Bold . Strong . Growth - Tatt Giap Group Berhad · Bold . Strong . Growth ... Berhad and Ideal Sun City Holding Bhd since 2011. ... Corporation Berhad and Padini Holdings Berhad

Annual Report 2013Bold . Strong . Growth

www.tattgiap.com.my

TATT GIAP GROUP BERHAD (732294-W)

Corporate Headquarters:No. 1617, Lorong Perusahaan Maju 6, Prai Industrial Estate IV,13600 Prai, Penang, Malaysia. Tel: +604-502 1155 Fax: +604-502 1166

Corporate Branch:No.63, Jalan Sesiku 15/2, Seksyen 15,40200, Shah Alam, Selangor Darul Ehsan, Malaysia. Tel: +603-5511 0366Fax: +603-5511 3166 Email: [email protected]

Subsidiary Companies:

TATT GIAP HARDWARE SDN. BHD. (39286-X)Tel: +604-331 0066/+603-5511 0366Fax: +604-331 3066/+603-5511 3166

TATT GIAP STEEL CENTRE SDN. BHD. (310962-X) Tel: +604-507 0033/+603-5512 1566Fax: +604-507 0066/+603-5512 3566

TGMI INDUSTRIES SDN. BHD. (421355-V) Tel: +603-8766 8616Fax: +603-8766 8616

TG ORIENTAL STEEL SDN. BHD. (42683-P) Tel: +604-502 1155Fax: +604-502 1100

SUPERINOX PIPE INDUSTRY SDN. BHD. (712388-D)Tel: +604-582 5511Fax: +604-582 8611

SUPERINOX MAX FITTINGS INDUSTRY SDN. BHD. (405083-T)Tel: +604-582 5511Fax: +604-582 8611

SUPERINOX INTERNATIONAL SDN. BHD. (786945-A)Tel: +604-582 5511Fax: +604-582 8611

Associate Companies:

NIPPON EGALV STEEL SDN. BHD. (721702-W)Tel: +604-502 1155Fax: +604-507 6688

NISSHIN METAL SERVICES (M) SDN. BHD. (434550-M)Tel: +604-507 3823Fax: +604-507 3928

Corporate Information 2Profile of Directors 3Corporate Structure 6Chairman’s Statement 7Corporate Governance Statement 9Additional Compliance Information 18Corporate Social Responsibility Statement 19Statement on Risk Management & Internal Control 20Audit Committee Report 22Notice of Annual General Meeting 25Statement Accompanying Notice of Annual General Meeting 26

AUDITED FINANCIAL STATEMENTSDirectors’ Report 27Consolidated Statement of Financial Position 31Consolidated Statement of Profit or Loss and Other Comprehensive Income

33

Consolidated Statement of Changes In Equity 35Consolidated Statement of Cash Flows 36Statement of Financial Position 39Statement of Profit or Loss and Other Comprehensive Income 40Statement of Changes In Equity 41Statement of Cash Flows 42Notes to the Financial Statements 44Statement by Directors 107Statutory Declaration 107Independent Auditors’ Report 108List of Group Properties 110Analysis of Shareholdings 112Analysis of ICULS 114Proxy Form 117

CONTENTS

Bold . Strong . Growth

“Bold” represents the company’s bold moves and strategies used to compete against its competitors while “Strong” focuses on the company’s strengths and abilities to overcome challenges in today’s tough marketing world and “Growth” is where the company is presently, in a top position at an international level and ready to take on yet another challenge of expansion and claim world wide recognition in the stainless steel industry.

TATT GIAP GROUP BERHAD (732294-W)Annual Report 20132 TATT GIAP GROUP BERHAD (732294-W)Annual Report 20132

BOARD OF DIRECTORS

Dato’ Siah Kok Poay, StevenChairman/President

Siah Lee Beng, MichaelExecutive Director

Tan Lu Eng, ChristinaExecutive Director

Siah Chin Pin, KevinExecutive Director

Dato’ Rosely bin SamsuriNon-Independent Non-Executive Director

Loh Eng WeeIndependent Non-Executive Director

Foo Kee FattIndependent Non-Executive Director

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

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

AUDIT COMMITTEE

Foo Kee FattIndependent Non-Executive Director (Chairman)

Dato’ Rosely bin SamsuriNon-Independent Non-Executive Director (Member)

Loh Eng WeeIndependent Non-Executive Director (Member)

NOMINATION COMMITTEE

Loh Eng WeeIndependent Non-Executive Director (Chairman)

Dato’ Rosely bin SamsuriNon-Independent Non-Executive Director (Member)

Foo Kee FattIndependent Non-Executive Director (Member)

REMUNERATION COMMITTEE

Loh Eng WeeIndependent Non-Executive Director (Chairman)

Dato’ Rosely bin Samsuri Non-Independent Non-Executive Director (Member)

Foo Kee FattIndependent Non-Executive Director (Member)

CORPORATE INFORMATION

SECRETARIES

Tai Yit Chan(MAICSA 7009143)

Ong Tze-En(MAICSA 7026537)

REGISTERED OFFICE

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

SHARE REGISTRAR

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

AUDITORS

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

PRINCIPAL BANKERS

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

STOCK EXCHANGE LISTING

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

WEBSITE

www.tattgiap.com.my

TATT GIAP GROUP BERHAD (732294-W)Annual Report 2013 3

PROFILE OF DIRECTORS

Dato’ Siah Kok Poay, Steven

Tan Lu Eng, Christina, aged 50, a Malaysian, was appointed to the Board on 1 December 2008 as an Executive Director of TGG Group.

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

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

She attended all six Board Meetings held during the financial year ended 31 December 2013.

Tan Lu Eng, Christina

Siah Lee Beng, Michael, aged 64, a Malaysian, was appointed to the Board on 1 December 2008 as an Executive Director of TGG Group.

Together with Dato’ Steven Siah, he is a co-founder of TGH. Presently, he is the Managing Director of TGH. He has more than 20 years of experience in the metal casting industry and approximately 26 years of experience in the steel and stainless steel business.

Mr. Michael Siah is actively involved in various social organisations. Presently, he is the President of Jelutong Chinese Primary School Ex-pupils Association. He is also a Director of Jelutong Chinese Primary School and SJKC Beng Teik (Pusat) Bukit Mertajam.

He attended five Board Meetings held during the financial year ended 31 December 2013.

He is the brother of Dato’ Siah Kok Poay, Steven. Siah Lee Beng, Michael

Dato’ Siah Kok Poay, Steven, aged 60, a Malaysian, was appointed to the Board on 1 December 2008. He is the Chairman/President of TGG.

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

In year 1978, Dato’ Steven Siah founded TGH together with his brothers, Siah Lee Beng and the late Cheah Chong Beng. He has over 35 years of hands-on experience in the steel and stainless steel business in trading, processing and manufacturing. Currently he oversees strategic business planning of the Group.

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

He attended all six Board Meetings held during the financial year ended 31 December 2013.

He is the brother of Mr Siah Lee Beng, Michael.

TATT GIAP GROUP BERHAD (732294-W)Annual Report 20134

PROFILE OF DIRECTORS (Cont’d)

Loh Eng Wee, aged 45, a Malaysian, was appointed to the Board on 1 December 2008 as an Independent Non-Executive Director. He is the Chairman of Nomination and Remuneration Committees as well as a member of Audit Committee.

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

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

He attended all six Board Meetings held during the financial year ended 31 December 2013.

Loh Eng Wee

Siah Chin Pin, aged 33, a Malaysian, was appointed to the Board on 1 July 2013.

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

In 2012, he was appointed to his present post, he is handling in all aspects of operations such as Management, Business Development, Planning, Procurement and Administration.

He attended two Board Meetings held since he was appointed to the Board during the financial year ended 31 December 2013.

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

Siah Chin Pin, Kevin

Dato’ Rosely bin Samsuri, aged 61, a Malaysian, was appointed to the Board on 2 July 2012 as a Non-Independent Non-Executive Director of TGG. He is the member of Audit Committee, Nomination Committee and Remuneration Committee. He graduated with a Bachelor of Science (Finance) from Indiana State University, Indiana, USA in year 1983 and a Master in Business Administration (International Business) from University of New Haven, Connecticut, USA in year 1985. Dato’ Rosely bin Samsuri started his career as a Credit and Accounts Officer in Negara Properties Sdn Bhd, a property development company in year 1985. In the same year, he joined Bank Rakyat as an Executive in the Corporate Planning Department. He was appointed as the Finance Manager of Rakyat Corporation in 1986 and was seconded to Angkasa Raya Development Sdn Bhd; both of which are Bank Rakyat’s wholly-owned subsidiaries. On 1 January 1994, he was appointed as the Head of Corporate Planning Division cum Executive Assistant to Managing Director of Bank Rakyat and was promoted as Chief Executive Officer of Angkasa Raya Development Sdn Bhd in year 1997. In 2000, he was appointed as the Head of Business Development Division and Credit Control Division. In 2003, Dato’ Rosely was appointed as General Manager Corporate Services and Secretary of Bank Rakyat till his retirement in year 2009.

Dato’ Rosely bin Samsuri

Dato’ Rosely was a member of the Board of Rakyat Holdings Sdn Bhd and Rakyat Management Services Sdn Bhd. He was appointed to Risk Management Committee of Bank Rakyat.At present, Dato’ Rosely is serving the Board of Perbadanan Nasional Berhad, Permodalan Felcra Sdn Bhd & Bioalpha Holdings Berhad and he served as a Chairman of Management Investment Committee Permodalan Felcra Sdn Bhd.He attended four Board Meetings held during the financial year ended 31 December 2013.


PROFILE OF DIRECTORS (Cont’d)

Foo Kee Fatt, aged 48, a Malaysian, was appointed to the Board on 18 January 2013 as an Independent Non-Executive Director. He is the Chairman of Audit Committee and a member of both Nomination and Remuneration Committees.

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

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

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

He attended five Board Meetings held since he was appointed to the Board during the financial year ended 31 December 2013.Foo Kee Fatt

Siah Chin Hoo, Darren, aged 29, a Malaysian, was appointed as Alternate Director to Dato’ Siah Kok Poay, Steven on 1 July 2013.

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

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

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

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

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

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

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

Siah Chin Soon, Victor

Notes: a) NoneoftheDirectorshasanyconflictofinterestwiththeGroup.b) NoneoftheDirectorshasbeenconvictedofanyoffenceswithinthepast10years.c) NoneoftheDirectorshasanyfamilyrelationshipwithanyotherdirectors/majorshareholdersoftheCompany,

otherthanasdisclosedinProfileofDirectors.


CORPORATE STRUCTURE As at 30 April 2014

TGG

TGMI100%

SI100%

FI100%

TGH100%

NIMS25%

SPI100%

TGO100%

SMFI100%

TGSC51%

TGG - TATT GIAP GROUP BERHAD (732294-W) TGH - TATT GIAP HARDWARE SDN BHD (39286-X) TGO - TG ORIENTAL STEEL SDN BHD (42683-P) TGMI - TGMI INDUSTRIES SDN BHD (421355-V) SPI - SUPERINOX PIPE INDUSTRY SDN BHD (712388-D) SI - SUPERINOX INTERNATIONAL SDN BHD (786945-A) SMFI - SUPERINOX MAX FITTINGS INDUSTRY SDN BHD (405083-T) (FormerlyknownasSuperinoxFittingsIndustrySdnBhd)

FI - FORMOSA INDUSTRIES SDN BHD (286755-M) TGSC - TATT GIAP STEEL CENTRE SDN BHD (310962-X) NEG - NIPPON EGALV STEEL SDN BHD (721702-W) NIMS - NISSHIN METAL SERVICES (M) SDN BHD (434550-M) (FormerlyknownasNipponMetalServices(M)SdnBhd)

NEG27.12%


CHAIRMAN’S STATEMENT

Further, the relocation of the Group’s stainless steel division, to its new facilities in Sungai Bakap, Penang has also interrupted production which further contributed to the lower sales in 2013.

REVIEW OF OPERATION

During the year, we achieved several important milestones with the first being the opening of our new factory in Sungai Bakap, Penang. As our one-stop centre for pipes and fittings, the new factory houses our production facilities for stainless steel pipes, tubes, fittings and steel flanges. We undertook this investment through equity participation in Shinseisuperinox Industry Sdn Bhd, an associated company.

Going into 2014, we had just completed the setting up of our second service centre in Beranang, Selangor with production to commence operations in the second quarter of 2014. The 2 strategically located service centres will allow us to increase our production output to better serve our customers in both the northern as well as southern and central regions leading to sales growth.

OVERVIEW

Owing to the highly cyclical nature of the global steel industry, steel prices have been fluctuating in the recent few years. The Euro-zone debt problem, which has been dragging on for the past two years, coupled with the slowdown in the Chinese economy, has adversely affected the industry and resulted in overcapacities. The continuing influx of cheap steel imports, caused by the overproduction of supplies and weakened steel demand in China and the increase in electricity tariff of up to 14.89% locally, which translates into higher production cost has placed local steel players, including Tatt Giap Group, in an unfavorable position. The government’s imposition of stricter policies and regulations such as anti-dumping duties and the mandatory standard has provided some degree of protection and relief to local steelmakers.

PERFORMANCE

For the financial year ended 31 December 2013 (“FYE 2013”), the Group has achieved total revenue of RM227.6 million which was 22% or RM63.56 million lower than FYE 2012. This was mainly due to the decrease in sales volume, the anti-dumping measures imposed by U.S.A. and deterioration in stainless steel price.


CHAIRMAN’S STATEMENT (Cont’d)

PROSPECTS

The cyclical steel industry is now experiencing a period of depressed prices and contracted margins. In mitigation, we focus on production efficacy; tighter control over overhead costs and enhancement to production activities to improve our efficiency and ultimately, cash flow. Our focus in 2014 is to deliver better results to our shareholders by improving performance and strengthening our balance sheet.

Tatt Giap Group will continue to develop our market presence and distribution networks. Mergers and acquisitions remain an important growth strategy for the steel industry. Thus, we will continue to explore prospective joint venture targets in order to enhance the comprehensiveness of our products range.

The overall prospect for the steel industry is expected to improve in 2014, with the global economy on gradual recovery mode and activities picking up in the automotive and construction industries. Demand for steel is expected to grow in the coming years as the emerging economies would bring about urbanization and industrialization, which in turn, would be the major driver for the huge demand for steel. The World Steel Association expects continued recovery in steel demand in 2014 and projects global steel usage to increase by 3.3% in 2014. The improving nickel price anticipated from second quarter of 2014 is also expected to perk up stainless steel prices.

Moving forward, Tatt Giap Group would focus on production efficiencies; strengthening its core production process and execute cost control measures so as to stay competitive in the industry.

APPRECIATION

On behalf of the Board, I extend our sincere appreciation to our management and staff for their resolute commitment and hard work. My deep gratitude goes to the investors and shareholders who continue to place their utmost confidence in the Group’s business. I would also like to thank my fellow Board members for their counsel, enthusiasm and dedication to the Group. Last but not least, I am confident that, with your continued support, the Group will able to expand further in our core markets.

Dato’ Siah Kok Poay, StevenChairman/President


CORPORATE GOVERNANCE STATEMENT

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

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

Principle 1: Establish Clear Roles and Responsibilities

1.1 Clear Functions of the Board and Management The Board assumes full responsibilities for the overall performance of the Company and its subsidiaries by providing

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

The Board has established 3 Board Committees (‘Committees’) to assist in the performance of its stewardship duties under specific terms of reference. The Committees established are Audit Committee, Nominating Committee and Remuneration Committee. All 3 Committees are composed of Non-Executive Directors with a majority Independent Non-Executive Directors (“INEDs”).

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

1.2 Clear Roles and Responsibilities

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

The Board has yet to have descriptions for certain Board positions and also the corporate objectives for which the Executive Directors are responsible to meet. Having due note of that, the Board is of the opinion that the Chairman/President, with the assistance and support from the Executive Directors and key management, is responsible for the day-to-day operations of the Group and represents Management to the Board.

During the year under review, the Board approved the appointment of Siah Chin Hoo as Alternate Director to Dato’ Siah Kok Poay. The Alternate Director is of the right calibre, having held positions with increasing responsibilities within the Group for the past few years. The appointment reflected Senior Management’s commitment towards developing future leaders and ensuring orderly succession planning of key positions.

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


CORPORATE GOVERNANCE STATEMENT (Cont’d)

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

1.3 Formalise Ethical Standards through a Code of Conduct and Ethics

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

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

Similar with the Charter, the Board has formalised a Whistle Blower Policy as well as Code of Ethics and Code of Conduct for Directors for adoption and subsequent disclosure on corporate website.

1.4 Strategies Promoting Sustainability

Going forward, the Executive Directors will update the Board the performance and operational progress of significant subsidiaries, where necessary, taking into account changes in the business environment and risk factors such as level of competition, commodity prices and global economic outlook. It is also the normal practice of Senior Management team to conduct annual review of group performance, refine business strategies and set targets, both qualitative and quantitative, in consultation with the Chairman/President and Executive Directors.

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

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

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

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

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

1.5 Access to Information and Advice

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

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

1.6 Qualified and Competent Company Secretaries

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



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

1.7 Board Charter The Board has established a Board Charter as a point of reference for Board activities and will publish it on the Company’s

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

Principle 2: Strengthen the Composition

2.1 Nominating Committee

The Nominating Committee is chaired by an INED and the Committee consists entirely of 3 Non- Executive Directors, a majority of whom are independent. The Nominating Committee shall meet at least once in a financial year or more frequently if required to do so.

The Nominating Committee currently comprised the following:

Name Position

Loh Eng Wee ChairmanDato’ Rosely bin Samsuri MemberFoo Kee Fatt (appointed on 18 January 2013) Member

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

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

During the financial year ended 31 December 2013, the Committee met to discuss the change in Non- INED, appointment of new Executive Director, as well as conduct annual assessment of the Directors, Board, Board Committees and Chief Financial Officer.

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

The Nominating Committee also systematically assesses the effectiveness of the Board, the Committees of the Board and contribution of each individual Director and reviews the required mix of skills, experience and other qualities, including core competencies of the members of the Board on annual basis. The assessment also considered the qualifications, contribution and performance of Directors and Chief Financial Officer in meeting the needs of the Group based on the criteria - competency, character, time commitment, integrity and experience as set out under paragraph 2.20A of the Listing Requirements. The evaluation process is a mix of self and peer review and this is properly documented. The assessment and comments are summarised and discussed at Nominating Committee meeting before it is presented to the Board.

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

In addition, the Board has taken note of Recommendation 2.2 of the MCCG 2012 pertaining to the establishment of policy formalising its approach to boardroom diversity. However, the Board will not establish a specific policy on setting targets for women candidates. The Board believes there is no need to adopt a formal gender diversity policy as the Company is committed to provide fair and equal opportunities and nurturing diversity within the Group. This is evidenced by the appointment of Tan Lu Eng to the Board of Directors of TGG. The evaluation of the suitability of candidates is based on the candidates’ competency, character, time commitment, integrity and experience to bring value and expertise to the Board. The Nominating Committee will however continue to take steps to ensure suitable women candidates are sought as part of its recruitment exercise. The Company Secretary will ensure that all appointments are properly effected with the necessary legal and regulatory obligations duly met.


Principle 2: Strengthen the Composition (Cont’d)

2.2 Develop, Maintain and Review Criteria for Recruitment and Annual Assessment of Directors (Cont’d) The director who is subject to re-election and/or re-appointment at the next Annual General Meeting is assessed by

the Nominating Committee before recommendation is made to the Board and shareholders for re-election and/or re-appointment. Appropriate assessment and recommendation by the Nominating Committee is based on the annual

assessment conducted. The Articles of Association of the Company requires that all Directors shall be subject to re-election by shareholders at the first opportunity after their appointment and that at least one third (1/3) or the number

nearest to one third (1/3) of the Directors, be subject to re-election thereafter by rotation at least once in every three (3) years at the Annual General Meeting.

The Board, together with Nominating Committee had formalised a guide to be used during the annual assessment and induction processes for Directors.

2.3 Remuneration Committee The Remuneration Committee consists of three members, the majority of whom are INEDS. The Remuneration Committee currently comprised the following:

Name Position

Loh Eng Wee ChairmanDato’ Rosely bin Samsuri MemberFoo Kee Fatt (appointed on 18 January 2013) Member

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

The Remuneration Committee is authorised, inter-alia, to recommend to the Board the remuneration packages for the Executive Directors of the Company and set up a broad policy or framework for all elements of remuneration for the Directors.

The Remuneration Committee provides remuneration package which is sufficient and necessary to attract, retain and motivate the Executive Directors to run the Company. Individual performance, comparison of Group performance against similar companies within the industry sector as well as additional responsibilities of said Directors are taken into consideration in the determination of remuneration system presently.

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

The aggregate remuneration, with categorisation into appropriate components and distinguishing between Executive and Non-Executive Directors, paid or payable to all Directors of the Company for the financial year ended 31 December 2013 is as follows:

Fees(RM)

Allowance(RM)

Salaries (RM)

EPF & SOCSO

(RM)BIK

(RM)Total (RM)

ExecutiveDirectors - 36,000 2,397,706 287,327 112,758 2,833,791Non-ExecutiveDirectors 87,500 34,000 - - - 121,500Total 87,500 70,000 2,397,706 287,327 112,758 2,955,291

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

Range of Remuneration Executive Directors Non-Executive Directors

RM100,000 & Below 2 3RM101,000 to RM350,000 5 -RM1,200,000 to RM1,250,000 1 -Total *8 3

Notes: * Include remuneration to one former Executive Director who left during the year




Principle 2: Strengthen the Composition (Cont’d)

2.3 Remuneration Committee (Cont’d)

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

The Board has established a Remuneration Policy to facilitate the Remuneration Committee to consider and recommend to the Board for decision the remuneration package of the Executive Directors. Going forward, the Remuneration Committee would take on the task of reviewing and recommending the compensation structure of the Board for both Executive and Non-Executive Directors.

