TATT GIAP GROUP · PDF fileStatements of Profit or Loss and Other Comprehensive Income 32 ......

TATT GIAP GROUP BERHAD (732294-W)

Corporate Information 2

Profile of Directors 3

Corporate Structure 6

Chairman’s Statement 7

Corporate Governance Statement 9

Additional Compliance Information 18

Corporate Social Responsibility Statement 19

Statement on Risk Management and Internal Control 20

Audit Committee Report 22

AUDITED FINANCIAL STATEMENTS

Directors’ Report 26

Statements of Financial Position 30

Statements of Profit or Loss and Other Comprehensive Income 32

Consolidated Statement of Changes in Equity 34

Statement of Changes in Equity 36

Statements of Cash Flows 37

Notes to the Financial Statements 40

Statement by Directors 99

Statutory Declaration 99

Independent Auditors’ Report 100

List of Group Properties 102

Analysis of Shareholdings 104

Analysis of ICULS 106

Notice of Annual General Meeting 108

Statement Accompanying Notice of Annual General Meeting 109

Proxy Form 111

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TATT GIAP GROUP BERHAD (732294-W)2 ANNUAL REPORT2014

CORPORATE INFORMATION

BOARDof DIRECTORS

Siah Chin Pin, KevinExecutive Director

Dato’ Rosely bin SamsuriIndependent Non-Executive Director

Loh Eng WeeIndependent Non-Executive Director

Dato’ Siah Kok Poay, Steven Chairman/President

Siah Lee Beng, MichaelExecutive Director

Tan Lu Eng, ChristinaExecutive Director

Foo Kee FattIndependent Non-Executive Director

Siah Chin Hoo, DarrenAlternate Director to Dato’ Siah Kok Poay, Steven

Siah Chin Soon, VictorAlternate Director to Siah Lee Beng, Michael

AUDITCOMMITTEEFoo Kee FattIndependent Non-Executive Director(Chairman)

Dato’ Rosely bin SamsuriIndependent Non-Executive Director(Member)

Loh Eng WeeIndependent Non-Executive Director(Member)

NOMINATIONCOMMITTEELoh Eng WeeIndependent Non-Executive Director(Chairman)


Foo Kee FattIndependent Non-Executive Director(Member)

REMUNERATIONCOMMITTEELoh Eng WeeIndependent Non-Executive Director(Chairman)


Foo Kee FattIndependent Non-Executive Director(Member)

SECRETARIESTai Yit Chan(MAICSA 7009143)

Ong Tze-En(MAICSA 7026537)

OFFICESuite 16-1, (Penthouse Upper)Menara Penang GardenNo. 42A, Jalan Sultan Ahmad Shah10050 Pulau PinangTel. No : (604) 229 4390Fax. No : (604) 226 5860

REGISTERED

REGISTRARAgriteum Share Registration Service Sdn Bhd(578473-T)2nd Floor, Wisma Penang GardenNo. 42, Jalan Sultan Ahmad Shah10050 Pulau PinangTel. No : (604) 228 2321Fax. No : (604) 227 2391

SHARE

AUDITORSKPMG (AF 0758)Chartered AccountantsLevel 18, Hunza TowerNo. 163E, Jalan Kelawei10250 Pulau PinangTel. No : (604) 238 2288Fax. No : (604) 238 2222

BANKERSMalayan Banking Berhad (3813-K)Alliance Bank Malaysia Berhad (88103-W)CIMB Bank Berhad (13491-P)

PRINCIPAL

LISTINGMain Market of Bursa Malaysia Securities BerhadStock Code : 5178Stock Name : TATGIAPListing Date : 22 July 2010

STOCK EXCHANGE

WEBSITEwww.tattgiap.com.my

TATT GIAP GROUP BERHAD (732294-W) 3ANNUAL REPORT2014

PROFILE OF DIRECTORS

Dato’ Siah Kok Poay, Steven, aged 61, a Malaysian, was appointed to the Board on 1 December 2008. He is the Chairman/President of TGG.

Dato’ Steven Siah obtained his Bachelor of Science (Mathematics & Computer Science) and Diploma in Business Administration in 1976 & 1977 respectively from Nanyang University, Singapore.

In year 1978, Dato’ Steven Siah founded TGH together with his brothers, Siah Lee Beng and the late Cheah Chong Beng. He has over 36 years of hands-on experiences in the steel and stainless steel business in trading, processing & manufacturing. Currently he oversees strategic business planning of the Group.

Dato’ Steven Siah is also active in many trade organisations. Presently, he is the Honorary President of Federation Of Asia Pacific Hardware Chambers (FAPHC); Executive Advisor of Malaysia Hardware, Machinery and Building Materials Dealer’s Association & Honorary Advisor of Penang Hardware and Machinery Merchants’ Association. He is a council member of Malaysian Iron & Steel Industry Federation (MISIF) cum MISIF Northern Region Branch Chairman.

He attended all five Board Meetings held during the financial year ended 31 December 2014.

Siah Lee Beng, Michael, aged 65, a Malaysian, was appointed to the Board on 1 December 2008 as Executive Director of TGG.

Together with Dato’ Steven Siah, he is a co-founder of TGH. Presently, he is Managing Director of TGH. He has more than 21 years experiences in the metal casting industry and approximately 27 years of experience in the steel and stainless steel business.

Mr. Michael Siah is actively involved in various social organisations. Presently, he is the President of Jelutong Chinese Primary School Ex-pupils Association. He is also a Director of Jelutong Chinese Primary School and SJKC Beng Teik (Pusat) Bukit Mertajam. He was the President of Lions Club Of Tanjung, Penang in year 2010 to 2011 and presently he is the Director of Lions Club of Tanjung Penang for year 2014-2015.


Tan Lu Eng, Christina, aged 51, a Malaysian, was appointed to the Board on 1 December 2008 as an Executive Director of TGG.

She began her career in 1987 as Accounts Assistant at TGH after completion of her high school in 1984. Ms. Christina Tan held positions across several functions – finance, sales to operations – with increasing responsibilities and scope before her appointment as Director of TGH in 1996.

In 2000, she was appointed as the Managing Director of TGSC and was instrumental in the expansion of TGSC’s business activities throughout Malaysia.

She attended four Board Meetings held during the financial year ended 31 December 2014.


PROFILE OF DIRECTORS (Cont’d)

Siah Chin Pin, Kevin, aged 34, a Malaysian, was appointed to the Board on 1 July 2013, as an Executive Director of TGG.

He is the Chief Operating Officer cum Executive Director of Superinox Pipe Industry Sdn Bhd, Superinox International Sdn Bhd & Superinox Max Fittings Industry Sdn Bhd. He graduated from the University of Melbourne (Australia) in 2006 with a Bachelor of Information Systems. Upon his graduation, he joined TGG as a Business Development Executive and was promoted to Business Development Director of SPI and SI in 2008, in charge of domestic and overseas marketing efforts for SPI.

He is handling in all aspects of operations such as Management, Business Development, Planning, Procurement and Administration.


He is the son of Dato’ Siah Kok Poay, Steven and nephew of Mr. Siah Lee Beng, Michael.

Loh Eng Wee, aged 46 a Malaysian, was appointed to the Board on 1 December 2008 as Independent Non-Executive Director. He is the Chairman of Nomination and Remuneration Committees as well as a member of Audit Committee.

Mr Loh graduated from University Malaya in 1994 with a Bachelor of Law (Hons). He joined Messrs. San & Associates in 1995 as an advocate and solicitor and became the partner of the firm in 1997. Mr Loh’s areas of specialisation include matters relating to banking, corporate, civil, land and conveyance.

He is also an Independent Non-Executive Director of Pensonic Holdings Berhad and Ideal Sun City Holding Bhd since 2011.


Dato’ Rosely bin Samsuri, aged 62, a Malaysian, was appointed to the Board on 2 July 2012 as Non-Independent Non-Executive Director of TGG. Following the full divestment of Perbadanan Nasional Berhad’s interest in the Company, Dato’ Rosely bin Samsuri was re-designated as Independent Non-Executive Director of the Company on 6 November 2014. He is the member of Audit Committee, Nomination Committee and Remuneration Committee.

He graduated with a Bachelor of Science (Finance) from Indiana State University, Indiana, USA in year 1983 and a Master in Business Administration (International Business) from University of New Haven, Connecticut, USA in year 1985.

Dato’ Rosely bin Samsuri started his career as a Credit and Accounts Officer in Negara Properties Sdn Bhd, a property development company in year 1985. In the same year, he joined Bank Rakyat as an Executive in Corporate Planning Department. He was appointed as the Finance Manager of Rakyat Corporation in 1986 and was seconded to Angkasa Raya Development Sdn. Bhd; both of

which are Bank Rakyat’s wholly-owned subsidiaries.

On 1st January 1994, he was appointed as the Head of Corporate Planning Division cum Executive Assistant to Managing Director of Bank Rakyat and was promoted as Chief Executive Officer of Angkasa Raya Development Sdn. Bhd in year 1997. In 2000, he was appointed as the Head of Business Development Division and Credit Control Division. In 2003, Dato’ Rosely was appointed as General Manager Corporate Services and Secretary of Bank Rakyat till his retirement in year 2009.

Dato’ Rosely was a member of the Board of Rakyat Holdings Sdn. Bhd. and Rakyat Management Services Sdn.Bhd. He was appointed as Risk Management Committee of Bank Rakyat.

At present, Dato’ Rosely is serving the Board of Perbadanan Nasional Berhad, Permodalan Felcra Sdn Bhd & Bioalpha Holdings Berhad and he served as a Chairman of Management Investment Committee Permodalan Felcra Sdn. Bhd.

He attended four Board Meetings held during the financial year ended 31 December 2014.


PROFILE OF DIRECTORS (Cont’d)

Foo Kee Fatt, aged 49, a Malaysian, was appointed to the Board on 18 January 2013 as an Independent Non-Executive Director. He is the Chairman of Audit Committee and a member of both Nomination and Remuneration Committees.

Mr. Foo is a member of The Malaysian Institute of Certified Public Accountant, Malaysian Institute of Accountants and Chartered Tax Institute of Malaysia. He is also an approved company auditor under Section 8 of the Malaysian Companies Act 1965.

In 1987, he joined and served his article-ship with one of the international accounting firms. From 1993 to 2006, he was with a local accounting firm with international affiliation. He is currently in public practice.

He is also an Independent Non-Executive Director of Central Industrial Corporation Berhad and Padini Holdings Berhad.


Notes:

a) NoneoftheDirectorshasanyconflictofinterestwiththeGroup.b) NoneoftheDirectorshasbeenconvictedofanyoffenceswithinthepast10years.c) NoneoftheDirectorshasanyfamilyrelationshipwithanyotherdirectors/majorshareholdersoftheCompany,otherthan

asdisclosedinProfileofDirectors.

Siah Chin Soon, Victor, aged 38, a Malaysian, was appointed as Alternate Director to Siah Lee Beng, Michael on 1 October 2012.

He obtained his Bachelor of Commerce in Accounting & Finance from Curtin University of Technology in Australia in 1999. He began his career in PricewaterhouseCoopers in 1999 as an Audit Assistant and was subsequently promoted to Senior Auditor in 2002. Gaining the requisite experiences in auditing, he joined TGSC as the Personal Assistant to the President in 2003, overseeing Finance Department.

In 2004, he was appointed to Business Development Director and in year 2010, was appointed as present post, the Deputy Managing Director of TGSC, where he assists the Managing Director of TGSC in all aspects of operations. In addition, he is also a member of Malaysian Institute of Accountants (“MIA”) and a Chartered Accountant of Certified Practising Accountant (“CPA”) Australia.

He is the son of Mr. Siah Lee Beng, Michael and nephew of Dato’ Siah Kok Poay, Steven.

Siah Chin Hoo, Darren, aged 30, a Malaysian, was appointed as Alternate Director to Dato’ Siah Kok Poay, Steven on 1 July 2013.

He obtained his diploma, major in Commerce from Melbourne Institute of Business & Technology (Australia) in 2003 and obtained his Bachelor of Commerce major in Accounting and Finance from Deakin University (Melbourne) in year 2005. Upon his graduation, he joined TGSC as a Business Development Executive and was promoted to Group Procurement Director in year 2008.

He is responsible for direct materials purchases required for TGO & TGH. Presently he is also the Deputy General Manager in Marketing Department of Nippon EGalv Steel Sdn Bhd. He is in charge of domestic and overseas marketing efforts.

He is the son of Dato’ Siah Kok Poay, Steven and nephew of Mr. Siah Lee Beng, Michael.

TGG - TATT GIAP GROUP BHD (732294-W)

TGH - TATT GIAP HARDWARE SDN BHD (39286-X)

SPI - SUPERINOX PIPE INDUSTRY SDN BHD (712388-D)

SI - SUPERINOX INTERNATIONAL SDN BHD (786945-A)

SMFI - SUPERINOX MAX FITTINGS INDUSTRY SDN BHD (405083-T)

TGO - TG ORIENTAL STEEL SDN BHD (42683-P)

TGMI - TGMI INDUSTRIES SDN BHD (421355-V)

FI - FORMOSA INDUSTRIES SDN BHD (286755-M)

TGSC - TATT GIAP STEEL CENTRE SDN BHD (310962-X)

NEG - NIPPON EGALV STEEL SDN BHD (721702-W)

NIMS - NISSHIN METAL SERVICES (M) SDN BHD (434550-M)

PIBI - PT. INDO BESTINOX INDUSTRI

TGG

SI 100%

SMFI 100%

TGO 100%

FI 100%

TGSC 51%

NEG 27.12%

NIMS 25%

SPI 100%

TGH 100%

PIBI 40%


CORPORATE STRUCTUREAS AT 27 APRIL 2015

TGMI 100%

OVERVIEW

The cautious optimism of recovery in 2014 did not pan out as expected. The international steel market continues to roil with no end in sight in the near future as low-priced steel products from China continues to surge and flood the market. Larger markets like the United States of America and European Union have taken early trade actions to control excessive entry of Chinese steel products into their markets. As a result, more than half of the Chinese steel exports were dumped into the ASEAN market, including Malaysia, despite concerted efforts by local steel companies to initiate trade actions against China. In the recent few years, local steel players’ profit margin had come under tremendous pressure and 2014 was no better. In fact, 2014 was even more challenging than the previous years. 2014 has seen many steel companies experiencing falling output and contracted revenues which placed many in a precarious position to keep their businesses afloat. Tatt Giap Group was also not spared.

The rise of Malaysia’s steel consumption with the ongoing construction of properties and mass rapid transit projects alone augured well for the industry in general. However, it is insufficient to sustain the local steel producers as the industry is facing low steel prices due to oversupply and flood of cheap steel imports from China. The local steel players find it difficult to compete on such uneven ground and hence, have been operating at below capacity resulting in production and cost inefficiencies. Trying to remain relevant in a capital intensive industry while running a plant that is operating below 60% of its capacity is a huge challenge for steel manufacturers. The high operating cost from raw material imports, electricity tariffs and fixed minimum salaries add further to the ordeal.


CHAIRMAN’S STATEMENT

CHAIRMAN’S STATEMENT (Cont’d)

REVIEW OF OPERATIONS AND PERFORMANCE

Although 2014 was a volatile and uncertain period, I am pleased to note Tatt Giap and its group of companies (“the Group”) have prevailed against the odds to deliver improvement in its performance for financial year ended 31 December 2014 (“FY2014”). Revenue was recorded at RM251.70 million, a marginal increase of RM24.10 million or 10.59% over FY2013 revenue and came mostly from increase in sales volume to export markets mainly in South America and Europe. In tandem with increase in export sales and aided further by better margin from favorable steel price in the first 9-months of the year and cost cutting as well as production enhancing measures, loss before tax contracted to RM18.78 million compared to the loss before tax of RM29.39 million for FY2013.

Even though operating environment remains dismal, the Group remains focused on growth and development. As we mentioned last year, the Group is pursuing initiatives on several fronts to strengthen its balance sheet. These efforts are still in progress.

PROSPECTS

Drawing on experience and trends in FY2014, rebound for the local steel industry in FY2015 is unlikely mainly due to low prices, lack of economies of scale and continued supply of low-priced steel products from China. As supply continues to outstrip demand, there is a likelihood for steel producers, the Group included, to scale back production.

On the global front, the long-drawn-out weaknesses in the external situation in Europe and North America continue to impact worldwide demand for steel related products. Furthermore, the excess capacity and slow-down of mega construction in China continues to overshadow any turnaround in the steel industry. Notwithstanding the uncertainties, the ASEAN region is expected to be the growth area for the next few years.

Hence, our plan to expand ASEAN-wide for new market and move other initiatives as mentioned earlier. We have been and will continue to improve our production efficiency, enhance our workforce, restructure our business, shelve unproductive operations and be cost vigilant to maintain our performance in FY2015 and beyond. Although the situation remains grim in the near future but I am certain that efforts currently undertaken will put us in a stronger position going forward.

APPRECIATION

On behalf of the Board, I would like to extend our deepest gratitude to our management and staff, business associates, financiers and shareholders and my fellow Board members for their continuous support, trust and dedication to Tatt Giap Group during these trying times. We will continue to strive forward in the interest of all stakeholders.

Dato’ Siah Kok PoayChairman/President27 April 2015


CORPORATE GOVERNANCE STATEMENT

The Board of Directors (‘Board’) of Tatt Giap Group Berhad (“Company” or “TattGiap” throughout this Annual Report) recognises the importance of good governance and is committed to ensure that the recommended standards of Corporate Governance are practised throughout TattGiap and its subsidiaries (“the Group” or “TattGiap Group”) towards enhancing business success and corporate accountability to protect and enhance the interests of its shareholders and stakeholders. The key focus is on adopting the substance behind good corporate governance practices with the ultimate aim to ensure Board effectiveness and efficacy in enhancing shareholders’ value.

The Board continues to work towards ensuring compliance with the Principles and Recommendations of Malaysian Code on Corporate Governance 2012 (“Code” or “MCCG 2012”) and this commitment is evidenced by the formulation of various policies and processes and the establishment of the relevant committees. The Board is pleased to disclose, in the following pages, the manner in which it has applied the principles of good corporate governance set out in the Code and the relevant provisions of the Main Market Listing Requirements (“MMLR”) of Bursa Malaysia Securities Berhad (“Bursa Securities”).

Principle 1: Establish Clear Roles and Responsibilities

1.1 Clear Functions of the Board and Management

The Board assumes full responsibilities for the overall performance of the Company and its subsidiaries by providing leadership and direction as well as management supervision. As a whole, the Board is the ultimate decision making body. In addition to its legal responsibilities, the Board assumes full responsibility for the Group’s strategic direction, overseeing the proper conduct of the Group’s business, identifying principal risks and ensuring the implementation of systems to manage risks, succession planning, developing investor relations programme, reviewing the adequacy and integrity of the Group’s internal control systems and management information systems, establishing goals for management and monitoring the achievement of these goals.

The Board has established 3 Board Committees (“Committees”) to assist in the performance of its stewardship duties under specific terms of reference. The Committees established are Audit Committee, Nominating Committee and Remuneration Committee. All 3 Committees are now composed of Independent Non-Executive Directors (“INEDs”) following the re-designation of Dato’ Rosely bin Samsuri as INED.

All decisions and deliberations at Committee level are documented by the Company Secretary in the minutes of Committee meetings. The ultimate responsibility for decision making, however, lies with the Board. The Chairman of Board Committees reports, on the outcome and recommendations of the Board Committee meetings, to the Board for further deliberation and approval. Such reporting is included in the minutes of Board meetings. The Committees function to principally assist the Board in the execution of its duties and responsibilities to enhance operational and business efficiency and efficacy. The Board reviews the Committees’ authority and terms of reference from time to time to ensure its relevance and enhance its efficacy.

1.2 Clear Roles and Responsibilities

As a collective body, the Board is responsible for overall management of the Group. The Executive Directors are responsible for implementing the policies and decisions of the Board, overseeing business operations as well as coordinating the development and implementation of business and corporate strategies. At the same time, the INED, who are independent of management, provide impartial judgement and informed opinion during Board deliberation and ensured that issues of strategies, performance and resources proposed by the Management are objectively evaluated taking into account the long term interest of the Group and various stakeholders. In carrying out their roles, the INEDs thereby fulfil a crucial role in corporate accountability.

The Board has developed descriptions for certain Board positions and also the corporate objectives for which the Executive Directors are responsible to meet. Having due note of that, the Board is of the opinion that the Chairman/President, with the assistance and support from the Executive Directors and key management, is responsible for the day-to-day operations of the Group and represents Management to the Board. The appointment of Alternate Directors reflects Senior Management’s commitment towards developing future leaders and ensuring orderly succession planning of key positions.

The specific duties of the Board and a formal schedule of matters reserved for the Board are spelt out in the Board Charter. It is the practice of the Board to deliberate on significant matters that concerned the overall Group business strategy, acquisition or divestment, major capital expenditure and significant financial matters as well as review of the financial and operating performance of the Group. The Group has in place a risk assessment framework to identify significant risks since 2010 which guided the development of a 3-year internal audit plan focussing on the review of the effectiveness and efficacy of internal controls. At the same time, the Group has in place a framework on internal controls and regulatory compliance which are drawn up in compliance with various international and Malaysian qualitative certifications. The risk assessment framework will be reviewed and updated periodically to identify key risks, the management of these risks and guide the formulation of a risk-centric internal audit plan.



CORPORATE GOVERNANCE STATEMENT (Cont’d)

Principle 1: Establish Clear Roles and Responsibilities (Cont’d)

1.3 Formalise Ethical Standards through a Code of Conduct and Ethics

A Code of Conduct, which outlined the conduct and responsibilities of both Management and employees, is in place. An Employee Handbook, which contained various human resource policies, serve as a guide for Management and employees of the Group and ensured that accepted code of conduct as well as employee responsibilities are practiced.

There is also a platform in place for employees and Management to report on any grievances and or wrongdoing by employees and or Management. Insofar as the Board is concerned, the Directors have a duty to declare immediately to the Board and abstain from further discussion and decision-making process should they be interested in any transaction to be entered into by the Group and or whenever there is a potential conflict arising from any transactions which involved the interest of the Directors.

Similar with the Charter, the Board has formalised and adopted Whistle Blower Policy as well as Code of Ethics and Code of Conduct for Directors. These are now disclosed on the corporate website.

1.4 Strategies Promoting Sustainability

The Board reviews the performance and operational progress of significant subsidiaries to-date in quarterly basis with due regard to the changes in the business environment and risk factors such as level of competition, commodity prices and global economic outlook. The Board responds to those issues and risks identified and put in place appropriate strategies to mitigate these risks. It is also the normal practice of Senior Management team to conduct annual review of group performance, refine business strategies and set targets, both qualitative and quantitative, in consultation with the Chairman/President and Executive Directors.

The Board is aware of the importance of business sustainability in general and vis a vis the environment, governance and social context. To that end, the Board has formalised a Sustainability Policy.

From a social context, employees’ welfare, financial contribution and participation in community activities are part and parcel of the Group’s commitment as a responsible corporate citizen.

The Group acknowledges the contribution of its employees and strive to improve the welfare and benefits accorded to them. All recruits undergo induction program to familiarise themselves with Group’s background, policies, structure, products and services. There is an established performance review process to reward deserving employees with competitive remuneration packages, increment and bonus. In addition, confirmed employees are entitled to medical and hospitalisation benefits at the Group’s expense. There is an emphasis on continuous employees’ training and professional development with various training programs organised from time to time to enhance skills and knowledge.

On a social note, company dinners are organised to foster relationship amongst employees and Management. Long service awards, for services up to 35 years with the Group, are conferred to Management and employees as a token of appreciation for their dedication, loyalty, support and contribution to the Group.

All operations of the Group are conducted within the ambit of the various legislating authorities.

1.5 Access to Information and Advice

Sufficient notice is given for all Board and Committee meetings. All Directors are provided with an agenda and relevant board papers, including financial statements, to ensure that they are able to appreciate the issues to be deliberated and obtain further information, to expedite decision-making during meetings. Meeting papers on issues or corporate proposals which are deemed confidential and sensitive would only be presented to the Directors during the meeting itself. Management is invited to provide Directors with updates on business and operational matters or clarify items tabled to the Board. Verbal explanation and briefings are also provided by management to enhance understanding of the matters under discussions.

The Board may seek opinion from the Management on issues under consideration. The Directors may also interact with the Management or request further clarifications or information on the Group’s operations or business concerns. The Directors review and approve corporate announcements, including the announcement of the quarterly financial reports, prior to releasing them to Bursa Securities. The Board of Directors, whether as a full board or in their individual capacity, may upon approval of the Board of Directors, seek independent professional advice if required, in discharge of their duties with full knowledge of cause and effect, at the Company’s expense.



Principle 1: Establish Clear Roles and Responsibilities (Cont’d)

1.6 Qualified and Competent Company Secretaries

All the Directors have unrestricted access to all information within the Group and to the advice and service of the Company Secretaries. The Company Secretaries, who are qualified and experienced, advise the Board on any updates relating to new statutory and regulatory requirements pertaining to the duties and responsibilities of Directors and the potential impact and implications arising there from.

