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CONTENTS CORPORATE INFORMATION …………………………………………………... 1 CORPORATE STRUCTURE .................................................................................... 2 GROUP FINANCIAL HIGHLIGHTS …………………………………………..... 3 CHAIRMAN’S STATEMENT ……………………………………………………... 6 PROFILE OF THE BOARD OF DIRECTORS ……………………………............. 8 AUDIT AND RISK MANAGEMENT COMMITTEE REPORT ……...................... 13 CORPORATE GOVERNANCE STATEMENT ……………………………………. 19 CORPORATE SOCIAL RESPONSIBILITY STATEMENT ..................................... 26 STATEMENT ON RISK MANAGEMENT & INTERNAL CONTROL ..………….. 28 OTHER INFORMATION ........................................................................................... 30 FINANCIAL STATEMENTS

Directors’ Report ………………………………………………………………… 32 Independent Auditors’ Report ………………………........................................... 36 Consolidated Statement of Financial Position ...………………………………… 38 Consolidated Statement of Comprehensive Income ………………….…………. 39 Consolidated Statement of Changes in Equity …..……………………………… 40 Consolidated Statement of Cash Flows .………………………………………… 41 Statement of Financial Position ...……………………………………………….. 43 Statement of Comprehensive Income …………………………………………… 44 Statement of Changes in Equity ………………………………………………… 45 Statement of Cash Flows ………………………………………………………… 46 Notes to the Financial Statements ………………………………………………. 47 Statement by Directors ………………………………………………………….. 124 Statutory Declaration ……………………………………………………………. 125

LIST OF GROUP PROPERTIES ……………………………………………………. 126 ANALYSIS OF SHAREHOLDINGS ……………………………………………….. 128 NOTICE OF ANNUAL GENERAL MEETING ……………………………………. 131 STATEMENT ACCOMPANYING NOTICE OF ANNUAL GENERAL MEETING 136 PROXY FORM ……………………………………………………….………………. Enclosed

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CORPORATE INFORMATION BOARD OF DIRECTORS Mok Yuen Lok (Chairman, Independent Non-Executive Director) Tai Boon Wee (Chief Executive Officer) Wong Ping Kiong (Chief Operating Office) Ismail Bin Mahayudin (Independent Non-Executive Director) Lt Jen (B) Datuk Hj Adenan Bin Hj Mohamad Zain (Non-Independent Non-Executive Director) AUDIT AND RISK MANAGEMENT COMMITTEE Mok Yue Lok (Chairman) Ismail Bin Mahayudin Lt Jen (B) Datuk Hj Adenan Bin Hj Mohamad Zain JOINT NOMINATION AND REMUNERATION COMMITTEE Ismail Bin Mahayudin (Chairman) Mok Yuen Lok

Lt Jen (B) Datuk Hj Adenan Bin Hj Mohamad Zain

COMPANY SECRETARY Foo Siew Loon (MAICSA 7006874) AUDITORS Kreston John & Gan (AF0113) 160-2-1, Kompleks Maluri Business Centre, Jalan Jejaka 55100 Kuala Lumpur Tel: 603-9287 1889 Fax: 603-9283 0889 PRINCIPAL BANKERS AmBank (Malaysia) Berhad Citibank Berhad HSBC Bank Malaysia Berhad CIMB Bank Berhad Maybank Islamic Bank Berhad PRINCIPAL PLACE OF BUSINESS Manufacturing Plant Lot PT 1654 & PT 1657 Nilai Industrial Estate 71800 Nilai Negeri Sembilan Darul Khusus Tel: 606-799 4833 Fax: 606-799 4866 Sales & Marketing / Corporate Office Level 6 A-06-03 Empire Tower 1 Empire Subang Jalan SS16/1 SS16 47500 Subang Jaya Selangor Tel: 603-5632 9981 Fax: 603-5632 9980 Web: http://www.giibworld.com

REGISTERED OFFICE Level 33A, Menara 1 MK, Kompleks 1 Mont’ Kiara No.1, Jalan Kiara, Mont’ Kiara, 50480 Kuala Lumpur SHARE REGISTRAR Symphony Share Register Sdn Bhd Level 6, Symphony House Pusat Dagangan Dana 1 Jalan PJU 1A/46 47301 Petaling Jaya Tel: 603-7841 8000 Fax: 603-7841 8152 STOCK EXCHANGE LISTING Main Market Bursa Malaysia Securities Berhad (“BMSB”)

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CORPORATE STRUCTURE

RUBBER COMPOUNDING

GOODWAY RUBBER INDUSTRIES SDN BHD

GOODWAY RUBBER COMPANY PTY LTD

GOODWAY SUPERCOOL PTY LTD

GOODWAY EUROPE (SWEDEN) A.B.

PT VULKANISIR GOODWAY INDONESIA

GOODWAY SIMPLEX (HK) PTE LIMITED

GOODWAY INTEGRATED INDUSTRIES BERHAD

NANTONG SHIBAKE RUBBER PRODUCTS CO. LTD

TYRE RETREADING

BIG WHEEL GREEN TYRES SDN BHD

BIG WHEEL (MALAYSIA) SDN BHD

BIGWHEEL OTR SDN BHD

RETAILING &WHOLESALE OF NATURAL

RUBBER

GOODWAY SMR SDN BHD

Note: The above structure does not include dormant/non-operating subsidiaries

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GROUP FINANCIAL HIGHLIGHTS

2012 2011 2010 2009Description RM'000 RM'000 RM'000 RM'000

Revenue 285,069 277,941 231,861 193,438 Profit before tax 8,937 7,827 4,639 5,155 Profit for the year 5,415 4,016 5,285 2,488 Profit attributable to shareholders 5,294 3,916 5,565 2,387

Share capital 55,259 55,259 44,208 40,189 Reserves 35,471 31,471 33,253 26,946

Net Equity funds 90,730 86,730 77,461 67,135 Non-controlling interests 779 658 558 721

TOTAL EQUITY 91,509 87,388 78,019 67,856

Long term liabilities 55,203 55,539 62,355 77,736 Current liabilities 103,603 104,566 83,932 63,115

TOTAL EQUITY AND LIABILITIES 250,315 247,493 224,306 208,707

Property, plant and equipment 102,421 101,242 95,465 102,321 Goodwill 6,586 6,586 6,570 6,000 Other non-current assets 1,346 1,485 1,837 3,571 Current assets 139,963 138,180 120,434 96,815

TOTAL ASSETS 250,316 247,493 224,306 208,707

Net assets per share 1.66 1.58 1.76 1.69 Net earnings per share (sen) 4.79 3.54 6.29 2.97

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CHAIRMAN’S STATEMENT Dear Shareholders, On behalf of the Board of Directors, I am pleased to present to you the Annual Report and the Audited Financial Statements of the Company and the Group for the financial year ended 31 December 2012. BUSINESS OVERVIEW The year 2012 was a challenging year for the Group. The global macro economic conditions remained soft which was attributable to uncertainties in global economies, and price fluctuations that affected many industries. Nonetheless, despite the challenging and tough operating global environment, the Group delivered another set of commendable results for the financial year 2012. FINANCIAL PERFORMANCE In the financial year ended 31 December 2012, the Group recorded revenue of RM285.07 million, and profit after tax of RM5.42 million as compared to the preceding year’s revenue of RM277.94 million and profit after tax of RM4.02 million. The Rubber Compounds business recorded revenue of RM226.15 million and profit after tax of RM3.43 million as compared to the preceding year’s revenue of RM237.69 million and profit after tax of RM7.03 million. The lower sales volume in tyre compound had resulted in our Rubber Compounds business recording a lower revenue. The deterioration in margins (due to lower sales) and inflationary cost pressure further affected our bottom line and as a result, the Rubber Compound business recorded a lower profit for the current financial year ended 31 December 2012. The Retreading Services recorded revenue of RM79.30 million compared to RM73.86 million achieved in the previous financial year, a 7% growth, largely driven by domestic sales. Its profit has also increased 2.3 times to RM2.79 million as compared to the preceding year’s profit of RM1.22 million.

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CHAIRMAN’S STATEMENT (CONTINUED) DIVIDEND A final tax exempt dividend of 1.086 sen per ordinary share was declared and paid on 23 July 2012, in respect of the financial year ended 31 December 2011. The Board of Directors is not recommending any dividend payment for the financial year ended 31 December 2012. PROSPECTS FOR THE YEAR AHEAD Though 2013 remains a very challenging year for the Group, the Board and the Management team are cautiously optimistic about the year ahead, with reasonable revenues and profits to be achieved. This view is taken as a result of the efficiency, austerity and back-up initiatives put into place in 2012. With our operating capacity and new initiatives, we are well positioned to meet the challenges of 2013 and remain committed to deliver another year of profit and value growth to shareholders. NOTES OF APPRECIATION On behalf of the board of directors, I would like to thank the management team and all staff for their commitment and dedication, without which the continued success of the Group would not have been possible. Our thanks also go to our valued stakeholders for their continued trust and support in us. Mok Yuen Lok Chairman

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PROFILE OF THE BOARD OF DIRECTORS MOK YUEN LOK Chairman, Independent Non-Executive Director Malaysian, aged 53 Mok Yuen Lok was appointed as an Independent Non-Executive Director on 20 May 2004 and subsequently was appointed as Chairman of the Company on 22 August 2006. He is also the Chairman of the Audit and Risk Management Committee (formerly known as Audit Committee) and a member of the Joint Nomination and Remuneration Committee of the Company. After graduating in 1981 with a Bachelor of Science from Heriot Watt University, Edinburgh, UK, he received an articleship at Messrs Ernst & Whinney (now known as Messrs Ernst & Young) where he qualified 5 years later as a member of the Malaysian Institute of Certified Public Accountants. He has since been involved in the accounting profession for over 18 years as a practicing member of the Malaysian Institute of Accountants. He is now the Country Managing Partner of Crowe Horwath (formerly known as Horwath), an international accounting firm, and is the Regional Executive Director of Crowe Horwath International covering 22 countries in Asia Pacific. His other positions are :

1. Independent Director and Chairman of the Audit & Risk Management Committee of Scomi Marine Berhad;

2. Council Member of Hospis Malaysia, a non-profit of charitable organization;

3. Member of the Young Presidents Organization, Malaysia Chapter and Entrepreneurs’ Organization, Malaysia Chapter.

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PROFILE OF THE BOARD OF DIRECTORS (CONTINUED) TAI BOON WEE Chief Executive Officer Malaysian, aged 53 Tai Boon Wee was appointed Chief Executive Officer and Group Managing Director of the Company on 20 May 2004. He is a member of the ESOS Committee of the Company. He joined Goodway Rubber Industries Sdn Bhd in 1989 as the Marketing Manager overseeing the international market. With his visionary leadership and outstanding performance, he was later appointed as the Operations Director in 1991 and subsequently assumed the position of Managing Director in 1994. He has contributed immensely to the Group’s expansion from 1993 to 2003 by successfully leading a 10 years joint venture project with Gummiwerk Kraiburg Produktions GmbH (“GK”), a German rubber compound entity, involving the transfer of technology know-how for the manufacturing of technical rubber and rubber compounds by GK to the Group. Tai Boon Wee was the chief strategist for the overall market expansion of the Group globally. He was also instrumental in orchestrating the listing of Goodway Integrated Industries Berhad on Bursa Malaysia Securities Berhad in 2004. WONG PING KIONG Chief Operating Officer Malaysian, aged 50 Wong Ping Kiong was appointed as an Executive Director of the Company on 20 May 2004. She begins her career with Goodway group of companies since 1989. Throughout her employment with Goodway, Wong Ping Kiong had demonstrated great leadership and entrepreneurial skill that earned her several senior posts including Managing Director and in early 2008, Chief Operating Officer of the Group. Her immense contribution to the Group was shown through her dedication and sheer commitment in leading the sales and marketing team to greater heights in 2007. She graduated from Oklahoma State University, United States of America with a degree in Bachelor of Science in Business Administration majoring in Accounting and minor in Management Information System.

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PROFILE OF THE BOARD OF DIRECTORS (CONTINUED) ISMAIL BIN MAHAYUDIN Independent Non-Executive Director Malaysian, aged 70 Ismail Bin Mahayudin was appointed as an Independent Non-Executive Director of the Company on 20 May 2004. He is also the Chairman of the Joint Nomination and Remuneration Committee and a member of the Audit and Risk Management Committee (formerly known as Audit Committee) of the Company. Prior to his retirement from the BIMB Holdings Berhad, he was a Management Member of BIMB Holdings Berhad and Senior General Manager, Treasury and International Banking Division of Bank Islam Malaysia Berhad (“BIMB”). He started his career as a teacher in Sekolah Menengah Dato’ Seri Amar Diraja, Muar, Johor, in 1971. He joined Bank Bumiputra Malaysia Berhad in 1975 as Officer in the Trade Finance Department. In 1980, he joined Bank of Commerce Malaysia Berhad as Manager of the Bills Department. He joined BIMB in 1983 as General Manager, Trade Finance and Treasury Division and assumed position as Senior General Manager of the Retail Banking Division in 1994 until 1998. He retired from BIMB in 2002. He graduated from University of Malaya and Malayan Teachers College, Kuala Lumpur. He was the Chairman of BIMB Foreign Currency Clearing Agency Sdn Bhd, Al-Wakalah Nominees (Tempatan) Sdn Bhd and BIMB International Islamic Trust (Labuan) Sdn Bhd. He was also a Director of Syarikat Takaful Malaysia Bhd and Bank Islam (L) Ltd. He is presently Adviser, CIMB Islamic Bank Berhad and a Senior Fellow of Accounting Research Institute (ARI), University Technology Mara, Malaysia.

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PROFILE OF THE BOARD OF DIRECTORS (CONTINUED) LT JEN (B) DATUK HJ ADENAN BIN HAJI MOHAMAD ZAIN Non-Independent Non-Executive Director Malaysian, aged 64 Lt Jen (B) Datuk Hj Adenan Bin Haji Mohamad Zain was appointed as a Non-Independent Non-Executive Director of the Company on 28 October 2005. He received his early education in Penang and graduated from the University of Kent at Canterbury, UK with a Diploma in Politics and International Relations in 1987 and with a Master of Arts Degree in International Relations in 1988. He was awarded a Diploma (PSc) by the Malaysian Armed Forces Staff College (“MAFSC”) and Defence Services Staff College (DSSC) Wellington, India. He was also awarded a Master of Science Degree (MSc) in Defence Studies by University of Madras, India. Lt Jen (B) Datuk Hj Adenan Bin Haji Mohamad Zain served in the Malaysian Armed Forces for 38 years before retiring on 10 November 2004. During his early service in the Armed Forces, he held many important positions such as Directing Staff at the MAFSC and Chief of Staff of an Infantry Division. In the rank of Brigadier General, he was the Director of Training Management at the Training and Doctrine Command (TRADOC) and later as the Commandant of the Malaysian Armed Forces Academy (ATMA). He spent the last five years of his service at the Ministry of Defence in the rank of Major General and Lt General. He held the appointment of Assistant Chief of Staff Defence Planning for four years and finally as the Chief of Staff at the Malaysian Armed Forces Headquarters. For his services to the King and Country, Lt Jen (B) Datuk Hj Adenan was conferred with several awards and Datukship.

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FURTHER INFORMATION ON BOARD OF DIRECTORS Shareholdings Details of Directors’ Shareholdings in the Company are disclosed in page 128 of this Annual Report. Conviction of offences None of the Directors have any convictions of offences within the past 10 years. Conflict of interest None of the Directors have conflict of interest within the Company. None of the Directors have any family relationship with any director and/or major shareholders of the Company save and except for Mr. Tai Boon Wee (“Mr. Tai”), who is related to Massive Structure Sdn Bhd, a major shareholder of the Company. Massive Structure Sdn Bhd is a company incorporated in Malaysia and its shareholders are Madam Goh Gee Thien and Mr. Tai Qi Sheng. Both Madam Goh Gee Thien and Mr. Tai Qi Sheng are related to Mr. Tai Boon Wee as wife and son respectively. Attendance at Board Meetings The numbers of board meetings attended by the Board of Directors of the Company are disclosed in the Corporate Governance Statement in page 20 of the Annual Report.

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AUDIT AND RISK MANAGEMENT COMMITTEE REPORT The Board of Directors of Goodway Integrated Industries Berhad (“the Company”) is pleased to present the Report of the Audit and Risk Management Committee (“ARMC”) for the financial year ended 31 December 2012. The Audit Committee of the Company was established on 20 May 2004. Subsequently on 25 February 2010, the Audit Committee has changed its name to Audit and Risk Management Committee (“ARMC”) and the members remain unchanged. In view of the said change, the ARMC have varied its Terms of Reference to reflect its overall roles and responsibilities. The ARMC comprises the following members :-

Chairman Mok Yuen Lok (Independent Non-Executive Director, a member of MIA) Members Ismail Bin Mahayudin (Independent Non-Executive Director) Lt Jen (B) Datuk Hj Adenan Bin Hj Mohamad Zain (appointed on 15.04.2010) (Non-Independent Non-Executive Director)

1. TERMS OF REFERENCE

1.1 Membership

(a) The Board, pursuant to a Board Resolution, shall appoint the Committee.

(b) It shall comprise at least three (3) members of whom all must be non-executive directors with a majority of them being independent directors.

(c) At least one member of the Committee:

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

ii) if he/she is not a member of the MIA, he/she must have at least three (3)

years’ working experience and;

he/she must have passed the examination specified in Part 1 of the 1st Schedule of the Accountants Act 1967; or

he/she must be a member of one of the associations of accountants specified in part II of the Schedule of the Accountants Act 1967

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AUDIT AND RISK MANAGEMENT COMMITTEE REPORT (CONTINUED)

iii) Fulfills such other requirements as prescribed or approved by Bursa

Malaysia Securities Berhad (“Bursa Securities”)

(d) The Chairman of the Committee shall be an independent non-executive director nominated by the Board and shall be appointed amongst the members.

1.2 Objectives

(a) To provide the Board with an objective and independent review of the financial

performance and the effectiveness of the operational and administrative controls and procedures.

(b) To assist the Board in establishing and maintaining internal controls for areas of risk as well as safeguarding of assets.

(c) To assess and supervise the quality of audit work conducted by the internal and

external auditors.

(d) To reinforce the independence of the company’s external auditor and to ensure that the auditor will have a free reign in the audit process.

(e) To provide a forum for regular, informal and private discussions between the

external auditor, the internal auditors or both excluding the attendance of the other directors and employees of the Company whenever deemed necessary.

(f) To reinforce the objectivity of the internal audit department.

(g) To oversee the Company’s proposed risk programme so that the risk management

framework is consistently adopted throughout the Company and the group.

1.3 Authority

The Board authorizes the Committee: (a) To investigate any activity within the Committee’s term of reference and shall

have unlimited access to both the internal and external auditors, as well as employees of the Group;

(b) To obtain an independent legal or other professional advice as and when it considers necessary;

(c) To establish a Sub-Audit Committee (s) to carry on certain investigations on

behalf of the Committee in such manner, as the Committee shall deem fit and necessary.

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(d) To review the implementation efforts that encompass all risk management activities within the Company. The Committee shall report to the Board and make presentations on the Company’s key risk profile to the Board at least once a year or as and when necessary.

1.4 Functions, Duties and Responsibilities

The functions of the Committee shall be as follows and report the same to the Board: (a) To review with the internal and external auditors their audit plans and reports. (b) To review the scope of the internal audit programmes and procedures and to

consider the results of the internal audit findings. (c) To evaluate the adequacy of the scope, functions, competency and resources of

the internal audit functions and that it has the necessary authority to carry out its work.

(d) To evaluate the adequacy and effectiveness of the internal audit control systems

and accounting policies. (e) The Enterprise Risk Management Department shall report directly to the

Committee with regard to their internal audit function. (f) To review the assistance given by the officers of the Group to the external

auditors. (g) To review the quarterly, annual and consolidated financial statements of the

Company and thereafter to submit the same for Board’s approval, focusing particularly on any changes in accounting policies and practices; significant adjustments arising from the audit; the going concern assumptions; compliance with the accounting standards and other legal requirements.

(h) To review any related party transactions within the Company or Group. (i) To identify and direct any special projects or investigations deemed necessary. (j) To nominate a person or persons as the Company’s external auditors. (k) To carry out such other functions and to consider other topics, as may agreed

upon with the Board.

(l) To recommend the structure and contents of the induction programme for the newly appointed Directors.

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(m) To review, evaluate and/or assess the effectiveness of the Company’s plans,

assumptions, forecasts, projections, including any contingency plan and its strategies implemented within the Group’s overall risk profile.

(n) To advise the Board concerning risk policy matters including but not limited to

oversight of compliance with the group’s risk management policy, review and/or recommend changes to risk policies for Board approval as well as taking corrective action where applicable.

(o) To delegate risk management authorities to the Company’s Enterprise Risk

Management department. (p) To review and confirm that the applicable policies, procedures or manuals for

individual subsidiaries that set forth the operational processes are aligned with the Group’s policy and risk management policy.

(q) To keep the Shareholders, Board and all employees informed of the risk

management plan including its strategy, policy and procedures, and responsibilities.

(r) To report to the Board from time to time on the Group’s risk appetite and

capacity as well as other criteria, which exceeded or triggered the risk tolerance limit.

(s) To keep abreast with current risk management techniques and theories, and any

possible or actual changes in regulatory environment that affects the Group; and (t) To ensure resources (including but not limited to budget, training, human

resources and professional advice), if required, are adequate and has been allocated to support the group’s risk management activities.

1.5 Meetings

The Committee shall meet at least four (4) times a year. The Company’s Head of Finance is usually invited to attend all the meetings. A representative of the external auditors will also be invited to attend the meetings occasionally to consider the final audited financial statements and such other matters determined by the Committee. The Company Secretary shall be the secretary of the Committee.

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During the financial year, the Audit Committee had met five (5) times and details of the attendance of each member in respect of the Audit Committee meetings held are as tabulated below:-

Name Attendance

1. Mok Yuen Lok 5/5 2. Ismail Bin Mahayudin 5/5 3. Lt Jen (B) Datuk Hj Adenan Bin Hj Mohamad Zain

(appointed on 15.04.2010) 5/5

2. SUMMARY OF ACTIVITIES CARRIED OUT BY THE AUDIT COMMITTEE DURING THE FINANCIAL YEAR ENDED 31 DECEMBER 2012

The Audit Committee, in accordance with its Terms of Reference, carried out the following activities during the year under review:-

a. Review of the unaudited quarterly financial results and making suitable

recommendations thereon to the Board for adoption prior to their release to Bursa Securities.

b. Reviewing the external auditor’s report on audit findings and accounting issues

thereon to the Board for adoption prior to their release to Bursa Securities. c. Discussion with external auditors on the impact of new accounting standards issued

by the Malaysian Accounting Standards Board on the Group’s financial statements. d. Discussion with external auditors on the Group Audit Plan which sets out the

auditor’s responsibilities and scope of audit work in respect of the Group’s financial statements.

e. Reviewing letters of engagement presented by the external auditors, which outlines

the terms governing the re-appointment as statutory auditors, reviewing of the Directors’ statement on internal control as well as audit fees before the same is recommended to the Board for approval.

f. Reviewing the internal audit report prepared by the Enterprise Risk Management

(“ERM”) Department and addressed the issues arising from the said report.

