the principles and best practices as governed by the Listing Requirements of the ACE Market of Bursa Malaysia Securities Berhad (“Listing Requirements”) and Guidance Note 11 on Corporate Governance. The Company will continuously endeavors to comply with the Malaysian Code on Corporate Governance 2012 (“Code”).

This statement describes the Company’s compliance with the principles of the Code.

A. DIRECTORS

i The Board

The Board is primarily responsible for the strategic directions of the Company. In addition, the Board also oversees the conduct of the Company‘s business, whereby it devises and puts in place adequate systems of control, focuses primarily on the mitigation of any foreseeable or potential risk besetting the Company.

ii Board Balance

The Board comprises six (6) directors; one of whom is an Executive Director and five (5) are Non-Executive Directors, out of whom four (4) are independent.

More than one-third (1/3) of the current Board is represented by Independent Non-Executive Directors who are independent of management and free from any business or other relationship which could interfere with the exercise of independent judgment on the Board’s deliberation and decision making, each of whom, brings with him vast and varied experiences, exposure and expertise.

The profile of each member of the current Board is set out on Directors’ profile of this Annual Report.

The Chairman of the Board holds a Non-Executive position and is primarily responsible for matters pertaining to the Board and the overall conduct of the Group. The Executive Director oversees the day to day management and running of the Group and the implementation of the Board’s decision and policies.

The presence of four (4) Independent Non-Executive Directors ensure that issues of strategic, performance and resources proposed by the management are objectively evaluated taking into account the interest of the shareholders and the Company.

In line with the Code, the tenure of an Independent Director shall not exceed nine (9) years consecutively. Upon completion of the nine (9) years, an Independent Director may continue to serve on the Board subject to his redesignation as a Non-Independent Non-Executive Director should an Independent Director be retained after 9 years, his retention must be approved by the shareholders.

iii Board Meetings

To ensure that the Envair Group is managed properly, the current Board is scheduled to meet at least four (4) times a year, with additional meetings being convened when necessary. Besides that, the Board also approves matters through the circulation of Director’ Circular Resolution in accordance with the Articles of Association of the Company.


During the financial year ended 31 December 2012, the Board met eight (8) times. The details of the Director’s attendances at the Board Meetings during their tenure in office are set out below:-

Name of Directors

No. of Meetings Attended during the time the Directors hold office %

Dato’ Malek Radzuan Bin Saharin * (Independent Non-Executive Director and Chairman)

2/2 100

Ezrul Ehsan Bin Ismail ** (Executive Director)

2/2 100

Deepak Jaikishan A/L Jaikishan Rewachand *** (Non-Independent Non-Executive Director)

4/4 100

Arulampalam A/L S Mariampillai **** (Independent Non-Executive Director)

2/2 100

Mohd Shukri Bin Abdullah ***** (Independent Non-Executive Director)

3/6 50

Dato’ Meor Chek Husein Bin Mahayuddin #

(Independent Non-Executive Director)6/6 100

Mohd Anuar Bin Mohd Hanadzlah # # (Executive Director)

5/6 83.33

Yap Chi Keong # # #

(Independent Non-Executive Director)6/6 100

Notes:-* Appointed on 27 August 2012** Appointed on 28 August 2012*** Firstly appointed on 1 March 2012 and resigned on 28 August 2012. Subsequently re-appointed on 10 May 2013**** Appointed on 27 August 2012***** Appointed on 1 March 2012# Retired on 28 June 2012# # Resigned on 22 June 2012# # # Resigned on 27 August 2012

iv Supply of Information and Access to Advice

The Board is provided with comprehensive board papers on a timely manner prior to board meetings. This is to ensure and enable the members of the Board to discharge their duties and responsibilities competently in a well-informed manner. All members of the Board have unhindered access to the advice and services of the Company Secretary, and where necessary, may seek independent professional advisers for advice for the purpose of discharging their statutory and fiduciary duties. Every Director also has unrestricted access to all information with regard to the activities of the Envair Group.

v Directors’ Training

Encik Mohd Shukri Bin Abdullah and Mr Poh Hou Liang had attended the Mandatory Accreditation Programme for Directors of Public Listed Companies (“MAP”). Dato’ Malek Radzuan Bin Saharin, Encik Ezrul Ehsan Bin Ismail and Mr. Arulampalan A/L S Mariampillai have yet to attend the MAP. They had been granted by Bursa Malaysia Securities Berhad to attend the MAP by 11 April 2013. Mr. Deepak Jaikishan A/L Jaikishan Rewachand who was appointed on 10 May 2013, Dato’ Malek Radzuan Bin Saharin, Encik Ezrul Ehsan Bin Ismail and Mr. Arulampalan A/L S Mariampillai will attend the MAP pursuant to the Listing Requirements pending registration with Bursatra Sdn Bhd.

vi Re-election of Directors

In accordance with the Company’s Articles of Association, one-third (1/3) of the directors shall retire from office and be eligible for re-election at each Annual General Meeting and all directors shall retire from office at least once in every three (3) years but shall be eligible for re-election. Directors appointed during the year will be subject to retirement and re-election by shareholders in the Annual General Meeting.

Corporate Governance Statementcont’d



Directors over seventy (70) years of age are required to retire and submit themselves for re-appointment annually in accordance with Section 129(6) of the Companies Act, 1965. Presently, none of the Directors is subject to such retirement and re-appointment.

vii Board Committees

The Board has set up the following Committees to assist the Board in discharging their duties and decision making:-

(a) Audit Committee

The Audit Committee comprises three (3) Independent Non-Executive Directors as follows:-

Chairman : Dato’ Malek Radzuan Bin Saharin Independent Non-Executive Director (Appointed on 27 August 2012)

Members : Ezrul Ehsan Bin Ismail Executive Director (Appointed on 28 August 2012)

Arulampalam A/L S Mariampillai Independent Non-Executive Director (Appointed on 27 August 2012)

Poh Hou Liang Independent Non-Executive Director (Appointed on 28 May 2013)

The Audit Committee Report is set out on page 12 – 15 of this Annual Report.

(b) Nomination Committee

The Nomination Committee comprises the following members:-

Chairman : Dato’ Malek Radzuan Bin Saharin Independent Non-Executive Director (Appointed on 27 August 2012)

Members : Arulampalam A/L S Mariampillai Independent Non-Executive Director (Appointed on 27 August 2012)

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

• To regularly review the Board structure, size and composition.• To recommend candidates for the approval of the Board to fill vacancies in the Board.• To annually review the required mix of skills and experience and other qualities and competencies

which non-executive directors should bring to the Board.• To annually assess the effectiveness of the Board as a whole, the committee of the Board and

contributions of each individual director of the Board.

The Nomination Committee has met two (2) times during the financial year ended 31 December 2012.

(c) Remuneration Committee

The Company has an established framework of principles to evaluate performance and reward for executive directors. Remuneration packages for the executive directors are formulated to be competitive and realistic, emphasis being placed on performance, with aims to attract, motivate and retain executive directors of high caliber to the Group. For non-executive directors, the level of remuneration commensurate with the level of responsibilities undertaken by them for the Company.



The Remuneration Committee comprises the following members:-

Chairman : Mr. Arulampalam A/L S Mariampillai Independent Non-Executive Director (Appointed on 27 August 2012)

Members : Ezrul Ehsan Bin Ismail Executive Director (Appointed on 28 August 2012)

Dato’ Malek Radzuan Bin Saharin Independent Non-Executive Director (Appointed on 27 August 2012)

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

• To review and determine, at least once annually, adjustments to the remuneration package including benefits-in-kind of each executive director, taking into account the performance of the individual, the inflation price index and where necessary, information from independent sources on remuneration packages for the equivalent jobs in the industry.

• To review and determine the quantum of performance related bonuses, benefits-in-kind and Employee Share Options, if available, to be given to the executive directors.

• To consider and execute the renewal of the service contract of executive directors as and when due, as well as the service contracts and remuneration packages for newly appointed executive directors prior to their appointments.

B. DIRECTORS’ REMUNERATION

The Directors are satisfied that the current level of remuneration is in line with the responsibilities expected.

The aggregate Directors’ remuneration paid or payable to all Directors of the Company categorised into appropriate components for the financial year ended 31 December 2012 are as follows:-

Remuneration ( RM’000)Non-Executive

DirectorsExecutive Directors Total

Salaries - 41 41Fees - - -Bonuses - - -Payroll based expenses – EPF - 5 5Meeting allowances - - -Benefits-in-kind - - -

Total - 46 46

Range of Remuneration

Number of Director

Non-Executive Directors

Executive Directors Total

Below RM50,000 - 2 2RM50,000 – RM100,000 - - -RM100,000 – RM150,000 - - -RM150,000 – RM200,000 - - -



C. RELATIONS WITH SHAREHOLDERS

The Company recognised the importance of timely and regular dissemination of information to shareholder of the Company via the Annual Report to shareholders, quarterly financial reports and the various announcements made during the year. These will enable the shareholders and members of the public to have an overview of the Group’s performance and operations.

The Annual General Meeting also provides an opportunity for the shareholder to seek and clarify any issues relevant to the Company. Shareholders are encouraged to meet and communicate with the Board at Annual General Meeting and to vote on all resolutions.

D. ACCOUNTABILITY AND AUDIT

i Financial Reporting

The Directors aim to provide a balanced and meaningful assessment of the Company’s financial performance and prospects, primarily through the Annual Report and quarterly financial statement.

The Directors are also responsible for ensuring that the annual financial statements are prepared in accordance with the provision of the Companies Act, 1965 and the applicable Approved Accounting Standards prevailing in Malaysia.

A statement by the Directors of their responsibilities in the preparation of financial statements is set out in the ensuring section.

ii Statement of Directors’ Responsibility in respect of the Financial Statements

The Malaysian Company Law requires the Directors to prepare financial statements for each financial year, which give a true and fair view of the state of affairs of the Company and the results and cash flow of the Company for that period.

In preparing those financial statements, the Directors are required to:-

a) Select suitable accounting policies and then apply them consistently;b) State whether applicable accounting standards have been followed;c) Make judgments and estimates that are reasonable and prudent; andd) Prepared the financial statements on a going concern basis unless it is inappropriate to presume that

the Company will continue in business.

The Directors are responsible for keeping proper accounting records, which disclose with reasonable accuracy, at any time, the financial position of the Company. The Directors are also responsible for safeguarding the assets of the Company and for taking reasonable steps for the prevention and detection of fraud and irregularities.

The Directors have prepared the annual financial statements in compliance with the Companies Act, 1965.

iii Internal Control

The Board acknowledges its responsibility for maintaining a sound system of internal control, which provides reasonable assessment of effective operations, internal controls and compliance with the laws and regulations as well as with internal procedures and guidelines. A statement on Risk Management and Internal Control of the Company is set out on page 16 of this Annual Report.

iv Relationship with the Auditors

Through the Audit Committee, the Company shall establish a transparent and appropriate relationship with the Company’s auditors, which enable the auditors to highlight to the Audit Committee and the Board, matters that require the Board’s attention.


Audit Committee Report

COMPOSITION AND DESIGNATION OF AUDIT COMMITTEE

The Audit Committee currently comprises the following members:-

Chairman : Dato’ Malek Radzuan Bin Saharin Independent Non-Executive Director (Appointed on 27 August 2012) Members : Arulampalam A/L S Mariampillai Independent Non-Executive Director (Appointed on 27 August 2012)

Mohd Shukri Bin Abdullah Independent Non-Executive Director (Appointed on 1 March 2012)

Poh Hou Liang Independent Non-Executive Director (Appointed on 28 May 2013)

TERMS OF REFERENCE

Composition of the Audit Committee The Audit Committee shall be appointed by the Board from amongst their members, who fulfils the following requirements:-

a) The Audit Committee must be composed of no fewer than three (3) members. In the event of any vacancy in the Audit Committee resulting in the non-compliance of the above, the Company must fill the vacancy within three (3) months.

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

c) All the Audit Committee members must be financially literate, with at least one member :-

• must be a member of the Malaysian Institute of Accountants; or

• if he is not a member of the Malaysian Institute of Accountants, he must have at least three (3) years’ working experience and:-

♦ he must have passed the examinations specified in Part I of the 1st Schedule of the Accountants Act 1967; or♦ he must be a member of one of the Associations of Accountants specified in Part II of the 1st Schedule

of the Accountants Act 1967; or

• fulfils such other requirements as prescribed or approved by the Exchange.

d) No alternate director shall be appointed as a member of the Audit Committee.

e) The member of the Audit Committee shall elect a Chairman from among themselves who shall be an Independent Director. The Chairman of the Audit Committee should engage on a continuous basis with senior management, the head of internal audit and the external auditors in order to be kept informed of matters affecting the Company.

All members of the Audit Committee, including the Chairman, will hold office only so long as they serve as Directors of the Company. The Board must review the term of office and performance of the Audit Committee and each of its members at least once every three (3) years to determine whether the Audit Committee has carried out its duties in accordance with its terms of reference.


Audit Committee Reportcont’d

Secretary of the Audit Committee

The Company Secretary of the Company shall be the Secretary of the Audit Committee.