Principle 3: Reinforce Independence

3.1 Annual Assessment of Independent Directors

The Board, through the Nominating Committee, assesses the independence of the INEDs annually. Based on the assessment carried out for financial year ended 31 December 2013, the Board is generally satisfied with the level of independence demonstrated by the INEDs and their ability to act in the best interests of the Company in decision-making.

3.2 Tenure of Independent Directors

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

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

3.3 Shareholders’ Approval for Retaining INEDS

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

3.4 Separation of Positions of Chairman and President

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

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


Principle 3: Reinforce Independence (Cont’d)

3.5 Composition of the Board

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

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

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

Non-Independent Non-Executive Director Dato’ Rosely bin SamsuriIndependent Non-Executive Director Loh Eng Wee

Foo Kee Fatt

Brief profiles of the Board members are presented under “Profile of Directors” section in this Annual Report.

Zainal Abidin bin Ab. Rahman resigned as an Executive Director of the Company on 27 June 2013. On 1 July 2013, the Board appointed Siah Chin Pin as Executive Director to fill vacancy left by Zainal Abidin bin Ab. Rahman.

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

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

Principle 4: Foster Commitment

4.1 Time Commitment

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

During the year under review, the Board held 6 meetings to deliberate and decide on various issues. The major deliberation, in terms of issues discussed and the conclusion arrived by the Board during the meetings, are recorded by the Company Secretary with the minutes signed by the Chairman of the meetings.

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

Directors BoardAudit

CommitteeNominating Committee

Remuneration Committee

Dato’ Siah Kok Poay 6/6 * * *Siah Lee Beng 5/6 * * *Tan Lu Eng 6/6 * * *Zainal Abidin bin Ab. Rahman1 4/4 * * *Dato’ Rosely bin Samsuri 4/6 3/5 4/5 1/1Loh Eng Wee 6/6 5/5 5/5 1/1Foo Kee Fatt 5/5 5/5 4/4 1/1Siah Chin Pin2 2/2 * * *

Notes: All Board members, save for the new appointments and resignations, met the minimum percentage required for Board

meeting attendance as prescribed under MMLR of Bursa Securities during the period under review.* Not applicable1 Resigned from the Board of Directors with effect from 27 June 20132 Appointed as a member of the Board of Directors with effect from 1 July 2013 with attendance counted from his

appointment date



Principle 4: Foster Commitment (Cont’d)

4.1 Time Commitment (Cont’d)

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

In the absence of a formal protocol on induction, acceptance of new Directorship and time commitment, a Director accepting new directorships will notify the Board ahead of his new appointment. New Directors are briefed on Group operations and Board activities and protocol including frequency of meetings. Operational site visits are organised as needed.

4.2 Directors’ Training

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

Pursuant to para 15.08(2) and Appendix9C (Part A, para 28) of MMLR, the Directors had, during year under review, attended the following training programs and seminars:

Date Training program

01-02.03.2013 Understanding Profitability Awareness & Commitment10.04.2013 Workshop On Anti-Dumping14-15.08.2013 Mandatory Accreditation Programme19-20.09.2013 Updates On Company Laws and Practices07.11.2013 National Tax Seminar 201324.01.2014 Mergers & Acquisitions: The Process and Making Mergers Succeed21.03.2014 2014 Continuous Director Education07.04.2014 Good And Services Tax (GST)

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

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

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

Principle 5: Uphold Integrity in Financial Reporting

5.1 Compliance with Applicable Financial Reporting Standards

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

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

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



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

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

Directors’ Responsibility Statement

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

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

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

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

The Board has established, through the Audit Committee, a close and transparent relationship with the External Auditors in seeking professional advice and ensuring compliance with relevant accounting standards. During the financial year ended 31 December 2013, the Audit Committee held two (2) dialogue sessions with the External Auditors in the absence of the Executive Directors and Management.

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

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

Principle 6: Recognise and Manage Risks

6.1 Sound Framework to Manage Risks

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

6.2 Internal Audit Function

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

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

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

Principle 7: Ensure Timely and High Quality Disclosure

7.1 Corporate Disclosure Policy

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



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

7.1 Corporate Disclosure Policy (Cont’d)

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

7.2 Leverage on Information Technology for Effective Dissemination of Information

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

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

www.bursamalaysia.com.

Principle 8: Strengthen Relationship with Shareholders

8.1 Shareholders Participation at General Meetings

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

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

8.2 Encourage Poll Voting

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

8.3 Effective Communication and Proactive Engagement

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

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

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

Compliance with the Principles and Recommendations of the Code

For the year ended 31 December 2013 and until to-date, the Group has complied substantially with the Principles and Recommendations of the Code insofar as applicable and described herein.

This statement is issued in accordance with a resolution of the Directors dated 29 April 2014.



ADDITIONAL COMPLIANCE INFORMATION

Utilisation of ProceedsThis was not applicable during the financial year under review.

Share BuybacksDuring the financial year ended 31 December 2013, there was no share buyback made by the Company.

Options or Convertible SecuritiesThere was no issue or exercise of options or convertible securities during the financial year under review apart from the conversion of Irredeemable Convertible Unsecured Loan Stocks as detailed on Note 14 to the Audited Financial Statements.

Depository Receipt ProgrammeDuring the financial year ended 31 December 2013, the Company did not sponsor any depository receipt programme.

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

Non-audit FeesDuring the financial year ended 31 December 2013, non-audit fees amounting to RM40,900.00 were paid to the Group’s external auditors and firms or companies affiliated to the auditors as professional fees paid to them for tax consulting and corporate advisory services.

Variation in ResultsThere were no material variances between audited results for the financial year ended 31 December 2013 and the unaudited results released for the financial quarter ended 31 December 2013.

Profit GuaranteeThere was no profit guarantee received by the Company during the financial year ended 31 December 2013.

Material ContractsDuring the financial year ended 31 December 2013, there was no material contract entered into by the Company or its subsidiaries, involving the interest of directors and/or substantial shareholders.


CORPORATE SOCIAL RESPONSIBILITY STATEMENT

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

TGG has organised a Blood Donation Campaign on 19 November 2013 in close cooperation with General Hospital Seberang Jaya. Over 40 employees had participated for distribution to all general hospitals in Penang.

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

• Persatuan Alumni Chung Ling S.P.;• The Associated Chinese Chambers Of Commerce And Industry Of Malaysia’s Socio-Economic Research Trust;• SJK(C) Beng Teik (Pusat), Penang ;• Penang Chinese School Football Championship, “Kwong Wah Yit Poh Cup” ; and• Tabung Pembangunan SJK (C) Selayang Baru, Batu Caves


STATEMENT ON RISK MANAGEMENT & INTERNAL CONTROL

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

RESPONSIBILITY FOR RISK AND INTERNAL CONTROL

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

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

RISK MANAGEMENT

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

INTERNAL AUDIT

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

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

On a quarterly basis, the internal auditors report to the Audit Committee the areas for improvement and will follow up to determine the extent of their recommendations that have been implemented.

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

KEY RISK MANAGEMENT AND INTERNAL CONTROL PROCESS

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

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

• A process of hierarchical reporting which promotes accountability by process owners;• A set of documented internal policies and procedures, as the Group is ISO 2001:2008 certified, which is subjected to

reviews and improvements by management;• Information being provided to management, covering financial and operational performance, for effective monitoring and

decision making;• Monthly monitoring of revenue and gross profit against budget, with major variances being followed up and management

action taken, where necessary;• Report by the Management to the Board on significant operational matters and other issues that affect the Group; and • Involvement by the Executive Directors and senior management in key operational matters.


KEY RISK MANAGEMENT AND INTERNAL CONTROL PROCESS (Cont’d)

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

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

CONCLUSIONS

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

This Statement was issued in accordance with a resolution of Directors dated 29 April 2014.

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


AUDIT COMMITTEE REPORT

The Board is pleased to present the Audit Committee Report for the financial year ended 31 December 2013 (“FY13”).

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

Chairman : Foo Kee Fatt Independent Non-Executive DirectorMembers : Loh Eng Wee Independent Non-Executive Director

Dato’ Rosely bin Samsuri Non-Independent Non-Executive Director

Mr. Foo Kee Fatt joined the Board as Independent Non-Executive Director and Chairman of Audit Committee on 8 January 2013 following the resignation of the previous Independent Non-Executive Director.

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

1. Membership The Committee shall be appointed by the Board from amongst the Directors of the Company. It shall consist of no less

than three (3) members and all shall be Non-Executive Directors with a majority of whom must be independent. At least one member must fulfill the following criteria:

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

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

; or (b) He must be a member of one of the association of accountants specified in Part II of the 1st Schedule of

the Accountants Act, 1967• Fulfils such other requirements as may be prescribed or approved by Bursa Malaysia Securities Berhad (“Bursa

Securities”) from time to time. The Chairman of the Committee shall be an Independent Non-Executive Director. No Alternate Director of the Board shall

be appointed as a member of the Committee. In the event of any vacancy in the Committee which results in the number of members to be reduced to below three (3),

the Board shall fill the vacancy within three (3) months of the event.

2. Meeting Procedures The Committee is to meet at least four (4) times a year or more frequently as the need arises or if so requested by any

member of the Committee or by the Chairman of the Board In order to form a quorum (subject to a minimum of two (2)) for the meeting, the majority of the members present must be

independent Non-Executive Directors. In the absence of the Chairman, the members present shall elect a Chairman from amongst them.

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

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

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

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

(a) Investigate any activities of the Group within its term of reference;(b) Have the resources which are required to perform its duties; (c) Have unrestricted access to information; (d) Directly communicate with the External Auditors and person(s) carrying out the internal audit function or activity (if

any);(e) Obtain at the cost of the Group legal and other necessary professional advise it considers necessary ;(f) Be able to convene meetings with the External Auditors, the Internal Auditors or both, excluding the attendance of

other directors and employees of the listed issuer, whenever deemed necessary;


3. Authority (Cont’d)(g) Report to the relevant authorities on any unresolved issues which result in breaching of any regulatory requirement.(h) The Chairman of the Audit Committee shall engage on a continuous basis with senior management, such as the

Chairman or Group President, the Group Chief Financial Officer, the Internal Auditors and the External Auditors in order to be kept informed of matters affecting the Group.

4. Scope of Responsibilities The duties and responsibilities of the Committee encompass the followings:

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

scope and ensure co-ordination where more than one firm of auditors is involved;• Review external audit reports to ensure that prompt corrective actions are taken to address issues (including

any deficiencies in internal control system) highlighted;• Review the assistance and cooperation rendered by the Group’s employees to External Auditors;• To consider the appointment, suitability and independence of the External Auditor, the services and audit fee

(to ensure balance between objectivity and value for money) and any questions of resignation or dismissal, and the letter of resignation from External Auditors, if applicable;

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

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

whether it has the necessary authority to carry out its work;• Review the internal audit programmes and results of the internal audit process and where necessary,

ensure that appropriate action is taken by management on the recommendations of the internal audit function;

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

• Review the performance of the Internal Auditors on an annual basis; and• Review the adequacy and effectiveness of internal control systems, including management information

system and the Internal Auditors’ and or External Auditors’ assessment of these systems.

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

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

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

• Review any related party transaction and conflict of interest situation that may arise within the Company or Group including any transaction, procedure or course of conduct that raises questions of management integrity.

(d) Others • Review the allocation of options pursuant to any Employees Share Option Scheme;• Direct and supervise, as appropriate, any necessary investigations and review all reports on any major

irregularities; and• Undertake any responsibilities as authorised by the Board.

AUDIT COMMITTEE REPORT (Cont’d)


AUDIT COMMITTEE REPORT (Cont’d)

5. Reporting Procedures The Chairman shall, at the conclusion of each meeting, report to the Board on activities that it had undertaken and key

recommendations for the Board’s consideration and approval as well as follow-up status on any key recommendations from previous internal audits.

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

Attendance at Meetings During the financial year ended 31 December 2013, a total of 5 Audit Committee meetings were held. The details of

attendance of the Committee members were as follows:

No. Directors Attendance1. Foo Kee Fatt 5/52. Dato’ Rosely bin Samsuri 3/53. Loh Eng Wee 5/5

Activities of Audit CommitteeBased on duties specified in the Terms of Reference, the activities performed by the Audit Committee during the period under review include the following:(a) Reviewed the Group’s unaudited quarterly results and announcements and audited year-end financial statements,

prior to recommending to the Board of Directors for approval.(b) Reviewed with the External Auditors the audit plan and the audit approach prior to commencement of the audit for

the financial year 2013.(c) Reviewed with the External Auditors the results of the audit of the financial statements and their report as well as

the management’s response.(d) Reviewed the performance and independence of the External Auditors, considered and recommended their re-

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

internal audit function.(f) Reviewed and approved the Internal Auditors’ annual audit plan and assessed their performance, adequacy of

resources and approved their remuneration. (g) Reviewed and deliberated on the findings and reports from the Internal Auditors which highlighted observations,

recommendations and management’s response. Discussed with management on the actions taken to improve the internal controls based on improvement opportunities identified.

(h) Reviewed the related party transactions entered into by the Group.(i) Reviewed and approved the risk management framework and assessed the adequacy of the internal control

system.(j) Reviewed the Audit Committee report and Statement on Risk Management and Internal Control for inclusion in the

Annual Report.(k) Reviewed the External Auditors’ management letter and management’s response.(l) Held 2 meetings with External Auditors without the presence of management.

Internal AuditThe Group outsourced the internal audit function to professional and consulting firm, to provide the Board with much of the assurance it requires regarding the adequacy and integrity of the system of internal control within the Group. In early 2013, the Committee deliberated upon and changed the outsourced internal audit services provider.The internal audit function is independent of the activities or operations of the Group. The principal role of the internal audit function is to undertake independent, regular and systematic reviews of the system of internal control to provide reasonable assurance that such system continues to operate satisfactorily and effectively. It is the responsibility of the internal audit function to provide the Audit Committee with independent and objective reports on the state of internal control of the various operating units within the Group.During the financial year ended 31 December 2013, the internal audit function carried out 4 cycles of internal audit to test the effectiveness of the internal control system of the Group.Further information regarding the Internal Audit function is detailed under Statement on Risk Management and Internal Control in this Annual Report.For the financial year ended 31 December 2013, the total cost incurred for the internal audit function was RM30,000.00.This statement is issued in accordance with a resolution of the Directors dated 29 April 2014.


NOTICE IS HEREBY GIVEN THAT the Eighth Annual General Meeting of Tatt Giap Group Berhad will be held at Function Hall of Tatt Giap Group Berhad at 1617 Lorong Perusahaan Maju 6, Prai Industrial Estate IV, 13600 Prai, Penang on Thursday, 26 June 2014 at 11:30 am for the following purposes:

AS ORDINARY BUSINESS:

1. To receive the Audited Financial Statements for the financial year ended 31 December 2013 together with the Reports of the Directors and Auditors thereon.

2. To approve the payment of Directors’ fees of RM87,500 for the financial year ended 31 December 2013.

Ordinary Resolution 1

3. To re-elect the following Directors who retire by rotation pursuant to Article 132 of the Company’s Articles of Association and being eligible, offer themselves for re-election:

3.1 Ms. Tan Lu Eng, Christina Ordinary Resolution 2

3.2 Mr. Loh Eng Wee Ordinary Resolution 3

4. To re-elect Mr. Siah Chin Pin, Kevin who retires pursuant to Article 137 of the Company’s Articles of Association and being eligible, offer himself for re-election.


5. To re-appoint Messrs KPMG as Auditors of the Company and to authorise the Directors to determine their remuneration.


AS SPECIAL BUSINESS:

To consider, and if thought fit, to pass the following as Ordinary Resolution with or without modification:

6. Ordinary Resolution Authority to Issue Shares

“THAT pursuant to Section 132D of the Companies Act 1965, the Company’s Articles of Association and subject to the approvals of the relevant Governmental and/or regulatory authorities, the Directors be and are hereby empowered to issue shares in the Company from time to time upon such terms and conditions and for such purposes and to such person or persons as the Directors may deem fit provided that the aggregate number of shares issued pursuant to this resolution does not exceed 10% of the total issued share capital of the Company for the time being and that the Directors be and are also empowered to obtain the approval from Bursa Malaysia Securities Berhad for the listing of and quotation for the additional shares so issued and that such authority shall continue to be in force until the conclusion of the next Annual General Meeting of the Company or the expiration of the period within which the next Annual General Meeting is required by law to be held or revoked/varied by resolution passed by the shareholders in general meeting whichever is the earlier.”


7. To consider any other business for which due notice shall have been given in accordance with the Companies Act, 1965.

By Order of the Board

ONG TZE-EN (MAICSA 7026537) TAI YIT CHAN (MAICSA 7009143) Joint Company Secretaries

Penang, 4 June 2014

NOTICE OF ANNUAL GENERAL MEETING


NOTICE OF ANNUAL GENERAL MEETING (Cont’d)

NOTES:

Appointment of Proxy

1. A member may appoint 2 proxies to attend on the same occasion. A proxy may but need not be a Member and the provisions of Section 149(1)(b) of the Companies Act, 1965 shall not apply to the Company. If a Member appoints 2 proxies, the appointments shall be invalid unless he specifies the proportions of his holdings to be represented by each proxy.

2. Where a member of the Company is an authorised nominee as defined under the Securities Industries (Central Depositories) Act, 1991 (“SICDA”), it may appoint at least one (1) proxy in respect of each securities account it holds with ordinary shares of the Company standing to the credit of the said securities account.

3. Where a member of the Company is an exempt authorised nominee which hold ordinary shares in the Company for multiple beneficial owners in one (1) securities account (“omnibus account”), there shall be no limit to the number of proxies which the exempt authorised nominee may appoint in respect of each omnibus account it holds.

An exempt authorised nominee refers to an authorised nominee defined under the SICDA which is exempted from compliance with the provisions of subsection 25A(1) of SICDA.

4. The instrument appointing a proxy shall be in writing under the hand of the appointor or his attorney duly authorised in writing or if such appointor is a corporation under its Common Seal or the hand of its attorney.

5. For the proxy to be valid, the proxy form duly completed must be deposited at the Company’s Registered Office at Suite 16-1 (Penthouse Upper), Menara Penang Garden, 42A Jalan Sultan Ahmad Shah, 10050 Penang, at least forty-eight (48) hours before the time appointed for holding the meeting or any adjournment thereof.

6. In respect of deposited securities, only a depositor whose name appear on the Record of Depositors on 18 June 2014 (General Meeting Record of Depositors) shall be eligible to attend the meeting or appoint proxies to attend and/or vote his/her behalf.

Explanatory Notes on Special Business

7. Ordinary Resolution 6 is a renewal of a general mandate given to the Directors of the Company to allot and issue shares pursuant to Section 132D of the Companies Act 1965 as approved by the shareholders at the Seventh Annual General Meeting (“AGM”) held on 27 June 2013. As at the date of the Notice, no new shares in the Company were issued pursuant to the mandate granted to the Directors at the last AGM which will lapse at the conclusion of the forthcoming AGM to be held on 26 June 2014.

The Ordinary Resolution 6, if passed, will empower the Directors of the Company to issue and allot shares in the Company

from time to time and for such purposes as the Directors consider would be in the interest of the Company up to an amount not exceeding 10% of the Company’s issued capital for the time being. This authority will, unless revoked or varied by the Company in general meeting, expire at the next AGM of the Company or the period within which the next AGM of the Company is required by law to be held whichever is the earlier.

The general mandate will provide flexibility to the Company for any possible fund raising activities, including but not limited to further placing of shares, for purpose of funding future investment projects, working capital and/or acquisitions as well as to avoid any delay and cost in convening general meeting to specifically approve such an issuance of shares.

STATEMENT ACCOMPANYING NOTICE OF ANNUAL GENERAL MEETING PURSUANT TO PARAGRAPH 8.27(2) OF THE MAIN MARKET LISTING REQUIREMENTS OF BURSA MALAYSIA SECURITIES BERHADDetails of individual(s) who are standing for election as Director(s)

No individual is seeking election as a Director at the Eighth AGM of the Company.


DIRECTORS’ REPORTFor the Year Ended 31 December 2013

The Directors have pleasure in submitting their report and the audited financial statements of the Group and of the Company for the financial year ended 31 December 2013.