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AUDIT AND RISK MANAGEMENT COMMITTEE REPORT (CONTINUED) 3. INTERNAL AUDIT FUNCTION

The internal audit function is carried out by the ERM Department, which shall assist the Audit Committee in discharging its duties and responsibilities. During the financial year under review, the ERM Department had reviewed the adequacy and effectiveness of the policy as well as the standard operating procedure within the Group’s local subsidiaries based on the key risk areas selected from the risk profiles. A summary of the internal audit activities carried out by the ERM department during the financial year under review as follow:

1. Prepared and presented an audit plan, scope of work to the ARMC and the Board for approval;

2. Carried out investigations and special reviews request by management;

3. Ascertained the level of operational and business compliance with established policies and procedures.

As at 31 December 2012, the ERM department managed to perform its responsibilities with independence, proficiency so as to give assurance to the Board on the integrity of its internal control and the reliability of the systems as a whole.

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CORPORATE GOVERNANCE STATEMENT The Board of Directors (“the Board”) is committed in ensuring a high standards of corporate governance are being practiced by the Company and its controlled entities (referred to collectively as the “Group”), as the Board recognizes that by practicing high standards of corporate governance in conducting its business and corporate affairs, the Group would protect and enhance its shareholders’ value and the financial performance of the Group. This Statement on Corporate Governance is made in compliance with Chapter 15, Part E, Paragraph 15.25 of the Main Market Listing Requirements and the Malaysian Code on Corporate Governance 2012 (“the Code”), which sets out the principles and best practices that companies may use in their operations towards achieving the optimal governance framework. The Board is pleased to present the Statement of Corporate Governance for the year ending 31 December 2012 outlining the application of the principal and the best practices of the Code. 1. THE BOARD OF DIRECTORS

1.1 Board Composition and Balance

The Board of Directors presently comprises five (5) members, in particular, the Chairman who is an Independent Non-Executive Director, two (2) Non-Independent Executive Directors, one (1) Non-Independent Non-Executive Director and one (1) Independent Non-Executive Director. This composition of the Board is in compliance with the provisions of the Main Market Listing Requirements to maintain the requisite number of Independent Non-Executive Directors of at least one third of the Board. The diverse entrepreneurial and financial expertise among the Board of Directors will enhance their stewardship in spearheading the Group’s direction towards achieving its goals and objectives.

A brief profile of each Director is presented in the “Board of Directors Profile” section in pages 8 to 12 of this Annual Report

1.2 Duties and Responsibilities of the Board

The Chairman is responsible for running the Board and acts as a facilitator at all Board Meetings and ensure effectiveness of the Board and the Chief Executive Officer will assist the Chairman in monitoring the day-to-day running of the business. The Executive Directors are responsible for making and implementing operational and corporate decisions.

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CORPORATE GOVERNANCE STATEMENT (CONTINUED)

The Non-Executive Directors’ pivotal role is ensuring corporate accountability by providing unbiased and independent views as well as sharing their knowledge and experience towards the corporate decision-making process. In the event that there is a potential conflict of interest, it is a mandatory practice for the director concerned to declare his interest and abstain from any board decisions.

1.3 Board Meetings

The Board meets at least every quarter to review its quarterly performances and discuss on matters specifically reserved to it and also to deliberate on decisions that ensure the direction and control of the Company is well managed. Additional meetings will be called as and when necessary. During the financial year under review, five (5) Board meetings were held and the attendance of the Board members is as follows:

Name Attendance

1. Mok Yuen Lok (Chairman) 5/5 2. Tai Boon Wee 5/5 3. Wong Ping Kiong 5/5 4. Ismail Bin Mahayudin 5/5 5. Lt Jen (B) Datuk Hj Adenan Bin Hj Mohamad Zain 5/5

1.4 Supply of Information to the Board

All Directors are provided with an agenda of the meeting and board papers, which contain updates on operational, financial and corporate developments, prior to the Board meeting. The Board papers were circulated to the Directors in advance to facilitate informed decision making. The Directors are also notified of any corporate announcement released to Bursa Malaysia Securities Berhad (“Bursa Securities”). All Directors have access to all information within the Group as well as advice and services of the Company Secretary who are responsible to the Board for ensuring that all Board procedures are followed and that applicable regulations are complied with. In addition, the Directors may engage external and independent professional advisors, whenever required, at the Company’s expense in order to discharge their duties and responsibilities more effectively.

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CORPORATE GOVERNANCE STATEMENT (CONTINUED)

1.5 Appointment and Re-election of Directors

The appointment of directors is conducted through a formal and transparent process, which was approved and adopted by the Board. The potential candidate will be assessed and reviewed by the Joint Nomination and Remuneration Committee (“JNRC”) prior to the recommendation to the Board for approval and appointment. The Company Secretary ensures that all appointments are properly made for the purposes of meeting statutory obligations, as well as obligations arising from the Listing Requirements of Bursa Securities or other regulatory requirements.

The Company’s Articles of Association governs that one third of the Board for the time being, shall retire from office and be eligible for re-election provided at all times that all Directors shall retire from office once at least in each three (3) years, but shall be eligible for re-election. This provides the opportunity for shareholders to renew their mandate. The Article of Association further governs that the Managing Director or Deputy Managing Director shall, while he continues to hold office, be subject to retirement by rotation. The election of each Director is voted separately. To assist the shareholders in their decision making, sufficient information such as the personal profile, attendance of Board meetings and shareholdings in the Group held by each Director standing for re-election will be furnished in a separate Statement Accompanying the Notice of Annual General Meeting.

Directors who are over seventy years of age are required to submit themselves for re-appointment annually in accordance with Section 129(6) of the Companies Act, 1965. The Board, through the JNRC, annually appraises its composition to ensure it has the required mix of skills, experience and other qualities, including core competencies which are required for them to discharge their duties and responsibilities effectively and efficiently.

1.6 Directors’ Training

All Directors have attended the Mandatory Accreditation Programme as required under the Listing Requirements of Bursa Malaysia. All Directors are mindful that they shall receive appropriate training, which may be required from time to time to keep abreast with current developments of the industry as well as new statutory and regulatory requirements. The Directors will continue to participate in relevant training programmes to further enhance their skills and knowledge and to keep abreast with the relevant changes and development of laws and regulation as well as the business environment.

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CORPORATE GOVERNANCE STATEMENT (CONTINUED) 1.7 Board Committees

The Board had established several Board Committees to assist the Board in carrying out specific responsibilities for the Company, which operate within a clearly defined terms of reference. Notwithstanding the aforesaid, the ultimate responsibility for the final decision lies with the full Board. The various Committees are as below: a. Audit and Risk Management Committee (“ARMC”)

The key responsibilities of the ARMC is to assist the Board in assessing the risks and control environment, overseeing financial reporting, evaluating the internal and external audit process as well as reviewing situations caused by conflict of interest and related party transactions of the Group. Presently, the ARMC members consist of two (2) Independent Non-Executive Directors and one (1) Non-Independent Non-Executive Director. The ARMC Report detailing the objective, term of reference, summary of the ARMC including the summary of activities during the financial year ended 31 December 2012 is as set out on pages 13 to 18 of the ARMC Report in this Annual Report.

b. Joint Nomination and Remuneration Committee

On 12 August 2004, the Board established a Nomination Committee as well as a Remuneration Committee. On 28 February 2009, the Board had decided and approved that both committees be combined and known as Joint Nomination and Remuneration Committee (“JNRC” or “the Committee”) for the purpose of expediency and its members are entrusted with the function of both committees. The members of the JNRC are as follows:

i. Ismail Bin Mahayudin (Chairman) ii. Mok Yuen Lok iii. Lt Jen (B) Datuk Hj Adenan Bin Hj Mohamad Zain

The role of the JNRC is to assess and recommend to the Board, suitable candidates to act as directors of the Company. The Committee carries out annual evaluations on the Board as a whole including individual contribution to ensure that it has the optimal mix of qualifications, skills, experience and other qualities, including core competencies, which they should possess in order to serve the Board effectively and efficiently. In respect of remuneration matters, the JNRC recommends to the Board the remuneration framework for Directors as well as the remuneration packages of Executive Directors, CEO and key management positions such as Chief

232323

CORPORATE GOVERNANCE STATEMENT (CONTINUED) Financial Officer, Chief Operating Officer and Senior General Manager for approval. This is to ensure that the components of the remuneration is linked to performance, responsibility levels and is comparable with market norm. The Committee also formulates and reviews the said remuneration packages with the aim of attracting, retaining and motivating individuals of the highest caliber which are required to manage the business of the Company and uphold shareholders’ interest. During the course of the Board’s deliberation in determining the remuneration packages for the Executive Directors, none of the Executive Directors have participated in the aforesaid deliberation. Further, each Director will abstain from participating in the decision-making of their respective remuneration packages.

2. DIRECTORS’ REMUNERATION

Details of the Directors’ remuneration for the financial year ended 31 December 2012 are as follows:

a. The aggregate remuneration of the Directors, distinguishing between executive and

non-executive directors is categorised below:-

Category of Directors

Fees

RM’000

Remuneration

RM’000

Other emoluments*

RM’000

Total

RM’000 Executive 33 870 203 1,106 Non-Executive 54 0 81 135 87 870 284 1,241

* Other emoluments includes E.P.F

b. The number of Directors remuneration that fall within the following brackets/range are as set out below:-

Bracket / Range (RM) Number of Directors Executive Non-Executive

Below 50,000

-

2

50,001 – 100,000 100,001 – 300,000 300,001 - 600,000

- - 2

--------- 2

=====

1 - -

--------- 3

=====

24

CORPORATE GOVERNANCE STATEMENT (CONTINUED) 3. RELATIONSHIP AND COMMUNICATION WITH SHAREHOLDERS /

INVESTORS

The Group values the importance of an effective communication channel between the Board, shareholders and general public. Press releases and announcements on quarterly financial results and corporate exercises are the primary modes of disseminating information on the Group’s business activities and financial performance to the shareholders and general public. Other corporate information available to shareholders is in the form of Annual Reports and Circulars to Shareholders. The policy of the Board is to maintain an active communication channel with its shareholders with the intention of providing shareholders a clear and complete view of the Group’s performance and direction. The Annual General Meeting (“AGM”) represents the principal forum for dialogue and interaction between the Board and shareholders. During the AGM, shareholders are informed of the current developments of the Company and they will be given an opportunity to seek clarifications or provide feedback and comments to the Directors and Management for consideration.

Bursa Securities allows the Company to electronically publish all its announcements, including quarterly financial result, Circulars to Shareholders and Annual Reports. These can be accessed any time through Bursa Securities’ website, http://www.bursamalaysia.com. The Company also endeavours to provide as much information as possible to its shareholders in compliance with the statutory and legal framework governing the release of material and price-sensitive information. As such, corporate disclosures will take into account the prevailing legislative restrictions and requirements as well as the investors’ need for timely release of price-sensitive information, such as financial performance results and statements, material acquisitions, significant corporate proposals as well as other significant corporate events.

To further enhance the transparency and communication with the shareholders and all interested parties, the Company has set up its website, http://www.giibworld.com for timely dissemination of business related information.

4. ACCOUNTABILITY AND AUDIT

4.1 Financial Reporting

The Directors are responsible to ensure that financial statements are drawn up in accordance with Section 169(15) of the Companies Act, 1965 and applicable approved accounting standards in Malaysia. The Directors are also accountable to ensure that the financial statements reflect true and fair view of the state of affairs of the Company, and the Group.

252525

CORPORATE GOVERNANCE STATEMENT (CONTINUED) The Board is assisted by the Audit and Risk Management Committee to oversee the Group’s financial reporting processes to ensure accuracy, adequacy of all relevant information for disclosure and that necessary steps have been taken to ensure that the Group had used all the applicable accounting policies consistently, and that the policies are supported by reasonable prudent judgments and estimates.

4.2 Risk Management and Internal Control

The Board of Directors has always placed significant emphasis on sound risk management and internal control, which provide reasonable assessment of effective and efficient operations, internal financial controls, and compliance with laws and regulations. The Statement on Internal Control is set out on pages 28 to 29 of the Annual Report.

4.3 Relationship with Auditors

The Board, through the Audit and Risk Management Committee (“ARMC”) has established a formal and transparent relationship with the external auditors, which are maintained on a professional basis. Key features underlying the relationship of the ARMC with the external auditors are included in the ARMC’s term of reference as set out on page 13 to 18 of the Annual Report.

4.5 Compliance Statement

The Company has complied with all the best practices of corporate governance set out in Part 2 of the Code, except for Best Practice AAVII (Nomination of Senior Independent Non-Executive Director) throughout the financial year. Given the current composition of the Board, which reflects the element of independence, the Board does not consider it necessary at this juncture to nominate a Senior Independent Non-Executive Director.

26

CORPORATE SOCIAL RESPONSIBILITY (“CSR”) STATEMENT Goodway’s core business has always been a ‘green’ business that focuses on preserving the environment where its main product of retreads serves as an ideal substitute for worn tyres. Charity to Spastic Children event During the year under review, Goodway had painted the future for special privileged children in our charitable event “A Future for Spastic Children” which was held on 7 July 2012. Spastic Children in simply define as children with cerebral palsy, which is a disorder of movement, posture & etc., appearing in the early years of life. It is due to the damage or failure to develop, normally in small part of the brain controlling these activities. The event was more meaningful with the participation of a designer, Ms Ng Siow Chen, a young talent graduate from Dasien Academy of Art, Malaysia who volunteered to be with part of our Goodway family in conducting wall painting. The event form part of our Corporate Social Responsibility in year 2012.

Road Safety Campaign Being the industry leader that constantly emphasizes on the importance of quality and safety, Goodway pioneered the Road Safety Campaign for truck and bus industry. As we strives to be the most reliable rubber compound and technology provider through innovative effective products and services to our customers, the matter of road safety is essential to our stakeholders on the road. Focusing on the word ‘Patience’ in the main safety message, “One Second of Patience will Save Millions of Regrets”, we further stressed on the importance of following the speed limit and conducting proper tyre maintenance. Goodway offered free vehicle checking; distributed tyre maintenance cards & booklets and safety brochures.

“DRIVE SAFE WITH SUPERCOOL; SO LET’S SUPERCOOL IT”

272727

CORPORATE SOCIAL RESPONSIBILITY (“CSR”) STATEMENT (CONTINUED) Book Reading Competition The Company has been nurturing the good habit of reading a good book and passing it around to be shared with all the employees. Till today, current staffs revisit these books to be inspired with new ideas both for personal and business growth. Our brand of culture still stays true: “Reading is gaining and gaining is growing”. Among books which were circulated were “Practical Management Philosophy (By Konosuke Matsushita)”, “Straight from the guts (By Jack Welsh)” and “How to get from where you are to where you want to be (By Jack Canfield)”.

Health and Safety Campaign The Company had organized a health and safety campaign in July 2012. During the safety campaign month, we had officially opened our own First Aid room in the factory compound. Among the activities held was blood donation, health checks, forklift driving competition and safety exhibition. The Company ensures that its continuous efforts in carrying out its role as a responsible corporate citizen through focused CSR activities is well observed and cultivated within its group of Companies.

28

STATEMENT ON RISK MANAGEMENT & INTERNAL CONTROL INTRODUCTION The Board of Directors (“the Board”) of Goodway Integrated Industries Berhad maintains a sound system of risk management and internal control to safeguard shareholders’ investment and the Group’s assets. In compliance with Paragraph 15.26 (b) of the Main Market Listing Requirements and Practice Note 9 of Bursa Malaysia Securities Berhad (“Bursa Malaysia”), the Board is pleased to set out below the Statement of Risk Management and Internal Control for the Group for financial year ended 31 December 2012. BOARD RESPONSIBILITY The Board recognises the importance of a sound system of internal control and risk management practices and as such affirms its overall responsibility for the Group’s system of internal control by periodically reviewing and evaluating its adequacy and integrity of the systems. Notwithstanding the above, it should be noted that such systems have inherent limitations and these are designed to manage and control rather than eliminate entirely the risks that may impede the Group from achieving its business objectives. As such, the systems of Risk Management and Internal Control can only provide a reasonable but not an absolute assurance against the occurrence of any material misstatements and/or losses. Whilst the Board has overall responsibility for the Group’s system of internal control and risk management, it has delegated the implementation of the system to the Management who regularly report on risks identified and steps taken to mitigate and minimize the risks. These internal control systems are subject to the Board’s regular review so that the Board can monitor the effectiveness of these systems. RISK MANAGEMENT Risk management is set in the Group’s management system. The Board with the assistance of an internal enterprise risk management executive, have established an ongoing processes for identifying, evaluating and managing the significant risks faced by the Group. This Enterprise Risk Management process includes conducting risk profiling and determining key risk areas and its impact including developing an internal audit plan, updating the system of internal controls when there are changes to business environment or regulatory guidelines. The Board also relies on the close involvement of the CEO, COO and few of the top key management staffs in its daily operations. There are periodic reviews of operational and financial performance at Audit and Risk Management Committee Meeting and Board Meetings at least on a quarterly basis. The Board and Management ensure that appropriate measures are taken to address any significant risks.

292929

STATEMENT ON RISK MANAGEMENT & INTERNAL CONTROL (CONTINUED) KEY INTERNAL CONTROL PROCESSES The Group’s system of internal control comprises various policies, procedures and, frameworks, amongst which are: 1. Clear and Structured Organisation Structure The Group has a well-defined structure that sets out clearly the segregation of roles and responsibilities, lines of accountability and level of authorities to ensure effective control at various level of the Group. 2. Policies and Procedures Clear, formalized and documented internal control policies, procedures (including standard operating procedures) are in place to ensure compliance with internal controls and relevant rules and regulations. Regular reviews are carried out to ensure that documentation is current and relevant. 3. Quality Health Safety and Environment The Company and its subsidiaries have adopted an integrated management system that has been certified by SIRIM and TUV as compliant with ISO 9001:2000 (quality management), ISO 14001:2004 (environmental management), OHSAS 18001:2007 (safety management) and MS224 (quality management). The system is subjected to ongoing internal audit programs, as well as annual audit by SIRIM and TUV. Managers who oversee quality, health, safety and environmental issues are to achieve “Zero” accident and an incident free environment where progress is monitored against key performance indicators. Monthly reports on progress are provided to the Head of Operating Units. ASSURANCE The Board will continue to be vigilant and committed in ensuring that the system of internal controls as well as risk management practices is effective and efficient for the Group’s operations. Therefore, the Board will implement appropriate action plans to rectify any material weaknesses identified or further enhance the system of internal controls as and when necessary. There has been an affirmation by the Chief Executive Officer, Chief Operating Officer and Chief Financial Officer in regards to this Statement. REVIEW OF THE STATEMENT As required by Paragraph 15.23 of the Bursa Malaysia Securities Berhad Main Market Listing Requirements, the external auditors have reviewed this Statement on Risk Management and Internal Control. Based on their review, for the financial year under review, the external auditors have reported to the Board that nothing has come to their attention that causes them to believe that this Statement is inconsistent with their understanding of the process the Board has adopted in the review of the adequacy and integrity of internal control of the Group.

30

OTHER INFORMATION MATERIAL CONTRACTS There are no material contracts entered into by the Company and its subsidiaries which involved Directors’ and major shareholders’ interests either still subsisting at the end of the financial year or entered into since the end of the previous financial year. NON-AUDIT FEE There was no non-audit fee paid out or payable to Kreston, John & Gan, the Company’s auditors, during the financial year. SHARE BUY-BACK The Company did not enter into any share buy-back transactions during the financial year. AMERICAN DEPOSITORY RECEIPT (“ADR”) OR GLOBAL DEPOSITORY RECEIPT (“GDR”) PROGRAMME. The Company has not sponsored any ADR or GDR programmes during the financial year. PROFIT GUARANTEE There was no profit guarantee given by the Company during the financial year. IMPOSITIONS OF SANCTIONS AND PENALTIES There were no sanctions and penalties imposed on the Company, its subsidiaries, Directors and management by any regulatory bodies during the financial year. RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING NATURE Details of the recurrent related party transactions of a revenue or trading nature undertaken by the Group during the financial year under review are disclosed in Note 42 of the audited financial statements. OPTIONS, WARRANTS OR CONVERTIBLE SECURITIES There was no exercise of options, warrants or convertible securities exercised/issued during the financial year.

313131

FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2012

32

Goodway Integrated Industries Berhad

3

Directors' Report for the year ended 31st December 2012 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 31st December 2012. Principal activities The Company is principally engaged in investment holding, whilst the principal activities of the subsidiary companies are set out in Note 7 to the financial statements. There have been no significant changes in the nature of these activities during the financial year. Results

Group CompanyRM RM

Profit/(Loss) after taxation attributable to : -Equity holders of the Company 5,293,872 (2,248,338) Non-controlling interests 121,134 -

Profit/(Loss) for the financial year 5,415,006 (2,248,338)

Dividends On 23rd July 2012, the Company paid a final tax exempt dividend of 1.086 sen per ordinary share amounting to RM1,200,222 in respect of the financial year ended 31st December 2011. The directors do not recommend any dividend to be paid for the year under review. Reserves and provisions There were no material transfers to or from reserves or provisions during the financial year other than those as disclosed in the financial statements. Share options No options have been granted by the Company to any parties during the financial year to take up unissued shares of the Company. No shares have been issued during the financial year by virtue of the exercise of any option to take up unissued shares of the Company. At the end of the financial year, there were no unissued shares of the Company under options. Directors of the Company The directors who served since the date of the last report are : - Mok Yuen Lok Ismail Bin Mahayudin Lt. Jen (B) Datuk Hj Adenan Bin Hj Mohamad Zain Tai Boon Wee Wong Ping Kiong

333333


4

Directors' Report for the year ended 31st December 2012 Directors of the Company (Cont’d.) In accordance with Article 79 of the Company’s Articles of Association, Mok Yuen Lok and Ismail Bin Mahayudin retire at the forthcoming Annual General Meeting and being eligible offer themselves for re-election. Directors' interests The interests and deemed interest in the ordinary shares of the Company and of its related corporations of those who are Directors at year end (including the interests of the spouses or children of the Directors) as recorded in the Register of Directors’ Shareholdings are as follows : - Number of ordinary shares of RM0.50 each As at

1/1/2012

Bought

Sold As at

31/12/2012 Direct interests Tai Boon Wee 26,309,860 - - 26,309,860 Wong Ping Kiong 4,567,953 - - 4,567,953 Mok Yuen Lok 125,000 - - 125,000 Ismail Bin Mahayudin 262,875 - - 262,875 Indirect interests Tai Boon Wee 5,562,724 - - 5,562,724 Wong Ping Kiong 180,000 - - 180,000 By virtue of their interests in the shares of the Company, Tai Boon Wee is deemed to have an interest in the shares of the subsidiary companies during the financial year to the extent that Goodway Integrated Industries Berhad has an interest. Save and except as disclosed above, none of the other directors holding office at the end of the financial year held any shares in the Company or in any related corporations during the financial year ended 31st December 2012. Directors’ benefits Since the end of the previous financial year, none of the directors of the Company have received or become entitled to receive a 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) by reason of a contract made by the Company or a related corporation with the director or with a firm of which the director is a member, or with a company in which the director has a substantial financial interest except for any benefits which may be deemed to have arisen by virtue of the significant related party transactions as disclosed in Note 42 to the financial statements. There were no arrangements during and at the end of the financial year, to which the Company or its subsidiary companies is a party, which had the object of enabling the 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.