Duties and Responsibilities of the Audit Committee

The following are the main duties and responsibilities of the Audit Committee collectively:-

(a) Review the following and report the same to the Board of the Company:-

(i) oversee the Company’s internal control; (ii) with the external auditors, the audit plan;(iii) with the external auditors, his evaluation of the system of internal controls; (iv) with the external auditors, his audit report;(v) the assistance given by the employees of the Company to the external auditors and the internal auditors;(vi) the adequacy of the scope, functions, competency and resources of the internal audit functions and that it

has the necessary authority to carry out its work;(vii) 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;

(viii) the quarterly results and year end financial statements, prior to the approval by the Board, focusing particularly on :-• changes in or implementation of major accounting policy changes;• significant and unusual events; and• compliance with accounting standards and other legal requirements;

(ix) 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;

(x) any letter of resignation from the external auditors and any questions of resignation or dismissal; and(xi) whether there is reason (supported by grounds) to believe that the Company’s external auditor is not suitable

for re-appointment;

(b) Oversee the Company’s internal control structure to ensure operational effectiveness and efficiency, reduce risk of inaccurate financial reporting, protect the Company’s assets from misappropriation and encourage legal and regulatory compliance;

(c) Assist the Board in identifying the principal risks in the achievement of the Company’s objectives and ensuring the implementation of appropriate systems to manage these risks;

(d) Recommend to the Board on the appointment and re-appointment of the external auditors and their audit fee, after taking into consideration the independence and objectivity of the external auditors and the cost effectiveness of the audit;

(e) Discuss with the external auditors before the audit commences the nature and scope of the audit and ensure co-ordination where more than one audit firm is involved;

(f) Discuss problems and reservations arising from the audits and any matter the auditors may wish to discuss in the absence of the management where necessary;

(g) Review the external auditor’s management letter and management’s response therein;

(h) In relation to the internal audit function:-

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

(ii) review the internal audit programme and results of the internal audit process and, where necessary, ensure that appropriate actions are taken on the recommendations of the internal audit function;



(iii) review any appraisal or assessment of the performance of members of the internal audit function;(iv) approve any appointment of termination of senior staff members of the internal audit function; and(v) take cognizance of resignations of internal audit staff members and provide the resigning staff member an

opportunity to submit his reasons for resigning;

(i) Consider the major findings of internal investigations and management’s response;

(j) To review the effectiveness of the internal controls and risk management processes of the Company; and

(k) Consider other matters as defined by the Board.

Rights of the Audit Committee

In carrying out its duties and responsibilities, the Audit Committee will:-

• have the authority to investigate any matter within its terms of reference;• have the resources which are required to perform its duties;• have full and unrestricted access to any information pertaining to the Company;• have direct communication channels with the external auditors and person(s) carrying out the internal audit

function or activity;• be able to obtain independent professional or other advice and to invite outsiders with relevant experience and

expertise to attend the Audit Committee meeting (if required) and to brief the Audit Committee; and• be able to convene meetings with the external auditors, the internal auditors or both, excluding the attendance of

other directors and employees of the Company, whenever deemed necessary.

Conduct of Meetings

a) The Audit Committee will meet at least four (4) times in each financial year although additional meetings may be called at any time, at the discretion of the Chairman of the Audit Committee.

b) The quorum shall consist of a majority of independent committee members and shall not be less than two (2).

c) Recommendations to the Audit Committee are submitted to the Board for approval.

d) The Company Secretary shall be in attendance at each Audit Committee meeting and record the proceedings of the meeting thereat.

e) Minutes of each meeting shall be kept as part of the statutory record of the Company upon confirmation by the Audit Committee and a copy shall be distributed to each member of the Board.

f) The Managing Director and other officers may be invited to attend where their presence are considered appropriate as determined by the Audit Committee Chairman.

g) The internal auditors and/or external auditors have the right to appear and be heard at any meeting of the Audit Committee.

h) Upon the request of the internal auditors and/or external auditors, the Audit Committee Chairman shall also convene a meeting of the Audit Committee to consider any matter the auditor(s) believes should be brought to the attention of the Board or the shareholders.

i) The Audit Committee must be able to convene meetings with external auditors without the presence of the executive board members and management at least twice a year and whenever deemed necessary.

j) Where the Audit Committee is of the view that a matter reported by it to the Board has not been satisfactorily resolved resulting in a breach or Bursa Malaysia Securities Berhad requirements, the Audit Committee must promptly report such matter to Bursa Malaysia Securities Berhad.


k) The attendance at any particular Audit Committee meeting by other directors and employees of the Company shall be at the Audit Committee’s invitation and discretion and must be specific to the relevant meeting.

SUMMARY OF ACTIVITIES

The Audit Committee is scheduled to meet at least four (4) times a year, with additional meetings being convened when necessary.

Details of the attendance during the ended 31 December 2012 are as follows:-

Name

No. of meetings attended during the time the Audit

Committee Members hold office %

Dato’ Malek Radzuan Bin Saharin (Appointed on 27 August 2012) 2/2 100

Arulampalan A/L S Mariampillai (Appointed on 27 August 2012) 2/2 100

Mohd Shukri Bin Abdullah (Appointed on 1 March 2012) 1/3 33.33

Yap Chi Keong (Resigned on 28 August 2012) 2/2 100

Dato’ Meor Chek Hussien Bin Mahayuddin (Retired on 28 June 2012) 2/2 100

During the year under review, the following were the activities of the Audit Committee:-

(a) Reviewed the quarterly financial results and ensured that the financial reporting and disclosure requirements of relevant authorities had been complied with, focusing particularly on:-

(i) changes in or implementation of major accounting policies and practices;(ii) the on-going concern assumption;(iii) significant and unusual event; and(iv) compliance with accounting standards and other legal policies and requirements.

(b) Reviewed the related party transactions and conflict of interest situation, if any, within the Company or group including any transactions, procedures or course of conduct that raised questions of management integrity in the ordinary course of business.

(c) Reviewed the audit strategy and plan of the external auditors.

(d) Meetings with external auditors.

INTERNAL AUDIT FUNCTION

The Internal Audit function was outsourced to Messrs. Sterling Business Alignment Consulting Sdn. Bhd.

During the financial year under review, the Internal Auditors had assessed the effectiveness of the internal control environment of the Accounts and Finance function of the Company and the Group. The internal audit findings were presented at the First Audit Committee Meeting for the year 2012. All the findings raised by the Internal Audit Function have been appropriately addressed by management.



Statement on Risk Management and Internal Control

INTRODUCTION

The Board of Directors (“the Board”), as guided by the ACE LR and the Statement on Risk Management and Internal Control (Guidelines for Directors of Listed Issuers) (“Internal Control Guideline”) is pleased to provide the following Statement which outlines the nature and scope of risk management and internal controls of the Group during the financial year in review.

THE BOARD’S RESPONSIBILITIES

The Board acknowledges their responsibility to maintain a system of sound risk management and internal control and for reviewing its adequacy and integrity. The system is designed to manage rather than eliminate the risk of failure in achieving the Group’s corporate objectives and can only provide reasonable but not absolute assurance against any material misstatement or loss.

THE RISK MANAGEMENT PROCESS

Apart from financial controls, the Group’s system of internal controls also cover operational and compliance controls and most importantly, risk management. As part of the risk management process, the Board assisted by the Audit Committee, is continuously identifying, assessing and managing significant business risks faced by the Group throughout the financial year.

The process will be regularly reviewed by the Board through the Audit Committee and is in accordance with the guidance as contained in the Internal Control Guidelines.

THE INTERNAL CONTROL PROCESS

The other key features of the Group’s internal control system include the following:

• An organization structure with defined lines of responsibility and appropriate reporting structure including proper approval and authorization limit for approving capital expenditure and expenses within the Group;

• The Audit Committee had appointed an outsourced independent professional internal audit service provider to discharge the internal audit function which performs regular and systematic review of the internal controls to assess and provide sufficient assurance on the effectiveness of the systems of internal control and to highlight significant risks impacting the Group with recommendation for improvement; and

• The Audit Committee will regularly review reports by the independent professional internal audit service provider and conducts annual assessment on the adequacy of the function’s scope of work and resources.

The Group continues to take measures to enhance and strengthen the internal control environment.


1. UTILISATION OF PROCEEDS

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

2. SHARE BUYBACK

During the financial year, the Company did not enter into any share buyback transaction.

3. OPTIONS, WARRANTS OR CONVERTIBLE SECURITIES

During the financial year, no option, warrants or convertible securities were issued by the Company.

4. DEPOSITORY RECEIPT PROGRAMME

During the financial year, the Company did not sponsor any Depository Receipt programme.

5. SANCTIONS AND/OR PENALTIES

During the financial year, there were no sanctions and/or penalties imposed on the Company and its subsidiaries, directors or management by the relevant regulatory bodies.

6. NON-AUDIT FEES

There were no non-audit fees paid to the external auditors by the Group for the financial year.

7. PROFIT ESTIMATES, FORECAST OR PROJECTION

There was no profit estimate, forecast or projection issued by the Company and/or its subsidiaries for the financial year.

8. VARIATION OF RESULTS

The variance between the audited results (net profit after tax) and the unaudited results announced is less than 10%.

9. PROFIT GUARANTEE

There was no profit guarantee issued by the Company and/or its subsidiaries for the financial year.

10. MATERIAL CONTRACTS

There were no material contracts entered into by the Company and its subsidiaries which involved the directors and substantial shareholders’ interest during the financial year ended 31 December 2012.

11. REVALUATION POLICY ON LANDED PROPERTIES

The Group is in the process of arranging for the valuation exercise of the landed properties and expects to be completed in the coming financial year ending 31st December 2013.

12. RECURRENT RELATED PARTY TRANSACTION OF REVENUE NATURE

The Company does not have any recurrent related party transaction of revenue nature during the financial year.

13. CORPORATE SOCIAL RESPONSIBILITY

The Group did not undertake any corporate social responsibility activities during the financial year ended 31 December 2012.

Other Compliance Information


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 31st December 2012.

PRINCIPAL ACTIVITIES

The Company is principally engaged in investment holding and the provision of management services. The principal activities of the subsidiaries are as disclosed in Note 13 to the Financial Statements. There have been no significant changes in the nature of the principal activities of the Company and its subsidiaries during the financial year. FINANCIAL RESULTS The results of the operations of the Group and of the Company for the financial year are as follows:

GROUP COMPANY

RM RM

Profit/(Loss) before tax (395,621) 661,748

Income tax credit 468,500 -

Net profit for the financial year 72,879 661,748

Attributable to:

Equity holders of the Company 72,879 661,748

DIVIDENDS No dividend has been paid or declared by the Company since the end of the previous financial year. The directors also do not recommend the payment of any dividend in respect of the current financial year. RESERVES AND PROVISIONS There were no material transfers to or from reserves or provisions during the financial year other than those disclosed in the Financial Statements.

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 were no debentures issued during the financial year. SHARE OPTIONS No options have been granted by the Company to any parties during the financial year to take up unissued shares of the Company. No shares have been issued during the financial year by virtue of the exercise of any options to take up unissued shares of the Company. As at the end of the financial year, there were no unissued shares of the Company under options.


Directors’ Report cont’d

DIRECTORS The following directors served on the Board of the Company since the date of the last report: Mohd Shukri Bin Abdullah Ezrul Ehsan Bin Ismail (appointed on 28.8.2012) Arulampalam A/L S Mariampillai (appointed on 27.8.2012) Dato’ Malek Radzuan Bin Saharin (appointed on 27.8.2012) Deepak Jaikishan A/L Jaikishan Rewachand (resigned on 28.8.2012) Yap Chi Keong (resigned 27.8.2012) Dato’ Meor Chek Hussein Bin Mahayuddin (retired on 28.6.2012) Mohd Anuar Bin Mohd Hanadzlah (resigned on 22.6.2012) DIRECTORS’ BENEFITS Since the end of the previous financial year, no director of the Company has received or become entitled to receive any benefit (other than the benefit included in the aggregate amount of emoluments received or due and receivable by directors as disclosed in the financial statements or the fixed salary of full-time employees of the Company) by reason of a contract made by the Company or a related corporation with the director or with a firm of which the director is a member, or with a company in which the director has a substantial financial interest. Neither during nor at the end of the financial year, was the Company a party to any arrangements whose object is to enable the directors to acquire benefits by means of the acquisition of shares in or debentures of the Company or any other body corporate.

DIRECTORS’ INTERESTS

The shareholdings in the Company and in the related companies of those who were directors at the end of the financial year, as recorded in the Register of Directors’ Shareholdings kept by the Company under Section 134 of the Companies Act, 1965, are as follows:

Number of ordinary shares of RM0.10 each

Balance as at date of

appointment Bought SoldBalance as at

31.12.2012

Shares in the Company

Registered in name of director

Arulampalam A/L S Mariampillai 100,000 - - 100,000 By virtue of the above director’s interest in the shares of the Company, the abovementioned director is also deemed to have an interest in the shares of the subsidiaries to the extent that the Company has an interest. None of the other directors in office at the end of the financial year held shares or had beneficial interest in the shares of the Company or its related companies during or at the beginning and end of the financial year.



STATUTORY INFORMATION ON THE FINANCIAL STATEMENTS a) Before the statements of comprehensive income and statements of financial position of the Group and of the

Company were made out, the directors took reasonable steps:

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

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

As at 31st December 2012, the accumulated losses of the Group and of the Company were RM16,436,029 and RM8,318,731 respectively which arose from losses sustained in prior years. As mentioned in Note 4 a) to the Financial Statements, the financial statements have been prepared on the basis of accounting principles applicable to a going concern which presumes that the future operating results will improve and consequently, the realisation of assets and settlement of liabilities will occur in the ordinary course of business.

b) Other than as stated, at the date of this report, the directors are not aware of any circumstances:

(i) which would render the amount written off for bad debts or the amount of the allowance for doubtful debts in the financial statements of the Group and of the Company inadequate to any substantial extent; or

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

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

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

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

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

d) No contingent liability or other liability of the Group and of the Company has become enforceable, or is likely to become enforceable within the period of twelve months after the end of the financial year which in the opinion of the directors, will or may substantially affect the ability of the Group and of the Company to meet their obligations as and when they fall due other than those as disclosed in Note 26 to the Financial Statements.

