TECNIC GROUP BERHAD - MalaysiaStock.Biz TECNIC GROUP BERHAD (302675-A) | ANNUAL REPORT 2015 ANNUAL...

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

Lot 1, Jalan P/2A, Kawasan Perusahaan Pkt. 1, 43650 Bandar Baru Bangi,

Selangor Darul Ehsan.

Tel: No.: 03-8925 6950Fax No.: 03-8925 6955

Website: www.tecnic.com.my

Research and DevelopmentMould Fabrication

Industrial PackagingConsumer Packaging

Electrical and ElectronicsAutomotive

TECNIC GROUP BERHAD(302675-A)

Corporate Information 2Directors’ Profile 3Chairman’s Statement 6Financial Highlights 8Statement on Corporate Social Responsibility 9Audit Committee Report 10Corporate Governance Statement 15Statement on Risk Management and Internal Control 25Statement of Directors’ Responsibility 28Additional Compliance Information 29Notice of Annual General Meeting 30Financial Statements 32Analysis of Shareholdings 95Proxy Form (Enclosed)

contents

2 TECNIC GROUP BERHAD (302675-A)Annual Report 2015

corporate information

DIRECTORSDato’ Gan Kim Huat (Executive Chairman)Gan Poh San (Non-Independent Executive Director)Gan Chia Siang (Non-Independent Executive Director)Ng Wan Cher @ Ng Guan Cher (Non-Independent Executive Director)Tan Jing Pho (Non-Independent Executive Director)Teo Chee Kok (Independent Non-Executive Director)Tan Sri Hussin bin Haji Ismail (Independent Non-Executive Director) Amirul Azhar bin Baharom (Independent Non-Executive Director)

COMPANY SECRETARIESHo Meng Chan (MACS 00574)Wu Siew Hong (MAICSA 7039647)

REGISTERED OFFICE308, Block A (3rd Floor),Kelana Business Centre,97, Jalan SS7/2, Kelana Jaya,47301 Petaling Jaya,Selangor Darul Ehsan.Tel No.: 03-74921818Fax No.: 03-74921933

AUDITORSMessrs Ernst & Young Chartered Accountants

REGISTRARSTricor Investor & Issuing House Services Sdn. Bhd. Unit 32-01, Level 32, Tower A, Vertical Business Suite, Avenue 3, Bangsar South,No. 8, Jalan Kerinchi,59200 Kuala Lumpur.Tel No.: 03-27839299Fax No.: 03-27839222

PRINCIPAL BANKERSMalayan Banking Berhad

BUSINESS ADDRESSTECNIC GROUP BERHAD Lot 1, Jalan P/2A,Kawasan Perusahaan PKT 1, 43650 Bandar Baru Bangi,Selangor Darul Ehsan.Tel No.: 03-89256950Fax No.: 03-89256955Website: www.tecnic.com.my

TECNIC GROUP BERHAD (302675-A)Annual Report 2015 3

Directors’ profiLe

DATO’ GAN KIM HUAT Executive ChairmanNon-Independent Executive Director Aged 69, a Malaysian, was appointed to the Board of Tecnic Group Berhad (“Tecnic”) on 14 January 2008.

Dato’ Gan Kim Huat has over 40 years of experience in plastic injection moulding and is a well-known entrepreneur in the local plastics industry due to his wide knowledge of plastics manufacturing and network of contacts in the industry. Dato’ Gan has also cultivated excellent relationships with the customers of the Group.

He is also the Executive Chairman and Managing Director of SKP Resources Berhad, a public listed Company.

Dato’ Gan Kim Huat is the parent of Mr. Gan Poh San and parent-in-law of Mr. Gan Chia Siang, both the Executive Directors of Tecnic. He has no conflict of interest with Tecnic and no conviction for offences within the past 10 years other than traffic offences.

GAN POH SAN Non-Independent Executive Director

Aged 41, a Malaysian, was appointed to the Board of Tecnic on 14 January 2008. Mr. Gan Poh San holds a Bachelor of Arts (Honours) majoring in Accounting and Finance from Staffordshire University and further obtained his MSc. in Finance from Imperial College (Management School), United Kingdom in 1998. He further studied Japanese language and plastic engineering in Kai Japanese School and Nissei Plastics School in Japan, respectively. His proficiency in speaking Japanese enables him to communicate easily with the Group’s Japanese customers.

He held a number of senior management positions within SKP Resources Berhad Group prior to being appointed to SKP Resources Berhad’s Board as Executive Director on 3 December 2002.

Mr. Gan Poh San is the son of Dato’ Gan Kim Huat and brother-in-law of Mr. Gan Chia Siang, both the Executive Directors of Tecnic. He has no conflict of interest with Tecnic and no conviction for offences within the past 10 years other than traffic offences.


NG WAN CHER @ NG GUAN CHERNon-Independent Executive Director

Age 69, a Malaysian, was appointed to the Board of Tecnic on 16 February 2005. Mr. Ng Wan Cher holds a Diploma in Accounting and received Management and Business Administration training in Australia during his early years of academic career.

Mr. Ng Wan Cher was Chief Executive Officer and was appointed to the Board of previously South Peninsular Industries Berhad, now ECM Libra Financial Group Berhad on 14 February 1995. He was also appointed as an Independent Non-Executive Director of U H Dove Holdings Berhad on 28 October, 1998 now, Bertam Alliance Berhad. Presently, Mr. Ng also sits on the Board of several other private limited companies in Malaysia.

Mr. Ng has wide knowledge and over 30 years of experience in the overall management and business administration in the manufacturing envirolement including corporate affairs. He has no family relationship with other Directors nor major shareholders of Tecnic, no conflict of interest and no conviction for offences within the past 10 years other than traffic offences.

TAN JING PHONon-Independent Executive Director

Aged 62, a Malaysian, was appointed to the Board of Tecnic on 8 February 1995.

Mr. Tan Jing Pho is actively involved in production management control and training of staff in all aspects of the mould manufacturing division.

Mr. Tan Jing Pho has no family relationship with other directors or major shareholders of Tecnic, no conflict of interest with Tecnic and no conviction for offences within the past 10 years other than traffic offences.

Directors’ profiLe(CONTINUED)

GAN CHIA SIANG Non-Independent Executive Director

Aged 42, a Malaysian, was appointed to the Board of Tecnic on 31 January 2008. Mr. Gan Chia Siang holds a Bachelor of Engineering (Honours) in Mechanical Engineering from University of Bradford, United Kingdom and Master of Science in Information Systems Engineering from South Bank University, United Kingdom.

Mr. Gan Chia Siang worked in Singapore and United Kingdom during the earlier days of his careers. He founded Lexcom Networks Ltd (London), a company specialises in computer hardware and IT solution and served as Managing Director until 2004. He joined Plastictecnic (M) Sdn. Bhd. in year 2005 and he had played a key role in the purchasing and operation reform in the company.

Mr. Gan Chia Siang is the son-in-law of Dato’ Gan Kim Huat and brother-in-law of Gan Poh San, both the Executiv Directors of Tecnic. He has no conflict of interest with Tecnic and no conviction for offences within the past 10 years other than traffic offences.


TEO CHEE KOK Independent Non-Executive Director

Aged 48, a Malaysian, was appointed to the Board of Tecnic on 14 January 2008. Mr. Teo is a fellow member of the Association of Chartered Certified Accountants (ACCA) in the United Kingdom and a member of the Malaysian Institute of Accountants, both since 1994.

Mr. Teo started his career in 1989 with a large public accounting firm in Kuala Lumpur until 1993. Thereafter, from 1994 to 1999, he served a large public listed company based in Kuala Lumpur with diverse business activities ranging from plantation to financial services. He has vast experience in auditing, corporate finance and related activities.

Presently, he also sits on the boards of Enra Group Berhad and Len Cheong Holding Berhad and several private companies in Malaysia.

Mr. Teo has no family relationship with other directors or major shareholders of Tecnic, no conflict of interest with Tecnic. He has no conviction for offences within the past 10 years other than traffic offences.

Directors’ profiLe(CONTINUED)

TAN SRI HUSSIN BIN HAJI ISMAIL Independent Non-Executive Director

Aged 63, a Malaysian, was appointed to the Board of Tecnic on 16 August 2011. Tan Sri Hussin bin Haji Ismail holds a Diploma in Police Science from University Kebangsaan Malaysia in 1998.

Tan Sri Hussin bin Haji Ismail is a former Deputy Inspector General of Police in Royal Malaysian Police (RMP). His excellent achievements are attributed to 39 years of working experience in various senior positions in RMP. The exposure of managing at various levels in RMP are added values to extensive policing knowledge and skills which have further enhanced personal capabilities and credibility in managing the force in the higher position. He is an Independent Non-Executive Director of JAKS Resources Berhad, a public listed Company. Currently, he is also a member of Police Force Commission (PFC) appointed by SPB Yang DiPertuan Agung and the Deputy Chairman of Yayasan Pengaman Malaysia (YPM).

Tan Sri Hussin bin Haji Ismail has no family relationship with other directors or major shareholders of Tecnic, no conflict of interest with Tecnic and no conviction for offences within the past 10 years other than traffic offences.

AMIRUL AZHAR BIN BAHAROM Independent Non-Executive Director

Aged 43, a Malaysian, was appointed to the Board of Tecnic on 15 March 2013. Encik Amirul Azhar bin Baharom holds a LLB Honours from Staffordshire University, United Kingdom.

He began his career as a Research Analyst with Cazenove & Co and had been in the financial services industry for a number of years where he was attached with the Securities Commission, BDO Capital Consultants Sdn Bhd and KAF Fund Management Sdn Bhd. He had also served as the Group Managing Director and CEO of Vastalux Energy Berhad. He currently sits on board of Spring Gallery Berhad, UMS-Neiken Group Berhad and Reliance Pacific Berhad and several other private limited companies in Malaysia.

Encik Amirul Azhar bin Baharom has no family relationship with other directors or major shareholders of Tecnic, no conflict of interest with Tecnic and no conviction for offences within the past 10 years other than traffic offences.


chairman’s statement

Dear Shareholders,

It is our pleasure, on behalf of the Board of Directors of Tecnic Group Bhd (“Tecnic” or “Group”) to present the Annual Report and the Audited Financial Statements for the financial year ended 31 December 2015.

FINANCIAL PERFORMANCE

Following the completion of the disposal of its entire equity interest in Plastictecnic (M) Sdn. Bhd., Bangi Plastics Sdn. Bhd. and Sun Tong Seng Mould-Tech Sdn. Bhd. to SKP Resources Bhd (“SKP”) (“Disposal”) on 6 April 2015, there was no revenue recorded from operations in the year under review, save for other income of RM814,458 arising from interest income and gain on disposal of other investment. The Group recorded a profit net of tax of RM97,807,648 for the year which was mainly due to gain of RM95,845,745 arising from the Disposal and profit from discontinued operations, net of tax of RM4,168,349.

CORPORATE DEvELOPMENTS

Following the completion of the Disposal, Tecnic does not have any business and/or operations. Pursuant to the Disposal, Tecnic became an affected listed issuer under Paragraph 8.03A(2) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad (“Bursa Securities”) (“Listing Requirements”) whereby a listed issuer has suspended or ceased all of its business on 9 April 2015. Tecnic must regularise its condition by submitting a proposal to acquire a new core business to the Securities Commission Malaysia (“SC”) within 12 months from 9 April 2015.

Bursa Securities had via its letter dated 14 July 2015 notified Tecnic that Tecnic is a Cash Company as defined under Paragraph 8.03(1) of the Listing Requirements. In view thereof, Tecnic must also place at least 90% of its cash and cash equivalents in an account opened with a financial institution licensed by Bank Negara Malaysia and operated by a custodian. On 6 August 2015, a total cash of amount RM22 million bearing interest was placed/deposited with RHB Trustees Berhad.

In the Company’s efforts to maintain the listing status of Tecnic on the Main Market of Bursa Securities, the Board had identified a new viable and profitable core business with the requisite financial track record with future propects. On 21 September 2015, Tecnic entered into a non-binding Memorandum of Understanding (“MOU”) with Rohas-Euco Holdings Sdn. Bhd. (“REHSB” or “Vendor”) in relation to a proposed reverse take-over of Tecnic by REHSB, which entails Tecnic acquiring all the equity interest held by REHSB in Rohas-Euco Industries Bhd. (“REI”) comprising

of 68,377,306 ordinary shares of RM1.00 each in REHSB for RM200 million (“Purchase Consideration”) (“Proposed Acquisition”).

On 28 January 2016, Tecnic entered into a sale and purchase agreement (“Definitive Agreement”) with REHSB for the Proposed Acquisition. The Purchase Consideration pursuant to the Definitive Agreement will be satisfied via the issuance and allotment of 317,460,318 new ordinary shares of RM0.10 each in Tecnic (“Tecnic Shares”) (“Consideration Shares”) at an issue price of RM0.63 per Consideration Share subject to conditions precedent to be fulfilled including approvals from the shareholders and relevant regulatory authorities to enable Tecnic to regularise its condition and to maintain its listing status on the Main Market of Bursa Securities.

In conjunction with the Proposed Acquisition, the implementation of the Proposed Regularisation Plan (“as defined herein”) will entail the following proposals:

(i) Proposed Distribution

Tecnic proposes to implement the Proposed Distribution whereby Tecnic will pay dividend in the form of cash distribution to its entitled shareholders (other than the Vendor), amounting to all of its cash reserves save and except for the cash sum (part of which shall be utilised to defray the expenses for the Proposed Regularisation Plan) equivalent to the total issued and paid-up share capital of our Company at par value of RM0.10 per Tecnic Share at an entitlement date to be determined later.

(ii) Proposed MGO

Upon the completion of the Proposed Acquisition, the Vendor will hold 317,460,318 Tecnic Shares representing approximately 88.71% of the enlarged issued and paid up share capital of Tecnic.

Pursuant to Section 218(2) of the Capital Markets and Services Act, 2007 (“CMSA”) and Section 9(1)(a), Part III of Malaysian Code on Take-Overs and Mergers, 2010 (“Code”), the Vendor and parties acting in concert with the Vendor and any other persons falling within the definition of Sections 216(2) and 216(3) of the CMSA for the purposes of the Code will be obliged to extend a Mandatory General Offer for all the remaining 40,397,333 Tecnic Shares not already owned by the Vendor, representing approximately 11.29% of the enlarged issued and paid-up share capital of Tecnic after the Proposed Acquisition at an offer price of RM0.63 per Tecnic Share to be satisfied by cash (“Proposed MGO”).


chairman’s statement(CONTINUED)

(iii) Proposed Offering

Pursuant to Paragraphs 3.06 and 8.02(1) of the Listing Requirements, Tecnic must ensure that at least 25% of its total listed Tecnic Shares are in the hands of a minimum number of 1,000 public shareholders holding not less than 100 Tecnic Shares each (“Public Shareholding Spread Requirement”).

The public shareholding spread of Tecnic will fall below 25% of the enlarged issued and paid-up share capital of Tecnic after the completion of the Proposed Acquisition. Upon completion of the Proposed MGO, the public shareholding spread of Tecnic may fall further subject to the outcome of the acceptance level of the Proposed MGO. As it is the intention of the Vendor to maintain the listing status of Tecnic on the Main Market of Bursa Securities, the Proposed Offering comprising the Proposed Public Issue and the Proposed Offer for Sale (as defined herein) will be undertaken to address the Public Shareholding Spread Requirement as set out below:

(a) proposed public issue entailing the issuance of up to 56,000,000 new Tecnic Shares (“Public Issue Shares”), representing approximately up to 13.53% of the enlarged issued and paid-up share capital of Tecnic, to the Malaysian public (excluding the existing and proposed directors of Tecnic and REI, substantial shareholders of Tecnic and REI, and persons connected or associated to them) and by way of placement to the selected investors at an issue price of RM0.63 per Public Issue Share (“Proposed Public Issue”); and

(b) proposed offer for sale of up to 48,000,000 Tecnic Shares (“Offer Shares”), representing approximately up to 11.60% of the enlarged issued and paid-up share capital of Tecnic by way of placement to the selected investors at an offer price of RM0.63 per Offer Share (“Proposed Offer for Sale”).

(collectively, the Proposed Distribution, Proposed MGO and Proposed Offering are referred as the “Proposed Regularisation Plan”)

Subject to completion of the Proposed MGO and the number of public shareholders of Tecnic then, should the number of public shareholders of Tecnic remain above 1,000 after completion of the Proposed MGO, the Proposed Public Issue and Proposed Offer for Sale will be fully undertaken by way of placement to the selected investors.

Tecnic had obtained Bursa Securities’ approval on 14 March 2016 for an extension of time to submit the Proposed Regularisation Plan to SC for up to 31 May 2016.

RATIONAL FOR THE PROPOSED ACqUISITION

The rationale for the Proposed Regularisation Plan is set out below:

(i) To enable Tecnic to regularise its condition in order to maintain its listing status on the Main Market at Bursa Securities;

(ii) To provide the existing shareholders of Tecnic an opportunity to participate in a new core business which is expected to provide a new source of growth for Tecnic thus enhancing shareholders’ value for the existing shareholders; and

(iii) To allow the emergence of a new and sizeable listed company which is involved in power, telecommunications, civil and infrastructure and water and sewage segments on the Main Market of Bursa Securities.

SPECIAL DIvIDEND AND CAPITAL REDUCTION

On 12 May 2015 and pursuant to the completion of the Disposal, Tecnic paid a special dividend of RM106,648,959 and dividend in specie of 172,092,612 ordinary shares of RM0.10 each in SKP to the respective entitled shareholders of Tecnic.

Based on the audited financial statement as at 31 December 2015, the cash and cash equivalents was RM23,942,765 less all expenses incurred or to be incurred, and the cash sum equivalent to the total issued and paid-up share capital of Tecnic at par value of RM0.10 per Tecnic Share, any cash balances shall be distributed to shareholders at the entitlement date to be determined later.

ESTIMATED TIMEFRAME FOR COMPLETION

Barring any unforeseen circumstances, the Proposed Regularisation Plan is expected to be completed by fourth (4th) quarter of 2016. APPRECIATION

I would like to express my appreciation to fellow Board members, management and staff for their hard work and dedication and also thanks to our business Associates and Shareholders for their continuous support to Tecnic.

DATO’ GAN KIM HUAT Executive ChairmanNon-Independent Executive Director


financiaL highLights

2015 2014 2013 2012 2011OPERATING RESULTSContinuing OperationsRevenue RM'000 - - - - - EBITDA RM'000 (2,206) (1,620) (1,153) (292) (702)EBIT RM'000 (2,206) (1,620) (1,153) (292) (702)Loss Before Taxation RM'000 (2,206) (1,620) (1,153) (292) (702)(Loss)/Profit After Taxation RM'000 (2,206) (1,620) (845) 163 (791)(Loss)/Profit Attributable to equity holders RM'000 (2,206) (1,620) (845) 163 (791)

Discontinued OperationsRevenue RM'000 58,552 283,494 213,192 193,955 209,879 EBITDA RM'000 103,705 35,601 26,987 29,940 31,870 EBIT RM'000 101,575 27,834 20,202 23,074 25,169 Profit Before Taxation RM'000 101,574 27,831 20,104 22,869 24,895 Profit After Taxation RM'000 100,014 21,343 15,587 17,233 20,921 Profit Attributable to equity holders RM'000 100,014 21,343 15,587 17,233 20,921

KEY BALANCE SHEET DATATotal Assets RM'000 - 181,994 157,357 136,222 135,195 Total Borrowings RM'000 - - - 5,920 6,076 Paid-up Capital RM'000 - 40,397 40,397 40,397 40,397 Equity Attributable to Owners of the Company RM'000 - 130,170 112,467 99,745 92,448

vALUATIONContinuing OperationsBasic Earnings/Net Earnings Per Share sen (5.46) (4.01) (2.09) 0.40 (1.96)Gross Dividend sen 421.08 - 5.00 5.00 25.00 Net Asset Per Share RM - 3.22 2.78 2.47 2.29

Discontinued OperationsBasic Earnings/Net Earnings Per Share sen 247.58 52.83 38.58 42.66 51.79

PROFITABILITY RATIOSContinuing OperationsReturn on Total Assets [EBIT/Total Assets] % - (0.89) (0.73) (0.21) (0.52)Return on Capital Employed % - (1.24) (1.03) (0.28) (0.71)

[EBIT/(Total Borrowings + Equity Attributable to Owners of the Company)]

Discontinued OperationsReturn on Total Assets [EBIT/Total Assets] % - 15.29 12.84 16.94 18.62 Return on Capital Employed % - 21.38 17.96 21.84 25.55

[EBIT/(Total Borrowings + Equity Attributable to Owners of the Company)]

GEARING RATIONet Debt to Equity Attributable to Owners of

the Companytimes - - - - -

[(Total Borrowing - Cash & Cash Equivalents)/Equity Attributable to Owners of the Company]


statement on corporate sociaL responsibiLity

The Board of Directors acknowledge the importance of corporate social responsibility (“CSR”) and strive to fulfil the expectation of its stakeholders by enhancing its social environmental and economical performance while ensuring the sustainability and operational success of the company.

Sustainability is an integral part of our business and the Group’s corporate responsibility practices focus on four areas - Environment, Workplace, Market Place and Community which aim to deliver sustainable value to society at large.

I) Environment

The Group recognizes the impact of its day to day business on the environment. As such, the Group is committed by implementing environmentally friendly work processes while raising the environmental awareness among its staff.

II) Workplace

The Group believes that employees are key resources that drive long term and sustainable organizational successes. As such, the Group continuously create a safe, pleasant and conducive working environment for its employee.

The Group respects the different cultures, gender and religions of our stakeholders as we understand that the diversity and differences give us broader range of competence, skills and experience to enhance our capabilities to achieve business results which is important for the overall business sustainability. Thus, the Group is committed to provide our staff an environment of equal opportunity to strive while promoting diversity in workforce.

To optimize the employee talents and capacities, various in-house training, external training programmes and seminar are continuously provided to all employees to enhance their knowledge and skill while promoting a motivated working team and fostering a closer relationship with each other.