1.7 Board Charter (“Charter”)

The Board has established a Charter as a point of reference for Board activities and the Charter is published on the Company’s website. The Board clearly delineate the roles, duties and responsibilities of the Board, Board Committees and Management in order to provide a structured guidance regarding their various responsibilities including the requirements of Directors in carrying out their leadership and supervisory role and in discharging their duties towards the Group as well as boardroom activities. Salient features of the Charter will be made available on the Company website www.tattgiap.com.my.

Principle 2: Strengthen the Composition

2.1 Nominating Committee

The Nominating Committee consists of 3 members and all are INEDs. Nominating Committee shall meet at least once in a financial year or more frequently if required to do so.

The Nominating Committee currently comprised the following:

Directors Position

Loh Eng Wee ChairmanDato’ Rosely bin Samsuri MemberFoo Kee Fatt Member

2.2 Develop, Maintain and Review Criteria for Recruitment and Annual Assessment of Directors

The Nominating Committee operates within defined terms of reference that has been drawn up in accordance with the best practices prescribed by the Code.

The Nominating Committee is empowered by the Board to amongst others, identify and recommend to the Board suitable candidates for appointment to the Board and Board Committees, re-election and re-appointment of Directors, review the independence of Directors as well as the Board structure, size and composition and determining the impact of the number on its effectiveness as well as considering the Board’s succession planning and training programmes.

The Nominating Committee also systematically assesses the effectiveness of the Board, the Committees of the Board and contribution of each individual Director and reviews the required mix of skills, experience and other qualities, including core competencies of the members of the Board on annual basis. The assessment also considered the qualifications, contribution and performance of Directors and Chief Financial Officer (“CFO”) in meeting the needs of the Group based on the criteria - competency, character, time commitment, integrity and experience as set out under paragraph 2.20A of the Listing Requirements.

The evaluation process is led by the Nominating Committee Chairperson and supported by the Company Secretary. The Directors complete a questionnaire regarding effectiveness of the Board and its Board Committees. This process includes a peer review where Director assess their own and also the CFO performance. The assessment and comments by all Directors are summarised and discussed at the Nominating Committee and reported at a Board Meeting by Nominating Committee Chairperson. All assessments and evaluations carried out are properly documented.

The Board is committed to ensuring diversity and inclusiveness in its composition and deliberations. The present Board composition reflects the broad range of experience, skills and expertise necessary for the success of the Group and the importance of independent judgment and opinion at Board level.

The Board has not established a specific policy on setting targets for women candidates. The Nominating Committee will however continue to ensure that suitable women candidates are sought and considered as part of the recruitment exercise. The Board believes there is no need to adopt a formal diversity policy as the Company is committed to provide fair and equal opportunities and nurturing diversity within the Group. Currently, the Board has a female Executive Director, Ms. Tan Lu Eng on the Board.



Principle 2: Strengthen the Composition (Cont’d)

2.2 Develop, Maintain and Review Criteria for Recruitment and Annual Assessment of Directors (Cont’d)

The activities of the Nominating Committee during the financial year under review included the followings:

• Reviewed the revised Terms of Reference of Nominating Committee to reflect recommendations of the MCCG 2012;

• Reviewed the required mix of skills, experience and other qualities of the Board, including core competencies, which Non-Executive Directors should bring to the Board;

• Assessed the effectiveness of the Board as a whole, the Committees of the Board and the contribution of each individual Director including his/her time commitment, character, experience and integrity;

• Assessed the effectiveness and performance of the Executive Directors;

• Assessed the independent of its independent directors;

• Assessed the size of the Board with a view to determine the impact of the number upon the Board’s effectiveness and recommend it to the Board;

• Reviewed the character, experience, integrity, competence and time to effectively discharge the roles of Chief Financial Officer;

• Recommendation for the re-election of the Directors who were retiring and seeking for re-election at the forthcoming AGM of the Company;

• Reviewed the Directors’ Induction Program; and

• Recommended for the re-designation of a Non-Independent Non-Executive Director to INED.

The Nominating Committee met three times during the financial year under review. All recommendations are subject to the approval of the Board.

2.3 Remuneration Committee

The Remuneration Committee consists of three members and all are INEDs.

The Remuneration Committee currently comprised the following:

Directors Position

Loh Eng Wee ChairmanDato’ Rosely bin Samsuri MemberFoo Kee Fatt Member

All deliberations of the Remuneration Committee are properly documented in the minutes of Committee meetings and recommendations are reported by the Remuneration Committee Chairman at Board meetings.

The Remuneration Committee is authorised, inter-alia, to recommend to the Board the remuneration packages for the Executive Directors of the Company and set up a broad policy or framework for all elements of remuneration for the Directors so as to ensure that the Company is able to attract and retain its Executive Directors to run the Company successfully.

The components of Non-Executive Directors’ remuneration are linked to their experience and level of responsibilities undertaken by them. Non-Executive Directors are paid fixed annual fees as members of the Board and Board Committees. The Directors’ fees are approved annually by the shareholders of the Company.

The aggregate remuneration, with categorisation into appropriate components and distinguishing between Executive and Non-Executive Directors, paid or payable to all Directors of the Company for the financial year ended 31 December 2014 is as follows:

Fees(RM)

Allowance (RM)

Salaries(RM)

EPF & SOCSO

(RM)BIK

(RM)Total(RM)

Executive Directors – 57,000 2,440,100 306,575 106,650 2,910,325Non-Executive Directors 90,000 51,000 – – – 141,000

Total 90,000 108,000 2,440,100 306,575 106,650 3,051,325



Principle 2: Strengthen the Composition (Cont’d)

2.3 Remuneration Committee (Cont’d)

The number of Directors whose total remuneration falls within the following bands is as follows:

Range of Remuneration Executive Directors Non-Executive Directors

RM100,000 & Below 1 3

RM101,000 to RM500,000 5 –

RM1,300,000 to RM1,400,000 1 –

Total 7 3

The Board has opted not to disclose each Director’s remuneration as it considers such information sensitive.

The Board has established a Remuneration Policy to facilitate the Remuneration Committee to consider and recommend to the Board for decision the remuneration package of the Executive Directors. Recently, the Board, on the recommendation of the Remuneration Committee, approved the compensation structure, inclusive of quantitative key performance indicators, of the Board for the Executive Directors.

Principle 3: Reinforce Independence

3.1 Annual Assessment of Independent Directors

The Board, through the Nominating Committee, assesses the independence of the INEDs annually. Based on the assessment carried out for financial year ended 31 December 2014, the Board is generally satisfied with the level of independence demonstrated by the INEDs and their ability to act in the best interests of the Company in decision-making.

3.2 Tenure of Independent Directors

The Board’s view on independence is in accordance with the definition of an independent director under para 1.01 and Practice Note 13 of MMLR of Bursa Securities. The present INEDs fulfil the key criteria of appointment as they are not members of management, free of any relationship that could interfere with exercise of independent judgment or ability to act in the best interest of the Company. None of the Independent Directors’ tenure has exceeded a cumulative term of 9 years.

Going forward, the Nominating Committee will review and recommend to the Board, as part of the Charter, the term of tenure of Independent Non-Executive Directors of the Company.

3.3 Shareholders’ Approval for Retaining INEDs

The Company does not have term limits for all Directors presently as the Board is of the opinion that continued contribution by Directors provides benefit to the Board and the Group as a whole. The MCCG 2012 provides a limit of a cumulative term of 9 years on the tenure of an Independent Director. However, an INED may continue to serve the Board upon reaching the 9-year limit subject to re-designation as a Non-INED. In the event the Board intends to retain the said INED as independent after the latter has served a cumulative term of 9 years, the Board must justify the decision and seek shareholders’ approval at general meeting. In justifying the decision, the Nominating Committee is entrusted to assess the candidate’s suitability to continue as an INED based on the criteria on independence.

3.4 Separation of Positions of Chairman and President

The role of the Chairman and President are currently combined. The Board is mindful of the combined roles but is comfortable that there is no undue risk involved as the Board will be informed and consulted before the Chairman/President makes any significant decision. Further, all major matters and issues are referred to the Board for consideration and approval. The roles and contributions of INEDs also provide an element of objectivity, independent judgement and check balance on the Board.

The Board is of the opinion that it is not necessary to have a majority INEDs when the Chairman is in an executive position in view of the facts that the Directors are professionals and seasoned business leaders who exercise objectivity and independence of opinions in arriving at their decisions and that Board deliberations are collegial and inclusive with ultimate aim of objective review of priorities and proposals. Chairman solicits the opinion of fellow Board members before seeking consensus on decisions.



Principle 3: Reinforce Independence (Cont’d)

3.5 Composition of the Board

The Board comprised 7 Directors as at the date of this Annual Report as follows:

Executive Chairman / President Dato’ Siah Kok Poay(His alternate, Siah Chin Hoo)

Executive Directors Siah Lee Beng(His alternate, Siah Chin Soon)Tan Lu EngSiah Chin Pin

Independent Non-Executive Directors Dato’ Rosely bin SamsuriLoh Eng WeeFoo Kee Fatt

On 6 November 2014, Dato’ Rosely bin Samsuri was re-designated as INED from Non-INED. Brief profiles of the Board members are presented under “Profile of Directors” section in this Annual Report.

The current Board has a balanced mix of skills, relevant expertise and professional experience. The Directors, with their different background and specialisations, collectively bring with them a wide range of experience and expertise in areas such as finance, corporate affairs, legal, general management, marketing and operations.

The present Board composition is in compliance with Chapter 15.02 of the MMLR of Bursa Securities as one third of its members are Independent Directors.

Principle 4: Foster Commitment

4.1 Time Commitment

The Board normally meets at least 4 times annually on quarterly intervals. Under exceptional circumstances owing to urgent and important issues at hand, additional meetings are convened between the scheduled meetings with sufficient notice.

During the year under review, the Board held 5 meetings to deliberate and decide on various issues. Board and Board Committee papers are prepared by the Management which provides relevant facts and analysis for the convenience of Directors. The major deliberation, in terms of issues discussed and the conclusion arrived by the Board during the meetings, are recorded by the Company Secretary with the minutes signed by the Chairman of the meetings.

Detail of attendance of each Director on the Board and respective Board Committees of TattGiap during the year under review is as follows:

Directors Board Audit CommitteeNominatingCommittee

RemunerationCommittee

Dato’ Siah Kok Poay 5/5 * * *Siah Lee Beng 5/5 * * *Tan Lu Eng 4/5 * * *Dato’ Rosely bin Samsuri 4/5 4/5 2/3 2/2Loh Eng Wee 5/5 5/5 3/3 2/2Foo Kee Fatt 5/5 5/5 3/3 2/2Siah Chin Pin 5/5 * * *

Notes:

All Board members met the minimum percentage required for Board meeting attendance as prescribed under MMLR of Bursa Securities during the period under review.

* Not applicable

The Company Secretary will convene, after consultation with the Chairman/President, special Board meetings to discuss any urgent issues. Agenda for Board meetings are set by the Company Secretary in consultation with the Chairman/President, as appropriate. In between meetings, whenever required, decisions are taken by way of Directors’ Circular Resolutions.



Principle 4: Foster Commitment (Cont’d)

4.1 Time Commitment (Cont’d)

In the absence of a formal procedure, acceptance of new Directorship on other listed entities and time commitment, a Director accepting new directorships will notify the Board ahead of his new appointment. Going forward, the Board would obtain from its directors their commitment to devote sufficient time to carry out their responsibilities as directors.

The Nomination Committee has proposed induction guide for new directors and has been adopted during the financial year. New Directors are briefed on Group operations, Board activities and protocol including frequency of meetings. Operational site visits are organised for the new Directors to have a better understanding of the Group’s operations.

4.2 Directors’ Training

The Board is cognisant of the need to ensure that its members undergo continuous trainings to enhance their knowledge, expertise and professionalism in discharging their duties.

Pursuant to para 15.08(2) and Appendix 9C (Part A, para 28) of MMLR, the Directors had attended the following training programs and seminars during year under review:

Date Training program

20.01.2014 The 2014 Budget Seminar 24.01.2014 Mergers & Acquisitions : The Process and Making Mergers Succeed18.03.2014 Preparing For GST In Malaysia21.03.2014 2014 Continuous Director Education07.04.2014 Goods And Services Tax (GST)26-28.05.2014 2014 SEAISI Conference & Exhibition : Strengthening the ASEAN Iron and Steel Industry for

the next decade 02.06.2014 Goods And Services Tax (GST) Training Course16.10.2014 11th MISIF Conference On Status & Outlook Of The Malaysian Iron & Steel Industry20-21.10.2014 Updates of the 2013 & 2014 MFRS-Compliant MFRs-Preparing MFRS-Compliant Financial

Statements in 2014 & thereafter27.10.2014 Seminar Percukaian Kebangsaan 2014

As the Board members have attended a diverse range of training programs during the year to enhance their knowledge and skills in specific areas, the Nominating Committee is of the opinion that the Directors have assessed and addressed their own training needs.

In addition to formal training programs outlined above, Board members have visited the Group’s operational sites to have a better understanding of the Group’s business operations. The Company has also provided internal briefings to the Directors on key corporate governance developments and salient changes to the MMLR.

As at to-date, all Directors have complied with the provision of MMLR in relation to Mandatory Accreditation Program.

Principle 5: Uphold Integrity in Financial Reporting

5.1 Compliance with Applicable Financial Reporting Standards

The Board is committed to provide and present a balanced, clear and comprehensive assessment of the financial performance and prospects of TattGiap Group at end of financial year primarily through audited financial statements, quarterly reports and the Annual Report.

The presence of the Audit Committee is to assist the Board in discharging its duties on financial reporting by overseeing the processes for production of the financial data, reviewing and monitoring the integrity of the financial reports and the internal controls of the Company. The composition and terms of reference of the Audit Committee together with its report are presented under “Audit Committee Report” in this Annual Report.

In consultation with the External Auditors, the Audit Committee reviews the appropriateness of the Group’s accounting policies and the changes to these policies as well as ensures these financial statements comply with accounting standards and regulatory requirements.



Principle 5: Uphold Integrity in Financial Reporting (Cont’d)

5.1 Compliance with Applicable Financial Reporting Standards (Cont’d)

Directors’ Responsibility Statement

The Board is responsible to ensure that the financial statements gives a true and fair view of the state of affairs of the Company and the Group at the end of the financial period and the results and cash flows of the Company and the Group for the financial period.

In the preparation of the financial statements, the Directors have ensured that all the applicable approved accounting standards in Malaysia and the provision of the Companies Act 1965 have been applied consistently. In addition, reasonable prudent judgements and estimates are adopted by the Directors in the financial statements reporting.

The Directors’ overall responsibilities also include taking such steps as are reasonably open to them to safeguard the assets of the Group and for the implementation and continued operations of internal control systems for the prevention of fraud and other irregularities.

5.2 Assessment of Suitability and Independence of External Auditors by the Audit Committee

The Board has established, through the Audit Committee, a close and transparent relationship with the External Auditors in seeking professional advice and ensuring compliance with relevant accounting standards. During the financial year ended 31 December 2014, the Audit Committee held two (2) dialogue sessions with the External Auditors in the absence of the Executive Directors and Management.

The Audit Committee is empowered by the Board to review all issues in relation to appointment and re-appointment, resignation or dismissal of External Auditors. The External Auditors have confirmed, to the Audit Committee that, they are, and have been independent throughout the conduct of audit engagement in accordance with terms of relevant professional and regulatory requirements. The Audit Committee undertook an assessment of suitability and independence of the External Auditors and was satisfied with the technical competency and independence of the External Auditors.

Going forward, the Audit Committee will establish procedures to assess the suitability and independence of the External Auditors as well as policy governing the circumstance under which contracts for provision of non-audit services could be entered into by the External Auditors.

Principle 6: Recognise and Manage Risks

6.1 Sound Framework to Manage Risks

In general, all major projects, investment and capital expenditure initiatives are presented to the Board for consideration and approval. An overview of the state of internal controls and risk management within the Group is spelt out in this Annual Report under Statement on Internal Control.

6.2 Internal Audit Function

The Board has established internal control procedures and policies for its operations and monitors, through the Internal Auditors, to ensure that such internal control system is implemented and carried out effectively by the Management. The internal audit function is currently outsourced to an independent professional consulting firm.

The Internal Auditors undertakes regular review of identified operational areas annually to assess the effectiveness of internal controls and risk management. During the review of Internal Audit Reports, the Audit Committee is made aware of the operational risks affecting the Group’s operations and all follow through mitigating actions thereof.

The Statement on Risk Management and Internal Control, which provided an overview of the state of internal control and risk management within the Group, is included in this Annual Report.

Principle 7: Ensure Timely and High Quality Disclosure

7.1 Corporate Disclosure Policy

The Board acknowledges the importance of ensuring prompt dissemination of information to shareholders and regulatory bodies with the intention of giving as clear and complete information of the Group’s position and financial performance as possible within the bounds of practicality and legal and regulatory framework governing release of material and price sensitive information. The Board peruses through and approve all announcements prior to release of the same to Bursa Securities. At the same time, the Board will take reasonable steps to ensure that all who invest in the Company’s securities enjoy equal access to such information to avoid an individual or selective disclosure.



Principle 7: Ensure Timely and High Quality Disclosure (Cont’d)

7.1 Corporate Disclosure Policy (Cont’d)

In line with increased investor awareness for greater accountability and transparency, the Board has formalised a corporate disclosure policy and procedure which is in line with requirements of MMLR to enable comprehensive, timely and accurate disclosures on the Group to the regulators, shareholders and other stakeholders.

7.2 Leverage on Information Technology for Effective Dissemination of Information

The Company’s website, www.tattgiap.com.my, provides an avenue for comprehensive information dissemination with dedicated sections on corporate information including announcements to Bursa Securities, financial information, governance, press releases and news and events related to the Group. Any queries or concerns regarding the Group may be directed to the email address: [email protected].

As the Group release all material information publicly through Bursa Securities, shareholders and the public in general may also obtain announcements and financial results of the Company from Bursa Securities’ website at www.bursamalaysia.com.

Principle 8: Strengthen Relationship with Shareholders

8.1 Shareholders Participation at General Meetings

The Annual General Meeting (“AGM”) is the principal forum for dialogue and interaction with individual shareholders and investors where they may seek clarifications on the Group’s businesses, performance and prospects. The notice of the AGM and the Annual Reports are sent to shareholders at least 21 days before the date of the meeting. The notice of the AGM is also published in a national newspaper and released through Bursa Securities for public dissemination. Members of the Board are present at the AGM to answer questions raised. All suggestions and comments put forth by shareholders will be noted by the Board for consideration.

The Board will consider adopting electronic voting, within the bound of practicability, in the future to facilitate greater shareholder participation at general meetings.

8.2 Encourage Poll Voting

At general meetings, shareholders are informed that voting will be by show of hands of every member or representative or proxy of a member present, unless a poll is duly demanded, before the meeting proceeds to transact the businesses set forth in the notice calling for the meeting.

8.3 Effective Communication and Proactive Engagement

The Board acknowledges the need for shareholders to be kept informed of all material business matters affecting the Group. Shareholders are provided with an overview of the Group’s performance and operations through timely release of financial results on yearly and quarterly basis as well as various other announcements.

The general meetings also provide a useful forum for shareholders to engage directly with the Board and Senior Management. The shareholders are at liberty to raise questions or seek clarification on the agenda of the meeting from the Board and the Senior Management.

Press conferences are also held to brief members of the media on key events involving the Group. To promote wider publicity and dissemination of public information, the Group also issues press releases to the media on significant corporate developments and business initiatives to keep the investment community and shareholders updated on the progress and development of the Group.

Compliance with the Principles and Recommendations of the Code

For the year ended 31 December 2014 and until to-date, the Group has complied substantially with the Principles and Recommendations of the Code insofar as applicable and described herein.

This statement is issued in accordance with a resolution of the Directors dated 27 April 2015.


ADDITIONAL COMPLIANCE INFORMATION

Utilisation of Proceeds

This was not applicable during the financial year under review.

Share Buybacks

During the financial year ended 31 December 2014, there was no share buyback made by the Company.

Options or Convertible Securities

There was no issue or exercise of options or convertible securities during the financial year under review apart from the conversation of Irredeemable Convertible Unsecured Loan Stocks as detailed on Note 15 to the Audited Financial Statements.

Depository Receipt Programme

During the financial year ended 31 December 2014, the Company did not sponsor any depository receipt programme.

Imposition of Sanctions / Penalties

The Company is not aware of any sanction and penalty imposed on the Company and its subsidiaries, directors or management by the relevant regulatory bodies that have not been made public.

Non-audit Fees

During the financial year ended 31 December 2014, non-audit fees amounting to RM 48,100.00 were paid to the Group’s external auditors and firms or companies affiliated to the auditors as professional fees paid to them for tax compliance services.

Variation in Results

There was no material variances between audited results for the financial year ended 31 December 2014 and the unaudited results released for the financial year ended 31 December 2014.

Profit Guarantee

There was no profit guarantee received by the Company during the financial year ended 31 December 2014.

Material Contracts

During the financial year ended 31 December 2014, there was no material contract entered into by the Company or its subsidiaries, involving the interest of directors and/or substantial shareholders.


CORPORATE SOCIAL RESPONSIBILITY STATEMENT

As a responsible and caring corporate citizen, the Group strives for the betterment of society by giving back to the community and environment where it operates through social welfare and community development activities.

TGGB has organised a Blood Donation Campaign on 23 October 2014 in close cooperation with General Hospital Seberang Jaya. Over 50 employees had participated for distribution to all general hospitals in Penang.

Apart from the above, the Group continued to make financial contributions to support the activities of the following organisations and social events during the year under review:

• Jawatan Kuasa Pembinaan SJKC Aik Keow, Penang;

• SJK(C) Beng Teik (Pusat), Penang;

• Persatuan Alumni Chung Ling S.P.;

• Persatuan Alumni Chung Ling Pulau Pinang;

• SMJK Chung Ling B’worth;

• SJK(C) Hun Bin, Tanjung Tokong, Penang and

• Lions Club Of Georgetown Central, Penang


STATEMENT ON RISK MANAGEMENT& INTERNAL CONTROL

Pursuant to Paragraph 15.26(b) MMLR of Bursa Securities, the Board of Directors of TattGiap is pleased to provide the following statement on the state of internal control of the Group, which has been prepared in accordance with the Statement on Risk Management and Internal Control: Guidance for Directors of Public Listed Companies adopted by Bursa Securities.

RESPONSIBILITY FOR RISK AND INTERNAL CONTROL

The Board of Directors (“the Board”) recognizes the importance of risk management and risk-based internal audit to establish and maintain a sound system of internal control. The Board affirms its overall responsibility for the Group’s systems of internal control and for reviewing the adequacy and integrity of those systems. However, because of the limitations that are inherent in any systems of internal control, these systems are designed to manage rather than eliminate the risk of failure to achieve business objectives and therefore, only provides reasonable but not absolute assurance against the occurrence of any material misstatement of financial information or losses.

The Board has established an ongoing process for identifying, evaluating and managing the significant risks faced, or potentially exposed to, by the Group in pursuing its business objectives. This process has been in place throughout the financial year and up to the date of approval of the annual report.

RISK MANAGEMENT

The Board and management endeavour to identify significant risks in the processes and activities of the Group, including new major proposed transactions and changes in nature of activities and/or operating environment which may entail different risks, and put in place the appropriate controls to manage and maintain those risks to a level acceptable to the Board.

As part of risk identification process, the Board carries out a high level risk assessment review annually. Management also present quarterly performance reports of key subsidiaries during Board meetings. These reports contained updates such as financial and operational performance and findings, changes in nature of activities and/or operating environment. The Board responds to these issues and risks identified during the Board meetings and subsequently put in place appropriate response strategies and controls until these risks are managed to a level acceptable to the Board.

INTERNAL AUDIT

The Board acknowledges the importance of internal audit function and has engaged the services of an independent professional company during the financial year to carry out internal audits of the Group to provide the assurance it requires regarding the effectiveness as well as the adequacy and integrity of the Group’s system of internal control.

The internal audit adopts a risk-based approach in developing its audit plan which addresses the core auditable areas of the Group based on their risk profiles. A risk based annual audit plan setting out the audit frequency, areas of audit focus and scope of work is approved by the Audit Committee every year. Scheduled internal audits are carried out by the internal auditors based on the audit plan presented to and approved by the Audit Committee. The audit focuses on areas with higher risk to ensure that these risks are mitigated and properly managed.

The Audit Committee reviews the risk management and internal control issues identified by the Internal Auditors, the external auditors and management and evaluates the adequacy and effectiveness of the risk management and internal control system.


STATEMENT ON RISK MANAGEMENT& INTERNAL CONTROL (Cont’d)

KEY RISK MANAGEMENT AND INTERNAL CONTROL PROCESS

Apart from internal audit, the Group has also put in place the following key elements of risk management and internal control:

• An organization structure with clearly-defined scopes of responsibilities, accountability, and appropriate levels of delegated authority;

• A set of documented internal policies and procedures, as the Group is ISO 2001:2008 certified, which is subjected to reviews and improvements by management.

• Information being provided to management, covering financial and operational performance, for effective monitoring and decision making;

• Monthly monitoring of revenue and gross profit against budget, with major variances being followed up and management action taken, where necessary;

• Quarterly reports by the Management to the Board on significant operational matters and other issues that affect the Group; and

• Involvement by the Executive Directors and senior management in key operational matters.