Principal activities

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

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

Results

GroupRM

CompanyRM

(Loss)/Profit for the year attributable to :Owners of the Company (29,315,394) 10,570,390Non-controlling interests (631,553) -

(29,946,947) 10,570,390

Reserves and Provisions

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

Dividend

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

Directors of the Company

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

Dato’ Siah Kok Poay Siah Lee Beng Tan Lu Eng Siah Chin Pin*Foo Kee FattDato’ Rosely Bin Samsuri Loh Eng WeeSiah Chin Soon (alternate to Siah Lee Beng) Siah Chin Hoo (alternate to Dato’ Siah Kok Poay) (appointed on 1.7.2013)Zainal Abidin Bin Ab. Rahman (resigned on 27.6.2013)

* Ceased as alternate to Dato’ Siah Kok Poay on 28.6.2013; appointed on 1.7.2013


DIRECTORS’ REPORT (Cont’d)For the Year Ended 31 December 2013

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

Number of ordinary shares of RM0.50 eachBalance at Balance at1.1.2013 Converted (Sold) 31.12.2013

Interests in the Company :

Direct interests

Dato’ Siah Kok Poay - own 96 - - 96Siah Lee Beng - others * 90,000 - - 90,000Tan Lu Eng - own 52 - - 52Siah Chin Soon - own 100,000 - - 100,000

Indirect interests

Dato’ Siah Kok Poay - own 46,203,053 1,836,000 - 48,039,053Siah Lee Beng - own 46,203,001 1,836,000 - 48,039,001

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

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

Balance at Balance at1.1.2013/^ Bought (Converted) 31.12.2013

Interests in the Company :

Direct interests

Siah Lee Beng - others * 100 - - 100Siah Chin Pin 100 - - 100Siah Chin Soon 100 - - 100Siah Chin Hoo ^100 - - 100

Indirect interests

Dato’ Siah Kok Poay - own 19,572,640 - (1,064,880) 18,507,760Siah Lee Beng - own 19,572,640 - (1,064,880) 18,507,760

^ At date of appointment

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

None of the other Directors holding office at 31 December 2013 had any interest in the ordinary shares and ICULS of the Company and of its related companies during the financial year.



Directors’ Benefits

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

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

Issue of Shares and Debentures

On 31 December 2013, the Company increased its issued and paid up share capital from RM51,000,000 comprising 102,000,000 ordinary shares of RM0.50 each to RM51,918,000 comprising 103,836,000 ordinary shares of RM0.50 each as a result of the conversion of 1,064,880 RM1.00 nominal value of 5-year 2% Irredeemable Convertible Loans Stocks (“ICULS”) into 1,836,000 ordinary shares of RM0.50 each on the basis of one RM1.00 nominal value of ICULS for approximately 1.724 ordinary shares of RM0.50 each at an issue price of RM0.58 per share.

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

Options Granted Over Unissued Shares

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

Irredeemable Convertible Unsecured Loan Stocks (“ICULS”)

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

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

Other Statutory Information

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

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

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

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

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

ii) that would render the value attributed to the current assets in the financial statements of the Group and of the Company misleading, or

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

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

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

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

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



Other Statutory Information (Cont’d)

No contingent liability or other liability of any company in the Group has become enforceable, or is likely to become enforceable within the period of twelve months after the end of the financial year which, in the opinion of the Directors, will or may substantially affect the ability of the Group and of the Company to meet their obligations as and when they fall due.

In the opinion of the Directors, other than the gain recognised on disposal of a subsidiary and dilution of interest in a subsidiary, the financial performance of the Group and of the Company for the financial year ended 31 December 2013 have not been substantially affected by any item, transaction or event of a material and unusual nature nor has any such item, transaction or event occurred in the interval between the end of that financial year and the date of this report.

Significant events during the year

The details of such events are disclosed in Note 33 to the financial statements.

Auditors

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

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

Dato’ Siah Kok Poay

Siah Lee Beng

Penang,

Date : 29 April 2014


Note 2013RM

2012RM

AssetsProperty, plant and equipment 3 163,672,598 158,090,718Investments properties 4 638,552 646,184Investments in associates 7 6,017,449 7,473,722Other investments 8 170,900 134,600Deferred tax assets 9 50,769 -

Total non-current assets 170,550,268 166,345,224

Inventories 10 85,843,782 107,536,963Trade and other receivables 11 63,214,864 74,380,353Current tax assets 1,803,891 1,560,011Cash and cash equivalents 12 11,228,604 10,774,653

162,091,141 194,251,980

Assets classified as held for sale 13 2,963,364 4,861,896

Total current assets 165,054,505 199,113,876

Total assets 335,604,773 365,459,100

EquityShare capital 14 51,918,000 51,000,000Reserves 15 13,072,138 41,425,642

Total equity attributable to owners of the Company 64,990,138 92,425,642

Non-controlling interests 17,620,529 579,961

Total equity 82,610,667 93,005,603

Liabilities

Loans and borrowings 16 46,539,641 48,280,935Deferred tax liabilities 9 6,830,944 6,459,944

Total non-current liabilities 53,370,585 54,740,879

CONSOLIDATED STATEMENT OF FINANCIAL POSITIONAs at 31 December 2013

The notes on pages 44 to 106 are an integral part of these financial statements.


Note 2013RM

2012RM

Liabilities

Loans and borrowings 16 140,429,844 147,346,375Trade and other payables 17 59,067,484 67,471,510Current tax liabilities 126,193 32,837

199,623,521 214,850,722

Liabilities classified as held for sale 13 - 2,861,896

Total current liabilities 199,623,521 217,712,618

Total liabilities 252,994,106 272,453,497

Total equity and liabilities 335,604,773 365,459,100

CONSOLIDATED STATEMENT OF FINANCIAL POSITION (Cont’d)As at 31 December 2013



Note 2013RM

2012RM

Continuing operations

Revenue 18 227,607,735 291,168,174

Cost of sales (227,231,660) (280,497,612)

Gross profit 376,075 10,670,562

Other operating income 4,646,136 1,072,119

Distribution expenses (3,807,095) (6,456,353)

Administrative expenses (16,332,202) (14,109,273)

Other operating expenses (1,144,525) (612,990)

Results from operating activities (16,261,611) (9,435,935)

Finance costs 19 (10,719,775) (9,830,887)

Operating loss (26,981,386) (19,266,822)

Share of loss of equity accounted associates net of tax (2,407,283) (7,116,066)

Loss before tax 20 (29,388,669) (26,382,888)

Tax expense 22 (558,278) 39,672

Loss from continuing operations (29,946,947) (26,343,216)

Discontinued operation

Loss from discontinued operation, net of tax 23 - (5,733,546)

Loss for the year (29,946,947) (32,076,762)

Other comprehensive expense, net of tax

Item that may be reclassified subsequently to profit or loss

Fair value of available-for-sale financial assets 8,300 (16,300)

Total comprehensive expense for the year (29,938,647) (32,093,062)

Loss for the year attributable to:

Owners of the Company (29,315,394) (31,083,019)Non-controlling interests (631,553) (993,743)

Loss for the year (29,946,947) (32,076,762)

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME For the year ended 31 December 2013



Note 2013RM

2012RM

Total comprehensive expense attributable to:

Owners of the Company (29,307,094) (31,099,319)Non-controlling interests (631,553) (993,743)

Total comprehensive expense for the year (29,938,647) (32,093,062)

Basic loss per ordinary share (sen):

- from continuing operations 24 (28.74) (25.83)- from discontinued operation 24 - (4.64)

24 (28.74) (30.47)

Diluted earnings per ordinary share (sen):

- from continuing operations 24 (28.74) (25.83)- from discontinued operation 24 - (4.64)

24 (28.74) (30.47)

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME (Cont’d) For the year ended 31 December 2013



CONSOLIDATED STATEMENT OF CHANGES IN EQUITY For the year ended 31 December 2013

The

note

s on

pag

es 4

4 to

106

are

an

inte

gral

par

t of t

hese

fina

ncia

l sta

tem

ents

.

Attr

ibut

able

to o

wne

rs o

f the

Com

pany

Non

-dis

trib

utab

leD

istr

ibut

able

Shar

eca

pita

lR

M

Shar

epr

emiu

m RM

Rev

erse

acqu

isiti

onre

serv

e R

M

Fair

valu

ere

serv

eR

M

Cap

ital

rese

rve

RM

Ret

aine

dea

rnin

gs RM

Tota

lR

M

Non

-co

ntro

lling

inte

rest

sR

M

Tota

leq

uity RM

At 1

Jan

uary

201

251

,000

,000

774,

800

(53,

300,

000)

(47,

500)

28,1

82,0

8096

,915

,581

123,

524,

961

-12

3,52

4,96

1

Fair

valu

e of

ava

ilabl

e-fo

r-sal

e fin

anci

al

asse

ts re

pres

entin

g to

tal o

ther

co

mpr

ehen

sive

exp

ense

for t

he y

ear

--

-(1

6,30

0)-

-(1

6,30

0)-

(16,

300)

Loss

for t

he y

ear

--

--

-(3

1,08

3,01

9)(3

1,08

3,01

9)(9

93,7

43)

(32,

076,

762)

Tota

l com

preh

ensi

ve e

xpen

se fo

r the

ye

ar-

--

(16,

300)

-(3

1,08

3,01

9)(3

1,09

9,31

9)(9

93,7

43)

(32,

093,

062)

Acqu

isiti

on o

f a s

ubsi

diar

y-

--

--

--

1,57

3,70

41,

573,

704

At 3

1 D

ecem

ber 2

012/

1 Ja

nuar

y 20

1351

,000

,000

774,

800

(53,

300,

000)

(63,

800)

28,1

82,0

8065

,832

,562

92,4

25,6

4257

9,96

193

,005

,603

Fair

valu

e of

ava

ilabl

e-fo

r-sal

e fin

anci

al

asse

ts re

pres

entin

g to

tal o

ther

co

mpr

ehen

sive

inco

me

for t

he y

ear

--

-8,

300

--

8,30

0-

8,30

0Lo

ss fo

r the

yea

r-

--

--

(29,

315,

394)

(29,

315,

394)

(631

,553

)(2

9,94

6,94

7)

Tota

l com

preh

ensi

ve in

com

e/ex

pens

e fo

r the

yea

r -

--

8,30

0-

(29,

315,

394)

(29,

307,

094)

(631

,553

)(2

9,93

8,64

7)

Tran

sact

ion

with

ow

ners

of t

he

Com

pany

- C

onve

rsio

n of

ICU

LS91

8,00

014

6,88

0-

-(9

74,3

68)

-90

,512

-90

,512

Dis

posa

l of a

sub

sidi

ary

--

--

--

-(5

79,9

61)

(579

,961

)D

ilutio

n of

inte

rest

in a

sub

sidi

ary

--

--

-1,

781,

078

1,78

1,07

818

,252

,082

20,0

33,1

60

At 3

1 D

ecem

ber 2

013

51,9

18,0

0092

1,68

0(5

3,30

0,00

0)(5

5,50

0)27

,207

,712

38,2

98,2

4664

,990

,138

17,6

20,5

2982

,610

,667

Not

e 14

Not

e 15


Note 2013RM

2012RM

Cash flows from operating activities

Loss before tax from:- continuing operations (29,388,669) (26,382,888)- discontinued operations - (5,733,546)

Adjustments for:Depreciation on:

- property, plant and equipment 3 12,771,467 7,306,649- investment property 4 7,632 3,816

Impairment loss on:- goodwill 5 - 1,469,045- plant and equipment 20 - 2,103,652

Interest expense 19 10,719,775 9,839,396Interest income 20 (494,938) (195,874)Gain on disposal of:

- plant and equipment 20 - (84,137)- investment in a subsidiary 20 (2,456,784) -

Plant and equipment written off 52,038 -Dividend income 20 (7,180) (7,990)Share of loss of equity accounted associate, net of tax 2,407,283 7,116,066

Operating loss before working capital changes (6,389,376) (4,565,811)

Changes in working capital:Inventories 21,693,181 20,839,211Trade and other receivables 13,842,312 (2,187,187)Trade and other payables (8,404,026) 12,059,849

Cash generated from operations 20,742,091 26,146,062

Interest paid 25 (616,000) (616,000)Income taxes paid (388,571) (1,122,618)

Net cash from operating activities 19,737,520 24,407,444

Cash flows from investing activities

Acquisition of property, plant and equipment A (20,194,885) (33,477,593)Acquisition of other investments (28,000) -Proceeds from disposal of plant and equipment - 89,900Proceeds from dilution of interest in a subsidiary 20,033,160 -Interest received 494,938 195,874Dividends received 7,180 7,990Net cash outflow on acquisition of a subsidiary B - (2,981,896)Net cash inflow on disposal of investment in a subsidiary 23 1,195,190 -Subscription of shares in an associate (951,010) -

Net cash from/(used in) investing activities 556,573 (36,165,725)

CONSOLIDATED STATEMENT OF CASH FLOWSFor the year ended 31 December 2013



CONSOLIDATED STATEMENT OF CASH FLOWS (Cont’d)For the year ended 31 December 2013

Note 2013RM

2012RM

Cash flows from financing activities

Interest paid (10,625,768) (9,717,356)Repayment of term loans (16,223,025) (1,756,584)Drawdown of term loans 17,900,000 16,113,880(Payment)/Drawdown of other borrowings, net (9,385,964) 7,717,639Payment of finance lease liabilities (3,866,422) (2,768,361)Placement of pledged fixed deposits (292,442) (273,829)

Net cash (used in)/from financing activities (22,493,621) 9,315,389

Net decrease in cash and cash equivalents (2,199,528) (2,442,892)

Cash and cash equivalents at 1 January (3,437,417) (994,525)

Cash and cash equivalents at 31 December C (5,636,945) (3,437,417)

NOTES

A. Acquisition of property, plant and equipment

During the financial year, the Group acquired property, plant and equipment with an aggregate cost of RM21,368,749 (2012 : RM45,319,226) of which RM1,173,864 (2012 : RM11,841,633) was acquired by means of finance lease arrangements. The balance of RM20,194,885 (2012 : RM33,477,593) was paid by cash.

B. Acquisition of a subsidiary

During the previous financial year, the Company acquired a 60% equity interests in Buminox Sdn. Bhd. (“Buminox”). The recognised amounts of assets acquired and liabilities assumed were as follows :

2012RM

Identifiable assets acquired and liabilities assumed

Property, plant and equipment 340,920Trade and other receivables 4,160,940Cash and cash equivalents 618,104Trade and other payables (990,594)Loans and borrowings (195,112)

Total identifiable net assets 3,934,258Goodwill on acquisition 1,239,446

5,173,704Non-controlling interests (1,573,704)

Purchase consideration settled in cash and cash equivalent 3,600,000

Cash and cash equivalents acquired (618,104)

Net cash outflow arising from acquisition of a subsidiary 2,981,896



CONSOLIDATED STATEMENT OF CASH FLOWS (Cont’d)For the year ended 31 December 2013

B. Acquisition of a subsidiary (Cont’d)

Acquisition-related costs

The Group incurred acquisition-related costs amounting to RM80,000 which have been included in administrative expenses in the Group’s consolidated statement of profit or loss and other comprehensive income.

C. Cash and cash equivalents

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

Note 2013RM

2012RM

Cash and bank balances 12 1,280,514 1,119,005Cash and bank balances attributable to a discontinued operation 13 - 4,810Bank overdrafts 16 (6,917,459) (4,561,232)

(5,636,945) (3,437,417)



STATEMENT OF FINANCIAL POSITIONAs at 31 December 2013

Note 2013RM

2012RM

AssetsPlant and equipment 3 252,405 106,348Investments properties 4 26,678,734 27,559,568Investments in subsidiaries 6 138,662,187 138,931,757Investments in associates 7 4,434,075 3,483,065

Total non-current assets 170,027,401 170,080,738

Other receivables 11 13,697,049 4,069,058Cash and cash equivalents 12 53,585 328,514

Total current assets 13,750,634 4,397,572

Total assets 183,778,035 174,478,310

EquityShare capital 14 51,918,000 51,000,000Reserves 15 95,061,559 85,318,657

Total equity 146,979,559 136,318,657

Liabilities

Loans and borrowings 16 590,899 1,073,607

Total non-current liability 590,899 1,073,607Loans and borrowings 16 591,087 596,045Other payables 17 35,616,490 36,490,001

Total current liabilities 36,207,577 37,086,046

Total liabilities 36,798,476 38,159,653

Total equity and liabilities 183,778,035 174,478,310



Note 2013RM

2012RM

Revenue 18 - 70,000,000

Other operating income 15,982,279 702,162

Administrative expenses (2,066,524) (920,152)

Other operating expenses (2,201,638) (10,900,000)

Results from operating activities 11,714,117 58,882,010

Finance costs 19 (1,054,830) (666,782)

Profit before tax 20 10,659,287 58,215,228

Tax expense 22 (88,897) -

Profit for the year representing total comprehensive income for the year 10,570,390 58,215,228

STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME For the year ended 31 December 2013



STATEMENT OF CHANGES IN EQUITYFor the year ended 31 December 2013

Attributable to owners of the CompanyNon-distributable Distributable

Sharecapital

RM

Sharepremium

RM

Capitalreserve

RM

(Accumulated losses)/

Retainedearnings

RM

Totalequity

RM

At 1 January 2012 51,000,000 774,800 28,182,080 (1,853,451) 78,103,429

Profit for the year representing total comprehensive income for the year - - - 58,215,228 58,215,228

At 31 December 2012/1 January 2013 51,000,000 774,800 28,182,080 56,361,777 136,318,657

Profit for the year representing total comprehensive income for the year - - - 10,570,390 10,570,390

Transaction with owner of the Company- Conversion of ICULS 918,000 146,880 (974,368) - 90,512

At 31 December 2013 51,918,000 921,680 27,207,712 66,932,167 146,979,559Note 14 Note 15



STATEMENT OF CASH FLOWSFor the year ended 31 December 2013

Note 2013RM

2012RM

Cash flows from operating activities

Profit before tax 10,659,287 58,215,228

Adjustments for:Depreciation on plant and equipment 3 56,767 16,056Depreciation on investment property 4 880,834 440,432Dividend income 18 - (70,000,000)Interest expense 19 1,054,830 666,782Interest income 20 (21,170) -Impairment loss on investment in a subsidiary 20 2,201,000 2,400,000Impairment loss on investment in an associate 20 - 8,500,000Gain on dilution of interest in a subsidiary 20 (14,664,590) -

Operating profit before working capital changes 166,958 238,498

Changes on working capital :Other receivables C (18,127,991) (2,057,391)Other payables (873,511) 6,429,092

Net cash (used in)/from operations (18,834,544) 4,610,199

Tax paid (88,897) -Interest paid 25 (616,000) (616,000)

Net cash (used in)/from operating activities (19,539,441) 3,994,199

Cash flows from investing activities

Acquisition of plant and equipment A (47,824) (88,767)Subscription of shares in an associate (951,010) -Purchase of investments in subsidiaries C - (3,600,000)Proceeds from disposal of a subsidiary 1,200,000 -Proceeds from dilution of interest in a subsidiary 20,033,160 -Interest received 21,170 -

Net cash from/(used in) investing activities 20,255,496 (3,688,767)

Cash flows from financing activities

Interest paid (960,823) (2,093)Repayment of finance lease liabilities (30,161) (11,847)

Net cash used in financing activities (990,984) (13,940)

Net (decrease)/increase in cash and cash equivalents (274,929) 291,492

Cash and cash equivalents at 1 January 328,514 37,022

Cash and cash equivalents at 31 December 12 53,585 328,514



STATEMENT OF CASH FLOWS (Cont’d)For the year ended 31 December 2013

NOTES

A. Acquisition of plant and equipment

During the financial year, the Company acquired plant and equipment with an aggregate cost of RM202,824 (2012 : RM113,739) of which RM155,000 (2012 : RM24,972) was acquired by means of finance lease arrangements. The balance of RM47,824 (2012 : RM88,767) was paid by cash.

B. Acquisition of investment properties

The acquisition of investment properties from a subsidiary of RM Nil (2012 : RM28,000,000) was settled by way of set-off against the amount due from the subsidiary to the Company.

C. Purchase of investments and subscription of shares in subsidiaries

During the financial year, the Company increased its investment in certain subsidiaries by RM8,500,000 (2012 : RM50,500,000) through the capitalisation of the amounts due from the subsidiaries.

In previous financial year, the Company acquired a 60% equity interests in Buminox Sdn. Bhd. for a total cash consideration of RM3,600,000.

As part of the Group’s restructuring exercise, the Company also acquired all the indirect subsidiaries previously owned by Tatt Giap Hardware Sdn. Bhd. (“TGH”) and Tatt Giap Steel Centre Sdn. Bhd. (“TGSC”) for a total purchase consideration of RM12,211,759 which was set-off against the amount due from TGH and TGSC respectively to the Company.

D. Dividend income

During the previous financial year, the Company received a single tier interim dividend of RM70,000,000 from a subsidiary where the dividend was debited against the amount due by the Company to the subsidiary.



NOTES TO THE FINANCIAL STATEMENTS

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

Registered office

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

Principal place of business

1617, Lorong Perusahaan Maju 6Prai Industrial Estate 413600 PraiPenang

The consolidated financial statements of the Company as at and for the financial year ended 31 December 2013 comprise the Company and its subsidiaries (together referred to as the “Group” and individually referred to as “Group entities”) and the Group’s interest in associates. The financial statements of the Company as at and for the financial year ended 31 December 2013 do not include other entities.

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

These financial statements were authorised for issue by the Board of Directors on 29 April 2014.