34


5

Directors' Report for the year ended 31st December 2012 Other statutory information Before the financial statements of the Group and of the Company were made out, the directors took reasonable steps : - i) to ascertain that proper action had been taken in relation to the writing off of bad debts and the

making of allowance for doubtful debts and have satisfied themselves that all known bad debts had been written off and that adequate allowance had been made for doubtful debts; and

ii) to ensure that any current assets which were unlikely to realise their values as shown in the

accounting records in the ordinary course of business had been written down to an amount which 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 allowance 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 Group’s and in the Company’s

financial statements 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 which has arisen since the end of the

financial year which secures the liabilities of any other person; or ii) any contingent liability in respect of the Group or of the Company which has arisen since the end

of the financial year. No contingent liability or other liability has become enforceable, or is likely to become enforceable within the period of twelve months after the end of the financial year which, in the opinion of the directors, will or may substantially affect the ability of the Group and of the Company to meet their obligations as and when they fall due. In the opinion of the directors, the results of the operations of the Group and of the Company for the financial year ended 31st December 2012 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 event subsequent to the reporting date Significant event subsequent to the reporting date is disclosed in Note 39 to the financial statements.

353535

36

Kreston John & Gan Chartered Accountants � AF 0113

160-2-1, Kompleks Maluri

Business Centre, Jalan Jejaka

55100 Kuala Lumpur, Malaysia

Tel No.

Fax No.

: 603-9287 1889

: 603-9283 0889

Email

Website

: [email protected]

: www.kreston.com.my

Independent Auditors' Report to members of Goodway Integrated Industries Berhad (Company No. 618972 - T)

Report on the Financial Statements We have audited the financial statements of Goodway Integrated Industries Berhad, which comprise statements of financial position as at 31

st December 2012 of the Group and of the Company, and statements of comprehensive

income, statements of changes in equity and statements of cash flows of the Group and of the Company for the year then ended, and a summary of significant accounting policies and other explanatory information, as set out on pages 9 to 94.

Directors’ Responsibility for the Financial Statements The directors of the Company are responsible for the preparation of financial statements so as to give a true and fair view in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act 1965 in Malaysia. The directors are also responsible for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

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

Opinion In our opinion, the financial statements give a true and fair view of the financial position of the Group and of the Company as of 31

st December 2012 and of its financial performance and cash flows for the year then ended in

accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act 1965 in Malaysia.

Report on Other Legal and Regulatory Requirements In accordance with the requirements of the Companies Act 1965 in Malaysia, we also report the following : - a) In our opinion, the accounting and other records and the registers required by the Act to be kept by the

Company and its subsidiaries of which we have acted as auditors have been properly kept in accordance with the provisions of the Act.

b) We have considered the financial statements and the auditors’ reports of all the subsidiaries of which we have

not acted as auditors, which are indicated in Note 7 to the financial statements.

7

32 to 123.

373737

38


9

Consolidated Statement of Financial Position 31st December 2012

Note 31.12.2012 31.12.2011 1.1.2011RM RM RM

ASSETS

Non-current AssetsProperty, plant and equipment 5 102,420,972 101,241,892 95,465,132 Intangible assets 6 6,706,507 6,656,648 6,737,087 Investment in associated company 8 196,664 213,221 228,376 Investment in jointly controlled entity 9 1,028,469 1,201,247 1,361,798

110,352,612 109,313,008 103,792,393

Current AssetsInventories 10 49,491,680 52,945,288 46,096,641 Trade receivables 11 61,120,529 60,245,408 46,448,613 Other receivables, deposits and prepayments 12 16,274,560 16,399,109 11,006,854 Tax recoverable 1,539,511 496,410 68,618 Forward contract assets - - 110,228 Deposit with a licensed bank 14 100,000 100,000 100,000 Cash and bank balances 11,436,255 7,993,956 10,706,933

139,962,535 138,180,171 114,537,887 Non-current assets held for sale 15 - - 5,975,603

139,962,535 138,180,171 120,513,490

Total Assets 250,315,147 247,493,179 224,305,883

EQUITY AND LIABILITIES

Equity attributable to ownersShare capital 16 55,258,750 55,258,750 44,207,000 Reserves 17 35,471,073 31,470,817 33,253,677

90,729,823 86,729,567 77,460,677 Non-controlling interests 18 779,198 658,064 557,937

91,509,021 87,387,631 78,018,614

Non-current LiabilitiesDeferred tax liabilities 19 9,994,720 8,711,010 5,981,000 Borrowings 20 45,208,144 46,827,675 56,373,704

55,202,864 55,538,685 62,354,704

Current LiabilitiesTrade payables 25 21,948,693 30,061,922 13,085,579 Other payables and accruals 26 13,769,776 9,001,867 8,952,162 Forward contract liabilities - - 85,650 Borrowings 20 67,390,754 63,987,932 61,081,925 Current tax liabilities 494,039 1,515,142 727,249

103,603,262 104,566,863 83,932,565

Total Liabilities 158,806,126 160,105,548 146,287,269

Total Equity and Liabilities 250,315,147 247,493,179 224,305,883

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

393939


10

Consolidated Statement of Comprehensive Income for the year ended 31st December 2012

Note 2012 2011RM RM

Revenue 27 285,069,113 277,940,311 Cost of sales (234,914,120) (234,451,847)

Gross profit 50,154,993 43,488,464

Other income 28 1,019,080 4,521,571 Distribution costs (18,720,148) (17,876,561) Administrative expenses (11,062,623) (9,770,716) Other expenses (6,172,033) (4,318,567)

15,219,269 16,044,191

Finance costs (6,092,830) (8,041,155)

Profit from operations 9,126,439 8,003,036

Share of results of associated company (16,556) (15,156) Share of results of jointly controlled entity (172,778) (160,552)

Profit before taxation 29 8,937,105 7,827,328

Income tax expense 32 (3,522,099) (3,811,187)

Profit for the year 5,415,006 4,016,141

Other comprehensive incomeRevaluation surplus, net of deferred tax - 6,708,729 Exchange difference on translation of foreign operations (93,394) (446,853) Interest expense for financial liability at fair value - (909,000)

(93,394) 5,352,876

Total comprehensive income for the year 5,321,612 9,369,017

Profit for the year attributable to :-

Equity holders of the Company 5,293,872 3,916,014 Non-controlling interests 121,134 100,127

5,415,006 4,016,141

Total comprehensive income for the year attributable to :-

Equity holders of the Company 5,200,478 9,268,890 Non-controlling interests 121,134 100,127

5,321,612 9,369,017

Basic earnings per share (sen) 33 4.79 3.54


40

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Consolidated Statement of Cash Flows for the year ended 31st December 2012

Note 2012 2011RM RM

Cash flows from operating activities

Profit before taxation 8,937,105 7,827,329

Adjustments for : -

Amortisation of intangible assets 82,303 57,096 Bad debts recovered - (46,095) Bad debts written off 389,245 -Depreciation 6,532,220 6,727,941 Gain on disposal of property, plant and equipment (99,924) (2,642,750) Gain on foreign exchange - unrealised (68,362) (550,351) Impairment loss on obsolete inventories 744,173 189,788 Impairment loss on trade receivables 579,325 374,600 Interest expense 5,424,666 7,692,455 Interest expense - fair value on financial liabilities 136,564 81,107 Interest income (108,816) (108,190) Islamic financing expenses 98,737 -Inventories written off - 2,073 Loss on foreign exchange - unrealised 920,894 -Other payables written back (11,823) -Plant and equipment written off 1,175 6,326 Reversal of impairment for slow moving inventories - (827,375) Reversal of impairment losses on trade receivables (265,963) (184,351) Reversal of unrealised gain on forward contract - 24,578 Share of loss of equity accounted for associates and jointly controlled entity 189,334 175,708

Operating profit before working capital changes 23,480,853 18,799,889

(Increase) /Decrease in inventories 3,084,736 (6,533,644) Increase in trade receivables (2,280,380) (1,981,797) Increase in other receivables, deposits and prepayments (482,348) (15,872,468) Increase /(Decrease) in trade payables (7,334,359) 6,151,119 Decrease in other payables and accruals 3,860,883 9,615,189

Cash generated from /(used in) operations 20,329,385 10,178,288

Interest paid (5,424,666) (7,692,455) Islamic financing expenses paid (98,737) -Tax paid (4,607,768) (3,454,430) Tax refund 230,995 287,014

Net cash from /(used in) operating activities carried forward 10,429,209 (681,583)

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Consolidated Statement of Cash Flows for the year ended 31st December 2012

Note 2012 2011RM RM

Net cash from /(used in) operating activities brought forward 10,429,209 (681,583)

Cash flows from investing activities

Additional investment in a subsidiary company (9,541) -Interest received 108,816 108,190 Proceeds from disposal of intangible assets 77,350 38,503 Proceeds from disposal of property, plant and equipment 122,800 9,407,311 Purchase of intangible asssets (209,512) -Purchase of property, plant and equipment 35 (7,070,625) (3,987,905)

Net cash from /(used in) investing activities (6,980,712) 5,566,099

3,448,497 4,884,516

Cash flows from financing activities

Dividend paid (1,200,222) -Drawndown of term loan and islamic financing 4,800,000 50,000,000 Proceeds from bill payables 711,194 1,820,420 Repayment of term loans (7,028,367) (4,717,451) Repayment of hire purchase liabilities (214,872) (346,584) Repayment of MUNIF - (60,000,000)

Net cash used in financing activities (2,932,267) (13,243,615)

Net increase /(decrease) in cash and cash equivalents 516,230 (8,359,099)

Effect of change on foreign exchange difference 235,839 258,078

Cash and cash equivalents at the beginning of the year 2,122,169 10,223,190

Cash and cash equivalents at the end of the year 36 2,874,238 2,122,169


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Statement of Financial Position 31st December 2012

Note 31.12.2012 31.12.2011 1.1.2011RM RM RM

ASSETS

Non-current AssetsPlant and equipment 5 248,802 309,761 68,958 Investment in subsidiary companies 7 52,004,787 52,695,021 52,695,021 Investment in associated company 8 196,999 499,999 499,999 Investment in jointly controlled entity 9 1,028,315 2,076,315 2,076,315

53,478,903 55,581,096 55,340,293

Current AssetsOther receivables, deposits and prepayments 12 1,016,453 354,711 1,230,795 Amount due from subsidiary companies 13 55,602,515 56,813,488 67,538,291 Tax recoverable 220,328 - -Deposit with a licensed bank 14 100,000 100,000 100,000 Cash and bank balances 90,634 73,411 76,683

57,029,930 57,341,610 68,945,769

Total Assets 110,508,833 112,922,706 124,286,062

EQUITY AND LIABILITIES

Equity attributable to ownersShare capital 16 55,258,750 55,258,750 44,207,000 Reserves 17 (464,717) 2,983,843 18,197,564

54,794,033 58,242,593 62,404,564

Non-current LiabilitiesDeferred tax liabilities 19 200 600 -Borrowings 20 40,155,574 44,215,402 49,126,178

40,155,774 44,216,002 49,126,178

Current LiabilitiesOther payables and accruals 26 880,696 421,336 168,659 Amount due to subsidiary companies 13 8,349,518 3,714,813 2,530,338 Borrowings 20 6,328,812 6,045,650 10,026,406 Current tax liabilities - 282,312 29,917

15,559,026 10,464,111 12,755,320

Total Liabilities 55,714,800 54,679,513 61,881,498

Total Equity and Liabilities 110,508,833 112,922,106 124,286,062


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Statement of Comprehensive Income for the year ended 31st December 2012

Note 2012 2011RM RM

Revenue 27 2,637,742 2,720,251 Other income 28 - 2,266,091 Administrative expenses (2,883,677) (3,443,147) Other expenses (2,102,193) (53,108)

Profit /(Loss) from operations (2,348,128) 1,490,087

Finance costs (3,131) (3,768,870)

Loss before taxation 29 (2,351,259) (2,278,783)

Income tax expense 32 102,921 (974,188)

Loss for the year (2,248,338) (3,252,971)

Other comprehensive incomeInterest expense for financial liability at fair value - (909,000)

Total comprehensive loss (2,248,338) (4,161,971)


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Statement of Changes in Equity for the year ended 31st December 2012

<--------------------------- Reserves ------------------------------->

<---- Non-Distributable ---->Fair Retained profits/

Share Share value (Accumulatedcapital premium reserve loss) Total

RM RM RM RM RM

Balance at 1st January 2011 44,207,000 11,262,321 909,000 6,026,243 62,404,564

Bonus issued 11,051,750 (11,051,750) - - -

Total comprehensive loss for the year - - (909,000) (3,252,971) (4,161,971)

Balance at 31st December 2011 55,258,750 210,571 - 2,773,272 58,242,593

Dividends paid (Note 34) - - - (1,200,222) (1,200,222)

55,258,750 210,571 - 1,573,050 57,042,371

Total comprehensive loss for the year - - - (2,248,338) (2,248,338)

Balance at 31st December 2012 55,258,750 210,571 - (675,288) 54,794,033

<- Distributable ->


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Statement of Cash Flows for the year ended 31st December 2012

Note 2012 2011

RM RM

Cash flows from operating activities

Loss before taxation (2,351,259) (2,278,783)

Adjustments for : -

Allowance for impairment 2,041,234 -Depreciation 60,959 53,108 Interest income - (2,266,091) Interest expenses 2,970 3,768,870

Operating loss before working capital changes (246,096) (722,896)

(Increase) /Decrease in other receivables, deposits and prepayments (661,742) 876,083 Increase in other payables and accruals 459,360 252,677

Cash generated from/(used in) operations (448,478) 405,864

Interest paid (2,970) (3,768,870) Tax paid (534,907) (721,192) Tax refund 134,786 -

Net cash used in operating activities (851,569) (4,084,198)

Cash flows from investing activities

Interest received - 2,266,091 Purchase of plant and equipment 35 - (293,911) Repayment from subsidiary companies 1,210,973 12,135,152

Net cash from investing activities 1,210,973 14,107,332

359,404 10,023,134

Cash flows from financing activities

Advance from subsidiary companies 4,408,833 -Dividends paid (1,200,222) -Drawndown of term loan - 50,000,000 Repayment of term loan (3,524,386) -Repayment of MUNIF - (60,000,000) Repayment of hire purchase creditors (26,406) (26,406)

Net cash used in financing activities (342,181) (10,026,406)

Net increase /(decrease) in cash and cash equivalents 17,223 (3,272)

Cash and cash equivalents at the beginning of the year 173,411 176,683

Cash and cash equivalents at the end of the year 36 190,634 173,411


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Notes to the Financial Statements 31st December 2012 1. Principal activities and corporate information

The Company is principally engaged in investment holding, whilst the principal activities of the subsidiary companies are set out in Note 7 to the financial statements.

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

The address of the Company’s registered office and principal place of business is as follows : -

Registered office : Level 33A, Menara 1MK, Kompleks 1 Mont’ Kiara No. 1, Jalan Kiara Mont’ Kiara, 50480 Kuala Lumpur Principal place of business : Sales and Marketing/ Corporate Office

A-06-3, Level 6, Empire Tower 1, Empire Subang Jalan SS 16/1, SS16, 47500 Subang Jaya, Selangor Darul Ehsan Manufacturing Plant Lot PT 1654 & PT 1657, Nilai Industrial Estate 71800 Nilai, Negeri Sembilan Darul Khusus

2. Basis of preparation of financial statements

The financial statements of the Group and of the Company have been prepared in accordance with Malayan Financial Reporting Standards (‘MFRSs’), International Financial Reporting Standards and the Companies Act, 1965 in Malaysia. In the previous financial years, the financial statements of the Group and of the Company were prepared in accordance with Financial Reporting Standards (“FRSs”) in Malaysia. The financial Statements of the Group and of the Company for the year ended 31st December 2012 are the first set of financial statements prepared in accordance with the MFRS, including MFRS 1 “First-time adoption of MFRS”. Subject to certain transition elections disclosed in Note 2.1.2, the Group and the Company have consistently applied the same accounting policies in its opening MFRS statement of financial position at 1st January 2011 (transition date) and throughout all years presented, as if these policies had always been in effect. Comparative figures for 2011 in these financial statements have been restated to give effect to these changes. Note 2.1.3 discloses the impact of the transition to MFRS on the Group and the Company’s reported financial position. MFRSs that do not have significant impacts on these financial statements

The following new and revised MFRSs issued by the MASB, effective for financial periods beginning on or after 1st January 2012, have been adopted, but the adoptions do not have a significant impact on the financial statements :

MFRS 2 Share-based Payment MFRS 3 Business Combinations MFRS 4 Insurance Contracts MFRS 5 Non-current Assets Held for Sale and Discontinued Operations MFRS 6 Exploration for and Evaluation of Mineral Resources MFRS 7 Financial Instruments: Disclosures MFRS 8 Operating Segments MFRS 101 Presentation of Financial Statements

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Notes to the Financial Statements 31st December 2012 2. Basis of preparation of financial statements (Cont’d.)

MFRSs that do not have significant impacts on these financial statements (Cont’d.) MFRS 102 Inventories MFRS 107 Statement of Cash Flows MFRS 108 Accounting Policies, Changes in Accounting Estimates and Errors MFRS 110 Events after the Reporting Period MFRS 111 Construction Contracts MFRS 112 Income Taxes MFRS 116 Property, Plant and Equipment MFRS 117 Leases MFRS 118 Revenue MFRS 119 Employee Benefits MFRS 120 Accounting for Government Grants and Disclosure of Government Assistance MFRS 121 The Effects of Changes in Foreign Exchange Rates MFRS 123 Borrowing Costs MFRS 124 Related Party Disclosures MFRS 126 Accounting and Reporting by Retirement Benefit Plans MFRS 127 Consolidated and Separate Financial Statements MFRS 128 Investments in Associates MFRS 129 Financial Reporting in Hyperinflationary Economies MFRS 131 Interests in Joint Ventures MFRS 132 Financial Instruments: Presentation MFRS 133 Earnings per Share MFRS 136 Impairment of Assets MFRS 137 Provisions, Contingent Liabilities and Contingent Assets MFRS 138 Intangible Assets MFRS 139 Financial Instruments: Recognition and Measurement MFRS 140 Investment Property MFRSs that have been issued but are not yet effective The Group and the Company have not adopted the following MFRSs that have been issued by the MASB but are not yet effective : - Effective for financial periods beginning on or after 1 July 2012 Amendments to MFRS 101 Presentation of Financial Statements Effective for financial periods beginning on or after 1 January 2013 Amendments to MFRS 1 Government loan Amendments to MFRS 1 Annual Improvements 2009-2011 Cycle Amendments to MFRS 7 Disclosures- Offsetting Financial Assets and Financial Liabilities MFRS 10 Consolidated Financial Statements MFRS 11 Joint Arrangements MFRS 12 Disclosure of Interests in Other Entities Amendments to MFRS 10, MFRS 11 and MFRS 12 Consolidated Financial Statements, Joint arrangements and Disclosure of Interests in Other Entities :Transition Guidance MFRS 13 Fair Value Measurement Amendments to MFRS 101 Annual Improvements 2009-2011 Cycle Amendments to MFRS 116 Annual Improvements 2009-2011 Cycle

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Notes to the Financial Statements 31st December 2012

2. Basis of preparation of financial statements (Cont’d.)

Effective for financial periods beginning on or after 1 January 2013 (Cont’d.)

MFRS 119 (as revised in 2011) Employee Benefits MFRS 127 (as revised in 2011) Separate Financial Statements MFRS 128 (as revised in 2011) Investment in Associates and Joint Ventures Amendments to MFRS 132 Annual Improvements 2009-2011 Cycle

Effective for financial periods beginning on or after 1 January 2014 Amendments to MFRS 134 Annual Improvements 2009-2011 Cycle Amendments to MFRS 132 Annual Improvements 2009-2011 Cycle Amendments to MFRS 132 Offsetting Financial Assets and Financial Liabilities Effective for financial periods beginning on or after 1 January 2015 MFRS 9 Financial Instruments

The Directors expect that adoption of the standards above will have no material impact on the financial statements in the period of initial application, except as disclosed below : - MFRS 9 Financial Instruments MFRS 9 requires all recognised financial assets that are within the scope of MFRS 139 Financial Instruments: Recognition and Measurement to be subsequently measured at amortised cost or fair value. Specifically, debt investments that are held within a business model whose objective is to collect the contractual cash flows, and that have contractual cash flows that are solely payments of principal and interest on the principal outstanding are generally measured at amortised cost at the end of subsequent accounting periods. All other debt investments and equity investments are measured at their fair values at the end of subsequent accounting periods. The most significant effect of MFRS 9 regarding the classification and measurement of financial liabilities relates to the accounting for changes in the fair value of a financial liability (designated as at ‘fair value through profit or loss’) attributable to changes in the credit risk of that liability. Specifically, under MFRS 9, for financial liabilities that are designated as at ‘fair value through profit or loss’, the amount of change in the fair value of the financial liability that is attributable to changes in the credit risk of that liability is presented in other comprehensive income, unless the recognition of the effects of changes in the liability's credit risk in other comprehensive income would create or enlarge an accounting mismatch in profit or loss. Changes in fair value attributable to a financial liability's credit risk are not subsequently reclassified to profit or loss. MFRS 10 Consolidated Financial Statements MFRS 10 replaces the parts of MFRS 127 Consolidated and Separate Financial Statements that deal with consolidated financial statements. IC Interpretation 112 Consolidation – Special Purpose Entities has been withdrawn upon the issuance of MFRS 10. Under MFRS 10, there is only one basis for consolidation, which is control. In addition, MFRS 10 includes a new definition of control that contains three elements: (a) power over an investee, (b) exposure, or rights, to variable returns from its involvement with the investee, and (c) the ability to use its power over the investee to affect the amount of the investor's returns. Extensive guidance has been added in MFRS 10 to deal with complex scenarios.

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2. Basis of preparation of financial statements (Cont’d.)