OTHER STATUTORY INFORMATION

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



b) In the opinion of the directors,

(i) 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 other than the exceptional items as disclosed in the Financial Statements; and

(ii) 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 financial year in which this report is made.

AUDITORS The auditors, Messrs. STYL Associates, have indicated their willingness to continue in office. Signed on behalf of the Board in accordance with a resolution of the Directors,

DATO’ MALEK RADZUAN BIN SAHARIN EZRUL EHSAN BIN ISMAIL Director Director Kuala Lumpur Date: 29 April 2013


Statement by Directors

Statutory Declaration

We, DATO’ MALEK RADZUAN BIN SAHARIN and EZRUL EHSAN BIN ISMAIL, being two of the directors of Envair Holding Berhad, do hereby state that, in the opinion of the directors, the accompanying financial statements are drawn up in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 1965 so as to give a true and fair view of the financial position of the Group and of the Company as at 31st December 2012 and of their financial performance and cash flows of the Group and of the Company for the year then ended. The supplementary information set out in Note 30, which is not part of the financial statements, is prepared in all material respects, in accordance with Guidance on Special Matter No.1 “Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements” as issued by the Malaysian Institute of Accountants and the directive of Bursa Malaysia Securities Berhad.

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

DATO’ MALEK RADZUAN BIN SAHARIN EZRUL EHSAN BIN ISMAIL Director Director Kuala Lumpur Date: 29 April 2013

I, EZRUL EHSAN BIN ISMAIL, being the director primarily responsible for the financial management of Envair Holding Berhad, do solemnly and sincerely declare that the accompanying financial statements are, in my opinion, correct and I make this solemn declaration conscientiously believing the same to be true, and by virtue of the provisions of the Statutory Declarations Act, 1960.

EZRUL EHSAN BIN ISMAIL Subscribed and solemnly declared by the abovenamed EZRUL EHSAN BIN ISMAIL, at Petaling Jaya, on 29 April 2013 Before me: S. AROKIADASS A.M.N.NO. B 390


Independent Auditors’ Reportto the Members of Envair Holding Berhad

(Incorporated in Malaysia)

REPORT ON THE FINANCIAL STATEMENTS We have audited the financial statements of Envair Holding Berhad, which comprise the statements of financial position as at 31st December 2012 of the Group and of the Company, and the statements of comprehensive income, statements of changes in equity and statements of cash flows of the Group and of the Company for the year then ended, and a summary of significant accounting policies and other explanatory information, as set out on pages 25 to 61. Directors’ Responsibility for the Financial Statements The directors of the Company are responsible for the preparation of financial statements so as to give a true and fair view in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia. The directors are also responsible for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with approved standards on auditing in Malaysia. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgement, including the assessment of risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity’s preparation of financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion In our opinion, the financial statements give a true and fair view of the financial position of the Group and of the Company as at 31st December 2012 and of their financial performance and cash flows for the year then ended in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia.

Emphasis of Matter Without qualifying our opinion, we draw attention to Note 4 a) to the Financial Statements which indicates that the accumulated losses of the Group and of the Company as at 31st December 2012 were RM16,436,029 and RM8,318,731 respectively. The successful turnaround plan for the Group and the Company is one of the key factors for the sustainability of the Group’s and of the Company’s operations and for the Group and the Company to continue as going concerns in the foreseeable future. The validity of the going concerns assumption is therefore dependent on the successful implementation of the turnaround plan in the future. In the event the going concern assumption is no longer valid, the Group and the Company may not able to discharge its liabilities in the normal course of business and adjustments may have to be made to reflect such situation. The financial statements of the Group and the Company do not include any adjustment relating to the amounts and classification of assets and liabilities that might be necessary should the Group and the Company be unable to continue as going concerns.


Independent Auditors’ Reportto the Members of Envair Holding Berhad(Incorporated in Malaysia)cont’d

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

have been properly kept in accordance with the provisions of the Act.

(b) We have considered the financial statements and the auditors’ reports of all the subsidiaries of which we have not acted as auditors, which are indicated in Note 13 to the Financial Statements.

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

(d) The auditors’ reports on the financial statements of the subsidiaries did not contain any qualification or any adverse

comment made under Section 174(3) of the Act other than as disclosed in Note 13 to the Financial Statements.

OTHER REPORTING RESPONSIBILITIES The supplementary information set out in Note 30 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.

STYL ASSOCIATES TAN CHIN HUAT Firm No. AF 1929 Approval No: 2037/06/14(J) Chartered Accountants Chartered Accountant Date: 29 April 2013 Kuala Lumpur


Statements of Comprehensive Incomefor the Year Ended 31st December 2012

GROUP COMPANY

2012 2011 2012 2011

Note RM RM RM RM

Revenue 6 871,987 740,908 - -

Other operating income 7 1,603,860 268,369 1,133,881 10,350

Raw materials and consumables used (341,006) (50,451) - -

Changes in inventories of finished goods (318,528) (585,142) - -

Purchases and other direct costs (24,644) (65,656) - -

Staff costs (262,329) (401,380) (260,133) (389,133)

Depreciation of property, plant and equipment 12 (579,551) (586,739) (8,560) (12,886)

Directors’ remuneration 8 (45,864) (169,358) (45,864) (169,358)

Other operating expenses 7 (824,883) (1,985,925) (157,576) (1,054,212)

Profit/(Loss) from operations 79,042 (2,835,374) 661,748 (1,615,239)

Finance costs 9 (474,663) (571,041) - -

Profit/(Loss) before tax (395,621) (3,406,415) 661,748 (1,615,239)

Income tax credit 10 468,500 4,470 - -

Profit/(Loss) for the year, representing total comprehensive income/(loss) for the financial year 72,879 (3,401,945) 661,748 (1,615,239)

Net profit/(loss) for the financial year attributable to:

Equity holders of the Company 72,879 (3,401,945) 661,748 (1,615,239)

Total comprehensive income/(loss) for the financial year attributable to:

Equity holders of the Company 72,879 (3,401,945) 661,748 (1,615,239)

Earnings/(Loss) per share attributable to equity holders of the Company:

Basic (sen) 11 0.06 (2.87)

Diluted (sen) 11 N/A N/A

The accompanying Notes form an integral part of the Financial Statements.


Consolidated Statement of Financial Positionas at 31st December 2012

31.12.2012 31.12.2011 1.1.2011

Note RM RM RM

(Restated) (Restated)

ASSETS

Non-Current assets

Property, plant and equipment 12 9,014,358 9,593,909 10,204,069

Deferred tax assets 14 463,057 - -

Total Non-Current Assets 9,477,415 9,593,909 10,204,069

Current Assets

Inventories 15 1,769,639 2,627,574 3,262,316

Trade receivables 16 1,185,432 232,148 1,192,654

Other receivables and prepaid expenses 16 659,846 849,589 3,242,646

Tax recoverable 42,810 43,345 43,345

Cash and bank balances 12,051 82,518 130,315

Total Current Assets 3,669,778 3,835,174 7,871,276

Total Assets 13,147,193 13,429,083 18,075,345

EQUITY AND LIABILITIES

Capital and Reserves

Share capital 17 11,855,580 11,855,580 11,855,580

Reserves 18 (5,695,110) (5,767,989) (2,366,044)

Total Equity 6,160,470 6,087,591 9,489,536

Non-Current Liabilities

Finance lease liabilities 19 38,756 59,900 97,472

Term loans 20 4,025,395 4,033,420 3,928,898

Deferred tax liabilities 14 9,180 14,623 19,093

Total Non-Current Liabilities 4,073,331 4,107,943 4,045,463

Current Liabilities

Trade payables 21 317,282 321,066 440,269

Other payables and accrued expenses 21 1,430,989 1,155,459 1,742,295

Bank borrowings 22 1,163,245 1,755,148 2,355,906

Tax liabilities 1,876 1,876 1,876

Total Current Liabilities 2,913,392 3,233,549 4,540,346

Total Liabilities 6,986,723 7,341,492 8,585,809

Total Equity and Liabilities 13,147,193 13,429,083 18,075,345


31.12.2012 31.12.2011 1.1.2011

Note RM RM RM

(Restated) (Restated)

ASSETS

Non-Current assets

Property, plant and equipment 12 19,193 27,753 47,809

Investments in subsidiaries 13 499,800 503,995 510,000

Total Non-Current Assets 518,993 531,748 557,809

Current Assets

Other receivables and prepaid expenses 16 52,190 7,632 1,937,743

Amount owing by subsidiaries 13 12,307,731 11,220,554 11,252,267

Cash and bank balances 584 31,937 83,160

Total Current Assets 12,360,505 11,260,123 13,273,170

Total Assets 12,879,498 11,791,871 13,830,979

EQUITY AND LIABILITIES

Capital and Reserves

Share capital 17 11,855,580 11,855,580 11,855,580

Reserves 18 (131,744) (793,492) 821,747

Total Equity 11,723,836 11,062,088 12,677,327

Current Liabilities

Other payables and accrued expenses 21 1,138,603 727,907 1,151,776

Bank borrowings 22 15,183 - -

Tax liabilities 1,876 1,876 1,876

Total Current Liabilities 1,155,662 729,783 1,153,652

Total Liabilities 1,155,662 729,783 1,153,652

Total Equity and Liabilities 12,879,498 11,791,871 13,830,979


Company Statement of Financial Positionas at 31st December 2012

cont’d



Statements of Changes in Equityfor the Year Ended 31st December 2012

Non Distributable

Sharecapital

Accumulatedloss

Sharepremium

Revaluationreserve Total

RM RM RM RM RM

GROUP

Balance as at 1st January 2011 11,855,580 (13,106,963) 8,186,987 2,553,932 9,489,536

Loss for the year representing total comprehensive loss for the year - (3,401,945) - - (3,401,945)

Balance as at 31st December 2011 11,855,580 (16,508,908) 8,186,987 2,553,932 6,087,591

Profit for the year representing total comprehensive income for the year - 72,879 - - 72,879

Balance as at 31st December 2012 11,855,580 (16,436,029) 8,186,987 2,553,932 6,160,470

Sharecapital

Accumulatedloss

Sharepremium Total

RM RM RM RM

COMPANY

Balance as at 1st January 2011 11,855,580 (7,365,240) 8,186,987 12,677,327

Loss for the year representing total comprehensive loss for the year - (1,615,239) - (1,615,239)

Balance as at 31st December 2011 11,855,580 (8,980,479) 8,186,987 11,062,088

Profit for the year representing total comprehensive income for the year - 661,748 - 661,748

Balance as at 31st December 2012 11,855,580 (8,318,731) 8,186,987 11,723,836


Statements of Cash Flowsfor the Year Ended 31st December 2012

GROUP COMPANY

2012 2011 2012 2011

RM RM RM RM

CASH FLOWS FROM OPERATING ACTIVITIES

Profit/(Loss) before tax (395,621) (3,406,415) 661,748 (1,615,239)

Adjustments for:

Bad debts written off 237,301 26,800 2,563 -

Depreciation of property, plant and equipment 579,551 586,739 8,560 12,886

Impairment loss on receivables 95,372 - - -

Inventories written down 479,217 - - -

Inventories written off - 49,600 - -

Exceptional items:

Impairment loss on receivables - 1,538,496 - 946,681

Waiver of shareholder’s advance (1,133,881) - (1,133,881) -

Impairment loss on investments in subsidiary - - 4,195 6,005

Reversal of impairment loss on trade receivables (30,165) (12,985) - -

Gain on disposal of property, plant and equipment - (77,849) - (9,850)

Interest income (3,185) - - -

Finance costs 474,663 571,041 - -

Operating profit/(loss) before working capital changes 303,252 (724,573) (456,815) (659,517)

Changes in working capital:

Decrease in inventories 388,718 585,142 - -

(Increase)/Decrease in trade receivables (1,255,792) 354,876 (2,563) -

(Increase)/Decrease in other receivables and prepaid expenses 179,743 1,446,376 (44,558) 983,430

(Increase)/Decrease in amount owing by subsidiaries - - (1,087,177) 31,713

Decrease in trade payables (3,784) (119,203) - -

Increase/(Decrease) in other payables and accrued expenses 1,409,411 (586,836) 1,544,577 (423,869)

Cash Generated From/(Used In) Operations 1,021,548 955,782 (46,536) (68,243)

Interest received 3,185 - - -

Interest paid (474,663) (540,115) - -

Tax refunded 535 - - -

Net Cash From/(Used In) Operating Activities 550,605 415,667 (46,536) (68,243)


Statements of Cash Flowsfor the Year Ended 31st December 2012cont’d

GROUP COMPANY

2012 2011 2012 2011

RM RM RM RM

CASH FLOWS FROM INVESTING ACTIVITIES

Purchase of property, plant and equipment - (230) - (230)

Proceeds from disposal of property, plant and equipment - 101,500 - 17,250

Net Cash From Investing Activities - 101,270 - 17,020

CASH FLOWS FROM FINANCING ACTIVITIES

Repayment of term loans (567,122) (319,275) - -

Repayment of finance lease obligations (46,034) (126,286) - -

Decrease in bank borrowings, excluding bank overdraft and long term borrowings - current portion (35,418) (69,802) - -

Net Cash Used In Financing Activities (648,574) (515,363) - -

NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS (97,969) 1,574 (46,536) (51,223)

CASH AND CASH EQUIVALENTS BROUGHT FORWARD (819,257) (820,831) 31,937 83,160

CASH AND CASH EQUIVALENTS CARRIED FORWARD (917,226) (819,257) (14,599) 31,937

Cash and cash equivalents carried forward consist of:

Cash and bank balances 12,051 82,518 584 31,937

Bank overdraft (Note 22) (929,277) (901,775) (15,183) -

(917,226) (819,257) (14,599) 31,937



Notes to the Financial Statements

1) GENERAL INFORMATION

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

The Company is principally engaged in investment holding and the provision of management services. The principal activities of the subsidiaries are as disclosed in Note 13 to the Financial Statements. There have been no significant changes in the nature of the principal activities of the Company and its subsidiaries during the financial year.