1. Basis of preparation

(a) Statement of compliance

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

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

MFRSs, Interpretations and amendments effective for annual periods beginning on or after 1 January 2014• Amendments to MFRS 10, Consolidated Financial Statements : Investment Entities• Amendments to MFRS 12, Disclosure of Interests in Other Entities : Investment Entities• Amendments to MFRS 127, Separate Financial Statements (2011) : Investment Entities• Amendments to MFRS 132, Financial Instruments : Presentation - Offsetting Financial Assets and Financial Liabilities• Amendments to MFRS 136, Impairment of Assets - Recoverable Amount Disclosures for Non-Financial

Assets• Amendments to MFRS 139, Financial Instruments : Recognition and Measurement - Novation of Derivatives and Continuation of Hedge Accounting *• IC Interpretation 21, Levies*

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

Improvements 2011-2013 Cycle)• Amendments to MFRS 2, Share-based Payment (Annual Improvements 2010-2012 Cycle) #• Amendments to MFRS 3, Business Combinations (Annual Improvements 2010-2012 Cycle and 2011-2013 Cycle) • Amendments to MFRS 8, Operating Segments (Annual Improvements 2010-2012 Cycle) • Amendments to MFRS 13, Fair Value Measurement (Annual Improvements 2010-2012 Cycle and 2011-2013

Cycle)• Amendments to MFRS 116, Property, Plant and Equipment (Annual Improvements 2010-2012 Cycle)• Amendments to MFRS 119, Employee Benefits - Defined Benefit Plans: Employee Contributions #• Amendments to MFRS 124, Related Party Disclosures (Annual Improvements 2010-2012 Cycle)• Amendments to MFRS 138, Intangible Assets (Annual Improvements 2010-2012 Cycle)• Amendments to MFRS 140, Investment Property (Annual Improvements 2011-2013 Cycle)


NOTES TO THE FINANCIAL STATEMENTS (Cont’d)

1. Basis of preparation (Cont’d)

(a) Statement of compliance (Cont’d)

MFRSs, Interpretations and amendments effective for a date yet to be confirmed• MFRS 9, Financial Instruments (2009)• MFRS 9, Financial Instruments (2010)• MFRS 9, Financial Instruments - Hedge Accounting and Amendments to MFRS 9, MFRS 7 and MFRS 139• MFRS 9, Financial Instruments - Hedge Accounting and Amendments to MFRS 9, MFRS 7 and MFRS 139• Amendments to MFRS 7, Financial Instruments : Disclosures - Mandatory Effective Date of MFRS 9 and

Transition Disclosures

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

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

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

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

MFRS 9, Financial Instruments

MFRS 9 replaces the guidance in MFRS 139, Financial Instruments: Recognition and Measurement on the classification and measurement of financial assets and financial liabilities, and on hedge accounting.

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

(b) Basis of measurement

The financial statements have been prepared on the historical cost basis other than as disclosed in Note 2 to thefinancial statements and on the assumption that the Group will continue to operate as a going concern. At 31 December 2013, the current liabilities of the Group and of the Company exceeded the current assets by RM34,569,016 and RM22,456,943 respectively.

The Directors are of the opinion that the Group’s banking facilities will continue to be available from its lenders and that the Group will be able to generate sufficient cash flows from its operations to meet its liabilities as and when they fall due. Subsequent to the end of the financial reporting period, the Group has also undertaken several new business initiatives to improve its working capital and cash flow position.

(c) Functional and presentation currency

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

(d) Use of estimates and judgements

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

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

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



2. Significant accounting policies

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

(a) Basis of consolidation

(i) Subsidiaries

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

The Group adopted MFRS 10, Consolidated Financial Statements in the current financial year. This resulted in changes to the following policies :

• Control exists when the Group is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. In the previous financial years, control exists when the Group has the ability to exercise its power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.

• Potential voting rights are considered when assessing control only when such rights are substantive. In the previous financial years, potential voting rights are considered when assessing control when such rights are presently exercisable.

• The Group considers it has de facto power over an investee when, despite not having the majority of voting rights, it has the current ability to direct the activities of the investee that significantly affect the investee’s return. In the previous financial years, the Group did not consider de facto power in its assessment of control.

The change in accounting policy has been made retrospectively and in accordance with the transitional provision of MFRS 10. The adoption of MFRS 10 has no significant impact to the financial statements of the Group.

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

(ii) Business combinations

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

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

• the fair value of the consideration transferred; plus• the recognised amount of any non-controlling interests in the acquiree; plus• if the business combination is achieved in stages, the fair value of the existing equity interest in the

acquiree; less• the net recognised amount (generally fair value) of the identifiable assets acquired and liabilities

assumed.

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

For each business combination, the Group elects whether it measures the non-controlling interests in the acquiree either at fair value or at the proportionate share of the acquiree’s identifiable net assets at the acquisition date.

Transaction costs, other than those associated with the issue of debt or equity securities, that the Group incurs in connection with a business combination are expensed as incurred.


2. Significant accounting policies (Cont’d)

(a) Basis of consolidation (Cont’d)

(iii) Acquisitions of non-controlling interests

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

(iv) Loss of control

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

(v) Associates

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

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

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

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

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

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

(vi) Non-controlling interests

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

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





(a) Basis of consolidation (Cont’d)

(vii) Transactions eliminated on consolidation

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

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

(b) Foreign currency transactions

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

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

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

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

(c) Financial instruments

(i) Initial recognition and measurement

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

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

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

(ii) Financial instrument categories and subsequent measurement

The Group and the Company categorise financial instruments as follows :

Financial assets

(a) Loans and receivables

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

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

(b) Available-for-sale financial assets

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



(c) Financial instruments (Cont’d)

(ii) Financial instrument categories and subsequent measurement (Cont’d)

Financial assets (Cont’d)

(b) Available-for-sale financial assets (Cont’d)

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

Financial liabilities

All financial liabilities are subsequently measured at amortised cost.

(iii) Financial guarantee contracts

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

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

(iv) Regular way purchase or sale of financial assets

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

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

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

a receivable from the buyer for payment on the trade date.

(v) Derecognition

A financial asset or part of it is derecognised when, and only when the contractual rights to the cash flows from the financial asset expire or the financial asset is transferred to another party without retaining control or substantially all risks and rewards of the asset. On derecognition of a financial asset, the difference between the carrying amount and the sum of the consideration received (including any new asset obtained less any new liability assumed) and any cumulative gain or loss that had been recognised in equity is recognised in profit or loss.

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

(d) Property, plant and equipment

(i) Recognition and measurement

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

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





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

(i) Recognition and measurement (Cont’d)

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

The cost of property, plant and equipment recognised as a result of a business combination is based on fair value at acquisition date. The fair value of property is the estimated amount for which a property could be exchanged between knowledgeable willing parties in an arm’s length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion. The fair value of other items of plant and equipment is based on the quoted market prices for similar items when available and replacement cost when appropriate.

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

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

(ii) Subsequent costs

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

(iii) Depreciation

Depreciation is based on the cost of an asset less its residual value. Significant components of individual assets are assessed, and if a component has a useful life that is different from the remainder of that asset, then that component is depreciated separately. Depreciation is recognised in profit or loss on a straight-line basis over the estimated useful lives of each component of an item of property, plant and equipment. Leased assets are depreciated over the shorter of the lease term and their useful lives unless it is reasonably certain that the Group will obtain ownership by the end of the lease term. Freehold land is not depreciated. Property, plant and equipment under construction are not depreciated until the assets are ready for their intended use.

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

%

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

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

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

(e) Leased assets

(i) Finance lease

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



(e) Leased assets (Cont’d)

(i) Finance lease (Cont’d)

Minimum lease payments made under finance leases are apportioned between the finance expense and the reduction of the outstanding liability. The finance expense is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability. Contingent lease payments are accounted for by revising the minimum lease payments over the remaining term of the lease when the lease adjustment is confirmed.

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

(ii) Operating lease

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

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

(f) Intangible assets

(i) Goodwill

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

(ii) Other intangible assets

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

(iii) Subsequent expenditure

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

(iv) Amortisation

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

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

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

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

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

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





(g) Investment properties

(i) Investment properties carried at cost

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

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

(ii) Reclassification to/from investment properties

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

(iii) Determination of fair value

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

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

(h) Inventories

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

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

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

(i) Non-current assets held for sale

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

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

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

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

(j) Cash and cash equivalents

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



(k) Impairment

(i) Financial assets

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

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

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

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

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

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

(ii) Other assets

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

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

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

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

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





(k) Impairment (Cont’d)

(ii) Other assets (Cont’d)

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

(l) Equity instruments

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

(i) Issue expenses

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

(ii) Ordinary shares

Ordinary shares are classified as equity.

(m) Compound financial instruments

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

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

The liability component of a compound financial instrument is recognised initially at fair value of a similar liability that does not have an equity conversion option. The equity component is recognised initially at the difference between the fair value of the compound financial instrument as a whole and the fair value of the liability component. Any directly attributable transaction costs are allocated to the liability and equity components in proportion to their initial carrying amounts.

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

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

(n) Employee benefits

(i) Short-term employee benefits

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

A liability is recognised for the amount expected to be paid under short term cash bonus or profit-sharing plans if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.

(ii) State plans

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



(o) Provisions

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

(p) Revenue and other income

(i) Goods sold

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

(ii) Rental income

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

(iii) Dividend income

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

(iv) Interest income

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

(q) Borrowing costs

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

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

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

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





(r) Income tax

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

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

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

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

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

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

(s) Earnings per ordinary share

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

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

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

(t) Operating segments

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

(u) Contingent liabilities

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

(v) Discontinued operation

A discontinued operation is a component of the Group’s business that represents a separate major line of business or geographical area of operations that has been disposed of or is held for sale or distribution, or is a subsidiary acquired exclusively with a view to resale. Classification as a discontinued operation occurs upon disposal or when the operation meets the criteria to be classified as held for sale, if earlier. When an operation is classified as a discontinued operation, the comparative statement of profit or loss and other comprehensive income is represented as if the operation had been discontinued from the start of the comparative period.



(w) Fair value measurement

From 1 January 2013, the Group adopted MFRS 13, Fair Value Measurement which prescribed that fair value of an asset or a liability, except for share-based payment and lease transactions, is determined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The measurement assumes that the transaction to sell the asset or transfer the liability takes place either in the principal market or in the absence of a principal market, in the most advantageous market.

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

In accordance with the transitional provision of MFRS 13, the Group applied the new fair value measurement guidance prospectively, and has not provided any comparative fair value information for new disclosures. The adoption of MFRS 13 has not significantly affected the measurements of the Group’s assets or liabilities other than the additional disclosures.



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

Pr

oper

ty, P

lant

and

Equ

ipm

ent

Land RM

Bui

ldin

gs RM

Plan

t and

eq

uipm

ent,

tool

s an

d m

ould

sR

M

Furn

iture

, fit

tings

and

eq

uipm

ent

RM

Mot

orve

hicl

es RM

Ren

ovat

ion

RM

Cap

ital

wor

k-in

-pr

ogre

ss RM

Tota

lR

M

Gro

up

Cos

t

At 1

Jan

uary

201

229

,115

,323

45,8

86,0

2854

,210

,088

4,63

8,20

77,

109,

228

3,59

9,23

12,

924,

968

147,

483,

073

Addi

tions

7,25

0,36

55,

877,

688

3,20

2,47

441

2,68

61,

788,

595

743,

009

26,0

44,4

0945

,319

,226

Acqu

isiti

on o

f a s

ubsi

diar

y-

-10

3,06

1-

237,

859

--

340,

920

Dis

posa

ls-

--

(19,

400)

(283

,000

)-

-(3

02,4

00)

Tran

sfer

to a

sset

s cl

assi

fied

as h

eld

for s

ale

--

(2,9

40,6

26)

(109

,492

)(2

37,8

59)

(11,

875)

-(3

,299

,852

)R

ecla

ssifi

catio

n-

-3,

301,

690

523,

396

-18

9,19

4(4

,014

,280

) -

At 3

1 D

ecem

ber 2

012/

1 Ja

nuar

y 20

1336

,365

,688

51,7

63,7

1657

,876

,687

5,44

5,39

78,

614,

823

4,51

9,55

924

,955

,097

189,

540,

967

Addi

tions

-13

,022

,756

5,97

7,08

358

8,09

249

7,63

723

,796

1,25

9,38

521

,368

,749

Writ

ten

off

--

(62,

655)

--

--

(62,

655)

Tran

sfer

to a

sset

s cl

assi

fied

as h

eld

for s

ale

--

--

--

(2,9

63,3

64)

(2,9

63,3

64)

Rec

lass

ifica

tion

-11

,249

,689

9,90

0,77

4-

--

(21,

150,

463)

-

At 3

1 D

ecem

ber 2

013

36,3

65,6

8876

,036

,161

73,6

91,8

896,

033,

489

9,11

2,46

04,

543,

355

2,10

0,65

520

7,88

3,69

7

Plan

t and

equ

ipm

ent,

tool

s an

d m

ould

s

Incl

uded

in p

lant

and

equ

ipm

ent o

f the

Gro

up is

labo

ur c

osts

cap

italis

ed o

f RM

269,

223

(201

2 : R

M N

il) r

elat

ing

to th

e in

stal

latio

n an

d te

stin

g of

cer

tain

pla

nt a

nd

equi

pmen

t tha

t wer

e co

mpl

eted

as

at 3

1 D

ecem

ber 2

013.



3.

Prop

erty

, Pla

nt a

nd E

quip

men

t (C

ont’d

)

Land RM

Bui

ldin

gs RM

Plan

t and

eq

uipm

ent,

tool

s an

d m

ould

sR

M

Furn

iture

, fit

tings

and

eq

uipm

ent

RM

Mot

orve

hicl

es RM

Ren

ovat

ion

RM

Cap

ital

wor

k-in

-pr

ogre

ss RM

Tota

lR

M

Gro

up

Dep

reci

atio

n

At 1

Jan

uary

201

21,

191,

534

2,62

9,07

011

,759

,413

3,48

9,15

64,

205,

632

1,34

7,22

0-

24,6

22,0

25D

epre

ciat

ion

for t

he y

ear

402,

573

886,

323

4,30

4,10

821

3,74

01,

114,

029

385,

876

-7,

306,

649

Dis

posa

ls-

--

(13,

637)

(283

,000

)-

-(2

96,6

37)

Tran

sfer

to a

sset

s cl

assi

fied

as h

eld

for s

ale

--

(128

,498

)(5

,124

)(4

7,57

2)(5

94)

-(1

81,7

88)

At 3

1 D

ecem

ber 2

012/

1 Ja

nuar

y 20

131,

594,

107

3,51

5,39

315

,935

,023

3,68

4,13

54,

989,

089

1,73

2,50

2-

31,4

50,2

49

Dep

reci

atio

n fo

r the

yea

r45

6,44

81,

458,

855

9,08

9,23

045

2,65

61,

084,

340

229,

938

-12

,771

,467

Writ

ten

off

--

(10,

617)

--

--

(10,

617)

At 3

1 D

ecem

ber 2

013

2,05

0,55

54,

974,

248

25,0

13,6

364,

136,

791

6,07

3,42

91,

962,

440

-44

,211

,099

Car

ryin

g am

ount

s

At 3

1 D

ecem

ber 2

012/

1 Ja

nuar

y 20

1334

,771

,581

48,2

48,3

2341

,941

,664

1,76

1,26

23,

625,

734

2,78

7,05

724

,955

,097

158,

090,

718

At 3

1 D

ecem

ber 2

013

34,3

15,1

3371

,061

,913

48,6

78,2

531,

896,

698

3,03

9,03

12,

580,

915

2,10

0,65

516

3,67

2,59

8



3. Property, Plant and Equipment (Cont’d)

Company

Furniture, fittings and equipment

RM

Motorvehicles

RMTotal

RM

Cost

At 1 January 2012 8,980 - 8,980Additions 17,739 96,000 113,739

At 1 December 2012/1 January 2013 26,719 96,000 122,719Additions 15,029 187,795 202,824

At 31 December 2013 41,748 283,795 325,543

Depreciation

At 1 January 2012 315 - 315Depreciation for the year 6,456 9,600 16,056

At 31 December 2012/1 January 2013 6,771 9,600 16,371Depreciation for the year 9,351 47,416 56,767

At 31 December 2013 16,122 57,016 73,138

Carrying amounts

At 31 December 2012/1 January 2013 19,948 86,400 106,348

At 31 December 2013 25,626 226,779 252,405

3.1 Land - Group

Included in the total carrying amounts of land are :

2013RM

2012RM

Freehold land 15,392,822 15,392,822Leasehold land with unexpired lease of more than 50 years 18,922,311 19,378,759

34,315,133 34,771,581

3.2 Security

The freehold land, leasehold land, buildings, plant and equipment of the Group with an aggregate carrying amount of RM108,073,118 (2012 : RM86,280,145) are charged to banks for loans and borrowings granted to the Group (Note 16).



3. Property, Plant and Equipment (Cont’d)

3.3 Leased Plant and Equipment

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

Group Company2013

RM2012

RM2013

RM2012

RMPlant and equipment, tools and moulds

16,196,079 17,533,426 - -

Motor vehicles 2,570,487 3,462,316 156,801 86,400

18,766,566 20,995,742 156,801 86,400

4. Investment Properties

Shop officeRM

Group

Cost

At 1 January 2012 -Addition 650,000

At 31 December 2012/1 January 2013/31 December 2013 650,000

Depreciation

At 1 January 2012 -Depreciation for the year 3,816

At 31 December 2012/1 January 2013 3,816

Depreciation for the year 7,632

At 31 December 2013 11,448

Group

Carrying amounts


At 31 December 2013 638,552

Estimated fair value


At 31 December 2013 700,000



4. Investment Property (Cont’d)

CompanyLand

RMBuilding

RMTotal

RM

Cost

At 1 January 2012 - - -

Inter-company transfer in 7,796,536 20,203,464 28,000,000

At 31 December 2012/1 January 2013/ 31 December 2013 7,796,536 20,203,464 28,000,000

Depreciation

At 1 January 2012 - - -

Depreciation for the year 96,253 344,179 440,432

At 31 December 2012/1 January 2013 96,253 344,179 440,432

Depreciation for the year 192,477 688,357 880,834

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

Company

Carrying amounts

At 31 December 2012/1 January 2013 7,700,283 19,859,285 27,559,568

At 31 December 2013 7,507,806 19,170,928 26,678,734

Estimated fair value


At 31 December 2013 10,150,000 24,850,000 35,000,000

The fair value of the investment properties was determined based on Directors’ estimate by reference to market information.

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

Group2013

RM2012

RM

Rental income 39,600 38,400Direct operating expenses :

- income generating investment properties 3,806 5,074

Company

Rental income from a subsidiary 1,220,893 702,162Direct operating expenses :

- income generating investment properties 259,559 85,844

Investment properties of the Company amounting to RM26,678,734 (2012 : RM27,559,568) are charged to banks for loans and borrowings granted to the Company (Note 16).



5. Intangible Assets - Group

GoodwillRM

Softwarecosts

RMTotal

RM

Cost

At 1 January 2012 1,055,547 581,436 1,636,983Acquisition of a subsidiary 1,239,446 - 1,239,446Transfer to assets classified as held for sale (1,239,446) - (1,239,446)

At 31 December 2012/1 January 2013/31 December 2013 1,055,547 581,436 1,636,983

Amortisation and impairment loss

At 1 January 2012 825,948 581,436 1,407,384Impairment loss 1,469,045 - 1,469,045Transfer to assets classified as held for sale (1,239,446) - (1,239,446)

At 31 December 2012/1 January 2013/31 December 2013 1,055,547 581,436 1,636,983

Carrying amounts

At 31 December 2012/1 January 2013/31 December 2013 - - -

5.1 Acquisition of a subsidiary

In financial year 2012, the Company acquired 60% equity interests in Buminox Sdn. Bhd. (“Buminox”) for a total cash consideration of RM3,600,000. The acquisition resulted in a goodwill of RM1,239,446 being recognised by the Group. On 31 December 2012, the Company entered into a Share Sale Agreement to dispose of its entire equity interests in Buminox for a total cash consideration of RM1,200,000 and consequently, impaired the goodwill relating to Buminox based on the recoverable amount.

5.2 Impairment testing for cash generating units (“CGU”) containing goodwill

In financial year 2012, the Group impaired the goodwill relating to TG Oriental Steel Sdn. Bhd. of RM229,599.

The recoverable amount of the goodwill was derived using value in use calculations prepared based on the 2013 financial budget and projected revenue growth covering a period of 3 years.

The values assigned to the key assumptions which includes steel price, sales growth and discount rate represented management’s assessment of future trends and are based on both external and internal sources (historical data).

In determining the recoverable amount of the goodwill, the projected cash flows were discounted using a pre-tax discount rate of 12.5%.


6. Investments in subsidiaries - Company

2013RM

2012RM

Unquoted shares, at cost :

At 1 January 141,331,757 75,019,998

Additions 8,500,000 66,311,759Less : Disposals (8,968,570) -

140,863,187 141,331,757

Less : Impairment loss (2,201,000) (2,400,000)

At 31 December 138,662,187 138,931,757

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

Effective ownership interest and voting interest

Name of equity 2013%

2012%

Principal activities

Tatt Giap Hardware Sdn. Bhd. (“TGH”) 100.00 100.00 Importers, wholesalers and retailers of stainless steel products

Tatt Giap Steel Centre Sdn. Bhd. (“TGSC”) (1)

51.00 100.00 Manufacturing and trading of stainless steel and other ferrous and non ferrous metal products

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

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

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

Superinox Max Fittings Industry Sdn. Bhd. (formerly known as Superinox Fittings Industry Sdn. Bhd.)