MFRS 11 Joint Arrangements

MFRS 11 replaces MFRS 131 Interests in Joint Ventures. MFRS 11 deals with how a joint arrangement of which two or more parties have joint control shall be classified. IC Interpretation 113 Jointly Controlled Entities – Non-monetary Contributions by Venturers has been withdrawn upon the issuance of MFRS 11. Under MFRS 11, joint arrangements are classified as joint operations or joint ventures, depending on the rights and obligations of the parties to the arrangements. In contrast, under MFRS 131, there are three types of joint arrangements: jointly controlled entities, jointly controlled assets and jointly controlled operations. In addition, joint ventures under MFRS 11 are required to be accounted for using the equity method of accounting, whereas jointly controlled entities under MFRS 131 can be accounted for using the equity method or proportionate consolidation accounting.

MFRS 12 Disclosure of Interests in Other Entities

MFRS 12 is a disclosure standard and is applicable to entities that have interests in subsidiaries, joint arrangements, associates and/or unconsolidated structured entities. In general, the disclosure requirements in MFRS 12 are more extensive than those in the current standards.

MFRS 13 Fair Value Measurement MFRS 13 establishes a single source of guidance for fair value measurements and disclosures about fair value measurements. MFRS 13 defines fair value, establishes a framework for measuring fair value, and requires disclosures about fair value measurements. The scope of MFRS 13 is broad; it applies to both financial instrument items and non-financial instrument items for which other MFRSs require or permit fair value measurements and disclosures about fair value measurements, except in specified circumstances. In general, the disclosure requirements in MFRS 13 are more extensive than those required in the current standards. Amendments to MFRS 119 Employee Benefits The amendments to MFRS 119 change the accounting for defined benefit plans and termination benefits. The most significant changes relate to the accounting for defined benefit obligations and plan assets. The amendments require the recognition of changes in defined benefit obligations and in fair value of plan assets when they occur, and hence eliminate the 'corridor approach' permitted under the previous version of MFRS 119 and accelerate the recognition of past service costs. The amendments require all actuarial gains and losses to be recognised immediately through other comprehensive income in order for the net pension asset or liability recognised in the consolidated statement of financial position to reflect the full value of the plan deficit or surplus.

Amendment to MFRS 101 Presentation of Financial Statements

The amendments to MFRS 101 retain the option to present profit or loss and other comprehensive income in either a single statement or in two separate but consecutive statements. However, the amendments to MFRS 101 require additional disclosures to be made in the other comprehensive income section such that items of other comprehensive income are grouped into two categories: (a) items that will not be reclassified subsequently to profit or loss; and (b) items that will be reclassified subsequently to profit or loss when specific conditions are met. Income tax on items of other comprehensive income is required to be allocated on the same basis.

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Notes to the Financial Statements 31st December 2012 2. Basis of preparation of financial statements (Cont’d.) 2.1 Transition from FRS to MFRS 2.1.1 MFRS 1 mandatory exceptions Estimates

MFRS estimates as at transition dates are consistent with the estimates as at the same date made in conformity with FRS.

2.1.2 MFRS 1 exemption options (a) Exemption for business combinations

MFRS 1 provides the option to apply MFRS 3 “Business combinations” prospectively for business combination that occurred from the transition date or from a designated date prior to the transition date. This provides relief from full retrospective application that would require restatement of all business combinations prior to the transition date or a designated date prior to the transition date. The Group elected to apply MFRS 3 prospectively to business combinations that occurred after 1st January 2011. Business combinations that occurred prior to 1st January 2011 have not been restated. In addition, the Group has also applied MFRS 127 “Consolidated and Separate Financial Statements” from the same date.

(b) Exemption for cumulative translation differences MFRS 1 permits cumulative translation gains and losses to be reset to zero at the

transition date. This provides relief from determining cumulative currency translation differences in accordance with MFRS 121 “The effects of changes in foreign exchanges rates” from the date a foreign operation was acquired. The Group elected to reset all cumulative translation differences to zero in opening retained earnings at its transition date. At the transition date, cumulative translation differences amounted to RM 1,627,072.

2.1.3 Reconciliation

The following reconciliations show the effect of the transition to the MFRSs on the Group’s equity and retained earnings : -

Effect oftransition

Group FRS to MFRS MFRSRM RM RM

At 31st December 2011Translation reserves 1,180,219 (1,627,072) (446,853) Retained earnings 20,898,630 1,627,072 22,525,702

At 1st January 2011Translation reserves 1,627,072 (1,627,072) -Retained earnings 19,178,947 1,627,072 20,806,019

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Notes to the Financial Statements 31st December 2012 3. Significant accounting policies

All significant accounting policies set out below have been applied consistently to the periods presented in these financial statements and in preparing the opening MFRS statement of financial position of the Company at 1st January 2011, unless otherwise stated.

a) Accounting convention

The financial statements of the Group and of the Company have been prepared under the historical cost convention unless otherwise indicated in the significant accounting policies.

b) Basis of consolidation i) Subsidiaries

A subsidiary is an entity controlled by the Company. Control exists when the Company has the power, directly or indirectly to govern the financial and operating policies of an entity so as to obtain benefits from its activities. The financial statements of subsidiary are included in the consolidated financial statements from the date that control effectively commences until the date that control effectively ceases. Subsidiary is consolidated using the acquisition method of accounting in accordance with MFRS 127, Consolidated and Separate Financial Statements. A subsidiary is excluded from consolidation when control is intended to be temporary if the subsidiary is acquired and held exclusively with a view of its subsequent disposal in the near future and it has not previously been consolidated or it operates under severe long term restrictions which significantly impair its ability to transfer funds to the Company. Subsidiaries excluded on these grounds are accounted for as investment. Under the acquisition method of accounting, the results of subsidiaries acquired or disposed during the year are included from the date of acquisition or up to the date of disposal. At the date of acquisition, the fair value of the subsidiaries’ net assets are determined and these values are reflected in the Group’s financial statements. The excess of the cost of acquisition over the fair value of the Group’s share of the identifiable net assets acquired at the date of acquisition is reflected as goodwill. If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognised directly in the profit or loss.

Intragroup transactions and balances and the resulting unrealised profits are eliminated on consolidation. Unrealised losses resulting from intragroup transactions are also eliminated unless cost cannot be recovered.

The gain or loss on disposal of a subsidiary, which is the difference between the net disposal proceeds and the Group’s share of its net assets as of the date of disposal including the carrying amount of goodwill that relate to the subsidiary is recognised in the consolidated profit or loss . Non-controlling interests represent the portion of profit or loss and net assets in subsidiaries not held by the Group. It is measured at the non-controlling interests’ share of the fair value of the subsidiaries’ identifiable assets and liabilities at the acquisition date and the non-controlling interests’ share of changes in the subsidiaries’ equity since then.

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Notes to the Financial Statements 31st December 2012 3. Significant accounting policies b) Basis of consolidation (Cont’d.) ii) Associates

Associates are entities, including unincorporated entities, in which the Group has significant influence, but not control, over the financial and operating policies. Associates are accounted for in the consolidated financial statements using the equity method. The consolidated financial statements include the Group’s share of the profit or loss and other comprehensive income of the equity accounted 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 equity accounted associate, the carrying amount of that interest (including any long-term investments) is reduced to nil 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 investee. Investments in associates are stated in the Company’s statements of financial position at cost less any impairment losses.

iii) Joint ventures

Joint ventures are those entities over whose activities the Group has joint control, established by contractual agreement and requiring unanimous consent for strategic financial and operating decisions. Joint ventures are accounted for in the consolidated financial statements using the equity method. The consolidated financial statements include the Group’s share of the profit or loss and other comprehensive income of the equity accounted joint ventures, after adjustments to align the accounting policies with those of the Group, from the date that joint control commences until the date that joint control ceases.

When the Group’s share of losses exceeds its interest in an equity accounted joint venture, the carrying amount of that interest (including any long-term investments) is reduced to nil 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 joint venture. Investments in joint ventures are stated in the Company’s statements of financial position at cost less impairment losses, unless the investment is classified as held for sale.

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3. Significant accounting policies (Cont’d.)

c) Derivative financial instruments

The Group uses derivative financial instruments such as forward currency contracts to hedge its risks associated with foreign currency and commodity price fluctuations. On initial recognition, these derivative financial instruments are recognised at fair value on the date on which the derivative contracts are entered into, and are subsequently remeasured to their fair value at each reporting date. Any gains or losses arising from changes in fair value on derivatives that do not qualify for hedge accounting are taken directly to the statement of comprehensive income. The fair value of forward contracts is determined by reference to current forward exchange rates for contracts with similar maturity profiles.

d) Intangible assets

i) Goodwill

Goodwill is initially measured at cost. Following initial recognition, goodwill is measured at cost less accumulated impairment losses.

For the purpose of impairment testing, goodwill acquired is allocated, from the

acquisition date, to each of the Company’s cash-generating units that are expected to benefit from the synergies of the combination.

The cash-generating unit on which has been allocated is tested for impairment annually and whenever there is an indication that the cash-generating unit may be impaired, by comparing the carrying amount of the cash-generating units, including the allocated goodwill, with the recoverable amount of the cash-generating unit. Where the recoverable amount of the cash-generating unit is less than the carrying amount, an impairment loss is recognised in the profit or loss. Impairment losses recognised for the goodwill are not reversed in subsequent periods.

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

ii) Trademarks

Trademarks acquired are stated at cost less accumulated amortisation and impairment losses. Subsequent expenditure on capitalised intangible assets is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure are expensed as incurred.

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3. Significant accounting policies (Cont’d.) d) Intangible assets (Cont’d.)

ii) Trademarks (Cont’d.)

Trademarks is amortised on a straight-line basis over their estimated useful lives and assessed for impairment whenever there is an indication that trademarks may be impaired. The amostisation period and the amortisation method are reviewed, and adjusted if appropriate, at each reporting date. The amortisation expense on trademarks is recognised in profit or loss.

e) Property, plant and equipment and depreciation

Property, plant and equipment are stated at cost/valuation less accumulated depreciation and impairment losses, if any.

The Group revalues its properties comprising land and buildings every five (5) years and at shorter intervals whenever the fair value of the revalued properties is expected to differ materially from their carrying value.

Surpluses arising from revaluation are dealt with in the property revaluation reserve account. Any deficit arising is offset against the revaluation reserve to the extent of a previous increase for the same property. In all other cases, a decrease in carrying amount is charged to the profit or loss.

Property, plant and equipment retired from active use and held for disposal are stated at the lower of net book value and net realisable value. Leasehold land is amortised over the remaining lease period. No depreciation is charged for capital work-in-progress.

The straight-line method is used to write off the cost of the other assets over the term of their estimated useful lives : -

Rate Buildings 10 and 50 years Motor vehicles 5 years Plant and machinery 10 – 20 years Furniture and fittings 5-10 years Renovation 10 years Equipment 2-5 years

The residual values, useful life and depreciation method are reviewed at each financial year end to ensure that the amount, method and period of depreciation are consistent with previous estimates and the expected pattern of consumption of the future economic benefits embodied in the items of property, plant and equipment.

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. The difference between the net disposal proceeds, if any and the net carrying amount is recognised in profit or loss.

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Notes to the Financial Statements 31st December 2012 3. Significant accounting policies (Cont’d.)

f) Leases

i) Finance lease

Lease in terms of which the Group and 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 the asset. Assets acquired by way of hire purchase or finance leases are stated at an amount equal to the lower of their fair values and the present value of the minimum lease payments at the inception of the leases, less accumulated depreciation and impairment losses. The corresponding liability is included in the statement of financial position as borrowings. In calculating the present value of the minimum lease payments, the discount factor used is the interest rate implicit in the lease, when it is practicable to determine; otherwise, the Group’s and the Company’s incremental borrowing rate is used. 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.

ii) Operating lease

For operating leases, the leased assets are not recognised on the Group’s 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. Leasehold land that normally has an indefinite economic life and title is not expected to pass to the lessee by the end of the lease term is treated as an operating lease. The payment made on entering into or acquiring a leasehold land is accounted for as prepaid lease payments, except for leasehold land classified as investment property. Payments made under operating leases are recognised in the profit or loss on a straight-line basis over the term of the lease. Lease incentives received are recognised as an integral part of the total lease expense, the term of the lease.

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g) Inventories

Inventories are measured at the lower of cost and net realisable value. The cost of inventories is based on the weighted average cost and includes expenditure incurred in acquiring the inventories and bringing them to their existing location and condition. For finished goods and work-in-progress, cost of direct materials and labour and a proportion of manufacturing overheads based on normal operating capacity are included. Net realisable value is the estimated selling price in the ordinary course of the business, less the estimated costs of completion and the estimated costs necessary to make the sale.

h) Receivables

Trade and other receivables are categorised and measured as loans and receivables in accordance with note 3(s).

i) Impairment

i) Financial assets

All financial assets (except for financial assets categorised as fair value through profit or loss and investment in subsidiaries) 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 equity instrument, a significant or prolonged decline in the fair value below its cost is an objective evidence of impairment. An impairment loss in respect of loans and receivables and held-to-maturity investments 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 the 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 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.

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i) Impairment (Cont’d.)

i) Financial assets (Cont’d.) 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) Non-financial assets

At the end of each reporting period, the Group and the Company assess whether there is any indication that an asset (other than inventories and deferred tax assets) may be impaired. If any such indication exists, the recoverable amount of the asset is estimated. Irrespective of whether there is any indication of impairment, the Group and the Company test an intangible asset with an indefinite useful life or an intangible asset not yet available for use for impairment annually by comparing the carrying amount with its recoverable amount. Where there is an indication that an asset may be impaired but it is not possible to estimate the recoverable amount of the individual asset, the Group and the Company determine the recoverable amount of the cash-generating unit to which the asset belongs. The recoverable amount of an individual asset and a cash-generating unit is the higher of the fair value less costs to sell and value in use. 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.

If the recoverable amount of an individual asset or a cash-generating unit is less than the carrying amount, an impairment loss is recognised to reduce the carrying amount to its recoverable amount. An impairment loss for a cash-generating unit is firstly allocated to reduce the carrying amount of any goodwill allocated to the cash-generating unit, and then, to the other assets of the unit within the scope of FRS 136 Impairment of Assets pro rata on the basis of the carrying amount of each appropriate asset in the unit. An impairment loss is recognised immediately in profit or loss, unless the asset is carried at a revalued amount, in which case it is treated as a revaluation decrease. An impairment loss recognised in prior periods for an individual asset or the appropriate assets of a cash-generating unit is reversed when there has been a change in the estimates used to determine the asset’s recoverable amount. An impairment loss is reversed to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation, if no impairment loss had been recognised in prior periods. A reversal of an impairment loss is recognised immediately in profit or loss, unless the asset is carried at revalued amount, in which case it is treated as a revaluation increase.

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j) Employee benefits

i) Short term 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 off as the related service is provided. A provision 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. The Group’s contribution to the statutory pension funds are charged to profit or loss in the year to which they relate. Once the contributions have been paid, the Group has no further payment obligations.

ii) Share based payment transactions

The grant date fair value of options granted to employee is recognised as an employee expense, with a corresponding increase in equity, over the period that the employees become unconditionally entitled to the options. The amount recognised as an expense is adjusted to reflect the actual number of share options vested. The fair value of employee share options is measured using a binomial lattice model. Measurement inputs include share price on measurement date, exercise price of the instrument, expected volatility (based on weighted average historic volatility adjusted for changes expected due to publicly available information), weighted average expected life of the instruments (based on historical experience and general option holder behaviour), expected dividends, and the risk-free interest rate (based on government bonds). Service and non-market performance conditions attached to the transactions are not taken into account in determining fair value.

k) Revenue i) Goods sold

Revenue from the sale of goods is measured at the fair value of the consideration received or receivable, net of returns and allowances, trade discounts and volume rebates. Revenue is recognised when the significant risks and rewards of ownership have been transferred to the buyer, 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.

ii) Rental income

Rental income is recognised on an accrual basis.

iii) Interest income Interest income is recognised in the profit or loss as it accrues taking into financial statements the effective yield on the assets.

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3. Significant accounting policies (Cont’d.) k) Revenue (Cont’d.)

iv) Management fees

Management fees are recognised when the services are rendered. l) Borrowing costs

Borrowing costs that are directly attributable to the acquisition, construction or production of qualifying assets are capitalised as part of the cost of the assets when the Group and the Company incur the expenditure for the assets, incur borrowing costs and undertake activities that are necessary to prepare the assets for the intended use or sale. Capitalisation of borrowing costs is suspended during extended periods in which active development is suspended and ceased when substantially all the activities necessary to prepare the qualifying assets for the intended use or sale are complete. Other borrowing costs are recognised as expense in profit or loss when they are incurred.

m) Income tax expense

Tax expense is the aggregate amount included in the determination of profit or loss for the period in respect of current tax and deferred tax. Current tax and deferred tax are charged or credited directly to equity if the tax relates to items that are credited or charged directly to equity. Current tax for current and prior periods is recognised as a liability to the extent unpaid. If the amount already paid in respect of the current and prior periods exceeds the amount due for those periods, the excess is recognised as an asset. Current tax assets and liabilities for the current and prior periods are measured at the amounts expected to be paid or recovered, using the tax rates that have been enacted or substantially enacted by the end of the reporting period. Current tax assets and liabilities are offset only when the Group and the Company have a legally enforceable right to set off the recognised amounts and intend either to settle on a net basis, or to realise the asset and settle the liability simultaneously. Deferred tax is provided in full on temporary differences which are the differences between the carrying amounts in the financial statements and the corresponding tax base of an asset or liability at the end of the reporting period.

Deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised for all deductible temporary differences to the extent that it is probable that taxable profit will be available against which the deductible temporary differences can be utilised. Deferred tax liabilities and assets are not recognised if the temporary differences arise from initial recognised of goodwill and the initial recognition of assets or liabilities that is not a business combination and at the time of the transaction, affected neither accounting profit nor taxable profit.

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Notes to the Financial Statements 31st December 2012 3. Significant accounting policies (Cont’d.) m) Income tax expense (Cont’d.)

Deferred tax liabilities and assets reflect the tax consequences that would follow from the manner in which the Group and the Company expect to recover or settle the carrying amounts of their assets and liabilities and are measured at the tax rates that are expected to apply to the period when the asset is realised or the liability settled, based on tax rates that have been enacted or substantially enacted by the end of the reporting period. The carrying amounts of the deferred tax assets are reviewed at the end of each reporting period, and they are reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow the benefit or part of the deferred tax assets to be utilised. The reduction is reversed to the extent that it becomes probable that sufficient taxable profit will be available.

Deferred tax assets and liabilities are offset when the Group and the Company have a legally enforceable right to set off current tax assets and liabilities, and the deferred tax assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities which intend either to settle current tax liabilities and assets on a net basis or to realise the assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered.

n) Non-current assets held for sale and discontinued operations

Non-current assets 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 are remeasured in accordance with the Group’s accounting policies. Thereafter generally the assets are measured at the lower of their carrying amount and fair value less cost to sell.

o) Foreign currencies i) Functional and presentation currency

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

ii) Foreign currency transactions

Transactions in foreign currencies are converted into Ringgit Malaysia at the rates of exchange ruling on transaction dates. Monetary assets and liabilities denominated in foreign currencies at the reporting date are translated into Ringgit Malaysia 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 Ringgit Malaysia at the exchange rate that the fair value was determined.

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3. Significant accounting policies (Cont’d.) o) Foreign currencies (Cont’d.) ii) Foreign currency transactions (Cont’d.)

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 or a financial instrument designated as a hedge currency risk, which are recognised in other comprehensive income.

The principal exchange rates used for every unit of foreign currency ruling at the reporting date are as follows : -

2012 2011 RM1 : US Dollar 0.3270 RM1 : US Dollar 0.3148 RM1 : Chinese Renminbi 2.0369 RM1 : Chinese Renminbi 1.9865 RM1 : Philippines Peso 13.4325 RM1 : Philippines Peso 13.7992 RM1 : Great Britain Pound 0.2023 RM1 : Great Britain Pound 0.2042 RM1 : Singapore Dollar 0.3995 RM1 : Singapore Dollar 0.4094 RM1 : EURO 0.2475 RM1 : EURO 0.2432 RM1 : Australian Dollar 0.3144 RM1 : Australian Dollar 0.3103 RM1 : Thai Baht 10.0090 RM1 : Thai Baht 9.990 RM1 : Japanese Yen 28.1092 RM1 : Japanese Yen 24.4051 RM1 : Hong Kong Dollar 2.5346 RM1 : Hong Kong Dollar 2.4456 RM1 : Swedish Krona 2.1308 RM1 : Swedish Krona 2.1707 RM1 : Indonesian Rupiah 3151.00 RM1 : Indonesian Rupiah 2857.50

iii) Foreign operations The assets and liabilities of foreign operations are translated into Ringgit Malaysia at

the rate of exchange ruling at the reporting date and income and expenses are translated at exchange rates at the dates of the transactions. The exchange differences arising on the translation are taken directly to other comprehensive income. On disposal of a foreign operation, the cumulative amount recognised in other comprehensive income and accumulated in equity under foreign currency translation reserve relating to that particular foreign operation is recognised in the profit or loss.

Goodwill and fair value adjustments arising on the acquisition of foreign operations

are treated as assets and liabilities of the foreign operations and translated at the closing rate at the reporting date.

p) Cash and cash equivalents

Cash and cash equivalents comprise of cash in hand, balances and deposits with banks and other financial institutions, fixed deposits pledged to financial institutions, bank overdrafts and short term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

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q) Provisions

A provision is recognised when the Group and the Company have a present legal or constructive obligation as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.

The risks and uncertainties are taken into account in reaching the best estimate of a provision. When the effect of the time value of money is material, the amount recognised in respect of the provision is the present value of the expenditure expected to be required to settle the obligation.

r) Contingent liabilities and contingent assets The Group does not recognise a contingent liability but discloses its existence in the

financial statements. A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Group or a present obligation that is not recognised because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in the extremely rare case where there is a liability that cannot be recognised because it cannot be measured reliably.

A contingent asset is a possible asset that arises from past events whose existence will be

confirmed by the occurrence or non-occurrence of one of more uncertain future events beyond the control of the Group. The Group does not recognise contingent assets but discloses its existence where inflows of economic benefits are probable, but not virtually certain.

s) Financial instrument

Financial instruments are categorised and measured using accounting policies as mentioned below.

i) Initial recognition and measurement

A financial instrument is recognised in the financial statements when, and only when, the Group 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 and loss, transaction costs that are directly attributable to the acquisition or issue of the financial instrument.

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s) Financial instrument (Cont’d.)

ii) Financial instrument categorises and subsequent measurement

The company categorises financial instruments as follows : - Financial assets

a) Financial assets at fair value through profit and loss

Fair value through profit or loss category comprises financial assets that are held for trading, including derivatives (except for a derivative that is a designated and effective hedging instrument) or financial assets that are specifically designated into this category upon initial recognition.