The Board has also received assurance from the President and Group Chief Financial Officer that the Group’s risk management and internal control system is operating adequately and effectively, in all material aspects based on the risk management and internal control system adopted.

This Statement on Risk Management and Internal Control does not cover the associates namely, Nippon Egalv Steel Sdn. Bhd. and Nisshin Metal Services Sdn. Bhd. in which the Company held only 27.12% and 25% equity interest respectively.

CONCLUSIONS

The Board is of the view that the risk management and internal control system put in place during the year and up to the date of approval of this statement is sound and adequate to safeguard shareholders’ investment, other stakeholders as well as the Group’s assets. The Board remains committed to strengthen the risk management and internal control environment of the Group.

This Statement was issued in accordance with a resolution of Directors dated 27 April 2015.


AUDIT COMMITTEE REPORT

The Board is pleased to present the Audit Committee Report for the financial year ended 31 December 2014 (“FY14”).

Membership

The Audit Committee (the “Committee”) currently comprises the following Directors:

Chairman : Foo Kee Fatt Independent Non-Executive Director

Members : Loh Eng Wee

Dato’ Rosely bin Samsuri

Independent Non-Executive Director

Independent Non-Executive Director

Following the full divestment of Perbadanan Nasional Berhad’s interest in the Company, Dato’ Rosely bin Samsuri was re-designated as Independent Non-Executive Director of the Company on 6 November 2014.

Terms of Reference

The Directors have approved and adopted the following Terms of Reference, which set out the roles and responsibilities of the Audit Committee.

1. Membership

The Committee shall be appointed by the Board from amongst the Directors of the Company. It shall consist of no less than three (3) members and all shall be Non-Executive Directors with a majority of whom must be independent.

At least one member must fulfil the following criteria:

• 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 of working experience and

(a) He must have passed the examination specified in Part I of the 1st Schedule to the Accountants Act, 1967 ; or

(b) 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

• Fulfils such other requirements as may be prescribed or approved by Bursa Malaysia Securities Berhad (“Bursa Securities”) from time to time.

The Chairman of the Committee shall be an Independent Non-Executive Director. No Alternate Director of the Board shall be appointed as a member of the Committee.

In the event of any vacancy in the Committee which results in the number of members to be reduced to below three (3), the Board shall fill the vacancy within three (3) months of the event.

2. Meeting Procedures

The Committee is to meet at least four (4) times a year or more frequently as the need arises or if so requested by any member of the Committee or by the Chairman of the Board.

In order to form a quorum (subject to a minimum of two (2)) for the meeting, the majority of the members present must be independent Non-Executive Directors. In the absence of the Chairman, the members present shall elect a Chairman from amongst them.

The Group Chief Financial Officer and Internal Auditors will usually attend the meeting and the presence of External Auditors may be requested if required. The Committee may, as and when necessary, invite other Board members and senior management members to attend the meeting.

The Committee shall meet with the External Auditors without the presence of executive Board members as and when required.

The Committee shall record its conclusion on issues discussed during meetings and report to the Board at the quarterly Board meetings. The minutes shall be circulated to members of the Board.


AUDIT COMMITTEE REPORT (Cont’d)

3. Authority

In fulfilling its duties, the Committee is granted the authority to:

(a) Investigate any matter within its term of reference;

(b) Have the resources which are required to perform its duties;

(c) Have full and unrestricted access to information pertaining to the Company and Group;

(d) Directly communicate with the External Auditors and person(s) carrying out the internal audit function or activity (if any);

(e) Obtain independent professional advice, at the expense of the Company wherever necessary and reasonable and in accordance with a procedure to be determined by the Board of Directors, in order to perform its duties;

(f) Be able to convene meetings with the External Auditors, the Internal Auditors or both (without the presence of executive Board members) as and whenever deemed necessary;

(g) The Chairman of the Audit Committee shall engage on a continuous basis with senior management, such as the Chairman or Group President, the Group Chief Financial Officer, the Internal Auditors and the External Auditors in order to be kept informed of matters affecting the Group;

(h) Report to the relevant authorities on any unresolved issues which result in breaching of any regulatory requirement.

4. Secretary

The Company Secretary shall be the Secretary of the Committee.

5. Functions and Responsibilities

The functions and responsibilities of the Committee encompass the followings:

(a) External Audit• Review the audit scope, nature and plan with External Auditors, including any changes to the planned audit

scope and ensure co-ordination where more than one firm of auditors is involved;

• Review external audit reports to ensure that prompt corrective actions are taken to address issues (including any deficiencies in internal control system) highlighted;

• Review the assistance and cooperation rendered by the Group’s employees to External Auditors;

• To consider the appointment, suitability and independence of the External Auditor, the services and audit fee (to ensure balance between objectivity and value for money) and any questions of resignation or dismissal, and the letter of resignation from External Auditors, if applicable;

• To discuss the contracts for the provision of non-audit services which can be entered into and procedures that must be followed by External Auditors. The contracts that cannot be entered into should include:- Management consulting;- Strategic decision;- Internal Audit; and- Policy and standard operating procedures documentation.

(b) Internal Audit• Review the adequacy of the scope, functions, competency and resources of the internal audit functions and

whether it has necessary authority to carry out its work;

• Review the internal audit programmes and results of the internal audit process and where necessary, ensure that appropriate action is taken by management on the recommendations of the internal audit function;

• Approve any appointments or termination of Internal Auditors and provide the resigning internal auditor an opportunity to submit his reasons for resigning;

• Review the performance of the Internal Auditors on an annual basis; and

• Review the adequacy and effectiveness of internal control systems, including management information system and the Internal Auditors’ and or External Auditors’ assessment of these systems.



5. Functions and Responsibilities (Cont’d)

(c) Financial Reporting and Related Party Transaction• Review the quarterly and year-end financial statements of the Company, focusing particularly on:

- any changes in accounting policies and practices;- significant adjustments arising from the audit;- the going concern assumption;- integrity of financial statements; and - compliance with accounting standards and other legal requirements

• Review major audit findings (including status of previous audit recommendations) and management’s response with management, External Auditors and Internal Auditors; and

• Review 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.

(d) Risk Assessment

• To evaluate risk assessment processes and measures in place are adequate to minimise any exposures to risks including frauds;

• To review and evaluate with both external and internal auditors the management procedures to ensure compliance with laws, regulations, policies and codes of practice or conduct; and

• To monitor the Group’s operations via internal audit reports to ascertain the efficiency and effectiveness of the Group’s operations.

(e) Others• Review the allocation of options pursuant to any Employees Share Option Scheme;

• Direct and supervise, as appropriate, any necessary investigations and review all reports on any major irregularities; and

• Undertake any responsibilities as authorised by the Board.

6. Reporting

The Chairman shall, at the conclusion of each meeting, report to the Board on activities that it had undertaken and key recommendations for the Board’s consideration and approval as well as follow-up status on any key recommendations from previous internal audits.

Where the Committee is of the view that a matter reported by it to the Board has not been satisfactorily resolved resulting in a breach of Bursa Securities’ Listing Requirements, the Committee shall promptly report such matter to Bursa Securities.

Audit Committee Meetings

During the financial year ended 31 December 2014, five (5) Audit Committee meetings were held and details of attendance of the Committee members are as follows:

No. Directors Number of meetings attended

1. Foo Kee Fatt 5/5

2. Dato’ Rosely bin Samsuri 4/5

3. Loh Eng Wee 5/5

Summary of Activities

Below is a summary of activities carried out by the Audit Committee during the financial year:

(a) Reviewed the Group’s quarterly unaudited financial results and annual audited financial statements as well as appropriate announcements to Bursa Securities before recommending to the Board’s approval.

(b) Reviewed the External Auditors’ scope of work and audit plan prior to the commencement of the audit for the financial year 2014.

(c) Reviewed with the External Auditors the results of the audit of the financial statements, audit reports, management letter and the response from the management.

(d) Reviewed the performance and independence of the External Auditors, considered and recommended their re-appointment to the Board.



6. Reporting (Cont’d) Summary of Activities (Cont’d)

(e) Reviewed and recommended the appointment of a professional and independent firm of consultants to manage internal audit function.

(f) Reviewed and deliberated on the findings and reports from the Internal Auditors which highlighted the audit observations, recommendations and management’s response. Discussed with management on the actions taken to improve the internal controls based on improvement opportunities identified in the internal audit reports.

(g) Reviewed the recurrent related party transactions of revenue and trading nature and other related party transactions entered into by the Group.

(h) Reviewed and approved the risk management framework and assessed the adequacy of the internal control system.

(i) Reviewed the Audit Committee report and Statement on Risk Management and Internal Control for inclusion in the Annual Report.

(j) Reviewed the Annual Group Budget for the year 2014.

(k) Met twice with the External Auditors without the presence of Executive Directors and management staff to discuss issues of concern to the auditors.

Internal Audit

The Group outsourced the internal audit function to professional and consulting firm, to provide the Board with much of the assurance it requires regarding the adequacy and integrity of the system of internal control within the Group. In early 2014, the committee deliberated upon and changed the outsourced internal audit services provider.

The internal audit function is independent of the activities or operations of the Group. The principal role of the internal audit function is to undertake independent, regular and systematic reviews of the system of internal control to provide reasonable assurance that such system continues to operate satisfactorily and effectively. It is the responsibility of the internal audit function to provide the Audit Committee with independent and objective reports on the state of internal control of the various operating units within the Group.

During the financial year ended 31 December 2014, the internal audit function carried out 4 cycles of internal audit to test the effectiveness of the internal control system of the Group.

Further information regarding the Internal Audit function is detailed under Statement on Risk Management and Internal Control in this Annual Report.

The total cost incurred for the internal audit function of the Group for the financial year ended 31 December 2014 was approximately RM30,000.


DIRECTORS’ REPORTFOR THE YEAR ENDED 31 DECEMBER 2014

The Directors have pleasure in submitting their report and the audited financial statements of the Group and of the Company for the financial year ended 31 December 2014.

Principal activities

The Company is principally engaged in investment holding whilst the principal activities of the subsidiaries are as stated in Note 6 to the financial statements.

There has been no significant change in the nature of these activities during the financial year.

Results

Group Company

RM RM

Loss for the year attributable to :

Owners of the Company (16,662,947) (14,558,612)

Non-controlling interests (2,823,296) –

(19,486,243) (14,558,612)

Reserves and provisions

There were no material transfers to or from reserves and provisions during the financial year except as disclosed in the financial statements.

Dividend

No dividend was paid since the end of the previous financial year and the Directors do not recommend any dividend to be paid for the financial year under review.

Directors of the Company

Directors who served since the date of the last report are :

Dato’ Siah Kok PoaySiah Lee BengTan Lu EngSiah Chin PinFoo Kee FattDato’ Rosely bin SamsuriLoh Eng WeeSiah Chin Soon (alternate to Siah Lee Beng)Siah Chin Hoo (alternate to Dato’ Siah Kok Poay)


DIRECTORS’ REPORTFOR THE YEAR ENDED 31 DECEMBER 2014 (Cont’d)

Directors’ interests in shares

The interests and deemed interests in the ordinary shares and Irredeemable Convertible Unsecured Loan Stocks (“ICULS”) of the Company and of its related companies (other than wholly-owned subsidiaries) of those who were Directors at year end (including the interests of the spouses and/or children of the Directors who themselves are not Directors of the Company) as recorded in the Register of Directors’ Shareholdings are as follows :

Number of ordinary shares of RM0.50 each

Balance at1.1.2014 Converted (Sold)

Balance at 31.12.2014

Interests in the Company :

Direct interests

Dato’ Siah Kok Poay - own 96 – – 96

Siah Lee Beng - others * 90,000 – – 90,000

Tan Lu Eng - own 52 – – 52

Siah Chin Soon - own 100,000 – – 100,000

Indirect interests

Dato’ Siah Kok Poay - own 48,039,053 2,024,801 – 50,063,854

Siah Lee Beng - own 48,039,001 2,024,801 – 50,063,802

Number of RM1 nominal value of 5-year 2% Irredeemable Convertible Unsecured Loan Stocks (“ICULS”)

Balance at1.1.2014 Bought (Converted)

Balance at 31.12.2014

Interests in the Company :

Direct interests

Siah Lee Beng - others* 100 – – 100

Siah Chin Pin 100 – – 100

Siah Chin Soon 100 – – 100

Siah Chin Hoo 100 – – 100

Indirect interests

Dato’ Siah Kok Poay - own 18,507,760 – (1,174,385) 17,333,375

Siah Lee Beng - own 18,507,760 – (1,174,385) 17,333,375

By virtue of their interests in the shares of the Company, Dato’ Siah Kok Poay and Mr. Siah Lee Beng are also deemed interested in the shares of the subsidiaries to the extent that Tatt Giap Group Berhad has an interest.

None of the other Directors holding office at 31 December 2014 had any interest in the ordinary shares and ICULS of the Company and of its related companies during the financial year.

* Being shares and ICULS held in the name of the spouse or children and are treated as the interest of the Director in accordance with Section 134(12)(c) of the Companies Act, 1965.



Directors’ benefits

Since the end of the previous financial year, no Director of the Company has received nor become entitled to receive any benefit (other than a benefit included in the aggregate amount of emoluments received or due and receivable by Directors as shown in the financial statements of the Company and its related companies) by reason of a contract made by the Company or a related company 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 other than as disclosed in Note 26 to the financial statements.

There were no arrangements during and at the end of the financial year which had the object of enabling Directors of the Company to acquire benefits by means of the acquisition of shares in or debentures of the Company or any other body corporate other than through the conversion of the ICULS of the Company.

Issue of shares and debentures

On 31 December 2014, the Company increased its issued and paid up share capital from RM51,918,000 comprising 103,836,000 ordinary shares of RM0.50 each to RM60,988,849 comprising 121,977,698 ordinary shares of RM0.50 each as a result of the conversion of 10,522,185 RM1.00 nominal value of 5-year 2% ICULS into 18,141,698 ordinary shares of RM0.50 each on the basis of one RM1.00 nominal value of ICULS for approximately 1.724 ordinary shares of RM0.50 each at an issue price of RM0.58 per share.

There were no other changes in the share capital of the Company and no debentures were in issue during the financial year.

Options granted over unissued shares

No options were granted to any person to take up unissued shares of the Company during the financial year.

Irredeemable convertible unsecured loan stocks (“ICULS”)

On 1 July 2010, the Company issued RM30,800,000 RM1.00 nominal value of 5-year 2% ICULS at 100% of its nominal value as part of the purchase consideration for the acquisition of Tatt Giap Hardware Sdn. Bhd.

The salient features of the ICULS are disclosed in Note 25 to the financial statements.

As at the end of the financial year, the Company has the following outstanding number of ICULS :

Expiry date

Number of ICULS

outstanding as at 31.12.2014

5-year 2% ICULS 30.6.2015 19,212,935

Other statutory information

Before the financial statements of the Group and of the Company were made out, the Directors took reasonable steps to ascertain that :

i) all known bad debts have been written off and adequate provision made for doubtful debts, and

ii) any current assets which were unlikely to be realised in the ordinary course of business have been written down to an amount which they might be expected so to realise.



Other statutory information (cont’d)

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

i) that would render the amount written off for bad debts or the amount of the provision for doubtful debts in the Group and in the Company inadequate to any substantial extent, or

ii) that would render the value attributed to the 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, or

iv) not otherwise dealt with in this report or the financial statements that would render any amount stated in the financial statements of the Group and of the Company misleading.

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

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

ii) any contingent liability in respect of the Group or of the Company that has arisen since the end of the financial year.

No contingent liability or other liability of any company in the Group 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.

In the opinion of the Directors, the financial performance of the Group and of the Company for the financial year ended31 December 2014 have not been substantially affected by any item, transaction or event of a material and unusual nature nor has any such item, transaction or event occurred in the interval between the end of that financial year and the date of this report.

Auditors

The auditors, Messrs KPMG, have indicated their willingness to accept re-appointment.

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

…………………………………..Dato’ Siah Kok Poay

…………………………………..Siah Lee Beng

Penang,

Date : 30 April 2015


STATEMENTS OF FINANCIAL POSITIONAS AT 31 DECEMBER 2014

Group Company

Note 2014 2013 2014 2013

RM RM RM RM

Assets

Property, plant and equipment 3 160,857,586 163,672,598 186,831 252,405

Investment properties 4 630,920 638,552 25,797,870 26,678,734

Investments in subsidiaries 6 – – 127,594,187 138,662,187

Investments in associates 7 5,827,109 6,017,449 3,483,065 4,434,075

Other investments 8 2,183,410 170,900 2,056,010 –

Deferred tax assets 9 149,907 50,769 – –

Total non-current assets 169,648,932 170,550,268 159,117,963 170,027,401

Inventories 10 65,128,816 85,843,782 – –

Trade and other receivables 11 57,501,084 63,214,864 11,823,724 13,697,049

Current tax assets 657,510 1,803,891 – –

Fixed deposits with licensed banks 12 4,944,469 5,578,966 – –

Cash and cash equivalents 13 5,904,196 5,649,638 310 53,585

134,136,075 162,091,141 11,824,034 13,750,634

Assets classified as held for sale 14 – 2,963,364 – –

Total current assets 134,136,075 165,054,505 11,824,034 13,750,634

Total assets 303,785,007 335,604,773 170,941,997 183,778,035

Equity

Share capital 15 60,988,849 51,918,000 60,988,849 51,918,000

Reserves 16 (12,464,015) 13,072,138 71,642,542 95,061,559

Total equity attributable to owners of the Company 48,524,834 64,990,138 132,631,391 146,979,559

Non-controlling interests 14,784,934 17,620,529 – –

Total equity 63,309,768 82,610,667 132,631,391 146,979,559

The notes on pages 40 to 98 are an integral part of these financial statements.


STATEMENTS OF FINANCIAL POSITIONAS AT 31 DECEMBER 2014 (Cont’d)

Group Company

Note 2014 2013 2014 2013

RM RM RM RM

Liabilities

Loans and borrowings 17 42,787,762 46,539,641 78,581 590,899

Deferred tax liabilities 9 7,154,944 6,830,944 – –

Total non-current liabilities 49,942,706 53,370,585 78,581 590,899

Loans and borrowings 17 120,305,752 140,429,844 333,511 591,087

Trade and other payables 18 70,220,056 59,067,484 37,891,789 35,616,490

Current tax liabilities 6,725 126,193 6,725 –

Total current liabilities 190,532,533 199,623,521 38,232,025 36,207,577

Total liabilities 240,475,239 252,994,106 38,310,606 36,798,476

Total equity and liabilities 303,785,007 335,604,773 170,941,997 183,778,035



STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2014

Group Company

Note 2014 2013 2014 2013

RM RM RM RM

Continuing operations

Revenue 19 251,682,237 227,607,735 – –

Cost of sales (240,914,340) (227,231,660) – –

Gross profit 10,767,897 376,075 – –

Other operating income 4,075,140 4,646,136 1,169,148 15,982,279

Distribution expenses (5,440,934) (3,807,095) – –

Administrative expenses (16,764,683) (16,332,202) (3,056,056) (2,066,524)

Other operating expenses (1,614,612) (1,144,525) (11,068,000) (2,201,638)

Results from operating activities (8,977,192) (16,261,611) (12,954,908) 11,714,117

Finance costs 20 (10,810,520) (10,719,775) (1,423,516) (1,054,830)

Operating (loss)/profit (19,787,712) (26,981,386) (14,378,424) 10,659,287

Share of profit/(loss) of equity- accounted associates, net of tax 1,010,870 (2,407,283) – –

(Loss)/Profit before tax 21 (18,776,842) (29,388,669) (14,378,424) 10,659,287

Tax expense 23 (709,401) (558,278) (180,188) (88,897)

(Loss)/Profit for the year (19,486,243) (29,946,947) (14,558,612) 10,570,390

Other comprehensive (expense)/income, net of tax

Item that may be reclassified subsequently to profit or loss

Fair value of available for-sale financial assets (25,100) 8,300 – –

Total comprehensive (expense)/profit for the year (19,511,343) (29,938,647) (14,558,612) 10,570,390



STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2014 (Cont’d)


Group Company

Note 2014 2013 2014 2013

RM RM RM RM

(Loss)/Profit for the year attributable to :

Owners of the Company (16,662,947) (29,315,394) (14,558,612) 10,570,390

Non-controlling interests (2,823,296) (631,553) – –


Total comprehensive (expense)/income attributable to :

Owners of the Company (16,675,748) (29,307,094) (14,558,612) 10,570,390

Non-controlling interests (2,835,595) (631,553) – –

Total comprehensive (expense)/income for the year (19,511,343) (29,938,647) (14,558,612) 10,570,390

Basic loss per ordinary share (sen) 24 (14.85) (28.74) – –

Diluted earnings per ordinary share (sen) 24

(14.85)

(28.74) – –


CONSOLIDATED STATEMENT OF CHANGES IN EQUITYFOR THE YEAR ENDED 31 DECEMBER 2014

Att

rib

uta

ble

to

own

ers

of t

he

Com

pan

y

Non

-dis

trib

uta

ble

Dis

trib

uta

ble

Sha

re

cap

ital

Sha

re

pre

miu

m

Rev

erse

ac

qui

siti

on

rese

rve

Fair

val

ue

rese

rve

Cap

ital

re

serv

eR

etai

ned

ea

rnin

gs

Tota

l

No

n-co

ntro

lling

in

tere

sts

Tota

leq

uity

RM

RM

RM

RM

RM

RM

RM

RM

RM

At

1 Ja

nuar

y 20

1351

,000

,000

774,

800

(53,

300,

000)

(63,

800)

28,1

82,0

8065

,832

,562

92,4

25,6

4257

9,96

193

,005

,603

Fair

valu

e of

ava

ilab

le-f

or-s

ale

finan

cial

ass

ets

rep

rese

ntin

g

tota

l oth

er c

omp

rehe

nsiv

e

inco

me

for

the

year

––

–8,

300

––

8,30

0–

8,30

0

Loss

for

the

year

––

––

–(2

9,31

5,39

4)(2

9,31

5,39

4)(6

31,5

53)

(29,

946,

947)

Tota

l co

mp

rehe

nsiv

e

inco

me/

(exp

ense

) fo

r th

e ye

ar–

––

8,30

0–

(29,

315,

394)

(29,

307,

094)

(631

,553

)(2

9,93

8,64

7)

Tran

sact

ion

wit

h

ow

ners

of

the

Co

mp

any

- C

onve

rsio

n of

ICU

LS91

8,00

014

6,88

0–

–(9

74,3

68)

–90

,512

–90

,512

Dis

pos

al o

f a s

ubsi

dia

ry–

––

––

––

(579

,961

)(5

79,9

61)

Dilu

tion

of in

tere

st in

a s

ubsi

dia

ry–

––

––

1,78

1,07

81,

781,

078

18,2

52,0

8220

,033

,160

At

31 D

ecem

ber

201

351

,918

,000

921,

680

(53,

300,

000)

(55,

500)

27,2

07,7

1238

,298

,246

64,9

90,1

3817

,620

,529

82,6

10,6

67

Not

e 15

Not

e 16

The

note

s on

pag

es 4

0 to

98

are

an in

tegr

al p

art

of t

hese

fina

ncia

l sta

tem

ents

.


CONSOLIDATED STATEMENT OF CHANGES IN EQUITYFOR THE YEAR ENDED 31 DECEMBER 2014 (Cont’d)

Att

rib

uta

ble

to

own

ers

of t

he

Com

pan

y

Non

-dis

trib

uta

ble

Dis

trib

uta

ble

Sha

re

cap

ital

Sha

re

pre

miu

m

Rev

erse

ac

qui

siti

on

rese

rve

Fair

val

ue

rese

rve

Cap

ital

re

serv

eR

etai

ned

ea

rnin

gs

Tota

l

No

n-co

ntro

lling

in

tere

sts

Tota

leq

uity

RM

RM

RM

RM

RM

RM

RM

RM

RM

At

1 Ja

nuar

y 20

1451

,918

,000

921,

680

(53,

300,

000)

(55,

500)

27,2

07,7

1238

,298

,246

64,9

90,1

3817

,620

,529

82,6

10,6

67

Fair

valu

e of

ava

ilab

le-f

or-s

ale

finan

cial

ass

ets

rep

rese

ntin

g

tota

l oth

er c

omp

rehe

nsiv

e

exp

ense

for

the

year

––

–(1

2,80

1)–

–(1

2,80

1)(1

2,29

9)(2

5,10

0)

Loss

for

the

year

––

––

–(1

6,66

2,94

7)(1

6,66

2,94

7)(2

,823

,296

)(1

9,48

6,24

3)

Tota

l co

mp

rehe

nsiv

e

exp

ense

fo

r th

e ye

ar–

––

(12,

801)

–(1

6,66

2,94

7)(1

6,67

5,74

8)(2

,835

,595

)(1

9,51

1,34

3)

Tran

sact

ion

wit

h

ow

ners

of

the

Co

mp

any

- C

onve

rsio

n of

ICU

LS9,

070,

849

1,45

1,33

6–

–(1

0,31

1,74

1)–

210,

444

–21

0,44

4

At

31 D

ecem

ber

201

460

,988

,849

2,37

3,01

6(5

3,30

0,00

0)(6

8,30

1)16

,895

,971

21,6

35,2

9948

,524

,834

14,7

84,9

3463

,309

,768

Not

e 15

Not

e 16

The

note

s on

pag

es 4

0 to

98

are

an in

tegr

al p

art

of t

hese

fina

ncia

l sta

tem

ents

.