100.00 100.00 Manufacturing and distribution of SuperinoxTM stainless steel fittings

TGMI Industries Sdn. Bhd. 100.00 100.00 Manufacturing and trading of perforated metal products

Formosa Industries Sdn. Bhd. 100.00 100.00 Dormant

Buminox Sdn. Bhd. (“Buminox”) (2) & (3) - 60.00 Excavation of iron ores

(1) On 1 May 2013, the Company diluted 49% equity interests in TGSC (Note 33)(2) Not audited by KPMG(3) Acquired on 12 January 2012 and of disposed of on 9 March 2013 (Note 33)



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

6.1 Non-controlling interest in a subsidiary

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

2013TGSC

RM

NCI percentage of ownership interest and voting interest 49%

Carrying amount of NCI 17,620,529

Loss allocated to NCI (631,553)

Summarised financial information before intra-group elimination

As at 31 December

Non current assets 34,221,000Current assets 106,805,143Non-current liabilities (1,330,267)Current liabilities (103,735,613)

Net assets 35,960,263

Year ended 31 December

Revenue 130,879,808Loss for the year (2,361,646)Total comprehensive expense (2,353,346)

Cash flows from operating activities 32,815,001Cash flows from investing activities 275,763Cash flows used in financing activities (32,721,729)

Net increase in cash and cash equivalents 369,035

2012Buminox

RM

NCI percentage of ownership interest and voting interest 40%

Carrying amount of NCI 579,961

Loss allocated to NCI (993,743)



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

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

2012Buminox

RMSummarised financial information before intra-group elimination

As at 31 December

Non current assets 3,141,138Current assets 3,847,484Non-current liabilities (5,417,317)Current liabilities (121,404)



Revenue -Loss for the year (2,484,357)Total comprehensive expense (2,484,357)

Cash flows from operating activities 1,688,117Cash flows used in investing activities (1,680,973)Cash flows used in financing activities (16,497)

Net decrease in cash and cash equivalents (9,353)

7. Investment in Associates

Group Company2013

RM2012

RM2013

RM2012

RM

Unquoted shares, at cost 16,685,648 16,685,648 11,983,065 11,983,065Additions 951,010 - 951,010 -Share of post-acquisition reserves (11,619,209) (9,211,926) - -Less : Impairment loss - - (8,500,000) (8,500,000)

6,017,449 7,473,722 4,434,075 3,483,065

The details of the material associates are as follows :

Principal placeEffective ownership interest

and voting interestName of entity of business Principal activities 2013

%2012

%

Nippon EGalv Steel Sdn. Bhd. (“NEG”)

Malaysia Manufacturing of electro-galvanised steel

27.12 27.12



7. Investment in Associates (Cont’d)

Principal placeEffective ownership interest

and voting interestName of entity of business Principal activities 2013

%2012

%

Nisshin Metal Services (M) Sdn. Bhd. (formerly known as Nippon Metal Services (M) Sdn. Bhd.) #

Malaysia Shearing, slitting, polishing and trading of stainless steel

25.00 25.00

Shinsei Superinox Industry Pte Ltd (“Shinsei”)

Singapore Investment holding company 25.00 -

Subsidiary of Shinsei

Shinseisuperinox Industry Sdn. Bhd.

Malaysia Manufacturing of flanges 25.00 -

# Held via Tatt Giap Hardware Sdn. Bhd.

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

NEGRM

2013

Group

Summarised financial information

As at 31 December


21,928,814

Less: Non-Cumulative Redeemable Preference Shares not subscribed by the Company (18,600,000)


NEGRM

Other individual immaterial associates

RMTotal

RM


Loss from continuing operations representing total comprehensive expense (9,328,620)

Included in the total comprehensive expense is :

Revenue 170,919,626




NEGRM


RMTotal

RM

Reconciliation of net assets to carrying amount

As at 31 December

Group’s share of net assets 902,774 2,662,092 3,564,866Gain on remeasurement of retained interest in

associate 2,452,583 - 2,452,583

Carrying amount in the statement of financial position 3,355,357 2,662,092 6,017,449

Group’s share of results


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

2012

Summarised financial information

As at 31 December




Loss from continuing operations representing total comprehensive expense (26,827,643)

Included in the total comprehensive expense is :

Revenue 143,724,356

Reconciliation of net assets to carrying amount

As at 31 December

Group’s share of net assets 3,432,699 1,588,440 5,021,139Gain on remeasurement of retained interest in

associate 2,452,583 - 2,452,583

Carrying amount in the statement of financial position 5,885,282 1,588,440 7,473,722




NEGRM


RMTotal

RM

Group’s share of results


Group’s share of (loss)/profit from continuing operations (7,275,657) 159,591 (7,116,066)

8. Other investments - Group

2013RM

2012RM

Non-current

Available-for-sale financial assets - Quoted shares in Malaysia, at fair value 170,900 134,600

Market value of quoted investments 160,000 133,000

9. Deferred tax assets/(liabilities) - Group

Recognised deferred tax assets/(liabilities)

Deferred tax assets and liabilities (after appropriate offsetting) are attributable to the following :

Assets Liabilities Net2013

RM2012

RM2013

RM2012

RM2013

RM2012

RM

Property, plant andequipment- capital allowance (20,000) - (344,000) (20,000) (364,000) (20,000)- revaluation reserve (79,231) - (6,589,944) (6,589,944) (6,669,175) (6,589,944)

Provisions 150,000 - 103,000 150,000 253,000 150,000

50,769 - (6,830,944) (6,459,944) (6,780,175) (6,459,944)



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

Movements in temporary differences during the year

At1.1.2012

RM

Recognised in profit or loss

(Note 22)RM

At 31.12.2012

/1.1.2013RM


(Note 22)RM

At31.12.2013

RM

Property, plant and equipment - capital allowance 3,076,392 (3,056,392) 20,000 344,000 364,000- revaluation surplus 6,589,944 - 6,589,944 79,231 6,669,175

Unutilised reinvestment allowance (1,063,000) 1,063,000 - - -Provisions (482,956) 332,956 (150,000) (103,000) (253,000)

8,120,380 (1,660,436) 6,459,944 320,231 6,780,175

Unrecognised deferred tax assets - Group

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

2013RM

2012RM

Unutilised tax losses 29,036,000 2,136,000Unabsorbed capital allowance 13,528,000 4,672,000Unutilised reinvestment allowance 432,000 432,000Other temporary differences (18,308,000) (2,540,000)

24,688,000 4,700,000

The unutilised tax losses, unabsorbed capital allowance, unutilised reinvestment allowance and other temporary differences do not expire under current tax legislation. Deferred tax assets have not been recognised in respect of these items because it is not probable that future taxable profits will be available against which the Group entities can utilise the benefits therefrom.

10. Inventories - Group

2013RM

2012RM

Raw materials and consumables 33,552,653 37,847,780Manufactured inventories 34,368,728 49,297,021Trading inventories 17,922,401 20,392,162

85,843,782 107,536,963

The write-down of inventories to net realisable value during the year amounted to RM1,245,071 (2012 : RM141,445) and is included in cost of sales.



11. Trade and other receivables

Group Company

Note2013

RM2012

RM2013

RM2012

RM

Trade

Trade receivables 56,289,398 71,552,004 - -Amount due from associates 11.1 69,420 222,871 - -

56,358,818 71,774,875 - -

Non-trade

Amount due from associates 11.1 228,965 81,492 - -Amount due from subsidiaries 11.1 11,136,337 4,057,391Other receivables 3,013,218 214,200 2,538,869 -Deposits 246,095 180,285 - -Prepayments 11.2 3,367,768 2,129,501 21,843 11,667

6,856,046 2,605,478 13,697,049 4,069,058

63,214,864 74,380,353 13,697,049 4,069,058

11.1 Amounts due from subsidiaries and associates

The trade amount due from associates of the Group is subject to normal trade terms.

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

11.2 Prepayments

Included in prepayments of the Group are payments made for the purchase of the raw materials amounting to RM1,509,352 (2012 : RM170,839).

12. Cash and cash equivalents

Group Company2013

RM2012

RM2013

RM2012

RM

Cash and bank balances 1,280,514 1,119,005 53,585 328,514Fixed deposits with licensed banks 9,948,090 9,655,648 - -

11,228,604 10,774,653 53,585 328,514

The fixed deposits with licensed banks are held in lien for borrowings granted to the Group (Note 16).

Fixed deposits with licensed banks of the Group amounting to RM6,862,887 (2012 : RM6,660,977) are held in trust by certain Directors.



13. Assets and liabilities classified as held for sale - Group

On 29 August 2013, the Company entered into a Sale and Purchase Agreement for the disposal of shoplot with a carrying amount of RM2,963,364 for a cash consideration of approximately RM3,300,000 of which, a deposit equivalentto 10% of the sale consideration has been received. The disposal is expected to be completed in financial year ending 31 December 2014. In previous financial year, the carrying amounts of Buminox Sdn. Bhd. (“Buminox”) were presented as assets and liabilities classified as held for sale following an agreement entered by the Company on 31 December 2012 to dispose of its 60% equity interests in Buminox. The disposal was completed on 9 January 2013.

At 31 December 2012, the assets and liabilities of Buminox are as follows :

Note RM

Assets classified as held for sale

Property, plant and equipment A 1,014,412Inventories 275,874Trade and other receivables 3,566,800Cash and bank balances 4,810

4,861,896

Liabilities classified as held for sale

Trade and other payables 2,702,671Finance lease liabilities 159,225

2,861,896

Note ARM

Property, plant and equipment held for sale comprised the following :Cost 3,299,852Accumulated depreciation (181,788)Impairment loss (2,103,652)

1,014,412

Cumulative income or expense recognised in other comprehensive income

The cumulative income or expense recognised in other comprehensive income relating to Buminox amounted to RM Nil.



14. Share capital - Group/Company

2013 2012Amount

RMNumber of

sharesAmount

RMNumber of

sharesOrdinary shares of RM0.50 each :

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

Issued and fully paid

As at 1 January 51,000,000 102,000,000 51,000,000 102,000,000

Conversion of ICULS to ordinary shares ^ 918,000 1,836,000 - -

As at 31 December 51,918,000 103,836,000 51,000,000 102,000,000

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

15. Reserves

Group Company

Note2013

RM2012

RM2013

RM2012

RM

Non-distributable :

Share premium 15.1 921,680 774,800 921,680 774,800Reverse acquisition reserve 15.2 (53,300,000) (53,300,000) - -Fair value reserve 15.3 (55,500) (63,800) - -Capital reserve- ICULS (equity component) 15.4 27,207,712 28,182,080 27,207,712 28,182,080

(25,226,108) (24,406,920) 28,129,392 28,956,880

Distributable :

Retained earnings 15.5 38,298,246 65,832,562 66,932,167 56,361,777

13,072,138 41,425,642 95,061,559 85,318,657

15.1 Share premium

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

15.2 Reverse acquisition reserve

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




15. Reserves (Cont’d)

15.2 Reverse acquisition reserve (Cont’d)

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

15.3 Fair value reserve

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

15.4 Capital reserve

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

15.5 Retained earnings

The entire retained earnings of the Company is eligible to be paid out as dividends under the single-tier Company income tax system in accordance with The Finance Act, 2007.

16. Loans and borrowings

Group Company

Note2013

RM2012

RM2013

RM2012

RM

Current

Secured

Bank overdrafts 5,942,012 3,788,512 - -Bankers’ acceptances 99,288,000 95,771,000 - -Trust receipts 1,495,096 6,774,519 - -Term loans - variable rate 2,265,029 2,302,488 - -Finance lease liabilities 16.2 3,980,014 3,809,194 28,322 13,125

112,970,151 112,445,713 28,322 13,125

Unsecured

Bank overdrafts 975,447 772,720 - -Bankers’ acceptances 23,599,456 30,652,089 - -Trust receipts 2,322,025 2,892,933 - -ICULS (liability component) 25 562,765 582,920 562,765 582,920

27,459,693 34,900,662 562,765 582,920

140,429,844 147,346,375 591,087 596,045



16. Loans and borrowings (Cont’d)

Group Company

Note2013

RM2012

RM2013

RM2012

RM

Non-current

Secured

Term loans - variable rate 38,528,730 36,814,296 - -Finance lease liabilities 16.2 7,529,654 10,393,032 109,642 -

46,058,384 47,207,328 109,642 -Unsecured

ICULS (liability component) 25 481,257 1,073,607 481,257 1,073,607

46,539,641 48,280,935 590,899 1,073,607

16.1 Securities - Group

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

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

16.2 Finance lease liabilities

Finance lease liabilities are payable as follows :

2013 2012

Futureminimum

leasepayments

RMInterest

RM

Presentvalue of

minimumlease

paymentsRM

Futureminimum

leasepayments

RMInterest

RM

Presentvalue of

minimumlease

paymentsRM

Group

Less than 1 year 4,578,056 598,042 3,980,014 4,597,034 787,840 3,809,194Between 1 and 5 years 8,215,033 685,379 7,529,654 11,422,222 1,064,936 10,357,286 More than 5 years - - - 37,950 2,204 35,746

12,793,089 1,283,421 11,509,668 16,057,206 1,854,980 14,202,226

Company

Less than 1 year 36,120 7,798 28,322 13,910 785 13,125Between 1 and 5 years 120,375 10,733 109,642 - - -

156,495 18,531 137,964 13,910 785 13,125



17. Trade and other payables

Group Company

Note2013

RM2012

RM2013

RM2012

RM

Trade

Trade payables 28,623,120 51,689,490 - -Amount due to related parties 17.1 20,040,265 - - -Amount due to associates 17.1 2,525,266 3,423,585 - -

51,188,651 55,113,075 - -

Non-trade

Amount due to a company which certain Directors have substantial financial interests

17.1 1,035,827 - - -

Amount due to a Director 17.1 1,942,958 - - -

Amount due to subsidiaries 17.2 - - 35,331,818 32,128,189Other payables 17.3 3,454,054 8,249,662 224,632 4,301,772Accruals 1,445,994 4,108,773 60,040 60,040

7,878,833 12,358,435 35,616,490 36,490,001

59,067,484 67,471,510 35,616,490 36,490,001

17.1 Amounts due to related parties and associates

The trade amounts due to related parties and associates are subject to normal trade terms.

The non-trade amounts due to a company in which certain Directors have substantial financial interests and a Director are unsecured, payable on demand and bear interest at a fixed rate of 4% (2012 : Nil) per annum.

17.2 Amount due to subsidiaries

The non-trade amount due to subsidiaries is unsecured, interest-free and payable on demand other than RM32,088,490 (2012 : RM14,824,451) which bears interest at a fixed rate at 4% (2012 : 4%) per annum.

17.3 Other payables

Included in other payables of the Group and of the Company is an amount of RM Nil (2012 : RM2,363,316) being deposits received for the disposal of interests in a subsidiary.



18. Revenue

Group Company2013

RM2012

RM2013

RM2012

RM

Invoiced value of goods sold less discounts and returns

227,607,735 291,168,174 - -

Dividend income from a subsidiary - - - 70,000,000

227,607,735 291,168,174 - 70,000,000

19. Finance costs

Group Company2013

RM2012

RM2013

RM2012

RM

Interest expense on :

Bank overdrafts 363,541 297,933 - -Bankers’ acceptances 5,886,458 5,034,285 - -Trust receipts 428,874 1,643,343 - -Term loans 2,359,082 1,768,664 - -Finance leases liabilities 749,911 560,386 5,070 2,093ICULS (Note 25) 94,007 122,040 94,007 122,040Amount due to subsidiaries - - 955,753 542,649Others 837,902 404,236 - -

10,719,775 9,830,887 1,054,830 666,782

Interest expense recognised on discontinued operation (Note 23) - 8,509 - -

10,719,775 9,839,396 1,054,830 666,782



20. (Loss)/Profit before tax

(Loss)/Profit before tax is arrived at :

Group Company2013

RM2012

RM2013

RM2012

RM

After charging :

Auditors’ remunerationAudit fees

- KPMG Malaysia 120,000 110,000 30,000 30,000- other auditors - 6,300 - -

Non-audit fees- KPMG Malaysia

-Current year 8,000 9,000 8,000 9,000-Prior year (3,000) - (3,000) -

- Local affiliates of KPMG Malaysia 32,900 115,015 2,000 82,000Directors’ remuneration

Directors of the Company- fees 87,500 60,000 87,500 60,000- others 2,692,525 2,727,907 70,000 103,000

Past Director of the Company- fees - 30,000 - 30,000- others 62,508 29,000 62,508 29,000

Other Director- others - 196,129 - -

Depreciation on :- property, plant and equipment 12,771,467 7,306,649 56,767 16,056- investment property 7,632 3,816 880,834 440,432Impairment loss on :

- goodwill - 1,469,045 - -- investment in a subsidiary - - 2,201,000 2,400,000- investment in an associate - - - 8,500,000- plant and equipment - 2,103,652 - -- trade receivables - 443,044 - -

Inventories written down 1,245,071 141,445 - -Rental of premises 142,331 120,887 - -Rental of plant and equipment - 91,600 - -Loss on foreign exchange (net)

- realised 678,491 849,687 - -- unrealised 168,901 - - -

Plant and equipment written off 52,038 - - -



20. (Loss)/Profit before tax (Cont’d)

(Loss)/Profit before tax is arrived at (Cont’d) :

Group Company2013

RM2012

RM2013

RM2012

RM

and after crediting :

Reversal of impairment loss on trade receivables 273,505 167,890 - -

Bad debts recovered 241,000 200,000 - -Dividend income from :

- subsidiaries - - - 70,000,000- other investments 7,180 7,990 - -

Gain on foreign exchange (net)- realised - - 75,627 -

Gain on disposal of :- plant and equipment - 84,137 - -- investment in a subsidiary 2,456,784 - - -

Gain on dilution of interest in a subsidiary - - 14,664,590 -Interest income

- subsidiaries - - 21,170 -- others 494,938 195,874 - -

Rental income from premises 901,621 790,864 1,220,893 702,162

The estimated monetary value of benefits received and receivable by Directors of the Group and of the Company otherwise than in cash amounted to RM112,758 (2012 : RM129,963) and RM6,108 (2012 : RM13,325) respectively.

21. Employee information - Group

2013RM

2012RM

Staff costs 10,435,163 12,715,815Less : Amount capitalised in plant and equipment (269,223) -

10,165,940 12,715,815

Staff costs of the Group include contributions to the Employees’ Provident Fund of RM1,045,428 (2012 : RM1,134,682).


22. Tax expense


Group Company2013

RM2012

RM2013

RM2012

RM

Income tax expense on continuing operations 558,278 (39,672) 88,897 -Share of tax of equity accounted associates (55,540) (43,224) - -

Total tax expense 502,738 (82,896) 88,897 -

Major components of tax expense include :

Current tax expense

- Current year 529,913 467,066 - -- Prior year (291,866) 1,153,698 88,897 -

238,047 1,620,764 88,897 -

Deferred tax expense

- Current year (1,582,832) (2,010,225) - -- Prior year 1,903,063 349,789 - -

320,231 (1,660,436) - -

Share of tax of equity accounted associates (55,540) (43,224) - -

Total tax expense 502,738 (82,896) 88,897 -

Reconciliation of tax expense

(Loss)/Profit for the year (29,946,947) (26,343,216) 10,570,390 58,215,228Total tax expense 502,738 (82,896) 88,897 -

(Loss)/Profit excluding tax (29,444,209) (26,426,112) 10,659,287 58,215,228

Income tax calculated using Malaysian tax rate of 25% (2012 : 25%) (7,361,052) (6,606,528) 2,664,822 14,553,807

Non-deductible expenses 1,491,509 3,351,035 1,115,430 2,946,193Difference in effective tax rate of equity

accounted associates 560,166 1,789,823 - -Income not subject to tax (633,191) (19,575) (3,685,054) (17,500,000)



22. Tax expense (Cont’d)

Reconciliation of tax expense (Cont’d)

Group Company2013

RM2012

RM2013

RM2012

RM

Effect of tax incentive (10,840) (38,072) - -Deferred tax assets not recognised 4,997,000 (1,162,250) - -Reversal of deferred tax assets previously

recognised - 1,063,000 - -Others (152,051) 36,184 (95,198) -

(1,108,459) (1,586,383) - -

Under provision in prior years 1,611,197 1,503,487 88,897 -

502,738 (82,896) 88,897 -

23. Discontinued operation/disposal of a subsidiary

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

The results and cash flows of Buminox were presented as discontinued operation for the financial year ended 31 December 2012 in accordance with MFRS 5 : Non-current Assets Held for Sale and Discontinued Operations to show the discontinued operation separately from continuing operations.

The loss attributable to the discontinued operation is as follows :

2012RM

Results of discontinued operation

Revenue -Cost of sales (1,365,883)

Gross loss (1,365,883)Administrative expenses (1,016,056)Other operating expenses (2,103,652)

Operating loss (4,485,591)Finance costs (8,509)

Results from operating activities, net of tax (4,494,100)Impairment loss on goodwill in discontinued operation (1,239,446)

Loss for the year (5,733,546)




23. Discontinued operation/disposal of a subsidiary (Cont’d)

The loss attributable to the discontinued operation is as follows (Cont’d) :

2012RM

Included in operating loss were :

Directors’ emolumentsDirectors of the Company

- remuneration 275,000Other Director

- remuneration 196,129Depreciation on property, plant and equipment 181,788Rental of premises 20,000Rental of plant and equipment 91,600Impairment loss on plant and equipment 2,103,652Impairment loss on goodwill 1,239,446Staff costs (excluding Directors’ remuneration) 276,408

Staff costs and Directors’ remuneration included contributions to the Employees’ Provident Fund of RM68,142.