Derivatives that are linked to and must be settled by delivery of unquoted equity instruments whose fair values cannot be reliably measured are measured at cost. Other financials assets categorised as fair value through profit or loss are subsequently measured at their fair values with the gain or loss recognised in profit or loss.

b) Held-to-maturity investments

Held-to-maturity investments category comprises debt instruments that are quoted in an active market and the Group has the positive intention and ability to hold to maturity. Financial assets categorised as held-to-maturity investments are subsequently measured at amortised cost using the effective interest method.

c) Loans and receivables

Loans and receivables category comprises debt instrument that are not quoted in an active market, trade and other receivables and cash and cash equivalents. Financial assets categorised as loans and receivables are subsequently measured at amortised cost using the effective interest rate method.

d) Available-for-sale financial assets

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

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

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

Available-for-sale category comprises investment in equity and debt securities instruments that are not held for trading.Investment in equity instruments that do not have a quoted market price in an active market 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 form equity into profit or loss. Interest calculated for a debt instrument using the effective interest method is recognised in profit or loss.

All financial assets, except for those measured at fair value through profit or loss, are subject to review for impairment (see note 3(i))

Financial liabilities All financial liabilities are subsequently measured at amortised cost other than those categorised as fair value through profit or loss. Fair value through profit or loss category comprises financial liabilities that are held for trading, derivatives (except for a derivative that is a financial guarantee contract or a designated and effective hedging instrument) or financial liabilities that are specifically designated into this category upon initial recognition. Derivatives that are linked to and must be settled by delivery of unquoted equity instruments whose fair values cannot be reliably measured are measured at cost. Other financial liabilities categorised as fair value through profit or loss are subsequently measured at their fair values with the gain or loss recognised in profit or loss.

iii) 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 the profit or loss.

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iii) Derecognition (Cont’d.)

A financial liability or 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 liability assumed, is recognised in the profit or loss.

t) Equity instruments

Instruments classified as equity are stated at cost on initial recognition and are not remeasured subsequently. Ordinary shares are classified as equity. Costs directly attributable to the issuance of new equity shares are taken to equity as a deduction, net of tax, from the proceeds. Dividends on ordinary shares are recognised in equity in the period in which they are declared.

u) Disclosures of fair values

The fair values of the financial assets and liabilities maturing within 12 months are stated at approximately the carrying value as at the reporting date.

The fair values of quoted investments are estimated based on quoted market prices. For investments for which there are no quoted market prices, a reasonable estimate of fair value could not be made without incurring excessive costs. Therefore, such investments are valued at cost subject to review for impairment.

v) Earnings per share The Group presents basic earnings per share (EPS) data for its ordinary shares. 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.

w) Segment reporting For management purposes, the Group is organised into operating segments based on their

products and services which are independently managed by the respective segment managers responsible for the performance of the respective segments under their charge. The segment managers report directly to the management of the Company who regularly review the segment results in order to allocate resources to the segments and to assess the segment performance. Additional disclosures on each of these segments are shown in Note 37, including the factors used to identify the reportable segments and the measurement basis of segment information.

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Notes to the Financial Statements 31st December 2012 4. Critical accounting judgments and key sources of estimation uncertainty a) Critical judgments made in applying accounting policies

In the process of preparing these financial statements, there were no significant judgments made in applying the accounting policies of the Group and of the Company which may have significant effects on the amounts recognised in the financial statements.

b) Key sources of estimation uncertainty

The key assumption concerning the future and other key sources of estimation uncertainty at the reporting date that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are as stated below : -

i) Depreciation of property, plant and equipment

Property, plant and equipment are depreciated in a straight-line basis over their estimated useful life. Management estimated the useful life of these assets to be within 2 to 74 years. Changes in the expected level of usage and technological developments could impact the economic useful life and the residual values of these assets, therefore future depreciation charges could be revised.

ii) Impairment losses for trade receivables

At the end of the reporting period, included in the allowance account for trade

receivables of the Group is individually assessed impairment losses for trade receivables amounting to approximately RM6,128,000 (31.12.2011 – RM5,845,000; 1.1.2011 – RM5,718,000). The estimates of individually assessed impairment for trade receivables are based on the historical default rate. Hence, should the actual default rate become higher than the estimated default rate, the Group may be required to charge additional impairment losses to the profit or loss within the next financial year.

iii) Deferred tax assets

Deferred tax assets are recognised for all unabsorbed tax losses, unabsorbed capital allowances and unutilised reinvestment allowance to the extent that it is probable that taxable profit will be available against which the unabsorbed tax losses, unabsorbed capital allowances and unutilised reinvestment allowance can be utilised. Significant management judgment is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and level of future taxable profits together with future tax planning strategies. The amount of unrecognised deferred tax assets arising from unabsorbed tax losses and capital allowances, and unutilised reinvestment allowance was approximately RM4,499,900 (31.12.2011 – RM4,361,400; 1.1.2011 – RM4,304,900).

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Notes to the Financial Statements 31st December 2012 4. Critical accounting judgments and key sources of estimation uncertainty (Cont’d.) b) Key sources of estimation uncertainty iv) Income tax expense

There are certain transactions and computations for which the ultimate tax determination may be different from the initial estimate. The Group recognises tax liabilities based on its understanding of the prevailing tax laws and estimates of whether such taxes will be due in the ordinary course of business. Where the final outcome of these matters is different from the amounts that were initially recognised, such difference will impact the income tax and deferred tax provisions in the period in which such determination is made.

v) Allowance for inventories

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

vi) Impairment of investment in subsidiary company

The Company carried out the impairment test based on the assessment of the fair value of the respective assets’ or cash generating units’ (“CGU”) fair value less costs to sell or based on the estimation of the value-in-use (“VIU”) of the CGUs to which the property, plant and equipment are allocated. Estimating the VIU requires the Company to make an estimate of the expected future cash flows from the CGU and also to choose a suitable discount rate in order to calculate the present value of those cash flows.

The carrying amounts of investment in subsidiary companies of the Company as at 31st December 2012 was RM52,004,787 (31.12.2011 – RM52,695,021; 1.1.2011 – RM52,695,021).

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Notes to the Financial Statements 31st December 2012 5. Property, plant and equipment

Motorvehicles, plant,

machinery,furniture

and fittings, CapitalLeasehold renovation work-in-

Group land Buildings and equipment progress Total2012 RM RM RM RM RM

At cost/valuation

Balance at 1/1/12 30,649,049 39,940,790 71,446,759 2,081,289 144,117,887 Reinstatement (1,658,769) 1,524,844 53,980,723 (14,626) 53,832,172

28,990,280 41,465,634 125,427,482 2,066,663 197,950,059 Additions - 515,040 3,243,294 4,184,786 7,943,120 Reclassification - - 82,520 2,702,492 (2,785,012) - Disposal/Written off - - (316,941) - (316,941) Effect of movement in

exchange rates - (28,390) (134,881) (11,250) (174,521) Balance at 31/12/12 28,990,280 42,034,804 130,921,446 3,455,187 205,401,717

Accumulated Depreciation

Balance at 1/1/12 638,198 5,128,031 34,171,051 - 39,937,280 Reinstatement 162,244 1,494,266 52,175,662 - 53,832,172

800,442 6,622,297 86,346,713 - 93,769,452 Charge for the year 269,029 823,687 5,439,504 - 6,532,220 Deletion - - (292,890) - (292,890) Effect of movement in

exchange rates - - 33,248 - 33,248 Balance at 31/12/12 1,069,471 7,445,984 91,526,575 - 100,042,030

Impairment losses

Balance at 1/1/12 - - 2,938,715 - 2,938,715

Charge for the year - - - - -

Balance at 31/12/12 - - 2,938,715 - 2,938,715

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Notes to the Financial Statements 31st December 2012 5. Property, plant and equipment (Cont’d.)

Motorvehicles, plant,

machinery,furniture

and fittings, CapitalLeasehold renovation work-in-

land Buildings and equipment progress TotalRM RM RM RM RM

2011

At cost/valuation

Balance at 1/1/11 24,200,000 37,341,000 69,889,000 4,002,128 135,432,128 Additions - 256,455 2,955,875 775,575 3,987,905 Reclassification - - 2,791,235 (2,791,235) -Fair value adjustments 6,449,049 2,285,553 - - 8,734,602 Disposal/Written off - - (4,533,007) - (4,533,007) Effect of movement in exchange rates - 57,782 343,656 94,821 496,259 Balance at 31/12/11 30,649,049 39,940,790 71,446,759 2,081,289 144,117,887


Balance at 1/1/11 510,000 4,355,000 32,163,281 - 37,028,281 Charge for the year 128,198 773,031 5,826,710 - 6,727,939 Deletion - - (3,890,631) - (3,890,631) Effect of movement in exchange rates - - 71,691 - 71,691 Balance at 31/12/11 638,198 5,128,031 34,171,051 - 39,937,280

Impairment lossesBalance at 1/1/11 - - 2,938,715 - 2,938,715 Charge for the year - - - - -

Balance at 31/12/11 - - 2,938,715 - 2,938,715

Carrying amounts

At 1/1/11 23,690,000 32,986,000 34,787,004 4,002,128 95,465,132

At 31/12/11 30,010,851 34,812,759 34,336,993 2,081,289 101,241,892At 31/12/12 27,920,809 34,588,820 36,456,156 3,455,187 102,420,972

Representing : -At 1/1/11At cost 2,952,000 3,981,000 34,787,004 4,002,128 45,722,132 At valuation 20,738,000 29,005,000 - - 49,743,000

23,690,000 32,986,000 34,787,004 4,002,128 95,465,132

At 31/12/11At cost - 13,339,707 34,336,993 2,081,289 49,757,989 At valuation 30,010,851 21,473,052 - - 51,483,903

30,010,851 34,812,759 34,336,993 2,081,289 101,241,892

At 31/12/12At cost - 2,539,254 36,456,156 3,455,187 42,450,597 At valuation 27,920,809 32,049,566 - - 59,970,375

27,920,809 34,588,820 36,456,156 3,455,187 102,420,972

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Notes to the Financial Statements 31st December 2012 5. Property, plant and equipment (Cont’d.)

Office Motor

Company Renovation equipment vehicle Total2012 RM RM RM RM

At cost

Balance at 1/1/12 273,766 20,145 147,767 441,678Additions - - - - Balance at 31/12/12 273,766 20,145 147,767 441,678


Balance at 1/1/12 20,532 3,022 108,363 131,917Charge for the year 27,377 4,029 29,553 60,959Balance at 31/12/12 47,909 7,051 137,916 192,876

2011

At cost

Balance at 1/1/11 - - 147,767 147,767 Additions 273,766 20,145 - 293,911 Balance at 31/12/11 273,766 20,145 147,767 441,678


Balance at 1/1/11 - - 78,809 78,809 Charge for the year 20,532 3,022 29,554 53,108 Balance at 31/12/11 20,532 3,022 108,363 131,917

Carrying amountsAt 1/1/11 - - 68,958 68,958 At 31/12/11 253,234 17,123 39,404 309,761 At 31/12/12 225,857 13,094 9,851 248,802 i) The leasehold land and buildings at carrying amount of RM59,970,375 (31.12.2011 –

RM51,483,903; 1.1.2011 – RM49,743,000) are stated at directors’ valuations based on professional valuations made by JS Valuers Property Consultants (E.M.) Sdn. Bhd. and Messrs KGV International Property Consultants (M) Sdn. Bhd., on an open market value basis conducted in 2011.

Had the leasehold land and buildings been carried at historical cost less accumulated depreciation, the carrying amounts of the revalued assets that would have been included in the financial statements at the end of the financial year is RM27,414,517 (31.12.2011 – RM27,752,693; 1.1.2011 – RM29,960,000).

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Notes to the Financial Statements 31st December 2012 5. Property, plant and equipment (Cont’d.) ii) The leasehold land and buildings at carrying amounts of RM42,156,939 (31.12.2011 –

RM40,827,417; 1.1.2011 - RM35,246,475) have been pledged to licensed banks as security for credit facilities granted to the Group and the Company.

iii) The gross carrying amounts of fully depreciated plant and equipment of the Group are as

follows : -

Group31.12.2012 31.12.2011 1.1.2011

RM RM RM

Plant, machinery, furniture and fittings, renovation and equipment 61,099,106 58,360,385 57,080,000Motor vehicles 2,158,638 1,516,425 1,339,000

63,257,744 59,876,810 58,419,000

iv) The carrying amount of property, plant and equipment at the reporting date held under hire

purchase arrangements is as follows : -

Group31.12.2012 31.12.2011 1.1.2011

RM RM RM

Plant and machinery - - 919,125 Motor vehicles 871,740 475,234 663,548

871,740 475,234 1,582,673

Company31.12.2012 31.12.2011 1.1.2011

RM RM RM

Motor vehicles 9,851 39,404 69,958

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Notes to the Financial Statements 31st December 2012 6. Intangible assets

Goodwill Trademarks TotalGroup RM RM RM

2012

CostAt 1st January 2012 6,734,248 195,381 6,929,629 Addition - 209,512 209,512 Deletion - (77,350) (77,350)

At 31st December 2012 6,734,248 327,543 7,061,791

Accumulated impairment and amortisationAt 1st January 2012 148,246 124,735 272,981 Amortisation for the year - 82,303 82,303

At 31st December 2012 148,246 207,038 355,284

2011

CostAt 1st January 2011 6,718,523 268,786 6,987,309 Deletion - (73,405) (73,405) Effects of movement in exchange rates 15,725 - 15,725

At 31st December 2011 6,734,248 195,381 6,929,629

Accumulated impairment and amortisationAt 1st January 2011 148,246 101,976 250,222 Amortisation for the year - 22,759 22,759

At 31st December 2011 148,246 124,735 272,981

Carrying amountAt 1st January 2011 6,570,277 166,810 6,737,087

At 31st December 2011 6,586,002 70,646 6,656,648

At 31st December 2012 6,586,002 120,505 6,706,507

74


45

Notes to the Financial Statements 31st December 2012 6. Intangible assets (Cont’d.)

Impairment testing for cash-generating units containing goodwill through acquisition of business with carrying amount of RM6,000,000 (31.12.2011 – RM6,000,000; 1.1.2011 – RM6,000,000) Goodwill acquired in the business combination is, from the acquisition date, allocated to the group of customers (the cash-generating unit) that is expected to benefit from the synergies of the combination. The recoverable amount of the cash-generating unit is determined based on the computation of its value in use.

Value in use was determined by discounting the future cash flows generated from the continuing use of the Unit and was based on the following key assumptions : - - Cash flow was projected based on actual operating results and the 5-year business plan - Revenue was projected at RM21,300,000 in the first year of the business plan. The

management anticipated the same revenue to be generated for the next 5 years when preparing the projected cash flow

- A pre-tax discount rate ranging from 10% to 20% were applied in determining the recoverable

amount of the Unit. The discount rate was estimated based on the Company’s incremental borrowing rate

The values assigned to the key assumptions represent management’s assessment of future trends in the Company’s and the Unit’s principal activities and are based on internal sources (historical data).

7. Investment in subsidiary companies

Company31.12.2012 31.12.2011 1.1.2011

RM RM RM

Unquoted shares, at cost 53,560,401 53,560,401 53,560,401 Less : Impairment losses (1,555,614) (865,380) (865,380)

52,004,787 52,695,021 52,695,021

Details of the subsidiary companies are as follows : -

Name of subsidiary

Country of Incorporation

Principal activities

Proportion of ownership

Interest 31.12.2012 31.12.2011 1.1.2011

% % % Goodway Rubber Industries Sdn. Bhd.

Malaysia Manufacturing of rubber compound and other related products

100 100 100

Big Wheel Green Tyres Sdn. Bhd.

Malaysia Manufacturing and retreading of tyres for motor vehicles

100 100 100

757575


46

Notes to the Financial Statements 31st December 2012 7. Investment in subsidiary companies (Cont’d.)

Details of the subsidiary companies are as follows (Cont’d.) : - Name of subsidiary




interest 31.12.2012 31.12.2011 1.1.2011 % % % Goodway SMR Sdn. Bhd.

Malaysia Retreading and wholesale of natural rubber

100 100 100

Bigwheel OTR Sdn. Bhd.

Malaysia Retreading of earthmovers tyres

75 75 75

Big Wheel (Malaysia) Sdn. Bhd.

Malaysia Manufacturing and retailing of tyres and rubber products

100 100 100

Goodway Marketing Sdn. Bhd.

Malaysia Property holding 100 100 100

Kilotrac Industries Sdn. Bhd.

Malaysia Retreading of tyres for motor vehicles and trading of tubes and flaps

100 100 100

Goodway Rubber Technology Sdn. Bhd.

Malaysia Strike off on 1st June 2011

- - 100

Goodway Rubber Company Pty. Ltd. (*)

Australia Trading of rubber compound material

90 90 90

Goodway Europe (Sweden) AB (*)

Sweden Trading of rubber compound material

100 100 100

PT Vulkanisir Goodway Indonesia (*)

Indonesia Distribution, marketing and supplying of rubber compound, pre-cured tread liners and other rubber related products

60 60 60

76


47

Notes to the Financial Statements 31st December 2012 7. Investment in subsidiary companies (Cont’d.)

Details of the subsidiary companies are as follows (Cont’d.) : - Name of subsidiary




interest 31.12.2012 31.12.2011 1.1.2011 % % % Goodway Simplex (HK) Pte. Ltd. (*)

Hong Kong Investment holding 100 100 100

Subsidiary of Goodway Rubber Company Pty. Ltd. Goodway Supercool Pty. Ltd. (*)

Australia Trading of rubber compound material

90 63 63

Subsidiary of Goodway Simplex (HK) Pte. Ltd. Nantong Shibake Rubber Product Co. Ltd. (*)

People’s Republic of

China

Manufacturing of rubber compound and other products

100 100 100

(*) The financial statements of the subsidiary company were audited by a firm other than Kreston

John & Gan On 20th November 2012, a subsidiary company of the Company, Goodway Rubber Company Pty. Ltd. (‘GRCPL’) increased its equity interest in Goodway Supercool Pty. Ltd. (‘GSPL’) from 70% to 100% by acquiring an additional 30% equity interest for a cash consideration of AUD3,000 (equivalent to RM9,541). Further to the aforesaid acquisition, GSPL will be a wholly owned subsidiary of GRCPL, which in turn will be 90% owned by the Company based on its 90% direct shareholding in the share capital of GRCPL.

8. Investment in associated company

Group31.12.2012 31.12.2011 1.1.2011

RM RM RM

Unquoted shares at cost 499,999 499,999 499,999 Group's share of post-acquisitionprofits less losses (303,335) (286,778) (271,623)

196,664 213,221 228,376

777777


48

Notes to the Financial Statements 31st December 2012 8. Investment in associated company (Cont’d.)

Company31.12.2012 31.12.2011 1.1.2011

RM RM RM

Unquoted shares at cost 499,999 499,999 499,999 Less : Impairment losses (303,000) - -

196,999 499,999 499,999

Details of the associated company are as follows : - Name of company




interest 31.12.2012 31.12.2011 1.1.2011 % % % Associated Autoways (Pvt) Ltd.

Sri Lanka Tyre retreading and manufacture of tread liner

20 20 20

The associated company’s financial statements are not audited by Kreston John & Gan.

The summarised financial information of the associated company not adjusted for the proportion of ownership interest held by the Group is as follows : -

Group31.12.2012 31.12.2011 1.1.2011

RM RM RM

Assets and Liabilities

Current assets 3,737,148 5,369,956 8,335,867 Non-current assets 330,710 523,089 1,715,357

Total assets 4,067,858 5,893,045 10,051,224

Current liabilities 3,277,600 4,561,127 5,884,629 Non-current liabilities 422,863 800,082 2,669,358

Total liabilities 3,700,463 5,361,209 8,553,987

Results

Revenue 10,980,767 14,585,175 26,875,559 Loss for the year (82,782) (75,790) (266,080)

78


49

Notes to the Financial Statements 31st December 2012 9. Investment in jointly controlled entity

Group31.12.2012 31.12.2011 1.1.2011

RM RM RM

Unquoted shares at cost 2,076,315 2,076,315 2,076,315 Group's share of post-acquisitionprofits less losses (1,047,846) (875,068) (714,517)

1,028,469 1,201,247 1,361,798

Company

31.12.2012 31.12.2011 1.1.2011RM RM RM

Unquoted shares at cost 2,076,315 2,076,315 2,076,315 Less : Impairment losses (1,048,000) - -

1,028,315 2,076,315 2,076,315

Details of the jointly controlled entity are as follows : - Name of company




interest 31.12.2012 31.12.2011 1.1.2011 % % % Shenzhen Xinxihu Goodway Tyres Co. Ltd.

People’s Republic of

China

Retreading of tyres

50 50 50

The jointly controlled entity’s financial statements are not audited by Kreston John & Gan.

797979


50


9. Investment in jointly controlled entity (Cont’d.)

The summarised financial information of the jointly controlled entity not adjusted for the proportion of ownership interest held by the Group is as follows : -

Group31.12.2012 31.12.2011 1.1.2011

RM RM RM

Assets and Liabilities

Current assets 3,436,099 1,697,451 2,037,013 Non-current assets 568,493 1,374,812 -

Total assets 4,004,592 3,072,263 2,037,013

Current liabilities 2,633,295 1,437,598 1,551,704 Non-current liabilities - - -

Total liabilities 2,633,295 1,437,598 1,551,704

Results

Revenue 2,777,651 2,181,774 1,750,340 Loss for the year (345,556) (321,104) (558,847)

10. Inventories

Group31.12.2012 31.12.2011 1.1.2011

RM RM RMAt cost Raw materials 13,040,216 14,277,807 15,671,920 Work-in-progress 8,207,366 7,514,999 6,477,367 Finished goods 26,890,867 27,752,951 21,182,324 Goods in transit 1,283,013 3,399,531 2,765,030

49,421,462 52,945,288 46,096,641

At net realisable valueWork-in-progress 70,218 - -

49,491,680 52,945,288 46,096,641

The cost of inventories recognised as an expense during the financial year in the Group amounted

to RM195,333,380 (31.12.2011 – RM243,141,541; 1.1.2011 – RM175,345,894).

80


51

Notes to the Financial Statements 31st December 2012 11. Trade receivables

Group31.12.2012 31.12.2011 1.1.2011

RM RM RM

Trade receivables 67,249,006 66,090,256 52,166,542 Less : Allowance account (6,128,477) (5,844,848) (5,717,929)

61,120,529 60,245,408 46,448,613

The reconciliation of the allowance account is as follows : -

At beginning of the financial year 5,844,848 5,717,929 3,992,000 Impairment losses recognised 477,629 375,108 1,725,929 Amounts recovered and reversed (190,984) (234,891) -Effects of movement in exchange rates (3,016) (13,298) -

At the end of the financial year 6,128,477 5,844,848 5,717,929

Allowance account at end of the financial year represents individually assessed impairment.