STATEMENT OF CHANGES IN EQUITYFOR THE YEAR ENDED 31 DECEMBER 2014

Attributable to owners of the Company

Non-distributable Distributable

Sharecapital

Share premium

Capital reserve

Retained earnings

Totalequity

RM RM RM RM RM

At 1 January 2013 51,000,000 774,800 28,182,080 56,361,777 136,318,657

Profit for the year representing total comprehensive income

for the year – – – 10,570,390 10,570,390

Transaction with owner of the Company

- Conversion of ICULS 918,000 146,880 (974,368) – 90,512

At 31 December 2013/ 1 January 2014 51,918,000 921,680 27,207,712 66,932,167 146,979,559

Loss for the year representing total comprehensive expense

for the year – – – (14,558,612) (14,558,612)

Transaction with owner of the Company

- Conversion of ICULS 9,070,849 1,451,336 (10,311,741) – 210,444

At 31 December 2014 60,988,849 2,373,016 16,895,971 52,373,555 132,631,391

Note 15 Note 16



STATEMENTS OF CASH FLOWSFOR THE YEAR ENDED 31 DECEMBER 2014

Group Company

Note 2014 2013 2014 2013

RM RM RM RM

Cash flows from operating activities

(Loss)/Profit before tax (18,776,842) (29,388,669) (14,378,424) 10,659,287

Adjustments for :

Depreciation on :

- property, plant and equipment 3 9,536,547 12,771,467 68,304 56,767

- investment property 4 7,632 7,632 880,864 880,834

Impairment loss on :

- investment in a subsidiary 21 – – 11,068,000 2,201,000

- other investments 21 18,400 – – –

Interest expense 20 10,810,520 10,719,775 1,423,516 1,054,830

Interest income 21 (346,617) (494,938) – (21,170)

Gain on disposal of :

- plant and equipment 21 (580,247) – – –

- investment in a subsidiary 21 – (2,456,784) – –

- assets classified as held for sale 21 (136,636) – – –

Gain on dilution of interest in a subsidiary 21 – – – (14,664,590)

Plant and equipment written off – 52,038 – –

Dividend income 21 (7,495) (7,180) – –

Share of (profit)/loss of equity accounted associates, net of tax (1,010,870) 2,407,283 – –

Operating (loss)/profit before working capital changes (485,608) (6,389,376) (937,740) 166,958

Changes in working capital :

Inventories 20,714,966 21,693,181 – –

Trade and other receivables 5,713,780 13,842,312 1,873,325 (18,127,991)

Trade and other payables 11,152,572 (8,404,026) 2,275,299 (873,511)

Cash generated from/ (used in) operations 37,095,710 20,742,091 3,210,884 (18,834,544)

Income taxes refunded/(paid) 542,374 (388,571) (173,463) (88,897)

Net cash from/(used in) operating activities 37,638,084 20,353,520 3,037,421 (18,923,441)



STATEMENTS OF CASH FLOWSFOR THE YEAR ENDED 31 DECEMBER 2014 (Cont’d)

Group Company

Note 2014 2013 2014 2013

RM RM RM RM

Cash flows from investing activities

Acquisition of property, plant and equipment A (3,594,720) (20,194,885) (2,730) (47,824)

Additions of other investments – (28,000) – –

Proceeds from disposal of plant and equipment 650,000 – – –

Proceeds from dilution of interest in a subsidiary

– 20,033,160 – 20,033,160

Proceeds from disposal of a subsidiary – – – 1,200,000

Proceeds from disposal of assets classified as held for sale 3,100,000 – – –

Interest received 346,617 494,938 – 21,170

Dividends received 257,695 7,180 – –

Net cash inflow on disposal of investment in a subsidiary B – 1,195,190 – –

Subscription of shares in an associate (1,105,000) (951,010) (1,105,000) (951,010)

Withdrawal/(Placement) of fixed deposits 634,497 (167,148) – –

Net cash from/(used in) investing activities 289,089 389,425

(1,107,730) 20,255,496

Cash flows from financing activities

Interest paid (11,340,837) (11,241,768) (1,953,833) (1,576,823)

Repayment of term loans (1,713,179) (16,223,025) – –

Drawdown of term loans – 17,900,000 – –

Repayment of other borrowings, net (17,868,344) (9,385,964) – –

Repayment of finance lease liabilities (4,826,141) (3,866,422) (29,133) (30,161)

Placement of pledged short term deposits

(139,143)

(125,294) – –

Net cash used in financing activities (35,887,644) (22,942,473) (1,982,966) (1,606,984)

Net increase/(decrease) in cash and cash equivalents 2,039,529 (2,199,528) (53,275) (274,929)

Cash and cash equivalents at 1 January (5,636,945) (3,437,417) 53,585 328,514

Cash and cash equivalents at 31 December C (3,597,416) (5,636,945) 310 53,585



STATEMENTS OF CASH FLOWSFOR THE YEAR ENDED 31 DECEMBER 2014 (Cont’d)

NOTES

A. Acquisition of property, plant and equipment

During the financial year, the Group acquired property, plant and equipment with an aggregate cost of RM6,791,288 (2013 : RM21,368,749) of which RM3,196,568 (2013 : RM1,173,864) was acquired by means of finance lease arrangements. The balance of RM3,594,720 (2013 : RM20,194,885) was paid by cash.

During the financial year, the Company acquired plant and equipment with an aggregate cost of RM2,730 (2013 : RM202,824) of which RM Nil (2013 : RM155,000) was acquired by means of finance lease arrangements. The balance of RM2,730 (2013 : RM47,824) was paid by cash.

B. Disposal of a subsidiary

On 31 December 2012, the Company entered into an agreement to dispose of 60% equity interests in Buminox Sdn. Bhd. (“Buminox”) for a total cash consideration of RM1,200,000. The disposal which was completed on 9 January 2013 had the following effects on the financial position of the Group :

2013

RM

Property, plant and equipment 1,014,412

Inventories 275,874

Trade and other receivables 889,977

Cash and cash equivalents 4,810

Trade and other payables (2,702,671)

Loans and borrowings (159,225)

Non-controlling interests (579,961)

Net liabilities relieved (1,256,784)

Gain on disposal 2,456,784

Consideration received, satisfied in cash 1,200,000

Cash and cash equivalents disposed (4,810)

Net cash inflow 1,195,190

C. Cash and cash equivalents

Cash and cash equivalents included in the consolidated statements of cash flows comprise the following amounts :

Group Company

Note 2014 2013 2014 2013

RM RM RM RM

Cash and bank balances 13 1,395,929 1,280,514 310 53,585

Bank overdrafts 17 (4,993,345) (6,917,459) – –

(3,597,416) (5,636,945) 310 53,585



NOTES TO THE FINANCIAL STATEMENTS

Tatt Giap Group Berhad is a public limited liability company, incorporated and domiciled in Malaysia and is listed on the Main Market of Bursa Malaysia Securities Berhad. The addresses of the registered office and principal place of business of the Company are as follows :

Registered office

Suite 16-1 (Penthouse Upper)Menara Penang Garden42A, Jalan Sultan Ahmad Shah10050 Penang

Principal place of business

1617, Lorong Perusahaan Maju 6Prai Industrial Estate 413600 PraiPenang

The consolidated financial statements of the Company as at and for the financial year ended 31 December 2014 comprise the Company and its subsidiaries (together referred to as the “Group” and individually referred to as “Group entities”) and the Group’s interest in associates. The financial statements of the Company as at and for the financial year ended 31 December 2014 do not include other entities. The Company is principally engaged in investment holding activities whilst the principal activities of the other Group entities are as stated in Note 6 to the financial statements.

These financial statements were authorised for issue by the Board of Directors on 30 April 2015.

1. Basis of preparation

(a) Statement of compliance

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

The following are accounting standards, amendments and interpretations that have been issued by the Malaysian Accounting Standards Board (“MASB”) but have not been adopted by the Group and the Company :

MFRSs, Interpretations and amendments effective for annual periods beginning on or after 1 July 2014• Amendments to MFRS 1, First-time Adoption of Malaysian Financial Reporting Standards (Annual Improvements

2011-2013 Cycle) *

• Amendments to MFRS 2, Share-based Payment (Annual Improvements 2010-2012 Cycle) *

• Amendments to MFRS 3, Business Combinations (Annual Improvements 2010-2012 Cycle and 2011-2013 Cycle)

• Amendments to MFRS 8, Operating Segments (Annual Improvements 2010-2012 Cycle)

• Amendments to MFRS 13, Fair Value Measurement (Annual Improvements 2010-2012 Cycle and 2011-2013 Cycle)

• Amendments to MFRS 116, Property, Plant and Equipment (Annual Improvements 2010-2012 Cycle)

• Amendments to MFRS 119, Employee Benefits - Defined Benefit Plans: Employee Contributions *

• Amendments to MFRS 124, Related Party Disclosures (Annual Improvements 2010-2012 Cycle)

• Amendments to MFRS 138, Intangible Assets (Annual Improvements 2010-2012 Cycle)

• Amendments to MFRS 140, Investment Property (Annual Improvements 2011-2013 Cycle)

MFRSs, Interpretations and amendments effective for annual periods beginning on or after 1 January 2016• Amendments to MFRS 5, Non-current Assets Held for Sale and Discontinued Operations (Annual Improvements

2012-2014 Cycle) #

• Amendments to MFRS 7, Financial Instruments: Disclosures (Annual Improvements 2012-2014 Cycle)

• Amendments to MFRS 10, Consolidated Financial Statements and MFRS 128, Investments in Associates and Joint Ventures - Sale or Contribution of Assets between an Investor and its Associate or Joint Venture

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


NOTES TO THE FINANCIAL STATEMENTS (Cont’d)

1. Basis of preparation (Cont’d)

(a) Statement of compliance (Cont’d)

MFRSs, Interpretations and amendments effective for annual periods beginning on or after 1 January 2016 (Cont’d)• Amendments to MFRS 11, Joint Arrangements - Accounting for Acquisitions of Interests in Joint Operations #

• MFRS 14, Regulatory Deferral Accounts #

• Amendments to MFRS 101, Presentation of Financial Statements - Disclosure Initiative

• Amendments to MFRS 116, Property, Plant and Equipment and MFRS 138, Intangible Assets - Clarification of Acceptable Methods of Depreciation and Amortisation

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

• Amendments to MFRS 119, Employee Benefits (Annual Improvements 2012-2014 Cycle)

• Amendments to MFRS 127, Separate Financial Statements - Equity Method in Separate Financial Statements

• Amendments to MFRS 134, Interim Financial Reporting (Annual Improvements 2012-2014 Cycle)

MFRSs, Interpretations and amendments effective for annual periods beginning on or after 1 January 2017• MFRS 15, Revenue from Contracts with Customers

MFRSs, Interpretations and amendments effective for annual periods beginning on or after 1 January 2018• MFRS 9, Financial Instruments (2014)

The Group and the Company plan to apply the abovementioned accounting standards, amendments and interpretations :

• from the annual period beginning on 1 January 2015 for those accounting standards, amendments or interpretations that are effective for annual periods beginning on or after 1 July 2014, except for those marked with “*” which are not applicable to the Group and the Company.

• from the annual period beginning on 1 January 2016 for those accounting standards, amendments or interpretations that are effective for annual periods beginning on or after 1 January 2016, except for those marked with “#” which are not applicable to the Group and the Company.

• from the annual period beginning on 1 January 2017 for those accounting standards, amendments or interpretations that are effective for annual periods beginning on or after 1 January 2017.

• from the annual period beginning on 1 January 2018 for those accounting standards, amendments or interpretations that are effective for annual periods beginning on or after 1 January 2018.

The initial application of the abovementioned accounting standards, amendments, and interpretations are not expected to have any material impacts to the financial statements of the Group and the Company except as mentioned below :

(i) MFRS 9, Financial Instruments

MFRS 9 replaces the guidance in MFRS 139, Financial Instruments: Recognition and Measurement on the classification and measurement of financial assets and financial liabilities, and on hedge accounting. Upon adoption of MFRS 9, financial asset will be measured at either fair value or amortised cost. It is expected that the Group’s and the Company’s shares will be measured at fair value through other comprehensive income.

The Group is currently assessing the financial impact that may arise from the adoption of MFRS 9.

(ii) MFRS 15, Revenue from Contracts with Customers

MFRS 15 replaces the guidance in MFRS 111, Construction Contracts, MFRS 118, Revenue, IC Interpretation 13, Customer Loyalty Programmes, IC Interpretation 15, Agreements for Construction of Real Estate, IC Interpretation 18, Transfers of Assets from Customers and IC Interpretation 131, Revenue - Barter Transactions Involving Advertising Services.

The Group is currently assessing the financial impact that may arise from the adoption of MFRS 15.



1. Basis of preparation (Cont’d)

(b) Basis of measurement

The financial statements have been prepared on the historical cost basis other thanas disclosed in Note 2 to the financial statements and on the assumption that the Group and the Company will continue to operate as a going concern.

The Group and the Company incurred a loss of RM19,486,243 and RM14,558,612 respectively for the year ended 31 December 2014. As at 31 December 2014, the current liabilities of the Group and of the Company exceeded the current assets by RM56,396,458 and RM26,407,991 respectively.

The financial statements of the Group and the Company have been prepared on a going concern basis which is dependent on the continuing financial support from their lenders and creditors, and the ability of the Group to generate sufficient cash flows from operations to meet its liabilities as and when they fall due. Subsequent to the end of the financial reporting period, the Group has also initiated discussions to dispose of a property belonging to the Company and investment in a subsidiary with the view to raise additional funds for working capital purposes.

The Directors are of the view that the Group and the Company will be able to generate sufficient cash flows from its operations to meet its liabilities as and when they fall due, and with the continued support of the Group’s and the Company’s lenders and creditors, the going concern basis of preparation is appropriate.

(c) Functional and presentation currency

These financial statements are presented in Ringgit Malaysia (“RM”) which is the Company’s functional currency. All financial information is presented in RM, unless otherwise stated.

(d) Use of estimates and judgements

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

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

There are no significant areas of estimation uncertainty and critical judgements in applying accounting policies that have significant effect on the amounts recognised in the financial statements.

2. Significant accounting policies

The accounting policies set out below have been applied consistently to the periods presented in these financial statements and have been applied consistently by the Group entities, unless otherwise stated.

(a) Basis of consolidation

(i) Subsidiaries

Subsidiaries are entities, including structured entities, controlled by the Company. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases.

The Group controls an entity when it is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Potential voting rights are considered when assessing control only when such rights are substantive. The Group also considers it has de facto power over an investee when, despite not having the majority of voting rights, it has the current ability to direct the activities of the investee that significantly affect the investee’s return.

Investments in subsidiaries are measured in the Company’s statement of financial position at cost less any impairment losses, unless the investment is classified as held for sale or distribution. The cost of investments includes transaction costs.



2. Significant accounting policies (Cont’d)

(a) Basis of consolidation (Cont’d)

(ii) Business combinations

Business combinations are accounted for using the acquisition method from the acquisition date, which is the date on which control is transferred to the Group except for Tatt Giap Hardware Sdn. Bhd. (“TGH”). The acquisition of TGH was accounted for using reverse acquisition accounting principles in accordance with MFRS 3, Business Combinations. Upon completion of the acquisition of TGH, the Company became the legal parent company of TGH. However, due to the relative value of TGH, the former shareholders of TGH became the majority shareholders of the Company. Furthermore, the Company’s continuing operations and management are those of TGH. Accordingly, the substance of the business combination is that TGH acquired the Company in a reverse acquisition. The reverse acquisition was assumed to have been prepared in the name of the legal parent; i.e. the Company, but it represents a combination of the statement of financial position of the legal subsidiary, TGH, which is deemed to be the acquirer.

For new acquisitions, the Group measures the cost of goodwill at the acquisition date as :

• the fair value of the consideration transferred; plus

• the recognised amount of any non-controlling interests in the acquiree; plus

• if the business combination is achieved in stages, the fair value of the existing equity interest in the acquiree; less

• the net recognised amount (generally fair value) of the identifiable assets acquired and liabilities assumed.

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

For each business combination, the Group elects whether it measures the non-controlling interests in the acquiree either at fair value or at the proportionate share of the acquiree’s identifiable net assets at the acquisition date. Transaction costs, other than those associated with the issue of debt or equity securities, that the Group incurs in connection with a business combination are expensed as incurred.

(iii) Acquisitions of non-controlling interests

The Group accounts for all changes in its ownership interest in a subsidiary that do not result in a loss of control as equity transactions between the Group and its non-controlling interest holders. Any difference between the Group’s share of net assets before and after the change, and any consideration received or paid, is adjusted to or against Group reserves.

(iv) Loss of control

Upon the loss of control of a subsidiary, the Group derecognises the assets and liabilities of the former subsidiary, any non-controlling interests and the other components of equity related to the former subsidiary from the consolidated statement of financial position. Any surplus or deficit arising on the loss of control is recognised in profit or loss. If the Group retains any interest in the former subsidiary, then such interest is measured at fair value at the date that control is lost. Subsequently it is accounted for as an equityaccounted investee or as an available-for-sale financial asset depending on the level of influence retained.

(v) Associates

Associates are entities, including unincorporated entities, in which the Group has significant influence, but not control, over the financial and operating policies.

Investments in associates are accounted for in the consolidated financial statements using the equity method less any impairment losses, unless it is classified as held for sale or distribution. The cost of the investment includes transaction costs. The consolidated financial statements include the Group’s share of the profit or loss and other comprehensive income of the associates, after adjustments if any, to align the accounting policies with those of the Group, from the date that significant influence commences until the date that significant influence ceases.

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



(a) Basis of consolidation (Cont’d)

(v) Associates

When the Group ceases to have significant influence over an associate, any retained interest in the former associate at the date when significant influence is lost is measured at fair value and this amount is regarded as the initial carrying amount of a financial asset. The difference between the fair value of any retained interest plus proceeds from the interest disposed of and the carrying amount of the investment at the date when equity method is discontinued is recognised in the profit or loss.

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

Investments in associates are measured in the Company’s statement of financial position at cost less any impairment losses, unless the investment is classified as held for sale or distribution. The cost of the investment includes transaction costs.

(vi) Non-controlling interests

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

Losses applicable to the non-controlling interests in a subsidiary are allocated to the non-controlling interests even if doing so causes the non-controlling interests to have a deficit balance.

(vii) Transactions eliminated on consolidation

Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements.

Unrealised gains arising from transactions with equity-accounted associates are eliminated against the investment to the extent of the Group’s interest in the investees. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.

(b) Foreign currency transactions

Transactions in foreign currencies are translated to the respective functional currencies of Group entities at exchange rates at the dates of the transactions.

Monetary assets and liabilities denominated in foreign currencies at the end of the reporting period are retranslated to the functional currency at the exchange rate at that date.

Non-monetary assets and liabilities denominated in foreign currencies are not retranslated at the end of the reporting date, except for those that are measured at fair value are retranslated to the functional currency at the exchange rate at the date that the fair value was determined.

Foreign currency differences arising on retranslation are recognised in profit or loss, except for differences arising on the retranslation of available-for-sale equity instruments, which are recognised in other comprehensive income.

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





(c) Financial instruments

(i) Initial recognition and measurement

A financial asset or a financial liability is recognised in the statement of financial position when, and only when, the Group or the Company becomes a party to the contractual provisions of the instrument.

A financial instrument is recognised initially, at its fair value plus, in the case of a financial instrument not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition or issue of the financial instrument.

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

(ii) Financial instrument categories and subsequent measurement

The Group and the Company categorise financial instruments as follows :

Financial assets

(a) Loans and receivables

Loans and receivables category comprises debt instruments that are not quoted in an active market.

Financial assets categorised as loans and receivables are subsequently measured at amortised cost using the effective interest method.

(b) Available-for-salefinancialassets

Available-for-sale category comprises investment in equity and debt securities instruments that are not held for trading.

Investments in equity instruments that do not have a quoted market price in an active market and whose fair value cannot be reliably measured are measured at cost. Other financial assets categorised as available-for-sale are subsequently measured at their fair values with the gain or loss recognised in other comprehensive income, except for impairment losses, foreign exchange gains and losses arising from monetary items and gains and losses of hedged items attributable to hedge risks of fair value hedges which are recognised in profit or loss. On derecognition, the cumulative gain or loss recognised in other comprehensive income is reclassified from equity into profit or loss. Interest calculated for a debt instrument using the effective interest method is recognised in profit or loss.

All financial assets are subject to review for impairment (see Note 2(k)(i)).

Financial liabilities

All financial liabilities are subsequently measured at amortised cost.

(iii) Financial guarantee contracts

A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due in accordance with the original or modified terms of a debt instrument.

Fair value arising from financial guarantee contracts are classified as deferred income and are amortised to profit or loss using a straight-line method over the contractual period or, when there is no specified contractual period, recognised in profit or loss upon discharge of the guarantee. When settlement of a financial guarantee contract becomes probable, an estimate of the obligation is made. If the carrying value of the financial guarantee contract is lower than the obligation, the carrying value is adjusted to the obligation amount and accounted for as a provision.



(c) Financial instruments (Cont’d)

(iv) Regular way purchase or sale of financial assets

A regular way purchase or sale is a purchase or sale of a financial asset under a contract whose terms require delivery of the asset within the time frame established generally by regulation or convention in the marketplace concerned.

A regular way purchase or sale of financial assets is recognised and derecognised, as applicable, using trade date accounting. Trade date accounting refers to :

(a) the recognition of an asset to be received and the liability to pay for it on the trade date, and(b) derecognition of an asset that is sold, recognition of any gain or loss on disposal and the recognition of a

receivable from the buyer for payment on the trade date.

(v) Derecognition

A financial asset or part of it is derecognised when, and only when the contractual rights to the cash flows from the financial asset expire or control of the asset is not retained or substantially all of the risks and rewards of ownership of the financial asset are transferred to another party without retaining control or substantially all risks and rewards of the asset. On derecognition of a financial asset, the difference between the carrying amount and the sum of the consideration received (including any new asset obtained less any new liability assumed) and any cumulative gain or loss that had been recognised in equity is recognised in profit or loss.

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

(d) Property, plant and equipment

(i) Recognition and measurement

Items of property, plant and equipment are measured at cost less any accumulated depreciation and any accumulated impairment losses.

Cost includes expenditures that are directly attributable to the acquisition of the asset and any other costs directly attributable to bringing the asset to working condition for its intended use, and the costs of dismantling and removing the items and restoring the site on which they are located. The cost of self-constructed assets also includes the cost of materials and direct labour. For qualifying assets, borrowing costs are capitalised in accordance with the accounting policy on borrowing costs.

Purchased software that is integral to the functionality of the related equipment is capitalised as part of that equipment.

When significant parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment.

The gain or loss on disposal of an item of property, plant and equipment is determined by comparing the proceeds from disposal with the carrying amount of property, plant and equipment and is recognised net within “other operating income” and “other operating expenses” respectively in profit or loss.

(ii) Subsequent costs

The cost of replacing a component of an item of property, plant and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the component will flow to the Group or the Company, and its cost can be measured reliably. The carrying amount of the replaced component is derecognised to profit or loss. The costs of the day-to-day servicing of property, plant and equipment are recognised in profit or loss as incurred.

(iii) Depreciation

Depreciation is based on the cost of an asset less its residual value. Significant components of individual assets are assessed, and if a component has a useful life that is different from the remainder of that asset, then that component is depreciated separately.





(d) Property, plant and equipment (Cont’d)

(iii) Depreciation (Cont’d)

Depreciation is recognised in profit or loss on a straight-line basis over the estimated useful lives of each component of an item of property, plant and equipment from the date they are available for use. Leased assets are depreciated over the shorter of the lease term and their useful lives unless it is reasonably certain that the Group will obtain ownership by the end of the lease term. Freehold land is not depreciated. Property, plant and equipment under construction are not depreciated until the assets are ready for their intended use.

The depreciation rates for the current and comparative periods are as follows :

%Buildings 2 - 10Plant and equipment, tools and moulds 5 - 20Furniture, fittings and equipment 10 - 40Motor vehicles 20Renovation 10

The leasehold land of the Group is amortised over the lease period of 60 years and 99 years.

Depreciation methods, useful lives and residual values are reviewed at the end of the reporting period, and adjusted as appropriate.

(e) Leased assets

(i) Finance lease

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

Leasehold land which in substance is a finance lease is classified as property, plant and equipment, or as investment property if held to earn rental income or for capital appreciation or for both.

(ii) Operating lease

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

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

(f) Intangible assets

(i) Goodwill

Goodwill arises on business combinations is measured at cost less any accumulated impairment losses. In respect of equity-accounted investees, the carrying amount of goodwill is included in the carrying amount of the investment and an impairment loss on such an investment is not allocated to any asset, including goodwill, that forms part of the carrying amount of the equity-accounted associates.



(f) Intangible assets (Cont’d)

(ii) Other intangible assets

Other intangible assets which comprise of software costs and have finite useful lives, are measured at cost less any accumulated amortisation and any accumulated impairment losses.

(iii) Subsequent expenditure

Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure, including expenditure on internally generated goodwill and brands, is recognised in profit or loss as incurred.