The loss from discontinued operation of RM5,733,546 was attributable to :

2012RM

Owners of the Company (4,739,803)Non-controlling interests (993,743)

(5,733,546)

Cash flows used in discontinued operation

Net cash used in operating activities (169,810)Net cash used in investing activities (2,958,932)Net cash used in financing activities (129,796)

Effect on cash flows (3,258,538)



23. Discontinued operation/disposal of a subsidiary (Cont’d)

The disposal which was completed on 9 January 2013 had the following effects on the financial position of the Group (Cont’d) :

2013RM

Property, plant and equipment 1,014,412Inventories 275,874Trade and other receivables 889,977Cash and cash equivalents 4,810Trade and other payables (2,702,671)Loans and borrowings (159,225)Non-controlling interests (579,961)

Net liabilities relieved (1,256,784)

Gain on disposal of investment in a subsidiary 2,456,784

Consideration received, satisfied in cash 1,200,000

Cash and cash equivalents disposed (4,810)

Net cash inflow 1,195,190


NOTES TO THE FINANCIAL STATEMENTS (Cont’d)24

. Lo

ss p

er o

rdin

ary

shar

e - G

roup

Bas

ic lo

ss p

er o

rdin

ary

shar

e

The

calc

ulat

ion

of b

asic

loss

per

ord

inar

y sh

are

for t

he fi

nanc

ial y

ear e

nded

31

Dec

embe

r was

bas

ed o

n th

e lo

ss a

ttrib

utab

le to

ord

inar

y sh

areh

olde

rs a

nd th

e w

eigh

ted

aver

age

num

ber o

f ord

inar

y sh

ares

out

stan

ding

, cal

cula

ted

as fo

llow

s :

2013

2012

Con

tinui

ng

oper

atio

ns RM

Dis

cont

inue

dop

erat

ion

RM

Tota

lR

M

Con

tinui

ng

oper

atio

ns RM

Dis

cont

inue

dop

erat

ion

RM

Tota

lR

M

Loss

for t

he y

ear a

ttrib

utab

le to

ow

ners

(29,

315,

394)

-(2

9,31

5,39

4)(2

6,34

3,21

6)(4

,739

,803

)(3

1,08

3,01

9)

Wei

ghte

d av

erag

e nu

mbe

r of o

rdin

ary

shar

es a

t 31

Dec

embe

r10

2,00

0,00

0-

102,

000,

000

102,

000,

000

102,

000,

000

102,

000,

000

Basi

c lo

ss p

er o

rdin

ary

shar

e (s

en)

(28.

74)

-(2

8.74

)(2

5.83

)(4

.64)

(30.

47)

Dilu

ted

loss

per

ord

inar

y sh

are

The

calc

ulat

ion

of d

ilute

d lo

ss p

er o

rdin

ary

shar

e fo

r the

fina

ncia

l yea

r end

ed 3

1 D

ecem

ber w

as b

ased

on

the

loss

attr

ibut

able

to o

rdin

ary

shar

ehol

ders

and

the

wei

ghte

d av

erag

e nu

mbe

r of o

rdin

ary

shar

es o

utst

andi

ng a

fter a

djus

tmen

t for

the

effe

cts

of a

ll di

lutiv

e po

tent

ial o

rdin

ary

shar

es, c

alcu

late

d as

follo

ws

:

Loss

attr

ibut

able

to o

rdin

ary

shar

ehol

ders

(dilu

ted)

2013

2012

Con

tinui

ng

oper

atio

ns RM

Dis

cont

inue

dop

erat

ion

RM

Tota

lR

M

Con

tinui

ng

oper

atio

ns RM

Dis

cont

inue

dop

erat

ion

RM

Tota

lR

M

Loss

for t

he y

ear a

ttrib

utab

le to

ow

ners

(bas

ic)

(29,

315,

394)

-(2

9,31

5,39

4)(2

6,34

3,21

6)(4

,739

,803

)(3

1,08

3,01

9)

Inte

rest

exp

ense

on

ICU

LS, n

et o

f tax

109,

037

-10

9,03

714

3,60

5-

143,

605

Loss

for t

he y

ear a

ttrib

utab

le to

ow

ners

(dilu

ted)

(29,

206,

357)

-(2

9,20

6,35

7)(2

6,19

9,61

1)(4

,739

,803

)(3

0,93

9,41

4)



24. Loss per ordinary share - Group (Cont’d)

Diluted loss per ordinary share (Cont’d)

Weighted average number of ordinary shares (diluted)

2013 2012

In sharesWeighted average number of ordinary shares (basic) 102,000,000 102,000,000Effect of conversion of ICULS 51,267,448 53,103,448

Weighted average number of ordinary shares (diluted) at 31 December 153,267,448 155,103,448

Diluted loss per ordinary share

from continuing operations (28.74) (25.83)from discontinued operation - (4.64)

The Company has outstanding ICULS to subscribe for new ordinary shares which are not converted at year end. The effect of the assumed conversion of the ICULS on the loss per share is anti-dilutive.

25. Irredeemable Convertible Unsecured Loan Stocks (“ICULS”) - Group/Company

On 4 June 2010, the Company issued RM30,800,000 of RM1.00 nominal value of 5-year 2% ICULS at 100% of its nominal value as part of the purchase consideration for the acquisition of the entire equity interests in Tatt Giap Hardware Sdn. Bhd..

The main features of the ICULS are as follows :

i) The ICULS were issued in multiples of RM1.00 and constituted by a Trust Deed dated 2 June 2010 made between the Company and the Trustee for the holders of the ICULS;

ii) The ICULS are convertible into new ordinary shares of RM0.50 each in the Company at any time after the third anniversary from the date of the issue of the ICULS until the maturity date on 3 June 2015 on the basis of one RM1.00 nominal value ICULS for approximately 1.724 ordinary shares of RM0.50 in the Company;

iii) Upon conversion of the ICULS into new ordinary shares, such shares shall rank pari passu in all respects with the existing issued and paid-up ordinary shares of the Company except that the new shares so allotted shall not be entitled to any dividend, right, allotment and/or other distribution, the entitlement date of which is prior to the date of conversion of the ICULS; and

iv) The interest on the ICULS at the rate of 2% per annum is payable annually in arrears.



25. Irredeemable Convertible Unsecured Loan Stocks (“ICULS”) - Group/Company (Cont’d)

The residual value, after deducting the liability component from the fair value of the instrument as a whole, is attributed to the equity component as follows :

Liability component of

ICULS (Note 16)RM

Equity component of

ICULSRM

TotalRM

At the date of issuance of ICULS- nominal value 2,617,920 28,182,080 30,800,000

At 1 January 2012 2,150,487 28,182,080 30,332,567Interest expense (Note 19) 122,040 - 122,040Interest paid (616,000) - (616,000)


Interest expense (Note 19) 94,007 - 94,007Interest paid (616,000) - (616,000)Conversion of ICULS into ordinary shares (90,512) (974,368) (1,064,880)

At 31 December 2013 1,044,022 27,207,712 28,251,734

The liability component is further analysed as follows :

2013RM

2012RM

Within 1 year 562,765 582,920Between 1 to 5 years 481,257 1,073,607

1,044,022 1,656,527

Interest expense on the ICULS was calculated on the effective yield basis by applying a coupon interest rate of 5.70% which is assumed to be equivalent to the prevailing market interest rate for non-convertible loan stocks at the date of issue.

26. Related parties

Identity of related parties

For the purposes of these financial statements, parties are considered to be related to the Group if the Group or the Company has the ability, directly or indirectly, to control or jointly control the party or exercise significant influence over the party in making financial and operating decisions, or vice versa, or where the Group or the Company and the party are subject to common control or common significant influence. Related parties may be individuals or other entities.

Related parties also include key management personnel defined as those persons having authority and responsibility for planning, directing and controlling the activities of the Group either directly or indirectly. The key management personnel include the Directors of the Group.

The Group has related party relationship with its holding company, significant investors, subsidiaries, associates, key management personnel and companies in which certain Directors have a substantial financial interest.



26. Related parties (Cont’d)

Significant related party transactions

The significant related party transactions of the Group and the Company are shown below. The balances related to the below transactions are shown in Notes 11 and 17.

(i) Subsidiaries

2013RM

2012RM

Company

Subscription of shares in subsidiaries 8,500,000 62,711,759Dividend income - 70,000,000Interest expense 955,753 542,649Interest income 21,170 -Rental income from premises 349,835 335,802Purchase of property, plant and equipment - 28,000,000

(ii) Associates

2013RM

2012RM

Group

Interest expense 25,640 -Sales 338,902 -Purchases 14,975,332 19,835,887Rental income from premises 871,058 732,720Services rendered 16,087 -

Company

Rental income from premises 871,058 366,360Purchase of plant and equipment - 96,000

(iii) Transactions with company in which certain Directors have a financial interest.

2013RM

2012RM

Group

Advances to the Group 1,035,827 -Interest expense 28,746 -



26. Related parties (Cont’d)

Significant related party transactions (Cont’d)

(iv) Transactions with a firm in which a Director is a partner.

2013RM

2012RM

Group

Legal fee 235,176 12,008

(v) Transactions with Directors

There were no transactions with the Directors and key management personnel of the Group other than the remuneration package paid to them (including contributions paid to state plans) and non-cash benefits in accordance with the terms and conditions of their appointment as disclosed in Note 20 to the financial statements and the following :

2013RM

2012RM

Group

Advances to the Group 1,942,958 -Interest expense 32,416 -Rental expense paid 42,000 48,000

27. Operating segments - Group

The Group only has one reportable segment which is principally confined to the manufacturing and trading of stainless steel pipes, tubes and bars, electro-galvanised steel, perforated metal products and other ferrous and non-ferrous metal products. The Group’s Executive Chairman (the chief operating decision maker) reviews internal management reports on the reportable segment on a monthly basis. Accordingly, information by operating segment on the Group’s operations as required by MFRS 8 is not presented.

Geographical segment

In presenting information on the basis of geographical segments, segment revenue is based on the geographical location of customers. Segment assets are based on the geographical location of assets. The amounts of non-current assets do not include financial instruments (including investments in associates) and deferred tax assets.

Geographical information

RevenueRM

Non-current assets

RM

2013

Malaysia 216,550,203 164,482,050Asia (excluding Malaysia) 3,990,515 -United States of America 5,791,272 -Europe 1,275,745 -

227,607,735 164,482,050


27. Operating segments - Group (Cont’d)

Geographical information (Cont’d)

RevenueRM

Non-current assets

RM2012

Malaysia 260,101,029 158,871,502Asia (excluding Malaysia) 7,748,361 -United States of America 21,468,450 -Europe 1,670,407 -Australia 179,927 -

291,168,174 158,871,502

28. Contingent liabilities, unsecured - Company

TheCompany has issued corporate guarantees to banks and financial institutions for borrowings granted to certainsubsidiariesforRM157,556,771(2012:RM157,483,000)ofwhich,RM139,156,723(2012:RM136,689,308)wereutilisedat the end of the reporting date.

The Company has also issued guarantees to suppliers for purchases made by certain subsidiaries amounting to RM16,748,308 (2012: RM12,297,000).

TheCompanyhasundertakentoprovidefinancialsupporttocertainsubsidiariestoenablethesubsidiariestocontinueoperating as a going concern.

29. Capital commitment - Group

2013RM

2012RM

Contractedbutnotprovidedforinthefinancialstatements- Property, plant and equipment 4,404,000 3,482,000

30. Financial instruments

30.1 Categoriesoffinancialinstruments

Thetablebelowprovidesananalysisoffinancialinstrumentscategorisedasfollows:

(a) Loans and receivables (L&R);(b) Available-for-salefinancialassets(AFS);and(c) Financialliabilitiesmeasuredatamortisedcost(FL)

Carrying amount

RML&RRM

AFSRM

2013

Financial assets

Group

Other investments 170,900 - 170,900Trade and other receivables (excluding

prepayments) 59,847,096 59,847,096 -

Cash and cash equivalents 11,228,604 11,228,604 -

71,246,600 71,075,700 170,900



30. Financial instruments (Cont’d)

30.1 Categoriesoffinancialinstruments (Cont’d)

Carrying amount

RML&RRM

AFSRM

Company

Trade and other receivables (excluding prepayments) 13,675,206 13,675,206 -

Cash and cash equivalents 53,585 53,585 -

13,728,791 13,728,791 -

2012

Group

Other investments 134,600 - 134,600Trade and other receivables (excluding

prepayments) 72,250,852 72,250,852 -

Cash and cash equivalents 10,774,653 10,774,653 -

83,160,105 83,025,505 134,600

Company

Trade and other receivables (excluding prepayments) 4,057,391 4,057,391 -

Cash and cash equivalents 328,514 328,514 -

4,385,905 4,385,905 -

Carrying amount

RMFL

RM

2013Financial liabilities

Group

Loansandborrowings 186,969,485 186,969,485Trade and other payables 59,067,484 59,067,484

246,036,969 246,036,969




30.1 Categoriesoffinancialinstruments (Cont’d)

Carrying amount

RMFL

RM

2013

Company


36,798,476 36,798,476

2012

Group


263,098,820 263,098,820

Company


38,159,653 38,159,653

30.2 Netgainsandlossesarisingfromfinancialinstruments

Group Company2013

RM2012

RM2013

RM2012

RM

Net gains/(losses) on :

Available-for-salefinancialassets

- recognised in other comprehensive income/ (expense) 8,300

(16,300) - -

-recognisedinprofitorloss 7,180 7,990 - -

15,480 (8,310) - -Loans and receivables 1,006,337 79,280 21,170 -Financialliabilitiesmeasuredatamortisedcost (11,564,061) (9,839,396) (979,203) (544,742)

(10,542,244) (9,768,426) (958,033) (544,742)




30.3 Financial risk management TheGrouphasexposuretothefollowingrisksfromitsuseoffinancialinstruments:

• Credit risk• Liquidity risk• Market risk

30.4 Credit risk

CreditriskistheriskofafinanciallosstotheGroupifacustomerorcounterpartytoafinancialinstrumentfailstomeet its contractual obligations.

The Group’s exposure to credit risk arises principally from its receivables from customers. The Company’s exposuretocreditriskarisesprincipallyfromadvancestosubsidiariesandfinancialguaranteesgiventobanksforcredit facilities granted to subsidiaries.

Receivables Risk management objectives, policies and processes for managing the risk

Management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis. Normally, credit evaluations are performed on customers requiring credit over a certain amount.

Exposure to credit risk, credit quality and collateral

As at the end of the reporting period, the maximum exposure to credit risk arising from trade receivables is representedbythecarryingamountsinthestatementsoffinancialposition.

Management has taken reasonable steps to ensure that trade receivables that are neither past due nor impaired arestatedat their realisablevalues.Asignificantportionof thesetradereceivablesareregularcustomersthathavebeentransactingwiththeGroup.TheGroupusesageinganalysistomonitorthecreditqualityofthetradereceivables.Anytradereceivableshavingsignificantbalancespastduemorethan90days,whicharedeemedtohave higher credit risk, are monitored individually.

Theexposureofcreditriskfortradereceivablesasattheendofthereportingperiodbygeographicregionwas:

2013RM

2012RM

Group

Domestic 54,347,331 69,583,849Asia (excluding Malaysia) 1,393,258 360,407Europe 618,229 1,282,471United States of America - 548,148

56,358,818 71,774,875




30.4 Credit risk (Cont’d)

Receivables (Cont’d)

Impairment losses

The Group maintains an ageing analysis in respect of trade receivables only. The ageing of trade receivables as attheendofthereportingperiodwas:

GrossRM

Individual impairment

RM

Collective impairment

RMNetRM

Group

31.12.2013

Not past due 27,291,128 - - 27,291,128Past due 1-30 days 15,365,534 - - 15,365,534Past due 31-60 days 8,640,888 - - 8,640,888Past due 61-90 days 2,014,892 - - 2,014,892Past due more than 90 days 3,178,950 (132,574) - 3,046,376

56,491,392 (132,574) - 56,358,818

31.12.2012

Not past due 37,205,297 - - 37,205,297Past due 1-30 days 17,106,975 - - 17,106,975Past due 31-60 days 8,067,736 - - 8,067,736Past due 61-90 days 5,887,722 - - 5,887,722Past due more than 90 days 3,913,224 (406,079) - 3,507,145

72,180,954 (406,079) - 71,774,875 Themovementsintheallowanceforimpairmentlossesoftradereceivablesduringthefinancialyearwere:

Group2013

RM2012

RM

At 1 January 406,079 417,328Impairment loss recognised - 443,044Impairment loss reversed (273,505) (167,890)Impairmentlosswrittenoff - (286,403)

At 31 December 132,574 406,079

Theallowanceaccountinrespectoftradereceivablesisusedtorecordimpairmentlosses.UnlesstheGroupissatisfiedthatrecoveryoftheamountispossible,theamountconsideredirrecoverableiswrittenoffagainstthereceivable directly.




30.4 Credit risk (Cont’d) Inter company balances

Risk management objectives, policies and processes for managing the risk

The Company provides unsecured advances to subsidiaries. The Company monitors the results of the subsidiaries regularly.

As at the end of the reporting period, the maximum exposure to credit risk is represented by their carrying amounts inthestatementsoffinancialposition.

Impairment losses

As at the end of the reporting period, there was no indication that the advances to the subsidiaries are notrecoverable. These advances are not considered overdue and are repayable on demand.

Financial guarantees

Risk management objectives, polices and processes for managing the risk

TheCompanyprovidesunsecuredfinancialguarantees tobanksandsuppliers in respectofbanking facilitiesand trade purchases granted to its subsidiaries. The Company monitors on an ongoing basis the results of the subsidiaries and repayments made by the subsidiaries.


The maximum exposure to credit risk amounted to RM139.2 million (2012 : RM136.7 million) representing the outstanding banking facilities of the subsidiaries as at the end of the reporting period.

Financialguaranteesto tradesuppliers for tradepurchasesmadebysubsidiariesamountedtoRM16.7million(2012 : RM12.3 million) representing the outstanding amount due by subsidiaries as at the end of the reporting period.

Asattheendofthereportingperiod,therewasnoindicationthatanysubsidiarywoulddefaultonrepayment.

Thefairvalueofthefinancialguaranteeshavenotbeenrecognisedsincethefairvalueoninitialrecognitionwasnot material.

Investmentsandotherfinancialassets


InvestmentsareallowedonlyinliquidsecuritiesandonlywithcounterpartiesthathaveacreditratingequaltoorbetterthantheGroup.TheGroup’sinvestmentsinequitiesarenotsignificantattheendofthereportingperiod.


As at the end of the reporting period, the Group has only invested in domestic securities. The maximum exposure tocreditriskisrepresentedbythecarryingamountinthestatementoffinancialposition.

Inviewofthesoundcreditratingofcounterparties,managementdoesnotexpectanycounterpartytofailtomeetits obligations. The Group does not have overdue investments that have not been impaired.

Theinvestmentsandotherfinancialassetsareunsecured.

Impairment losses

TherewerenoimpairmentlossesrecognisedinrespectofinvestmentsandotherfinancialassetsbytheGroup.




30.5 Liquidity risk

LiquidityriskistheriskthattheGroupwillnotbeabletomeetitsfinancialobligationsastheyfalldue.TheGroup’sexposuretoliquidityriskarisesprincipallyfromitsvariouspayables,loansandborrowings.

The Group maintains a level of cash and cash equivalents and bank facilities deemed adequate by the management toensure,asfaraspossible,thatitwillhavesufficientliquiditytomeetitsliabilitieswhentheyfalldue.

It is not expected that the cash flows included in thematurity analysis could occur significantly earlier, or atsignificantlydifferentamounts.

At 31 December 2013, the current liabilities of the Group and of the Company exceeded the current assets by RM34,569,016 and RM22,456,943 respectively.

TheDirectorsareoftheopinionthattheGroup’sbankingfacilitieswillcontinuetobeavailablefromitslendersandthattheGroupwillbeabletogeneratesufficientcashflowsfromitsoperationstomeetitsliabilitiesasandwhentheyfalldue.Subsequenttotheendofthefinancialreportingperiod,theGrouphasalsoundertakenseveralnewbusinessinitiativestoimproveitsworkingcapitalandcashflowposition.




. Fi

nanc

ial i

nstr

umen

ts (C

ont’d

)

30.5

Li

quid

ity R

isk

(Con

t’d)

M

atur

ity a

naly

sis

Thetablebelowsum

marisesthematurityprofileoftheGroup’sandtheCom

pany’sfinancialliabilitiesasattheendofthereportingperiodbasedonundiscounted

cont

ract

ual p

aym

ents

:

Car

ryin

gam

ount RM

Con

trac

tual

inte

rest

rate

s %

Con

trac

tual

cashflow

sR

M

Und

er1

year RM

1-2

year

sR

M

2-5

year

sR

M

Mor

e th

an5

year

sR

M

Gro

up

2013

Non

-der

ivat

ive

finan

cial

liab

ilitie

s

Bank

ove

rdra

fts6,

917,

459

7.60

- 8.

106,

917,

459

6,91

7,45

9-

--

Bank

ers’

acc

epta

nces

122,

887,

456

3.97

- 7.

60

122,

887,

456

122,

887,

456

--

-Te

rm lo

ans

40,7

93,7

594.