Included in trade receivables are the following : -

a) An amount of RM195,700 (31.12.2011 – RM195,700; 1.1.2011 – RM154,458) due from a jointly controlled entity, Shenzhen Xinxihu Goodway Tyres Co. Ltd.

b) An amount of RM3,839,606 (31.12.2011 – RM3,417,587; 1.1.2011 – RM3,293,126) due

from a company, Coltrac Sdn. Bhd. which is connected to a director of the Company, Tai Boon Wee.

The normal credit terms of trade receivables range from immediate payment to 120 days. Other terms are assessed and approved on a case-by-case basis. They are recognised at their original invoice amounts which represents their fair value on initial recognition.

The foreign currency exposures of trade receivables of the group are as follows : -

31.12.2012 31.12.2011 1.1.2011 RM RM RM US Dollar 18,070,433 16,754,000 3,896,000 EURO - 147,955 775,000 Australian Dollar 5,668,811 5,731,759 5,307,000 Singapore Dollar 1,639,061 3,578,324 1,274,000 Thai Baht 813,085 722,665 - Swedish Krona 1,504,810 2,207,900 1,831,000 Chinese Renminbi 586,372 635,874 - Hong Kong Dollar - - 939,000

818181


52

Notes to the Financial Statements 31st December 2012 12. Other receivables, deposits and prepayments

Group31.12.2012 31.12.2011 1.1.2011

RM RM RM

Other receivables 8,804,516 10,695,468 6,563,874 Other deposits 3,367,081 2,653,445 1,850,537 Prepayments 4,102,963 3,050,196 2,592,443

16,274,560 16,399,109 11,006,854

Company31.12.2012 31.12.2011 1.1.2011

RM RM RM

Other receivables 287,974 287,974 330,002 Other deposits 728,479 66,737 67,632 Prepayments - - 833,161

1,016,453 354,711 1,230,795

Group Included in other receivables is an amount of RM301,974 (31.12.2011 – RM301,974; 1.1.2011 – RM301,974) due from a jointly controlled entity, Shenzhen Xinxihu Goodway Tyres Co. Ltd.. The amount outstanding is unsecured, interest free and repayable on demand. Company Included in other receivables is an amount of RM287,974 (31.12.2011 – RM287,974; 1.1.2011 – RM287,974) due from a jointly controlled entity, Shenzhen Xinxihu Goodway Tyres Co. Ltd.. The amount outstanding is unsecured, interest free and repayable on demand.

The foreign currency exposures of other receivables, deposits and prepayments of the group are as follows : - 31.12.2012 31.12.2011 1.1.2011 RM RM RM Australian Dollar 167,906 137,445 511,000 Swedish Krona 101,464 262,971 149,000 Chinese Renminbi 7,235,331 7,232,238 - Hong Kong Dollar - - 4,462,000 Indonesian Rupiah 281,715 310,324 308,000

82


53

Notes to the Financial Statements 31st December 2012 13. Amounts due from /(to) subsidiary companies

Company31.12.2012 31.12.2011 1.1.2011

RM RM RM

Amount due from subsidiaries 55,602,515 56,813,488 67,538,291 Amount due to subsidiaries (8,349,518) (3,714,813) (2,530,338)

47,252,997 53,098,675 65,007,953

The amounts due from /(to) subsidiary companies are in respect of advances and payments made on behalf, which are non-trade in nature, unsecured and repayable on demand.

The amounts due from subsidiary companies of which RM20,876,642 (31.12.2011 – RM21,484,356; 1.1.2011 – RM27,231,027) are subject to bear the interest rate of 1.75% above the Cost of Fund (31.12.2011 – 1.75% above the Cost of Fund; 1.1.2011 – 5.75% to 7.00%) per annum.

The foreign currency exposure of amount due from /(to) subsidiary companies of the Company is as follows : - 31.12.2012 31.12.2011 1.1.2011 RM RM RM Amount due from subsidiary companies US Dollar - - 20,084,000 Amount due to subsidiary companies US Dollar - - 1,297,000

838383


54

Notes to the Financial Statements 31st December 2012 14. Deposit with a licensed bank

Group and Company31.12.2012 31.12.2011 1.1.2011

Al-Mudharabah Investment RM100,000 RM100,000 RM100,000

The profit sharing rates of Al-Mudharabah Investment that were effective during the financial year was 3.70% (31.12.2011 – 3.70%; 1.1.2011 – 3.70%) per annum.

The deposit with a licensed bank has maturity periods of 60 months (31.12.2011 – 60 months; 1.1.2011 – 60 months).

15. Non-current assets held for sale

In year 2010, the land and buildings are classified as held for sale upon execution of conditional sales and purchase agreement to dispose of these properties. The disposal was completed in year 2011.

Leasehold Factory andland building Total

Group RM RM RM

2011

At cost

Balance at 1/1/2011 4,276,950 1,967,671 6,244,621 Addition - - -Disposal (4,276,950) (1,967,671) (6,244,621)

Balance at 31/12/2011 - - -

Accumulated depreciation

Balance at 1/1/2011 172,738 96,280 269,018 Charge for the year - - -Disposal (172,738) (96,280) (269,018)

Balance at 31/12/2011 - - -

Carrying amountsAt 1/1/11 4,104,212 1,871,391 5,975,603 At 31/12/11 - - - At 31/12/12 - - -

84


55

Notes to the Financial Statements 31st December 2012 16. Share capital

2012 2011 2012 2011Number of shares

of RM0.50 each RM RMAuthorised :At beginning of the financal year 200,000,000 100,000,000 100,000,000 50,000,000 Created during the financial year - 100,000,000 - 50,000,000

At end of the financial year 200,000,000 200,000,000 100,000,000 100,000,000

Issued and fully paid :

At beginning of the financal year 110,517,500 88,414,000 55,258,750 44,207,000 Bonus issue /issue of shares - 22,103,500 - 11,051,750

At end of the financial year 110,517,500 110,517,500 55,258,750 55,258,750

The holders of ordinary shares are entitled to receive dividends as declared from time to time and

are entitled to one vote per share at meetings of the Company. All ordinary shares rank equally with regard to the Company’s residual assets.

17. Reserves

Group31.12.2012 31.12.2011 1.1.2011

RM RM RMNon-distributableShare premium 210,571 210,571 11,262,321 Translation reserves (540,247) (446,853) -Revaluation reserves 9,181,397 9,181,397 2,472,668 Fair value reserves - - (1,287,331)

8,851,721 8,945,115 12,447,658 DistributableRetained profits 26,619,352 22,525,702 20,806,019

35,471,073 31,470,817 33,253,677

Company31.12.2012 31.12.2011 1.1.2011

RM RM RMNon-distributableShare premium 210,571 210,571 11,262,321 Fair value reserves - - 909,000

210,571 210,571 12,171,321 DistributableRetained profits /(Accumulated loss) (675,288) 2,773,272 6,026,243

(464,717) 2,983,843 18,197,564

858585


56

Notes to the Financial Statements 31st December 2012 17. Reserves (Cont’d.) Translation reserves

The translation reserves comprise all foreign currency differences arising from the translation of the financial statements of foreign operations.

Revaluation reserves

The non-distributable revaluation reserves of the Group represents surplus on revaluation of leasehold land and buildings of subsidiary companies.

Fair value reserves

Fair value reserves of the Group and the Company represents the cumulative fair value changes, net of tax, of available-for-sale financial assets until they are disposed of or impaired.

18. Non-controlling interests

Group31.12.2012 31.12.2011 1.1.2011

RM RM RM

Balance at the beginning of the year 658,064 557,937 721,000 Transferred from /(to) income statement 121,134 100,127 (280,000) Acquisition of a subsidiary - - 116,937

Balance at the end of the year 779,198 658,064 557,937

19. Deferred tax liabilities

Group31.12.2012 31.12.2011 1.1.2011

RM RM RM

Balance at the beginning of the year 8,711,010 5,981,000 8,726,000 Charge/(Credit) to income tax expense 1,308,090 704,137 (2,745,000) Charge to other comprehensive incomerevaluation surplus - 2,098,623 -Effect of movement in exchange rates (24,380) (72,750) -

Balance at the end of the year 9,994,720 8,711,010 5,981,000

Company

31.12.2012 31.12.2011 1.1.2011RM RM RM

Balance at the beginning of the year 600 - -Charge/(Credit) to income tax expense (400) 600 -

Balance at the end of the year 200 600 -

86


57


19. Deferred tax liabilities (Cont’d.) The components and movements of deferred tax assets and liabilities during the financial year

prior to offsetting are as follows : - Effect of

Charge/ Charge movementGroup (Credit) to other in

As at to income comprehensive exchange As at1st January tax expense income rates 31st December

2012 RM RM RM RM RM

Deferred tax assetsUnabsorbed reinvestment allowance (2,700,000) 1,150,000 - - (1,550,000) Unutilised tax losses (600,000) 550,000 - - (50,000) Other temporary differences (1,248,000) (13,000) - - (1,261,000)

(4,548,000) 1,687,000 - - (2,861,000)

Deferred tax liabilitiesSurplus on revaluation 6,745,473 (467,473) - - 6,278,000 Accelerated capital allowances 6,367,010 215,090 - (24,380) 6,557,720 Other temporary differences 146,527 (126,527) - - 20,000

13,259,010 (378,910) - (24,380) 12,855,720

2011Deferred tax assetsUnabsorbed reinvestment allowance (3,019,048) 319,048 - - (2,700,000) Unutilised tax losses (695,354) 95,354 - - (600,000) Other temporary differences (2,474,680) 1,226,680 - - (1,248,000)

(6,189,082) 1,641,082 - - (4,548,000)

Deferred tax liabilitiesSurplus on revaluation 4,862,876 (216,026) 2,098,623 - 6,745,473 Accelerated capital allowances 7,307,206 (867,446) - (72,750) 6,367,010 Other temporary differences - 146,527 - - 146,527

12,170,082 (936,945) 2,098,623 (72,750) 13,259,010

878787


58


19. Deferred tax liabilities (Cont’d.)

Charge/ ChargeCompany (Credit) to other

As at to income comprehensive As at1st January tax expense income 31st December

2012 RM RM RM RM

Deferred tax liabilitiesAccelerated capital allowances 600 (400) - 200

2011

Deferred tax liabilitiesAccelerated capital allowances - 600 - 600

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set-off current tax assets against current tax liabilities and where the deferred income taxes relate to the same tax authority. The net deferred tax assets and liabilities shown on the statements of financial position after appropriate offsetting are : -

Group31.12.2012 31.12.2011 1.1.2011

RM RM RM

Deferred tax assets (2,861,000) (4,548,000) (6,189,082) Deferred tax liabilities 12,855,720 13,259,010 12,170,082

9,994,720 8,711,010 5,981,000

Company

31.12.2012 31.12.2011 1.1.2011RM RM RM

Deferred tax assets - - -Deferred tax liabilities 200 600 -

200 600 -

88


59

Notes to the Financial Statements 31st December 2012 20. Borrowings

Group31.12.2012 31.12.2011 1.1.2011

RM RM RMNon-current liabilities

SecuredTerm loans 40,155,574 45,748,724 5,406,700 Islamic financings 4,334,388 924,414 1,546,047 Hire purchase creditors 718,182 154,537 329,957 MUNIF - - 49,091,000

45,208,144 46,827,675 56,373,704

Current liabilities

SecuredBank overdraft 8,662,017 5,971,787 583,744 Bills payable 51,664,506 50,623,131 16,807,421 Term loans 6,320,040 6,435,911 566,772 Islamic financings 465,612 778,782 778,782 Hire purchase creditors 278,579 178,321 347,974 MUNIF - - 10,000,000

67,390,754 63,987,932 29,084,693

UnsecuredBills payable - - 31,997,232

67,390,754 63,987,932 61,081,925

Total borrowings

SecuredBank overdraft (Note 21) 8,662,017 5,971,787 583,744 Bills payable (Note 21) 51,664,506 50,623,131 16,807,421 Term loans (Note 22) 46,475,614 52,184,635 5,973,472 Islamic financings (Note 23) 4,800,000 1,703,196 2,324,829 Hire purchase creditors (Note 24) 996,761 332,858 677,931 MUNIF - - 59,091,000

112,598,898 110,815,607 85,458,397

UnsecuredBills payable - - 31,997,232

112,598,898 110,815,607 117,455,629

898989


60

Notes to the Financial Statements 31st December 2012 20. Borrowings (Cont’d.)

Company31.12.2012 31.12.2011 1.1.2011

RM RM RMNon-current liabilities

SecuredTerm loans 40,155,574 44,206,630 -Hire purchase creditors - 8,772 35,178 MUNIF - - 49,091,000

40,155,574 44,215,402 49,126,178

Current liabilities

SecuredTerm loans 6,320,040 6,019,244 -Hire purchase creditors 8,772 26,406 26,406 MUNIF - - 10,000,000

6,328,812 6,045,650 10,026,406

Total borrowings

SecuredTerm loans (Note 22) 46,475,614 50,225,874 -Hire purchase creditors (Note 24) 8,772 35,178 61,584 MUNIF - - 59,091,000

46,484,386 50,261,052 59,152,584

Effective interest rates per annum on the borrowings of the Group and of the Company are as follows : -

Group31.12.2012 31.12.2011 1.1.2011

% % %

Bank overdraft 7.35 - 7.85 7.35 - 7.85 7.05 - 7.55Bills payable 1.49 - 5.60 1.49 - 5.60 2.99 - 7.55Term loans 5.10 - 8.35 5.10 - 8.35 4.15 - 7.00Islamic financings 7.00 - 10.60 7.00 7.00 Hire purchase creditors 2.33 - 4.00 2.33 - 4.00 2.33 - 3.88MUNIF - 6.35 - 6.55 5.75 - 7.00

90


61

Notes to the Financial Statements 31st December 2012 20. Borrowings (Cont’d.)

Effective interest rates per annum on the borrowings of the Group and of the Company are as follows (Cont’d.) : -

Company

31.12.2012 31.12.2011 1.1.2011% % %

Term loans 8.35 8.35 -Hire purchase creditors 4.28 4.28 4.28 MUNIF - - 5.75 - 7.00

The MUNIF is subject to the fulfillment of the following significant covenants : -

i) Gearing ratio of the Group shall not be greater than 1.75 : 1.00 times throughout the tenure of the MUNIF.

ii) Finance service cover ratio of the Group shall not be less than 1.50 : 1.00 times throughout the

tenure of the MUNIF. 21. Bank overdraft and bills payable Secured Group

The bank overdraft and bills payable are secured by the following : -

i) fixed charge over the leasehold land and buildings of a subsidiary, Big Wheel Green Tyres Sdn. Bhd. (Note 5);

ii) corporate guarantee by the Company of RM41.4 million.

The bank overdraft bears interest at rate range from 7.35% to 7.85% (31.12.2011 – 7.35% to 7.85%; 1.1.2011 - 7.05% to 7.55%) per annum.

The bills payable bears interest at rate range from 1.49% to 5.60% (31.12.2011 – 1.49% to 5.60%; 1.1.2011 - 2.99% to 7.55%) per annum.

919191


62


22. Term loans

Group31.12.2012 31.12.2011 1.1.2011

RM RM RM

SecuredTerm loan I - 1,958,761 2,300,279 Term loan II - - 3,673,193 Term loan III 46,475,614 50,225,874 -

46,475,614 52,184,635 5,973,472

Repayable as follows : -

Non-current liabilities- later than one year and not later than two years 6,320,040 6,736,706 592,480 - later than two years and not later than five years 18,960,120 20,085,548 2,340,818 - later than five years 14,875,414 18,926,470 2,473,402

40,155,574 45,748,724 5,406,700

Current liabilities- not later than one year 6,320,040 6,435,911 566,772

46,475,614 52,184,635 5,973,472

Company31.12.2012 31.12.2011 1.1.2011

RM RM RM

SecuredTerm loan I - - -Term loan II - - -Term loan III 46,475,614 50,225,874 -

46,475,614 50,225,874 -

92


63

Notes to the Financial Statements 31st December 2012 22. Term loans (Cont’d.)

Company31.12.2012 31.12.2011 1.1.2011

RM RM RM


Non-current liabilities- later than one year and not later than two years 6,320,040 6,320,040 -- later than two years and not later than five years 18,960,120 18,960,120 -- later than five years 14,875,414 18,926,470 -

40,155,574 44,206,630 -

Current liabilities- not later than one year 6,320,040 6,019,244 -

46,475,614 50,225,874 -

Group and Company The term loan I is repayable by 71 equal monthly instalments of RM34,722 and final instalment of RM34,723 and bears interest at a rate of 2% per annum above the prevailing one month Cost of Fund. The term loan I has been fully settled during the financial year.

The term loan II is repayable by 132 monthly instalments in which the first nine year’s monthly instalment is RM41,984 and the remaining years’ monthly instalment is RM42,616. The term loan II bears interest at a fixed rate of 5.75% per annum for the first ten years and thereafter at 0.5% per annum above the bank’s base lending rate (BLR). The term loan II has been fully settled in year 2011. The term loan III is repayable by 120 equal monthly instalments of RM526,670 and bears interest at a rate of 1.75% per annum above the Cost of Fund.

The term loans are secured by the following : -

i) first legal charge over the leasehold land and buildings of subsidiaries, Goodway Rubber

Industries Sdn. Bhd. and Big Wheel Green Tyres Sdn. Bhd. (Note 5); ii) corporate guarantee by the Company of RM88.9 million.

939393


64

Notes to the Financial Statements 31st December 2012 23. Islamic financings

Group31.12.2012 31.12.2011 1.1.2011

RM RM

SecuredIslamic financings- Bai Bithaman Ajil - 1,703,196 2,324,829 - Commodity Murabahah Term Financing 4,800,000 - -

4,800,000 1,703,196 2,324,829


Non-current liabilities- later than one year and not later than two years 465,612 697,346 596,560 - later than two years and not later than five years 1,396,836 227,068 949,487 - later than five year 2,471,940 - -

4,334,388 924,414 1,546,047

Current liabilities- not later than one year 465,612 778,782 778,782

4,800,000 1,703,196 2,324,829

The Islamic financing – Bai Bithaman Ajil is repayable by 84 equal monthly instalments of RM64,898 and bears expense at a fixed rate of 7% per annum. The Islamic financing has been fully settled during the financial year.

The Islamic financing – Commodity Murabahah Term Financing is repayable by 180 equal monthly instalments of RM38,801 and bears expense at a rate of 4% per annum above the bank’s base financing rate (BFR).

The Islamic financings are secured by the following : - i) fixed charges over the leasehold land and buildings of a subsidiary company, Big Wheel Green

Tyres Sdn. Bhd. ii) corporate guarantee by the Company for a sum of RM9,737,296.

94


65

Notes to the Financial Statements 31st December 2012 24. Hire purchase creditors

Group31.12.2012 31.12.2011 1.1.2011

RM RM RM

Minimum hire purchase payments : -- not later than one year 323,557 195,429 372,944 - later than one year and not later than two years 205,458 141,998 361,711 - later than two years and not later than five years 505,416 23,899 -- later than five years 100,157 - -

1,134,588 361,326 734,655 Less : Future interest charges (137,827) (28,468) (56,724)

Present value of hire purchasecreditors 996,761 332,858 677,931


Non-current liabilities- later than one year and not later than two years 175,893 131,339 329,957 - later than two years and not later than five years 456,336 23,198 -- later than five years 85,953 - -

718,182 154,537 329,957


996,761 332,858 677,931

Company31.12.2012 31.12.2011 1.1.2011

RM RM RM

Minimum hire purchase payments : -- not later than one year 9,762 29,376 29,376 - later than one year and not later than two years - 9,762 29,376 - later than two years and not later than five years - - 9,762 - later than five years - - -

9,762 39,138 68,514 Less : Future interest charges (990) (3,960) (6,930)

Present value of hire purchasecreditors 8,772 35,178 61,584

959595


66

Notes to the Financial Statements 31st December 2012 24. Hire purchase creditors (Cont’d.)

Company31.12.2012 31.12.2011 1.1.2011

RM RM RM


Non-current liabilities- later than one year and not later than two years - 8,772 26,406 - later than two years and not later than five years - - 8,772 - later than five years - - -

- 8,772 35,178


8,772 35,178 61,584 Effective interest rates of hire purchase for the financial year range from 2.33% to 4.00% (31.12.2011 – 2.33% to 4.00%; 1.1.2011 – 2.33% to 3.88%) per annum.

The Group and Company obtain hire purchase facilities to finance its purchase of motor vehicles.

The remaining hire purchase terms range from 1 to 6 years as at 31st December 2012. Implicit interest rates of the hire purchase are fixed at the inception of the hire purchase arrangements, and the hire purchase instalments are fixed throughout the hire purchase period. The Group and Company have the option to purchase the assets at the end of the agreements. There are no significant restriction clauses imposed on the hire purchase arrangements.

25. Trade payables Group

The normal credit terms of trade payables range from immediate payment to 90 days. However, the terms may vary upon negotiation with the trade payables.

The foreign currency exposures of trade payables of the group are as follows : - 31.12.2012 31.12.2011 1.1.2011 RM RM US Dollar 6,245,746 7,925,990 3,615,000 Japanese Yen 239,302 1,466,324 774,000 Australian Dollar 701,630 85,026 69,000 EURO - 246,708 - Chinese Renminbi 315,609 305,701 - Hong Kong Dollar - 56,081 238,000 Swedish Krona 146,155 - 94,000

96


67

Notes to the Financial Statements 31st December 2012 26. Other payables and accruals

Group31.12.2012 31.12.2011 1.12.2011

RM RM RM

Other payables 7,031,426 4,783,790 5,856,589 Accruals 6,738,350 4,218,077 3,095,573

13,769,776 9,001,867 8,952,162

Company31.12.2011 31.12.2011 1.1.2011

RM RM RM

Other payables 259,907 69,246 -Accruals 620,789 352,090 168,659

880,696 421,336 168,659

Group Included in other payables is an amount of RM2,290 (31.12.2011 – Nil; 1.1.2011 – Nil) due to a

company, Coltrac Sdn. Bhd. which is connected to a director of the Company, Tai Boon Wee. The amount outstanding is unsecured, interest free and repayable on demand.