The registered office of the Company is located at No: D2-1-11, No. 1, Solaris Dutamas, Jalan Dutamas, Taman Sri Hartamas, 50480 Kuala Lumpur.

The principal place of business of the Company is located at No: D2-1-11, No. 1, Solaris Dutamas, Jalan Dutamas, Taman Sri Hartamas, 50480 Kuala Lumpur.

The financial statements are presented in Ringgit Malaysia (RM).

The financial statements have been authorised by the Board of Directors for issuance on 29th April 2013.

2) BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS

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.

Adoption of the New IFRS - compliant MFRS Framework

The Group’s and the Company’s financial statements for the year ended 31st December 2012 have been prepared in accordance with MFRSs for the first time. In the previous years, these financial statements were prepared in accordance with Financial Reporting Standards (FRSs). As the former FRSs are virtually identical to the MFRSs, the adoption of the applicable MFRSs has no significant effect on the Group’s and the Company’s financial position. Hence, there are no adjustments arising from the transition to MFRSs. Accordingly, no notes relating to the statements of financial position as at date of transition to MFRSs will be presented.

New and Revised MFRSs, IC Interpretations and Amendments issued but are not yet effective for the Group and the Company

The Group and the Company have not adopted the following new and revised MFRSs, IC Interpretations and Amendments as they are not effective for the current financial year ended 31st December 2012.

Effective for financial periods beginning on or after 1st July 2012

Amendments to MFRS 101 Presentation of Items of Other Comprehensive Income Effective for financial periods beginning on or after 1st January 2013

MFRS 3 Business Combinations MFRS 10 Consolidated Financial Statements MFRS 11 Joint Arrangements MFRS 12 Disclosure of Interests in Other Entities MFRS 13 Fair Value Measurement MFRS 119 Employee Benefits (revised)

MFRS 127 Consolidated and Separate Financial Statements (revised) MFRS 128 Investments in Associates and Joint Ventures (revised)


Notes to the Financial Statementscont’d

Amendments to MFRS 1 First-time Adoption of MFRS - Government Loans Amendments to MFRS 7 Financial Instruments: Disclosures - Offsetting Financial Assets and Financial Liabilities

Amendments to MFRS 10 Consolidated Financial Statements: Transition Guidance Amendments to MFRS 11 Joint Arrangements: Transition Guidance Amendments to MFRS 12 Disclosure of Interests in Other Entities: Transition Guidance Annual Improvements to IC Interpretations and MFRSs 2009 - 2011 Cycle

Effective for financial periods beginning on or after 1st January 2014

Amendments to MFRS 132 Financial Instruments: Presentation - Offsetting Financial Assets and Financial Liabilities

Effective for financial periods beginning on or after 1st January 2015

Amendments to MFRS 9 Mandatory Effective Date of MFRS 9 and Transition Disclosures

The Group and the Company will adopt the above pronouncements when they become effective in the respective financial periods. These pronouncements are not expected to have any effect to the financial statements of the Group and of the Company upon their initial application, except as described below:

MFRS 9: Financial Instruments - Classification and Measurement of Financial Assets and Financial Liabilities

This MFRS replaces the multiple classification and measurement models in MFRS 139 with a single model that has only two classification categories: amortised cost and fair value. The basis of classification depends on the entity’s business model for managing the financial assets and the contractual cash flow characteristics of the financial asset.

The accounting and presentation for financial liabilities and for de-recognising financial instruments has been relocated from MFRS 139, without change, except for financial liabilities that are designated at fair value through profit or loss (FVTPL). Entities with financial liabilities designated at FVTPL recognise changes in the fair value due to changes in the liability’s credit risk directly in other comprehensive income (OCI). There is no subsequent recycling of the amounts in OCI to profit or loss, but accumulated gains or losses may be transferred within equity.

The Group and the Company will quantity the effect of adopting this MFRS when the full standard is issued.

MFRS 10: Consolidated Financial Statements

This MFRS introduces a single control model to identify a parent-subsidiary relationship. This control model is based on the elements of power, returns and the link between power and returns. An investor controls an investee when it is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. It establishes control as the basis for determining which entities are consolidated in the consolidated financial statements and sets out the accounting requirements for the preparation of consolidated financial statements.

The Group and the Company will apply this standard from financial period beginning on 1st January 2013.

MFRS 13: Fair Value Measurement

This MFRS aims to improve consistency and reduce complexity by providing a precise definition of fair value and a single source of fair value measurement and disclosure requirements for use across MFRSs. The requirements do not extend the use of fair value accounting but provide guidance on how it should be applied where its use is already required or permitted by other standards. The enhanced disclosure requirements are similar to those in MFRS 7 Financial instruments: Disclosures, but apply to all assets and liabilities measured at fair value, not just financial ones.

The directors anticipate that the application of this new Standard will result in more extensive disclosures in the financial statements.



Amendment to MFRS 101: Presentation of Items of Other Comprehensive Income

These amendments require that items of other comprehensive income be distinguished into those that will never be reclassified to profit or loss and those that may be reclassified to profit or loss when specified conditions in the applicable MFRSs are met.

The amendments will be applied retrospectively upon adoption and hence, the presentation of items of other comprehensive income will be modified accordingly to reflect the changes, Other than the abovementioned presentation changes, the application of the amendments to MFRS 101 would not result in any impact on profit or loss, other comprehensive income and total comprehensive income.

3) FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The operations of the Group are subject to a variety of financial risks, including market risk (foreign currency exchange risk and interest rate risk), credit risk and liquidity risk. The Group has formulated a financial risk management framework whose principal objective is to minimise the Group’s exposure to risks and/or costs associated with the financing, investing and operating activities of the Group. The Group also ensures that the above risks are managed in order to minimise the effects of the unpredictability of the financial markets on the performance of the Group.

Market risk

Market risk is the risk that changes in market prices, such as foreign currency exchange risk, interest rate risk and other prices will affect the Group’s financial position and cash flows.

The Group has in place policies to manage its competitive risks from its competitors in providing better alternatives in terms of better services.

(i) Interest rate risk

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

The Group’s variable rate borrowings are exposed to a risk of change in cash flows due to changes in interest rates. The Group’s investment in financial assets are mainly short term in nature and mostly placed in financial deposits.

Changes in interest rates are not expected to have a significant impact on the Group’s profit or loss.

Cash flow sensitivity analysis for variable rate instruments

An increase of 100 basis point at the reporting date would have increase in loss before tax by the amount shown below and a decrease would have an equal but opposite effect. This analysis assumes that all other variables, remain constant.

GROUP

RM

Increase in loss before tax 27,838

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. The Group’s exposure to credit risk arises principally from its receivables from customers. The Company’s exposure to credit risk arises principally from loans and advances to subsidiary.



Management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis. As at the end of the reporting period, the maximum exposure to credit risk arising from receivables is represented by the carrying amounts in the statements of financial position.

Management has taken reasonable steps to ensure that receivables that are neither past due nor impaired are measured at their realisable values. A significant portion of these receivables are regular customers that have been transacting with the Group. The Group uses ageing analysis to monitor the credit quality of the receivables. Any receivables having significant balances past due more than 120 days, which are deemed to have higher credit risk, are monitored individually.

The ageing of trade receivables as at the end of the reporting period was:

GROUP2012 2011

RM RM

Past due 31 - 120 days - 191,723

Past due more than 120 days 3,955,178 2,744,964

3,955,178 2,936,687

The movements in the allowance for impairment losses of receivables during the financial year were:

GROUP2012 2011

RM RM

As at beginning of year 2,704,539 2,201,807

Impairment loss recognised 95,372 591,815

Reversal of impairment loss (30,165) (89,083)

As at end of year 2,769,746 2,704,539 Liquidity risk

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

The Group practises prudent liquidity risk management to minimise the mismatch of financial assets and liabilities and to maintain sufficient funds for contingent funding requirement of working capital.

Fair values

The fair value of financial instruments is the amount at which the instrument could be exchanged for or settled between knowledgeable parties at an arm’s length transaction, other than a forced or liquidation sale.

The carrying amounts of the financial assets and financial liabilities as reported in the statements of financial position as at 31st December 2012 approximate their fair values because of the immediate/short maturity terms of these financial instruments.

Capital Risk Management Policies and Procedures

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


The Group manages its capital structure and makes adjustments to it in light of changes in economic conditions. To maintain or adjust the capital structure, the Group may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. No changes were made in the objectives, policies or processes during the year.

The Group is not subject to any externally imposed capital requirements.

The debt-to-equity ratios as at 31st December 2012 and at 31st December 2011 were as follows:

GROUP

2012 2011

RM RM

Total borrowings 5,227,396 5,848,468

Less: Cash and cash equivalents (12,051) (82,518)

Net debt 5,215,345 5,765,950

Total equity 6,160,470 6,087,591

Debt-to-equity ratio 0.85 0.95

4) SIGNIFICANT ACCOUNTING POLICIES

a) Basis of Accounting

The financial statements are prepared under the historical cost convention unless otherwise indicated in the accounting policies below.

As at 31st December 2012, the Group and the Company’s accumulated losses were RM16,436,029 and RM8,318,731 respectively. The successful turnaround plan for the Group and the Company is one of the key factors for the sustainability of the Group’s and of the Company’s operations and for the Group and the Company to continue as going concerns in the foreseeable future. The validity of the going concerns assumption is therefore dependent on the successful implementation of the turnaround plan in the future. In the event the going concern assumption is no longer valid, the Group and the Company may not able to discharge its liabilities in the normal course of business and adjustments may have to be made to reflect such situation.

The financial statements of the Group and the Company do not include any adjustment relating to the amounts and classification of assets and liabilities that might be necessary should the Group and the Company be unable to continue as going concerns.

b) Revenue Recognition

Revenue is recognised when it is probable that the economic benefits associated with the transaction will flow to the enterprise and the amount of the revenue can be measured reliably. Revenue is measured at the fair value of consideration received or receivable, net of returns, allowances and trade discounts.

Gross dividend income from investment is recognised when the right to received payment is established. Management fee, administrative charges, rental income and interest income are recognised on accrual basis.



c) Employee Benefits

(i) Short term benefits

Wages, salaries, bonuses and social security contributions are recognised as an expense in the year in which associated services are rendered by 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 occur.

(ii) Defined contributions plans

As required by law, companies in Malaysia make contributions to the state pension scheme, Employees Provident Fund. Such contributions are recognised as an expense in profit or loss as incurred.

d) Foreign Currency Conversion

(i) Functional and Presentation Currency

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

(ii) Foreign Currency Transactions

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss.

e) Income Taxes

(i) Current tax

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

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

(ii) Deferred tax

Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are generally recognised for all deductible temporary differences, unused tax losses and unused tax credit to the extent that it is probable that taxable profit will be available against which those deductible temporary differences, unused tax losses and unused tax credits can be utilised.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.



Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Group and the Company expect, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group and the Company intend to settle its current tax assets and liabilities on a net basis.

f) Property, Plant and Equipment

All items of property, plant and equipment are initially recorded at cost. The cost of an item of property, plant and equipment initially recognised includes its purchase price and any cost that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management. Cost also include borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset.

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

Subsequent to recognition, property, plant and equipment are stated at cost less accumulated depreciation and any accumulated impairment losses.

At each reporting date, the Group assesses whether there is any indication of impairment. If such indications exist, an analysis is performed to assess whether the carrying amount of the asset is fully recoverable. A write down is made if the carrying amount exceeds the recoverable amount.

Freehold land and building are stated at valuation and are revalued at regular intervals of at least once in every three years by the directors based on the valuation reports of independent professional valuers using the “open market value on existing use” basis with additional valuation in the intervening years where market conditions indicate that the carrying values of the revalued assets differ materially from the market value.

An increase in the carrying amount arising from revaluation of property, plant and equipment is credited to the revaluation reserve account as revaluation surplus. Any deficit arising from revaluation is charged against the revaluation reserve account to the extent of a previous surplus held in the revaluation reserve account for the same asset. In all other cases, a decrease in carrying amount is charged to profit or loss. An increase in revaluation directly related to a previous decrease in carrying amount for that same asset that was recognised as an expense, is credited to profit or loss to the extent that it offsets the previously recorded decrease.

Freehold land is not depreciated as it has an infinite life. Depreciation of other property, plant and equipment is calculated to write off the cost of the property, plant and equipment on a straight-line basis over the expected useful lives of the property, plant and equipment concerned. The annual depreciation rates used are:

%

Freehold building and renovation 2 - 10

Furniture, fittings and other equipment 15

Tools and equipment 15

Motor vehicles 20

Computers 15

Office equipment 15



Gain or loss arising from the disposal of an asset is determined as the difference between the estimated net disposal proceed and the carrying amount of the asset, and is recognised in profit or loss.

g) Subsidiaries and Basis of Consolidation

The consolidated financial statements include the financial statements of the Company and all its subsidiaries made up to the end of the financial year. Subsidiaries are those entities in which the Group has power to exercise control over the financial and operating policies so as to obtain benefits from their activities. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity.

Subsidiaries are consolidated using the acquisition method of accounting. Under the acquisition method of accounting, subsidiaries are fully consolidated from the date on which control is transferred to the Group and are no longer consolidated from the date that control ceases. Total comprehensive income of subsidiaries is attributed to the owners of the Company and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance. The cost of acquisition is measured as fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange. Acquisition-related costs are expensed as incurred.

Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition dates. On an acquisition-by-acquisition basis, the Group recognised any non-controlling interests in the acquiree either at fair value or at the non-controlling interest’s proportionate share of the acquiree’s net assets. The excess of the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree, and the fair value of the acquirer’s previously held equity interest in the acquiree (if any) over the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed is recorded as goodwill. If, after reassessment, the net of the acquisition-date amounts of the identifiable assets acquired and liabilities assumed exceeds the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree and the fair value of the acquirer’s previously held equity interest in the acquiree (if any), the excess is recognised immediately in profit or loss as a bargain purchase gain.

Inter-company transactions, balances, income and expenses on transactions between group companies are eliminated. Profits and losses resulting from inter-company transactions that are recognised in assets are also eliminated. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.

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.

Amounts arising from interests in the acquiree prior to the acquisition date that have previously been recognised in other comprehensive income are reclassified to profit or loss, where such treatment would be appropriate if that interest were disposed of.

If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the Group reports provisional amounts for the items for which the accounting is incomplete. Those provisional amounts are adjusted during the measurement period (see above), or additional assets or liabilities are recognised, to reflect new information obtained about facts and circumstances that existed as at the acquisition date that, if known, would have affected the amounts recognised at that date.

The policy described above is applied to all business combinations that take place on or after 1st January 2011.

Transactions with non-controlling interests that do not result in loss of control are accounted as equity transactions - that is, as transactions with the owners in their capacity as owners. The difference between fair value of any consideration paid and the relevant share acquired of the carrying value of net assets of the subsidiary is recorded in equity. Gains or losses on disposals to non-controlling interests are also recorded in equity.



When the Group ceases to have control, any retained interest in the entity is re-measured to its fair value at the date when control is lost, with the change in carrying amount recognised in profit or loss. The fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset. In addition, any amounts previously recognised in other comprehensive income in respect of that entity are accounted for as if the Group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognised in other comprehensive income are reclassified to profit or loss.

h) Investments in Subsidiaries

In the Company’s separate financial statements, investments in subsidiaries are stated at cost less accumulated impairment losses. On disposal of such investments, the difference between disposal proceeds and their carrying amounts are recognised in profit or loss.

i) Finance Lease

Leases in terms of which the Group assumes substantially all the risks and rewards of ownership are classified as finance leases. On 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. Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that asset.

Minimum lease payments made under finance leases are apportioned between the finance expenses and the reduction of the outstanding liability. The finance expense is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability. 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.

j) Inventories

Inventories are valued at the lower of cost (determined principally on the first-in, first-out method) and net realisable value. Cost consists of purchases and other direct costs incurred in bringing the inventories to its present condition and location.

Net realisable value is the estimated selling price in the ordinary course of business, less the costs of completion and selling expenses.

k) Financial Instruments

i) Initial recognition and measurement

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

Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of the financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs that are directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in profit or loss.



ii) Financial instrument categories and subsequent measurement

The Group categories financial instruments as follows:

Financial assets

The Group classifies its financial assets in the following categories: at fair value through profit or loss (FVTPL), held-to-maturity, loans and receivables and available-for-sale. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification at initial recognition.

a) Financial assets at fair value through profit or loss

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

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

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

Investment in quoted securities are designated as fair value through profit or loss on initial recognition.

b) Held-to-maturity investments

Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturity dates that the Group has the positive intent and ability to hold to maturity. Subsequent to initial recognition, held-to-maturity investments are measured at amortised cost using the effective interest method less any impairment.

c) Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Loans and receivables are measured at amortised cost using the effective interest method, less any impairment. Interest income is recognised by applying the effective interest rate, except for short-term receivables when the recognition of interest would be immaterial.

d) Available-for-sale (AFS) financial assets

Available-for-sale financial assets are non-derivatives that are either designated in this category or not classified in any of the other categories. After initial recognition, available-for-sale financial assets are measured at fair value. Any gains or losses from changes in fair value of the financial assets are recognised in other comprehensive income, except that impairment losses, foreign exchange gains and losses on monetary instruments and interest calculated using the effective interest method are recognised in profit or loss. The cumulative gain or loss previously recognised in other comprehensive income is reclassified from equity to profit or loss as a reclassification adjustment when the financial asset is derecognised. Interest income calculated using the effective interest method is recognised in profit or loss. Dividends on available-for-sale equity instrument are recognised in profit or loss when the Company’s right to receive payment is established.



Available-for-sale financial assets are included in non-current assets unless the investment matures or management intends to dispose of it within 12 months of the end of the reporting period.

All financial assets, except for those measured at fair value through profit or loss, are subject to review for impairment.

Financial assets, other than those at FVTPL, are assessed for indicators of impairment at the end of each reporting period. Financial assets are considered to be impaired when there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been affected.

For equity investments classified as AFS, a significant or prolonged decline in the fair value of the security below its cost is considered to be objective evidence of impairment.

For all other financial assets, including redeemable bonds classified as AFS and financial lease receivables, objective evidence of impairment could include:

a) significant financial difficulty of the issuer or counterparty; or

b) default or delinquency in interest or principal payments; or

c) it becoming probable that the borrower will enter bankruptcy or financial re-organisation; or

d) the disappearance of an active market for that financal asset because of financial difficulties.

For certain categories of financial assets, such as trade receivables, assets that are assessed not to be impaired individually are, in addition, assessed for impairment on a collective basis. Objective evidence of impairment for a portfolio of receivables could include the Group’s past experience of collecting payments, an increase in the number of delayed payments in the portfolio past the average credit period of 60 days, as well as observable changes in national or local economic conditions that correlate with default on receivables.

For financial assets carried at amortised cost, the amount of the impairment loss recognised is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the financial asset’s original effective interest rate.

For financial assets carried at cost, the amount of the impairment loss is measured as the difference between the asset’s carrying amount and the present value of the estimated future cash flows discounted at the current market rate of return for a similar financial asset. Such impairment loss will not be reversed in subsequent periods.

The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables, where the carrying amount is reduced through the use of an allowance account. When a trade receivable is considered uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying amount of the allowance account are recognised in profit or loss.

When an AFS financial asset is considered to be impaired, cumulative gains or losses previously recognised in other comprehensive income are reclassified to profit or loss in the period.

For financial assets measured at amortised cost, if, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed through profit or loss to the extent that the carrying amount of the investment at the date the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised.



In respect of AFS equity securities, impairment losses previously recognised in profit or loss are not reversed through profit or loss. Any increase in fair value subsequent to an impairment loss is recognised in other comprehensive income and accumulated under the heading of investments revaluation reserve. In respect of AFS debt securities, impairment losses are subsequently reversed through profit or loss if an increase in the fair value of the investment can be objectively related to an event occurring after the recognition of the impairment loss.

Financial assets are de-recognised when the rights to receive cash flows from the investments have expired or have been transferred and the Group has transferred substantially all risks and rewards of ownership.

Receivables that are factored out to banks and other financial institutions with recourse to the Group are not derecognised until the recourse period has expired and the risks and rewards of the receivables have been fully transferred. The corresponding cash received from the financial institutions is recorded as borrowings.

When available-for-sale financial assets are sold, the accumulated fair value adjustments recognised in other comprehensive income are reclassified to profit or loss.

Financial liabilities

Financial liabilities are classified as either financial liabilities ‘at FVTPL’ or ‘other financial liabilities’.

Financial liabilities at FVTPL

Financial liabilities are classified as at FVTPL when the financial liability is either held for trading or it is designated as at FVTPL.

A financial liability is classified as held for trading if:

a) it has been acquired principally for the purpose of repurchasing it in the near term; or

b) on initial recognition it is part of a portfolio of identified financial instruments that the Group manages together and has a recent actual pattern of short-term profit-taking; or

c) it is a derivative that is not designated and effective as a hedging instrument.

A financial liability other than a financial liability held for trading may be designated as at FVTPL upon initial recognition if:

a) such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise; or

b) the financial liability forms part of a group of financial assets or financial liabilities or both, which is managed and its performance is evaluated on a fair value basis, in accordance with the Group’s documented risk management or investment strategy, and information about the grouping is provided internally on that basis; or

c) it forms part of a contract containing one or more embedded derivatives, and MFRS 139 Financial Instruments: Recognition and Measurement permits the entire combined contract (asset or liability) to be designated as at FVTPL.

Financial liabilities at FVTPL are stated at fair value, with any gains or losses arising on remeasurement recognised in profit or loss. The net gain or loss recognised in profit or loss incorporates any interest paid on the financial liability and is included in the ‘other gains and losses’ line item in the statements of comprehensive income.




Other financial liabilities

Other financial liabilities, including borrowings, are initially measured at fair value, net of transaction costs and are subsequently measured at amortised cost using the effective interest method, with interest expense recognised on an effective yield basis.

The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the exactly discounts estimated future cash payments through the expected life of the financial liability, or (where appropriate) a shorter period, to the net carrying amount on initial recognition.

Derecognition of financial liabilities

The Group derecognises financial liabilities when, and only when, the Group’s obligations are discharged, cancelled or they expire. The difference between the carrying amount of the financial liability derecognised and the consideration paid or payable is recognised in profit or loss.

l) Impairment of Non- Financial Assets

Assets that have an indefinite useful life, for example goodwill or intangible assets not ready to use, are not subject to amortisation and are tested annually for impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the carrying amount of the asset exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there is separately identifiable cash flows (cash-generating units). Non-financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at each reporting date.

The impairment loss is charged to profit or loss unless it reverses a previous revaluation in which case it is charged to the revaluation surplus. Impairment losses on goodwill are not reversed. In respect of the assets, any subsequent increase in recoverable amount is recognised in profit or loss unless it reverses an impairment loss on a revalued asset in which case it is taken to revaluation surplus reserve.

m) Provisions

Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of economic resources will be required to settle the obligation and the amount of the obligation can be estimated reliably.

Provisions are reviewed at each reporting date 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. If the effect of the time value of money is material, provisions are discounted using a current pre tax rate that reflects, where appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.

n) Borrowing Costs

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

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.

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



o) Cash and Cash Equivalents

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

p) Share Capital

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

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

q) Contingencies

A contingent liability or asset is a possible obligation or asset that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of uncertain future event(s) not wholly within the control of the Group.

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

r) 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 revenues and expenses that relate to transactions with any of the Group’s other components. An operating segment’s operating results are reviewed regularly by the chief operating decision maker, which in this case is the Managing Director of the Group, to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available.

Operating segments are reported in a manner consistent with the internal reporting provided to the chief

operating decision-maker.

5) CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

The preparation of financial statements in conformity with Malaysian Financial Reporting Standards requires the use of certain critical accounting estimates and assumptions that affect the reported amounts of assets and liabilities, and the reported results during the reported period. It also requires directors to exercise their judgement in the process of applying the Group’s and the Company’s accounting policies. Although these estimates and judgement are based on the director’s best knowledge of current events and actions, actual results may differ.

Critical judgements in applying the Group’s and the Company’s accounting policies

In the process of applying the Group’s and the Company’s accounting policies, which are described in Note 4 above, management is of the opinion that there are no instances of application of judgement which are expected to have significant effect on the amounts recognised in the financial statements.

Key sources of estimation uncertainty

Management believes that there are no key assumptions made concerning the future, and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year other than as follows:



(i) Impairment on receivables

The Group assesses at each reporting date whether there is any objective evidence that a financial asset is impaired. To determine whether there is objective evidence of impairment, the Group considers factors such as the probability of insolvency or significant financial difficulties of the debtor and default or significant delay in payments. Where there is objective evidence of impairment, the amount and timing of future cash flows are estimated based on historical loss experience for assets with similar credit risk characteristics. The carrying amount of the Group’s loans and receivable at the reporting date is disclosed in Note 16 to the Financial Statements.

(ii) Write-down of inventories

Reviews are made periodically by management on damaged, obsolete and slow-moving inventories. These reviews require judgement and estimates. Possible changes in these estimates could result in revisions to the valuation of inventories.

(iii) Deferred tax assets

Deferred tax assets are recognised for all unused tax losses and unabsorbed capital allowances to the extent that is probable that taxable profit will be available against which the losses 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 profit together with future tax planning strategies.