(iv) Amortisation

Goodwill is not amortised but are tested for impairment annually and whenever there is an indication that they may be impaired.

Other intangible assets are amortised from the date that they are available for use.

Amortisation is based on the cost of an asset less its residual value.

Amortisation is recognised in profit or loss on a straight-line basis over the estimated useful lives of intangible assets from the date that they are available for use.

The estimated useful life for the current and comparative periods of software costs is 2.5 years.

Amortisation methods, useful lives and residual values are reviewed at the end of each reporting period and adjusted, if appropriate.

(g) Investment properties

(i) Investment properties carried at cost

Investment properties are properties which are owned to earn rental income or for capital appreciation or for both, but not for sale in the ordinary course of business, use in the production or supply of goods or services or for administrative purpose. These include freehold land and leasehold land which in substance is a finance lease held for a currently undetermined future use. Properties that are occupied by the companies in the Group are accounted for as owner-occupied rather than as investment properties. Investment properties are initially measured at cost and are accounted for similarly to property, plant and equipment.

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

The straight-line method is used to write-off the cost of the investment properties over the term of their estimated useful lives at the annual rate ranging from 1% to 2.5%.

An investment property is derecognised on its disposal, or when it is permanently withdrawn from use and no future economic benefits are expected from its disposal. The difference between the net disposal proceeds and the carrying amount is recognised in profit or loss in the period in which the item is derecognised.

(ii) Reclassification to/from investment properties

Transfers between investment property, property, plant and equipment and inventories do not change the carrying amount and the cost of the property transferred.

(iii) Determination of fair value

The Directors estimate the fair values of the Group’s investment properties without involvement of independent valuers.

The fair values are based on market values, being the estimated amount for which a property could be exchanged on the date of the valuation between a willing buyer and a willing seller in an arm’s length transaction after proper marketing wherein the parties had each acted knowledgeably.





(h) Inventories

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

The cost of inventories is calculated using the weighted average method, and includes expenditure incurred in acquiring the inventories, production or conversion costs and other costs incurred in bringing them to their existing location and condition. In the case of work-in-progress and manufactured inventories, cost includes an appropriate share of production overheads based on normal operating capacity.

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

(i) Non-current assets held for sale

Non-current assets, or disposal group comprising assets and liabilities that are expected to be recovered primarily through sale rather than through continuing use, are classified as held for sale.

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

Any impairment loss on a disposal group is first allocated to goodwill, and then to remaining assets and liabilities on pro rata basis, except that no loss is allocated to inventories, financial assets, deferred tax assets and employee benefit assets, which continue to be measured in accordance with the Group’s accounting policies. Impairment losses on initial classification as held for sale and subsequent gains or losses on remeasurement are recognised in profit or loss. Gains are not recognised in excess of any cumulative impairment loss.

Intangible assets and property, plant and equipment once classified as held for sale are not amortised or depreciated. In addition, equity accounting of equity accounted associates ceases once classified as held for sale or distribution.

(j) Cash and cash equivalents

Cash and cash equivalents consist of cash on hand, balances and deposits with banks and highly liquid investments which have an insignificant risk of changes in fair value with original maturities of three months or less, and are used by the Group and the Company in the management of their short term commitments. For the purpose of the statements of cash flows, cash and cash equivalents are presented net of bank overdrafts and pledged deposits.

(k) Impairment

(i) Financial assets

All financial assets (except for investments in subsidiaries and associates) are assessed at each reporting date whether there is any objective evidence of impairment as a result of one or more events having an impact on the estimated future cash flows of the asset. Losses expected as a result of future events, no matter how likely, are not recognised. For an investment in an equity instrument, a significant or prolonged decline in the fair value below its cost is an objective evidence of impairment. If any such objective evidence exists, then the impairment loss of the financial asset is estimated.

An impairment loss in respect of loans and receivables is recognised in profit or loss and is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the asset’s original effective interest rate. The carrying amount of the asset is reduced through the use of an allowance account.

An impairment loss in respect of available-for-sale financial assets is recognised in profit or loss and is measured as the difference between the asset’s acquisition cost (net of any principal repayment and amortisation) and the asset’s current fair value, less any impairment loss previously recognised. Where a decline in the fair value of an available-for-sale financial asset has been recognised in the other comprehensive income, the cumulative loss in other comprehensive income is reclassified from equity to profit or loss.

An impairment loss in respect of unquoted equity instrument that is carried at cost is recognised in profit or loss and is measured as the difference between the financial asset’s carrying amount and the present value of estimated future cash flows discounted at the current market rate of return for a similar financial asset.




(k) Impairment (Cont’d)

(i) Financial assets (Cont’d)

Impairment losses recognised in profit or loss for an investment in an equity instrument classified as available-for-sale is not reversed through profit or loss.

If, in a subsequent period, the fair value of a debt instrument increases and the increase can be objectively related to an event occurring after the impairment loss was recognised in profit or loss, the impairment loss is reversed, to the extent that the asset’s carrying amount does not exceed what the carrying amount would have been had the impairment not been recognised at the date the impairment is reversed. The amount of the reversal is recognised in profit or loss.

(ii) Other assets

The carrying amounts of other assets (except for inventories, deferred tax assets and non-current assets (or disposal groups) classified as held for sale) are reviewed at the end of each reporting period to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated. For goodwill, the recoverable amount is estimated each period at the same time.

For the purpose of impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or cash-generating units. Subject to an operating segment ceiling test, for the purpose of goodwill impairment testing, cash-generating units to which goodwill has been allocated are aggregated so that the level at which impairment testing is performed reflects the lowest level at which goodwill is monitored for internal reporting purposes. The goodwill acquired in a business combination, for the purpose of impairment testing, is allocated to a cashgenerating unit or a group of cash-generating units that are expected to benefit from the synergies of the combination.

The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs of disposal. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or cash-generating unit.

An impairment loss is recognised if the carrying amount of an asset or its related cash-generating unit exceeds its estimated recoverable amount.

Impairment losses are recognised in profit or loss. Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to the cash-generating unit (group of cash-generating units) and then to reduce the carrying amounts of the other assets in the cash-generating unit (groups of cash-generating units) on a pro rata basis.

An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognised in prior periods are assessed at the end of each reporting period for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount since the last impairment loss was recognised. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised. Reversals of impairment losses are credited to profit or loss in the financial year in which the reversals are recognised.

(l) Equity instruments

Instruments classified as equity are measured at cost on initial recognition and are not remeasured subsequently.

(i) Issue expenses

Costs directly attributable to the issue of instruments classified as equity are recognised as a deduction from equity.

(ii) Ordinary shares

Ordinary shares are classified as equity.




(m) Compound financial instruments

A compound financial instrument is a non-derivative financial instrument that contains both a liability and an equity component.

Compound financial instruments issued by the Company comprise Irredeemable Convertible Unsecured Loan Stocks (“ICULS”) that can be converted to share capital at the option of the holder, when the number of shares to be issued does not vary with changes in their fair value.

The proceeds are first allocated to the liability component, determined based on the fair value of a similar liability that does not have a conversion feature or similar associated equity component. The residual amount is allocated as the equity component. Any directly attributable transaction costs are allocated to the liability and equity components in proportion to their initial carrying amounts.

Subsequent to initial recognition, the liability component of a compound financial instrument is measured at amortised cost using the effective interest method. The equity component of a compound financial instrument is not remeasured subsequent to initial recognition.

Interest and losses and gains relating to the financial liability are recognised in profit or loss. On conversion, the financial liability is reclassified to equity; no gain or loss is recognised on conversion.

(n) Employee benefits

(i) Short-term employee benefits

Short-term employee benefit obligations in respect of salaries, annual bonuses, paid annual leave and sick leave are measured on an undiscounted basis and are expensed as the related service is provided.

(ii) State plans

The Group’s contributions to statutory pension funds are charged to profit or loss in the financial year to which they relate. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in future payments is available.

(o) Provisions

A provision is recognised if, as a result of a past event, the Group has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pretax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The unwinding of the discount is recognised as finance cost.

(p) Revenue and other income

(i) Goods sold

Revenue from the sale of goods in the course of ordinary activities is measured at fair value of the consideration received or receivable, net of returns and allowances, trade discount and volume rebates. Revenue is recognised when persuasive evidence exists, usually in the form of an executed sales agreement, that the significant risks and rewards of ownership have been transferred to the customer, recovery of the consideration is probable, the associated costs and possible return of goods can be estimated reliably, and there is no continuing management involvement with the goods, and the amount of revenue can be measured reliably. If it is probable that discounts will be granted and the amount can be measured reliably, then the discount is recognised as a reduction of revenue as the sales are recognised.

(ii) Rental income

Rental income from investment properties is recognised in profit or loss on a straight-line basis over the term of the lease. Lease incentives granted are recognised as an integral part of the total rental income, over the term of the lease. Rental income from sub-leased property is recognised as other income.




(p) Revenue and other income (Cont’d)

(iii) Dividend income

Dividend income is recognised in profit or loss on the date that the Group’s or the Company’s right to receive payment is established, which in the case of quoted securities is the ex-dividend date.

(iv) Interest income

Interest income is recognised as it accrues using the effective interest method in profit or loss except for interest income arising from temporary investment of borrowings taken specifically for the purpose of obtaining a qualifying asset which is accounted for in accordance with the accounting policy on borrowing costs.

(q) Borrowing costs

Borrowing costs that are not directly attributable to the acquisition, construction or production of a qualifying asset are recognised in profit or loss using the effective interest method.

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 capitalised as part of the cost of those assets.

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

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.

(r) Income tax

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

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

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

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

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

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




(s) Earnings per ordinary share

The Group presents basic and diluted earnings per share data for its ordinary shares (“EPS”).

Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the period, adjusted for own shares held.

Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding, adjusted for the effects of all dilutive potential ordinary shares, which comprise convertible notes.

(t) 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. All operating segments’ operating results are reviewed regularly by the chief operating decision maker, which in this case is the Executive Chairman of the Group, to make decisions about resources to be allocated to the segment and to assess its performance, and for which discrete financial information is available.

(u) Contingent liabilities

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

(v) Fair value measurement

Fair value of an asset or a liability, except for share-based payment and lease transactions, is determined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The measurement assumes that the transaction to sell the asset or transfer the liability takes place either in the principal market or in the absence of a principal market, in the most advantageous market.

For non-financial asset, the fair value measurement takes into account a market participant’s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.

When measuring the fair value of an asset or a liability, the Group uses observable market data as far as possible. Fair value are categorised into different levels in a fair value hierarchy based on the input used in the valuation technique as follows :

Level 1 : quoted prices (unadjusted) in active markets for identical assets or liabilities that the Group can access at the measurement date.

Level 2 : inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

Level 3 : unobservable inputs for the asset or liability.

The Group recognises transfers between levels of the fair value hierarchy as of the date of the event or change in circumstances that caused the transfers.


3.

Pro

per

ty, p

lant

and

eq

uip

men

t

Land

Bui

ldin

gs

Pla

nt a

nd

equi

pm

ent,

to

ols

and

m

oul

ds

Furn

itur

e,

fitt

ing

s an

d

equi

pm

ent

Mo

tor

vehi

cles

Ren

ova

tio

n

Cap

ital

wo

rk-i

n-p

rog

ress

Tota

l

RM

RM

RM

RM

RM

RM

RM

RM

Gro

up

Co

st

At

1 Ja

nuar

y 20

1336

,365

,688

51,7

63,7

1657

,876

,687

5,44

5,39

78,

614,

823

4,51

9,55

924

,955

,097

189,

540,

967

Ad

diti

ons

–13

,022

,756

5,97

7,08

358

8,09

249

7,63

723

,796

1,25

9,38

521

,368

,749

Writ

ten

off

––

(62,

655)

––

––

(62,

655)

Tran

sfer

to

asse

ts c

lass

ified

as

held

for

sale

––

––

––

(2,9

63,3

64)

(2,9

63,3

64)

Rec

lass

ifica

tion

–11

,249

,689

9,90

0,77

4–

––

(21,

150,

463)

–

At

31 D

ecem

ber

201

3/1

Janu

ary

2014

36,3

65,6

8876

,036

,161

73,6

91,8

896,

033,

489

9,11

2,46

04,

543,

355

2,10

0,65

520

7,88

3,69

7

Ad

diti

ons

–74

9,30

11,

160,

189

352,

666

790,

235

27,7

603,

711,

137

6,79

1,28

8

Dis

pos

als

––

(297

,782

)(2

7,20

1)(1

,538

,769

)–

–(1

,863

,752

)

Writ

ten

off

–(4

,632

)(3

,201

)–

––

–(7

,833

)

Rec

lass

ifica

tion

––

3,68

3,91

777

,450

–60

5,98

5(4

,367

,352

)–

At

31 D

ecem

ber

201

436

,365

,688

76,7

80,8

3078

,235

,012

6,43

6,40

48,

363,

926

5,17

7,10

01,

444,

440

212,

803,

400

P

lan

t an

d e

qu

ipm

ent,

too

ls a

nd

mou

lds

- G

rou

p

In

clud

ed in

ad

diti

ons

to p

lant

and

eq

uip

men

t was

lab

our c

ost c

apita

lised

of R

M N

il (2

013

: RM

269,

223)

rela

ting

to th

e in

stal

latio

n an

d te

stin

g of

cer

tain

pla

nt a

nd e

qui

pm

ent.



NOTES TO THE FINANCIAL STATEMENTS (Cont’d)3.

P

rop

erty

, pla

nt a

nd e

qui

pm

ent

(Co

nt’d

)

Land

Bui

ldin

gs

Pla

nt a

nd

equi

pm

ent,

to

ols

and

m

oul

ds

Furn

itur

e,

fitt

ing

s an

d

equi

pm

ent

Mo

tor

vehi

cles

Ren

ova

tio

n

Cap

ital

wo

rk-i

n-p

rog

ress

Tota

l

RM

RM

RM

RM

RM

RM

RM

RM

Gro

up

Dep

reci

atio

n

At

1 Ja

nuar

y 20

131,

594,

107

3,51

5,39

315

,935

,023

3,68

4,13

54,

989,

089

1,73

2,50

2–

31,4

50,2

49

Dep

reci

atio

n fo

r th

e ye

ar45

6,44

81,

458,

855

9,08

9,23

045

2,65

61,

084,

340

229,

938

–12

,771

,467

Writ

ten

off

––

(10,

617)

––

––

(10,

617)

At

31 D

ecem

ber

201

3/1

Janu

ary

2014

2,05

0,55

54,

974,

248

25,0

13,6

364,

136,

791

6,07

3,42

91,

962,

440

–44

,211

,099

Dep

reci

atio

n fo

r th

e ye

ar45

6,47

81,

788,

849

5,44

0,97

351

0,27

21,

103,

990

235,

985

–9,

536,

547

Dis

pos

als

––

(229

,423

) (2

5,80

7)(1

,538

,769

)–

– (1

,793

,999

)

Writ

ten

off

– (4

,632

)(3

,201

)–

––

–(7

,833

)

At

31 D

ecem

ber

201

42,

507,

033

6,75

8,46

530

,221

,985

4,62

1,25

65,

638,

650

2,19

8,42

5–

51,9

45,8

14

Car

ryin

g a

mo

unts

At

1 Ja

nuar

y 20

1334

,771

,581

48,2

48,3

2341

,941

,664

1,76

1,26

23,

625,

734

2,78

7,05

724

,955

,097

158,

090,

718

At

31 D

ecem

ber

201

3/1

Janu

ary

2014

34,3

15,1

3371

,061

,913

48,6

78,2

531,

896,

698

3,03

9,03

12,

580,

915

2,10

0,65

516

3,67

2,59

8

At

31 D

ecem

ber

201

433

,858

,655

70,0

22,3

6548

,013

,027

1,81

5,14

82,

725,

276

2,97

8,67

51,

444,

440

160,

857,

586



3. Property, plant and equipment (Cont’d)

Furniture, fittings and equipment

Motorvehicles Total

RM RM RM

Company

Cost

At 1 January 2013 26,719 96,000 122,719

Additions 15,029 187,795 202,824

At 31 December 2013/1 January 2014 41,748 283,795 325,543

Additions 2,730 – 2,730

At 31 December 2014 44,478 283,795 328,273

Depreciation

At 1 January 2013 6,771 9,600 16,371

Depreciation for the year 9,351 47,416 56,767


Depreciation for the year 11,556 56,748 68,304

At 31 December 2014 27,678 113,764 141,442

Carrying amounts

At 1 January 2013 19,948 86,400 106,348


At 31 December 2014 16,800 170,031 186,831

3.1 Land - Group

Included in the carrying amount of land are :

2014 2013

RM RM

Freehold land 15,392,822 15,392,822

Leasehold land with unexpired lease of more than 50 years 18,465,833 18,922,311

33,858,655 34,315,133

3.2 Security - Group

The freehold land, leasehold land, buildings and plant and equipment of the Group with an aggregate carrying amount of RM109,825,568 (2013 : RM108,073,118) are charged to banks for loans and borrowings granted to the Group (Note 17).



3. Property, plant and equipment (Cont’d)

3.3 Change in estimates - Group

During the current financial year, a subsidiary in consultation with its machine supplier, reviewed the useful life of its plant and machinery used for the production of stainless steel pipes. Arising from the review, the plant and machinery which management previously estimated their useful lives to be ten (10) years are now expected to remain in production for twenty (20) years from the date of purchase.

As a result, the expected useful lives of these assets increased. The effect of these changes on depreciation expense, recognised in cost of sales, in current and future periods is as follows :

2014 2015 2016 Later

RM’000 RM’000 RM’000 RM’000

(Decrease)/Increase in depreciation expense (2,342) (2,342) (2,342) 7,026

3.4 Leased plant and equipment

The carrying amounts of plant and equipment acquired under finance lease arrangements are as follows :

Group Company

2014 2013 2014 2013

RM RM RM RM

Plant and equipment, tools and moulds 17,170,200 16,196,079 – –

Motor vehicles 2,571,157 2,570,487 120,375 156,801

19,741,357 18,766,566 120,375 156,801

4. Investment properties

Shop office

RM

Group

Cost

At 1 January 2013/31 December 2013/1 January 2014/31 December 2014 650,000

Depreciation

At 1 January 2013 3,816

Depreciation for the year 7,632

At 31 December 2013/1 January 2014 11,448

Depreciation for the year 7,632

At 31 December 2014 19,080


4. Investment properties (Cont’d)

Shop office

RM

Carrying amounts

At 1 January 2013 646,184


At 31 December 2014 630,920

Estimated fair value


At 31 December 2014 700,000

Land Building Total

RM RM RM

Company

Cost

At 1 January 2013/31 December 2013/ 1 January 2014/31 December 2014 7,796,536 20,203,464 28,000,000

Depreciation

At 1 January 2013 96,253 344,179 440,432

Depreciation for the year (Note 21) 192,477 688,357 880,834

At 31 December 2013/1 January 2014 288,730 1,032,536 1,321,266

Depreciation for the year (Note 21) 192,507 688,357 880,864

At 31 December 2014 481,237 1,720,893 2,202,130

Carrying amounts

At 1 January 2013 7,700,283 19,859,285 27,559,568

At 31 December 2013/1 January 2014 7,507,806 19,170,928 26,678,734

At 31 December 2014 7,315,299 18,482,571 25,797,870




4. Investment properties (Cont’d)

Land Building Total

RM RM RM

Estimated fair value


At 31 December 2014 12,600,000 32,400,000 45,000,000

Investment properties of the Group comprise a shop office leased to an external party. Investment properties of the

Company comprise land and factory building leased to an associate and a subsidiary. Investment properties of the Company amounting to RM25,797,870 (2013 : RM26,678,734) are charged to banks for loans and borrowings granted to the Company (Note 17).

4.1 Fair value information

The fair value of the investment properties is determined by external, independent property valuers, having appropriate recognised professional qualifications and recent experience in the location and category of properties valued. The fair value of the investment properties are regarded as Level 2 fair value in the fair value hierarchy.

Level 2 fair value of the properties were determined using the depreciated replacement cost method. This valuation technique considers the cost to replace a similar property giving equivalent utilities at current construction costs, including finance charges, professional fees, builder’s profits and other incidental expenses. The depreciated value of the property is determined after making allowance for physical deterioration, functional obsolescence affecting the property, when compared to a new and similar property.

4.2 The following are recognised in profit or loss in respect of investment properties :

2014 2013

RM RM

Group

Rental income 43,200 39,600

Direct operating expenses :

- income generating investment properties 5,253 3,806

Company

Rental income from a subsidiary and an associate 1,169,063 1,220,893

Direct operating expenses :

- income generating investment properties 315,944 259,559



5. Intangible assets - Group

GoodwillSoftware

costs Total

RM RM RM

Cost

At 1 January 2013/ 31 December 2013/ 1 January 2014/31 December 2014 1,055,547 581,436 1,636,983

Amortisation and impairment loss

At 1 January 2013/ 31 December 2013/ 1 January 2014/31 December 2014 1,055,547 581,436 1,636,983

Carrying amounts

At 1 January 2013/ 31 December 2013/ 1 January 2014/31 December 2014 – – –

6. Investments in subsidiaries - Company

2014 2013

RM RM

Unquoted shares, at cost :

At 1 January 140,863,187 141,331,757

Additions – 8,500,000

Less : Disposals – (8,968,570)

140,863,187 140,863,187

Less : Impairment loss (13,269,000) (2,201,000)

At 31 December 127,594,187 138,662,187

During the previous financial year, the Company increased its investments in certain subsidiaries by RM8,500,000 through the capitalisation of the amounts due from the subsidiaries.

Details of the subsidiaries all of which are incorporated in Malaysia are as follows:

Effective ownership interest and voting

interest

Name of subsidiary 2014 2013 Principal activities

% %

Tatt Giap Hardware Sdn. Bhd. 100.00 100.00 Importers, wholesalers and retailers of stainless steel products

Tatt Giap Steel Centre Sdn. Bhd. (“TGSC”)* 51.00 51.00 Manufacturing and trading of stainless steel and other ferrous and non ferrous metal products



6. Investments in subsidiaries - Company (Cont’d)

Effective ownership interest and voting

interest

Name of subsidiary 2014 2013 Principal activities

% %

Superinox Pipe Industry Sdn. Bhd. 100.00 100.00 Manufacturing and distribution of Superinox™ stainless steel pipes and tubes

Superinox International Sdn. Bhd. 100.00 100.00 Exporter of SuperinoxTM stainless steel pipes and tubes

TG Oriental Steel Sdn. Bhd. 100.00 100.00 Manufacturing and trading of cold drawn and polished stainless steel bars

Superinox Max Fittings Industry Sdn. Bhd. 100.00 100.00 Manufacturing and distribution of SuperinoxTM stainless steel fittings and pipes

TGMI Industries Sdn. Bhd. 100.00 100.00 Dormant

Formosa Industries Sdn. Bhd. 100.00 100.00 Dormant

* On 1 May 2013, the Company completed the disposal of 49% interests in TGSC, a formerly wholly owned subsidiary, representing 19,600,000 ordinary shares of RM1.00 each in TGSC for a total cash consideration of RM20,033,160.

6.1 Non-controlling interest in a subsidiary

The Group’s subsidiary that has material non-controlling interests (“NCI”) is as follows :

TGSC

2014 2013

RM RM

NCI percentage of ownership interest and voting interest 49% 49%

Carrying amount of NCI 14,784,934 17,620,529

Loss allocated to NCI (2,823,296) (631,553)

Summarised financial information before intra-group elimination

As at 31 December

Non current assets 36,983,488 34,221,000

Current assets 100,539,563 106,805,143

Non-current liabilities (1,633,094) (1,330,267)

Current liabilities (105,716,623) (103,735,613)

Net assets 30,173,334 35,960,263


6. Investments in subsidiaries - Company (Cont’d)

6.1 Non-controlling interest in a subsidiary (Cont’d)

TGSC

2014 2013

RM RM

Year ended 31 December

Revenue 108,145,632 130,879,808

Loss for the year (5,761,829) (2,361,646)

Total comprehensive expense for the year (5,786,929) (2,353,346)

Cash flows from operating activities 20,857,749 32,815,001

Cash flows (used in)/from investing activities (897,431) 275,763

Cash used in financing activities (18,772,640) (32,721,729)

Net increase in cash and cash equivalents 1,187,678 369,035

7. Investments in associates

Group Company

2014 2013 2014 2013

RM RM RM RM

Unquoted shares, at cost 17,636,658 16,685,648 12,934,075 11,983,065

Additions 1,105,000 951,010 1,105,000 951,010

Reclassified to other investments (Note 8) (2,056,010) – (2,056,010) –

16,685,648 17,636,658 11,983,065 12,934,075

Share of post-acquisition reserves (10,858,539) (11,619,209) – –

Less : Impairment loss – – (8,500,000) (8,500,000)

5,827,109 6,017,449 3,483,065 4,434,075

The details of the material associates are as follows :


Effective ownership interest and voting interest

Name of entity Principal activities 2014 2013

% %

Nippon EGalv Steel Sdn. Bhd. (“NEG”)

Malaysia Manufacturing of electro-galvanised steel 27.12 27.12

Nisshin Metal Services (M) Sdn. Bhd. (“Nisshin”) #

Malaysia Shearing, slitting, polishing and trading of stainless steel

25.00 25.00

PT. Indo Bestinox Industri ^ Indonesia Dormant 40.00 –




7. Investments in associates (Cont’d) The details of the material associates are as follows (Cont’d) :


Effective ownership interest and voting interest

Name of entity Principal activities 2014 2013

% %

Shinsei Holdings Pte. Ltd. (“Shinsei”) (formerly known as Shinsei Superinox Industry

Pte. Ltd.) *

Singapore Investment holding company – 25.00

Subsidiary of Shinsei

Shinsei Industry Sdn. Bhd. (formerly known as

Shinseisuperinox Industry Sdn. Bhd.) *

Malaysia Manufacturing of flanges – 25.00

# Held via Tatt Giap Hardware Sdn. Bhd.

* The cost of investments of RM2,056,010 was reclassified to other investments during the year as the Company no longer has significant influence over the financial and operating policies of Shinsei.