Group and Company Included in accruals is an accrued directors’ remuneration of RM434,625 (31.12.2011 –

RM242,625; 1.1.2011 – Nil ). Group

The foreign currency exposures of other payables and accruals of the group are as follows : -

31.12.2012 31.12.2011 1.1.2011 RM RM RM Australian Dollar 1,173,288 162,502 674,000 Swedish Krona 218,071 534,918 272,000 Chinese Renminbi 233,097 233,097 - Hong Kong Dollar 57,990 - 340,000 Great Britain Pound 15,121 2,448 - Philippines Peso 6,572 7,159 - US Dollar 1,040,302 207,324 - Indonesian Rupiah 23,798 - - Japanese Yen 61,703 - - Singapore Dollar 66,269 - -

979797


68


27. Revenue

Group Company2012 2011 2012 2011

RM RM RM RMRevenueSale of rubber compounds 176,798,037 164,293,040 - -Revenue from retreading services 79,304,886 73,862,921 - -Trading 28,966,190 39,784,350 - -Management fee - - 2,637,742 2,720,251

285,069,113 277,940,311 2,637,742 2,720,251

28. Other income

Group Company2012 2011 2012 2011

RM RM RM RM

Bad debts recovered - 46,095 - -Gain on foreign exchange - realised 143,344 625,763 - -- unrealised 68,362 550,351 - -Gain on disposal of property,plant and equipment 99,924 2,643,093 - -Insurance claim - 13,520 - -Interest income 108,816 108,395 - 2,266,091 Interest on late payment 12,679 - - -Other payables written back 11,823 - - -Reversal of impairment lossesof trade receivables 163,544 184,351 - -Reversal of accrued expenses - 167,923 - -Sundry income 410,588 182,080 - -

1,019,080 4,521,571 - 2,266,091

98


69

Notes to the Financial Statements 31st December 2012 29. Profit /(Loss) before taxation

Group Company 2012 2011 2012 2011 RM RM RM RM Profit before tax is arrived at after charging : - Amortisation of intangible assets 82,303 57,096 - - Auditors’ remuneration - Audit services

- Kreston John & Gan (KJG) 155,000 120,000 40,000 30,000 - Underprovision in previous year 43,000 - 10,000 8,000 - Affiliates of KJG 9,280 2,907 - - - Other auditors 60,591 59,740 - -

Bad debts written off 389,245 - - - Deposit written off - 1,500 - - Depreciation 6,532,220 6,727,941 60,959 53,108 Employee benefits expenses (Note 30) 26,378,647 24,573,491 1,920,512 1,923,370 Impairment losses on trade receivables 579,325 374,600 - - Impairment losses on investment in subsidiaries

- - 690,234 -

Impairment losses on investment in associated company

-

-

303,000

-

Impairment losses on investment in jointly controlled entity

-

-

1,048,000

-

Impairment losses on obsolete inventories

744,143 189,788 - -

Interest expense on :- - Trust receipt 1,174 - - - - Bank overdraft 526,591 650,375 - - - Bills payable 2,300,118 2,362,800 - - - Bond interest - 3,765,318 - - - Hire purchase 21,954 25,181 2,970 2,970 - Islamic financing - 151,191 - - - MUNIF - 3,765,318 - 3,765,318 - Term loans 2,574,829 737,378 - - - Islamic financing 98,737 - - - Inventories written off - 2,073 - - Loss on foreign exchange - realised 594,794 364,432 - - - unrealised 920,894 - - - Management fee - 165,188 - - Plant and equipment written off 1,175 9 - - Rental 490,377 656,677 - - Reversal of unrealised gain on forward contract

-

24,578

-

-

999999


70

Notes to the Financial Statements 31st December 2012 29. Profit /(Loss) before taxation (Cont’d.)

Group Company 2012 2011 2012 2011 RM RM RM RM and after crediting : - Bad debts recovered - 46,095 - - Gain on disposal of property, plant and equipment

99,924

2,643,093

-

-

Gain on fair value - - - - Gain on foreign exchange - realised 143,344 625,763 - - - unrealised 68,362 550,351 - - Interest income 108,816 108,395 - 2,266,091 Interest on late payment 12,679 - - - Other payable written back 11,823 - - - Reversal of impairment losses on trade receivables

163,544

184,351

-

-

Reversal of impairment for slow moving inventories

-

827,375

-

-

Management fee - - 2,637,742 2,720,251 30. Employee benefits expense

Group Company2012 2011 2012 2011

RM RM RM RM

Salaries and allowances 21,632,751 21,405,754 1,595,933 1,618,880 Employees Provident Fund 1,197,410 1,155,088 213,281 207,905 Social security costs 168,494 342,599 3,831 3,870 Other staff related expenses 3,379,992 1,670,050 107,467 92,715

26,378,647 24,573,491 1,920,512 1,923,370

Included in employee benefits expense of the Group and of the Company are executive directors’ remuneration excluding benefits-in-kind, amounting to RM1,739,210 (2011 - RM1,828,250) and RM 1,267,750 (2011 - RM1,144,250) respectively as disclosed in Note 31.

100


71

Notes to the Financial Statements 31st December 2012 31. Directors’ remuneration

Group Company2012 2011 2012 2011

RM RM RM RMDirectors of the Company

Executive directors- Fees 33,000 33,000 33,000 33,000 - Other emoluments 1,100,000 974,000 1,100,000 974,000 - Benefits-in-kind - - - -Non-executive directors- Fees 53,625 53,625 53,625 53,625 - Other emoluments 81,125 83,625 81,125 83,625

1,267,750 1,144,250 1,267,750 1,144,250

Total excluding benefits-in-kind 1,267,750 1,144,250 1,267,750 1,144,250

Directors of a subsidiary companyExecutive directors- Other emoluments 471,460 684,000 - -- Benefits-in-kind - - - -

471,460 684,000 - -

Total excluding benefits-in-kind 471,460 684,000 - -

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

Number of directors Group Company 2012 2011 2012 2011 Directors of the Company Executive directors : - RM50,001 – RM100,000 - - - - - RM100,000 - RM300,000 - 1 - 1 - RM300,001 - RM600,000 2 1 2 1 Non-Executive directors : - Below RM50,000 3 3 3 3 Directors of subsidiary companies Executive directors : - RM100,000 - RM200,000 1 1 - - - RM200,001 - RM300,000 1 2 - -

101101101


72

Notes to the Financial Statements 31st December 2012 32. Income tax expense

Group Company2012 2011 2012 2011

RM RM RM RM

Malaysian income tax Income tax- current year provision 1,083,501 2,081,080 63,000 310,000 - under /(over)provision in previous year (251,420) 3,170 (165,521) 663,588 Deferred taxation 1,149,518 357,381 (400) 600 Real property gains tax - 170,000 - -

1,981,599 2,611,631 (102,921) 974,188

Foreign income taxIncome tax- current year provision 1,381,928 865,485 - -- underprovision in previous year - (12,685) - -Deferred taxation 158,572 346,756 - -

1,540,500 1,199,556 - -

3,522,099 3,811,187 (102,921) 974,188

Domestic income tax is calculated at the Malaysian statutory tax rate of 25% of the estimated

assessable profit for the year. Taxation for other jurisdiction is calculated at the rates in the respective jurisdictions.

The numerical reconciliation between the effective tax rate and the applicable tax rate is as

follows:-

2012 2011 2012 2011% % % %

Applicable tax rate 25 25 (25) (25) Under/(Over)provision of taxation in previous year (1) 6 (7) 30 Real property gain tax - 2 - -Tax effects of :- Different tax rates in other countries - 2 - -- Non-allowable expenses 18 17 28 38 - Non-taxable income (3) (2) - -- Deferred tax assets not recognised during the year - 1 - -- Utilisation of unabsorbed tax losses and capital allowances - (2) - -

Effective tax rate 39 49 (4) 43

CompanyGroup

102


73

Notes to the Financial Statements 31st December 2012 32. Income tax expense (Cont’d.)

The utilisation of unabsorbed tax losses and capital allowances is as follows : -

2012 2011RM RM

Capital allowances - approximatelyBalance brought forward 7,723,300 6,773,300 Claimed during the year - 950,000

7,723,300 7,723,300 Utilised during the year - -

Balance carried forward 7,723,300 7,723,300

Tax losses - approximatelyBalance brought forward 11,494,000 11,616,000 Claimed during the year - 136,000

11,494,000 11,752,000 Utilised during the year (2,013,000) (258,000)


Reinvestment allowances - approximatelyBalance brought forward 13,302,000 13,789,000 Claimed during the year - -

13,302,000 13,789,000 Utilised during the year (4,697,000) (487,000)


Group

The tax savings of the Group arising from utilisation of unabsorbed tax losses, capital allowances and reinvestment allowances brought forward from previous year amounted to approximately RM1,677,500 (2011 – RM186,000). Unabsorbed tax losses, capital allowances and unutilised reinvestment allowance of the Group which are available to set-off against future chargeable income for which the tax effects have not been recognised in the financial statements are shown below : - Group 2012 2011 RM RM Unabsorbed tax losses 9,481,000 11,494,000 Unabsorbed capital allowances 7,723,300 7,723,300 Unutilised reinvestment allowance 8,605,000 13,302,000

103103103


74

Notes to the Financial Statements 31st December 2012 32. Income tax expense (Cont’d.) The potential deferred tax benefits that have not been accounted for in the financial statements are

as follows : - Unabsorbed Unutilised Accelerated

Unabsorbed capital reinvestment capitalGroup tax losses allowances allowances allowances Total

RM RM RM RM RM

Balance at 1st January 2011 2,256,800 1,693,600 540,500 (186,000) 4,304,900 Arising /(Utilised) during the year (12,500) 196,000 - (127,000) 56,500

Balance at 31st December 2011 2,244,300 1,889,600 540,500 (313,000) 4,361,400 Arising /(Utilised) during the year 31,500 156,500 - (49,700) 138,300

Balance at 31st December 2012 2,275,800 2,046,100 540,500 (362,700) 4,499,700

No deferred tax asset has been recognised as the Group is unable to ascertain whether it is probable that taxable profit of the subsidiary companies will be available against which the deductible temporary differences can be utilised.

33. Earnings per share Basic :

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

Group2012 2011

RM RMProfit for the year attributable to ordinary equity holdersof the Company 5,293,872 3,916,014

Weighted average number of ordinary shares in issue 110,517,500 110,517,500

Basic earnings per share (sen) 4.79 3.54

Number of shares

Diluted : The basic and diluted earnings per share are equal as the Company has no dilutive potential

ordinary shares.

104


75

Notes to the Financial Statements 31st December 2012 34. Dividends The dividends paid in respect of financial year ended 31st December 2011 are as follows : -

2012 2011RM RM

- Final tax exempt dividend of 1.086 sen per ordinary shares paid on 23rd July 2012 1,200,222 -

The directors do not recommend any dividend to be paid for the year under review. 35. Purchase of property, plant and equipment

During the financial year, the Group and the Company made the following cash payments to purchase property, plant and equipment : -

Group Company2012 2011 2012 2011

RM RM RM RM

Purchase of property, plant andequipment (Note 5) 7,943,120 3,987,905 - 293,911 Financed by hire purchasearrangements (872,495) - - -

Cash payments on purchase of property, plant and equipment 7,070,625 3,987,905 - 293,911

36. Cash and cash equivalents

Cash and cash equivalents included in the cash flow statements comprise the following statements of financial position amounts : -

Group31.12.2012 31.12.2011 1.1.2011

RM RM RM

Cash and bank balances 11,436,255 7,993,956 10,706,933 Deposit with a licensed bank 100,000 100,000 100,000 Bank overdraft (8,662,017) (5,971,787) (583,744)

2,874,238 2,122,169 10,223,189

Company31.12.2012 31.12.2011 1.1.2011

RM RM RM

Cash and bank balances 90,634 73,411 76,683 Deposit with a licensed bank 100,000 100,000 100,000

190,634 173,411 176,683

105105105


76


36. Cash and cash equivalents (Cont’d.) Group

The foreign currency exposures of cash and bank balances of the group are as follows : -

31.12.2012 31.12.2011 1.1.2011 RM RM RM Australian Dollar 4,485,128 3,053,621 3,395,000 Swedish Krona 859,727 1,084,788 537,000 US Dollar 816,844 162,715 1,759,000 Chinese Renminbi 116,914 109,793 - Hong Kong Dollar 1,231 - 784,000 Indonesian Rupiah - 17,747 17,000 Singapore Dollar 148 1 30,000 EURO 4,387 12 39,000

37. Segmental information

Segment information is presented in respect of the Group’s business and geographical segments. The primary format, business segments, is based on the Group’s management and internal reporting structure.

Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated items mainly comprise interest-earning assets and revenue, interest-bearing loans, borrowings and expenses, and corporate assets and expenses.

Segment capital expenditure is the total cost incurred during the year to acquire segment assets that are expected to be used for more than one year.

Business segments The Group comprises the following main business segments : - Rubber compounds Manufacture and distribution of rubber compounds and related products. Retreading services Retreading of tyres for motor vehicles, earthmovers and trading of tyres related products. Trading Retailing and wholesale of natural rubber and other related goods. Geographical segments The retreading service and trading operations are solely based in Malaysia. Whereas, the rubber compound operations are based not only in Malaysia but also spread throughout the rest of Asia, Republic of China, Europe and Oceanic region, which comprising Australia and New Zealand. In presenting information on the basis of geographical segments, segment revenue is based on the geographical location of customers whereas segment assets are based on the geographical location of assets.

106

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109109109


80


38. Contingent liabilities

Group Company2012 2011 2012 2011

RM RM RM RM

UnsecuredCorporate guarantees issued to bankfor bank facilities granted to : -- subsidiary companies - - 44,916,773 64,500,000

SecuredBank guarantee issued infavour of third parties 5,246,954 2,362,194 - -

5,246,954 2,362,194 44,916,773 64,500,000

Group Secured The bank guarantee is secured by the leasehold land and buildings of subsidiary companies.

The directors are of the opinion that adequate allowance has been made in the financial statements for any possible liabilities.

39. Significant event subsequent to the reporting date

On 23rd January 2013, a subsidiary company of the Company, Goodway Rubber Industries Sdn. Bhd. acquired 2 ordinary shares of RM1.00 each, representing 100% equity interest in Wellrank Equity Sdn. Bhd., from third parties, with a total cash consideration of RM2.00. The acquisition does not have any significant impact to the financial statements of the Group.

110


81

Notes to the Financial Statements 31st December 2012 40. Fair value of financial instruments a) Categories of financial instruments

The carrying amounts of each of the categories of financial instruments as at the statement of financial position are as follows : - 31.12.2012 31.12.2011 1.1.2011 RM RM RM

Group

Loans and receivables - Trade receivables 61,120,529 60,245,408 46,448,613 - Other receivables 8,804,516 10,695,468 6,563,874 - Deposits with a licensed bank 100,000 100,000 100,000 - Cash and bank balances 11,436,255 7,993,956 10,706,933 Financial liabilities at amortised cost - Trade payables 21,948,693 30,061,922 13,085,579 - Other payables 7,031,426 4,783,790 5,856,589 - Bank overdraft 8,662,017 5,971,787 583,744 - Bills payable 51,664,506 50,623,131 16,807,421 - Term loans 46,475,614 52,184,635 5,973,472 - Islamic financings 4,800,000 1,703,196 2,324,829 - Hire purchase creditors 996,761 332,858 677,931 - MUNIF - - 59,091,000

Company

Loans and receivables - Other receivables 287,794 287,974 330,002 - Amount due from subsidiary companies 55,602,515 56,813,488 67,538,291 - Deposits with a licensed bank 100,000 100,000 100,000 - Cash and bank balances 90,634 73,411 76,683 Financial liabilities at amortised cost - Other payables 259,907 69,246 - - Amount due to subsidiary companies 8,349,518 3,714,813 2,530,338 - Term loan 46,475,614 50,225,874 - - Hire purchase creditor 8,772 35,178 61,584 - MUNIF - - 59,091,000

111111111


82

Notes to the Financial Statements 31st December 2012 40. Fair value of financial instruments (Cont’d.) b) Financial risk management

The Group’s financial risk management policy seeks to ensure that adequate financial resources are available for the development of the Group’s businesses whilst managing its risks.

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

i) Foreign currency risk The Group incurs foreign currency risk on transactions that are denominated in foreign

currencies. The currencies giving rise to this risk are primarily the United States Dollar, EURO, Chinese Renminbi, Great Britain Pound and others. The Group has not entered into any derivative instruments for hedging or trading purposes as the net exposure to foreign currency risk is not significant.

The carrying amounts of the Group’s foreign currency denominated financial assets and

financial liabilities at the end of the reporting period are as follows : -

31.12.2012 31.12.2011 1.1.2011 Group RM RM RM

US Dollar - Trade receivables (Note 11) 18,070,433 16,754,000 3,896,000 - Trade payables (Note 25) (6,245,746) (7,925,990) (3,615,000) - Other payables (Note 26) (1,040,302) (207,324) - - Cash and bank balances (Note 36) 816,844 162,715 1,759,000 EURO - Trade receivables (Note 11) - 147,955 775,000 - Trade payables (Note 25) - (246,708) - - Cash and bank balances (Note 36) 4,387 12 39,000 Australian Dollar - Trade receivables (Note 11) 5,668,811 5,731,759 5,307,000 - Other receivables, deposits and prepayments (Note 12)

167,906

137,445

511,000

- Trade payables (Note 25) (701,630) (85,026) (69,000) - Other payables and accruals (Note 26) (1,173,288) (162,502) (674,000) - Cash and bank balances (Note 36) 4,485,128 3,053,621 3,395,000 Swedish Krona - Trade receivables (Note 11) 1,504,810 2,207,900 1,831,000 - Other receivables, deposits and prepayments (Note 12)

101,464

262,971

149,000

- Trade payables (Note 25) (146,155) - (94,000) - Other payables and accruals (Note 26) (218,071) (534,918) (272,000) - Cash and bank balances (Note 36) 859,727 1,084,788 537,000

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83

Notes to the Financial Statements 31st December 2012 40. Fair value of financial instruments (Cont’d.)

b) Financial risk management (Cont’d.) i) Foreign currency risk (Cont’d.)

31.12.2012 31.12.2011 1.1.2011 Group RM RM RM

Chinese Renminbi - Trade receivables (Note 11) 586,372 635,874 - - Other receivables, deposits and prepayments (Note 12)

7,235,331

7,232,238

-

- Trade payables (Note 25) (315,609) (305,701) - - Other payables and accruals (Note 26) (233,097) (233,097) - - Cash and bank balances (Note 36) 116,914 109,793 - Singapore Dollar - Trade receivables (Note 11) 1,639,061 3,578,324 1,274,000 - Other payables (Note 26) (66,269) - - - Cash and bank balances (Note 36) 148 1 30,000 Thai Baht - Trade receivables (Note 11) 813,085 722,665 - Japanese Yen - Trade payables (Note 25) (239,302) (1,466,324) (774,000) Hong Kong Dollar - Trade receivables (Note 11) - - 939,000 - Other receivables, deposits and prepayments (Note 12)

-

-

4,462,000

- Trade payables (Note 25) - (56,081) (238,000) - Other payables and accruals (Note 26) (57,990) - (340,000) - Cash and bank balances (Note 36) 1,231 - 784,000 Indonesian Rupiah - Other receivables, deposits and prepayments (Note 12)

281,715

310,324

308,000

- Other payables (Note 26) (61,703) - - - Cash and bank balances (Note 36) - 17,747 17,000 Great Britain Pound - Other payables (Note 26) (15,121) (2,448) - Philippines Peso - Other payables (Note 26) (6,572) (7,159) -

Company

US Dollar - Amount due from subsidiary companies (Note 13)

-

-

20,084,000

- Amount due to subsidiary companies (Note 13)

-

-

1,297,000

113113113


84


b) Financial risk management (Cont’d.) i) Foreign currency risk (Cont’d.)

Foreign currency risk sensitivity A 10% strengthening of Ringgit Malaysia against the following foreign currencies at the end of the reporting period would increase /(decrease) the profit before tax by the amounts shown below. This analysis assumes that all other variables remain unchanged.

USD EURO AUD RMB SEK TotalRM RM RM RM RM RM

31.12.2012

Profit before tax 6,407,479 (1,222,562) 370,090 (38,613) 35,645 5,552,039

31.12.2011

Profit before tax 4,355,304 31,552 (168,603) (32,076) (132,974) 4,053,203

1.1.2011

Profit before tax 7,334,000 61,000 (83,000) - (14,000) 7,298,000

A 10% weakening of Ringgit Malaysia against the above foreign currencies at the end of

reporting period would have had the equal but opposite effect on the above currencies to the amounts shown above, on the basis that all other variables remain unchanged.

ii) Credit risk

The credit risk is controlled by the application of credit approvals, limits and monitoring procedures. Credit risks are minimised and monitored via strictly limiting the Group’s associations to business partners with high credit worthiness. The Group also has an internal credit review which is conducted if the credit risk is material. Trade receivables are monitored on an ongoing basis via Group management reporting procedures.

Receivables

As at the end of the reporting period, the maximum exposure to credit risk arising from

receivables is represented by the carrying amount in the statement of financial position. Management has taken reasonable steps to ensure that receivables that are neither past due nor impaired are measured at their realisable values. A significant portion of these receivables are regular customers that have been transacting with the Group. The Group uses ageing analysis to monitor the credit quality of the receivables. Any past due receivables having significant balances, which are deemed to have higher credit risk, are monitored individually.

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85


b) Financial risk management (Cont’d.)

ii) Credit risk

The ageing analysis of the trade receivables is as follows : -

31.12.2012 31.12.2011 1.1.2011RM RM RM

Within credit term : 43,207,086 48,187,745 33,292,013 Past due :1 - 30 days 8,177,286 4,308,052 5,934,300 Over 30 days 9,736,157 7,749,611 7,222,300

17,913,443 12,057,663 13,156,600

Total trade receivables 61,120,529 60,245,408 46,448,613

Receivables that are neither past due nor impaired

Trade receivables that are neither past due nor impaired are creditworthy debtors with good payment records with the Group. None of the Group’s trade receivables have been renegotiated during the financial year.

Receivables that are past due but not impaired

As at 31st December 2012, trade receivables of approximately RM17,913,000 (31.12.2011 – RM12,057,000; 1.1.2011 – RM13,158,000) were past due but not impaired. These relate to a number of independent customers for whom there is no recent history of default. All trade receivables, whether current or past due, are reviewed for impairment on a case-by-case basis to identify impairment taking into account the ageing of the debt, the likelihood of recoverability and other external factors.

Inter company balances

As at the end of the reporting period, the maximum exposure to credit risk is represented by their carrying amount in the statement of financial position. As at the end of the reporting period, there was no indication that the amount due from related companies are not recoverable, The Company does not specifically monitor the ageing of these balances as the amounts are repayable on demand.

iii) Liquidity and cash flow risks

Liquidity risk is the risk that the Group will encounter difficulty in meeting financial obligations due to shortage of funds. The Group’s exposure to liquidity risk arises primarily from mismatches of the maturities of financial assets and liabilities. The Group manages its debt maturity profile, operating cash flows and the availability of funding so as to ensure that refinancing, repayment and funding needs are met.

115115115


86


b) Financial risk management (Cont’d.) iii) Liquidity and cash flow risks (Cont’d.)

The Group seeks to achieve a balance between certainty of funding even in difficult times from the markets a flexible and cost-effective borrowing structure. This is to ensure that at the minimum, all projected net borrowing needs are covered by committed facilities. Also, the objective for debt maturity is to ensure that the amount of debt maturing in any one year is not beyond the Group’s means to repay and refinance.

Analysis of financial instruments by remaining contractual maturities

The following table analyses the remaining contractual maturity for non-derivative financial liabilities. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Group can be required to pay.