III) Market place

The Group is committed to ensure that the interests of all its important stakeholders – shareholders, analysts, bankers, customers, suppliers, authority bodies and public are being taken care of. The Group emphasizes on good corporate governance practices, transparency and accountability to meet shareholders’ expectations.

The Group engages investment analysts in order to provide shareholders and investor’s overview and update latest development and activities in the Group while Annual General Meeting, together with the Annual Report serves as a primary platform to interact and extend public relationship, to ensure that the stakeholders are well-informed and are able to adequately raise any concerns that they might have.

IV) Community

The Group recognizes the co-relationship between business growth and social well-being and welfare. Therefore, in fulfilling its corporate responsibility to the community in which it conducts its business, the Group is obligated to nourish and improve the quality of the society at large.

The Group focuses its corporate responsibility on enhancing community sustainability through various sponsorship to non-profitable organizations, school and charitable activities.


auDit committee report

The Audit Committee has been established since 10 February 1995. The Committee presently comprises of the following directors:

Teo Chee Kok Chairman of the Committee(Independent Non-Executive Director)

Tan Sri Hussin bin Haji Ismail (Independent Non-Executive Director)

Amirul Azhar bin Baharom (Independent Non-Executive Director)

TERMS OF REFERENCE

Objectives

The objectives of the Audit Committee are to comply with the Main Market Listing Requirements of Bursa Malaysia Securities Berhad and the Malaysian Code on Corporate Governance and to relieve the full Board of Directors from detailed involvement in the review of the results of internal and external audit activities and ensure that audit findings are brought up to the highest level for consideration.

Members

a) The Audit Committee shall be appointed by the Board from amongst the Directors of the Company and shall consist of not less than 3 members. All members of the Audit Committee must be non-executive Directors, with a majority of them being Independent Directors. At least one member of the Audit Committee :-

i) must be a member of the Malaysian Institute of Accountants; or

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

(aa) he must have passed the examinations specified in Part 1 of the 1st Schedule of the Accountants Act, 1967; or

(bb) he must be a member of one of the associations of accountants specified in Part II of the 1st Schedule of the Accountants Act, 1967; or

iii) fulfils such other requirements as prescribed or approved by the Bursa Malaysia Securities Berhad.

b) No alternate Director shall be appointed as a member of the Audit Committee.

c) The members of the Audit Committee shall elect a Chairman from among their numbers who shall be an Independent Director.

Functions

The functions of the Audit Committee shall be

a) to review the following and report the same to the Board of Directors :-

i) with the external auditors, the audit plan;

ii) with the external auditors, the evaluation of the system of internal controls;


iii) with the external auditors, the audit report;

iv) the assistance given by the employees of the Company to the external auditors;

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

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

vii) the quarterly results and year end financial statements, before to the approval by the Board of Directors, focusing particularly on :-

(aa) changes in or implementation of major accounting policy changes;

(bb) significant adjustment arising from the audit;

(cc) significant and unusual events;

(dd) compliance with MASB Approved Accounting Standards in Malaysia for Entities Other than Private Entities, Bursa Malaysia Main Market Listing Requirements and other legal requirements; and

(ee) going concern assumption.

viii) 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;

ix) any letter of resignation from the external auditors of the Company;

x) whether there is reason (supported by grounds) to believe that the Company’s external auditors are not suitable for re-appointment;

xi) the external auditors’ management letter and management’s response;

xii) the list of eligible employee and the allocation of Employees’ Share Option Scheme (ESOS) to be offered to them.

b) to do the following, in relation to the internal audit function :-

i) review any appraisal or assessment of the performance of member of the internal audit function; ii) approve any appointment or termination of senior staff members of the internal audit function; and

iii) take cognizance of resignations of internal audit staff members and provide the resigning staff member an opportunity to submit his reasons for resigning.

c) to consider :-

i) the major findings or internal investigations and management’s response;

ii) other topics as defined by the Board; and

iii) the nomination of a person or persons as external auditors together with such other functions as may be agreed by the Audit Committee and the Board of Directors.

auDit committee report(CONTINUED)


d) to discuss problems and reservations arising from the interim and final audits, and any matter the auditors may wish to discuss (in the absence of management where necessary).

e) to report promptly to Bursa Malaysia Securities Berhad on any matter reported by it to the Board of Directors, which has not been satisfactorily resolved resulting in the breach of the Bursa Malaysia Main Market Listing Requirements.

Authority

The Audit Committee shall have the authority to :

a) investigate any matter within its terms of reference;

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

c) have full and unrestricted access to any information pertaining to the Company;

d) have direct communication channels with the external auditors and person(s) carrying out the internal audit function or activity ;

e) obtain independent professional or other advice; and

f) convene meetings with the external auditors, the internal auditors or both, excluding the attendance of other Directors and employees of the Company, whenever deemed necessary. However, the committee should meet with the external auditors without Executive Board members present at least twice a year.

Meetings and Reporting Procedures

a) The agenda for Audit Committee meetings shall be circulated at least five days before each meeting.

b) The Audit Committee shall meet as the Chairman deems necessary but not less than four times a year.

c) The Chairman shall be entitled, where deemed appropriate, to invite any person(s) to meetings of the Audit Committee.

d) The Chairman should engage on a continuous basis with senior management, such as the chairman, the chief executive officer, the finance director, the head of internal audit and the external auditors in order to be kept informed of matters affecting the Company.

e) In order to form a quorum in respect of a meeting of the Audit Committee, the majority of members of the Audit Committee present at the meeting must be Independent Directors.

f) The Secretary is responsible for sending out notices of meetings, preparing and keeping minutes of meetings and circulating the minutes of meetings to all members of the Board.

During the financial year ended 31 December 2015, the Committee met 5 times. The number of meetings attended by each member is as follows:

Members Total Meetings AttendedTeo Chee Kok 5 out of 5Tan Sri Hussin bin Haji Ismail 4 out of 5Amirul Azhar bin Baharom 5 out of 5




Summary of Activities

The Audit Committee carried out the following activities during the financial year ended 31 December 2015 in discharging its duties and responsibilities as stipulated in its Terms of Reference:-

Financial Results

(a) Reviewed the unaudited quarterly reports on consolidated results and financial statements’ result prior to tabling of the same to the Board and thereafter, for announcement to the Bursa Malaysia Securities Berhad;

(b) Reviewed the statutory financial statements of the Company and the Group for the financial year then ended prior to the Board’s approval for public release focusing on the going concern assumption, compliance with accounting standards and regulatory requirements, any changes in accounting policies and practices, significant issues and unusual event arising from the audit and major judgment issues;

(c) Reviewed the procedures of Recurrent Related Party Transaction of a Revenue or Trading Nature with SKP Resources Berhad’s Group;

(d) Reviewed the Group’s related party transactions to ensure they are transacted within the Shareholders’ Mandate; and

(e) Reviewed the Audit Committee Report for inclusion in the Annual Report.

External Audit

(a) Reviewed with the External Auditors their Audit Plan for the financial year 31 December 2015 covering the audit objectives and approach, independent policies and procedures, areas of emphasis, consideration of fraud, internal control, audit timeline, recent technical pronouncements and regulations;

(b) Reviewed and assessed the suitability and independence of the external auditors and made recommendation for their reappointment and their audit fees; and

(c) Conducted independent meetings (without the presence of Management) with the external auditors.

Internal Audit

(a) Reviewed the Internal Audit Reports presented by the Internal Auditors on findings and recommendations with regards to systems and control weaknesses noted in the course of their audit and management’s responses thereto and ensuring materials findings are adequately addressed by management; and

(b) Reviewed the Statement of Risk Management and Internal Control for inclusion in the Annual Report.


Internal Audit Function and Summary of Activities

The Company outsourced its internal audit function to Messrs Grant Thornton Consulting Sdn. Bhd.(“GT”) to assist the Audit Committee in discharging its duties and responsibility more effectively. GT performed the internal audit function guided by risk management methodology or also known as “Risk Based Internal Audit” to enhance the Group internal control and risk management practice. GT acted independently and with due professional care and present the Internal Audit Report on the findings and recommendations to the Audit Committee.

Further to the completion of the disposal of entire interests in the operating subsidiaries, namely Plastictecnic (M) Sdn. Bhd., Sun Tong Seng Mould-Tech Sdn. Bhd. and Bangi Plastics Sdn. Bhd., the internal audit function has been suspended since the second half of the financial year ended 2015. However, the Company is in the midst of sourcing and shortlisting a suitable professional firm to reactivate the Company’s internal audit function in order to comply with Paragraph 15.27 of the Main Market Listing Requirements.

In respect of the financial year ended 31 December 2015, the Internal Auditors had carried out risk assessment and internal audit reviews on the Company’s former subsidiary, Plastictecnic (M) Sdn. Bhd. (Nilai Plant) on the business area of Production Management.

The reviews were conducted in order to ensure the adequacy and effectiveness of the Group’s Systems of Internal Controls as well as to provide useful recommendations so as to improve various process implemented by the subsidiary.

For the financial year ended 31 December 2015, the total costs incurred for the outsourced internal audit function is RM20,688.

This report is made in accordance with the resolution of the Board of Directors on 15 April 2016.



The Board of Tecnic Group Berhad recognizes the importance of practicing the highest standards of Corporate Governance throughout the Group as a fundamental part of discharging its responsibilities to protect and enhance shareholders’ value and the financial performance of the Group.

The Board remains committed in its efforts to implement the principles and best practices set out in the Malaysian Code on Corporate Governance 2012 (“the Code”).

The following statement sets out how the Board has applied the Principles and observed the recommendations of the Code during the financial year ended 31 December 2015.

CLEAR ROLES AND RESPONSIBILITIES

Functions of the Board

The Board has overall responsibilities for the performance and affairs of the Group. The Board members with a wide range of skills and experience from financial and business background leads and controls the Group. To ensure the effective discharge of its function and responsibilities, the Board established an internal governance model for delegating of specific powers of the Board to the Executive Directors and the relevant Board Committees, namely the Audit, Nomination and Remuneration Committee. The Board Committees entrusted with specific responsibilities to oversee the Group’s affairs, in accordance with their respective Terms of References. The ultimate decisions on all matters deliberated in the Board Committees are required to be reported to the Board. As such, the direction and control of the Group is firmly within the Board.

The Executive Directors, representing the management are primarily responsible for the Group’s day-to-day management and operations. The Executive Directors formulate operation plans and oversee the execution of these plans. The Independent Non-Executive Directors are actively involved in various Board Committees and contribute significantly to areas such as performance monitoring and enhancement of corporate governance and controls. They provide broader views, independent assessments and opinions on management proposals.

Key matters reserved for the Board’s approval includes financial results, dividend policy, related party transactions, new ventures and investment, material acquisitions and disposal of assets not in the ordinary course of business, authority levels and treasury policies. All Board’s decisions are duly minuted.

Roles and responsibilities of the Board

The Board in discharging its stewardship, is constantly mindful of safeguarding the interest of the Group’s stakeholders and ultimately responsible for the performance of the Group. The Board assumes the following core responsibilities:-

(1) Adopting and reviewing the overall strategic plans for the Company and Group;(2) Overseeing and evaluating the conduct of business of the Company and Group;(3) Identifying principal risks and ensuring implementation of a proper risk management system to manage such risks;(4) Establishing a succession plan;(5) Developing and implementing an investor relations programme or shareholder communication policy for the

Company; and(6) Reviewing the adequacy and the integrity of the internal control systems and management information systems of

the Company and Group, including systems for compliance with applicable laws, rules, directives and guidelines.

Directors’ Code of Ethics

The Board members observe a code of ethics in accordance with the code of conduct expected of Directors in the Company Directors’ Code of Ethics established by the Companies Commission of Malaysia.

corporate governance statement


corporate governance statement(CONTINUED)

Strategies promoting sustainability

The Board promotes good corporate governance in the application of sustainability practices throughout the Group, the benefits of which are believed to translate into better corporate performance. A report on sustainability activities, demonstrating the Group’s commitment to the global environment, workplace, human resources development, marketplace and community, is detailed in the Statement on Corporate Social Responsibility.

Access to information and advice

The Directors have the right to access all information pertaining to the Group for the purpose of discharging their duties. The Directors may interact directly with the Management, or request further explanation, information or updates on any aspect of the Company’s operation or business concerns.

Every Director has unhindered access to the advice and dedicated support services of the Company Secretaries in ensuring the effective functioning of the Board. In addition, the Directors may seek independent professional advice at the Company’s expense, as they individually or collectively consider necessary, to fulfill their responsibilities and permit independent judgment in decision making.

A minimum of four board meetings will be held annually. Prior to board meetings, the Directors are supplied with an agenda together with the relevant documents and information on the matters to be deliberated. The Executive Directors and/or senior management of the Group will provide comprehensive explanation of pertinent issues and recommendations. The issues would then be deliberated and discussed by the Board prior to decision-making.

Qualified and competent Company Secretaries

The appointment and removal of the Company Secretary or Secretaries shall be the prerogative of the Board. The Board is assisted by two qualified and competent company secretaries, who are members of the professional bodies prescribed by the Minister, to ensure that Board procedures are followed and the applicable rules and regulations for the conduct of the affairs of the Board are complied with.

The Directors are regularly updated by the Company Secretaries on new statutory as well as regulatory requirements relating to Directors’ duties and responsibilities or the discharge of their duties as Directors of the Company.

The Company Secretaries attend all board meetings and ensure that accurate and adequate records of the proceedings of board meetings and decisions made are properly kept.

Board Charter

The Board acknowledges that a Board Charter would act as a source reference and primary induction literature to provide insights to prospective Board members and senior management. In addition, it would assist the Board in the assessment of its own performance and that of its individual Directors.

The Directors are well aware of their functions, roles and responsibilities. There is availability of source of reference for the Board such as the Group’s Vision and Mission Statement, Company’s Articles of Association, Terms of Reference of the Board Committees, the Code, Main Market Listing Requirements of Bursa Malaysia Securities Berhad (“MMLR”) and the relevant regulations. The Nomination Committee will facilitate the Board induction and the Directors may have access to the advice and support services of the Company Secretaries in relation to the regulatory requirements relating to Directors’ duties and responsibilities or the discharge of their duties as Directors of the Company and the processes and procedures for convening Board Meeting. The Terms of Reference of Nomination Committee outline the criteria on assessment of performance of the Board and the individual Director.

Thus, the Board will consider and deliberate the formalization of Board Charter when it is necessary.



STRENGTHEN COMPOSITION

Nomination Committee

The Company has in place a Nomination Committee, consisting of 3 Directors who are Independent Non-Executive of the Company. This Committee is to assist the Board in recommending of new Directors and assessing the effectiveness of the Board.

The present members of Nomination Committee are :-

1. Tan Sri Hussin bin Haji Ismail (Chairman, Independent Non-Executive Director)2. Teo Chee Kok (Independent Non-Executive Director)3. Amirul Azhar bin Baharom (Independent Non-Executive Director)

The duties of the Nomination Committee are as follows :

(a) to consider, evaluate and recommend to the Board any new board appointments. In making a recommendation to the Board on the candidate for directorship, the committee shall have regard to :-

i) Size, composition (including gender diversity), mix of skills, experience, competencies and other qualities of the existing Board, level of commitment, resources and time that the recommended candidate can contribute to the existing Board and Group;

ii) The appropriate number of Independent Directors to fairly reflect the interest of minority shareholders and the Independent Directors should make up at least one-third of the membership of the Board; and

iii) Best Practices of the Code which stipulates that Non-Executive Directors should be persons of caliber, credibility and have the necessary skill and experience to bring an independent judgment on issues considered by the Board.

(b) to recommend to the Board, Directors to fill the seats on Board Committees.

(c) to evaluate the performance and effectiveness of the Board as a whole, the Committees of the Board and the contribution of each individual Director on an annual basis as follows :-

i) to assess the Board based on specific criteria, covering areas such as size, composition (including gender diversity), mix of skills, principal responsibilities of the Board, the Board process, succession planning and Board governance; and

ii) to assess individual director based on criteria such as contribution to interaction, role and duties, knowledge and integrity.

(d) to assess independence of Independent Directors on an annual basis based on the guidelines as set out in the MMLR and other criteria such as, tenure, relationship between the Independent Director and the Company and his involvement in any significant transaction with the Company.

(e) to make the following recommendations to the Board :

i) Matters relating to the succession plan of Directors and Senior Management to maintain an appropriate balance of skills on the Board;

ii) Matters relating to the re-appointment of any Independent Non-Executive Director at the conclusion of their specified term of office; and

iii) Matters relating to the re-election by shareholders of any Director under the retirement by rotation provisions in the Company’s Articles of Association.

(f) to facilitate board induction and training programmes.



Develop, maintain and review criteria for recruitment and annual assessment of Directors

The Company has in place its procedures and criteria for appointment of new directors, all candidates for appointment are first considered by the Nomination Committee. The final decision as to who shall be appointed as Director remains the responsibility of the full Board after considering the recommendation of the Nomination Committee.

The Nomination Committee meets at least once a year with additional meetings to be convened, where necessary. During the financial year ended 31 December 2015, the Nomination Committee convened a meeting to evaluate the performance and effectiveness of the Board based on specific criteria, covering areas such as size, composition, mix of skills, principal responsibilities of the Board, the Board process and Board governance. The performance of each Director was evaluated based on criteria such as contribution to interaction, role and duties, knowledge and integrity. The Nomination Committee also reviewed the composition of respective Board Committees of the Company to ensure its effectiveness and deliberated on the re-election of the affected Directors retiring pursuant to the Company’s Articles of Association before making recommendations to the Directors for consideration. Besides, the Nomination Committee also assessed independence of each Independent Director by taking into their disclosed interests and based on the guidelines as set out in the MMLR and other criteria such as, tenure, relationship between the Independent Directors and the Company and their involvement in any significant transaction with the Company.

All the Directors shall retire from office at least once in every three (3) consecutive years from the date of his appointment in accordance with Article 104 of the Company’s Articles of Association and will be eligible to offer themselves for re-election at the Annual General Meeting (“AGM”). The Directors to retire in each year are the Directors who have been longest in office since their appointment or re-appointment. This provides an opportunity for shareholders to renew their mandate. In addition, Article 109 of the Company’s Articles of Association also provides that any Director who is appointed to fill a casual vacancy or as an additional Director shall hold office until the next AGM shall then be eligible for re-election but shall not be taken into account in determining the number of Director who retires by rotation at the meeting.

Pursuant to Section 129 of the Companies Act, 1965, Directors who are over the age of seventy (70) years shall retire at every AGM and may offer themselves for re-appointment to hold office until the next AGM.

The Directors who are due for retirement by rotation pursuant to Article 104 of the Company’s Articles of Association at the forthcoming Twenty-Second AGM are Mr. Tan Jing Pho, Mr. Gan Poh San and Mr. Teo Chee Kok. Their profiles are set out on pages 3 to 5.

Gender Diversity Notwithstanding the recommendation of the Code, the Board is presently of the view that there is no necessity to fix a specific gender diversity policy in view of the Company’s commitment to ensuring that all Directors are appointed on merit, in line with the standards as set out in Para 2.20A of the MMLR.

Remuneration Policies

The Remuneration Committee was established on 26 November, 2001. The objective of Remuneration Committee is to recommend to the Board the remuneration of Executive Directors.

The present members of Remuneration Committee are :-

1. Teo Chee Kok (Chairman, Independent Non-Executive Director) 2. Dato’ Gan Kim Huat (Non-Independent Executive Chairman)3. Amirul Azhar bin Baharom (Independent Non-Executive Director)



The Remuneration Committee is generally responsible to :

(a) establish and recommend the remuneration structure and policy for Executive Directors.

(b) review and recommend the remuneration packages for each of the Executive Directors including, where appropriate, bonuses and increments.

(c) review with the Executive Directors, their goals and objectives and to assess their performance against these objectives as well as their contribution to the corporate strategy.

(d) advise on any major changes in employee benefits structure throughout the Company or Group.

The policy practiced on Executive Directors’ remuneration by the Remuneration Committee is to provide the remuneration packages necessary to attract, retain and motivate Directors of the quality required to manage the business of the Group. In the case of the Non-Executive Directors, a basic fee as ordinary remuneration will be paid. This fee is subject to the approval of the shareholders at the AGM.

From time to time, the Remuneration Committee will review the existing level of remuneration of Executive Directors and to recommend their remuneration to the Board based on the Company’s and their individual performance to ensure they commensurate with the scope of responsibilities held. The remuneration packages for Executive Directors are set at a competitive level to reflect the performance of the Director, skills and experience as well as responsibility undertaken.

Details of Directors’ remuneration for the financial year ended 31 December 2015 are as follows:

(a) The aggregate remuneration (within the Group) of the Directors of the Company is as follows :

Executive Non-Executive(RM) (RM)

Salaries and other emoluments 63,000 -Fees 151,000 90,000Bonus 21,000 -

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

Range of remuneration (RM) Executive Non-Executive

0 – 50,000 4 3100,001 – 150,000 1 -

REINFORCE INDEPEDENCE

Annual Assessment of Independence

The Board recognizes the importance of independence and objectivity in the decision-making process. The Independent Directors with their respective knowledge and experience provide independent judgment to the Board. The Board is committed in ensuring that Independent Directors are capable and willing to make decisions in the best interests of the Company.

In ensuring that independent judgments are not compromised, the Board has adopted a policy on assessment of independence on its independent directors which is conducted on an annual basis or as and when a disclosure is made by any Director in respect of any new interest or relationship. The policy makes reference to the guidelines set out in the MMLR.



The Board, through the Nomination Committee, assesses the independence of the Independent Directors on the Board, including new appointments. The Nomination Committee assesses the independence of the Independent Directors annually by taking into consideration of their disclosed interests and based on the guidelines as set out in the MMLR and other criteria such as, tenure, relationship between the Independent Director and the Company and his involvement in any significant transaction with the Company.

Based on the assessment conducted recently, the Board is satisfied with the level of independence demonstrated by the Independent Directors and their ability to act in the best interest of the Company.