6) REVENUE

GROUP COMPANY

2012 2011 2012 2011

RM RM RM RM

Continuing operations Air filter 377,713 288,431 - - Cleanroom 479,600 174,849 - - Water filter 14,674 277,628 - -

871,987 740,908 - -



7) OTHER OPERATING EXPENSES/(INCOME)

Included in other operating expenses/(income) are the following charges/(credits):

GROUP COMPANY

2012 2011 2012 2011

RM RM RM RM

Auditors’ remuneration- current year 27,500 25,500 15,000 12,000 - underprovision in prior year - 630 - - Bad debts written off 237,301 26,800 2,563 - Impairment loss on investments in subsidiary - - 4,195 6,005 Impairment loss on receivables 95,372 - - - Exceptional item:

Impairment loss on receivables - 1,538,496 - 946,681 Inventories written off - 49,600 - - Inventories written down 479,217 - - -

And crediting:Bad debts recovered - (103,936) - - Gain on disposal of property, plant and

equipment - (77,849) - (9,850)Interest income (3,185) - - - Exceptional item:

Waiver of shareholder’s advance (1,133,881) - (1,133,881) - Reversal of impairment loss on trade

receivables (30,165) (12,985) - - Rental income (24,064) (72,192) - -

8) DIRECTORS’ REMUNERATION

GROUP COMPANY

2012 2011 2012 2011

RM RM RM RM

Executive directors:

Salaries and other emoluments 40,934 123,522 40,934 123,522 Defined contribution plan 4,930 13,334 4,930 13,334

45,864 136,856 45,864 136,856 Non-executive directors:

Fees - 32,502 - 32,502

45,864 169,358 45,864 169,358



The number of directors of the Company whose total remuneration during the financial year fell within the following bands is analysed below:

Number of directors

2012 2011

Executive directors:

RM100,001 - RM200,000 - 1

Below RM50,000 2 -

Non-executive directors:

Below RM50,000 - 5 9) FINANCE COSTS

GROUP

2012 2011

RM RM

Interest on:

Bank overdraft 86,288 83,947

Bankers’ acceptances and trust receipts - 22,720

Finance lease 33,081 42,769

Term loans 355,294 421,605

474,663 571,041

10) INCOME TAX CREDIT

GROUP COMPANY

2012 2011 2012 2011

RM RM RM RM

Deferred tax in respect of:Tax assets (Note 14) 463,057 - - - Tax liabilities (Note 14) 5,443 4,470

468,500 4,470 - -



A numerical reconciliation between the income tax credit and the product of accounting profit/(loss) multiplied by the applicable statutory income tax rate, is as follows:

GROUP COMPANY

2012 2011 2012 2011

RM RM RM RM

Accounting profit/(loss) (395,621) (3,406,415) 661,748 (1,615,239)

Tax at the applicable statutory income tax rate of 25% (98,905) (851,604) 165,437 (403,810)

Tax effects in respect of:Expenses that are not deductible for tax

purposes 165,904 294,438 29,108 231,579 Utilisation of previous year’s unrecognised

deferred tax assets (104,701) (739) - - Recognition of previously unrecognised

deferred tax assets (577,333) - - - Income not subject to tax (299,248) - (283,470) - Net deferred tax assets not recognised 445,783 553,435 88,925 172,231

Income tax credit (468,500) (4,470) - -

11) EARNINGS/(LOSS) PER ORDINARY SHARE

Basic earnings/(loss) per share

Basic earnings/(loss) per share is calculated by dividing the profit/(loss) for the year attributable to equity holders of the Company by the weighted average number of ordinary shares in issue during the financial year as follows:

GROUP

2012 2011

Earnings/(Loss) attributable to equity holders of the Company (RM) 72,879 (3,401,945)

Weighted average number of ordinary shares in issue 118,555,800 118,555,800

Basic earnings/(loss) per share (sen) 0.06 (2.87)

Diluted

The diluted earnings per share of the Group has not been presented as there are no dilutive potential ordinary

shares.



12) PROPERTY, PLANT AND EQUIPMENT

GROUP

Freehold land

Freeholdbuilding

and renovation

Furniture,fittings and

otherequipment

Tools andequipment

Motor vehicles Total

2012 RM RM RM RM RM RM

Cost/Valuation

As at 1st January 2012 2,900,000 6,702,165 2,822,926 322,158 250,621 12,997,870

Additions - - - - - -

As at 31st December 2012 2,900,000 6,702,165 2,822,926 322,158 250,621 12,997,870

Accumulated depreciationAs at 1st January 2012 - 800,520 2,156,166 322,158 125,117 3,403,961 Charge for the year - 191,881 351,670 - 36,000 579,551

As at 31st December 2012 - 992,401 2,507,836 322,158 161,117 3,983,512

Net carrying amountAt cost - - 315,090 - 89,504 404,594 At valuation 2,900,000 5,709,674 - - - 8,609,674

As at 31st December 2012 2,900,000 5,709,764 315,090 - 89,504 9,014,358

2011

Cost/Valuation As at 1st January 2011 2,900,000 6,702,165 2,822,696 322,158 509,571 13,256,590 Additions - - 230 - - 230 Disposals - - - - (258,950) (258,950)

As at 31st December 2011 2,900,000 6,702,165 2,822,926 322,158 250,621 12,997,870

Accumulated depreciationAs at 1st January 2011 - 608,638 1,802,876 322,158 318,849 3,052,521 Charge for the year - 191,882 353,290 - 41,567 586,739 Disposals - - - - (235,299) (235,299)

As at 31st December 2011 - 800,520 2,156,166 322,158 125,117 3,403,961

Net carrying amountAt cost - - 666,760 - 125,504 792,264 At valuation 2,900,000 5,901,645 - - - 8,801,645

As at 31st December 2011 2,900,000 5,901,645 666,760 - 125,504 9,593,909



12) PROPERTY, PLANT AND EQUIPMENT COMPANY

ComputersOffice

equipmentMotor

vehicles Total

RM RM RM RM

2012

Cost

As at 1st January 2012 45,829 12,279 - 58,108

Additions - - - -

As at 31st December 2012 45,829 12,279 - 58,108

Accumulated depreciation

As at 1st January 2012 25,034 5,321 - 30,355

Charge for the year 6,873 1,687 - 8,560

As at 31st December 2012 31,907 7,008 - 38,915

Net book value as at 31st December 2012 13,922 5,271 - 19,193

2011

Cost

As at 1st January 2011 45,829 12,049 37,000 94,878

Additions - 230 - 230

Disposals - - (37,000) (37,000)

As at 31st December 2011 45,829 12,279 - 58,108

Accumulated depreciation

As at 1st January 2011 18,160 3,626 25,283 47,069

Charge for the year 6,874 1,695 4,317 12,886

Disposals - - (29,600) (29,600)

As at 31st December 2011 25,034 5,321 - 30,355

Net book value as at 31st December 2011 20,795 6,958 - 27,753

Assets of the Group with a total net carrying amount of RM89,504 (2011: RM255,289) were acquired under finance lease.

Included in property, plant and equipment of the Group are fully depreciated assets which are still in use, with a cost of RM1,250,679 (2011: RM787,143).



The above landed properties are charged to banks for banking facilities granted to the Group as disclosed in Notes 20 and 22 to the Financial Statements.

The details of the valuation of the Group’s land and building are as follows:

Details of propertyYear of

valuation Details of valuers

GROUP Revalued

amountRM

Freehold land 2009 Jamsari Mohamad Aris, MIS (M) RegisteredValuer of TD Aziz Sdn. Bhd.

2,900,000

Freehold building 2009 Jamsari Mohamad Aris, MIS (M) RegisteredValuer of TD Aziz Sdn. Bhd.

6,073,569

As at the date of this report, the Group is in the process of arranging for the valuation exercise of the abovementioned properties and expects to be completed in the coming financial year ending 31st December 2013.

13) INVESTMENTS IN SUBSIDIARIES

COMPANY

2012 2011

RM RM

Unquoted shares - At cost 1,390,000 1,390,000 Less: Impairment loss (890,200) (886,005)

Net 499,800 503,995 The details of the subsidiaries are as follows:

Name of CompanyCountry of

Incorporation

Equity Interest

Principal Activities2012 2011% %

Envair Energy Sdn. Bhd. Malaysia 100 100 Distribution and manufacturing of air fliters. However, the subsidiary is temporarily inactive since 2011.

Quest Equipment and Services Sdn. Bhd.*

Malaysia 100 100 Installation of cleanroom systems and sale of air filters and cleanroom equipment. However, the subsidiary is temporarily inactive during the financial year.

Quest Technology Sdn. Bhd.* @

Malaysia 100 100 Trading in air filters, cleanroom equipment and vinyl flooring and installation of cleanroom systems. Also principally involved in trading of beauty products.

Quest Filter Sdn. Bhd.* @ Malaysia 100 100 Manufacturing, and trading of water and air filters. Also, principally involved in trading of beauty products.

Quest System and Engineering Sdn. Bhd.* @

Malaysia 100 100 Selling, installation, maintenance and servicing of water treatment equipment and sale of cleanroom filters and equipment. However, the subsidiary is temporarily inactive since 2011.



* Audited by firm of auditors other than auditors of the Company @ The auditors’ reports on the financial statements of these subsidiaries include an emphasis of matter regarding the

ability of these subsidiaries to continue as a going-concern in view of their capital deficiency positions as at the end of the financial year. The financial statements of these subsidiaries have been prepared on a going-concern basis as the Company has undertaken to continue providing financial support to these subsidiaries.

The amount owing by subsidiaries, which arose mainly from trade transactions and advance given, is unsecured, interest-free and repayable on demand.

14) DEFERRED TAXATION

GROUP

2012 2011

RM RM

Deferred tax assets

Balance as at beginning of the year - -

Recognised in profit or loss (Note 10) (463,057) -

Balance as at end of the year (463,057) -

Deferred tax liabilities

Balance as at beginning of the year 14,623 19,093

Recognised in profit or loss (Note 10) (5,443) (4,470)

Balance as at end of the year 9,180 14,623

The recognised deferred tax assets are made up of unutilised tax losses while the recognised deferred tax liabilities

are made up of temporary differences between tax capital allowances and book depreciation of property, plant and equipment.

15) INVENTORIES

GROUP

2012 2011

RM RM

At cost:

Raw materials - 885,871

Finished goods - 1,741,703

- 2,627,574

At net realisable value:

Raw materials 401,390 -

Finished goods 1,368,249 -

1,769,639 -

1,769,639 2,627,574



16) TRADE RECEIVABLES, OTHER RECEIVABLES AND PREPAID EXPENSES

GROUP2012 2011

RM RM

Trade receivables 3,955,178 2,936,687 Less: Allowance for doubtful debts (2,769,746) (2,704,539)

Net 1,185,432 232,148 Trade receivables comprise amounts receivable from the sale of goods. The credit period granted to their customers

are assessed and approved on a case by case basis.

Other receivables and prepaid expenses consist of:

GROUP COMPANY2012 2011 2012 2011

RM RM RM RM

Other receivables 189,126 421,269 7,150 4,992 Refundable deposits 426,320 427,680 640 640 Prepaid expenses 44,400 640 44,400 2,000

659,846 849,589 52,190 7,632

The trade and other receivables are all denominated in Ringgit Malaysia.

17) SHARE CAPITAL

GROUP AND COMPANY2012 2011

RM RM

Authorised250,000,000 ordinary shares of RM0.10 each 25,000,000 25,000,000

Issued and fully paid118,555,800 ordinary shares of RM0.10 each 11,855,580 11,855,580

18) RESERVES

GROUP COMPANY2012 2011 2012 2011

RM RM RM RM

Non-distributable reserve:

Share premium 8,186,987 8,186,987 8,186,987 8,186,987 Revaluation reserve 2,553,932 2,553,932 - -

10,740,919 10,740,919 8,186,987 8,186,987

Accumulated loss (16,436,029) (16,508,908) (8,318,731) (8,980,479)

(5,695,110) (5,767,989) (131,744) (793,492)



Share premium reserve

The reserve comprises the premium paid on subscription of shares in the Company over and above the par value of the shares net of share issue expenses.

Revaluation reserve

Revaluation reserve arose from revaluation of the Group’s freehold land and building in 2009.

19) FINANCE LEASE LIABILITIES

GROUP

2012 2011

RM RM

Total finance lease instalments payable 131,352 175,456

Less:

Finance lease interest in suspense (27,839) (25,909)

Principal outstanding 103,513 149,547

GROUP

2012 2011

RM RM

Portion payable within the next 12 months (Note 22)(included in current liabilities) 64,757 89,647

Portion payable after the next 12 months:

Payable between 1 and 2 years 38,756 42,288

Payable between 2 and 5 years - 17,612

38,756 59,900

103,513 149,547

The interest rates on finance lease range from 2.35% to 4.20% (2011: 2.35% to 4.20%) per annum.

20) TERM LOANS

GROUP

2012 2011

RM RM

Secured term loans 4,194,606 4,761,728

Less: Portion payable within the next 12 months (Note 22) (169,211) (728,308)

Non-current portion 4,025,395 4,033,420



The non-current portion of the term loans is repayable as follows:

GROUP2012 2011

RM RM

Financial years ending 31st December:2013 - 220,583 2014 221,155 236,294 2015 and thereafter 3,804,240 3,576,543

The above term loans bear interest at rates ranging from 5.85% to 8.60% (2011: 5.85% to 8.60%) per annum and

are secured by the following:

i) General facility agreement; and

ii) First legal charge over the landed property of the Group.

The fair value of term loans of the Group at the end of reporting period are RM2,057,431(2011: RM2,989,132).

21) TRADE PAYABLES, OTHER PAYABLES AND ACCRUED EXPENSES

Trade payables comprise amounts outstanding for trade purchases. The normal credit terms granted to the Group and the Company for trade purchases range from 30 to 60 days and certain credit terms granted by the suppliers were based on negotiation.

Other payables and accrued expenses comprise:

GROUP COMPANY2012 2011 2012 2011

RM RM RM RM(Restated) (Restated)

Other payables 228,590 348,553 118,997 111,640 Amount owing to former shareholders/directors 925,462 528,462 925,462 528,462 Accrued expenses 128,830 130,337 94,144 87,805 Deposits received in advance 148,107 148,107 - -

1,430,989 1,155,459 1,138,603 727,907

22) BANK BORROWINGS

GROUP COMPANY2012 2011 2012 2011

RM RM RM RM

Bank overdraft 929,277 901,775 15,183 - Bankers’ acceptances and trust receipts - 35,418 - - Finance lease - current portion (Note 19) 64,757 89,647 - - Term loans - current portion (Note 20) 169,211 728,308 - -

1,163,245 1,755,148 15,183 -



As at 31st December 2012, the Group has bank overdraft and other credit facilities (excluding finance lease and term loans as mentioned in Notes 19 and 20) totalling RM5,350,000 obtained from licensed banks. These facilities bear interest range from 1.25% - 6.80% (2011: 1.25% - 7.55%) per annum and are secured by the following: i) Legal charge over the Group’s landed properties; and

iii) A joint and several guarantee by certain directors of the Company in their personal capacities.