40 -

7.85

56,4

41,6

474,

455,

093

5,31

8,39

514

,180

,616

32,4

87,5

43Financeleaseliabilities

11,5

09,6

682.

30 -

4.02

12,7

93,0

894,

578,

056

3,78

0,39

73,

034,

616

1,40

0,02

0Tr

ust r

ecei

pts

3,81

7,12

15.

50 -

9.10

3,81

7,12

13,

817,

121

--

-IC

ULS

(lia

bilit

y co

mpo

nent

)1,

044,

022

2.00

1,18

9,40

459

4,70

259

4,70

2-

-Am

ount

due

to a

Dire

ctor

1,03

5,82

74.

001,

035,

827

1,03

5,82

7-

--

Amountduetoacom

panyinwhichcertain

Directorshavesubstantialfinancialinterests

1,94

2,95

84.

001,

942,

958

1,94

2,95

8-

--

Trad

e an

d ot

her p

ayab

les

56,0

88,6

99-

56,0

88,6

9956

,088

,699

--

-

246,

036,

969

263,

113,

660

202,

317,

371

9,69

3,49

417

,215

,232

33,8

87,5

63



. Fi

nanc

ial i

nstr

umen

ts (C

ont’d

)

30.5

Li

quid

ity R

isk

(Con

t’d)

M

atur

ity a

naly

sis

(Con

t’d)

Car

ryin

gam

ount

RM

Con

tract

ual

inte

rest

rate

s %

Con

tract

ual

cashflow

sR

M

Und

er1

year RM

1-2

year

sR

M

2-5

year

sR

M

Mor

e th

an5

year

sR

M

Gro

up

2012

Non

-der

ivat

ive

finan

cial

liab

ilitie

s

Bank

ove

rdra

fts4,

561,

232

7.55

- 8.

604,

561,

232

4,56

1,23

2-

--

Bank

ers’

acc

epta

nces

126,

423,

089

2.98

- 6.

5612

6,42

3,08

912

6,42

3,08

9-

--

Term

loan

s39

,116

,784

4.40

- 7.

8554

,615

,015

4,47

0,72

04,

391,

289

13,0

29,7

5332

,723

,253

Financeleaseliabilities

14,2

02,2

262.

30 -

4.73

16,0

57,2

064,

597,

034

4,20

4,19

47,

218,

028

37,9

50Tr

ust r

ecei

pts

9,66

7,45

27.

60 -

8.60

9,66

7,45

29,

667,

452

--

-IC

ULS

(lia

bilit

y co

mpo

nent

)1,

656,

527

2.00

1,84

8,00

061

6,00

0 6

16,0

00 6

16,0

00-

Trad

e an

d ot

her p

ayab

les

67,4

71,5

10-

67,4

71,5

1067

,471

,510

--

-

263,

098,

820

280,

643,

504

217,

807,

037

9,21

1,48

320

,863

,781

32,7

61,2

03



. Fi

nanc

ial i

nstr

umen

ts (C

ont’d

)

30.5

Li

quid

ity R

isk

(Con

t’d)

M

atur

ity a

naly

sis

(Con

t’d)

Car

ryin

gam

ount RM

Con

trac

tual

inte

rest

rate

s %

Con

trac

tual

cashflow

sR

M

Und

er1

year RM

1-2

year

sR

M

2-5

year

sR

M

Mor

e th

an5

year

sR

M

Com

pany

Non

-der

ivat

ive

finan

cial

liab

ilitie

s

2013


137,

964

3.30

156,

495

36,1

2036

,120

84,2

55-

ICU

LS (l

iabi

lity

com

pone

nt)

1,04

4,02

22.

001,

189,

404

594,

702

594,

702

--

Oth

er p

ayab

les

3,52

8,00

0-

3,52

8,00

03,

528,

000

--

-Am

ount

due

to a

sub

sidi

ary

32,0

88,4

904.

0032

,088

,490

32,0

88,4

90-

--

36,7

98,4

7636

,962

,389

36,2

47,3

1263

0,82

284

,255

-

2012


13,1

252.

3013

,910

13,9

10-

--

ICU

LS (l

iabi

lity

com

pone

nt)

1,65

6,52

72.

001,

848,

000

616,

000

616,

000

616,

000

-O

ther

pay

able

s21

,665

,550

-21

,665

,550

21,6

65,5

50-

--

Amou

nt d

ue to

a s

ubsi

diar

y14

,824

,451

4.00

14,8

24,4

5114

,824

,451

--

-

38,1

59,6

5338

,351

,911

37,1

19,9

1161

6,00

061

6,00

0-




30.6 Market risk

Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and other prices willaffecttheGroup’sfinancialpositionorcashflows.

30.6.1 Currency risk

The Group is exposed to foreign currency risk on sales and purchases that are denominated in a currency other than the respective functional currency of Group entities. The currencies giving rise to this risk are primarily U.S. Dollar (USD).


It is generally the Group’s practice not to enter into foreign exchange contracts in managing its foreign exchange riskresultingfromcashflowsfromtransactionsdenominatedinforeigncurrencyotherthantocovershorttermpositions.

Exposure to foreign currency risk

TheGroup’sexposuretoforeigncurrency(acurrencywhichisotherthanthefunctionalcurrencyoftheGroupentities)risk,basedoncarryingamountsasattheendofthereportingperiodwas:

Group2013

RM2012

RM

Amount denominated in USD :

Trade and other receivables 2,217,875 2,179,251Trade and other payables (8,280,321) (6,160,747)Cash and cash balances 7,300 3,646

Net exposure (6,055,146) (3,977,850)

Company

Amount denominated in USD :

Cash and cash balances 7,124 -

Currency risk sensitivity analysis

ForeigncurrencyriskarisesfromGroupentitieswhichhaveaRinggitMalaysia(“RM”)currency.

A5%(2012:5%)strengtheningoftheRMagainstthefollowingcurrenciesattheendofthereportingperiodwouldhaveincreased/(decreased)post-taxprofitorlossbytheamountsshownbelow.Thisanalysisassumesthatallother variables, in particular interest rates, remained constant and ignores any impact of forecasted sales and purchases. There is no impact to equity arising from exposure to currency risk.

Group Company2013

RM2012

RM2013

RM2012

RM

Profitorloss

USD 227,068 149,169 (267) - A5%(2012:5%)weakeningofRMagainsttheabovecurrenciesattheendofthereportingperiodwouldhavehad

equalbutoppositeeffectontheabovecurrenciestotheamountsshownabove,onthebasisthatallothervariablesremained constant.




30.6 Market risk (Cont’d)

30.6.2 Interest rate risk

TheGroup’sfixedrateborrowingsareexposedtoariskofchangeintheirfairvalueduetochangesininterestrates.TheGroup’svariablerateborrowingsareexposedtoariskofchangeincashflowsduetochangesininterestrates.Investmentsinequitysecuritiesandshorttermreceivablesandpayablesarenotsignificantlyexposedtointerest rate risk.


TheGroupispresentlyenjoyingmarketinterestrateswhicharereviewedandnegotiatedonayearlybasis.TheGroupmanagestheirinterestrateriskbyhavingacombinationofborrowingswithfixedandfloatingrates.

Exposure to interest rate risk TheinterestrateprofileoftheGroup’sandtheCompany’ssignificantinterest-bearingfinancialinstruments,based

oncarryingamountsasattheendofthereportingperiodwas:

Group2013

RM2012

RM

Fixed rate instruments

Financialassets 9,948,090 9,655,648Financialliabilities (142,237,052) (151,949,294)

(132,288,962) (142,293,646)

Floating rate instruments

Financialliabilities (47,711,218) (43,678,016)

Company

Fixed rate instruments

Financialliabilities (33,270,476) (16,494,103)

Interest rate risk sensitivity analysis

(a) Fair value sensitivity analysis for fixed rate instruments

TheGroupdoesnotaccountforanyfixedratefinancialassetsandliabilitiesatfairvaluethroughprofitorloss.Therefore,achangeininterestratesattheendofthereportingperiodwouldnotaffectprofitorloss.

(b) Cash flow sensitivity analysis for variable rate instruments

A change of 50 basis points (bp) in interest rates at the end of the reporting period would have increased/(decreased)post-taxprofitorlossbytheamountsshownbelow.Thisanalysisassumesthatallothervariables,inparticular foreign currency rates, remained constant.



30.6 Market risk (Cont’d)

30.6.2 Interest rate risk (Cont’d)

Interest rate risk sensitivity analysis (Cont’d)

Profitorloss

Group

50 bpincrease

RM

50bpdecrease

RM

2013

Floatingrateinstruments (178,917) 178,917

2012

Floatingrateinstruments (163,793) 163,793

30.6.3 Other price risk

Equity price risk arises from the Group’s investments in equity securities.


TheGroup’sinvestmentsinequitiesarenotsignificantasattheendofthereportingperiod.

Equity price risk sensitivity analysis

ThemanagementisoftheviewthattheresultsoftheGroupisnotsensitivetowardschangesinequitypriceriskastherearenoequityinvestmentsbeingdesignatedasfairvaluethroughprofitorloss.Changesinequitypriceriskforequityinvestmentsdesignatedasavailable-for-saleisnotsignificanttothetotalequityoftheGroup.

30.7 Fair value information

Thecarryingamountsofcashandcashequivalents,shorttermreceivablesandpayablesandshort-termborrowingsapproximatefairvaluesduetotherelativelyshorttermnatureofthesefinancialinstruments.




. Fi

nanc

ial i

nstr

umen

ts (C

ont’d

)

30.7

Fa

ir va

lue

info

rmat

ion

(Con

t’d)

Thetablebelowanalysesfinancialinstrumentscarriedatfa

irvalueandthosenotcarriedatfa

irvalueforw

hichfa

irvalueisdisclosed,togetherw

ithth

eirfair

valuesandcarryingam

ountsshow

ninthestatem

entsoffinancialposition.

Fairvalueoffinancialinstrum

ents

carr

ied

at fa

ir va

lue

Fairvalueoffinancialinstrum

entsnotcarrie

dat

fair

valu

eTo

tal

fair

valu

eR

M

Car

ryin

g am

ount RM

Leve

l 1 RM

Leve

l 2 RM

Leve

l 3 RM

Tota

lR

MLe

vel 1 RM

Leve

l 2 RM

Leve

l 3 RM

Tota

lR

M

2013

Gro

up

Fina

ncia

l ass

ets

Oth

er in

vest

men

ts16

0,00

0-

-16

0,00

0-

--

-16

0,00

017

0,90

0

Fina

ncia

l lia

bilit

ies

Term

loan

s - v

aria

ble

rate

--

--

--

(40,

794,

000)

(40,

794,

000)

(40,

794,

000)

(40,

793,

759)


--

--

--

(12,

290,

000)

(12,

290,

000)

(12,

290,

000)

(11,

509,

668)

ICU

LS (l

iabi

lity

com

pone

nts)

--

--

--

(1,0

00,0

00)

(1,0

00,0

00)

(1,0

00,0

00)

(1,0

44,0

22)

--

--

--

(54,

084,

000)

(54,

084,

000)

(54,

084,

000)

(53,

347,

449)

Com

pany


--

--

--

(127

,463

)(1

27,4

63)

(127

,463

)(1

37,9

64)

ICU

LS (l

iabi

lity

com

pone

nts)

--

--

--

(1,0

00,0

00)

(1,0

00,0

00)

(1,0

00,0

00)

(1,0

44,0

22)

--

--

--

(1,1

27,4

63)

(1,1

27,4

63)

(1,1

27,4

63)

(1,1

37,9

64)



. Fi

nanc

ial i

nstr

umen

ts (C

ont’d

)

30.7

Fa

ir va

lue

info

rmat

ion

(Con

t’d)

Fairvalueoffinancialinstrumentsnotcarriedatfairvalue

Fairvalueof

financial

inst

rum

ents

no

t car

ried

at

fair

valu

e *

RM

Tota

l fa

ir va

lue

RM

Car

ryin

g am

ount

RM

Leve

l 1 RM

Leve

l 2 RM

Leve

l 3 RM

Tota

lR

M

2012

Gro

up

Financialassets

Oth

er in

vest

men

ts13

3,00

0-

-13

3,00

0-

133,

000

134,

600

Financialliabilities

Term

loan

s - v

aria

ble

rate

-

--

-(3

9,00

0,00

0)(3

9,00

0,00

0)(3

9,11

6,78

4)Financeleaseliabilities

--

--

(13,

840,

000)

(13,

840,

000)

(14,

202,

226)

ICU

LS (l

iabi

lity

com

pone

nts)

--

--

(1,6

60,0

00)

(1,6

60,0

00)

(1,6

56,5

27)

--

--

(54,

500,

000)

(54,

500,

000)

(54,

975,

537)

Com

pany

Financialliabilities


--

--

(13,

000)

(13,

000)

(13,

125)

ICU

LS (l

iabi

lity

com

pone

nts)

--

--

(1,6

60,0

00)

(1,6

60,0

00)

(1,6

56,5

27)

--

--

(1,6

73,0

00)

(1,6

73,0

00)

(1,6

69,6

52)

*

Com

parativefigureshavenotbeenanalysedbylevels,byvirtueoftransitionalprovisiongiveninAppendixC2ofMFR

S13.




30.7 Fair value information (Cont’d)

Policyontransferbetweenlevels

Thefairvalueofanassettobetransferredbetweenlevelsisdeterminedasofthedateoftheeventorchangeincircumstances that caused the transfer.

Level 1 fair value

Level 1 fair value is derived fromquoted price (unadjusted) in activemarkets for identical financial assets orliabilities that the entity can access at the measurement date.

Level 2 fair value

Level2fairvalueisestimatedusinginputsotherthanquotedpricesincludedwithinLevel1thatareobservableforthefinancialassetsorliabilities,eitherdirectlyorindirectly.

Non-derivative financial liabilities

Fairvalue,whichisdeterminedfordisclosurepurposes,iscalculatedbasedonthepresentvalueoffutureprincipalandinterestcashflows,discountedatthemarketrateofinterestattheendofthereportingperiod.Inrespectoftheliability component of convertible notes, the market rate of interest is determined by reference to similar liabilities thatdonothaveaconversionoption.Forotherborrowings,themarketrateofinterestisdeterminedbyreferencetosimilarborrowingarrangements.

TransfersbetweenLevel1andLevel2fairvalues

TherehasbeennotransferbetweenLevel1and2fairvaluesduringthefinancialyear.(2012:notransferineitherdirections).

Level 3 fair value

Level3fairvalueisestimatedusingunobservableinputsforthefinancialassetsandliabilities.Thefairvalueoftheloansandborrowingsiscalculatedusingdiscountedcashflowswherethemarketrateofinterestisdeterminedbyreferencetosimilarborrowingarrangements.

31. Capital Management

TheGroup’sobjectiveswhenmanagingcapitalistomaintainastrongcapitalbaseandsafeguardtheGroup’sabilitytocontinueasagoingconcern,soastomaintaininvestor,creditorandmarketconfidenceandtosustainfuturedevelopmentof the business. At 31 December 2013, the current liabilities of the Group and of the Company exceeded the current assets by RM34,569,016 and RM22,456,943 respectively.

TheDirectorsareoftheopinionthattheGroup’sbankingfacilitieswillcontinuetobeavailablefromitslendersandthattheGroupwillbeabletogeneratesufficientcashflowsfromitsoperationstomeetitsliabilitiesasandwhentheyfalldue.Subsequenttotheendofthefinancialreportingperiod,theGrouphasalsoundertakenseveralnewbusinessinitiativestoimproveitsworkingcapitalandcashflowposition.

TherewerenochangesintheGroup’sapproachtocapitalmanagementduringtheyear.


32. Operating lease - Group/Company

Leases as lessor

The Company sub-leased part of a factory building to an associate for a period of 3 years. The future minimum lease receivableundernon-cancellableleasesareasfollows:

2013

RM2012

RM

Less than one year 468,279 823,058Betweenoneandfiveyears - 468,279

468,279 1,291,337

TheCompanyleasedland,warehouse,officeandfactoryspacetoanassociateunderoperatinglease.Theleaserunsforaninitialperiodof3yearswithanoptiontorenewheleaseupontheexpiryoftheinitialleaseperiod.

33. Significanteventsduringtheyear

1. On 31 December 2012, the Company entered into a Share Sale Agreement to dispose of its entire equity interests in Buminox Sdn. Bhd. for a total cash consideration of RM1,200,000.

Thedisposalwascompletedon9January2013resultinginagainofRM2,456,784beingrecognisedbytheGroup.

2. On 1May 2013, theCompany completed the disposal of 49% equity interests in awholly owned subsidiaryrepresenting 19,600,000 ordinary shares of RM1.00 each in Tatt Giap Steel Centre Sdn. Bhd. to CSGT International Corporation,CSCSteelHoldingsBerhadandHanwaCo.Ltd.foratotalconsiderationofRM20,033,160.




34. Supplementaryinformationonthebreakdownofrealisedandunrealisedprofitsorlosses

ThebreakdownoftheretainedearningsoftheGroupandoftheCompanyasat31December,intorealisedandunrealisedprofits,pursuanttoParagraphs2.06and2.23ofBursaMalaysiaMainMarketListingRequirements,areasfollows:

Group Company

2013RM

2012RM

2013RM

2012RM

Total retained earnings of the Company and its subsidiaries :

- Realised 78,767,912 94,030,560 66,932,167 56,361,777- Unrealised (6,949,076) (6,459,944) - -

71,818,836 87,570,616 66,932,167 56,361,777

Total share of accumulated losses of associates- Realised (8,758,012) (9,610,926) - -- Unrealised (2,861,197) 399,000 - -

60,199,627 78,358,690 66,932,167 56,361,777

Less : Consolidation adjustments (21,901,381) (12,526,128) - -

Total retained earnings at 31 December 38,298,246 65,832,562 66,932,167 56,361,777

ThedeterminationofrealisedandunrealisedprofitsisbasedontheGuidanceofSpecialMatterNo.1,Determination of Realised and Unrealised Profits or Losses in the Context of Disclosures Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, issued by the Malaysian Institute of Accountants on 20 December 2010.


IntheopinionoftheDirectors,thefinancialstatementssetoutonpages31to105aredrawnupinaccordancewithMalaysianFinancialReportingStandards,InternationalFinancialReportingStandardsandtheCompaniesAct,1965inMalaysiasoastogiveatrueandfairviewofthefinancialpositionoftheGroupandoftheCompanyasat31December2013andoftheirfinancialperformanceandcashflowsforthefinancialyearthenended.

IntheopinionoftheDirectors,theinformationsetoutinNote34onpage106tothefinancialstatementshasbeencompiledinaccordancewiththeGuidanceonSpecialMatterNo.1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosures Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, issued by the Malaysian Institute of Accountants, and presented based on the format prescribed by Bursa Malaysia Securities Berhad.

SignedonbehalfoftheBoardofDirectorsinaccordancewitharesolutionoftheDirectors:


Siah Lee Beng

Penang,


STATUTORY DECLARATION Pursuant to Section 169(16) of the Companies Act, 1965

I, Dato’ Siah Kok Poay,theDirectorprimarilyresponsibleforthefinancialmanagementofTattGiapGroupBerhad,dosolemnlyandsincerelydeclarethatthefinancialstatementssetoutonpages31to106are,tothebestofmyknowledgeandbelief,correctand I make this solemn declaration conscientiously believing the same to be true, and by virtue of the provisions of the Statutory Declarations Act, 1960.

SubscribedandsolemnlydeclaredbytheabovenamedatGeorgetownintheStateofPenangon29April2014.


Before me :

Chan Kam Chee (No. P120)Pesuruhjaya Sumpah(Commissioner for Oaths)

STATEMENT BY DIRECTORS Pursuant to Section 169(15) of the Companies Act, 1965


INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF TATT GIAP GROUP BERHAD

Report on the Financial Statements

WehaveauditedthefinancialstatementsofTattGiapGroupBerhad,whichcomprisethestatementsoffinancialpositionasat31December2013oftheGroupandoftheCompany,andthestatementsofprofitorlossandothercomprehensiveincome,changes inequityandcashflowsof theGroupandof theCompany for theyear thenended,andasummaryofsignificantaccounting policies and other explanatory information, as set out on pages 33 to 105.

Directors’ Responsibility for the Financial Statements

TheDirectors of theCompany are responsible for the preparation of financial statements that give a true and fair view inaccordancewithMalaysianFinancialReportingStandards,InternationalFinancialReportingStandardsandtherequirementsof the Companies Act, 1965 in Malaysia. The Directors are also responsible for such internal control as the Directors determine isnecessarytoenablethepreparationoffinancialstatementsthatarefreefrommaterialmisstatement,whetherduetofraudorerror.

Auditors’ Responsibility

Ourresponsibilityistoexpressanopiniononthesefinancialstatementsbasedonouraudit.WeconductedourauditinaccordancewithapprovedstandardsonauditinginMalaysia.Thosestandardsrequirethatwecomplywithethicalrequirementsandplanandperformtheaudittoobtainreasonableassuranceaboutwhetherthefinancialstatementsarefreefrommaterialmisstatement.

Anauditinvolvesperformingprocedurestoobtainauditevidenceabouttheamountsanddisclosuresinthefinancialstatements.Theproceduresselecteddependonourjudgement,includingtheassessmentofrisksofmaterialmisstatementofthefinancialstatements,whetherduetofraudorerror.Inmakingthoseriskassessments,weconsiderinternalcontrolrelevanttotheentity’spreparationoffinancialstatementsthatgiveatrueandfairviewinordertodesignauditproceduresthatareappropriateinthecircumstances, 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 theDirectors,aswellasevaluatingtheoverallpresentationofthefinancialstatements.