Tenure of Independent Directors

Notwithstanding the recommendation of the Code, the Board is presently of the view that there is no necessity to fix a maximum tenure limit for Independent Directors to serve on the Board as the ability of a Director to serve effectively as an Independent Director is very much dependent on his caliber, qualification, experience and personal qualities, particularly his integrity and objectivity, and has no real connection to his tenure as an Independent Director.

Shareholders’ approval to retain an Independent Director who has served for more than 9 years

Currently, all Independent Directors of the Company served less than 9 years in the Company.

Separation of roles of Chairman and Chief Executive Officer (CEO)

Notwithstanding the recommendation of the Code, the Board is presently of the view that the intimate knowledge and extensive involvement of the Chairman in the business, his reputation and goodwill in the industry will benefit the Group directly. The vast experiences of the Chairman would enable him to be well equipped to interact with the global leaders of the industry and build relationships with stakeholders. As such, the role of CEO remains vested with the Chairman. The Board is mindful of the combined roles but is comfortable that there is no undue risk involved as the functions of the CEO are executed by delegation of authority to the Executive Directors to ensure that division and accountability in essence are separated. All major matters and issues are referred to the Board for consideration and approval. The Board is always mindful of the potential conflict of interest that may arise in each transaction, in which case, interested Directors will abstain from decision making. All related party transactions are disclosed and strictly dealt with in accordance with the MMLR. The roles and contributions of Independent Directors also provide an element of objectivity, independent judgement and check and balance on the Board.

The Chairman leads the Executive Directors in making and implementing the day-to-day decisions on the business operations, managing resources and risks in pursuing the corporate objective of the Group. He is responsible to ensure due execution of strategic goals, effective operation within the Company, and to explain, clarify and inform the Board on matters pertaining to the Group. Apart from the above, the Company practices a clear demarcation of responsibilities and a balance of power and authority.

Besides the above role, the Executive Chairman is responsible for the Board’s effectiveness and conduct. He promotes an open environment for debate and ensures effective contribution from Non-Executive Directors. The Chairman also facilitates the flow of information between the Management and the Board and in consultation with Management, sets the agenda for each Board meeting. At a general meeting, the Chairman plays a role in fostering constructive dialogue between shareholders, Board and Management.

Composition of the Board

The Board comprises of 8 Directors, 3 of whom are non-executives. All of the 3 Non-Executive Directors are independent. The composition of the Board reflects that one-third of its members are independent and this is to ensure that minority shareholders’ interests are represented.

The Board is mindful to the recommendation that the Board composition must comprise a majority of Independent Directors where the Chairman of the Company is not an Independent Director. However, the Board is of the opinion that the presence of the Independent Directors, though not forming a majority of the Board members, is sufficient to provide the necessary checks and balance on the decision making process of the Board.



The three Independent Directors of the Company possess integrity and extensive experience to provide unbiased, fully balanced and independent views to the Board. The significant contributions of the Independent Directors in the decision making process is evidenced in their participation as members of the various committees of the Board.

The Chairman has also exercised his due care in the interest of the Company and shareholders during his tenure as an Executive Chairman of the Company. He provided objectivity in decision-making and ensured effective conduct of the board meetings. If the need arises, the Company may increase the number of Independent Directors to ensure the balance of power and authority on the Board.

The Board is also of the view that it is not necessary to identify a Senior Independent Non-Executive Director to whom other Directors may bring their concerns to, as all Directors believes that they can freely express their views at board meeting and always within the reach of the shareholders.

FOSTER COMMITMENT

Time Commitment

The Board in satisfied with the level of time commitment given by the Directors towards fulfilling their roles and responsibilities as Directors of the Company. This is evidenced by the attendance record of the Directors at Board meetings held during the financial year ended 31 December, 2015 :

Directors Total meetings attendedDato’ Gan Kim Huat 3 out of 4Gan Poh San 3 out of 4Gan Chia Siang 4 out of 4Ng Wan Cher @ Ng Guan Cher 3 out of 4Tan Jing Pho 3 out of 4Teo Chee Kok 4 out of 4Tan Sri Hussin bin Haji Ismail 3 out of 4Amirul Azhar bin Baharom 4 out of 4

To ensure that the Directors devote sufficient time to carry out their roles and responsibilities and in line with the MMLR, a Director of the Company must not hold directorships of more than five (5) Public Listed Companies.

The Directors are required to submit an update on their other directorships from time to time for monitoring of the number of directorships held by the Directors of the Company and for notification to Companies Commission Malaysia accordingly.

Directors’ Training

The Board views continuous learning and training as an integral part of directors’ development. All Directors have attended and successfully completed the Mandatory Accreditation Training Programme (MAP) prescribed by MMLR.

The Board encourages its Directors to attend talks, seminars workshops and conferences to update and enhance their skills and knowledge to enable them to carry out their roles effectively as Directors in discharging their responsibilities towards corporate governance, operational and regulatory issues.



During the financial year ended 31 December, 2015, the seminars/courses by the Directors including the following :-

1. Management Seminar for Directors and Share Holders of Malaysian Security Companies by Ministry of Home Affairs 2. Risk Management and Internal Control Workshop3. Lead The Change - Getting Women on Board 4. Detecting Financial Frauds and Related Party Transactions and Recurrent Related Party Transaction5. CG Breakfast Series with Directors - The Board’s Response in Light of Rising Shareholder Engagements In addition, Directors’ education also includes briefings by the Internal Auditors, External Auditors and the Company Secretaries on the relevant updates on statutory and regulatory requirements from time to time during the Audit Committee and Board meetings.

UPHOLD INTEGRITY IN FINANCIAL REPORTING

Compliance with applicable financial reporting standards

The Board aims to provide and present a balanced and meaningful assessment of the Group’s financial position and prospects in the public release of financial results. These results are contained in the quarterly financial results, audited financial statements and Annual Reports.

Quarterly financial results and audited financial statements are reviewed and deliberated upon by the Audit Committee to ensure the quality and adequacy of such information, prior to submission to the Board for approval. The Audit Committee also reviews the appropriateness of the Company’s accounting policies and the changes to these policies.

The Directors are responsible for the preparation and fair presentation of the financial statements for each financial year in accordance with applicable Financial Reporting Standards and the requirements of the Companies Act, 1965. The Statement of Directors’ Responsibility in relation to the financial statements is presented in this Annual Report.

Assessment of suitability and Independence of External Auditors

To maintain a transparent and formal relationship with the Company’s external auditors, the Audit Committee reviews the appointment, performance, independence and remuneration of the External Auditors in accordance to the established policy and procedure of the Company.

The Audit Committee will review the performance of the External Auditors on an annual basis after completion of the year-end audit on the suitability and independence of the External Auditors. In evaluation the suitability and effectiveness of external auditors, the Audit Committee will review the overall comprehensive external audit plan, the timelines and quality of deliverables and the competency/adequacy of the resources to achieve the scope outlined in the audit plan.

The Audit Committee reviews and assesses the independence of the External Auditors annually at the time the External Auditors present its annual audit plan. It is expected that the External Auditors will rigorously comply with its own internal policies on independence and all relevant professional guidance on independence. The Audit Committee will also ensure that the policies governing the provision of non-audit fees are observed.

After having satisfied with the performance of Messrs Ernst & Young and its audit independence, the Audit Committee recommended the re-appointment of Messrs Ernst & Young to the Board for approval by its shareholders at the forthcoming AGM.


RECOGNISE AND MANAGE RISK

Sound Framework to manage risk

The Board is responsible for the adequacy and effectiveness of the Group’s risk management and internal control system. Risk management is embedded in the Group’s management systems. The Board with the assistance of the senior management has established processes for identifying, evaluating and managing the significant risks faced by the core business of the Group. The outcome of the process is reviewed by the Board and is guided by the Statement on Risk Management & Internal Control Guidelines for Directors of Public Listed Companies issued by Bursa Malaysia Securities Berhad (“Bursa Securities”).

Internal Audit Function

The Group engaged the services of an independent professional firm to provide much of the assurance regarding the effectiveness as well as adequacy and integrity of the Group’s system of internal control. The internal auditors report directly to the Audit Committee on its activities based on the approved Internal Audit Plans. Its principal role is to provide independent assurance on the adequacy and effectiveness of governance and internal control processes.

Further to the completion of the disposal of entire interests in the operating subsidiaries, namely Plastictecnic (M) Sdn. Bhd., Sun Tong Seng Mould-Tech Sdn. Bhd. and Bangi Plastics Sdn. Bhd., the internal audit function has been suspended since the second half of the financial year ended 2015. However, the Company is in the midst of sourcing and shortlisting a suitable professional firm to reactivate the Company’s internal audit function in order to comply with Paragraph 15.27 of the Main Market Listing Requirements.

Statement on Risk Management & Internal Control set out in this Annual Report provides an overview of the state of risk management and internal controls within the Group.

ENSURE TIMELY AND HIGH qUALITY DISCLOSURE

Corporate Disclosure Policy

The Board acknowledges that timely, complete and accurate disclosure is important to an orderly and fair market for the trading of securities. The Board adheres to the Bursa Securities’ disclosures framework to provide investors and the public with accurate and complete information on timely basis.

The Board ensures that confidential information is handled properly to avoid leakage and improper use. In line with the best practices, the Board strives to disclose price sensitive information to the public as soon as practicable through Bursa Securities.

Leverage on Information technology for effective dissemination of information

The Board endeavors to provide timely and accurate disclosure of all material information of the Group to shareholders and investors. Information is disseminated through various disclosures and announcements made to the Bursa Securities. These information are also electronically published at the Bursa Securities website at www.bursamalaysia.com and the Group website at www.tecnic.com.my.

These information includes:-

- Quarterly Announcements- Annual Reports- Circular to Shareholders- Other Important Announcements



STRENGTHEN RELATIONSHIP BETWEEN COMPANY AND SHAREHOLDERS

Encourage shareholder participation at general meeting

The Board regards that AGMs and Extraordinary General Meetings (“EGMs”) are the primary forum for communication by the Company with its shareholders and for shareholders participation.

Prior to the AGM and EGM, shareholders will be provided with the notices of meetings and accompanying explanatory material such as notes, Annual Report and/or Circular to enable shareholders to exercise their rights. Notices of AGM and EGM will be issued in accordance with the provisions of the Companies Act, 1965 and the MMLR. The Board endeavor to serve earlier notice than the minimum notice period where practicable. The adequate time given to shareholders allows them to make necessary arrangements to attend and participate in the general meeting. Shareholders, who are unable to attend an AGM or EGM, are encouraged to appoint proxy or proxies to attend and vote at meetings for and on their behalf.

Separate issues are tabled in separate resolutions at general meetings, voting is carried out systematically and resolutions are properly recorded.

Poll Voting

Shareholders will be informed of their right to demand a poll vote at the commencement of the meeting. In line with the recommendation of the Code, the Board would encourage and facilitate poll voting at general meetings in the case of substantive resolutions which require shareholders approval.

At the AGM of the Company held on 26 June 2015, no substantive resolutions were put forth for approval, thus the resolutions were voted on by a show of hand.

Consideration is being given to adopt an electronic voting system to facilitate greater shareholders participation whenever deemed necessary and where circumstances permit. Effective Communication and Proactive Engagement

During General Meetings, the chairman of Meeting will invite shareholders to raise questions pertaining to the Company’s Financial Statements and other items for adoption at the meeting, before putting a resolution to vote. The Directors, Management and external auditors were in attendance to respond to the shareholders’ queries.

In addition to the above, the Company will look into allocation of time during AGM for dialogue with shareholders to address the issue concerning the Group and to make arrangement for Officers of the Company to present and handle other face-to-face enquires from shareholders.

This Statement of Corporate Governance is made in accordance with the resolution of the Board of Directors on 15 April 2016.



statement on risk management anD internaL controL

INTRODUCTION

The Board of Directors (“the Board”) of listed companies is required to maintain a sound risk management framework and internal control system under the revised Malaysian Code on Corporate Governance (2012) to safeguard shareholders’ investments and the Group’s assets. The Board acknowledges and affirms its commitment in maintaining a sound system of risk management and internal control in the Group and is pleased to present the Statement on Risk Management and Internal Control, which outlines the nature and scope of internal control of the Group, made in accordance with the “Statement on Risk Management & Internal Control – Guideline for Directors of Public Listed Issuers” issued by Bursa Malaysia Securities Berhad.

BOARD RESPONSIBILITY

The Board acknowledge its responsibilities and accountabilities over the Group’s system of internal control and effective risk management practices that covers all aspects of the Group’s business which includes strategic planning, commercial, operational and financial areas, as well as reviewing the adequacy and integrity of the system of internal control on a regular basis. In recognition of this responsibility, the Board sets the procedures, controls and draw up policies to seek assurance that the system is operating to safeguard shareholders’ investments and the Group’s assets.

The Board is of the view that the risk management framework and internal control system are designed to manage the Group’s risks within an acceptable risk appetite, rather than eliminate the risk of failure to achieve the policies, goals and objectives of the Group. In view of the limitations inherent in any system of internal controls, it can therefore only provide reasonable, rather than absolute assurance of effectiveness against material errors, losses, fraud and breaches of law or regulations.

The Board regards risk management as an integral part of business operations and establish process for identifying, evaluating and managing the significant risks encountered by the Group that has been put in place for the year and up to the date of approval of this statement for inclusion in the annual report. The process is being regularly reviewed by the Board through its Audit Committee to ensure that adequate measures are taken to mitigate weaknesses in a controlled environment.

RISK MANAGEMENT

The Board recognises the importance for identifying, evaluating, managing the significant risks that could potentially impact the achievement of Group’s business objectives. The Group is responsible for implementing the framework, policies and procedures on risk and internal control which approved by the Board.

The Group established a process for identifying, evaluating and managing key risks in the context of its business objectives. These processes are embedded within the Group’s management systems. Senior management together with Heads of Department are delegated with the responsibility to monitor and manage risks covering their respective areas of responsibilities, taking appropriate and timely corrective action as needed. During the periodical/monthly operational/management meetings, key risks and mitigating controls are assessed, reviewed and deliberated. Significant risks, if any, affecting the Group’s strategic and business plan are then presented to the Audit Committee and onwards to the Board at their scheduled meetings. The Board shall continue to evaluate the Group’s risk management process to ensure it remains relevant to the Group’s requirements.

CONTROL STRUCTURE

The Group’s policy is to assume operating risks that are within its core businesses and competencies to manage. The Group manage its risks by implementing various internal control systems. The day to day operations are monitored by the Executive Directors and the management team. The Group sets out the roles and responsibilities, review and approval procedures in order to strengthen the internal control of the Group’s various operations.


This is achieved through control exercised by the Executive Directors over all significant decision making related to commercial, financial and operating areas of the Company. Monthly management meetings are conducted among senior management whereby monthly performance of the respective subsidiary is being closely reviewed and evaluated based on performance result against expected target and budget set.

The Group also provides comprehensive guidelines on employment, performance appraisal, training and retention of employees are in place to ensure that employees of the Group are well trained and equipped with all the necessary knowledge, skills and abilities to perform their responsibility effectively and adequately.

In accordance with the directives of the Board, the Executive Directors guide the management in the implementation of the Board policies. These include amongst others, control issue for financial accounting, reporting, procurement and human resources.

INTERNAL AUDIT

The Audit Committee assists the Board in reviewing the adequacy and integrity of the internal control system in the Group.

As an on-going process, the Internal Auditors carries out detailed risk audits on each identified area according to an approved audit plan. Risk-based audit reviews are carried out and results of such reviews are reported to the Audit Committee. The status of the implementation of corrective actions to address control weaknesses is also followed up by the internal auditors to ensure that corrective actions have been satisfactorily implemented.

The membership of the Audit Committee, summary of its term of references and activities are set out on Audit Committee Report

OTHER KEY ELEMENTS OF INTERNAL CONTROL

The other key elements of the Group’s system of internal control are as follows:-

● Clearly defined delegation of responsibilities to senior management and the respective business unit heads by the Board, including appropriate authority limits. Each department has clear accountabilities for ensuring that appropriate risk management and control procedures are in place. These delegations are subject to periodic review by the Board.

● Monitoring of performance including discussion of any significant issues at monthly management meetings which are attended by heads of companies under the Group.

● Reviews by the Audit Committee on internal control issues identified by external auditors, and the status of corrective actions taken by management.

● The Executive and Non-Executive directors meet regularly to consider the Group’s financial performance, business initiatives, management and corporate issues.

● Identifying and evaluating the risks exposed to the Group and recommend on processes and procedures for the management of these risks in adherence to the Group policy and objective.

● Regular and comprehensive information provided to management, covering financial performance and key business indicators.

● Recommendations for improvement in efficiency and effectiveness of business.● Review of all proposals for material capital and investment acquisitions by management team and approve by the

Board.● Ensuring the operation is in adherence to the relevant regulatory and legislative requirement.● Safeguarding the Group’s interest and shareholders’ value.● Where appropriate, certain subsidiaries have ISO 9001:2008 and ISO 14001:2004 accreditation for their operational

purposes.● Reviewing of an appropriate insurance programme to safeguard major assets against financial loss resulting from

property damage, machinery breakdown, business interruption and general liability.

statement on risk management anD internaL controL(CONTINUED)


statement on risk management anD internaL controL(CONTINUED)

CONCLUSION

The Board is of the view that the existing system of internal control is embedded into the operations of the Group and was satisfactory and has not resulted in any material loss, contingencies or uncertainties that would require disclosure in the Group’s annual report.

The Board has received assurance from the Executive Chairman and Accountant of the Company that the Company’s overall risk management and internal control system is operating adequately and effectively, in all material aspects, based on the risk management and internal control systems of the Group.

The Board continues to take pertinent measures to sustain and where required, to improve the Group’s risk management and systems of internal control in meeting the Group’s strategic objectives.

This statement is made in accordance with a resolution of the Board of Directors on 15 April 2016.


The Directors are responsible to ensure that financial statements are drawn up in accordance with the Malaysian Financial Reporting Standards, International Financing Reporting Standards and the requirements of Companies Act, 1965 in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company as at 31 December 2015 and of the financial performance and the cash flows of the Group and of the Company for the year then ended. In preparing these financial statements for the year ended 31 December 2015, the Directors have:

• adopted suitable accounting policies and then applied them consistently;• made estimates and judgements that are reasonable and prudent;• ensured that applicable accounting standards have been followed, subject to any material departures disclosed

and explained in the financial statements ; and• prepared the financial statements on the going concern basis.

This statement is made in accordance with the resolution of the Board of Directors 15 April 2016.

statement of Directors’ responsibiLityIN RESPECT OF AUDITED FINANCIAL STATEMENTS PURSUANTTO PARAGRAPH 15.26(A) OF THE LISTING REQUIREMENTS


aDDitionaL compLiance information

1) UTILISATIOn OF PROCEEDS

During the financial year ended 31 December 2015, the Company did not raise any proceeds from corporate proposals.

2) ShARE bUy-bACkS

The Company has not purchased any of its own shares during the financial year ended 31 December 2015. As such, there is no treasury share maintained by the Company.

3) OPTIOnS, WARRAnTS OR COnVERTIbLE SECURITIES

The Company has not issued any options, warrants and convertible securities in respect of the financial year ended 31 December 2015.

4) DEPOSITORy RECEIPT

The Company has not sponsored any Depository Receipt programme in the financial year ended 31 December 2015.

5) SAnCTIOnS AnD /OR PEnALTIES

There were no sanctions and/or penalties imposed on the Company and its subsidiaries, Directors or management by the relevant regulatory bodies during the financial year ended 31 December 2015.

6) NON-AUDIT FEES

During the financial year ended 31 December 2015, non-audit fees paid to the external auditors by the Company amounted to RM7,500.

7) vARIATION IN RESULTS

The Company did not release any profit estimate, forecast or projection for the financial year. There is no significant variance between results for the financial year and the unaudited results previously released by the Company.

8) PROFIT GUARANTEE

There is no profit guarantee in respect of the Company during the financial year ended 31 December 2015.

9) MATERIAL CONTRACTS

The Company and its subsidiaries do not have any material contracts involving the interest of its Directors and /or major shareholders.

10) MATERIAL COnTRACTS RELATInG TO LOAnS

The Company and its subsidiaries do not have any material contracts relating to loans involving the interest of its Directors and/or major shareholders.

11) RECURREnT RELATED PARTy TRAnSACTIOnS

The breakdown of the aggregate value of the recurrent related party transactions conducted by the Group and the related parties were disclosed in the Note 27 to the financial statements.


NOTICE IS HEREBY GIvEN THAT the Twenty-Second Annual General Meeting of the Company will be held at Cempaka Room (Level 03), Hotel Bangi-Putrajaya, Off Persiaran Bandar, 43650 Bandar Baru Bangi, Selangor Darul Ehsan on Friday, 24 June 2016 at 11.00 a.m. to transact the following businesses :

AS ORDINARY BUSINESS

1. To receive the audited Financial Statements for the year ended 31 December 2015 together with the Reports of the Directors and Auditors thereon.

(Please refer Explanatory note (a))

2. To approve the payment of Directors’ Fees of RM241,000.00 in respect of the financial year ended 31 December 2015.

(Resolution 1)

3. To re-elect the following Directors:-

3.1 Tan Jing Pho who retires by rotation pursuant to Article 104 of the Company’s Articles of Association and being eligible, offers himself for re-election.

(Resolution 2)

3.2 Gan Poh San retires by rotation pursuant to Article 104 of the Company’s Articles of Association and being eligible, offers himself for re-election.

(Resolution 3)

3.3 Teo Chee Kok retires by rotation pursuant to Article 104 of the Company’s Articles of Association and being eligible, offers himself for re-election.

(Resolution 4)

4. To re-appoint Messrs Ernst & Young as Auditors of the Company and to authorise the Directors to fix their remuneration.