^ Associate incorporated on 12 December 2014 and held through Superinox Pipe Industry Sdn. Bhd., a wholly owned subsidiary of the Company.

The following table summarises the information of the Group’s material associates, adjusted for any differences in accounting policies and reconciles the information to the carrying amount of the Group’s interest in the associate.

NEG Nisshin

2014 2013 2014 2013

Group RM RM RM RM

Summarised financial information

As at 31 December

Non -current assets 106,510,901 111,516,065 6,291,597 6,497,668

Current assets 94,853,494 62,264,687 22,021,272 21,331,500

Non-current liabilities (39,085,653) (40,012,010) (4,580,433) (4,458,480)

Current liabilities (154,679,174) (111,839,918) (424,000) (426,000)

Net assets 7,599,568 21,928,824 23,308,436 22,944,688

Less: Non-Cumulative

Redeemable Preference Shares not subscribed by the Company (18,600,000) (18,600,000) – –

Net (liabilities)/assets (11,000,432) 3,328,824 23,308,436 22,944,688



7. Investments in associates (Cont’d)

NEG Nisshin

RM RM

2014

Group


(Loss)/Profit from continuing operations representing total comprehensive expense (14,329,256) 613,948

Included in the total comprehensive expense is :

Revenue 232,753,045 25,326,415

NEG Nisshin Total

RM RM RM

2014

Group

Reconciliation of net assets to carrying amount

As at 31 December

Group’s share of net assets representing the carrying amount in the statement of financial position – 5,827,109 5,827,109

Group’s share of results


Group’s share of profit from continuing operations

- current year *– 153,487 153,487

- adjustment for losses over equity accounted in prior year 857,383 – 857,383

857,383 153,487 1,010,870

* The recognition of further losses is discontinued as the Group’s share of losses is confined to its interest in the associate.



7. Investments in associates (Cont’d)

NEG Nisshin

RM RM

2013

Group


(Loss)/Profit from continuing operations representing total comprehensive expense (9,328,620) 490,556

Included in the total comprehensive expense is :

Revenue 170,919,626 20,368,659

NEG Nisshin

Other immaterial associate Total

RM RM RM RM

2013

Group

Reconciliation of net assets to carrying amount

As at 31 December

Group’s share of net assets representing the carrying amount in the statement of financial position (857,383) 5,923,822 951,010

6,017,449

Group’s share of results


Group’s share of (loss)/profit from continuing operations (2,529,922) 122,639 – (2,407,283)



8. Other investments

Quoted in Malaysia

Unquoted outside

Malaysia Total

RM RM RM

Group

2014

Non-current

- Available-for-sale financial assets

Balance at 1 January 127,400 – 127,400

Reclassified from investments in associates (Note 7) – 2,056,010 2,056,010

Balance at 31 December 127,400 2,056,010 2,183,410

Market value of quoted investments 127,400 – 127,400

2013

Non-current

Available-for-sale financial assets 170,900 – 170,900

Market value of quoted investments 160,000 – 160,000

2014 2013

RM RM

Company

2014

Non-current

Available-for-sale financial assets

- Unquoted investments outside Malaysia

Balance at 1 January – –

Reclassified from investments in associates (Note 7) 2,056,010 –

Balance at 31 December 2,056,010 –


NOTES TO THE FINANCIAL STATEMENTS (Cont’d)9.

D

efer

red

tax

ass

ets/

(liab

iliti

es) -

Gro

up

R

eco

gni

sed

def

erre

d t

ax a

sset

s/(li

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ties

)

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efer

red

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ets

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s (a

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ap

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te o

ffset

ting)

are

att

ribut

able

to

the

follo

win

g :

Ass

ets

Liab

iliti

esN

et

2014

2013

2014

2013

2014

2013

RM

RM

RM

RM

RM

RM

Pro

per

ty, p

lant

and

eq

uip

men

t

- ca

pita

l allo

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(20,

000)

(565

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00)

(565

,000

)(3

64,0

00)

- re

valu

atio

n re

serv

e(7

9,23

1)(7

9,23

1)(6

,589

,944

)(6

,589

,944

)(6

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,175

)(6

,669

,175

)

Cap

ital a

llow

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car

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1,00

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––

121,

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–

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138

150,

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8,13

825

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0

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907

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) (6

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)(7

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M

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2013

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t 31

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2014

RM

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RM

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565,

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944

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669,

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9,94

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0,23

16,

780,

175

224,

862

7,00

5,03

7



9. Deferred tax assets/(liabilities) - Group (Cont’d)

Unrecognised deferred tax assets - Group

Deferred tax assets have not been recognised in respect of the following items (stated at gross) :

2014 2013

RM RM

Tax losses carry-forwards 35,955,000 22,412,000

Unutilised reinvestment allowance 432,000 432,000

Other deductible temporary differences 889,000 –

37,276,000 22,844,000

The tax losses carry-forwards, unutilised reinvestment allowance and other deductible temporary differences do not

expire under current tax legislation. Deferred tax assets have not been recognised in respect of these items because it is not probable that future taxable profits will be available against which the Group entities can utilise the benefits therefrom.

10. Inventories - Group

2014 2013

RM RM

Raw materials and consumables 21,732,992 33,552,653

Manufactured inventories 31,283,947 34,368,728

Trading inventories 12,111,877 17,922,401

65,128,816 85,843,782

The write-down of inventories to net realisable value during the year amounted to RM2,763,864 (2013 : RM1,245,071) and is included in cost of sales.

11. Trade and other receivables

Group Company

Note 2014 2013 2014 2013

RM RM RM RM

Trade

Trade receivables 51,796,789 56,289,398 – –

Amount due from a related party 11.1 6,737 – – –

Amount due from associates 11.1 122,245 69,420 – –

51,925,771 56,358,818 – –



11. Trade and other receivables (Cont’d)

Group Company

Note 2014 2013 2014 2013

RM RM RM RM

Non-trade

Amount due from associates 11.1 244,466 228,965 – –

Amount due from subsidiaries 11.1 – – 10,244,211 11,136,337

Other receivables 1,985,344 3,013,218 1,538,868 2,538,869

Deposits 175,788 246,095 – –

Prepayments 11.2 3,169,715 3,367,768 40,645 21,843

5,575,313 6,856,046 11,823,724 13,697,049

57,501,084 63,214,864 11,823,724 13,697,049

Trade and other receivables (excluding prepayments) 54,331,369 59,847,096 11,783,079 13,675,206

Fixed deposits with licensed banks 12 4,944,469 5,578,966 – –

Cash and cash equivalents 13 5,904,196 5,649,638 310 53,585

Total loans and receivables 65,180,034 71,075,700 11,783,389 13,728,791

11.1 Amounts due from subsidiaries, associates and a related party

The trade amounts due from associates and a related party of the Group are subject to normal trade terms.

The non-trade amounts due from subsidiaries and associates are unsecured, interest-free and repayable on demand.

11.2 Prepayments

Included in prepayments of the Group are advance payments made for the purchase of raw materials and semi finished products amounting to RM1,405,068 (2013 : RM1,509,352).

12. Fixed deposits with licensed banks - Group

The fixed deposits with licensed banks are held in lien for borrowings granted to the Group (Note 17).

Fixed deposits with licensed banks amounting to RM4,352,627 (2013 : RM5,004,641) are held in trust by certain Directors.

13. Cash and cash equivalents

Group Company

2014 2013 2014 2013

RM RM RM RM

Short term deposits with licensed banks 4,508,267 4,369,124 – –

Cash and bank balances 1,395,929 1,280,514 310 53,585

5,904,196 5,649,638 310 53,585

The short term deposits with licensed banks are held in lien for borrowings granted to the Group (Note 17).

Short term deposits with licensed banks of the Group amounting to RM1,326,404 (2013 : RM1,283,921) are held in trust by certain Directors.


14. Assets classified as held for sale - Group

On 29 August 2013, the Company entered into a Sale and Purchase Agreement for the disposal of a shoplot with a carrying amount of RM2,963,364 for a cash consideration of RM3,100,000 of which, a deposit equivalent to 10% of the sale consideration has been received in financial year 2013. The disposal was completed during the current financial year.

15. Share capital - Group/Company

2014 2013

Amount Number of shares

Amount Number of shares RM RM

Ordinary shares of RM0.50 each :

Authorised 80,000,000 160,000,000 80,000,000 160,000,000

Issued and fully paid

As at 1 January 51,918,000 103,836,000 51,000,000 102,000,000

Conversion of ICULS to ordinary shares ^ 9,070,849 18,141,698 918,000 1,836,000

As at 31 December 60,988,849 121,977,698 51,918,000 103,836,000

The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the Company.

^ Conversion of 10,522,185 (2013 : 1,064,880) of RM1.00 nominal value of 5-year 2% ICULS into 18,141,698 (2013 : 1,836,000) ordinary shares of RM0.50 each on the basis of one RM1.00 nominal value of ICULS for approximately 1.724 ordinary shares of RM0.50 each at an issue price of RM0.58 per share.

16. Reserves

Group Company

Note 2014 2013 2014 2013

RM RM RM RM

Non-distributable :

Share premium 16.1 2,373,016 921,680 2,373,016 921,680

Reverse acquisition reserve 16.2 (53,300,000) (53,300,000) – –

Fair value reserve 16.3 (68,301) (55,500) – –

Capital reserve

- ICULS (equity component) 16.4 16,895,971 27,207,712 16,895,971 27,207,712

(34,099,314) (25,226,108) 19,268,987 28,129,392

Distributable :

Retained earnings 16.5 21,635,299 38,298,246 52,373,555 66,932,167

(12,464,015) 13,072,138 71,642,542 95,061,559




16. Reserves (Cont’d)

16.1 Share premium

Share premium comprises the premium paid on subscription of shares in the Company and conversion of ICULS over and above the par value of the shares.

16.2 Reverse acquisition reserve

This relates to the acquisition of Tatt Giap Hardware Sdn. Bhd. (“TGH”) and its subsidiaries, where upon the completion of the said acquisition, the Company became the legal parent company of TGH. However, due to the relative value of TGH, the former equity holders of TGH became the majority equity holders of the Company. Furthermore, the Company’s continuing operations and management are those of TGH. Accordingly, the substance of the business combination is that TGH acquired the Company through a reverse acquisition.

In accordance with MFRS 3, the amount recognised as issued equity instruments in the consolidated financial statements is determined by adding the cost of the business combination to the issued equity of TGH (i.e. the legal subsidiary) immediately before the business combination. However, the equity structure appearing in the consolidated financial statements (i.e. the number and type of equity instruments issued) shall reflect the issued equity structure of the Company, including the equity instruments issued by the Company to effect the combination.

16.3 Fair value reserve

The fair value reserve comprises the cumulative net change in fair value of available-for-sale financial assets until the investments are derecognised or impaired.

16.4 Capital reserve

Capital reserve comprises the residual amount of the ICULS after deducting the fair value of the liability component from the fair value of the instrument as a whole (Note 25).

16.5 Retained earnings The entire retained earnings of the Company are eligible to be paid out as dividends under the single-tier Company

income tax system in accordance with The Finance Act, 2007.

17. Loans and borrowings

Group Company

Note 2014 2013 2014 2013

RM RM RM RM

Current

Secured

Bank overdrafts 4,316,048 5,942,012 – –

Bankers’ acceptances 103,087,616 99,288,000 – –

Trust receipts 2,324,527 1,495,096 – –

Term loans - variable rate 2,063,296 2,265,029 – –

Finance lease liabilities 17.2 4,109,617 3,980,014 30,250 28,322

115,901,104 112,970,151 30,250 28,322


17. Loans and borrowings (Cont’d)

Group Company

Note 2014 2013 2014 2013

RM RM RM RM

Current (Cont’d)

Unsecured

Bank overdrafts 677,297 975,447 – –


Trust receipts 1,088,090 2,322,025 – –

ICULS (liability component) 25 303,261 562,765 303,261 562,765

4,404,648 27,459,693 303,261 562,765

120,305,752 140,429,844 333,511 591,087

Non-current

Secured

Term loans - variable rate 37,017,284 38,528,730 – –

Finance lease liabilities 17.2 5,770,478 7,529,654 78,581 109,642

42,787,762 46,058,384 78,581 109,642

Unsecured

ICULS (liability component) 25 – 481,257 – 481,257

42,787,762 46,539,641 78,581 590,899

Total loans and borrowings 163,093,514 186,969,485 412,092 1,181,986

17.1 Securities - Group

The secured borrowings are secured by legal charges over the freehold and leasehold land, buildings, plant and machinery, pledged fixed and short term deposits of the Group and are jointly and severally guaranteed by certain Directors of the Company.

The finance lease liabilities are effectively secured as the rights to the assets under the finance lease that will revert to the lessor in the event of default.




17. Loans and borrowings (Cont’d)

17.2 Finance lease liabilities

Finance lease liabilities are payable as follows :

2014 2013

Futureminimum

lease payments Interest

Present value of

minimum lease

payments

Futureminimum

lease payments Interest

Present value of

minimum lease

payments

RM RM RM RM RM RM

Group

Less than 1 year 4,587,938 478,321 4,109,617 4,578,056 598,042 3,980,014

Between 1 and 5 years 6,154,861 384,383 5,770,478 8,215,033 685,379 7,529,654

10,742,799 862,704 9,880,095 12,793,089 1,283,421 11,509,668

Company

Less than 1 year 36,120 5,870 30,250 36,120 7,798 28,322

Between 1 and 5 years 84,255 5,674 78,581 120,375 10,733 109,642

120,375 11,544 108,831 156,495 18,531 137,964

18. Trade and other payables

Group Company

Note 2014 2013 2014 2013

RM RM RM RM

Trade

Trade payables 25,301,647 28,623,120 – –

Amount due to related parties 18.1 33,915,816 20,040,265 – –

Amount due to associates 18.1 2,966,593 2,525,266 – –

62,184,056 51,188,651 – –


18. Trade and other payables (Cont’d)

Group Company

Note 2014 2013 2014 2013

RM RM RM RM

Non-trade

Amount due to a company in which certain Directors have a substantial financial interest 18.1 832,127 1,035,827 – –

Amount due to a Director 18.1 2,031,669 1,942,958 – –

Amount due to subsidiaries 18.2 – – 37,412,662 35,331,818

Other payables 18.3 3,369,618 3,454,054 373,472 224,632

Accruals 1,802,586 1,445,994 105,655 60,040

8,036,000 7,878,833 37,891,789 35,616,490

70,220,056 59,067,484 37,891,789 35,616,490

Trade and other payables 70,220,056 59,067,484 37,891,789 35,616,490

Loans and borrowings 17 163,093,514 186,969,485 412,092 1,181,986

Total financial liabilities measured at amortised cost 233,313,570 246,036,969 38,303,881 36,798,476

18.1 Amounts due to related parties, associates and a company in which certain directors have a substantial financialinterest

The trade amounts due to related parties and associates are subject to negotiated terms. Past due amounts of RM17,689,574 (2013 : RM7,774,412) are subject to fixed interest at rates ranging from 3% to 8% (2013 : 8% to 8.1%).

The non-trade amounts due to a company in which certain Directors have a substantial financial interest and a Director are unsecured, payable on demand and bear interest at a fixed rate of 4% (2013 : 4%) per annum.

18.2 Amount due to subsidiaries

The non-trade amount due to subsidiaries is unsecured, interest-free and payable on demand other than an amount of RM37,240,757 (2013 : RM32,088,490) which bears interest at a fixed rate of 4% (2013 : 4%) per annum.

18.3 Other payables Included in other payables is an amount of RM1,117,122 (2013 : RM Nil) in relation to advance payments received

from customers.

19. Revenue

Group Company

2014 2013 2014 2013

RM RM RM RM

Invoiced value of goods sold less discounts and returns 251,682,237 227,607,735 – –




20. Finance costs

Group Company

2014 2013 2014 2013

RM RM RM RM

Interest expense on :

Bank overdrafts 418,632 363,541 – –


Trust receipts 345,179 428,874 – –

Term loans 2,456,225 2,359,082 – –

Finance leases liabilities 854,210 749,911 6,988 5,070

ICULS (Note 25) 64,385 94,007 64,385 94,007

Amount due to related parties 1,078,226 323,036 – –

Amount due to subsidiaries – – 1,352,143 955,753

Others 220,225 514,866 – –

10,810,520 10,719,775 1,423,516 1,054,830

21. (Loss)/Profit before tax

(Loss)/Profit before tax is arrived at :

Group Company

2014 2013 2014 2013

RM RM RM RM

After charging :

Auditors’ remuneration

Audit fees

- KPMG Malaysia 125,000 120,000 30,000 30,000

Non-audit fees

- KPMG Malaysia

- Current year 8,000 8,000 8,000 8,000

- Prior year – (3,000) – (3,000)

- Local affiliates of KPMG Malaysia 40,100 32,900 2,500 2,000

Directors’ remuneration

Directors of the Company

- fees 90,000 87,500 90,000 87,500

- others 2,854,675 2,692,525 108,000 70,000

Past Director of the Company

- others – 62,508 – 62,508

Depreciation on :

- property, plant and equipment 9,536,547 12,771,467 68,304 56,767

- investment properties 7,632 7,632 880,864 880,834



21. (Loss)/Profit before tax

Group Company

2014 2013 2014 2013

RM RM RM RM

After charging (Cont’d) :

Impairment loss on :

- other investments 18,400 – – –

- investment in a subsidiary – – 11,068,000 2,201,000

- trade receivables 30,969 – – –

- other receivables 1,000,000 – 1,000,000 –

Inventories written down 2,763,864 1,245,071 – –

Rental of premises 88,974 142,331 – –

Loss on foreign exchange (net)

- realised 632,417 678,491 – –

- unrealised 716,080 168,901 118 –

Plant and equipment written off – 52,038 – –

and after crediting :

Reversal of impairment loss on trade receivables – 273,505

– –

Bad debts recovered 12,723 241,000 – –

Dividend income from other investments 7,495 7,180 – –

Gain on foreign exchange (net)

- realised – – 85 75,627

Gain on disposal of :

- plant and equipment 580,247 – – –

- assets classified as held for sale 136,636 – – –

- investment in a subsidiary – 2,456,784 – –

Gain on dilution of interest in a subsidiary – – – 14,664,590

Interest income

- subsidiaries – – – 21,170

- others 346,617 494,938 – –

Rental income from premises 1,451,041 901,621 1,169,063 1,220,893



22. Employee information - Group

Group Company

2014 2013 2014 2013

RM RM RM RM

Staff costs (including Directors) 12,186,526 11,585,966 108,000 70,000

Less : Amount capitalised in plant and equipment (Note 3) – (269,223) – –

12,186,526 11,316,743 108,000 70,000

Staff costs of the Group include contributions to the Employees’ Provident Fund of RM1,227,159 (2013 : RM1,045,428).

The estimated monetary value of benefits received and receivable by Directors of the Group and of the Company otherwise than in cash amounted to RM106,650 (2013 : RM112,758) and Nil (2013 : RM6,108) respectively.

23. Tax expense

Recognised in profit or loss

Group Company

2014 2013 2014 2013

RM RM RM RM

Income tax expense on continuing operations 709,401 558,278 180,188 88,897

Share of tax of equity- accounted associates 43,526 (55,540) – –

Total income tax expense 752,927 502,738 180,188 88,897

Major components of income tax expense include :

Group Company

2014 2013 2014 2013

RM RM RM RM

Current tax expense

- Current year 467,600 529,913 74,226 –

- Prior year 16,939 (291,866) 105,962 88,897

484,539 238,047 180,188 88,897

Deferred tax expense

- Reversal of temporary differences (209,959) (1,582,832) – –

- Prior year 434,821 1,903,063 – –

224,862 320,231 – –

709,401 558,278 180,188 88,897



23. Tax expense (Cont’d)

Recognised in profit or loss (Cont’d)

Group Company

2014 2013 2014 2013

RM RM RM RM

Share of tax of equity accounted associates 43,526 (55,540) – –

Total tax expense 752,927 502,738 180,188 88,897

Reconciliation of tax expense

Group Company

2014 2013 2014 2013

RM RM RM RM


Total tax expense 752,927 502,738 180,188 88,897

(Loss)/Profit excluding tax (18,733,316) (29,444,209) (14,378,424) 10,659,287

Income tax calculated using Malaysian tax rate of 25% (2013 : 25%) (4,683,329) (7,361,052) (3,594,606) 2,664,822

Non-deductible expenses 1,612,959 1,491,509 3,677,976 1,115,430

Difference in effective tax rate of equity accounted associates (220,073) 560,166 – –

Income not subject to tax (73,688) (633,191) (21) (3,685,054)

Effect of tax incentive (4,669) (10,840) – –

Deferred tax assets not recognised 3,608,677 4,997,000 – –

Others 61,290 (152,051) (9,123) (95,198)

301,167 (1,108,459) 74,226 –

Under provision in prior years 451,760 1,611,197 105,962 88,897

752,927 502,738 180,188 88,897



24. Loss per ordinary share - Group

Basic loss per ordinary share

The calculation of basic loss per ordinary share at 31 December 2014 was based on loss attributable to the ordinary shareholders of RM16,662,947 (2013 : RM29,315,394) and on the weighted average number of ordinary shares outstanding of 112,214,111 (2013 : 102,000,000) calculated as follows :

2014 2013

Issued ordinary shares at beginning of year 103,836,000 102,000,000

Effect of shares issued arising from ICULS conversion 8,378,111 –

Weighted average number of ordinary shares 112,214,111 102,000,000

Diluted loss per ordinary share

The calculation of diluted loss per ordinary share for the financial year ended 31 December was based on the loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding after adjustment for the effects of all dilutive potential ordinary shares, calculated as follows :

Loss attributable to ordinary shareholders (diluted)

2014 2013

RM RM

Loss for the year attributable to owners (basic) (16,662,947) (29,315,394)

Interest expense on ICULS, net of tax 48,289 109,037

Loss for the year attributable to owners (diluted) (16,614,658) (29,206,357)

Weighted average number of ordinary shares (diluted)

2014 2013

Weighted average number of ordinary shares (basic) 112,214,111 102,000,000

Effect of conversion of ICULS 33,125,750 51,267,448

Weighted average number of ordinary shares (diluted) at 31 December 145,339,861 153,267,448

Diluted loss per ordinary share (14.85) (28.74)

The Company has outstanding ICULS to subscribe for new ordinary shares which are not converted at year end. The

effect of the assumed conversion of the ICULS on the loss per ordinary share is anti-dilutive.



25. Irredeemable Convertible Unsecured Loan Stocks (“ICULS”) - Group/Company

On 4 June 2010, the Company issued RM30,800,000 of RM1.00 nominal value of 5-year 2% ICULS at 100% of its nominal value as part of the purchase consideration for the acquisition of the entire equity interests in Tatt Giap Hardware Sdn. Bhd.

As at the end of the financial year, the Company has the following outstanding number of ICULS :

Expiry date

Number of ICULSoutstanding

as at 31.12.2014

5-year 2% ICULS 30.6.2015 19,212,935

The main features of the ICULS are as follows :

i) The ICULS were issued in multiples of RM1.00 and constituted by a Trust Deed dated 2 June 2010 made between the Company and the Trustee for the holders of the ICULS;

ii) The ICULS are convertible into new ordinary shares of RM0.50 each in the Company at any time after the third anniversary from the date of the issue of the ICULS until the maturity date on 3 June 2015 on the basis of one RM1.00 nominal value ICULS for approximately 1.724 ordinary shares of RM0.50 in the Company;

iii) Upon conversion of the ICULS into new ordinary shares, such shares shall rank pari passu in all respects with the existing issued and paid-up ordinary shares of the Company except that the new shares so allotted shall not be entitled to any dividend, rights, allotment and/or other distribution, the entitlement date of which is prior to the date of conversion of the ICULS; and

iv) The interest on the ICULS at the rate of 2% per annum is payable annually in arrears.