23) SIGNIFICANT RELATED PARTY DISCLOSURES

Compensation of key management personnel

The remuneration of directors and other members of key management during the financial year are as follow:

GROUP COMPANY

2012 2011 2012 2011

RM RM RM RM

Short-term employee benefits 157,191 272,281 157,191 272,281

EPF expenses 18,201 26,605 18,201 26,605

Total 175,392 298,886 175,392 298,886

Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the Group and of the Company, directly or indirectly.

Included in the total key management personnel cost are:

GROUP COMPANY

2012 2011 2012 2011

RM RM RM RM

Directors’ remuneration (Note 8) 45,864 169,358 45,864 169,358



24) SEGMENTAL INFORMATION

Primary reporting-Business segments

Investmentholding

Air filtration

system, fast

moving consumer

product and

ancillary supportservices

Liquid filtration

system Manufacturing Eliminations Consolidated


REVENUE

External sales - 792,556 - 79,431 871,987

Intersegment sales - 6,121 - - (6,121) -

- 798,677 - 79,431 (6,121) 871,987

RESULTS

Profit/(Loss) from operations 661,748 237,785 (3,610) (821,076) 4,195 79,042

Finance costs - (30,371) - (444,292) (474,663)

Profit/(Loss) before tax 661,748 207,414 (3,610) (1,265,368) 4,195 (395,621)

Income tax credit - 468,500 - - 468,500

Profit/(Loss) after tax 661,748 675,914 (3,610) (1,265,368) 4,195 72,879

OTHER INFORMATION

Segment assets 12,879,498 4,206,217 41 12,849,630 (17,251,250) 12,684,136

Segment liabilities 1,155,662 5,504,062 510,465 16,558,802 (16,751,448) 6,977,543

Depreciation 8,560 62,742 - 508,249 - 579,551

Non-cash expenses other than depreciation 4,195 357,614 - 454,276 (4,195) 811,890



24) SEGMENTAL INFORMATION

Primary reporting-Business segments

Investmentholding

Air filtration

system, fast

moving consumer

product and

ancillary supportservices

Liquid filtration

system Manufacturing Eliminations Consolidated


REVENUE

External sales - 325,020 - 415,888 740,908

Intersegment sales - - - 90,415 (90,415) -

- 325,020 - 506,303 (90,415) 740,908

RESULTS

Loss from operations (1,615,239) (721,522) (6,620) (497,998) 6,005 (2,835,374)

Finance costs - (37,442) - (533,599) - (571,041)

Loss before tax (1,615,239) (758,964) (6,620) (1,031,597) 6,005 (3,406,415)

Income tax credit - 4,470 - - - 4,470

Loss after tax (1,615,239) (754,494) (6,620) (1,031,597) 6,005 (3,401,945)

OTHER INFORMATION

Segment assets 11,791,871 3,808,715 61 14,000,958 (16,172,522) 13,429,083

Segment liabilities 729,783 5,578,494 506,875 16,180,241 (15,668,524) 7,326,869

Capital expenditure 230 - - - - 230

Depreciation 12,886 65,566 - 508,287 - 586,739

Non-cash expenses other than depreciation 952,686 534,131 - 134,084 (6,005) 1,614,896

Secondary Reporting-Geographical Segments The Group’s operations are entirely located in Malaysia. Therefore, information on geographical segments is not

presented.



25) CONTINGENT LIABILITIES

As at 31st December 2012, the Company had contingent liabilities in respect of corporate guarantees issued to financial institutions amounting to RM7,733,000 (2011: RM7,733,000) for banking facilities extended to certain subsidiaries. The Company is also contingently liable in respect of corporate guarantees issued to suppliers of certain subsidiaries in respect of supply agreements to supply product to the subsidiaries.

26) CORPORATE PROPOSALS

On 18th October 2011, the Company proposed to undertake a private placement of up to 35,566,740 new ordinary shares of RM0.10 each in the Company, representing up to thirty percent of the existing issued and paid up share capital of the Company. The proposed private placement is subject to approval from the shareholders of the Company and as at to date, there is no further development on the above.

27) MATERIAL LITIGATION

Subsequent to year end, a Winding-Up Petition pursuant to Section 218(1)(e) of the Companies Act, 1965 together with a copy of the Affidavit Verifying Petition (“the said Winding-Up Petition”) have been served on the Company by a former shareholder/director of the Company, demanding the payment of the total outstanding sum owing by the Company amounting to RM835,445. The Company disputed this amount as based on the accounting records, the accumulated advances received as at 31st December 2012 stood at RM582,000. According to management, there was a previous agreement for the said advance to be returned upon the Company obtaining approval for its private placement exercise from Bursa Malaysia Securities Berhad (Bursa Securities). To date, no submission has been made to Bursa Securities. The Company is also disputing the manner of service of the Writ and Statement of Claim as it was not done properly. The Company does not expect any further financial or operational impact as a principal shareholder has given a written irrevocable undertaking to the Company to pay the entire sum claimed and replace the said advance in the event that the Company is denied by the court to set aside its application to strike out the judgment in default obtained by the said former director/shareholder. The Setting Aside Application has been fixed for hearing on 17th May 2013.

28) EXPLANATION OF TRANSITION TO MFRSs

As mentioned in Note 2 to the Financial Statements, these are the first financial statements of the Group and of the Company prepared and presented in accordance with MFRSs. The last financial statements under FRSs were for the year ended 31st December 2011 and the date of transition to MFRSs was therefore, 1st January 2011.

The accounting policies set out in Note 4 have been applied in preparing the financial statements of the Group and of the Company for the year ended 31st December 2012, the comparative information presented in these financial statements for the year ended 31st December 2011 and in the preparation of the opening MFRS statement of financial position at 1st January 2011.

The transition to MFRSs does not have financial impact to the financial statements of the Group and of the Company.



29) COMPARATIVE FIGURES

The following comparative amounts as at 31st December 2011 and 1st January 2011 have been reclassified to conform with the current year’s presentation.

Asrestated Reclassifications

As previously

stated

RM RM RM

Consolidated Statement of Financial Position

As at 1st January 2011

Liabilities

Amount owing to directors - (256,234) 256,234

Other payables and accrued expenses 1,742,295 256,234 1,486,061

As at 31st December 2011

Liabilities


Other payables and accrued expenses 1,155,459 528,462 626,997

Company Statement of Financial Position

As at 1st January 2011

Liabilities



As at 31st December 2011

Liabilities





30) SUPPLEMENTARY INFORMATION

The breakdown of the accumulated loss of the Group and of the Company as at 31st December 2012 into realised and unrealised loss is presented in accordance with the directive issued by Bursa Malaysia Securities Berhad dated 25th March 2011 and prepared in accordance with Guidance on Special Matter No.1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysia Institute of Accountants.

GROUP COMPANY

2012 2011 2012 2011

RM RM RM RM

Accumulated loss carried forward are analysed as follows:

- Realised (17,795,104) (16,500,290) (8,318,731) (8,980,479)

- Unrealised 453,877 (14,623) - -

(17,341,227) (16,514,913) (8,318,731) (8,980,479)

Add: Consolidation adjustments 905,198 6,005 - -

(16,436,029) (16,508,908) (8,318,731) (8,980,479)


List of Properties

The details of the landed property of the Group as at 31 December 2012 are set out below:-

Location

Approximate Land Area/Built-up

Area Description/UseTenure/Date of

Acquisition

Net book value as at

31 December 2012

Age of building (years)

Quest Filter Sdn Bhd No. 6, Jalan Salung 33/26,Shah Alam Technology Park,Section 33,40400 Shah AlamSelangor Darul Ehsan

Land area: Approximately

58,578 square feet

Built-up floor area: Approximately

66,632 square feet

Corner three (3) storey office block annexed to a one and a half storey warehouse

building

Tenure:The land on which

the property is a erected is a freehold land

Date of acquisition:9 March 2006

RM8,439,309 13


Analysis of Shareholdings

Authorised Share Capital : RM25,000,000.00 (250,000,000 Ordinary Shares of RM0.10 each)Issued and Fully Paid-up Share Capital : RM11,855,580.00 (118,555,800 Ordinary Shares of RM0.10 each)Class of Shares : Ordinary Shares of RM0.10 Each Voting Rights : One (1) vote per Ordinary Share

DISTRIBUTION OF SHAREHOLDINGS AS AT 3 MAY 2013

Size of ShareholdingsNo. of

Shareholders %No. of Shares %

1 - 99 20 1.45 876 0.00

100 - 1,000 123 8.93 44,960 0.04

1,001 - 10,000 462 33.55 3,320,500 2.80

10,001 - 100,000 631 45.83 25,244,310 21.29

100,001 - less than 5% of the issued shares 138 10.02 59,648,254 50.31

5% and above of issued shares 3 0.22 30,296,900 25.56

Total 1,377 100.00 118,555,800 100.00

DIRECTORS’ SHAREHOLDINGS AS PER THE REGISTER OF DIRECTORS’ SHAREHOLDINGS AS AT 3 MAY 2013

Direct Indirect

DirectorNo. of Shares %

No. of Shares %

Arulampalam A/L S Mariampillai 100,000 0.08 - -

SUBSTANTIAL SHAREHOLDINGS AS PER THE REGISTER OF SUBSTANTIAL SHAREHOLDERS AS AT 3 MAY 2013

Direct Indirect

Substantial ShareholderNo. of Shares %

No. of Shares %

Deepak Jaikishan A/L Jaikishan Rewachand 19,997,900 16.87 530,000 (1) 0.45

Note:

(1) Deemed interest by virtue of his father, Mr. Jaikishan Rewachand’s direct shareholdings in Envair Holding Berhad and his sister, Ms. Renu Jaikishan’s direct shareholdings in Envair Holding Berhad.


Analysis of Shareholdings cont’d

THIRTY (30) LARGEST SHAREHOLDERS AS AT 3 MAY 2013

No. Name of Shareholders No. of Shares

%

1. RHB Capital Nominees (Tempatan) Sdn BhdPledged Securities Account for Deepak Jaikishan A/L Jaikishan Rewachand

16,170,300 13.64

2. Ang Leng 7,125,000 6.01

3. Ang Leng 7,001,600 5.90

4. Liew Kok Chiang 5,180,000 4.37

5. Deepak Jaikishan A/L Jaikishan Rewachand 3,827,600 3.23

6. Maybank Securities Nominees (Tempatan) Sdn BhdPledged Securities Account for Jaikishan Rewachand A/L Rewachand Bhojumall (REM 822-Margin)

2,200,000 1.85

7. Wendy Ng Ai Hoon 2,002,000 1.69

8. Choe Yang Choon 1,978,500 1.67

9. Sucha Singh @ Gurmej Singh 1,500,000 1.27

10. Wang Fook Weng 1,300,000 1.10

11. Maybank Nominees (Tempatan) Sdn BhdPledged Securities Account for Abd Rahim Bin Abd Kadir

1,279,200 1.08

12. Low Lay Khim 1,250,000 1.05

13. Dharminder Singh A/L Amar Singh 1,200,000 1.01

14. Ranjit Singh A/L Harchand Singh 1,100,000 0.93

15. Tang Ah Kau 1,000,000 0.84

16. Ho Yip Yin 810,000 0.68

17. Yong Boon Fook 776,700 0.66

18. Maybank Nominees (Tempatan) Sdn BhdPledged Securities Account for Teh Siew Wah

759,000 0.64

19. Saroni Bin Judi 750,000 0.63

20. Public Invest Nominees (Tempatan) Sdn BhdExempt an for Philip Securities Pte Ltd (Clients)

748,300 0.63

21. HLB Nominees (Tempatan) Sdn BhdPledged Securities Berhad for Francis Kong @ Kong Fen Shin

705,000 0.59

22. JF Apex Nominees (Tempatan) Sdn BhdPledged Securities Account for Loo Chuan Lu (STA 2)

700,000 0.59

23. Pakirisamy Baskaran A/L P Thangavelu 600,000 0.51

24. Wong Lit Meng 600,000 0.51

25. Wong Lit Meng 600,000 0.51

26. Maybank Nominees (Tempatan) Sdn BhdChin Kah Seng

567,000 0.48

27. Laila Binti Ismail 550,000 0.46

28. Sucha Singh @ Gurmej Singh 520,000 0.44

29. Ahmad Komarolaili Bin Abu 516,800 0.44

30. Ding Mee Hong 500,000 0.42

Total 63,817,000 53.83


Notice of Sixteenth Annual General Meeting

NOTICE IS HEREBY GIVEN THAT the Sixteenth Annual General Meeting of the Company will be held at Kemuning 3, Bukit Kemuning Golf & Country Resort, Lot 6031, Batu 7, Bukit Kemuning, 42450 Shah Alam, Selangor Darul Ehsan on Thursday, 27 June 2013 at 5.00 p.m. for the following purposes:-

AGENDA

AS ORDINARY BUSINESS

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

2. To re-elect Encik Mohd Shukri Bin Abdullah who retires pursuant to Article 92 of the Company’s Articles of Association.

3. To-re-elect the following Directors who retire pursuant to Article 98 of the Company’s Articles of Association:-

3.1 Dato’ Malek Radzuan Bin Saharin

3.2 Encik Ezrul Ehsan Bin Ismail

3.3 Mr. Deepak Jaikishan A/L Jaikishan Rewachand

3.4 Mr. Arulampalam A/L S Mariampillai

3.5 Mr. Poh Hou Liang

4. To re-appoint Messrs STYL Associates as the Auditors of the Company and to authorise the Board of Directors to fix their remuneration.