(Resolution 5)

AS SPECIAL BUSINESS

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

Ordinary Resolution – Authority To Directors To Issue Shares

“THAT pursuant to Section 132D of the Companies Act, 1965, the Directors be and are hereby empowered to issue shares in the Company, at any time and upon such terms and conditions and for such purposes as the Directors may, in their absolute discretion, deem fit, provided that the aggregate number of shares issued pursuant to this resolution in any one financial year does not exceed 10% of the issued capital of the Company for the time being and that the Directors be and are also empowered to obtain approval for the listing of and quotation for the additional shares so issued on the Bursa Malaysia Securities Berhad and that such authority shall continue in force until the conclusion of the next Annual General Meeting of the Company.”

(Resolution 6)

6. To transact any other business of which due notice shall have been given.

BY ORDER OF THE BOARD

---------------------------------------------------HO MENG CHAN (MACS 00574)WU SIEW HONG (MAICSA 7039647)Secretaries

Petaling Jaya,Selangor Darul Ehsan.28 April 2016

notice of annuaL generaL meeting


notice of annuaL generaL meeting(CONTINUED)

Notes: -

1) A member entitled to attend and vote at the Meeting is entitled to appoint any person or persons to be his/her proxy or proxies to attend and vote in his/her stead. Such proxy need not be a member of the Company and the provision of Section 149(1)(b) of the Companies Act, 1965 shall not apply to the Company. Where two (2) or more proxies are appointed, the proportions of shareholdings to be represented by each proxy must be specified in order for the appointments to be valid.

2) The instrument appointing a proxy, in the case of an individual, shall be signed by the appointer or by his/her attorney duly authorised in writing, and in the case of a corporation, shall either be given under its common seal or under the hand of an officer or attorney of the corporation duly authorised.

3) If there is no indication as to how you wish your vote(s) to be cast, the proxy may vote or abstain from voting at his/her discretion.

4) The instrument appointing a proxy must be duly executed and deposited at the Registered Office of the Company at 308, Block A (3rd Floor), Kelana Business Centre, 97, Jalan SS7/2, Kelana Jaya, 47301 Petaling Jaya, Selangor Darul Ehsan not less than forty-eight (48) hours before the time set for holding the meeting or any adjournment thereof.

5) Depositors who appear in the Record of Depositors as at 16 June 2016 shall be regarded as Member of the Company entitled to attend the Twenty-Second Annual General Meeting or appoint a proxy or proxies to attend and vote on his behalf.

EXPLANATORY NOTES

a) This Agenda item is meant for discussion only, as the provision of Section 169(1) of the Companies Act, 1965 does not require a formal approval of the shareholders for the Audited Financial Statements. Hence, this Agenda item is not put forward for voting.

b) Ordinary Resolution – Resolution on Authority to Directors to Issue Shares

The proposed resolution 6 under item 5 of the agenda, if passed, will give authority to the Directors of the Company, from the date of the above Annual General Meeting, to issue and allot shares in the Company up to and not exceeding 10% of the issued share capital of the Company for the time being, for such purposes as they consider would be in the interest of the Company. This authority, unless revoked or varied at a general meeting, will expire at the next Annual General Meeting of the Company.

The proposed Resolution is to seek a renewal of the General Mandate for the issue of new ordinary shares pursuant to Section 132D of the Companies Act, 1965 which was approved by the shareholders at the Twenty-First Annual General Meeting.

At the date of this notice, no new shares in the Company were issued pursuant to the general authority to the Directors for issuance of shares pursuant to Section 132D of the Companies Act, 1965 at the Twenty-First Annual General Meeting held on 26 June 2015 and which will lapse at the conclusion of the Twenty-Second Annual General Meeting.

With this renewed General Mandate, the Company will be able to raise funds for the purpose of funding future investment, working capital and/or acquisitions.

Directors’ Report 33Statement by Directors 37Statutory Declaration 37Independent Auditors’ Report 38Statements of Comprehensive Income 40Statements of Financial Position 41Statements of Changes in Equity 42Statements of Cash Flows 44Notes to the Financial Statements 46

financiaLstatements


Directors’ report

The directors have pleasure in presenting their report together with the audited financial statements of the Group and of the Company for the financial year ended 31 December 2015.

PRINCIPAL ACTIvITIES

The principal activity of the Company is investment holding.

The principal activities of the subsidiaries are described in Note 16 to the financial statements.

There have been no significant changes in the nature of the principal activities of the Company and of its subsidiaries except as disclosed in Note 33 to the financial statements.

RESULTS

Group Company RM RM

Loss from continuing operations, net of tax (2,206,446) (2,206,446)Profit from discontinued operations, net of tax 4,168,349 - Gain on disposal of subsidiaries 95,845,745 186,739,413 Profit net of tax 97,807,648 184,532,967

Profit attributable to:Equity holders of the Company 97,807,648 184,532,967

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

In the opinion of the directors, the results of the operations of the Group and of the Company during the financial year were not substantially affected by any item, transaction or event of a material and unusual nature except as disclosed in Note 33.

DIvIDENDS

The amounts of dividends paid by the Company since 31 December 2014 was as follows:

RM

In respect of financial year ended 31 December 2015:

Special cash distribution on 40,397,333 ordinary shares, declared on 13 April 2015 and paid on 12 May 2015 70,291,359

Dividend-in-specie of 172,092,612 SKP Resources Berhad (“SKPRB”) shares, declared on 13 April 2015 and distributed on 12 May 2015 99,813,715

170,105,074


Directors’ report(CONTINUED)

DIvIDENDS (CONTINUED)

As disclosed in Note 33 to the financial statements, upon completion of the disposal of subsidiaries, the Company carried out the distribution of total consideration from the disposal of subsidiaries in the following manner:

(a) Dividend-in-specie of RM99,813,715 which consist of 172,092,638 SKPRB shares on the basis of 4.26 SKPRB shares for every share held by the Company’s shareholders; and

(b) Cash distribution of RM70,291,359 on the basis of approximately RM1.74 for every one share held by the Company’s shareholders.

The directors do not recommend any final dividend to be paid in respect of the current financial year.

DIRECTORS

The names of the directors of the Company in office since the date of the last report and at the date of this report are:

Dato’ Gan Kim HuatGan Poh SanGan Chia SiangNg Wan Cher @ Ng Guan CherTan Jing PhoTeo Chee KokTan Sri Hussin Bin Haji Ismail Amirul Azhar Bin Baharom

DIRECTORS’ BENEFITS

Neither at the end of the financial year, nor at any time during that year, did there subsist any arrangement to which the Company was a party, whereby the directors might acquire benefits by means of the acquisition of shares in or debentures of the Company or any other body corporate.

Since the end of the previous financial year, no director has received or become entitled to receive a benefit (other than benefits included in the aggregate amount of emoluments received or due and receivable by the directors or the fixed salary of a full-time employee of the Company as shown in Note 9 to the financial statements) by reason of a contract made by the Company or a related corporation with any director or with a firm of which he is a member, or with a company in which he has a substantial financial interest, except as disclosed in Note 27 to the financial statements.

DIRECTORS’ INTERESTS

According to the register of directors’ shareholdings, the interests of directors in office at the end of the financial year in shares in the Company and its related corporations during the financial year were as follows:

number of ordinary shares of RM1 each 1.1.2015 Acquired Sold 31.12.2015

Name of director

Direct Interest:Ordinary shares of the CompanyDato’ Gan Kim Huat 12,102,029 - (3,067,000) 9,035,029 Gan Chia Siang 10,000 - (10,000) - Tan Jing Pho 818,176 - (578,176) 240,000


DIRECTORS’ INTERESTS (CONTINUED)

number of ordinary shares of RM1 each 1.1.2015 Acquired Sold 31.12.2015

Name of director

Deemed Interest:Ordinary shares of the CompanyDato’ Gan Kim Huat 15,637,357 - - 15,637,357 Gan Poh San 7,602,357 - - 7,602,357 Tan Jing Pho 98,776 - (98,776) -

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

OTHER STATUTORY INFORMATION

(a) Before the statements of comprehensive income and statements of financial position of the Group and of the Company were made out, the directors took reasonable steps:

(i) to ascertain that proper action had been taken in relation to the writing off of bad debts and the making of provision for doubtful debts and satisfied themselves that there were no known bad debts and that no provision for doubtful debts was necessary; and

(ii) to ensure that any current assets which were unlikely to realise their values as shown in the accounting records in the ordinary course of business had been written down to an amount which they might be expected so to realise.

(b) At the date of this report, the directors are not aware of any circumstances which would render:

(i) it necessary to write off any bad debts or to make any provision for doubtful debts in respect of the Group and of the Company; and

(ii) the values attributed to current assets in the financial statements of the Group and of the Company misleading.

(c) At the date of this report, the directors are not aware of any circumstances which have arisen which would render adherence to the existing method of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate.

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

(e) As at the date of this report, there does not exist:

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

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



OTHER STATUTORY INFORMATION (CONTINUED)

(f) In the opinion of the directors:

(i) no contingent or other liability has become enforceable or is likely to become enforceable within the period of twelve months after the end of the financial year which will or may affect the ability of the Group or of the Company to meet its obligations when they fall due; and

(ii) no item, transaction or event of a material and unusual nature has arisen in the interval between the end of the financial year and the date of this report which is likely to affect substantially the results of the operations of the Group and of the Company for the financial year in which this report is made.

SIGNIFICANT AND SUBSEqUENT EvENTS

The significant and subsequent events are disclosed in Note 33 to the financial statements.

AUDITORS

The auditors, Ernst & Young, have expressed their willingness to continue in office.

Signed on behalf of the Board in accordance with a resolution of the directors dated 4 April 2016.

Gan Poh San Gan Chia Siang



statement by DirectorsPURSUANT TO SECTION 169 (15) OF THE COMPANIES ACT, 1965

We, Gan Poh San and Gan Chia Siang, being two of the directors of Tecnic Group Berhad, do hereby state that, in the opinion of the directors, the accompanying financial statements set out on pages 40 to 93 are drawn up in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company as at 31 December 2015 and of their financial performance and cash flows for the year then ended.

Signed on behalf of the Board in accordance with a resolution of the directors dated 4 April 2016.

Gan Poh San Gan Chia Siang

statutory DecLarationPURSUANT TO SECTION 169 (16) OF THE COMPANIES ACT, 1965

I, Gan Poh San, being the director primarily responsible for the financial management of Tecnic Group Berhad, do solemnly and sincerely declare that the accompanying financial statements set out on pages 40 to 94 are in my opinion correct, and I make this solemn declaration conscientiously believing the same to be true and by virtue of the provisions of the Statutory Declarations Act, 1960.

Subscribed and solemnly declared by the abovenamed Gan Poh Sanat Bangi in the State of Selangoron 4 April 2016 Gan Poh San

Before me,NOR AzIzAH BINTI JOHARUDDINCommissioner for Oaths


REPORT ON THE FINANCIAL STATEMENTS

We have audited the financial statements of Tecnic Group Berhad, which comprise the statement of financial position as at 31 December 2015 of the Company, and the statements of comprehensive income, statements of changes in equity and statements of cash flows of the Group and of the Company for the year then ended, and a summary of significant accounting policies and other explanatory notes, as set out on pages 40 to 93.

Directors’ responsibility for the financial statements

The directors of the Company are responsible for the preparation of financial statements so as to give a true and fair in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of Companies Act, 1965 in Malaysia. The directors are also responsible for such internal control as the directors determined 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 judgment, including the assessment of the 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 and true and fair presentation of the financial statements 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 Company as at 31 December 2015 and of the financial performance and cash flows of the Group and of the Company 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 that in our opinion, the accounting and other records and the registers required by the Act to be kept by the Company was properly kept in accordance with the provisions of the Act.

inDepenDent auDitors’ report TO THE MEMBERS OF TECNIC GROUP BERHAD (INCORPORATED IN MALAYSIA)


OTHER MATTERS

The supplementary information set out in Note 36 on page 94 is disclosed to meet the requirement of Bursa Malaysia Securities Berhad. The directors are responsible for the preparation of the supplementary information in accordance with Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants (“MIA Guidance”) and the directive of Bursa Malaysia Securities Berhad. In our opinion, the supplementary information is prepared, in all material respects, in accordance with the MIA Guidance and the directive of Bursa Malaysia Securities Berhad.

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.

Ernst & young Lee Ah TooAF: 0039 2187/09/17(J)Chartered Accountants Chartered Accountant

Melaka, MalaysiaDate: 4 April 2016

inDepenDent auDitors’ reportTO THE MEMBERS OF TECNIC GROUP BERHAD (CONTINUED)(INCORPORATED IN MALAYSIA)


Group Company Note 2015 2014 2015 2014

RM RM RM RM Continuing operations

Other income 7 814,458 44,636 814,458 44,636 Other item of expenses

Administrative expenses (3,021,088) (1,664,960) (3,021,088) (1,664,960)Loss before tax from continuing operations 8 (2,206,630) (1,620,324) (2,206,630) (1,620,324)Income tax expense 11 184 966 184 966 Loss from continuing operations, net of tax (2,206,446) (1,619,358) (2,206,446) (1,619,358)

Discontinued operations

Profit from discontinued operations, net of tax 12 4,168,349 21,342,836 - -

Gain on disposal of subsidiaries 12 95,845,745 - 186,739,413 - 100,014,094 21,342,836 186,739,413 -

Profit/(loss) net of tax 97,807,648 19,723,478 184,532,967 (1,619,358)

Profit/(loss) attributable to:Owners of the Company 97,807,648 19,723,478 184,532,967 (1,619,358)

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

Basic

Continuing operations 13 (5.46) (4.01)Discontinued operations 13 247.57 52.83 Total 242.11 48.82

DilutedContinuing operations 13 (5.46) (4.01)Discontinued operations 13 247.57 52.83 Total 242.11 48.82

The accompanying accounting policies and explanatory notes form an integral part of the financial statements.

statements of comprehensive incomeFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2015


Group Company Note 2015 2014 2015 2014

RM RM RM RM Assets

Non-current assetsProperty, plant and equipment 14 - 59,513,440 - - Land use rights 15 - 5,369,108 - - Investment in subsidiaries 16 - - - 14,260,587 Available-for-sale financial asset 17 - 100,000 - -

- 64,982,548 - 14,260,587

Current assetsInventories 18 - 14,164,439 - - Trade and other receivables 19 - 61,880,251 1,000 25,652,828 Other current assets 20 - 2,148,613 - 3,770 Other investment 21 - - 23,612,019 - Tax recoverable - - 892 - Cash and bank balances 22 - 38,818,213 330,746 5,377,264

- 117,011,516 23,944,657 31,033,862

Total assets - 181,994,064 23,944,657 45,294,449

Equity and liabilities

Current liabilitiesTrade and other payables 23 - 44,473,236 2,429,340 1,849,425 Tax payable - 1,040,485 - -

- 45,513,721 2,429,340 1,849,425

Net current assets - 71,497,795 21,515,317 29,184,437

non-current liabilityDeferred tax liabilities 24 - 6,310,000 - -

Total liabilities - 51,823,721 2,429,340 1,849,425

Net assets - 130,170,343 21,515,317 43,445,024

Equity attributable to equity holders of the Company

Share capital 25 - 40,397,333 4,039,733 40,397,333 Retained earnings 26 - 89,773,010 17,475,584 3,047,691 Total equity - 130,170,343 21,515,317 43,445,024

Total equity and liabilities - 181,994,064 23,944,657 45,294,449


statements of financiaL position of the companyAS AT 31 DECEMBER 2015


Total equity, Non- attributable to distributable Distributable equity holders Share Retained

of the Company capital earnings RM RM RM

Group

2015

Opening balance at 1 January 2015 130,170,343 40,397,333 89,773,010

Total comprehensive income 97,807,648 - 97,807,648

Transaction with ownersDividends on ordinary shares, representing total transaction

with owners (Note 32) (170,105,074) - (170,105,074)Capital reduction (Note 25) (36,357,600) (36,357,600) -

(206,462,674) (36,357,600) (170,105,074)

Closing balance at 31 December 2015 21,515,317 4,039,733 17,475,584

2014



Transaction with ownersDividend on ordinary shares, representing total transaction

with owners (Note 32) (2,019,867) - (2,019,867)


statements of changes in eQuityFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2015


Non- distributable Distributable

Share Retained Equity, total capital earnings

RM RM RM Company

2015



Transaction with ownersDividends on ordinary shares, representing total transaction

with owners (Note 32) (170,105,074) - (170,105,074)Capital reduction (Note 25) (36,357,600) (36,357,600) -

(206,462,674) (36,357,600) (170,105,074)


2014


Total comprehensive loss (1,619,358) - (1,619,358)

Transaction with ownersDividend on ordinary shares, representing total transaction

with owners (Note 32) (2,019,867) - (2,019,867)



statements of changes in eQuityFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2015 (CONTINUED)


Group Company 2015 2014 2015 2014

RM RM RM RM Operating activities

Profit/(loss) before tax from: - continuing operations (2,206,630) (1,620,324) (2,206,630) (1,620,324)- discontinued operations 101,574,220 27,831,785 186,739,413 -

Profit/(loss) before tax, total 99,367,590 26,211,461 184,532,783 (1,620,324)Adjustments for:

Amortisation of land use rights 30,882 123,533 - - Depreciation of property, plant and equipment 2,098,841 7,642,637 - - Finance costs 640 2,693 - - (Gain)/loss on disposal of:

- property, plant and equipment (14,542) (126,830) - - - other investment (198,544) (10,116) (198,544) (10,116)- subsidiaries (95,845,745) - (186,739,413) 18,764

Interest income (691,308) (317,299) (615,914) (34,520)Property, plant and equipment written off - 174,361 - - Provision for legal claim 356,961 725,553 - - Reversal of provision for claim on damaged

goods - (859,000) - - Reversal of impairment loss on trade debtors - (140,000) - - Unrealised foreign exchange gain (1,043,781) (836,690) - -

Total adjustments (95,306,596) 6,378,842 (187,553,871) (25,872)Operating cash flows before changes in

working capital 4,060,994 32,590,303 (3,021,088) (1,646,196)Changes in working capitalDecrease in inventories 156,850 1,460,643 - - Decrease/(increase) in receivables 21,424,549 (2,309,971) 25,648,365 2,483,522 (Increase)/decrease in other current assets (2,517,682) 135,936 3,770 3,730 (Decrease)/increase in payables (10,327,169) 5,923,050 579,915 (700,423)Total changes in working capital 8,736,548 5,209,658 26,232,050 1,786,829 Cash flows from operations 12,797,542 37,799,961 23,210,962 140,633 Interest paid (640) (2,693) - - Income taxes (paid)/refunded (1,106,673) (5,973,175) (708) 966 Net cash flows from operating activities 11,690,229 31,824,093 23,210,254 141,599

statements of cash fLoWs FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2015


Group Company 2015 2014 2015 2014

RM RM RM RM Investing activities

Purchase of financial asset at fair value through profit or loss (27,137,780) (7,270,137) (23,612,019) (7,270,137)

Purchase of property, plant and equipment (2,975,600) (14,965,228) - - Proceeds from disposal of:

- property, plant and equipment 45,000 577,875 - - - other investment 384,829 7,280,253 384,829 7,280,253

Net cash inflows from discontinued operations 84,647,515 - 101,000,000 873,804 Interest received 694,771 313,836 619,377 31,057 Net cash flows from/(used in) investing activities 55,658,735 (14,063,401) 78,392,187 914,977

Financing activities

Dividend paid on ordinary shares (70,291,359) (2,019,867) (70,291,359) (2,019,867)Reduction in share capital (36,357,600) - (36,357,600) - Net cash flows used in financing activities (106,648,959) (2,019,867) (106,648,959) (2,019,867)

net (decrease)/increase in cash and bank balances (39,299,995) 15,740,825 (5,046,518) (963,291)

Effects of foreign exchange changes 812,528 418,205 - - Cash and bank balances at beginning of year 38,818,213 22,659,183 5,377,264 6,340,555

Cash and bank balances at end of year 330,746 38,818,213 330,746 5,377,264


statements of cash fLoWs FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2015 (CONTINUED)


1. CORPORATE InFORMATIOn

The Company is a public limited liability company, incorporated and domiciled in Malaysia, and is listed on the Main Market of Bursa Malaysia Securities Berhad. The registered office of the Company is located at 308, Block A (3rd Floor), Kelana Business Centre, 97 Jalan SS7/2, Kelana Jaya, 47301 Petaling Jaya, Selangor.

The principal activity of the Company is investment holding. The principal activities of the subsidiaries are described in Note 16 to the financial statements. There have been no significant changes in the nature of the principal activities except as disclosed on Note 33 to the financial statements.

2. bASIS OF PREPARATIOn

(a) Accounting framework

These financial statements have been prepared in accordance with Malaysian Financial Reporting Standards (MFRS) as issued by the Malaysian Accounting Standards Board (MASB), International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board and the requirements of the Companies Act, 1965 in Malaysia.

The financial statements have also been prepared on a historical basis, unless otherwise indicated in the accounting policies below.

The financial statements are presented in Ringgit Malaysia (RM) except when otherwise indicated.

(b) Going concern assumption

During the current financial year, as disclosed in Note 33 to the financial statements, the Group has disposed off all its manufacturing, distribution and sale of plastic products and moulds business, which represents the entire core businesses of the Group (“the Disposal”).

On 9 April 2015, pursuant to the completion of the Disposals, the Company has triggered Paragraph 8.03A(2) of the Listing Requirements whereby a listed issuer has suspended or ceased all of its business or its major business as a result of the disposal of the Company’s major business. Bursa Malaysia Securities Berhad (“Bursa Securities”) had via its letter dated 14 July 2015 notified the Company that it is a Cash Company (as defined under Paragraph 8.03(1)). The Company has a 12 months period from 9 April 2015 to submit its proposal to acquire a new core business in order to enable the Company to regularise its condition and to maintain the listing status on the Main Market of Bursa Securities.

The directors are currently evaluating various options to formulate a regularisation plan to address the Company’s PN16 status by looking into identifying potential future business expansion opportunities. In view of the directors’ intention and financial ability to pursue new business opportunities, the directors are of the opinion that the preparation of the financial statements of the Company on the going concern basis is appropriate.