The residual value, after deducting the liability component from the fair value of the instrument as a whole, is attributed to the equity component as follows :

Liability component of

ICULS(Note 17)

Equity component of

ICULS Total

RM RM RM

At the date of issuance of ICULS

- nominal value 2,617,920 28,182,080 30,800,000

At 1 January 2013 1,656,527 28,182,080 29,838,607

Interest expense (Note 20) 94,007 – 94,007

Interest paid (616,000) – (616,000)

Conversion of ICULS into ordinary shares (90,512) (974,368) (1,064,880)


Interest expense (Note 20) 64,385 – 64,385

Interest paid (594,702) – (594,702)

Conversion of ICULS into ordinary shares (210,444) (10,311,741) (10,522,185)

At 31 December 2014 303,261 16,895,971 17,199,232



25. Irredeemable Convertible Unsecured Loan Stocks (“ICULS”) - Group/Company (Cont’d)

The liability component is further analysed as follows :

2014 2013

RM RM

Within 1 year 303,261 562,765

Between 1 to 5 years – 481,257

303,261 1,044,022

Interest expense on the ICULS was calculated on the effective yield basis by applying a coupon interest rate of 5.70% which is assumed to be equivalent to the prevailing market interest rate for non-convertible loan stocks at the date of issue.

26. Related parties

Identity of related parties

For the purposes of these financial statements, parties are considered to be related to the Group if the Group or the Company has the ability, directly or indirectly, to control or jointly control the party or exercise significant influence over the party in making financial and operating decisions, or vice versa, or where the Group or the Company and the party are subject to common control. Related parties may be individuals or other entities.

The Group has related party relationship with its subsidiaries and associates as disclosed in the financial statements, significant investors of the Company and a subsidiary, key management personnel of the Group a firm in which a Director is a partner and a company in which certain Directors have a substantial interest.

Related parties also include key management personnel defined as those persons having authority and responsibility for planning, directing and controlling the activities of the Group either directly or indirectly. The key management personnel include the Directors of the Group.

Significant related party transactions

The significant related party transactions of the Group and the Company are shown below. The balances related to the below transactions are shown in Notes 11 and 18.

(i) Subsidiaries

2014 2013

RM RM

Company

Subscription of shares in subsidiaries – (8,500,000)

Interest expense (1,352,143) (955,753)

Interest income – 21,170

Rental income from premises 120,000 349,835


26. Related parties (Cont’d) Significant related party transactions (Cont’d)

(ii) Associates

2014 2013

RM RM

Group

Interest expense (41,655) (25,640)

Sales 348,439 338,902

Purchases (9,350,227) (14,975,332)

Rental income from premises 1,383,841 871,058

Dividends received 250,200 –

Company

Rental income from premises 1,049,063 871,058

(iii) A company in which certain Directors have a substantial financial interest

2014 2013

RM RM

Group

Advances to the Group 300,000 1,035,827


Rental expense (60,000) –

(iv) A firm in which a Director is a partner

2014 2013

RM RM

Group

Legal fee expense (92,885) (235,176)




26. Related parties (Cont’d) Significant related party transactions (Cont’d)

(v) Directors

There were no transactions with the Directors and key management personnel of the Group other than the remuneration package paid to them (including contributions paid to state plans) in accordance with the terms and conditions of their appointment as disclosed in Note 21 to the financial statements and the following :

2014 2013

RM RM

Group

Advances to the Group 1,321,730 1,942,958


Rental expense (48,000) (42,000)

(vi) Substantial shareholders of a subsidiary

2014 2013

RM RM

Group

Sales 1,035,867 573,459

Purchases (66,350,233) (55,688,993)

Management fee (202,500) (84,000)

Interest expense (1,036,571) (268,650)

27. Operating segments - Group

The Group only has one reportable segment which is principally confined to the manufacturing and trading of various steel products which include stainless steel pipes, tubes and bars, electro-galvanised steel, perforated metal products and other ferrous and non-ferrous metal products. The Group’s Executive Chairman (the chief operating decision maker) reviews internal management reports on the reportable segment on a monthly basis. Accordingly, information by operating segment on the Group’s operations as required by MFRS 8 is not presented.

Geographical segment

In presenting information on the basis of geographical segments, segment revenue is based on the geographical location of customers. Segment assets are based on the geographical location of assets. The amounts of non-current assets do not include financial instruments (including investments in associates) and deferred tax assets.


27. Operating segments - Group (Cont’d)

Geographical information

RevenueNon-current

assets

RM RM

2014

Malaysia 205,415,003 163,671,916

Asia (excluding Malaysia) 11,336,834 –

United States of America 5,682,287 –

Brazil 21,933,753 –

Europe 7,314,360 –

251,682,237 163,671,916

2013

Malaysia 216,550,203 164,482,050

Asia (excluding Malaysia) 3,990,515 –

United States of America 5,791,272 –

Europe 1,275,745 –

227,607,735 164,482,050

28. Contingent liabilities, unsecured - Company

The Company has issued corporate guarantees to banks and financial institutions for borrowings granted to certain subsidiaries for RM196,299,270 (2013 : RM157,556,771) of which, RM143,673,722 (2013 : RM139,156,723) were utilised at the end of the reporting period.

The Company has also issued guarantees to suppliers of certain subsidiaries amounting to RM22,974,814 (2013 : RM16,748,308).

The Company has undertaken to provide financial support to certain subsidiaries to enable the subsidiaries to continue operating as a going concern.

29. Capital commitment - Group

2014 2013

RM RM

Contracted but not provided for in the financial statements

- Property, plant and equipment 1,960,000 4,404,000

30. Financial instruments

30.1 Categories of financial instruments

Trade and other receivables (excluding prepayments), fixed deposits with licensed banks and cash and cash equivalents are categorised as loans and receivables (Note 11) while trade and other payables and loans and borrowings are categorised as financial liabilities measured at amortised cost (Note 18). The carrying amount of available-for-sale financial instruments is disclosed in Note 8 to the financial statements.




30. Financial instruments (Cont’d)

30.2 Net gains and losses arising from financial instruments

Group Company

2014 2013 2014 2013

RM RM RM RM

Net gains/(losses) on :

Available-for-sale financial assets

- recognised in other comprehensive income/ (expense) (25,100) 8,300 – –

- recognised in profit or loss (10,905) 7,180 – –

(36,005) 15,480 – –

Loans and receivables (2,020,126) 162,051 (1,000,033) 96,797

Financial liabilities measured at amortised cost (10,810,520) (10,719,775) (1,423,516) (1,054,830)

(12,866,651) (10,542,244) (2,423,549) (958,033)

30.3 Financial risk management

The Group has exposure to the following risks from its use of financial instruments :

• Credit risk• Liquidity risk• Market risk

30.4 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 advances to subsidiaries and financial guarantees given to banks for credit facilities granted to subsidiaries.

Receivables Risk management objectives, policies and processes for managing the risk

Management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis. Normally, credit evaluations are performed on customers requiring credit over a certain amount.

Exposure to credit risk, credit quality and collateral

As at the end of the reporting period, the maximum exposure to credit risk arising from trade receivables is represented by the carrying amounts in the statements of financial position.

Management has taken reasonable steps to ensure that trade receivables that are neither past due nor impaired are stated at their realisable values. A significant portion of these trade receivables are regular customers that have been transacting with the Group. The Group uses ageing analysis to monitor the credit quality of the trade receivables. Any trade receivables having significant balances past due more than 90 days, which are deemed to have higher credit risk, are monitored individually.



30.4 Credit risk (Cont’d)

Receivables (Cont’d) Exposure to credit risk, credit quality and collateral (Cont’d)

The exposure of credit risk for trade receivables as at the end of the reporting period by geographic region was :

2014 2013

RM RM

Group

Domestic 50,638,142 54,347,331

Asia (excluding Malaysia) 573,201 1,393,258

Europe – 618,229

United States of America 714,428 –

51,925,771 56,358,818

Impairment losses

The Group maintains an ageing analysis in respect of trade receivables only. The ageing of trade receivables as at the end of the reporting period was :

GrossIndividual

impairment Collective

impairment Net

RM RM RM RM

Group

2014

Not past due 40,624,583 – – 40,624,583

Past due 1-30 days 3,313,796 – – 3,313,796

Past due 31-60 days 3,234,091 – – 3,234,091

Past due 61-90 days 1,523,989 – – 1,523,989

Past due more than 90 days 3,360,014 (130,702) – 3,229,312

52,056,473 (130,702) – 51,925,771

2013

Not past due 27,291,128 – – 27,291,128

Past due 1-30 days 15,365,534 – – 15,365,534

Past due 31-60 days 8,640,888 – – 8,640,888

Past due 61-90 days 2,014,892 – – 2,014,892

Past due more than 90 days 3,178,950 (132,574) – 3,046,376

56,491,392 (132,574) – 56,358,818






Receivables (Cont’d)

Impairment losses (Cont’d)

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

Group

2014 2013

RM RM

At 1 January 132,574 406,079

Impairment loss recognised 30,969 –

Impairment loss reversed – (273,505)

Impairment loss written off (32,841) –

At 31 December 130,702 132,574

The allowance account in respect of trade receivables is used to record impairment losses. Unless the Group is satisfied that recovery of the amount is possible, the amount considered irrecoverable is written off against the receivable directly.

Inter company balances

Risk management objectives, policies and processes for managing the risk

The Company provides unsecured advances to subsidiaries. The Company monitors the results of the subsidiaries regularly.

As at the end of the reporting period, the maximum exposure to credit risk is represented by their carrying amounts in the statements of financial position.

Impairment losses

As at the end of the reporting period, there was no indication that the advances to the subsidiaries are not recoverable. These advances are not considered overdue and are repayable on demand.

Financial guarantees


The Company provides unsecured financial guarantees to banks and suppliers in respect of banking facilities and trade purchases granted to its subsidiaries. The Company monitors on an ongoing basis the results of the subsidiaries and repayments made by the subsidiaries.


The maximum exposure to credit risk amounted to RM143.7 million (2013 : RM139.2 million) representing the outstanding banking facilities of the subsidiaries as at the end of the reporting period.

Financial guarantees to trade suppliers for trade purchases made by subsidiaries amounted to RM23.0 million (2013 : RM16.7 million) representing the outstanding amount due by subsidiaries as at the end of the reporting period.

As at the end of the reporting period, there was no indication that any subsidiary would default on repayment.

The fair value of the financial guarantees has not been recognised since the fair value on initial recognition was not material.




Investments and other financial assets


Investments are allowed only in liquid securities. The Group’s investments in equities are not significant at the end of the reporting period.


As at the end of the reporting period, the Group has only invested in domestic securities. The maximum exposure to credit risk is represented by the carrying amount in the statements of financial position.

Impairment losses

During the year, the Group recognised an impairment of RM18,400 (2013 : RM Nil) in respect of its other investments.

30.5 Liquidity risk

Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s exposure to liquidity risk arises principally from its various payables, loans and borrowings.

The Group maintains a level of cash and cash equivalents and bank facilities deemed adequate by the management to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they fall due.

It is not expected that the cash flows included in the maturity analysis could occur significantly earlier, or at significantly different amounts.






NOTES TO THE FINANCIAL STATEMENTS (Cont’d)30

. Fi

nanc

ial i

nstr

umen

ts (C

ont

’d)

30.5

Liq

uid

ity

risk

(Co

nt’d

)

M

atu

rity

an

alys

is

Th

e ta

ble

bel

ow s

umm

aris

es t

he m

atur

ity p

rofil

e of

the

Gro

up’s

and

the

Com

pan

y’s

finan

cial

liab

ilitie

s as

at

the

end

of

the

rep

ortin

g p

erio

d b

ased

on

und

isco

unte

d

cont

ract

ual p

aym

ents

:

Car

ryin

g

amo

unt

Co

ntra

ctua

l in

tere

st r

ates

Co

ntra

ctua

l ca

sh fl

ow

sU

nder

1 ye

ar 1

- 2

ye

ars

2 -

5 ye

ars

Mo

re t

han

5 ye

ars

RM

%R

MR

MR

MR

MR

M

Gro

up

2014

Non

-der

ivat

ive

finan

cial

liab

ilitie

s

Ban

k ov

erd

raft

s4,

993,

345

6.88

- 8

.35

4,99

3,34

54,

993,

345

––

–

Ban

kers

’ acc

epta

nces

105,

423,

616

3.97

- 8

.30

105,

423,

616

105,

423,

616

––

–

Term

loan

s39

,080

,580

4.40

- 7

.85

54,9

05,1

484,

431,

848

5,27

5,63

712

,347

,396

32,8

50,2

67

Fina

nce

leas

e lia

bili

ties

9,88

0,09

52.

30 -

4.6

410

,742

,799

4,58

7,93

83,

952,

137

2,20

2,72

4–

Trus

t re

ceip

ts3,

412,

617

7.60

- 8

.40

3,41

2,61

73,

412,

617

––

–

ICU

LS (l

iab

ility

com

pon

ent)

303,

261

2.00

297,

351

297,

351

––

–

Am

ount

due

to

:

- a

com

pan

y in

whi

ch c

erta

in

D

irect

ors

have

a s

ubst

antia

l

fina

ncia

l int

eres

t83

2,12

74.

0083

2,12

783

2,12

7–

––

- a

Dire

ctor

2,03

1,66

94.

002,

031,

669

2,03

1,66

9–

––

- re

late

d p

artie

s 16

,547

,058

3.00

- 8

.00

16,5

47,0

5816

,547

,058

––

–

- as

soci

ates

1,

142,

516

4.00

1,14

2,51

61,

142,

516

––

–

Trad

e an

d o

ther

pay

able

s49

,666

,686

–49

,666

,686

49,6

66,6

86–

––

Fina

ncia

l gua

rant

ees

––

22,9

74,8

1422

,974

,814

––

–

233,

313,

570

272,

869,

746

216,

341,

585

9,22

7,77

414

,550

,120

32,8

50,2

67


30.

Fina

ncia

l ins

trum

ents

(Co

nt’d

)

30.5

Liq

uid

ity

risk

(Co

nt’d

)

M

atu

rity

an

alys

is (C

ont’

d)

Car

ryin

g

amo

unt

Co

ntra

ctua

l in

tere

st r

ates

Co

ntra

ctua

l ca

sh fl

ow

sU

nder

1 ye

ar 1

- 2

ye

ars

2 -

5 ye

ars

Mo

re t

han

5 ye

ars

RM

%R

MR

MR

MR

MR

M

Gro

up

2013

Non

-der

ivat

ive

finan

cial

liab

ilitie

s

Ban

k ov

erd

raft

s6,

917,

459

7.60

- 8

.10

6,91

7,45

96,

917,

459

––

–

Ban

kers

’ acc

epta

nces

122,

887,

456

3.97

- 7

.60

122,

887,

456

122,

887,

456

––

–

Term

loan

s40

,793

,759

4.40

- 7

.85

56,4

41,6

474,

455,

093

5,31

8,39

514

,180

,616

32,4

87,5

43

Fina

nce

leas

e lia

bili

ties

11,5

09,6

682.

30 -

4.0

212

,793

,089

4,57

8,05

63,

780,

397

3,03

4,61

61,

400,

020

Trus

t re

ceip

ts3,

817,

121

5.50

- 9

.10

3,81

7,12

13,

817,

121

––

–

ICU

LS (l

iab

ility

com

pon

ent)

1,04

4,02

22.

001,

189,

404

594,

702

594,

702

––

Am

ount

due

to

:

- a

com

pan

y in

whi

ch c

erta

in

Dire

ctor

s ha

ve a

sub

stan

tial

fi

nanc

ial i

nter

est

1,03

5,82

7 4

.00

1,03

5,82

71,

035,

827

- a

Dire

ctor

1,94

2,95

84.

001,

942,

958

1,94

2,95

8–

––

- re

late

d p

artie

s 6,

368,

969

8.00

- 8

.10

6,36

8,96

96,

368,

969

––

–

- as

soci

ates

1,

405,

443

4.00

1,40

5,44

31,

405,

443

––

–

Trad

e an

d o

ther

pay

able

s48

,314

,287

–48

,314

,287

48,3

14,2

87–

––

Fina

ncia

l gua

rant

ees

––

16,7

48,3

0816

,748

,308

––

–

246,

036,

969

279,

861,

968

219,

065,

679

9,69

3,49

417

,215

,232

33,8

87,5

63




. Fi

nanc

ial i

nstr

umen

ts (C

ont

’d)

30.5

Liq

uid

ity

risk

(Co

nt’d

)

M

atu

rity

an

alys

is (C

ont’

d)

Car

ryin

g

amo

unt

Co

ntra

ctua

l in

tere

st r

ates

Co

ntra

ctua

l ca

sh fl

ow

sU

nder

1 ye

ar 1

- 2

ye

ars

2 -

5 ye

ars

Mo

re t

han

5 ye

ars

RM

%R

MR

MR

MR

MR

M

Co

mp

any

Non

-der

ivat

ive

finan

cial

liab

ilitie

s

2014

Fina

nce

leas

e lia

bili

ties

108,

831

3.30

120,

375

36,1

2036

,120

48,1

35–

ICU

LS (l

iab

ility

com

pon

ent)

303,

261

2.00

594,

702

594,

702

––

–

Oth

er p

ayab

les

651,

032

–65

1,03

265

1,03

2–

––

Am

ount

due

to

sub

sid

iarie

s37

,240

,757

4.00

37,2

40,7

5737

,240

,757

––

–

Fina

ncia

l gua

rant

ees

––

219,

274,

084

219,

274,

084

––

–

38,3

03,8

8125

7,88

0,95

025

7,79

6,69

536

,120

48,1

35–

2013

Fina

nce

leas

e lia

bili

ties

137,

964

3.30

156,

495

36,1

2036

,120

84,2

55–

ICU

LS (l

iab

ility

com

pon

ent)

1,04

4,02

22.

001,

189,

404

594,

702

594,

702

––

Oth

er p

ayab

les

3,52

8,00

0–

3,52

8,00

03,

528,

000

––

–

Am

ount

due

to

sub

sid

iarie

s32

,088

,490

4.00

32,0

88,4

9032

,088

,490

––

–

Fina

ncia

l gua

rant

ees

––

174,

305,

079

174,

305,

079

––

–

36,7

98,4

7621

1,26

7,46

821

0,55

2,39

163

0,82

284

,255

–




30.6 Market risk

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

30.6.1 Currency risk

The Group is exposed to foreign currency risk on sales and purchases that are denominated in a currency other than the respective functional currency of Group entities. The currencies giving rise to this risk are primarily U.S. Dollar (USD).


It is generally the Group’s practice not to enter into foreign exchange contracts in managing its foreign exchange risk resulting from cash flows from transactions denominated in foreign currency other than to cover short term positions.

Exposure to foreign currency risk

The Group’s exposure to foreign currencies (a currency which is other than the functional currency of the Group entities) risk, based on carrying amounts as at the end of the reporting period was:

2014 2013

Group RM RM

Amount denominated in USD :

Trade and other receivables 1,227,639 2,217,875

Trade and other payables (17,376,397) (8,280,321)

Cash and cash balances 202,214 7,300

Net exposure (15,946,544) (6,055,146)

Currency risk sensitivity analysis

Foreign currency risk arises from Group entities which have a Ringgit Malaysia (“RM”) currency.

A 5% (2013 : 5%) strengthening of the RM against the USD at the end of the reporting period would have increased/(decreased) post-tax profit or loss by the amounts shown below. This analysis is based on foreign currency exchange rate variances that the Group considered to be reasonably possible at the end of the reporting period. This analysis assumes that all other variables, in particular interest rates, remained constant and ignores any impact of forecasted sales and purchases. There is no impact to equity arising from exposure to currency risk.

Group

2014 2013

RM RM

Profit or loss

USD 597,995 227,068

A 5% (2013 : 5%) weakening of RM against the USD at the end of the reporting period would have had equal but opposite effect on the above currencies to the amounts shown above, on the basis that all other variables remained constant.




30.6 Market risk

30.6.2 Interest rate risk

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


The Group is presently enjoying market interest rates which are reviewed and negotiated on a yearly basis. The Group manages their interest rate risk by having a combination of borrowings with fixed and floating rates.

Exposure to interest rate risk

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

2014 2013

RM RM

Group

Fixed rate instruments

Financial assets 9,452,736 9,948,090

Financial liabilities (139,572,959) (164,776,419)

(130,120,223) (154,828,329)

Floating rate instruments


Company

Fixed rate instruments


Interest rate risk sensitivity analysis

(a) Fair value sensitivity analysis for fixed rate instruments

The Group does not account for any fixed rate financial assets and liabilities at fair value through profit or loss. Therefore, a change in interest rates at the end of the reporting period would not affect profit or loss.



30.6 Market risk (Cont’d)

30.6.2 Interest rate risk (Cont’d)

Interest rate risk sensitivity analysis (Cont’d)

(b) Cash flow sensitivity analysis for variable rate instruments

A change of 50 basis points (bp) in interest rates at the end of the reporting period would have increased/(decreased) post-tax profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular foreign currency rates, remained constant.

Profit or loss

50 bpincrease

50 bp decrease

RM RM

Group

2014

Floating rate instruments (165,277) 165,277

2013

Floating rate instruments (178,917) 178,917

30.6.3 Other price risk

Equity price risk arises from the Group’s investments in equity securities.


The Group’s investments in equities are not significant as at the end of the reporting period.

Equity price risk sensitivity analysis

The management is of the view that the results of the Group is not sensitive towards changes in equity price risk as there are no equity investments being designated as fair value through profit or loss. Changes in equity price risk for equity investments designated as available-for-sale is not significant to the total equity of the Group.

30.7 Fair value information

The carrying amounts of cash and cash equivalents, fixed deposits, short term receivables and payables and short-term borrowings reasonably approximate their fair values due to the relatively short term nature of these financial instruments.

It was not practicable to estimate the fair value of the Group’s investment in unquoted shares due to the lack of comparable quoted market prices in an active market and the fair value cannot be reliably measured.




. Fi

nanc

ial i

nstr

umen

ts (C

ont

’d)

30.7

Fai

r va

lue

info

rmat

ion

(Co

nt’d

)

Th

e ta

ble

bel

ow a

naly

ses

finan

cial

inst

rum

ents

car

ried

at

fair

valu

e an

d t

hose

not

car

ried

at

fair

valu

e fo

r w

hich

fair

valu

e is

dis

clos

ed, t

oget

her

with

the

ir fa

ir va

lues

an

d c

arry

ing

amou

nts

show

n in

the

sta

tem

ents

of fi

nanc

ial p

ositi

on.

Fair

val

ue o

f fi

nanc

ial i

nstr

umen

tsca

rrie

d a

t fa

ir v

alue

Fair

val

ue o

f fi

nanc

ial i

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30.7 Fair value information (Cont’d)

Policy on transfer between levels

The fair value of an asset to be transferred between levels is determined as of the date of the event or change in circumstances that caused the transfer.

There has been no transfer between the fair value levels during the financial year (2013: no transfer in either direction).

Level 1 fair value

The fair value of quoted investments is derived from quoted prices (unadjusted) in active markets.

Level 3 fair value

Non-derivative financial liabilities

Fair value, which is determined for disclosure purposes, is calculated based on the present value of future principal and interest cash flows, discounted at the market rate of interest at the end of the reporting period. The fair value of the loans and borrowings is calculated using discounted cash flows where the market rate of interest is determined by reference to similar borrowing arrangements.

31. Capital management

The Group’s objectives when managing capital is to maintain a strong capital base and safeguard the Group’s ability to continue as a going concern, so as to maintain investor, creditor and market confidence and to sustain future development of the business. At 31 December 2014, the current liabilities of the Group and of the Company exceeded the current assets by RM56,396,458 and RM26,407,991 respectively.




32. Operating lease - Group/Company Leases as lessor

The future minimum lease receivable under non-cancellable leases are as follows :

2014 2013

RM RM

Less than one year 1,331,487 969,876

Between one and five years 1,864,081 –

3,195,568 969,876

The Company leased land, warehouse, office and factory space to an associate under operating lease. The lease runs for an initial period of 3 years with an option to renew the lease upon the expiry of the initial lease period.



33. Supplementary information on the breakdown of realised and unrealised profits or losses

The breakdown of the retained earnings of the Group and of the Company as at 31 December, into realised and unrealised profits, pursuant to Paragraphs 2.06 and 2.23 of Bursa Malaysia Main Market Listing Requirements, are as follows :

Group Company

2014 2013 2014 2013

RM RM RM RM

Total retained earnings of the Company and its subsidiaries :

- Realised 60,337,862 78,767,912 52,373,555 66,932,167

- Unrealised (7,721,117) (6,949,076) – –

52,616,745 71,818,836 52,373,555 66,932,167

Total share of accumulated losses of associates

- Realised (6,376,073) (8,758,012) – –

- Unrealised (4,482,466) (2,861,197) – –

41,758,206 60,199,627 52,373,555 66,932,167

Less : Consolidation adjustments (20,122,907) (21,901,381) – –

Total retained earnings at 31 December 21,635,299 38,298,246 52,373,555 66,932,167

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


STATEMENT BY DIRECTORSPURSUANT TO SECTION 169(15) OF THE COMPANIES ACT, 1965

In the opinion of the Directors, the financial statements set out on pages 30 to 97 are drawn up in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company as of 31 December 2014 and of their financial performance and cash flows for the financial year then ended.

In the opinion of the Directors, the information set out in Note 33 on page 98 to the financial statements has been compiled in accordance with the Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosures Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, issued by the Malaysian Institute of Accountants, and presented based on the format prescribed by Bursa Malaysia Securities Berhad.

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


…………………………………..Siah Lee Beng

Penang,


STATUTORY DECLARATIONPURSUANT TO SECTION 169(16) OF THE COMPANIES ACT, 1965

I, Dato’ Siah Kok Poay, the Director primarily responsible for the financial management of Tatt Giap Group Berhad, do solemnly and sincerely declare that the financial statements set out on pages 30 to 97 are, to the best of my knowledge and belief, correct and I make this solemn declaration conscientiously believing the same to be true, and by virtue of the provisions of the Statutory Declarations Act, 1960.