AS SPECIAL BUSINESS

To consider and, if thought fit, to pass with or without modifications, the following Resolutions:- 5. ORDINARY RESOLUTION 1 AUTHORITY TO ALLOT SHARES PURSUANT TO SECTION 132D OF THE COMPANIES ACT, 1965

“THAT pursuant to Section 132D of the Companies Act, 1965, the Directors be and are hereby authorised 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 to be issued pursuant to this resolution does not exceed ten per centum (10%) of the total issued capital of the Company at the time of issue AND THAT the Directors be and are also empowered to obtain the approval for the listing of and quotation for the additional shares to be issued on Bursa Malaysia Securities Berhad AND THAT such authority shall continue to be in force until the conclusion of the next Annual General Meeting of the Company.”

Note B

Resolution 1

Resolution 2

Resolution 3

Resolution 4

Resolution 5

Resolution 6

Resolution 7

Resolution 8


6. SPECIAL RESOLUTION 1 PROPOSED CHANGE OF COMPANY’S NAME FROM “ENVAIR HOLDING BERHAD” TO “RAYA

INTERNATIONAL BERHAD”

“THAT the name of the Company be changed from “Envair Holding Berhad” to “Raya International Berhad” with effect from the date of Certificate of Incorporation on Change of Name of the Company to be issued by the Companies Commission of Malaysia, AND THAT all references in the Memorandum and Articles of Association of the Company to the name of “Envair Holding Berhad” shall be deleted and substituted with “Raya International Berhad” AND THAT the Directors and/or the Company Secretary be and are hereby authorised to carry out all necessary formalities to effect the proposed change of the Company’s name.”

7. SPECIAL RESOLUTION 2 PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION OF THE COMPANY

“THAT the proposed amendments to the Articles of Association of the Company as contained in Appendix I of the 2012 Annual Report be and are hereby approved AND THAT the Directors and/or the Company Secretary be and are hereby authorised to assent to any modifications, variations and/or amendments as may be required by the relevant authorities and to do all acts and things and take all steps as may be considered necessary to give full effect to the proposed amendments to the Articles of Association of the Company.”

8. To transact any other business of the Company of which due notice shall be given in accordance with the Company’s Articles of Association and the Companies Act, 1965.

BY ORDER OF THE BOARD

NG YIM KONG (LS0009297)Company Secretary

Kuala Lumpur 5 June 2013

Notes:-

A. APPOINTMENT OF PROXY:

a) A member of the Company who is entitled to attend and vote at this meeting is entitled to appoint a proxy/proxies, and in the case of a corporation, a duly authorised representative to attend and vote in its stead.

b) A proxy may but need not be a member of the Company. Where a member appoints more than one (1) proxy, he shall specify the proportions of his shareholdings to be represented by each proxy.

c) Where a member of the Company is an exempt authorised nominee which holds ordinary shares in the Company for multiple beneficial owners in one securities account (“omnibus account”), the exempt authorised nominee may appoint any number of proxy (no limit) in respect of each omnibus account it holds.

d) The instrument appointing a proxy shall be in writing under the hand of the appointor or his attorney duly authorised in writing or if the appointor is a corporation, either under its common seal or under the hand of its attorney duly authorised in writing.

e) The instrument appointing a proxy must be deposited at the Registered Office of the Company situated at 2nd Floor, Lot 107, Jalan 6, Off Jalan Chan Sow Lin, Sungai Besi, 55200 Kuala Lumpur, not less than forty-eight (48) hours before the time set for holding this meeting or at any adjournment thereof.

f) For the purpose of determining a member who shall be entitled to attend the Sixteenth Annual General Meeting, only members whose name appears on the Record of Depositors as at 20 June 2013 shall be entitled to attend the said meeting or appoint proxy to attend and/or vote on his/her behalf.

Notice of Sixteenth Annual General Meeting cont’d

Resolution 9

Resolution 10


Notice of Sixteenth Annual General Meeting cont’d

B. AUDITED FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2012

This Agenda item is meant for discussion only as the provision of the Company’s Articles of Association do not require a formal approval from shareholders, and hence, is not put forward for voting.

C. EXPLANATORY NOTES ON SPECIAL BUSINESS

1. Ordinary Resolution 1 - Authority to allot shares pursuant to Section 132D of the Companies Act, 1965

The Proposed Ordinary Resolution 8, if passed, will empower the Directors of the Company from the date of the above Annual General Meeting, authority to allot and issue shares in the Company up to an aggregate amount of not exceeding 10% of the issued share capital of the Company for the time being for such purposes as they consider would be in the best interest of the Company and also to empower Directors to obtain approval from Bursa Malaysia Securities Berhad for the listing of and quotation for additional shares issued. This authority, unless revoked or varied at a general meeting, will expire at the next Annual General Meeting of the Company.

This Mandate is a renewal of the last mandate granted to the Directors’ at the Fifteenth Annual General Meeting held on 28 June 2012 which will lapse at the conclusion of the Sixteenth Annual General Meeting.

As at the date of this Notice, the Company did not issue any shares pursuant to the mandate granted to the Directors at the Fifteenth Annual General Meeting because there were no investment(s), acquisition(s) or working capital that required fund raising activity.

The renewal of this mandate will provide flexibility to the Company for any possible fund raising activities, including but not limited to further placing of shares, for the purpose of funding future investment, working capital and/or acquisition or to issue new shares as consideration for investments and/or acquisition which the Directors consider would be in the best interest of the Company.

2. Special Resolution 1 - Proposed Change of Company Name from “Envair Holding Berhad” to “Raya International Berhad”

On 17 May 2013, the Company announced to Bursa Malaysia Securities Berhad that the Baord has proposed to change the Company’s name from “Envair Holding Berhad” to “Raya International Berhad”.

The rationale for the Proposed Change of Name is to better reflect the intention and determination of the new Board of Directors and Management of the Company to turnaround the Company’s business under the leadership of the new Board of Directors and Management of the Company and the new name, Raya International Berhad, reflects a more synergized and aligned business direction for the Company.

The Proposed Change of Company’s Name, if approved by the shareholders, will be effective from the date of issuance of the Certificate of Incorporation on Change of Name of the Company by the Companies Commission of Malaysia. The Memorandum and Articles of Association of Company will be amended accordingly to reflect the change of name.

3. Special Resolution 2 - Proposed Amendments to the Articles of Association of the Company

The Proposed Special Resolution 2 is to amend the Articles of Association of the Company to be in line with the recent amendments to the ACE Market Listing Requirements of Bursa Malaysia Securities Berhad. The details of the Proposed Amendments are as set out in Appendix I of this Annual Report.


Statement AccompanyingNotice of Sixteenth Annual General Meeting

Details of the following Directors who are standing for re-election or re-appointment at the Sixteenth Annual General Meeting of Envair Holding Berhad are set out on pages 3 to 5 of this Annual Report:

(a) Mohd Shukri Bin Abdullah(b) Dato’ Malek Radzuan Bin Saharin(c) Ezrul Ehsan Bin Ismail(d) Deepak Jaikishan A/L Jaikishan Rewachand(e) Arulampalam A/L S Mariampillai(f) Poh Hou Liang


Appendix I

Special Resolution – Proposed Amendments to the Company’s Articles of Association

The Articles of Association of the Company be amended in the following manner:-

Article No. Existing Articles Proposed Amendments

2 INTERPRETATIONS WORDS MEANINGS WORDS MEANINGS

- - No definition for “Cash Distributions”

CashDistributions

- Cash payment made by the Company in respect of its securities which are listed and quoted for trading on Bursa Securities, as prescribed by Bursa Securities from time to time which include:-

a) Cash dividends;

b) Payment of interest or profit rates on debt securities or sukuk respectively;

c) Capital repayments;

d) Cash payments in lieu of odd lots arising from distributions in specie.

- - No definition for “Share Issuance Scheme”

Share Issuance Scheme

- A new scheme involving a new issuance of shares to the employees and/or Directors.

3 Shares may be issued subject to different conditions

Shares may be issued subject to different conditions

b) No Director shall participate in a share scheme for employees unless the members in general meeting have approved the allotment to be made to such Director;

b) No Director shall participate in a Share Issuance Scheme unless the members in general meeting have approved the allotment to be made to such Director;

Envair Holding Berhad (412406-T)70 Envair Holding Berhad (412406-T)70

Appendix I cont’d

The Articles of Association of the Company be amended in the following manner:- cont’d

Article No. Existing Articles Proposed Amendments

137 Dividend Payable

Any dividend, interest or other money payable in cash in respect of shares may be paid by cheque or warrant, sent through the post directed to the registered address of the holder or person entitled thereto, or, if several persons are entitled in consequence of the death or bankruptcy of the holder, to any one of such persons or to such persons and such address as such persons may by writing direct or by directly crediting the dividend entitlement into the member’s bank account as provided to the Central Depository from time to time. Every such cheque or warrant shall be sent made payable to the order of the person to whom it is sent, or such person as the holder may direct and payment of the cheque or the direct crediting to the member’s bank account shall be a good discharge to the Company. Every such cheque or warrant shall be sent or directly credited to the member’s bank account at the risk of the person entitled to the money represented thereto. Where the members have provided to the Central Depository the relevant contact details for purposes of electronic notifications, the Company shall notify them electronically once the Company has paid the cash dividends into the member’s bank account.

Payment of Cash Distributions

All cash distributions in respect of securities may be paid by cheque and/or warrant sent through the post to the registered address of the member of person entitled thereto, or if several persons are entitled in consequence of the death or bankruptcy of the holder, to any one of such persons or to such persons and such address as such persons may by writing direct or by directly crediting the payments into the member’s bank account as provided to the Central Depository from time to time. Every such cheque or warrant shall be made payable to the order of the person to whom it is sent or such person as the holder may direct and payment of the cheque or warrant shall be sent or directly credited at the risk of the person entitled to the cash distributions represented thereby. Where the members have provided to the Central Depository the relevant contact details for purposes of electronic notifications, the Company shall notify the electronically once the Company has paid the cash distributions into the member’s bank account.

*I/We (NRIC No./Company No. ) (FULL NAME IN CAPITAL LETTERS)

of (FULL ADDRESS)

being a *member/*members of ENVAIR HOLDING BERHAD hereby appoint *the Chairman of the meeting or

(NRIC No. ) (FULL NAME)

of (FULL ADDRESS)

or failing whom (NRIC No. ) (FULL NAME)

of (FULL ADDRESS)

as *my/*our proxy(ies) to vote for *me/*us and on *my/*our behalf at the Sixteenth Annual General Meeting of the Company to be held at Kemuning 3, Bukit Kemuning Golf & Country Resort, Lot 6031, Batu 7 Bukit Kemuning, 42450 Shah Alam, Selangor Darul Ehsan on Thursday, 27 June 2013 at 5.00 p.m. and at any adjournment thereof for/against the resolution(s) to be proposed thereat.

*My/*our proxy(ies) *is/*are to vote as indicated below:

NO. RESOLUTIONS FOR AGAINST

Resolution 1 To re-elect Encik Mohd Shukri Bin Abdullah as Director

Resolution 2 To re-elect Dato’ Malek Radzuan Bin Saharin as Director

Resolution 3 To re-elect Encik Ezrul Ehsan Bin Ismail as Director

Resolution 4 To re-elect Mr. Deepak Jaikishan A/L Jaikishan Rewachand as Director

Resolution 5 To re-elect Mr. Arulampalam A/L S Mariampillai as Director

Resolution 6 To re-elect Mr. Poh Hou Liang as Director

Resolution 7 To re-appoint Messrs STYL Associates as the Auditors and to authorise the Board of Directors to fix their remuneration.

Resolution 8 Authority to allot shares pursuant to Section 132D of the Companies Act, 1965.

Resolution 9 Proposed Change of Company’s Name from “Envair Holding Berhad” to “Raya International Berhad”

Resolution 10 Proposed Amendments to the Articles of Association of the Company Please indicate with an “X” in the appropriate space provided above on how you wish your vote to be cast. If you do not indicate how you wish your proxy to vote on any resolution, the proxy may vote as he thinks fit.

Dated this day of 2013

[Signature/Common Seal of Shareholder (s)]* Delete if not applicable

Notes:

1. A member of the Company who is entitled to attend and vote at this meeting is entitled to appoint a proxy/proxies, and in the case of a corporation, a duly authorised representative to attend and vote in its stead.

2. A proxy may but need not be a member of the Company. Where a member appoints more than one (1) proxy, he shall specify the proportions of his shareholdings to be represented by each proxy.

3. Where a member of the Company is an exempt authorised nominee which holds ordinary shares in the Company for multiple beneficial owners in one securities account (“omnibus account”), the exempt authorised nominee may appoint any number of proxy (no limit) in respect of each omnibus account it holds.

4. The instrument appointing a proxy shall be in writing under the hand of the appointor or his attorney duly authorised in writing or if the appointor is a corporation, either under its common seal or under the hand of its attorney duly authorised in writing.

5. The instrument appointing a proxy must be deposited at the Registered Office of the Company situated at 2nd Floor, Lot 107, Jalan 6, Off Jalan Chan Sow Lin, Sungai Besi, 55200 Kuala Lumpur, not less than forty-eight (48) hours before the time set for holding this meeting or at any adjournment thereof.

6. For the purpose of determining a member who shall be entitled to attend the Sixteenth Annual General Meeting, only members whose name appears on the Record of Depositors as at 20 June 2013 shall be entitled to attend the said meeting or appoint proxy to attend and/or vote on his/her behalf.

PROXY FORM

ENVAIR HOLDING BERHAD(Company No. 412406-T)

CDS Account No. :

Number of Ordinary Shares held :

AFFIXSTAMPHERE

1st fold here

Then fold here

THE COMPANY SECRETARY

ENVAIR HOLDING BERHAD (412406-T)

2nd Floor, Lot 107, Jalan 6Off Jalan Chan Sow Lin, Sungai Besi55200 Kuala Lumpur

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