3. SUMMARy OF SIGnIFICAnT ACCOUnTInG POLICIES

3.1 basis of consolidation

The consolidated financial statements comprise the financial statements of the Company and its subsidiaries as at the reporting date. The financial statements of the subsidiaries used in the preparation of the consolidated financial statements are prepared for the same reporting date as the Company. Consistent accounting policies are applied for like transactions and events in similar circumstances.

notes to the financiaL statements FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2015

Notes to the fiNaNcial statemeNtsFor the Financial year ended 31 december 2015 (continUed)


3. SUMMARy OF SIGnIFICAnT ACCOUnTInG POLICIES (COnTInUED)

3.1 basis of consolidation (continued)

The Company controls an investee if and only if the Company has all the following:

(i) Power over the investee (i.e existing rights that give it the current ability to direct the relevant activities of the investee);

(ii) Exposure, or rights, to variable returns from its investment with the investee; and

(iii) The ability to use its power over the investee to affect its returns.

When the Company has less than a majority of the voting rights of an investee, the Company considers the following in assessing whether or not the Company’s voting rights in an investee are sufficient to give it power over the investee:

(i) The size of the Company’s holding of voting rights relative to the size and dispersion of holdings of the other vote holders;

(ii) Potential voting rights held by the Company, other vote holders or other parties;

(iii) Rights arising from other contractual arrangements; and

(iv) Any additional facts and circumstances that indicate that the Company has, or does not have, the current ability to direct the relevant activities at the time that decisions need to be made, including voting patterns at previous shareholders’ meetings.

Subsidiaries are consolidated when the Company obtains control over the subsidiary and ceases when the Company loses control of the subsidiary. All intra-group balances, income and expenses and unrealised gains and losses resulting from intra-group transactions are eliminated in full.

Losses within a subsidiary are attributed to the non-controlling interests even if that results in a deficit balance.

Changes in the Group’s ownership interests in subsidiaries that do not result in the Group losing control over the subsidiaries are accounted for as equity transactions. The carrying amounts of the Group’s interests and the non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiaries. The resulting difference is recognised directly in equity and attributed to owners of the Company.

When the Group loses control of a subsidiary, a gain or loss calculated as the difference between (i) the aggregate of the fair value of the consideration received and the fair value of any retained interest and (ii) the previous carrying amount of the assets and liabilities of the subsidiary and any non-controlling interest, is recognised in profit or loss. The subsidiary’s cumulative gain or loss which has been recognised in other comprehensive income and accumulated in equity are reclassified to profit or loss or where applicable, transferred directly to retained earnings. The fair value of any investment retained in the former subsidiary at the date control is lost is regarded as the cost on initial recognition of the investment.

3.2 business combinations

Acquisitions of subsidiaries are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate of the consideration transferred, measured at acquisition date fair value and the amount of any non-controlling interests in the acquiree. The Group elects on a transaction-by-transaction basis whether to measure the non-controlling interests in the acquiree either at fair value or at the proportionate share of the acquiree’s identifiable net assets. Transaction costs incurred are expensed and included in administrative expenses.




3.2 business combinations (continued)

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

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

If the business combination is achieved in stages, the acquisition date fair value of the acquirer’s previously held equity interest in the acquiree is remeasured to fair value at the acquisition date through profit or loss.

3.3 Foreign currency translation

(a) Functional and presentation currency

The Group’s and the Company’s financial statements are presented in Ringgit Malaysian which is also the Company’s functional currency. Each entity in the Group determines its own functional currency and items included in the financial statements of each entity are measured using that functional currency.

(b) Transactions and balances

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

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

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

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

3.4 Revenue recognition

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the Company and the revenue can be reliably measured, regardless of when the payment is being made. Revenue is measured at the fair value of the consideration received or receivable, taking into account contractually defined terms of payment and excluding taxes or duty.




3.4 Revenue recognition (continued)

The Company and its subsidiaries assess their revenue arrangements against specific criteria in order to determine if the Company and its subsidiaries are acting as principal or agent. The Group and the Company have concluded that they are acting as a principal in all of its revenue arrangements. The following specific recognition criteria must also be met before revenue is recognised:

(a) Sale of goods

Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer, usually on delivery of the goods.

(b) Fabrication of moulds

Revenue is recognised upon delivery of products and customer acceptance, if any or performance of services, net of discounts.

(c) Interest income

For all financial instruments measured at amortised cost and interest bearing financial assets classified as available for sale, interest income or expense is recorded using the effective interest rate (EIR), which is the rate that exactly discounts the estimated future cash payments or receipts through the expected life of the financial instrument or a shorter period, where appropriate, to the net carrying amount of the financial asset or liability. Interest income is included in finance income in the profit or loss.

(d) Management fees

Management fees are recognised when services are rendered.

(e) Dividend income

Dividend income is recognised when the Group’s and the Company’s right to receive payment is established.

3.5 Taxes

(a) Current income tax

Current income tax assets and liabilities for the current period are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date in the countries where the Group operates and generates taxable income.

Current income tax relating to items recognised directly in equity is recognised in equity and not in the profit or loss. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.

(b) Deferred tax

Deferred tax is provided using the liability method on temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.




3.5 Taxes (continued)

(b) Deferred tax (continued)

Deferred tax liabilities are recognised for all temporary differences, except:

(i) where the deferred tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and

(ii) in respect of taxable temporary differences associated with investments in subsidiaries and associates where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

Deferred tax assets are recognised for all deductible temporary differences, carry forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised, except:

(i) where the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and

(ii) in respect of deductible temporary differences associated with investments in subsidiaries and associates, deferred tax assets are recognised only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised.

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are reassessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.

Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss. Deferred tax items are recognised in correlation to the underlying transaction either in other comprehensive income or directly in equity.

Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current income tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.

Tax benefits acquired as part of a business combination, but not satisfying the criteria for separate recognition at that date, would be recognised subsequently if new information about facts and circumstances changed. The adjustment would either be treated as a reduction to goodwill (as long as it does not exceed goodwill) if it is incurred during the measurement period or in profit or loss.




3.6 Employee benefits

(i) Short term benefits

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

(ii) Defined contribution plans

The Group makes contributions to the Employees Provident Fund in Malaysia, a defined contribution pension scheme. Contributions to defined contribution pension schemes are recognised as an expense in the period in which the related service is performed.

3.7 Property, plant and equipment

Property, plant and equipment are stated at cost, net of accumulated depreciation and/or accumulated impairment losses, if any. Such cost includes the cost of replacing component parts of the property, plant and equipment and borrowing costs for long-term construction projects if the recognition criteria are met.

When significant parts of property, plant and equipment are required to be replaced at intervals, the Group derecognises the replaced part, and recognises the new part with its own associated useful life and depreciation. Likewise, when a major inspection is performed, its cost is recognised in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are recognised in the profit or loss as incurred. The present value of the expected cost for the decommissioning of the asset after its use is included in the cost of the respective asset if the recognition criteria for a provision are met. Refer to Note 6 Significant accounting judgments, estimates and assumptions.

Long term leasehold lands are depreciated over the period of the lease of 73 to 99 years.

Depreciation is calculated on a straight-line basis over the estimated useful lives of the assets as follows:

- Buildings: 50 to 99 years- Renovations: 10 years- Plant, machinery and equipment: 3 to 10 years- Furniture, fittings, office equipment and computer: 5 to 7 years- Motor vehicles: 7 years

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

The assets’ residual values, useful lives and methods of depreciation are reviewed at each financial year end and adjusted prospectively, if appropriate.

3.8 Leases

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




3.8 Leases (continued)

(a) Group/Company as lessee

Finance leases which transfer to the Group/Company substantially all the risks and benefits incidental to ownership of the leased item, are capitalised at the commencement of the lease at the fair value of the leased property or, if lower, at the present value of the minimum lease payments. Lease payments are apportioned between finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are recognised in finance costs in the profit or loss.

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

Operating lease payments are recognised as an operating expense in the profit or loss on a straight-line basis over the lease term.

3.9 Land use rights

Land use rights are initially measured at cost. Following initial recognition, land use rights are measured at cost less accumulated amortisation and accumulated impairment losses. The land use rights are amortised over their lease terms.

3.10 Subsidiaries

A subsidiary is an entity over which the Group has all the following:

(i) Power over the investee (i.e existing rights that give it the current ability to direct the relevant activities of the investee);

(ii) Exposure, or rights, to variable returns from its investment with the investee; and

(iii) The ability to use its power over the investee to affect its returns.

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

3.11 borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of the respective assets. All other borrowing costs are expensed in the period they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds.

3.12 Financial instruments

A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.

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




3.12 Financial instruments (continued)

(a) Financial assets

(i) Initial recognition and measurement

Financial assets within the scope of MFRS 139 are classified as financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments, available-for-sale financial assets, or as derivatives designated as hedging instruments in an effective hedge, as appropriate. The Group determines the classification of its financial assets at initial recognition.

All financial assets are recognised initially at fair value plus, in the case of assets not at fair value through profit or loss, directly attributable transaction costs.

Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the marketplace (regular way trades) are recognised on the trade date, i.e., the date that the Group commits to purchase or sell the asset.

The Group’s financial assets include cash and short-term deposits, trade and other receivables and loans and other receivables.

(ii) Subsequent measurement

The subsequent measurement of financial assets depends on their classification as follows:

Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss includes financial assets held for trading and financial assets designated upon initial recognition at fair value through profit or loss. Financial assets are classified as held for trading if they are acquired for the purpose of selling or repurchasing in the near term. This category includes derivative financial instruments entered into by the Group that are not designated as hedging instruments in hedge relationships as defined by MFRS 139. Derivatives, including separated embedded derivatives are also classified as held for trading unless they are designated as effective hedging instruments. Financial assets at fair value through profit and loss are carried in the statement of financial position at fair value with changes in fair value recognised in finance income or finance costs in the profit or loss.

The Group evaluates its financial assets held for trading, other than derivatives, to determine whether the intention to sell them in the near term is still appropriate. When the Group is unable to trade these financial assets due to inactive markets and management’s intention to sell them in the foreseeable future significantly changes, the Group may elect to reclassify these financial assets in rare circumstances. The reclassification to loans and receivables, available-for-sale or held to maturity depends on the nature of the asset. This evaluation does not affect any financial assets designated at fair value through profit or loss using the fair value option at designation.

Derivatives embedded in host contracts are accounted for as separate derivatives and recorded at fair value if their economic characteristics and risks are not closely related to those of the host contracts and the host contracts are not held for trading or designated at fair value though profit or loss. These embedded derivatives are measured at fair value with changes in fair value recognised in the profit or loss. Reassessment only occurs if there is a change in the terms of the contract that significantly modifies the cash flows that would otherwise be required.





(a) Financial assets (continued)

(ii) Subsequent measurement (continued)

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. After initial measurement, such financial assets are subsequently measured at amortised cost using the effective interest rate method (EIR), less impairment. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included in finance income in the profit or loss. The losses arising from impairment are recognised in the profit or loss in finance costs.

Held-to-maturity investments

Non-derivative financial assets with fixed or determinable payments and fixed maturities are classified as held-to-maturity when the Group has the positive intention and ability to hold them to maturity. After initial measurement, held-to-maturity investments are measured at amortised cost using the effective interest method, less impairment. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included in finance income in the profit or loss. The losses arising from impairment are recognised in the profit or loss in finance costs.

The Group did not has any held-to-maturity investments during the years ended 31 December 2014 and 2015.

Available-for-sale financial investments

Available-for-sale financial investments include equity and debt securities. Equity investments classified as available-for-sale are those, which are neither classified as held for trading nor designated at fair value through profit or loss. Debt securities in this category are those which are intended to be held for an indefinite period of time and which may be sold in response to needs for liquidity or in response to changes in the market conditions.

After initial measurement, available-for-sale financial investments are subsequently measured at fair value with unrealised gains or losses recognised as other comprehensive income in the available-for-sale reserve until the investment is derecognised, at which time the cumulative gain or loss is recognised in other operating income, or determined to be impaired, at which time the cumulative loss is reclassified to the profit or loss in finance costs and removed from the available-for-sale reserve. Interest income on available-for-sale debt securities is calculated using the effective interest method and is recognised in profit or loss.

The Group evaluates its available-for-sale financial assets to determine whether the ability and intention to sell them in the near term is still appropriate. When the Group is unable to trade these financial assets due to inactive markets and management’s intention to do so significantly changes in the foreseeable future, the Group may elect to reclassify these financial assets in rare circumstances. Reclassification to loans and receivables is permitted when the financial assets meet the definition of loans and receivables and the Group has the intent and ability to hold these assets for the foreseeable future or until maturity. Reclassification to the held-to-maturity category is permitted only when the entity has the ability and intention to hold the financial asset accordingly.





(a) Financial assets (continued)

(ii) Subsequent measurement (continued)

Available-for-sale financial investments (continued)

For a financial asset reclassified out of the available-for-sale category, any previous gain or loss on that asset that has been recognised in equity is amortised to profit or loss over the remaining life of the investment using the EIR. Any difference between the new amortised cost and the expected cash flows is also amortised over the remaining life of the asset using the EIR. If the asset is subsequently determined to be impaired, then the amount recorded in equity is reclassified to the profit or loss.

(iii) Derecognition

A financial asset (or, where applicable a part of a financial asset or part of a group of similar financial assets) is derecognised when:

- The rights to receive cash flows from the asset have expired;

- The Group has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a ‘pass-through’ arrangement; and either (a) the Group has transferred substantially all the risks and rewards of the asset, or (b) the Group has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

When the Group has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, and has neither transferred nor retained substantially all of the risks and rewards of the asset nor transferred control of it, the asset is recognised to the extent of the Group’s continuing involvement in it.

In that case, the Group also recognises an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Group has retained.

Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Group could be required to repay.

(b) Impairment of financial assets

The Group and the Company assess at each reporting date whether there is any objective evidence that a financial asset or a group of financial assets is impaired. A financial asset or a group of financial assets is deemed to be impaired if, and only if, there is objective evidence of impairment as a result of one or more events that has occurred after the initial recognition of the asset (an incurred ‘loss event’) and that loss event has an impact on the estimated future cash flows of the financial asset or the group of financial assets that can be reliably estimated.

Evidence of impairment may include indications that the debtors or a group of debtors is experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial reorganisation and where observable data indicate that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults.





(b) Impairment of financial assets (continued)

Financial assets carried at amortised cost

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

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

The carrying amount of the asset is reduced through the use of an allowance account and the amount of the loss is recognised in the profit or loss. Interest income continues to be accrued on the reduced carrying amount and is accrued using the rate of interest used to discount the future cash flows for the purpose of measuring the impairment loss. The interest income is recorded as part of finance income in the profit or loss.

Loans together with the associated allowance are written off when there is no realistic prospect of future recovery and all collateral has been realised or has been transferred to the Group. If, in a subsequent year, the amount of the estimated impairment loss increases or decreases because of an event occurring after the impairment was recognised, the previously recognised impairment loss is increased or reduced by adjusting the allowance account. If a future write-off is later recovered, the recovery is credited to finance costs in the profit or loss.

Available-for-sale investments

For available-for-sale financial investments, the Group assesses at each reporting date whether there is objective evidence that an investment or a group of investments is impaired.

In the case of equity investments classified as available-for-sale, objective evidence would include a significant or prolonged decline in the fair value of the investment below its cost. ‘Significant’ is evaluated against the original cost of the investment and ‘prolonged’ against the period in which the fair value has been below its original cost. Where there is evidence of impairment, the cumulative loss - measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that investment previously recognised in the profit or loss - is removed from other comprehensive income and recognised in the profit or loss. Impairment losses on equity investments are not reversed through the profit or loss; increases in their fair value after impairments are recognised directly in other comprehensive income.

Future interest income continues to be accrued based on the reduced carrying amount of the asset, using the rate of interest used to discount the future cash flows for the purpose of measuring the impairment loss. The interest income is recorded as part of finance income. If, in a subsequent year, 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 the profit or loss, the impairment loss is reversed through the profit or loss.





(c) Financial liabilities

(i) Initial recognition and measurement

Financial liabilities within the scope of MFRS 139 are classified as financial liabilities at fair value through profit or loss, loans and borrowings, or as derivatives designated as hedging instruments in an effective hedge, as appropriate. The Group determines the classification of its financial liabilities at initial recognition.

All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings, carried at amortised cost. This includes directly attributable transaction costs.

(ii) Subsequent measurement

The measurement of financial liabilities depends on their classification as follows:

Financial liabilities at fair value through profit or loss

Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss.

Financial liabilities are classified as held for trading if they are acquired for the purpose of selling in the near term. This category includes derivative financial instruments entered into by the Group that are not designated as hedging instruments in hedge relationships as defined by MFRS 139. Separated embedded derivatives are also classified as held for trading unless they are designated as effective hedging instruments.

Gains or losses on liabilities held for trading are recognised in the profit or loss.

The Group has not designated any financial liabilities upon initial recognition as at fair value through profit or loss.

Loans and borrowings

After initial recognition, interest bearing loans and borrowings are subsequently measured at amortised cost using the effective interest rate method. Gains and losses are recognised in the profit or loss when the liabilities are derecognised as well as through the effective interest rate method (EIR) amortisation process.

Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included in finance costs in the profit or loss.

Financial guarantee contracts

Financial guarantee contracts issued by the Group are those contracts that require a payment to be made to reimburse the holder for a loss it incurs because the specified debtor fails to make a payment when due in accordance with the terms of a debt instrument. Financial guarantee contracts are recognised initially as a liability at fair value, adjusted for transaction costs that are directly attributable to the issuance of the guarantee. Subsequently, the liability is measured at the higher of the best estimate of the expenditure required to settle the present obligation at the reporting date and the amount recognised less cumulative amortisation.





(c) Financial liabilities (continued)

(iii) Derecognition

A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires.

When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in the profit or loss.

(d) Offsetting of financial instruments

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

3.13 Inventories

Inventories are stated at the lower of cost and net realisable value. Costs incurred in bringing the inventories to their present location and condition are accounted for as follows:

(a) Raw materials: purchase costs on a weighted average basis.

(b) Finished goods and work-in-progress: Cost of direct materials and labour and a proportion of manufacturing overheads based on normal operating capacity but excluding borrowing costs.

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

3.14 Impairment of non-financial assets

The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Group estimates the asset’s recoverable amount. An asset’s recoverable amount is the higher of an asset’s or cash-generating unit’s (CGU) fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets.

Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs to sell, recent market transactions are taken into account, if available. If no such transactions can be identified, an appropriate valuation model is used. These calculations are corroborated by valuation multiples, quoted share prices for publicly traded subsidiaries or other available fair value indicators.

The Group bases its impairment calculation on detailed budgets and forecast calculations which are prepared separately for each of the Group’s cash-generating units to which the individual assets are allocated. These budgets and forecast calculations are generally covering a period of five years. For longer periods, a long term growth rate is calculated and applied to project future cash flows after the fifth year.




3.14 Impairment of non-financial assets (continued)

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

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

3.15 Cash and cash equivalents

Cash and cash equivalents comprise cash at banks and on hand, short-term deposits with a maturity of three months or less and highly liquid investments that are readily convertible to known amount of cash and which are subject to an insignificant amount of changes in value.

For the purpose of the consolidated statement of cash flows, cash and cash equivalents consist of cash and short-term deposits as defined above, net of outstanding bank overdrafts.

3.16 Share capital and share issuance expenses

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

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

3.17 Dividend distributions

The Group recognises a liability to make cash or non-cash distributions to owners of equity when the distribution is authorised and is no longer at the discretion of the Group. A corresponding amount is recognised directly in equity. Non-cash distributions are measured at the fair value of the assets to be distributed. Upon settlement of the distribution of non-cash assets, any difference between the carrying amount of the liability and the carrying amount of the assets distributed is recognised in income as a separate line in statement of comprehensive income.

3.18 Provisions

Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Where the Group expects some or all of a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. The expense relating to any provision is presented in the income statement net of any reimbursement.

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




3.19 Contingencies

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

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

3.20 Current versus non-current classification

Assets and liabilities in statement of financial position are presented based on current/non-current classification. An asset is current when it is:

- Expected to be realised or intended to sold or consumed in normal operating cycle;- Held primarily for the purpose of trading;- Expected to be realised within twelve months after the reporting period, or- Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least

twelve months after the reporting period.

All other assets are classified as non-current. A liability is current when:

- It is expected to be settled in normal operating cycle;- It is held primarily for the purpose of trading;- It is due to be settled within twelve months after the reporting period; or- There is no unconditional right to defer the settlement of the liability for at least twelve months after the

reporting period.

All other liabilities are classified as non-current.

Deferred tax assets and liabilities are classified as non-current assets and liabilities.

3.21 Fair value measurement

Fair value is 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 fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:

- In the principal market for the asset or liability; or- In the absence of a principal market, in the most advantageous market for the asset or liability.

The principal or the most advantageous market must be accessible to by the Group.

The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.

A fair value measurement of a non-financial asset 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.

Valuation techniques that are appropriate in the circumstances and for which sufficient data are available, are used to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.




3.21 Fair value measurement (continued)

All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:

Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities

Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable

Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable

For assets and liabilities that are recognised in the financial statements on a recurring basis, the Group determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.

Policies and procedures are determined by senior management for both recurring fair value measurement and for non-recurring measurement.

External valuers are involved for valuation of significant assets and significant liabilities. Involvement of external valuers is decided by senior management. Selection criteria include market knowledge, reputation, independence and whether professional standards are maintained. The senior management decides, after discussions with the external valuers, which valuation techniques and inputs to use for each case.

At each reporting date, the senior management analyses the movements in the values of assets and liabilities which are required to be re-measured or re-assessed according to the accounting policies of the Group. For this analysis, the senior management verifies the major inputs applied in the latest valuation by agreeing the information in the valuation computation to contracts and other relevant documents.

The senior management, in conjunction with the external valuers, also compares the changes in the fair value of each asset and liability with relevant external sources to determine whether the change is reasonable.