Subscribed and solemnly declared by the abovenamed at Georgetown in the State of Penang on 30 April 2015.


Before me :

Goh Suan Bee (No. P125)Pesuruhjaya Sumpah(Commissioner for Oaths)


INDEPENDENT AUDITORS’ REPORT TO THE MEMBERSOF TATT GIAP GROUP BERHAD

Report on the Financial Statements

We have audited the financial statements of Tatt Giap Group Berhad, which comprise the statements of financial position as at 31 December 2014 of the Group and of the Company, and the statements of profit or loss and other comprehensive income, changes in equity and 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 30 to 97.

Directors’ Responsibility for the Financial Statements

The Directors of the Company are responsible for the preparation of financial statements that 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 of 31 December 2014 and of their financial performance and cash flows for the year then ended in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia.

Report on Other Legal and Regulatory Requirements

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

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

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

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


INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF TATT GIAP GROUP BERHAD (Cont’d)

Other Reporting Responsibilities

Our audit was made for the purpose of forming an opinion on the financial statements taken as a whole. The information set out in Note 33 on page 98 to the financial statements has been compiled by the Company as required by the Bursa Malaysia Securities Berhad Listing Requirements and is not required by the Malaysian Financial Reporting Standards or International Financial Reporting Standards. We have extended our audit procedures to report on the process of compilation of such information. In our opinion, the information has been properly compiled, in all material respects, in accordance with the Guidance of Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosures Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, issued by the Malaysian Institute of Accountants and presented based on the format prescribed by Bursa 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.

KPMG Ooi Kok Seng

Firm Number : AF 0758 Approval Number : 2432/05/15 (J)

Chartered Accountants Chartered Accountant


Penang


LIST OF GROUP PROPERTIESFOR THE YEAR ENDED 31 DECEMBER 2014

Location & Description

Name of registered

owner / beneficial

ownerDescription /Existing Use Tenure

Land / Built-

up area (square

feet)

Book value @

31.12.2014

Marketvalue (RM) /

date ofvaluation

No. 1617 Lorong Perusahaan Maju 6, Prai Industrial Estate IV, 13600 Prai, Penang held under Title No. HS(D) 14941 & 14942, No. PT 2961 & 2960, both Mukim 11, Daerah Seberang Perai Tengah, Pulau Pinang.

TGG / Nil 3-storey office building and

annexed single storey factory / Currently used as factory and

office

60 years leasehold

interest expiring

on 6 December

2052

456,134 / 293,520

25,223,462 28,000,000/

10 April 2012

Plot 33, Jalan Perusahaan Bukit Minyak, Kawasan Perindustrian Bukit Minyak, 14000 Bukit Mertajam, Pulau Pinang, held under Title No. HS(D) 16499,PT 169 Mukim 13, SeberangPrai Tengah, Pulau Pinang.

TGSC / Nil 3-storey office building and

annexed single storey factory / Currently used as factory and

office

60 years leasehold

interest expiring

on 26 December

2056

217,801 / 151,040

15,807,819 16,550,000/

10 April 2012

No. 1067, 1068 & 1069, Jalan Bagan Lallang, 13400 Butterworth, Pulau Pinang, held under Title No. GM 262, Lot 681, Mukim 16, Daerah Seberang Perai Utara, Pulau Pinang.

TGH / Nil Comprises of 3 units of 2 ½ storey terrace

shop office annexed to a single storey

warehouse / Currently

used as office building and warehousing

purpose

Freehold 38,115 / 26,764

3,042,494 3,200,000/

8 January 2008

No. 6 Jalan Perusahaan 5, Kawasan Perindustrian Beranang, 43700 Semenyih, Selangor, held under Title No. HS(D) 59007, No. PT. 51 Bandar Batu 26, Beranang, Daerah Ulu Langat, Negeri SelangorDarul Ehsan.

TGSC / Nil Double storey office annexed

with single storey factory / Currently used as factory and office building

99 years leasehold

interest expiring on 9 October

2099

207,959 / 32,596

7,091,515 5,650,000/

8 January 2008


LIST OF GROUP PROPERTIESFOR THE YEAR ENDED 31 DECEMBER 2014 (Cont’d)

Location & Description

Name of registered

owner / beneficial

ownerDescription /Existing Use Tenure

Land / Built-

up area (square

feet)

Book value @

31.12.2014

Marketvalue (RM) /

date ofvaluation

No. 1237 Jalan Bagan Lallang, Bagan Lallang, 13400 Butterworth, held under Geran Mukim 261, Lot 679, Mukim 16, Seberang Perai Utara,Pulau Pinang.

TGO / Nil Single storey warehouse /

Currently used for warehousing

purpose

Freehold 47,088 / 16,641

2,001,098 2,031,169

Lot 1628 & 1630, MK12, Tempat Ladang Valdor, Daerah Seberang Perai Selatan, Penang.

SPI/Nil 2 storey office building with a

factory building attached & a stand-alone building and new single-

storey detached factory/currently used as factory

and office

Freehold 549,927 / 325,335

42,865,517 45,000,000 /

4 September2013

No. 63, Jalan Sesiku 15/2, Section 15 Shah Alam Selangor Darul Ehsan held under title HS(D) 167366, PT-, Mukim of Damansara District of Petaling, Selangor Darul Ehsan.

TGH/Nil 2 storey office building with 2 units single

storey detached warehouses attached &

an annexed double storey

office building/ Currently

used as office building and warehousing

purpose

99 years leasehold

interest expiring 24 September

2066

87,134 / 96,445

12,233,251 12,200,000 /

27 February 2012


ANALYSIS OF SHAREHOLDINGSAS AT 27 APRIL 2015

Share Capital

Authorised Share Capital : RM80,000,000Issued and Fully Paid-Up Capital : RM60,988,848.50Class of Share : Ordinary Shares of RM0.50 each fully paidVoting Rights : On a show of hands - one vote for every shareholder

On a poll - one vote for every ordinary share held

Distribution of Shareholdings as at 27 April 2015

Size of shareholdingsNo. of

Shareholders % No. of Shares %

Less than 100 5 0.44 299 0.00100 - 1000 130 11.61 49,001 0.041,001 - 10,000 435 38.84 2,886,796 2.3710,001 -100,000 447 39.91 16,778,100 13.76100,001 to less than 5% of issued shares 102 9.11 52,199,699 42.795% and above of issued shares 1 0.09 50,063,802 41.04

Total 1,120 100.00 121,977,697 100.00

Thirty Largest Shareholders as at 27 April 2015

No. Name No. of Shares %

1 GIAPXIN SDN BHD 50,063,802 41.0432 HANWA CO., LTD. 5,060,000 4.1483 CHONG SIEW PIN 4,551,199 3.7314 TAN GUAT CHOO 4,173,500 3.4225 LAI YAT GIN 2,921,600 2.3956 RHB NOMINEES (TEMPATAN) SDN BHD

PLEDGED SECURITIES ACCOUNT FOR TAN CHIN SEOH2,300,000 1.886

7 AFFIN HWANG NOMINEES (ASING) SDN BHDDBS VICKERS SECS (S) PTE LTD FOR NIPPON METAL SERVICES (S) PTE LTD

1,500,000 1.230

8 HANG LI CONSTRUCTION & RENOVATION SDN BHD 1,138,800 0.9349 PHILIP A/L K.O. KUNJAPPY 1,116,000 0.91510 LIM BONG CHAI 1,085,000 0.89011 TEOH CHEW SENG 1,050,000 0.86112 GEORGE LEE SANG KIAN 1,028,900 0.84413 ALLIANCEGROUP NOMINEES (TEMPATAN) SDN BHD

PLEDGED SECURITIES ACCOUNT FOR LIM LIAN SENG (800394)865,900 0.710

14 SEE MING HOI 863,000 0.70815 ARICH HOLDINGS INC. 830,900 0.68116 ONG ENG KHOON 735,400 0.60317 GONG LIRU 697,000 0.57118 CHEW CHAI HONG 670,000 0.54919 RHB NOMINEES (TEMPATAN) SDN BHD

PLEDGED SECURITIES ACCOUNT FOR CHEANG FOOK SAM613,100 0.503

20 PHILIP A/L K.O. KUNJAPPY 594,500 0.487

21 MAYBANK NOMINEES (TEMPATAN) SDN BHDPLEDGED SECURITIES ACCOUNT FOR LIAU SIONG KEE @ LIEW SIONG KEE

534,500 0.438

22 RHB CAPITAL NOMINEES (TEMPATAN) SDN BHDPLEDGED SECURITIES ACCOUNT FOR LIM KAM SENG (IPH)

510,000 0.418


ANALYSIS OF SHAREHOLDINGSAS AT 27 APRIL 2015 (Cont’d)

Thirty Largest Shareholders as at 27 April 2015 (Cont’d)

No. Name No. of Shares %

23 TI LIAN KER 500,000 0.41024 CHEAH CHIN ENG 493,000 0.40425 CHEAH CHIN WOOI 493,000 0.40426 LAU KENG MONG 426,900 0.35027 YAT YEE TONG 407,000 0.33428 CHIANG SIEW ENG @ LE YU AK EE 400,000 0.32829 MAGARET TING THIEN HUNG 400,000 0.32830 SOH GUAN CHAI 400,000 0.328

Total 86,423,001 70.851

Substantial Shareholders as at 27 April 2015

Direct Interest Indirect Interest

Name No. of Shares % No. of Shares %

Dato’ Siah Kok Poay 96 – 50,063,854 (a) 41.04 Siah Lee Beng – – 50,063,802 (b) 41.04 Giapxin Sdn Bhd 50,063,802 41.04 – –

Note:

(a) Deemed interested by virtue of holding more than 15% in the shares of Giapxin Sdn Bhd and Sixis Resources Sdn Bhd pursuant to section 6A of the Companies Act 1965 (“Act”)

(b) Deemed interested by virtue of holding more than 15% in Giapxin Sdn Bhd pursuant to Section 6A of the Act

Directors’ Shareholdings as at 27 April 2015


Name No. of Shares % No. of Shares %

The Company

Dato’ Siah Kok Poay 96 – 50,063,854 (a) 41.04 Siah Lee Beng – – 50,153,802 (b) 41.12 Tan Lu Eng 52 – – – Siah Chin Pin – – – –Dato’ Rosely bin Samsuri – – – –Loh Eng Wee – – – –Foo Kee Fatt – – – –Siah Chin Soon, Alternate Director to Siah Lee Beng 100,000 0.08 – – Siah Chin Hoo, Alternate Director to Dato’ Siah Kok Poay – – – –

Note:

(a) Deemed interested by virtue of holding more than 15% in the shares of Giapxin Sdn Bhd and Sixis Resources Sdn Bhd pursuant to section 6A of the Act

(b) Held in the name of his child and is deemed interested by virtue of holding more than 15% in Giapxin Sdn Bhd pursuant to Section 6A of the Act


ANALYSIS OF ICULSAS AT 27 APRIL 2015

ICULS

Original ICULS issued : RM30,800,000Nominal/Par value per ICULS : RM1.00 per ICULSCoupon Rate : 2% per annum payable annually in arrearsVoting Rights : NoneTotal ICULS holders : 104

Distribution of ICULS holders as at 27 April 2015

Size of ICULS holdingsNo. of ICULS

holders % No. of ICULS %

Less than 100 – 0.00 – –100 - 1000 100 96.16 10,000 0.051,001 - 10,000 – 0.00 – –10,001 -100,000 – 0.00 – –100,001 to less than 5% of issued shares 2 1.92 357,280 1.865% and above of issued shares 2 1.92 18,845,655 98.09

Total 104 100.00 19,212,935 100.00

Thirty Largest ICULS holders as at 27 April 2015

No. Name No. of ICULS %

1 GIAPXIN SDN BHD 17,333,375 90.2172 TAN GUAT CHOO 1,512,280 7.8713 CHEAH CHIN ENG 178,640 0.9304 CHEAH CHIN WOOI 178,640 0.9305 AHMAD AFIFI BIN MOHD NOR 100 *6 AHMAD BIN AMIN 100 *7 AHMAD HAMBALY BIN SABRI 100 *8 CHEW SHAN NEE 100 *9 CHUAH CHOON SIANG 100 *10 CHUNG KIM LIANG 100 *11 CINDY SAM CHIA YUNN 100 *12 FADLI BIN RAZMAN 100 *13 FAZILAH BINTI SIRAJUDIN 100 *14 FOR KOH KHEONG @ HOR KOH KHEONG 100 *15 GOH SEW CHENG 100 *16 HEE SU NEE 100 *17 KANAN A/L SANDANASAMY 100 *18 KARTEYAYENE A/P MUNIANDY 100 *19 KHOR CHOOI HUANG 100 *20 KOK KIAN HWEE 100 *21 LAKSHMI A/P THATA @ KANNAIAH 100 *22 LAU MEI FONG 100 *


ANALYSIS OF ICULSAS AT 27 APRIL 2015 (Cont’d)

Thirty Largest ICULS holders as at 27 April 2015 (Cont’d)

No. Name No. of ICULS %

23 LEE BENG SIEA 100 *24 LEE LAY LING 100 *25 LEE TEIK WAI 100 *26 YEAP BEE CHIN 100 *27 YEOH KHYE HWA 100 *28 YONG SAN CHONG 100 *29 YU LENY 100 *30 ZAIFERI BIN MD YUSOFF 100 *

Total 19,205,535 99.96

Note:

* Negligible

Directors’ ICULS holdings as at 27 April 2015


Name No. of ICULS % No. of ICULS %

The Company

Dato’ Siah Kok Poay – – 17,333,375 (a) 90.22Siah Lee Beng – – 17,333,475 (b) 90.22Tan Lu Eng – – – –Siah Chin Pin 100 – – –Dato’ Rosely bin Samsuri – – – –Loh Eng Wee – – – –Foo Kee Fatt – – – –Siah Chin Soon, Alternate Director to Siah Lee Beng 100 – – –Siah Chin Hoo, Alternate Director to Dato’ Siah Kok Poay 100 – – –

Note:(a) Deemed interested by virtue of holding more than 15% in Giapxin Sdn Bhd pursuant to Section 6A of the Act(b) Held in the name of his child and is deemed interested by virtue of holding more than 15% in Giapxin Sdn Bhd pursuant

to Section 6A of the Act


NOTICE OF ANNUAL GENERAL MEETING

NOTICE IS HEREBY GIVEN THAT the Ninth Annual General Meeting of Tatt Giap Group Berhad will be held at Function Hall of Tatt Giap Group Berhad at 1617 Lorong Perusahaan Maju 6, Prai Industrial Estate IV, 13600 Prai, Penang on Tuesday, 23 June 2015 at 11:30 am for the following purposes :

AS ORDINARY BUSINESS :

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

2. To approve the payment of Directors’ fees of RM90,000 for the financial year ended 31 December 2014. Ordinary Resolution 1

3. To re-elect the following Directors who retire by rotation pursuant to Article 132 of the Company’s Articles of Association and being eligible, offer themselves for re-election : 3.1 Dato’ Siah Kok Poay, Steven 3.2 Mr. Siah Lee Beng, Michael

Ordinary Resolution 2 Ordinary Resolution 3

4. To re-appoint Messrs KPMG as Auditors of the Company and to authorise the Directors to determine their remuneration. Ordinary Resolution 4

AS SPECIAL BUSINESS :

To consider, and if thought fit, to pass the following as Ordinary Resolution with or without modification :

5. Ordinary Resolution Authority to Issue Shares

“THAT pursuant to Section 132D of the Companies Act 1965, the Company’s Articles of Association and subject to the approvals of the relevant Governmental and/or regulatory authorities, the Directors be and are hereby empowered to issue shares in the Company from time to time upon such terms and conditions and for such purposes and to such person or persons as the Directors may deem fit provided that the aggregate number of shares issued pursuant to this resolution does not exceed 10% of the total issued share capital of the Company for the time being and that the Directors be and are also empowered to obtain the approval from Bursa Malaysia Securities Berhad for the listing of and quotation for the additional shares so issued and that such authority shall continue to be in force until the conclusion of the next Annual General Meeting of the Company or the expiration of the period within which the next Annual General Meeting is required by law to be held or revoked/varied by resolution passed by the shareholders in general meeting whichever is the earlier.”

Ordinary Resolution 5

6. To consider any other business for which due notice shall have been given in accordance with the Companies Act, 1965.

By Order of the Board

ONG TZE-EN (MAICSA 7026537) TAI YIT CHAN (MAICSA 7009143) Joint Company Secretaries

Penang, 29 May 2015


NOTICE OF ANNUAL GENERAL MEETING (Cont’d)

NOTES :

Appointment of Proxy

1. A member may appoint 2 proxies to attend on the same occasion. A proxy may but need not be a Member and the provisions of Section 149(1)(b) of the Companies Act, 1965 shall not apply to the Company. If a Member appoints 2 proxies, the appointments shall be invalid unless he specifies the proportions of his holdings to be represented by each proxy.

2. Where a member of the Company is an authorised nominee as defined under the Securities Industries (Central Depositories) Act, 1991 (“SICDA”), it may appoint at least one (1) proxy in respect of each securities account it holds with ordinary shares of the Company standing to the credit of the said Securities Account.

3. Where a member of the Company is an exempt authorised nominee which hold ordinary shares in the Company for multiple beneficial owners in one (1) securities account (“omnibus account”), there shall be no limit to the number of proxies which the exempt authorised nominee may appoint in respect of each omnibus account it holds.

An exempt authorised nominee refers to an authorised nominee defined under the SICDA which is exempted from compliance with the provisions of subsection 25A(1) of SICDA.

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 such appointor is a corporation under its Common Seal or the hand of its attorney.

5. For the proxy to be valid, the proxy form duly completed must be deposited at the Company’s Registered Office at Suite 16-1 (Penthouse Upper), Menara Penang Garden, 42A Jalan Sultan Ahmad Shah, 10050 Penang, at least forty-eight (48) hours before the time appointed for holding the meeting or any adjournment thereof.

6. In respect of deposited securities, only a depositor whose name appear on the Record of Depositors on 16 June 2015 (General Meeting Record of Depositors) shall be eligible to attend the meeting or appoint proxies to attend and/or vote his/her behalf.

Explanatory Notes on Special Business

7. Ordinary Resolution 5 is a renewal of a general mandate given to the Directors of the Company to allot and issue shares pursuant to Section 132D of the Companies Act 1965 as approved by the shareholders at the Eighth Annual General Meeting (“AGM”) held on 26 June 2014. As at the date of the Notice, no new shares in the Company were issued pursuant to the mandate granted to the Directors at the last AGM which will lapse at the conclusion of the forthcoming AGM to be held on 23 June 2015.

The Ordinary Resolution 5, if passed, will empower the Directors of the Company to issue and allot shares in the Company from time to time and for such purposes as the Directors consider would be in the interest of the Company up to an amount not exceeding 10% of the Company’s issued capital for the time being. This authority will, unless revoked or varied by the Company in general meeting, expire at the next AGM of the Company or the period within which the next AGM of the Company is required by law to be held whichever is the earlier.

The general mandate will provide flexibility to the Company for any possible fund raising activities, including but not limited to further placing of shares, for purpose of funding future investment projects, working capital and/or acquisitions as well as to avoid any delay and cost in convening general meeting to specifically approve such an issuance of shares.

STATEMENT ACCOMPANYING NOTICE OF ANNUAL GENERAL MEETING PURSUANT TO PARAGRAPH 8.27(2) OF THE MAIN MARKET LISTING REQUIREMENTS OF BURSA MALAYSIA SECURITIES BERHAD Details of individual(s) who are standing for election as Director(s)

No individual is seeking election as a Director at the Ninth AGM of the Company.

THIS PAGE HAS BEEN INTENTIONALLY BLANK

PROXY FORM9TH ANNUAL GENERAL MEETING

CDS Account No.

No. of Shares Held

I/We __________________________________________________________________________________________________________(Full Name as per NRIC and NRIC No./Company No. in Block Letters)

of ____________________________________________________________________________________________________________(Full Address in Block Letters and Tel No.)

being a member/members of the above Company hereby appoint ___________________________________________________(Full Name as per NRIC and NRIC No./Company No. in Block Letters)


or failing him, __________________________________________________________________________________________________(Full Name as per NRIC and NRIC No./Company No. in Block Letters)


or failing him/her, the CHAIRMAN OF THE MEETING as my/our Proxy to vote in my/our name(s) on my/our behalf at the Ninth Annual General Meeting of the Company to be held at Function Hall of Tatt Giap Group Berhad at 1617 Lorong Perusahaan Maju 6, Prai Industrial Estate IV, 13600 Prai, Penang on Tuesday, 23 June 2015 at 11:30 am and at any adjournment thereof in the manner indicated below :

Ordinary Resolutions For Against

1. To approve the payment of Directors’ fees for financial year ended 31 December 2014.

2. To re-elect Dato’ Siah Kok Poay, Steven as Director of the Company.

3. To re-elect Mr. Siah Lee Beng, Michael as Director of the Company.

4. To re-appoint Messrs KPMG as Auditors of the Company.

5. To empower the Directors to issue and allot shares up to 10% of the issued share capital of the Company.

(Please indicate with an “X” in the appropriate box against each Resolution how you wish your proxy to vote. If no instruction is given, this form will be taken to authorise the proxy to vote at his/her discretion.)

Dated this _________ day of __________________ 2015

Signature of Shareholder Common Seal to be affixed here if Shareholder is a Corporation

Notes :

1. A member may appoint 2 proxies to attend on the same occasion. A proxy may but need not be a Member and the provisions of Section 149(1)(b) of the Companies Act, 1965 shall not apply to the Company. If a Member appoints 2 proxies, the appointments shall be invalid unless he specifies the proportions of his holdings to be represented by each proxy.

2. Where a member of the Company is an authorised nominee as defined under the Securities Industries (Central Depositories) Act, 1991 (“SICDA”), it may appoint at least one (1) proxy in respect of each securities account it holds with ordinary shares of the Company standing to the credit of the said securities account.

3. Where a member of the Company is an exempt authorised nominee which hold ordinary shares in the Company for multiple beneficial owners in one (1) securities account (“omnibus account”), there shall be no limit to the number of proxies which the exempt authorised nominee may appoint in respect of each omnibus account it holds.

An exempt authorised nominee refers to an authorised nominee defined under SICDA which is exempted from compliance with the provisions of subsection 25A(1) of SICDA.

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 such appointor is a corporation under its Common Seal or the hand of its attorney.

5. For the proxy to be valid, the proxy form duly completed must be deposited at the Company’s Registered Office at Suite 16-1 (Penthouse Upper), Menara Penang Garden, 42A Jalan Sultan Ahmad Shah, 10050 Penang, not less than forty-eight (48) hours before the time appointed for holding the meeting or any adjournment thereof.

6. In respect of deposited securities, only a depositor whose name appear on the Record of Depositors on 16 June 2015 (General Meeting Record of Depositors) shall be eligible to attend the meeting or appoint proxies to attend and/or vote his/her behalf.

For appointment of two (2) proxies, no. of shares and percentage of shareholdings to be represented by the proxies:

No. of shares Percentage

Proxy 1

Proxy 2

Total 100%


(Incorporated in Malaysia)

To

The Company SecretariesTatt Giap Group Berhad (732294-W)

Suite 16-1 (Penthouse Upper)Menara Penang Garden42A, Jalan Sultan Ahmad Shah10050 Penang

Stamp


Corporate Headquarters:No. 1617, Lorong Perusahaan Maju 6,Prai Industrial Estate IV,13600 Prai, Penang, Malaysia.Tel : +604-502 1155Fax : +604-502 1166Email : [email protected]

Corporate Branch:No. 63, Jalan Sesiku 15/2, Seksyen 15,40200, Shah Alam,Selangor Darul Ehsan, Malaysia.Tel : +603-5511 0366Fax : +603-5511 3166

Subsidiary Companies:TATT GIAP HARDWARE SDN. BHD. (39286-X)Tel : +604-331 0066/+603-5511 0366Fax : +604-331 3066/+603-5511 3166

TATT GIAP STEEL CENTRE SDN. BHD. (310962-X)Tel : +604-507 0033/+603-5512 1566Fax : +604-507 0066/+603-5512 3566

TGMI INDUSTRIES SDN. BHD. (421355-V)Tel : +603-8766 7366Fax : +603-8766 8366

TG ORIENTAL STEEL SDN. BHD. (42683-P)Tel : +604-582 5511Fax : +604-582 8611

SUPERINOX PIPE INDUSTRY SDN. BHD. (712388-D)Tel : +604-582 5511Fax : +604-582 8611

SUPERINOX MAX FITTINGS INDUSTRY SDN. BHD. (405083-T)Tel : +604-582 5511Fax : +604-582 8611

SUPERINOX INTERNATIONAL SDN. BHD. (786945-A)Tel : +604-582 5511Fax : +604-582 8611

Associate Companies:NIPPON EGALV STEEL SDN. BHD. (721702-W)Tel : +604-502 1155Fax : +604-507 6688

NISSHIN METAL SERVICES (M) SDN. BHD. (434550-M)Tel : +604-507 3823Fax : +604-507 3928

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