Webelievethattheauditevidencewehaveobtainedissufficientandappropriatetoprovideabasisforourauditopinion.

Opinion

Inouropinion,thefinancialstatementsgiveatrueandfairviewofthefinancialpositionoftheGroupandoftheCompanyasof31December2013andoftheirfinancialperformanceandcashflowsfortheyearthenendedinaccordancewithMalaysianFinancialReportingStandards,InternationalFinancialReportingStandardsandtherequirementsoftheCompaniesAct,1965in Malaysia.

Report on Other Legal and Regulatory Requirements

InaccordancewiththerequirementsoftheCompaniesAct,1965inMalaysia,wealsoreportthefollowing:

a) In our opinion, the accounting and other records and the registers required by the Act to be kept by the Company and its subsidiarieshavebeenproperlykeptinaccordancewiththeprovisionsoftheAct.

b) WearesatisfiedthattheaccountsofthesubsidiariesthathavebeenconsolidatedwiththeCompany’sfinancialstatementsareinformandcontentappropriateandproperforthepurposesofthepreparationofthefinancialstatementsoftheGroupandwehavereceivedsatisfactoryinformationandexplanationsrequiredbyusforthosepurposes.

c) Theauditreportsontheaccountsofthesubsidiariesdidnotcontainanyqualificationoranyadversecommentmadeunder Section 174(3) of the Act.


Other Reporting Responsibilities

Ourauditwasmadeforthepurposeofforminganopiniononthefinancialstatementstakenasawhole.TheinformationsetoutinNote34onpage106tothefinancialstatementshasbeencompiledbytheCompanyasrequiredbytheBursaMalaysiaSecuritiesBerhadListingRequirementsand is not requiredby theMalaysianFinancialReportingStandardsor InternationalFinancialReporting Standards. We have extended our audit procedures to report on the process of compilation of such information. In our opinion,theinformationhasbeenproperlycompiled,inallmaterialrespects,inaccordancewiththeGuidanceofSpecialMatterNo. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosures Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, issued by the Malaysian Institute of Accountants and presented based on the format prescribed by Bursa Malaysia Securities Berhad.

Other Matters

ThisreportismadesolelytothemembersoftheCompany,asabody,inaccordancewithSection174oftheCompaniesAct,1965 in Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of this report.

KPMG Ooi Kok SengFirmNumber:AF0758 ApprovalNumber:2432/05/15(J)Chartered Accountants Chartered Accountant


Penang

INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF TATT GIAP GROUP BERHAD (Cont’d)


LIST OF GROUP PROPERTIESFor the Financial Year Ended 31.12.2013

Location & Description

Name of registered

owner/beneficial

owner

Description / Existing Use Tenure

Land / Built-up

area (square

feet)

Audited NBV @

31.12.2013 (RM)

Market value (RM)

/ date of valuation

Date of certificate

offitnessforoccupation

No. 1617 Lorong Perusahaan Maju 6, Prai Industrial Estate IV, 13600 Prai, Penang held under Title No. HS(D) 14941 & 14942, No. PT 2961 & 2960, both Mukim 11, Daerah Seberang Perai Tengah, Pulau Pinang.

TGG / Nil 3-storey officebuilding and annexed single storey factory / Currently used as factory and office

60 years leasehold interest expiring on 6 December 2052

456,134 / 293,520

26,678,734 28,000,000 /

10 April 2012

6-Aug-97

Plot 33, Jalan Perusahaan BukitMinyak,KawasanPerindustrian Bukit Minyak, 14000 Bukit Mertajam, Pulau Pinang, held under Title No. HS(D) 16499, PT 169 Mukim 13, Seberang Prai Tengah, Pulau Pinang.

TGSC / Nil 3-storey officebuilding and annexed single storey factory / Currently used as factory and office

60 years leasehold interest expiring on 26 December 2056

217,801 / 151,040

16,187,699 16,550,000 /

10 April 2012

17-Oct-98

No. 1067, 1068 & 1069, Jalan Bagan Lallang, 13400Butterworth,Pulau Pinang, held under Title No. GM 262, Lot 681, Mukim 16, Daerah Seberang Perai Utara, Pulau Pinang.

TGH / Nil Comprises of 3 units of 2½ storey terrace shopofficeannexed to a single storey warehouse/ Currently used as officebuilding and warehousingpurpose

Freehold 38,115 / 26,764

2,973,609 3,200,000 /

8 January 2008

15-Aug-06

No. 6 Jalan Perusahaan 5,KawasanPerindustrianBeranang, 43700 Semenyih, Selangor, held under Title No. HS(D) 59007, No. PT. 51 Bandar Batu 26, Beranang, Daerah Ulu Langat, Negeri Selangor Darul Ehsan.

TGSC / Nil Double storeyofficeannexed withsinglestorey factory / Currently used as factory andofficebuilding

99 years leasehold interest expiring on 9 October 2099

207,959 / 32,596

6,153,800 5,650,000 /

8 January 2008

23-Mar-98

No. 1237 Jalan Bagan Lallang, Bagan Lallang, 13400Butterworth,heldunder Geran Mukim 261, Lot 679, Mukim 16, Seberang Perai Utara, Pulau Pinang.

TGO / Nil Single storey warehouse/ Currently used for warehousingpurpose

Freehold 47,088 / 16,641

2,016,136 2,031,169 15-Aug-06


LIST OF GROUP PROPERTIES (Cont’d)For the Financial Year Ended 31.12.2013

Location & Description

Name of registered

owner/beneficial

owner

Description / Existing Use Tenure

Land / Built-up

area (square

feet)

Audited NBV @

31.12.2013 (RM)

Market value (RM)

/ date of valuation

Date of certificate

offitnessforoccupation

B2-44, Tingkat 7, Menara Mutiara, Jalan 11, Taman Tun Abdul Razak, 68000 Ampang, Selangor held under Master Title No. PN11796, Lot 4920, Seksyen 2, Mukim Hulu Klang, Daerah Gombak, Selangor Darul Ehsan.

Shah Alam Properties Sdn Bhd /

TGH

1-bedroom apartment / Currently rented

99 years leasehold interest expiring 17 June 2078

N/A / 884 138,996 - 28-May-98

Lot 1628 & 1630, MK12, Tempat Ladang Valdor, Daerah Seberang Perai Selatan, Penang

SPI/Nil 2 storey officebuildingwitha factory building attached & a stand-alone building andanewsingle-storey detached factory / currently used as factory and office

Freehold 549,927 / 152,287

43,439,460 45,000,000 /

4 September2013

26-Jan-07

No. 63, Jalan Sesiku 15/2, Section 15 Shah Alam Selangor Darul Ehsan held under title HS(D) 167366, PT-, Mukim of Damansara District of Petaling, Selangor Darul Ehsan

TGH/Nil 2 storey officebuilding with2unitssingle storey detached warehousesattached & an annexed double storeyofficebuilding/ Currently used as officebuilding and warehousingpurpose

99 years leasehold interest expiring 24 September 2066

8,095 / 8,960

12,471,146 12,200,000 /

27February2012

6-May-03


ANALYSIS OF SHAREHOLDINGS As at 30 April 2014

Share Capital

Authorised Share Capital : RM80,000,000IssuedandFullyPaid-UpCapital : RM51,918,000Class of Share : Ordinary Shares of RM0.50 each fully paidVoting Rights : Onashowofhands-onevoteforeveryshareholder

On a poll - one vote for every ordinary share held

Distribution of Shareholdings as at 30 April 2014

Size of shareholdingsNo. of

Shareholders % No. of Shares %

Less than 100 5 0.54 299 0.00100 - 1000 126 13.67 46,301 0.041,001 - 10,000 434 47.07 2,828,500 2.7210,001 -100,000 292 31.67 9,786,800 9.43100,001 to less than 5% of issued shares 63 6.83 32,833,900 31.625% and above of issued shares 2 0.22 58,340,200 56.19

Total 922 100.00 103,836,000 100.00

Thirty Largest Shareholders as at 30 April 2014

No. Name No. of Shares %

1 GIAPXIN SDN BHD 48,039,001 46.2642 JASA DUNIA SDN. BHD. 10,301,199 9.9213 HANWA CO., LTD. 5,060,000 4.8734 TAN GUAT CHOO 4,173,500 4.0195 LAI YAT GIN 2,921,600 2.8146 HDM NOMINEES (ASING) SDN BHD

DBSVICKERSSECS(S)PTELTDFORNIPPONMETALSERVICES(S)PTELTD1,500,000 1.445

7 HANG LI CONSTRUCTION & RENOVATION SDN. BHD. 1,138,800 1.0978 GEORGE LEE SANG KIAN 1,035,000 0.9979 PHILIP A/L K.O. KUNJAPPY 1,000,000 0.96310 SEE MING HOI 863,000 0.83111 ONG ENG KHOON 735,400 0.70812 GONG LIRU 697,000 0.67113 LIM BONG CHAI 685,000 0.66014 CHEW CHAI HONG 670,000 0.64515 TEOH CHEW SENG 650,000 0.62616 ARICH HOLDINGS INC. 520,000 0.50117 CHEAH CHIN ENG 493,000 0.47518 CHEAH CHIN WOOI 493,000 0.47519 LOOI BIING HUEI 452,000 0.43520 ZAINAL ABIDIN BIN AB RAHMAN 400,000 0.38521 TEOH CHU YANG 390,000 0.37622 PHILIP A/L K.O. KUNJAPPY 344,500 0.332


ANALYSIS OF SHAREHOLDINGS (Cont’d)As at 30 April 2014

Thirty Largest Shareholders as at 30 April 2014 (Cont’d)


23 ONG TECK LOONG 330,000 0.31824 TAY CHIAU CHAI 320,000 0.30825 YEOH CHIN SENG 313,000 0.30126 LIM KOK WEI 310,900 0.29927 WONG NGIE TIEN 310,000 0.29928 WONG JONG WANG 290,000 0.27929 KHIAZH SDN. BHD. 250,000 0.24130 PUBLIC NOMINEES (TEMPATAN) SDN BHD

PLEDGEDSECURITIESACCOUNTFORCHAULAMCHO(E-TWU)250,000 0.241

Total 84,935,900 81.799

Substantial Shareholders as at 30 April 2014

NameDirect Interest Shareholders %

Indirect InterestNo. of Shares %

Dato’ Siah Kok Poay 96 - 48,039,053(a) 46.26Siah Lee Beng - - 48,039,001(b) 46.26Giapxin Sdn Bhd 48,039,001 46.26 - -Jasa Dunia Sdn. Bhd. 10,301,199 9.92 - -Poscon Engineering Sdn. Bhd. - - 10,301,199(c) 9.92Dato’ Hong Yeam Wah - - 10,301,199(c) 9.92Tai Ai Eng - - 10,301,199(c) 9.92

Note: (a) Deemed interested by virtue of holding more than 15% in the shares of Giapxin Sdn Bhd and Sixis Resources Sdn Bhd

pursuanttosection6AoftheCompaniesAct1965(“Act”)(b) Deemed interested by virtue of holding more than 15% in Giapxin Sdn Bhd pursuant to Section 6A of the Act (c) Deemed interested by virtue of holding more than 15% in Jasa Dunia Sdn Bhd pursuant to Section 6A of the Act

Directors’ Shareholdings as at 30 April 2014

NameDirect Interest Shareholders %


The Company

Dato’ Siah Kok Poay 96 - 48,039,053(a) 46.26Siah Lee Beng - - 48,129,001(b) 46.35Tan Lu Eng 52 - - -Siah Chin Pin - - - -Dato’ Rosely bin Samsuri - - - -Loh Eng Wee - - - -FooKeeFatt - - - -Siah Chin Soon, Alternate Director to Siah Lee Beng 100,000 - - -Siah Chin Hoo, Alternate Director to Dato’ Siah Kok Poay - - - -

Note: (a) Deemed interested by virtue of holding more than 15% in the shares of Giapxin Sdn Bhd and Sixis Resources Sdn Bhd

pursuant to section 6A of the Act(b) Held in the name of his child and is deemed interested by virtue of holding more than 15% in Giapxin Sdn Bhd pursuant

to Section 6A of the Act


ANALYSIS OF ICULSAs at 30 April 2014

ICULS

Original ICULS issued : RM30,800,000Nominal/Par value per ICULS : RM1.00 per ICULSCoupon Rate : 2% per annum payable annually in arrearsVoting Rights NoneTotal ICULS holders : 105

Distribution of ICULS holders as at 30 April 2014

Size of ICULS holdingsNo. of ICULS

holders % No. of ICULS %

Less than 100 - 0.00 - -100 - 1000 100 95.24 10,000 0.031,001 - 10,000 - 0.00 - -10,001 -100,000 - 0.00 - -100,001 to less than 5% of issued shares 2 1.90 357,280 1.205% and above of issued shares 3 2.86 29,367,840 98.77

Total 105 100.00 29,735,120 100.00

Thirty Largest ICULS holders as at 30 April 2014

No. Name No. of ICULS %

1 GIAPXIN SDN BHD 18,507,760 62.2422 PERBADANAN NASIONAL BERHAD 9,347,800 31.4373 TAN GUAT CHOO 1,512,280 5.0864 CHEAH CHIN ENG 178,640 0.6015 CHEAH CHIN WOOI 178,640 0.6016 AHMAD BIN AMIN 100 *7 CHAN WEI SENG 100 *8 CHEAH HOOI LEE 100 *9 CHEW KIM KUN 100 *10 CHEW SHAN NEE 100 *11 CHUAH CHOON SIANG 100 *12 CHUNG KIM LIANG 100 *13 CINDY SAM CHIA YUNN 100 *14 FADLIBINRAZMAN 100 *15 FAZILAHBINTISIRAJUDIN 100 *16 FORKOHKHEONG@HORKOHKHEONG 100 *17 TAN HOCK MENG 100 *18 TAN JOO BEE 100 *19 TAN KOK SOON 100 *

20 TAN YONG CHIUN 100 *21 TAY PEH HUA 100 *22 TEH TEONG HENG 100 *


ANALYSIS OF ICULS (Cont’d)As at 30 April 2014

Thirty Largest ICULS holders as at 30 April 2014 (Cont’d)


23 TEOH CHIN KOK 100 *24 TEOH SIEW ENG 100 *25 YAU CHIEW SIONG 100 *26 YEAP BEE CHIN 100 *27 YEOH KHYE HWA 100 *28 YONG SAN CHONG 100 *29 YU LENY 100 *30 ZAIFERIBINMDYUSOFF 100 *

29,727,620 99.967

Note:

* Negligible

Directors’ ICULS holdings as at 30 April 2014

NameDirect Interest No. of Shares %


The Company

Dato’ Siah Kok Poay - - 18,507,760(a) 62.24Siah Lee Beng - - 18,507,860(b) 62.24Tan Lu Eng - - - -Siah Chin Pin 100 - - -Dato’ Rosely bin Samsuri - - - -Loh Eng Wee - - - -FooKeeFatt - - - -Siah Chin Soon, Alternate Director to Siah Lee Beng 100 - - -Siah Chin Hoo, Alternate Director to Dato’ Siah Kok Poay 100 - - -

Note: (a) Deemed interested by virtue of holding more than 15% in Giapxin Sdn Bhd pursuant to Section 6A of the Act(b) Held in the name of his child and is deemed interested by virtue of holding more than 15% in Giapxin Sdn Bhd pursuant

to Section 6A of the Act

THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK

PROXY FORM8th Annual General Meeting

I/We

of

being a member/members of the above Company hereby appoint

of

or failing him,

of

orfailinghim/her,theCHAIRMANOFTHEMEETINGasmy/ourProxytovoteinmy/ourname(s)onmy/ourbehalfattheEighthAnnualGeneralMeetingoftheCompanytobeheldatFunctionHallofTattGiapGroupBerhadat1617LorongPerusahaanMaju6, Prai Industrial Estate IV, 13600 Prai, Penang on Thursday, 26 June 2014 at 11:30 am and at any adjournment thereof in the mannerindicatedbelow:

Ordinary Resolutions For Against1. ToapprovethepaymentofDirectors’feesforfinancialyearended31December2013.2. To re-elect Ms. Tan Lu Eng, Christina as Director of the Company.3. To re-elect Mr. Loh Eng Wee as Director of the Company.4. To re-elect Mr. Siah Chin Pin, Kevin as a Director of the Company.5. To re-appoint Messrs KPMG as Auditors of the Company.6. ToempowertheDirectorstoissueandallotsharesupto10%oftheissuedsharecapital

of the Company.

(Pleaseindicatewithan“X”intheappropriateboxagainsteachResolutionhowyouwishyourproxytovote.Ifnoinstructionisgiven,thisformwillbetakentoauthorisetheproxytovoteathis/herdiscretion.)

Dated this day of 2014

SignatureofShareholder CommonSealtobeaffixedhereif Shareholder is a CorporationNotes:

1. A member may appoint 2 proxies to attend on the same occasion. A proxy may but need not be a Member and the provisions of Section 149(1)(b) of the Companies Act, 1965 shall not apply to the Company. If a Member appoints 2 proxies, the appointments shall be invalid unlesshespecifiestheproportionsofhisholdingstoberepresentedbyeachproxy.

2. WhereamemberoftheCompanyisanauthorisednomineeasdefinedundertheSecuritiesIndustries(CentralDepositories)Act,1991(“SICDA”), itmayappointat leastone(1)proxy in respectofeachsecuritiesaccount itholdswithordinarysharesof theCompanystanding to the credit of the said securities account.

3. WhereamemberoftheCompanyisanexemptauthorisednomineewhichholdordinarysharesintheCompanyformultiplebeneficialownersinone(1)securitiesaccount(“omnibusaccount”),thereshallbenolimittothenumberofproxieswhichtheexemptauthorisednominee may appoint in respect of each omnibus account it holds.

Anexemptauthorisednomineerefers toanauthorisednomineedefinedunderSICDAwhich isexempted fromcompliancewith theprovisions of subsection 25A(1) of SICDA.

4. Theinstrumentappointingaproxyshallbeinwritingunderthehandoftheappointororhisattorneydulyauthorisedinwritingorifsuchappointor is a corporation under its Common Seal or the hand of its attorney.

5. Fortheproxytobevalid,theproxyformdulycompletedmustbedepositedattheCompany’sRegisteredOfficeatSuite16-1(PenthouseUpper), Menara Penang Garden, 42A Jalan Sultan Ahmad Shah, 10050 Penang, not less than forty-eight (48) hours before the time appointed for holding the meeting or any adjournment thereof.

6. Inrespectofdepositedsecurities,onlyadepositorwhosenameappearontheRecordofDepositorson18June2014(GeneralMeetingRecord of Depositors) shall be eligible to attend the meeting or appoint proxies to attend and/or vote his/her behalf.

(FullNameasperNRICandNRICNo./CompanyNo.inBlockLetters)

(FullAddressinBlockLettersandTelNo.)





CDS Account No.No. of Shares Held

(Incorporated in Malaysia)

To

The Company Secretaries Tatt Giap Group Berhad (732294W)Suite 16-1 (Penthouse Upper) Menara Penang Garden 42A, Jalan Sultan Ahmad Shah 10050 Penang

Stamp



Annual Report 2013Bold . Strong . Growth

www.tattgiap.com.my

TATT GIAP GROUP BERHAD (732294-W)

Corporate Headquarters:No. 1617, Lorong Perusahaan Maju 6, Prai Industrial Estate IV,13600 Prai, Penang, Malaysia. Tel: +604-502 1155 Fax: +604-502 1166

Corporate Branch:No.63, Jalan Sesiku 15/2, Seksyen 15,40200, Shah Alam, Selangor Darul Ehsan, Malaysia. Tel: +603-5511 0366Fax: +603-5511 3166 Email: [email protected]

Subsidiary Companies:

TATT GIAP HARDWARE SDN. BHD. (39286-X)Tel: +604-331 0066/+603-5511 0366Fax: +604-331 3066/+603-5511 3166

TATT GIAP STEEL CENTRE SDN. BHD. (310962-X) Tel: +604-507 0033/+603-5512 1566Fax: +604-507 0066/+603-5512 3566

TGMI INDUSTRIES SDN. BHD. (421355-V) Tel: +603-8766 8616Fax: +603-8766 8616

TG ORIENTAL STEEL SDN. BHD. (42683-P) Tel: +604-502 1155Fax: +604-502 1100

SUPERINOX PIPE INDUSTRY SDN. BHD. (712388-D)Tel: +604-582 5511Fax: +604-582 8611

SUPERINOX MAX FITTINGS INDUSTRY SDN. BHD. (405083-T)Tel: +604-582 5511Fax: +604-582 8611

SUPERINOX INTERNATIONAL SDN. BHD. (786945-A)Tel: +604-582 5511Fax: +604-582 8611

Associate Companies:

NIPPON EGALV STEEL SDN. BHD. (721702-W)Tel: +604-502 1155Fax: +604-507 6688

NISSHIN METAL SERVICES (M) SDN. BHD. (434550-M)Tel: +604-507 3823Fax: +604-507 3928

Documents

Bold . Strong . Growth - Tatt Giap Group Berhad · Bold . Strong . Growth ... Berhad and Ideal Sun City Holding Bhd since 2011. ... Corporation Berhad and Padini Holdings Berhad