For the purpose of fair value disclosures, classes of assets and liabilities are determined based on the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.

4. ChAnGES In ACCOUnTInG POLICIES

The accounting policies adopted are consistent with those of the previous financial year except as follows:

On 1 January 2015, the Group and the Company adopted the following new and amended MFRSs and IC Interpretation mandatory for annual financial periods beginning on or after 1 July 2014.

DescriptionEffective for annual periods

beginning on or after

Amendments to MFRS 119: Defined Benefit Plans: Employee Contributions 1 July 2014Annual Improvements to MFRSs 2010-2012 Cycle 1 July 2014Annual Improvements to MFRSs 2011-2013 Cycle 1 July 2014



4. ChAnGES In ACCOUnTInG POLICIES (COnTInUED)

The nature and impact of the new and amended MFRSs and IC Interpretation are described below:

Amendments to MFRS 119 Defined benefit Plans: Employee Contributions

The amendments to MFRS 119 clarify how an entity should account for contributions made by employees or third parties to defined benefit plans, based on whether those contributions are dependent on the number of years of service provided by the employee. For contributions that are independent of the number of years of service, an entity is permitted to recognise such contributions as a reduction in the service cost in the period in which the service is rendered, instead of allocating the contributions to the periods of service. For contributions that are dependent on the number of years of service, the entity is required to attribute them to the employees’ periods of service.

These amendments have been applied retrospectively. The application of these amendments has had no material impact on the disclosures or the amounts recognised in the Group’s financial statements.

Annual Improvements to MFRSs 2010–2012 Cycle

The Annual Improvements to MFRSs 2010-2012 Cycle include a number of amendments to various MFRSs, which are summarised below.

Standards DescriptionsMFRS 2 Share-based Payment This improvement clarifies various issues relating to the definitions of

performance and service conditions which are vesting conditions, including:

- A performance condition must contain a service condition;- A performance target must be met while the counterparty is rendering service;- A performance target may relate to the operations or activities of an entity, or

those of another entity in the same group;- A performance condition may be a market or non-market condition; and- If the counterparty, regardless of the reason, ceases to provide service during

the vesting period, the service condition is not satisfied.

This improvement is effective for share-based payment transactions for which the grant date is on or after 1 July 2014. The Group did not grant any awards during the year. Thus, this amendment did not impact the Group.

MFRS 3 business Combinations The amendments to MFRS 3 clarifies that contingent consideration classified as liabilities (or assets) should be measured at fair value through profit or loss at each reporting date, irrespective of whether the contingent consideration is a financial instrument within the scope of MFRS 9 or MFRS 139. The amendments are effective for business combinations for which the acquisition date is on or after 1 July 2014. This is consistent with the Group’s current accounting policy and thus, this amendment did not impact the Group.

MFRS 8 Operating Segments The amendments are to be applied retrospectively and clarify that:

- an entity must disclose the judgements made by management in applying the aggregation criteria in MFRS 8, including a brief description of operating segments that have been aggregated and the economic characteristics used to assess whether the segments are similar; and

- the reconciliation of segment assets to total assets is only required to be disclosed if the reconciliation is reported to the chief operating decision maker.

The Group has not applied the aggregation criteria as mentioned above. The Group continues to present the reconciliation of segment assets to total assets.



4. ChAnGES In ACCOUnTInG POLICIES (COnTInUED)

Annual Improvements to MFRSs 2010–2012 Cycle (continued)

Standards DescriptionsMFRS 116 Property, Plant and Equipment and MFRS 138 Intangible Assets

The amendments remove inconsistencies in the accounting for accumulated depreciation or amortisation when an item of property, plant and equipment or an intangible asset is revalued. The amendments clarify that the asset may be revalued by reference to observable data by either adjusting the gross carrying amount of the asset to market value or by determining the market value of the carrying value and adjusting the gross carrying amount proportionately so that the resulting carrying amount equals the market value. In addition, the accumulated depreciation or amortisation is the difference between gross and carrying amounts of the asset. This amendment did not have any impact on the Group.

MFRS 124 Related Party Disclosures

The amendments clarify that a management entity providing key management personnel services to a reporting entity is a related party of the reporting entity. The reporting entity should disclose as related party transactions the amounts incurred for the service paid or payable to the management entity for the provision of key management personnel services. This amendment is not applicable to the Group as the Group does not receive any management services from other entities.


The Annual Improvements to MFRSs 2011-2013 Cycle include a number of amendments to various MFRSs, which are summarised below. The Group has applied the amendments for the first time in the current year.

Standards DescriptionsMFRS 3 business Combinations The amendments to MFRS 3 clarify that the standard does not apply to the

accounting for formation of all types of joint arrangement in the financial statements of the joint arrangement itself. This amendment is to be applied prospectively. The Group is not a joint arrangement and thus this arrangement is not relevant to the Group.

MFRS 13 Fair Value Measurement

The amendments to MFRS 13 clarify that the portfolio exception in MFRS 13 can be applied not only to financial assets and financial liabilities, but also to other contracts within the scope of MFRS 9 (or MFRS 139 as applicable). The Group does not apply the portfolio exception.

MFRS 140 Investment Property The amendments to MFRS 140 clarify that an entity acquiring investment property must determine whether:

- the property meets the definition of investment property in terms of MFRS 140; and

- the transaction meets the definition of a business combination under MFRS 3,

to determine if the transaction is a purchase of an asset or is a business combination.

In previous financial years, the Group has applied MFRS 3 and not MFRS 140 in determining whether an acquisition is of an asset or is a business combination. Accordingly, this amendment did not have any impact to the Group.



5. STAnDARDS ISSUED bUT nOT yET EFFECTIVE

The standards and interpretations that are issued but not yet effective up to the date of issuance of the Group’s and the Company’s financial statements are disclosed below. The Group and the Company intend to adopt these standards, if applicable, when they become effective.

DescriptionEffective for annual periods

beginning on or after

Annual Improvements to MFRSs 2012 – 2014 Cycle 1 January 2016Amendments to MFRS 116 and MFRS 138: Clarification of Acceptable Methods of

Depreciation and Amortisation 1 January 2016Amendments to MFRS 116 and MFRS 141: Agriculture: Bearer Plants 1 January 2016Amendments to MFRS 10 and MFRS 128: Sale or Contribution of Assets between

an Investor and its Associate or Joint Venture DeferredAmendments to MFRS 11: Accounting for Acquisitions of Interests in Joint

Operations 1 January 2016Amendments to MFRS 127: Equity Method in Separate Financial Statements 1 January 2016Amendments to MFRS 101: Disclosure Initiatives 1 January 2016Amendments to MFRS 10, MFRS 12 and MFRS 128: Investment Entities:

Applying the Consolidation Exception 1 January 2016MFRS 14 Regulatory Deferral Accounts 1 January 2016MFRS 15 Revenue from Contracts with Customers 1 January 2016MFRS 9 Financial Instruments 1 January 2016

Amendments to MFRS 116 and MFRS 138: Clarification of Acceptable Methods of Depreciation and Amortisation

The amendments clarify that revenue reflects a pattern of economic benefits that are generated from operating a business (of which the asset forms part of the business) rather than the economic benefits that are consumed through the use of an asset. As a result, a revenue-based method cannot be used to depreciate property, plant and equipment and may only be used in very limited circumstances to amortise intangible assets.

The amendments are effective prospectively for annual periods beginning on or after 1 January 2016, with early adoption permitted. These amendments are not expected to have any impact to the Group as the Group has not used a revenue-based method to depreciate its non-current assets.

Amendments to MFRS 101: Disclosure Initiatives

The amendments to MFRS 101 include narrow-focus improvements in the following five areas:

• Materiality• Disaggregation and subtotals• Notes structure• Disclosure of accounting policies• Presentation of items of other comprehensive income arising from equity accounted investments

The directors of the Company do not anticipate that the application of these amendments will have a material impact on the Group’s and the Company’s financial statements.



5. STAnDARDS ISSUED bUT nOT yET EFFECTIVE (COnTInUED)

Amendments to MFRS 10, MFRS 12 and MFRS 128: Investment Entities: Applying the Consolidation Exception

The amendments clarify that the exemption from presenting consolidated financial statements applies to a parent entity that is a subsidiary of an investment entity, when the investment entity measures all of its subsidiaries at fair value. The amendments further clarify that only a subsidiary that is not an investment entity itself and provides support services to the investment entity is consolidated. In addition, the amendments also provides that if an entity that is not itself an investment entity has an interest in an associate or joint venture that is an investment entity, the entity may, when applying the equity method, retain the fair value measurement applied by that investment entity associate or joint venture to the investment entity associate’s or joint venture’s interests in subsidiaries.

The amendments are to be applied retrospectively and are effective for annual periods beginning on or after 1 January 2016, with early adoption permitted. These amendments will not have any impact on the Group’s and the Company’s financial statements.

MFRS 9 Financial Instruments

In November 2014, MASB issued the final version of MFRS 9 Financial Instruments which reflects all phases of the financial instruments project and replaces MFRS 139 Financial Instruments: Recognition and Measurement and all previous versions of MFRS 9. The standard introduces new requirements for classification and measurement, impairment and hedge accounting. MFRS 9 is effective for annual periods beginning on or after 1 January 2018, with early application permitted. Retrospective application is required, but comparative information is not compulsory. The adoption of MFRS 9 will have an effect on the classification and measurement of the Group’s financial assets, but no impact on the classification and measurement of the Group’s financial liabilities.


The Annual Improvements to MFRSs 2012-2014 Cycle include a number of amendments to various MFRSs, which are summarised below. The Directors of the Company do not anticipate that the application of these amendments will have a significant impact on the Group’s and the Company’s financial statements.

Standards DescriptionsMFRS 5 non-current Assets Held for Sale and Discontinued Operations

The amendment to MFRS 5 clarifies that changing from one disposal methods to the other should not be considered to be a new plan of disposal, rather it is a continuation of the original plan. There is therefore no interruption of the application of the requirements in MFRS 5.

The amendment also clarifies that changing the disposal method does not change the date of classification. This amendment is to be applied prospectively to changes in methods of disposal that occur in annual periods beginning on or after 1 January 2016, with earlier application permitted.

MFRS 7 Financial Instruments: Disclosures

The amendment clarifies that a servicing contract that includes a fee can constitute continuing involvement in a financial asset. An entity must assess the nature of the fee and arrangement against the guidance for continuing involvement in MFRS 7 in order to assess whether the disclosures are required.

In addition, the amendment also clarifies that the disclosures in respect of offsetting of financial assets and financial liabilities are not required in the condensed interim financial report.

MFRS 119 Employee benefits The amendment to MFRS 119 clarifies that market depth of high quality corporate bonds is assessed based on the currency in which the obligation is denominated, rather than the country where the obligation is located. When there is no deep market for high quality corporate bonds in that currency, government bond rates must be used.



5. STAnDARDS ISSUED bUT nOT yET EFFECTIVE (COnTInUED)

Annual Improvements to MFRSs 2012–2014 Cycle (continued)

Standards DescriptionsMFRS 134 Interim Financial Reporting

MFRS 134 requires entities to disclose information in the notes to the interim financial statements ‘if not disclosed elsewhere in the interim financial report’.

The amendment states that the required interim disclosures must either be in the interim financial statements or incorporated by cross-reference between the interim financial statements and wherever they are included within the greater interim financial report (e.g., in the management commentary or risk report). The other information within the interim financial report must be available to users on the same terms as the interim financial statements and at the same time.

6. SIGnIFICAnT ACCOUnTInG JUDGMEnTS, ESTIMATES AnD ASSUMPTIOnS

The preparation of the Group’s financial statements requires management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities at the reporting date. However, uncertainty about these assumptions and estimates could result in outcomes that could require a material adjustment to the carrying amount of the asset or liability affected in the future periods.

6.1 Judgments made in applying accounting policies

In the process of applying the Group’s accounting policies, management has not made any critical judgments, apart from those involving estimations, which could have a significant effect on the amounts recognised in the financial statements.

6.2 Estimates and assumptions

The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. The Group based its assumptions and estimates on parameters available when the consolidated financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising beyond the control of the Group. Such changes are reflected in the assumptions when they occur.

(a) Impairment of non-financial assets

Impairment exists when the carrying value of an asset or cash generating unit exceeds its recoverable amount, which is the higher of its fair value less costs to sell and its value in use. The fair value less costs to sell calculation is based on available data from binding sales transactions in an arm’s length transaction of similar assets or observable market prices less incremental costs for disposing of the asset. The value in use calculation is based on a discounted cash flow model. The cash flows are derived from the budget for the next five years and do not include restructuring activities that the Group is not yet committed to or significant future investments that will enhance the asset’s performance of the cash generating unit being tested. The recoverable amount is most sensitive to the discount rate used for the discounted cash flow model as well as the expected future cash-inflows and the growth rate used for extrapolation purposes.



6. SIGnIFICAnT ACCOUnTInG JUDGMEnTS, ESTIMATES AnD ASSUMPTIOnS (COnTInUED)

6.2 Estimates and assumptions (continued)

(b) Taxes

Uncertainties exist with respect to the interpretation of complex tax regulations, changes in tax laws, and the amount and timing of future taxable income. Given the wide range of international business relationships and the long-term nature and complexity of existing contractual agreements, differences arising between the actual results and the assumptions made, or future changes to such assumptions, could necessitate future adjustments to tax income and expense already recorded.

The Group establishes provisions, based on reasonable estimates, for possible consequences of audits by the tax authorities of the respective countries in which it operates. The amount of such provisions is based on various factors, such as experience of previous tax audits and differing interpretations of tax regulations by the taxable entity and the responsible tax authority. Such differences of interpretation may arise on a wide variety of issues depending on the conditions prevailing in the respective Group company’s domicile. As the Group assesses the probability for litigation and subsequent cash outflow with respect to taxes as remote, no contingent liability has been recognised.

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

(c) Impairment of loans and receivables

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

Where there is objective evidence of impairment, the amount and timing of future cash flows are estimated based on historical loss experience for assets with similar credit risk characteristics. The carrying amounts of the Group’s and of the Company’s loans and receivables at the reporting date are disclosed in Note 19.

7. OThER InCOME

Group and Company 2015 2014

RM RM

Gain on disposal of other investment 198,544 10,116 Interest income 615,914 34,520

814,458 44,636



8. LOSS bEFORE TAx FROM COnTInUInG OPERATIOnS

The following items have been included in arriving at loss before tax:


RM RM

Auditors’ remuneration- Statutory audit - current year 43,000 38,000

- underprovision of prior year 5,000 - - Other services 7,500 7,800

Employee benefits expense (Note 9) 523,436 151,000 Loss on disposal of a subsidiary - 18,764 Non-executive directors remuneration (Note 10) 90,000 90,000

9. EMPLOyEE bEnEFITS ExPEnSE


RM RM

Salaries, bonus and other emoluments 489,991 151,000 Contributions to defined contribution plan 32,515 - Other employee benefits 930 -

523,436 151,000

Included in employee benefits expense of the Group and of the Company are executive directors’ remuneration amounting to RM235,000 (2014: RM151,000).

10. DIRECTORS’ REMUnERATIOn

The details of remuneration receivable by directors of the Company during the year are as follows:


RM RM Executive:

Salaries and other emoluments 63,000 - Fees 151,000 151,000 Bonus 21,000 - Total executive directors’ remuneration (Note 27(b)) 235,000 151,000

Non executive:

Fees 90,000 90,000 Total non-executive directors’ remuneration 90,000 90,000

Total directors’ remuneration 325,000 241,000



10. DIRECTORS’ REMUnERATIOn (COnTInUED)

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

Number of Directors 2015 2014

Executive directors:Up to RM50,000 4 5 RM100,001 - RM150,000 1 -

Non-executive directors:Up to RM50,000 3 3

11. InCOME TAx ExPEnSE

Major components of income tax expense

The major components of income tax expense for the years ended 31 December 2015 and 2014 are:


RM RM Statement of comprehensive income:

Current income tax:- Malaysian income tax 1,049 1,233 - Overprovision in respect of previous years (1,233) (2,199)

(184) (966)

Reconciliation between tax expense and accounting loss

The reconciliation between tax expense and the product of accounting loss multiplied by the applicable corporate tax rate for the years ended 31 December 2015 and 2014 are as follows:

2015 2014 RM RM

Group

Accounting loss before tax from continuing operations (2,206,630) (1,620,324)

Tax at Malaysian statutory tax rate of 25% (2014: 25%) (551,658) (405,081)Adjustments:Income not subject to taxation (193,217) (7,663)Non-deductible expenses 745,924 413,977 Overprovision of tax expense in respect ofprevious years (1,233) (2,199)

Income tax expense recognised in profit or loss (184) (966)



11. InCOME TAx ExPEnSE (COnTInUED)

2015 2014 RM RM

Company

Accounting loss before tax (2,206,630) (1,620,324)

Tax at Malaysian statutory tax rate of 25% (2014: 25%) (551,658) (405,081)Adjustments:

Income not subject to taxation (193,217) (7,663)Non-deductible expenses 745,924 413,977 Overprovision of tax expense in respect of previous years (1,233) (2,199)

Income tax expense recognised in profit or loss (184) (966)

Domestic income tax is calculated at the Malaysian statutory tax rate of 25% (2014: 25%) of the estimated assessable loss for the year.

The Malaysian statutory tax rate will be reduced to 24% from the current year’s rate of 25% effective from year of assessment 2016.

12. DISCOnTInUED OPERATIOnS

As disclosed in Note 33 to the financial statements, on 2 October 2014, the Company entered into a Share Sale Agreement to dispose off its 100% equity interest in Plastictecnic (M) Sdn. Berhad, Sun Tong Seng Mould-Tech Sdn. Bhd., and Bangi Plastics Sdn. Bhd. (“Disposal Companies”) to SKP Resources Berhad (“SKPRB”) for a total consideration of RM200 million to be satisfied by RM100 million in cash and 172,413,793 new SKPRB shares at an issue price of RM0.58 per SKPRB share (“Proposed Disposal”). On 6 April 2015, the Company announced the completion of the Proposed Disposal. Arising therefrom, Disposal Companies ceased to be subsidiaries of the Company.

Subsequently, on 29 June 2015, the Company disposed off its 100% equity interest in GPlus Manufacturing Sdn. Bhd. for a total cash consideration of RM1 million.

The results of the Disposal Companies are disclosed under discontinued operations in the current financial year and the comparative results have been restated accordingly.



12. DISCOnTInUED OPERATIOnS (COnTInUED)

Statements of comprehensive income disclosures

The results of the Disposal Companies for the years ended 31 December are as follows:

Note Group 2015 2014

RM RM

Revenue 12(a) 58,552,338 283,494,710 Cost of sales 12(b) (47,848,971) (232,608,675)Gross profit 10,703,367 50,886,035 Other income 12(c) 1,175,894 2,573,281 Administrative expenses (5,179,738) (19,340,449)Selling and distribution expenses (970,408) (6,284,389)Profit from operations 5,729,115 27,834,478 Finance costs 12(d) (640) (2,693)Profit before tax from discontinued operations 12(e) 5,728,475 27,831,785 Income tax expenses 12(g) (1,560,126) (6,488,949)

Profit from discontinued operations, net of tax 4,168,349 21,342,836

(a) Revenue

Group 2015 2014

RM RM

Sale of plastic products 49,381,825 249,912,082 Fabrication of moulds 9,170,513 33,582,628

58,552,338 283,494,710

(b) Cost of sales

Group 2015 2014

RM RM

Sale of plastic products 41,154,486 206,696,240 Fabrication of moulds 6,694,485 25,912,435

47,848,971 232,608,675




(c) Other income

Group 2015 2014

RM RM

Gain on foreign exchange:- Realised - 307,567 - Unrealised 1,043,781 836,690

Gain on disposal of property, plant and equipment 14,542 126,830 Interest income 75,394 282,779 Reversal of impairment loss of trade receivables 39,000 140,000 Reversal of provision for claim on damaged goods - 859,000 Sundry income 3,177 20,415

1,175,894 2,573,281

(d) Finance costs

Group 2015 2014

RM RM

Interest expense on:- Bank guarantee fee 640 2,676 - Other interest - 17

Total finance costs 640 2,693

(e) Profit before tax from discontinued operations

The following items have been included in arriving at profit before tax:

Group 2015 2014

RM RM

Amortisation of land use rights 30,882 123,533 Auditors’ remuneration

- Statutory audit - current year 25,300 100,000 - under provision in prior year - 20,300

- Other services- current year 4,175 16,200 - over provision in prior year - (250)

Depreciation of property, plant and equipment 2,098,841 7,642,637 Employee benefits expense (Note 12(f)) 6,405,423 26,763,350 Loss on foreign exchange - realised 41,307 - Minimum lease payments on:

- land and buildings 17,903 68,364 - office equipment 1,290 5,160

Directors’ remuneration (Note 12(f)) 1,581,257 6,647,371 Property, plant and equipment written off - 174,361 Provision for legal claim 356,961 725,553




(f) Employee benefits expense

The details of remuneration receivable by directors of the Company during the year are as follows:

Group 2015 2014

RM RM

Directors’ remuneration:Salaries and other emoluments 1,402,420 5,452,885 Fees - 171,000 Defined contribution plan 178,527 1,022,866 Other employee benefits 310 620 Total directors’ remuneration 1,581,257 6,647,371

Other staff:Salaries and other emoluments 5,878,536 24,729,161 Defined contribution plan 345,252 1,439,106 Social security contributions 35,927 145,726 Other staff related costs 145,708 449,357

6,405,423 26,763,350

Total 7,986,680 33,410,721

(g) Income tax expense

Group 2015 2014

RM RM

Statement of comprehensive income:

Current income tax:- Malaysian income tax 1,384,400 5,850,100 - Underprovision in respect of previous years 65,726 3,202

1,450,126 5,853,302

Deferred income tax: (Note 24)- Origination and reversal of temporary differences 57,912 768,761 - Reduction in Malaysian income tax rate (2,311) (557,000)- Underprovision in respect of previous years 54,399 423,886

110,000 635,647

1,560,126 6,488,949




Statements of cash flows disclosures

The cash flows attributable to the Disposal Companies are as follows:

Group 2015 2014

RM RM

Operating activities 990,009 33,927,175 Investing activities (5,599,266) (13,619,728)Financing activities (13,288,528) (4,086,660)

Net cash (outflows)/inflows from discontinued operations (17,897,785) 16,220,787

Effects of disposal on financial position

The disposal had the following effects on the financial position of the Group and of the Company as at the end of the year:

Group Company 2015 2015

RM RM

Property, plant and equipment 59,910,194 - Land use rights 5,338,226 - Inventories 14,007,589 - Investment in subsidiaries - 14,260,587 Other investment 3,525,761 - Trade and other receivables 40,888,927 - Other current assets 4,688,531 - Cash and bank balances 16,352,485 - Available for sale financial asset 100,000 - Trade and other payables (31,852,812) - Current tax payable (1,384,646) - Deferred tax liabilities (6,420,000) - Net assets disposed 105,154,255 14,260,587 Total disposal proceeds (201,000,000) (201,000,000)

Gain on disposal (95,845,745) (186,739,413)

Disposal proceeds settled by:Cash 101,000,000 101,000,000 Ordinary shares of SKPRB 100,000,000 100,000,000

201,000,000 201,000,000

Cash inflow arising on disposals:Cash consideration 101,000,000 101,000,000 Cash and cash equivalents of subsidiaries disposed (16,352,485) -

Net cash inflow on disposal 84,647,515 101,000,000




Gain on disposal of subsidiaries

Company 2015

RM

Total disposal proceeds 201,000,000 Cost of investment (14,260,587)Expenses related to the disposal ** -

Net gain on disposal to the Company 186,739,413

** All expenses related to the disposal have been taken in financial year ended 31 December 2014.

13. EARnInGS PER ShARE

(a) basic earnings per share

Basic earnings per share amounts are calculated by dividing profit for the year, net of tax, attributable to owners of the Company by the weighted average number of ordinary shares outstanding during the financial year.

Group 2015 2014

RM RM

Profit/(loss) net of tax attributable to equity holders of the Company:- Continuing operations (2,206,446) (1,619,358)- Discontinued operations 100,014,094 21,342,836

97,807,648 19,723,478

Number of Number of shares shares

Weighted average number of ordinary shares 40,397,333 40,397,333

Basic earnings per share (sen):- Continuing operations (5.46) (4.01)- Discontinued operations 247.57 52.83

Total 242.11 48.82

(b) Diluted earnings per share

The effects of diluted earnings per share for the current and previous year are not illustrated as they were anti-dilutive. Therefore, the diluted earnings per share is the same as the basis earnings per share.



14. PROPERTy, PLAnT AnD EQUIPMEnT

Furniture, fittings,

Factory Plant, office Long term buildings machinery, equipment leasehold and and and Motor

lands renovations equipment computers vehicles Total RM RM RM RM RM RM

Group

Cost

At 1 January 2014 1,332,240 22,668,081 85,720,675 4,166,651 8,828,225 122,715,872 Additions - 484,296 11,297,343 1,162,289 2,668,447 15,612,375 Disposals - - (1,781,612) (2,600) (249,300) (2,033,512)Written off - - (645,686) (188,398) - (834,084)At 31 December 2014

and 1 January 2015 1,332,240 23,152,377 94,590,720 5,137,942 11,247,372 135,460,651 Additions - 5,885 2,503,068 2,100 15,000 2,526,053 Disposals - - (32,634) - - (32,634)Disposal of subsidiaries

(Note 12) (1,332,240) (23,158,262) (97,061,154) (5,140,042) (11,262,372) (137,954,070)

At 31 December 2015 - - - - - -

Accumulated depreciation

At 1 January 2014 284,097 4,122,739 57,344,327 3,501,188 5,294,413 70,546,764 Depreciation charge for

the year 14,703 536,215 5,587,460 279,144 1,225,115 7,642,637 Disposals - - (1,382,661) (2,599) (197,207) (1,582,467)Written off - - (471,353) (188,370) - (659,723)At 31 December 2014

and 1 January 2015 298,800 4,658,954 61,077,773 3,589,363 6,322,321 75,947,211 Depreciation charge for

the year 3,676 145,302 1,540,222 90,595 319,046 2,098,841 Disposals - - (2,176) - - (2,176)Disposal of subsidiaries

(Note 12) (302,476) (4,804,256) (62,615,819) (3,679,958) (6,641,367) (78,043,876)

At 31 December 2015 - - - - - -

net carrying amount:

At 31 December 2014 1,033,440 18,493,423 33,512,947 1,548,579 4,925,051 59,513,440

At 31 December 2015 - - - - - -



14. PROPERTy, PLAnT AnD EQUIPMEnT (COnTInUED)

Addition during the year

The Group acquired property, plant and equipment with an aggregate cost of RM2,526,053 (2014: RM15,612,375) by means of:

Group 2015 2014

RM RM

- (Utilisation of)/advance deposit paid to suppliers of property, plant and equipment (1,710) 1,710

- Amount paid/(due to) suppliers of property, plant and equipment 451,257 (451,257)

449,547 (449,547)

The cash outflow on acquisition of property, plant and equipment amounted to RM2,975,600 (2014: RM14,965,228).

Assets pledged as security

Certain property, plant and equipment of the Group with net carrying amount of RM NIL (2014: RM11,630,956) have been charged to financial institutions for banking facilities granted to the subsidiaries.

Assets held in trust

Motor vehicles with net carrying amount of RM NIL (2014: RM667,981) are registered in the name of directors on behalf of the Group.

15. LAnD USE RIGhTS

Group 2015 2014

RM RM Cost:

At 1 January 7,075,232 7,075,232 Disposal of subsidiaries (Note 12) (7,075,232) - At 31 December - 7,075,232

Accumulated amortisation:

At 1 January 1,706,124 1,582,591 Amortisation for the year 30,882 123,533 Disposal of subsidiaries (Note 12) (1,737,006) - At 31 December - 1,706,124

net carrying amount - 5,369,108



15. LAnD USE RIGhTS (COnTInUED)

Group 2015 2014

RM RM

Amount to be amortised:- Not later than one year - 123,531 - Later than one year but not later than five years - 494,124 - Later than five years - 4,751,453

Certain land use rights with net carrying amount of RM NIL (2014: RM3,918,590) are pledged as security for bank borrowing.

16. InVESTMEnT In SUbSIDIARIES

Company 2015 2014

RM RM

Unquoted shares, at cost:

At 1 January 14,260,587 16,358,331 Disposal (14,260,587) (2,097,744)At 31 December - 14,260,587

Impairment loss:

At 1 January - 1,205,176 Written off - (1,205,176)At 31 December - -

net carrying amount - 14,260,587

(a) Details of the Company’s subsidiaries are as follows:

name of company

Country of incorporation/

Principal place ofbusiness Principal activities

% of ownership interest held by the Company* 2015 2014

Plastictecnic (M) Sdn. Bhd. Malaysia Manufacture and distribution of plastic products

- 100

Sun Tong Seng Mould-Tech Sdn. Bhd.

Malaysia Manufacture, fabrication and sales of moulds

- 100

Bangi Plastics Sdn. Bhd. Malaysia Manufacture and sales of industrial plastic products

- 100



16. InVESTMEnT In SUbSIDIARIES (COnTInUED)

(a) Details of the Company’s subsidiaries are as follows: (continued)

name of company

Country of incorporation/

Principal place ofbusiness Principal activities

% of ownership interest held by the Company* 2015 2014

GPlus Manufacturing Sdn. Bhd.

Malaysia Inactive - 100

* equals to the proportion of voting rights held

(b) Disposal of subsidiaries

On 31 March 2015, the Company announced the completion of the disposal of its entired equity interests in Plastictecnic (M) Sdn. Berhad, Sun Tong Seng Mould-Tech Sdn. Bhd. and Bangi Plastics Sdn. Bhd. to SKPRB for a total consideration of RM200 million via RM100 million in cash and issuance of 172,413,793 new ordinary share of RM0.10 each in SKPRB at issue price of RM0.58 per SKPRB shares.

Subsequently, on 29 June 2015, the Company disposed off its 100% equity interest in GPlus Manufacturing Sdn. Bhd. for a total cash consideration of RM1 million.

The effects of disposal to the financial position of the Group and the Company at the end of reporting period are disclosed in Note 12 to the financial statements.

17. AVAILAbLE-FOR-SALE FInAnCIAL ASSET

Group 2015 2014

RM RM

Unquoted:Golf club memberships - 100,000

The golf club membership are registered under the name of certain directors, who held it on behalf of the Group.

18. InVEnTORIES

Group 2015 2014

RM RM

At cost:Raw materials - 4,406,789 Work-in-progress - 3,900,343 Finished goods - 5,857,307

- 14,164,439

During the year, the amount of inventories recognised as expense in cost of sales of the Group under discontinued operation was RM47,848,971 (2014: RM232,608,675).



19. TRADE AnD OThER RECEIVAbLES

Group Company 2015 2014 2015 2014

RM RM RM RM

Trade receivablesThird parties - 60,181,436 - - Amounts due from companies in which

certain directors of the Company have substantial financial interest - 1,391,920 - -

- 61,573,356 - - Less: Allowances for impairment-third parties - (208,000) - -

- 61,365,356 - -

Other receivablesAmounts due from related parties:

- Subsidiaries - - - 25,648,365 - Associate - 50,126 - -

Interest receivable - 3,463 - 3,463 Sundry deposits - 198,034 1,000 1,000 Sundry receivables - 263,272 - -

- 514,895 1,000 25,652,828

Total trade and other receivables - 61,880,251 1,000 25,652,828 Add: Cash and bank balances - 38,818,213 330,746 5,377,264

Total loans and receivables - 100,698,464 331,746 31,030,092

(a) Trade receivables

Trade receivables are non-interest bearing and are generally on 30 day to 90 day (2014: 90 day) terms. They are recognised at their original invoice amounts which represent their fair values on initial recognition.

Ageing analysis of trade receivables

The ageing analysis of the Group’s trade receivables is as follows:

Group 2015 2014

RM RM

Neither past due nor impaired - 38,011,702 1 to 30 days past due not impaired - 18,654,976 31 to 60 days past due not impaired - 2,173,492 61 to 90 days past due not impaired - 2,028,619 91 to 120 days past due not impaired - 281,700 More than 121 days past due not impaired - 214,867

- 23,353,654 Impaired - 208,000

- 61,573,356



19. TRADE AnD OThER RECEIVAbLES (COnTInUED)

(a) Trade receivables (continued)

Receivables that are neither past due nor impaired

Trade and other receivables that are neither past due nor impaired are creditworthy debtors with good payment records with the Group.

None of the Group’s trade receivables that are neither past due nor impaired have been renegotiated during the financial year.

Receivables that are past due but not impaired

The Group has trade receivables amounting to RM NIL (2014: RM23,353,654) that are past due at the reporting date but not impaired. These receivables are active accounts which the management considers to be recoverable.

Receivables that are impaired

The Company’s trade receivables that are impaired at the reporting date and the movement of the allowance accounts used to record the impairment are as follows:

Group 2015 2014

RM RM

Trade receivables - nominal amount - 208,000 Less : Allowance for impairment - (208,000)

- -

Movement in allowance accounts:At 1 January 208,000 348,000

Disposal of subsidiaries (208,000) - Reversal of impairment loss (Note 12(c)) - (140,000)

At 31 December - 208,000

(b) Related parties balances

The amounts due from subsidiaries and an associate are unsecured, interest free, repayable on demand and to be settled in cash.



20. OThER CURREnT ASSETS

Group Company 2015 2014 2015 2014

RM RM RM RM

Prepaid operating expenses - 528,585 - 3,770 Deposit paid to suppliers of property, plant

and equipment - 1,710 - - Deposit paid to suppliers - 1,618,318 - -

- 2,148,613 - 3,770

21. OThER InVESTMEnT

Company Carrying amount Market value

2015 2014 2015 2014 RM RM RM RM

CurrentFair value through profit or lossInvestment in cash management fund in

Malaysia 23,612,019 - 23,612,019 -

Total other investment 23,612,019 -

Investment in cash management fund is placed with licensed asset management company in Malaysia which is highly liquid and readily convertible to cash. The weighted average effective interest rate of cash management fund of the Company at the reporting date was 4.11% (2014: NIL) per annum.

22. CASh AnD bAnk bALAnCES

Group Company 2015 2014 2015 2014

RM RM RM RM

Cash at banks and on hand - 14,818,213 330,746 377,264 Short term deposits with licensed banks - 24,000,000 - 5,000,000

Cash and bank balances - 38,818,213 330,746 5,377,264

Cash at banks earns interest at floating rates based on daily bank deposit rates. Short-term deposits are made for varying periods of between one day and fortnight depending on the immediate cash requirements of the Group and the Company and earn interests at the respective short-term deposit rates. The weighted average effective interest rates (“WAIER”) of short term deposit and money market fund as at 31 December 2015 and 2014 for the Group and the Company were as follows:



22. CASh AnD bAnk bALAnCES (COnTInUED)

Group Company 2015 2014 2015 2014

% % % %

Short term deposits - 2.93 - 2.62

23. TRADE AnD OThER PAyAbLES

Group Company 2015 2014 2015 2014

RM RM RM RM

Trade payablesThird parties - 16,046,900 - - Amounts due to companies in which certain

directors of the Company have substantial financial interest - 14,934,369 - -

- 30,981,269 - -

Other payablesAccrued operating expenses - 8,006,375 2,429,340 1,849,425 Amount due to property, plant and

equipment suppliers - 451,257 - - Deposit received from customers - 106,473 - - Other payables - 4,927,862 - -

- 13,491,967 2,429,340 1,849,425

Total trade and other payables, representing total financial liabilities carried at amortised cost - 44,473,236 2,429,340 1,849,425

(a) Trade payables

These amounts are non-interest bearing. Trade payables are normally settled on 30 to 90 day (2014: 30 to 90 day) terms.

(b) Other payables

These amounts are non-interest bearing. Other payables are normally settled on an average term of 30 to 180 day (2014: 30 to 180 day) terms.



24. DEFERRED TAx

Deferred income tax as at 31 December relates to the following:

Group

Property, plant and

equipment Others Total RM RM RM

At 1 January 2014 6,097,049 (422,696) 5,674,353 Recognised in profit or loss 781,060 411,587 1,192,647 Relating to reduction in Malaysian income tax rate (557,000) - (557,000)At 31 December 2014 6,321,109 (11,109) 6,310,000Recognised in profit or loss (Note 12) 229,578 (117,267) 112,311 Relating to reduction in Malaysian income tax rate (Note 12) (2,311) - (2,311)Disposal of subsidiaries (Note 12) (6,548,376) 128,376 (6,420,000)

At 31 December 2015 - - -

2015 2014 RM RM

Presented after appropriate offsetting as follows:Deferred tax assets - (11,109)Deferred tax liabilities - 6,321,109

- 6,310,000

25. ShARE CAPITAL

Company

number of ordinary shares Amount

2015 2014 2015 2014 RM RM Authorised At 1 January/31 December 100,000,000 100,000,000 100,000,000 100,000,000

Issued and fully paidAt 1 January 40,397,333 40,397,333 40,397,333 40,397,333 Capital reduction - - (36,357,600) -

At 31 December 40,397,333 40,397,333 4,039,733 40,397,333

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



25. ShARE CAPITAL (COnTInUED)

Capital reduction

Further to the completion of the disposal of subsidiaries as disclosed in Note 33 to the financial statements, on 1 April 2015, the board of directors of the Company announced that an order granted by the High Court of Malaya at Kuala Lumpur dated 5 February 2015 confirming the reduction of the issued and paid-up share capital of the Company via the cancellation of RM0.90 of the par value of each ordinary share in the Company had been lodged with the Companies Commission of Malaysia on 1 April 2015. Pursuant thereto, the Capital Reduction took effect and was deemed completed on the same day.

26. RETAInED PROFITS

The Company may distribute dividends out of its entire retained earnings as at 31 December 2015 under the single tier system.

27. RELATED PARTy DISCLOSURES

(a) Sale and purchase of goods and services

In addition to the related party information disclosed elsewhere in the financial statements, the following significant transactions between the Group and related parties took place at terms agreed between the parties during the financial year:

Companies in which certain directors have substantial financial interest

: SKP Resources Berhad (“SKPRB”): Syarikat Sin Kwang Plastic Industries Sdn. Bhd. (“SKP”): S.P.I Plastic Industries (M) Sdn. Bhd. (“SPI”): Goodhart Industries Sdn. Bhd. (“GHI”)

2015 2014 RM RM Group

Sales of raw materials, assembly parts and packing materials to:- SPI 1,620,257 8,122,783 - SKP 51,638 629,620 - GHI 1,150,623 -

Purchase of plastic parts from:- GHI 2,458,702 11,530,972 - SPI 4,514,561 25,563,815 - SKP 2,458,702 9,398,537

Sales proceeds from disposal of subsidiaries to SKPRB 200,000,000 -

Purchase of raw materials, assembly parts and packing materials from:- SPI 73,769 1,479 - SKP 48,770 1,309,834 - GHI - 20,605



27. RELATED PARTy DISCLOSURES (COnTInUED)

(a) Sale and purchase of goods and services (continued)

2015 2014 RM RM Group (continued)

Fabrication and modification of mould by:- SKP 361,509 1,942,399 - GHI 282,914 394,342 - SPI 693,895 724,523

Fabrication and modification of mould for:- GHI - 5,280 - SKP 550,834 2,888,660 - SPI 7,650 -

Purchase of mould from SKP 1,016,000 -

Company

Administrative fees reimbursed by subsidiaries 510,438 2,861,899

(b) Compensation of key management personnel


RM RM

Short-term employee benefits 325,000 241,000

Included in the total key management personnel are:Directors’ remuneration (Note 10) 235,000 151,000

28. FAIR VALUE OF FInAnCIAL InSTRUMEnTS

A. Financial instruments that are not carried at fair value and whose carrying amounts are reasonable approximation of fair value

The following are classes of financial instruments that are not carried at fair value and whose carrying amounts are reasonable approximation of fair value:

Note

Trade and other receivables 19Trade and other payables 23

The carrying amounts of these financial assets and liabilities are reasonable approximation of fair values, either due to their short-term nature or that they are floating rate instruments that are re-priced to market interest rates on or near the reporting date.



28. FAIR VALUE OF FInAnCIAL InSTRUMEnTS (COnTInUED)

b. Fair value hierarchy

The Group uses the following hierarchy for determining the fair value of all financial instruments carried at fair value:

Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities

Level 2: Inputs that are based on observable market data, either directly or indirectly

Level 3: Inputs that are not based on observable market data

As at reporting date, the following financial instruments that are measured at fair value:

Level 2 RM

Company

2015

Financial asset at fair value through profit or lossInvestment in cash management fund in Malaysia 23,612,019

Group

2014

Available-for-sale financial assetGolf club membership 149,000

No transfers between any levels of the fair value hierarchy took place during the reporting period. There was also no changes in the purpose of any financial asset that subsequently resulted in a different classification of that asset.

29. FInAnCIAL RISk MAnAGEMEnT ObJECTIVES AnD POLICIES

The Group is exposed to financial risk arising from their operations and the use of financial instruments. The key financial risk includes credit risk.

The Board of Directors reviews and agrees policies and procedures for the management of this risk. The audit committee provides independent oversight to the effectiveness of the risk management process.

It is, and has been throughout the current and previous financial year, the Group’s policy that no derivatives shall be undertaken except for the use as hedging instruments where appropriate and cost-efficient. The Group does not apply hedge accounting.

The following sections provide details regarding the Group’s exposure to the above-mentioned financial risk and the objectives, policies and processes for the management of this risk.



29. FInAnCIAL RISk MAnAGEMEnT ObJECTIVES AnD POLICIES (COnTInUED)

(a) Credit risk

Credit risk is the risk of loss that may arise on outstanding financial instruments should a counterparty default on its obligations. The Group’s exposure to credit risk arises primarily from trade and other receivables. For other financial assets (including available-for-sale financial asset, financial asset at fair value through profit or loss and cash and bank balances), the Group minimises credit risk by dealing exclusively with high credit rating counterparties.

The Group’s objective is to seek continual revenue growth while minimising losses incurred due to increased credit risk exposure. The Group trades only with recognised and creditworthy third parties. It is the Group’s policy that all customers who wish to trade on credit terms are subject to credit verification procedures. In addition, receivable balances are monitored on an ongoing basis with the result that the Group’s exposure to bad debts is not significant.

Exposure to credit risk

At the reporting date, the Group’s maximum exposure to credit risk is represented by the carrying amount of each class of financial assets recognised in the statements of financial position.

Information regarding credit risk management for trade and other receivables is disclosed in Note 19.

Credit risk concentration profile

At the reporting date, approximately:

- NIL% (2014: 68%) of the Group’s gross trade receivables were due from NIL (2014: 8) major customers.

- NIL% (2014: 2.3%) of the Group’s trade and other receivables were due from related parties.

Financial assets that are neither past due nor impaired

Information regarding trade and other receivables that are neither past due nor impaired is disclosed in Note 19. Deposits with banks are placed with or entered into with reputable banks with high credit ratings and no history of default.

Financial assets that are either past due or impaired

Information regarding trade and other receivables that are either past due or impaired is disclosed in Note 19.

30. CAPITAL MAnAGEMEnT

The primary objective of the Group and the Company’s capital management are to ensure that they maintain a strong credit rating and healthy capital ratios in order to support their business and maximise shareholder value.

The Group and the Company manage their capital structure and make adjustments to it, in light of changes in economic conditions. To maintain or adjust the capital structure, the Group and the Company may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. No changes were made in the objectives, policies or processes during the years ended 31 December 2015 and 2014.

The Group and the Company monitor capital using a gearing ratio, which is net debt divided by total capital plus net debt. The Group and the Company include within net debt, interest-bearing borrowings, trade and other payables, less cash and bank balances.



30. CAPITAL MAnAGEMEnT (COnTInUED)

Company Group 2015 2014

RM RM

Trade and other payables 2,429,340 44,473,236 Less: Cash and bank balances (330,746) (38,818,213)Net debt 2,098,594 5,655,023

Equity attributable to equity holder of the CompanyTotal capital 21,515,317 130,170,343

Capital and net debt 23,613,911 135,825,366

Gearing ratio 9% 4%

31. SEGMEnT InFORMATIOn

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

I. Plasticwares - manufacture and supplier of plasticwares. This segment offers products in the areas of household, consumers, industrial and electronics.

II. Moulds - manufacture, fabrication and sale of moulds. This segment offers products and services in the areas of electronics, automobile and plastic injection moulding.

During the financial year, plasticwares and moulds segments have been classified as discontinued operations as disclosed in Note 12 to the financial statements.

Management monitors the operating results of its business units separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on operating profit which, in certain respects as explained in the table below, is measured differently from operating profit in the consolidated financial statements. Group financing (including finance costs) and income taxes are managed on a group basis and are not allocated to operating segments.

Transfer prices between operating segments are on an arm’s length basis in a manner similar to transactions with third parties.

Discontinued operations Continuing operation Corporate

Adjustments and elimination

Per consolidatedfinancial statements Plasticwares Moulds

2015 2014 2015 2014 2015 2014 2015 2014 2015 2014 RM RM RM RM RM RM RM RM Notes RM RM

Revenue:External customers 49,381,825 249,912,082 9,170,513 33,582,628 - - (58,552,338) (283,494,710) B - - Inter-segment 1,066,923 4,913,149 16,200 2,377,515 - - (1,083,123) (7,290,664) B - - Total revenue 50,448,748 254,825,231 9,186,713 35,960,143 - - (59,635,461) (290,785,374) - -



31. SEGMEnT InFORMATIOn (COnTInUED)

Discontinued operations Continuing operation Corporate

Adjustments and elimination

Per consolidatedfinancial statements Plasticwares Moulds

2015 2014 2015 2014 2015 2014 2015 2014 2015 2014 RM RM RM RM RM RM RM RM Notes RM RM

Results:Interest income 40,754 155,164 34,640 127,615 615,914 34,520 (75,394) (282,779) B 615,914 34,520 Depreciation and

amortisation 1,829,166 6,707,028 300,557 1,068,838 - - (2,129,723) (7,775,866) B - - Income tax expense 1,362,722 5,969,160 197,404 769,789 (184) (966) (1,560,126) (6,738,949) B (184) (966)Segment profit 3,920,981 24,759,408 1,807,952 3,369,274 88,706,132 (1,620,324) (96,644,055) (28,128,682) C (2,208,990) (1,620,324)

Assets:Additions to non-

current assets 2,085,953 13,961,914 440,100 2,231,806 - - (2,526,053) (581,345) D - 15,612,375 Segment assets - 157,909,567 - 22,513,471 23,944,657 45,294,449 - (43,723,423) E 23,944,657 181,994,064

Segment liabilities - 73,601,385 - 5,083,169 2,429,340 1,849,425 - (28,710,258) F 2,429,340 51,823,721

A The amounts relating to the plasticwares and moulds segments have been excluded to arrive at amounts shown in the consolidated statement of comprehensive income as they are presented separately in the statement of comprehensive income within one line item, “profit from discontinued operation, net of tax”.

B Inter-segment revenues are eliminated on consolidation.

C The followings items are added to/(deducted from) segment profit to arrive at “profit before tax” presented in the consolidated statement of comprehensive income:

2015 2014 RM RM

Profit/(loss) from inter-segment sales 181 (279,019)Unallocated corporate expenses (798,491) (17,878)

(798,310) (296,897)

Dividend from subsidiary is deducted from segment profit to arrive at “Profit before tax” presented in the consolidated statement of comprehensive income.

D Additions to non-current assets consist of:

2015 2014 RM RM

Property, plant and equipment - 15,612,375

E The following item is deducted from segment assets to arrive at total assets reported in the consolidated statement of financial position:

2015 2014 RM RM

Inter-segment assets - (43,723,423)



31. SEGMEnT InFORMATIOn (COnTInUED)

F The following item is deducted from segment liabilities to arrive at total liabilities reported in the consolidated statement of financial position:

2015 2014 RM RM

Inter-segment liabilities - (28,710,258)

Geographical information

As the Group’s business segments are predominantly carried out in Malaysia, secondary segment reporting by geographical area is not prepared.

32. DIVIDEnDS

Company 2015 2014

RM RM

Recognised during the financial year:

Dividends on ordinary shares:- Special dividend for 2015: 174 sen per share 70,291,359 - - Final single-tier dividend for 2013: 5 sen per share - 2,019,867

70,291,359 2,019,867

Dividend-in-specie of SKPRB’s ordinary shares:- Special dividend for 2015: 4.26 SKPRB shares per share 99,813,715 -

170,105,074 2,019,867

As disclosed in Note 33 to the financial statements, upon completion of the disposal of subsidiaries, the Company carried out the distribution of total consideration from the disposal of subsidiaries in the following manner:

(a) Dividend-in-specie of RM99,813,715 which consist of 172,092,638 SKPRB shares on the basis of 4.26 SKPRB shares for every share held by the Company’s shareholders; and

(b) Cash distribution of RM70,271,359 on the basis of approximately RM1.74 for every one share held by the Company’s shareholders.

The directors do not recommend any final dividend to be paid in respect of the current financial year.



33. SIGnIFICAnT AnD SUbSEQUEnT EVEnTS

(a) On 2 October 2014, the Company entered into a Share Sale Agreement (“SSA”) to dispose off its entire equity interests in Plastictecnic (M) Sdn Berhad, Bangi Plastics Sdn. Bhd. and Sun Tong Seng Mould-Tech Sdn. Bhd. to SKP Resources Bhd. (“SKPRB”) (“the Disposal”).

The Disposal was approved by the shareholders on 6 January 2015 and other approvals including the following:

(i) The proceeds arising from the disposal for a total consideration of RM200 million to be satisfied via RM100 million in cash and issuance of 172,413,793 new SKPRB shares at an issue price of RM0.58 per SKPRB share;

(ii) Distribution of 95% of cash proceeds which amounts to RM95 million and any cash balances of the Group as at the entitlement date together with the consideration shares to the entitled shareholders; and

(iii) Proposed amendment to the Memorandum of Association of the Company to facilitate the Proposed capital reduction.

(b) On 31 March 2015, the board of directors of the Company announced that all the conditions precedent as set out in the SSA has become unconditional on 30 March 2015.

(c) On 1 April 2015, the board of directors of the Company announced that the reduction of the issued and paid-up share capital of the Company via the cancellation of RM0.90 of the par value of each ordinary share in the Company had been lodged with the Companies Commission of Malaysia on 1 April 2015. Pursuant thereto, the Capital Reduction took effect and was deemed completed on the same day. The Disposals were completed on 6 April 2015.

(d) On 9 April 2015, pursuant to the completion of the Disposals, the Company has triggered Paragraph 8.03A(2) of the Listing Requirements whereby a listed issuer has suspended or ceased all of its business or its major business as a result of the disposal of the Company’s major business. Bursa Securities had via its letter dated 14 July 2015 notified the Company that it is a Cash Company (as defined under Paragraph 8.03(1)). The Company has a 12 months period from 9 April 2015 to submit its proposal to acquire a new core business in order to enable the Company to regularise its condition and to maintain the listing status on the Main Market of Bursa Securities.

In the event of absence of any acceptable alternative proposal(s) to regularise the Company’s condition prior to the completion of the proposals, the Company will apply to Bursa Securities for the delisting of the Company from the Main Market of Bursa Securities and subsequently be delisted.

(e) On 12 May 2015, the total distributions of cash amounting to RM106,648,959.12 (which consist of special cash distribution of RM70,291,359 and capital reduction of RM36,357,600) were completed and 172,092,612 SKPRB Shares amounted to RM99,813,715 were transferred to the respective entitled shareholders of the Company.

(f) On 29 June, 2015, the Company disposed off its entire shareholdings in GPlus Manufacturing Sdn. Bhd. (a dormant company) for a cash consideration of RM1million.

(g) On 21 September 2015, the Company entered into a non-binding Memorandum of Understanding (“MOU”) with Rohas-Euco Holdings Sdn. Bhd. (“REHSB”) in relation to a proposed reverse take-over of the Company by REHSB, which entails the Company acquiring all the equity interest held by REHSB in Rohas-Euco Industries Berhad comprising of 68,377,306 ordinary shares of RM1.00 each for RM200 million (“Proposed Acquisition”).



33. SIGnIFICAnT AnD SUbSEQUEnT EVEnTS (COnTInUED)

(h) On 28 January 2016, the Company entered into the Definitive Agreement for the Proposed Acquisition. In conjunction with the Proposed Acquisition, a Proposed Regularisation Plan which entailed the following was proposed:

(i) proposal to declare a dividend or other form of cash distribution by the Company to its entitled shareholders prior to the completion of the Proposed Acquisition, amounting to all of its cash reserves save and except for the cash sum equivalent to the total issued and paid-up share capital of the Company at par value of RM0.10 per share at the entitlement date to be determined later prior to the completion of Proposed Acquisition;

(ii) proposed mandatory general offer by REHSB to acquire all the remaining ordinary shares of RM0.10 each in the Company not already owned by REHSB following the Proposed Acquisition (“Proposed MGO”); and

(iii) proposed offering comprising the proposed public issue of the Company’s new shares and proposed offer for sale by REHSB following the Proposed MGO.

(i) On 25 February 2016, the Company submitted an application to Bursa Securities for a proposed extension of time from 9 April 2016 to 31 May 2016 to submit the Proposed Regularisation Plan. Bursa Securities has on 14 March 2016 granted the Company an extension of time up to 31 May 2016 to submit the Proposed Regularisation Plan to the Securities Commission Malaysia.

34. COMPARATIVES

During the financial year, the Company disposed off all its subsidiaries and remains as a single entity as at reporting date. As a result, no Group is existed as at the reporting date and the Group’s profit, cash flows and statement of equity are consolidated until the date of the disposal of the subsidiaries.

The result of the Disposal Companies are disclosed under discontinued operations in the current financial year and the comparative results have been restated accordingly.

35. AUThORISATIOn OF FInAnCIAL STATEMEnTS FOR ISSUE

The financial statements for the year ended 31 December 2015 were authorised for issue in accordance with a resolution of the directors on 4 April 2016.



36. SUPPLEMEnTARy InFORMATIOn – bREAkDOWn OF RETAInED PROFITS InTO REALISED AnD UNREALISED

The breakdown of the retained profits of the Company as at 31 December 2015 into realised and unrealised profits is presented in accordance with the directive issued by Bursa Malaysia Securities Berhad dated 25 March 2010 and prepared in accordance with Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants.

Company RM

Total retained profits of the Company - Realised 17,475,584 - Unrealised -

Retained profits as per financial statements 17,475,584


anaLysis of sharehoLDingsAS AT 31 MARCH, 2016

AUTHORISED SHARE CAPITAL : RM100,000,000.00ISSUED AND FULLY PAID-UP CAPITAL : RM4,039,733.30CLASS OF SHARES : Ordinary shares of RM0.10 eachVOTING RIGHTS : One vote per Ordinary Share (on a poll)

DISTRIBUTION SCHEDULE OF SHAREHOLDINGS

Size of Shareholdings no. of Shareholders

% of Shareholders

No of Shares Held

% of Issued Capital

1 - 99 25 2.26 986 0.00100-1,000 152 13.72 103,633 0.261,001 - 10,000 777 70.12 2,305,461 5.7110,001 - 100,000 118 10.65 3,411,151 8.44100,001 - less than 5% of issued shares 32 2.89 11,542,796 28.575% and above of issued shares 4 0.36 23,033,306 57.02

1,108 100.00 40,397,333 100.00

TOP THIRTY SECURITIES ACCOUNT HOLDERS (without aggregating the securities from different securities accounts belonging to the same Depositor)

no. Name of Shareholders no. ofShares Held

% ofIssued Capital

1. GAN KIM HUAT 8,695,949 21.532. GRACEFUL ASSESSMENT SDN. BHD. 8,035,000 19.893.4.5.

6.

7.8.

9.

zENITH HIGHLIGHT SDN. BHD. zENITH HIGHLIGHT SDN. BHD.HSBC NOMINEES (TEMPATAN) SDN. BHD. – HSBC (M) TRUSTEE BHD. FOR RHB SMART TREASURE FUNDCARTABAN NOMINEES (TEMPATAN) SDN. BHD. – TMF TRUSTEES MALAYSIA BERHAD FOR RHB PRIVATE FUND – SERIES 6LIM KIEN HUAT HSBC NOMINEES (TEMPATAN) SDN. BHD. –HSBC (M) TRUSTEE BHD. FOR RHB MALAYSIA DIVIDEND FUND HSBC NOMINEES (TEMPATAN) SDN. BHD. –HSBC (M) TRUSTEE BHD. FOR RHB EMERGING OPPORTUNITY UNIT TRUST

4,136,2572,166,1002,000,000

1,900,000

758,500517,700

400,000

10.245.364.95

4.70

1.881.28

1.00

10. HSBC NOMINEES (TEMPATAN) SDN. BHD. – HSBC (M) TRUSTEE BHD. FOR RHB GOLDENLIFE TODAY 387,200 0.96

11.

12.

HSBC NOMINEES (TEMPATAN) SDN. BHD. –HSBC (M) TRUSTEE BHD. FOR RHB SMART BALANCED FUND GAN KIM HUAT

369,800

339,080

0.92

0.8413. HLB NOMINEES (TEMPATAN) SDN. BHD. –

PLEDGED SECURITIES ACCOUNT FOR TEO CHONG KIOW 311,300 0.7714. HSBC NOMINEES (TEMPATAN) SDN. BHD. –

HSBC (M) TRUSTEE BHD. FOR RHB KIDSAVE TRUST 305,000 0.7615. TAN PHAN LIEH 300,000 0.7416. TAN PHAN SHEI 300,000 0.7417. POH KIAT 293,500 0.7318. HSBC NOMINEES (TEMPATAN) SDN. BHD. –

HSBC (M) TRUSTEE BHD. FOR RHB GOLDENLIFE 2020 290,000 0.72


anaLysis of sharehoLDings (CONTINUED)AS AT 31 MARCH, 2016

no. Name of Shareholders no. ofShares Held

% ofIssued Capital

19. CITIGROUP NOMINEES (ASING) SDN. BHD. –EXEMPT AN FOR OCBC SECURITIES PRIVATE LIMITED (CLIENT A/C-NR) 263,600 0.65

20. RHB NOMINEES (TEMPATAN) SDN. BHD. –RHB ISLAMIC INTERNATIONAL ASSET MANAGEMENT BERHAD FOR TABUNG WARISAN NEGERI SELANGOR 248,100 0.61

21. LOW POW CHIN 235,300 0.5822. NIRMAL SINGH S/O GURNAM SINGH 227,896 0.5623. HSBC NOMINEES (TEMPATAN) SDN. BHD. –

HSBC (M) TRUSTEE BHD. FOR RHB GOLDENLIFE 2030 210,000 0.52

24. RHB NOMINEES (ASING) SDN. BHD. –RHB SECURITIES SINGAPORE PTE. LTD. FOR LOW POW CHIN

200,000 0.50

25. MAYBANK NOMINEES (TEMPATAN) SDN. BHD. –PLEDGED SECURITIES ACCOUNT FOR TANG TEW KING @ TAN TEW KING (01249100309A)

188,400 0.47

26. CARTABAN NOMINEES (ASING) SDN. BHD. –EXEMPT AN FOR CREDIT INDUSTRIEL ET COMMERCIAL (AC CLIENT) 178,000 0.44

27. SANGAT SINGH A/L SURJEET SINGH 151,820 0.3828. LIM KIAN LOONG 150,000 0.3729. RHB NOMINEES (TEMPATAN) SDN. BHD. –

RHB ASSET MANAGEMENT SDN. BHD. FOR PROGRESSIVE INSURANCE BERHAD (PIB) 150,000 0.37

30. MALACCA EQUITY NOMINEES (TEMPATAN) SDN. BHD. –EXEMPT AN FOR PHILLIP CAPITAL MANAGEMENT SDN. BHD. (EPF) 149,300 0.37

33,857,802 83.83

SUBSTANTIAL SHAREHOLDERS(as per Register of Substantial Shareholders)

Shareholdingsno. Name of Shareholders Direct

Interest% of Issued

CapitalDeemed Interest

% of Issued Capital

1. GAN KIM HUAT 9,035,029 22.37 (a)14,337,357 35.492. zENITH HIGHLIGHT SDN. BHD. 6,302,357 15.60 - -3. GRACEFUL ASSESSMENT SDN. BHD. 8,035,000 19.89 - -4. GAN POH SAN - - (b)6,302,357 15.60

Notes:(a) Deemed interest by virtue of his substantial shareholding in Zenith Highlight Sdn. Bhd. and Graceful Assessment Sdn.

Bhd. pursuant to Section 6A of the Companies Act, 1965.(b) Deemed interest by virtue of his substantial shareholding in Zenith Highlight Sdn. Bhd. pursuant to Section 6A of the

Companies Act, 1965.


anaLysis of sharehoLDings (CONTINUED)AS AT 31 MARCH, 2016

DIRECTORS’ SHAREHOLDINGS(as per Register of Directors’ Shareholdings)

no. Name of Shareholders ShareholdingsDirect

Interest% of Issued

CapitalDeemed Interest

% of Issued Capital

1. GAN KIM HUAT 9,035,029 22.37 (a)14,337,357 35.492. GAN POH SAN - - (b)6,302,357 15.603. TAN JING PHO 118,000 0.29 - -

Notes :(a) Deemed interest by virtue of his substantial shareholding in Zenith Highlight Sdn. Bhd. and Graceful Assessment Sdn.

Bhd. pursuant to Section 6A of the Companies Act, 1965.(b) Deemed interest by virtue of his substantial shareholding in Zenith Highlight Sdn. Bhd. pursuant to Section 6A of the

Companies Act, 1965.

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PROXY FORM

I/We, ........................................................................................................... (name of shareholders as per NRIC, in capital letters)

IC No./ ID No./ Company No .......................................................................... (new) ................................................................ (old)

of ........................................................................................................................................................................................................

…………….………….............................................................. (full address) being a member(s ) of the above Company, hereby

appoint ……………................................................................................................ (name of proxy as per NRIC, in capital letters)

IC No .............................................................................................. (new) ................................................................................. (old)

or failing him/her ...................................................................................................(name of proxy as per NRIC, in capital letters)

IC No .............................................................................................. (new) ................................................................................. (old)

or failing him/her, the Chairman of the Meeting as my/our proxy to vote for me/us on my/our behalf at the Twenty-Second Annual General Meeting of the Company to be held at Cempaka Room (Level 03), Hotel Bangi-Putrajaya, Off Persiaran Bandar, 43650 Bandar Baru Bangi, Selangor Darul Ehsan on Friday, 24 June 2016 at 11.00 a.m. at any adjournment thereof.

My/Our proxy is to vote either on a show of hands or on a poll as indicated below with an “X”:

Item Agenda1. To receive the audited Financial Statements for the year ended 31 December 2015 together with the Reports of the

Directors and Auditors thereonRESOLUTIONS FOR AGAINST

2. To approve the payment of Directors’ Fees of RM241,000.00 13. To re-elect Tan Jing Pho as Director 24. To re-elect Gan Poh San as Director 35. To re-elect Teo Chee Kok as Director 46. To re-appoint Messrs Ernst & Young as Auditors and to authorise the

Directors to fix their remuneration5

7. To empower the Directors of the Company to issue shares pursuant to Section 132D of the Companies Act, 1965

6

Signature:

Dated this day of , 2016.

Notes :-

1) A member entitled to attend and vote at the Meeting is entitled to appoint any person or persons to be his/her proxy or proxies to attend and vote in his/her stead. Such proxy need not be a member of the Company and the provision of Section 149(1)(b) of the Companies Act, 1965 shall not apply to the Company. Where two (2) or more proxies are appointed, the proportions of shareholdings to be represented by each proxy must be specified in order for the appointments to be valid.

2) The instrument appointing a proxy, in the case of an individual, shall be signed by the appointer or by his/her attorney duly authorised in writing, and in the case of a corporation, shall either be given under its common seal or under the hand of an officer or attorney of the corporation duly authorised.

3) If there is no indication as to how you wish your vote(s) to be cast, the proxy may vote or abstain from voting at his/her discretion.

4) The instrument appointing a proxy must be duly executed and deposited at the Registered Office of the Company at 308, Block A (3rd Floor), Kelana Business Centre, 97, Jalan SS7/2, Kelana Jaya, 47301 Petaling Jaya, Selangor Darul Ehsan not less than forty-eight (48) hours before the time set for holding the meeting or any adjournment thereof.

5) Depositors who appear in the Record of Depositors as at 16 June 2016 shall be regarded as Member of the Company entitled to attend the Twenty-Second Annual General Meeting or appoint a proxy or proxies to attend and vote on his behalf.

CDS account no. No. of Shares held

For appointment of two or more proxies, percentage of shareholdings to be represented by the proxies:

No. of Shares PercentageProxy 1 %Proxy 2 %Total 100%

TECNIC GROUP BERHAD (302675-A) (Incorporated in Malaysia)

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Fold this flap for sealing

The Company Secretary

Tecnic Group Berhad (302675-A)No. 308, Block A (3rd Floor)

Kelana Business Centre97, Jalan SS7/2, Kelana Jaya

47301 Petaling JayaSelangor Darul Ehsan

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

Lot 1, Jalan P/2A, Kawasan Perusahaan Pkt. 1, 43650 Bandar Baru Bangi,

Selangor Darul Ehsan.

Tel: No.: 03-8925 6950Fax No.: 03-8925 6955

Website: www.tecnic.com.my

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