Effective On demandInterest or within One to Over Total

Rate one year five years five years% RM RM RM RM

31.12.2012

Trade payables - 21,948,693 - - 21,948,693 Other payables - 7,031,426 - - 7,031,426 Bank overdraft 7.35-7.85 8,662,017 - - 8,662,017 Bills payable 1.49-5.60 51,664,506 - - 51,664,506 Term loans 5.10-5.15 6,320,040 25,280,160 14,875,414 46,475,614 Islamic financing 7.00-10.60 465,612 1,862,448 2,471,940 4,800,000 Hire purchase creditors 2.33-4.00 278,579 632,589 85,593 996,761

Total undiscountedfinancial liabilities 96,370,873 27,775,197 17,432,947 141,579,017

31.12.2011

Trade payables - 30,061,922 - - 30,061,922 Other payables - 4,783,790 - - 4,783,790 Bank overdraft 7.35-7.85 5,971,787 - - 5,971,787 Bills payable 1.49-5.60 50,623,131 - - 50,623,131 Term loans 5.10-5.15 6,435,911 26,822,254 18,926,470 52,184,635 Islamic financing 7.00 778,782 924,414 - 1,703,196 Hire purchase creditors 2.33-4.00 178,321 154,537 - 332,858

Total undiscounted financial liabilities 98,833,644 27,901,205 18,926,470 145,661,319

116


87


b) Financial risk management (Cont’d.) iii) Liquidity and cash flow risks (Cont’d.)

Effective On demandInterest or within One to Over Total

Rate one year five years five years% RM RM RM RM

1.1.2011

Trade payables - 13,085,579 - - 13,085,579 Other payables - 5,856,589 - - 5,856,589 Bank overdraft 7.05-7.55 583,744 - - 583,744 Bills payable 2.99-7.55 16,807,421 - - 16,807,421 Term loans 4.15-7.00 566,772 2,933,298 2,473,402 5,973,472 Islamic financing 7.00 778,782 1,546,047 - 2,324,829 Hire purchase creditors 2.33-3.88 347,974 329,957 - 677,931 MUNIF 5.75-7.00 10,000,000 49,091,000 - 59,091,000

Total undiscounted financial liabilities 48,026,861 53,900,302 2,473,402 104,400,565

iv) Interest rate risk

The Group’s policy is to borrow principally on a floating rate basis but to retain a proportion of fixed rate debt. The objectives for the mix between fixed and floating rate borrowings are to reduce the impact of an upward change in interest rates while enabling benefits to be enjoyed if interest rates fall. The mix between fixed and floating rate borrowings are monitored and varied according to changes in interest rates to ensure that the Group’s cost of financing is kept at the lowest possible. The Group does not generally hedge interest rate risks. Hedging of risk through the use of financial instruments may be adopted should its use results in significant cost savings. The Group has a policy to ensure that the rates obtained are competitive. The Group’s other interest rate risk relates to its placement of fixed deposits with licensed banks. The Group’s policy is to obtain the most favorable interest rate available.

117117117


88

Notes to the Financial Statements 31st December 2012 40. Fair value of financial instruments (Cont’d.) b) Financial risk management (Cont’d.)

iv) Interest rate risk (Cont’d.) The table below summarises the carrying amounts of the Group’s and the Company’s financial assets and liabilities, categorised by their maturity dates, which represent the Group’s and the Company’s exposure to interest rate risk : - Group

Not later than

1 year

1 to 5 years

Later than

5 years

Total

Effective interest

rate during the

financial year RM RM RM RM % Financial assets - Fixed deposits 100,000 - - 100,000 3.70 Financial liabilities - Bank overdraft 8,662,017 - - 8,662,017 7.35-7.85 - Bills payable 51,664,506 - - 51,664,506 1.49-5.60 - Term loans 6,320,040 25,280,160 14,875,414 46,475,614 5.10-8.35 - Islamic financings 465,612 1,862,448 2,471,940 4,800,000 7.00-10.60 - Hire purchase

creditors

278,579

632,589

85,953

996,761

2.33-4.00

Company

Financial assets - Fixed deposits 100,000 - - 100,000 3.46 Financial liabilities - Term loan 6,320,0400 25,280,160 14,875,414 46,475,614 8.35 - Hire purchase creditor

8,772

-

-

8,772

4.00

Sensitivity analysis for interest rate risk At the reporting date, if interest rates had been 100 basis points lower/higher, with all other variables held constant, the Group’s profit net of tax would have been RM12,986 higher/lower, arising mainly as a result of lower/higher interest expense on floating rate loans and borrowings. The assumed movement in basis points for interest rate sensitivity analysis is based on the currently observable market environment.

v) Operational risk

The operational risk arises from the daily activities of the Group which includes legal, credit reputation and financing risk and other risks associated to daily running of its business operations.

Such risks are mitigated through proper authority levels of approval limits, clear

reporting structure, segregation of duties, policies and procedures implemented and periodic management meetings.

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89


b) Financial risk management (Cont’d.)

v) Operational risk (Cont’d.)

In dealing with its stewardship, the directors recognise that effective risk management is

an integral part of good business practice. The directors will pursue an ongoing process of identifying, assessing and managing

key business areas, overall operational and financial risks faced by the business units as well as regularly reviewing and enhancing risk mitigating strategies with its appointed and key management personnel.

c) Fair values of financial assets and liabilities Financial instruments that are measured at fair value

The Group uses the following hierarchy for determining the fair value of all the financial instruments carried at fair value : - Level 1 : Quoted market prices in active market. Level 2 : Valuation input (other than Level 1 input) that are based on observable

market data for the asset or liability, whether directly or indirectly. Level 3 : Valuation inputs that are not based on observable market data.

The table below analyses the financial instruments measured at fair value at the reporting date, according to the level in the fair value hierarchy : -

Level 1 Level 2 Level 3 Total RM RM RM RM 1.1.2011 Financial assets Forward contract assets - - 110,228 110,228 Financial liabilities Forward contract liabilities - - (85,650) (85,650)

The interest rates used to discount estimated cash flows, when applicable, are as follows : -

1.1.2011 Derivatives instruments 2.00%

119119119


90

Notes to the Financial Statements 31st December 2012 40. Fair value of financial instruments (Cont’d.) c) Fair values of financial assets and liabilities (Cont’d.)

The following table shows a reconciliation from the beginning balances to the ending balances for fair value measurement in Level 3 of the fair value hierarchy : -

2012 2011RM RM

Balance at 1 January - 24,578 Additions during the year - -Total gains and losses recognised in profit and loss - (24,578)

Balance at 31 December - -

d) Determination of fair value

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

Note

Trade receivables 11Other receivables 12Borrowings 20Trade payables 25Other payables 26

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

The nominal amount of contingent liabilities not recognised in the statement of financial position of the Group and of the Company as at the end of the year is disclosed in Note 38. The fair value of financial guarantees provided by the Company and related company as disclosed in the contingent liabilities is expected to be minimal and the subsidiary companies are managed by the Group without any expectation of default on the credit facilities.

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91

Notes to the Financial Statements 31st December 2012 41. Capital management

The overall capital management objective of the Group is to safeguard its ability to continue as a going concern so as to provide fair returns to owners and benefits to other stakeholders. In order to meet this objective, the Group always strives to maintain an optimal capital structure to reduce the cost of capital and sustain its business development.

The Group considers its total equity to be the key component of its capital structure and may, from time to time, adjust the dividend payouts, purchase own shares, issue new shares, redeem debts or sell assets, where necessary, to maintain an optimal capital structure. Management has not formulated any formal policies and processes for monitoring the Group’s capital in view of its simple structure. Nevertheless, management will always strive to improve those policies and processes whenever the need arises.

42. Related party disclosures

Parties are considered to be related if one party has the ability to control the other party or exercise significant influence over the other party in making financial or operational decisions, or if one other party controls both. The related parties of the Group and of the Company are : -

i) Subsidiary companies Details of the subsidiary companies are shown in Note 7. ii) Companies connected to certain directors of the Company and/or of its subsidiaries. iii) Key management personnel

Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the Group and of the Company, directly or indirectly. The key management personnel of the Group and of the Company include the directors of the Company and head or senior management officers.

a) Transactions and balances with related parties / companies i) Significant related company transactions in the financial statements are as follows : -

Group 2012 2011 RM RM Sales to a company, Coltrac Sdn. Bhd. which is connected to a director of the Company, Tai Boon Wee

10,585,956

9,684,713 * These transactions have been entered in the normal course of business and

established under negotiated terms.

121121121


92


42. Related party disclosures (Cont’d.)

a) Transactions and balances with related parties / companies i) Significant related company transactions in the financial statements are as follows

(Cont’d.) : - Company

2012 2011 RM RM Interest income received and receivable from subsidiary companies

- Big Wheel Green Tyres Sdn. Bhd. - 1,582,334 - Goodway Rubber Industries Sdn. Bhd. - 683,757

Management income received and receivable from subsidiary companies

- Big Wheel Green Tyres Sdn. Bhd. 798,384 726,589 - Big Wheel OTR Sdn. Bhd. 15,480 13,996 - Goodway Rubber Industries Sdn. Bhd 1,794,912 1,939,431 - Goodway SMR Sdn. Bhd. 28,966 40,234

ii) Significant related party/company balances are as follows : -

Group 31.12.2012 31.12.2011 1.1.2011 RM RM RM Trade receivables - Shenzhen Xinxihu Goodway Tyres Co. Ltd. 195,700 195,700 154,458 - Coltrac Sdn. Bhd. 3,839,606 3,417,587 3,293,126 Other receivable - Shenzhen Xinxihu Goodway Tyres Co. Ltd. 301,974 301,974 301,974 Company 31.12.2012 31.12.2011 1.1.2011 RM RM RM Other receivable - Shenzhen Xinxihu Goodway Tyres Co. Ltd. 287,974 287,974 287,974 Amount due from subsidiary companies - Big Wheel Green Tyres Sdn. Bhd. 22,495,654 23,103,030 29,972,564 - Big Wheel OTR Sdn. Bhd. 8,444,549 8,429,069 8,415,073 - Goodway Europe (Sweden) AB 272,382 929,729 929,728 - Goodway SMR Sdn. Bhd. 5,213,960 5,184,994 5,144,760 - Goodway Simplex (HK) Pte. Limited 19,175,970 19,166,666 19,153,999 - Goodway Rubber Industries Sdn. Bhd. - - 3,922,167 Amount due to subsidiary companies - Goodway Marketing Sdn. Bhd. (1,231,273) (1,231,273) (1,233,393) - Goodway Rubber Industries Sdn. Bhd. (7,118,245) (1,186,595) - - Nantong Shibake Rubber Products Co. Ltd. - (1,296,945) (1,296,945)

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93

Notes to the Financial Statements 31st December 2012 42. Related party disclosures (Cont’d.) b) Compensation of Key Management Personnel

The remuneration paid by the Group and the Company to key management personnel during the year are as follows : -

Group Company2012 2011 2012 2011

RM RM RM RMShort-term employeebenefits 1,897,570 1,828,810 1,267,750 1,144,250 Post-employment benefits : - Defined contribution plan - EPF - 227,354 165,300 201,434 Estimated value of benefits-in-kind - - - -

1,897,570 2,056,164 1,433,050 1,345,684

Included in the total key management personnel are : -

Group Company2012 2011 2012 2011

RM RM RM RM

Directors' remuneration (Note 30)- Directors of the Company 1,267,750 1,144,250 1,267,750 1,144,250 - Directors of the subsidiaries - 684,560 - -

1,267,750 1,828,810 1,267,750 1,144,250

43. Currency All amounts in the financial statements are stated in Ringgit Malaysia. 44. Authorisation for issue of financial statements

These financial statements were authorised for issue by the Board of Directors in accordance with a resolution of the Directors on 26th April 2013.

123123123


94

Notes to the Financial Statements 31st December 2012 45. Supplementary information on the breakdown of realised and unrealised profits or losses

On 25th March 2010, Bursa Malaysia Securities Berhad (“Bursa Malaysia”) issued a directive to all listed issuers pursuant to Paragraphs 2.06 and 2.23 of Bursa Malaysia Main Market Listing Requirements. The directive requires all listed issuers to disclose the breakdown of the retained earnings or accumulated losses as at the end of the reporting period, into realised and unrealised profits or losses. On 20th December 2010, Bursa Malaysia further issued another directive on the disclosure and the prescribed format of presentation.

The following analysis of realised and unrealised retained profits is prepared in accordance with Guidance on Special Matter No.1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to “Bursa Securities” Listing Requirements, as issued by the Malaysian Institute of Accountants whilst the disclosure is based on the prescribed format by the Bursa Securities.

Group2012 2011

RM RM

Total retained profits of the Company and its subsidiaries :- realised 49,880,867 43,875,624 - unrealised (9,994,720) (7,080,100)

39,886,147 36,795,524

Total accumulated losses from associated companies :- realised (302,665) (286,778)

Total accumulated losses from jointly controlled entity :- realised (1,048,154) (875,068)

38,535,328 35,633,678

Less : Consolidation adjustments (11,915,976) (13,107,976)

26,619,352 22,525,702

The disclosure above is solely for compliance with the directive issued by the Bursa Securities and should not be used for any other purpose.

124

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128

ANALYSIS OF SHAREHOLDINGS AS AT 15 MAY 2013 Authorised Share Capital : RM100,000,000.00 comprising 200,000,000 ordinary shares

of RM0.50 each

Issued and paid-up capital : RM55,258,750.00 comprising 110,517,500 ordinary shares of RM0.50 each

Class of shares : Ordinary shares of RM0.50 each Voting rights : One vote per ordinary share Size of Shareholdings

No. of Shareholders

% of shareholders

No. of shares held

% of Shareholdings

Less than 100 38 3.72 1,717 0.00 100 - 1,000 29 2.84 11,407 0.01 1,001 - 10,000 568 55.52 2,145,613 1.94 10,001 - 100,000 323 31.57 9,382,225 8.49 100,001 to less than 5% 62 6.06 60,539,675 54.78 5% and above 3 0.29 38,436,863 34.78 TOTAL 1,023 100.00 110,517,500 100.00 SUBSTANTIAL SHAREHOLDERS Name

Direct Indirect No. of shares % No. of shares %

1. Tai Boon Wee 26,309,860(1) 23.81 5,562,724(2) 5.03 2. Lembaga Tabung Angkatan

Tentera 12,500,000 11.31 - -

3. Sleuths Holdings Sdn Bhd 7,678,125(3) 6.95 - - 4. Lee Fook Seng 7,427,926(4) 6.72 - - DIRECTORS’ INTEREST Name

Direct Indirect No. of shares % No. of shares %

1. Tai Boon Wee 26,309,860 (1) 23.81 5,562,724 (2) 5.03 2. Wong Ping Kiong 4,567,953 (5) 4.13 180,000 (6) 0.16 3. Ismail Bin Mahayudin 262,875 0.24 - - 4. Mok Yuen Lok 125,000 0.11 - - 5. Lt Jen (B) Datuk Hj Adenan

Bin Hj Mohamad Zain - - - -

129129129

ANALYSIS OF SHAREHOLDINGS AS AT 15 MAY 2013 (CONTINUED) Notes: (1) Shares held in the name of-

(a) Individual account – 1,025,006 (b) Al Wakalah Nominees (Tempatan) Sdn Bhd – 18,258,738 (c) EB Nominees (Tempatan) Sendirian Berhad – 3,704,991 (d) CIMSEC Nominees (Tempatan) Sdn Bhd – 1,587,500 (e) RHB Capital Nominees (Tempatan) Sdn Bhd – 1,733,625

(2) Deemed interest by virtue of spouse’s and child’s interest in the Company via Massive Structure Sdn Bhd pursuant to Section 6A of the Companies Act, 1965 and shares held by children pursuant to Section 134(12)(c) of the Companies Act, 1965

(3) Shares held in the name of RHB Capital Nominees (Tempatan) Sdn Bhd (4) Shares held in the name of -

(a) Individual account – 3,677,926 (b) EB Nominees (Tempatan) Sendirian Berhad – 3,750,000

(5) Shares held in the name of- (a) Individual account – 25,000 (b) EB Nominees (Tempatan) Sendirian Berhad – 2,792,953 (c) CIMB Group Nominees (Tempatan) Sdn Bhd – 250,000 (d) JF Apex Nominees (Tempatan) Sdn Bhd – 1,500,000

(6) Deemed interest by virtue of shares held by spouse pursuant to Section 134(12)(c) of the Companies Act, 1965 LIST OF THIRTY LARGEST SHAREHOLDERS NO.

NAME NO. OF SHARES

HELD %

1. Al Wakalah Nominees (Tempatan) Sdn Bhd - Pledged securities account for Tai Boon Wee

18,258,738 16.52

2. Lembaga Tabung Angkatan Tentera 12,500,000 11.31

3. RHB Capital Nominees (Tempatan) Sdn Bhd -Pledged securities account for Sleuths Holdings Sdn Bhd

7,678,125 6.95

4. Al Wakalah Nominees (Tempatan) Sdn Bhd - Pledged securities account for Massive Structure Sdn Bhd

5,248,462 4.75

5. RHB Capital Nominees (Tempatan) Sdn Bhd -Pledged securities account for Melval Holdings Sdn Bhd

5,000,000 4.52

6. AMSEC Nominees (Tempatan) Sdn Bhd - Pledged securities account for AmBank Bhd for Ho Sin Vui

3,921,250 3.55

7. EB Nominees (Tempatan) Sendirian Berhad - Pledged securities account for Lee Fook Seng

3,750,000 3.39

8. EB Nominees (Tempatan) Sendirian Berhad - Pledged securities account for Tai Boon Wee

3,704,991 3.35

9. Lee Fook Seng 3,677,926 3.33

130

ANALYSIS OF SHAREHOLDINGS AS AT 15 MAY 2013 (CONTINUED) NO.

NAME NO. OF SHARES

HELD %

10. EB Nominees (Tempatan) Sendirian Berhad - Pledged securities account for Ngok Seng Lee

3,655,375 3.31

11. HDM Nominees (Tempatan) Sdn Bhd - Pledged securities account for Oh Kim Sun

3,279,600 2.97

12. EB Nominees (Tempatan) Sendirian Berhad - Pledged securities account for Wong Ping Kiong

2,792,953 2.53

13. MIDF Amanah Investment Nominees (Tempatan) Sdn Bhd - Pledged securities account for Sierra Growth Sdn Bhd

2,675,025 2.42

14. Guan Huai Yun 2,125,000 1.92

15. RHB Capital Nominees (Tempatan) Sdn Bhd - Pledged securities account for Tai Boon Wee

1,733,625 1.57

16. CIMSEC Nominees (Tempatan) Sdn Bhd - CIMB Bank for Tai Boon Wee

1,587,500 1.44

17. JF Apex Nominees (Tempatan) Sdn Bhd - Pledged securities account for Wong Ping Kiong

1,500,000 1.36

18. CitiGroup Nominees (Tempatan) Sdn Bhd - Pledged securities account for Kuek Sze Tong

1,250,000 1.13

19. AllianceGroup Nominees (Tempatan) Sdn Bhd - Pledged securities account for Lim Beng Guan

1,221,500 1.11

20. Kenanga Nominees (Tempatan) Sdn Bhd - Pledged securities account for Agrobulk Holdings Sdn Bhd

1,122,100 1.02

21. Tai Boon Wee 1,025,006 0.93

22. Yang Tou 882,000 0.80

23. Soh Tong Hwa 773,750 0.70

24. Chong Ten San 624,450 0.57

25. Yang Yok 506,000 0.46

26. Wong Chin Fan 445,000 0.40

27. Catherine Chan Ka Yien 370,000 0.33

28. Lim Kwee Fatt 350,000 0.32

29. Bong Nyuk Fah 315,500 0.29

30. Low Kim Heng 302,500 0.27

131131131

NOTICE OF ANNUAL GENERAL MEETING NOTICE IS HEREBY GIVEN that the Tenth Annual General Meeting of the Company will be held at Crown Theater, Empire Hotel, Empire Subang, Jalan SS16/1, 47500 Subang Jaya on Thursday, 27 June 2013 at 10.00 a.m. for the following purposes: 1. To receive the Audited Financial Statements for the financial year ended

31 December 2012 and the Reports of the Directors and the Auditors thereon. Please refer

to Note 1

2. To approve the payment of Directors’ Fees for the financial year ended 31 December 2012.

Resolution 1

3. To re-elect the following Director retiring in accordance with Article 79 of the Company’s Articles of Association: (a) Mok Yuen Lok

Resolution 2

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

“THAT Ismail Bin Mahayudin, a Director who retires in accordance with Section 129 (6) of the Companies Act, 1965, be and is hereby re-appointed as Director of the Company to hold office until the conclusion of the next Annual General Meeting of the Company.”

Resolution 3

5. To re-appoint Messrs Kreston John & Gan as the Auditors of the Company for the ensuing year and to authorise the Directors to fix their remuneration.

Resolution 4

As Special Business To consider and if thought fit, to pass the following resolutions:

6. Ordinary Resolution Authority to Allot and Issue Shares pursuant to Section 132D of the Companies Act, 1965 “THAT pursuant to Section 132D of the Companies Act, 1965 and approvals from Bursa Malaysia Securities Berhad for the listing of and quotation for the additional shares so issued and other relevant authorities, where approval is necessary, authority be and is hereby given to the Directors to allot and issue shares in the Company at any time upon such terms and conditions and for such purposes as the Directors may in their absolute discretion deem fit provided always that the aggregate number of shares to be issued shall not exceed 10% of the issued share capital of the Company at any point in time AND THAT such authority shall continue to be in force until the conclusion of the next Annual General Meeting of the Company.”

Resolution 5

7. Ordinary Resolution Proposed Renewal of Shareholders’ Mandate for Recurrent Related Party Transactions of a Revenue or Trading Nature “THAT approval be and is hereby given for the renewal of the Shareholders’ Mandate for the Goodway Integrated Industries Berhad Group of Companies to enter into any category of recurrent transactions of a revenue or trading nature falling within the types of transactions as set out in Section 3.3 in the Circular to Shareholders dated 5 June 2013 with the related parties falling within the classes of persons set out in Section 3.2 in the Circular which are necessary for day-to-day operations and are carried out in the ordinary course of business on terms which are not more favorable to the related parties than those generally available to the public and are not to the detriment of minority shareholders;

Resolution 6

132

NOTICE OF ANNUAL GENERAL MEETING (CONTINUED) THAT the authority conferred by such mandate shall continue to be in force

until:- (a) the conclusion of the next Annual General Meeting (“AGM”) of the

Company at which time the mandate will lapse, unless by an ordinary resolution passed at the AGM, the mandate is renewed; or

(b) the expiration of the period within which the next AGM of the Company is required to be held pursuant to Section 143(1) of the Act (but shall not extend to such extension as may be allowed pursuant to Section 143(2) of the Act); or

(c) revoked or varied by ordinary resolution passed by the shareholders in a general meeting.

whichever is earlier. AND THAT the Directors be and are hereby authorised to complete and do all such acts and things including executing such documents as may be required to give effect to the transactions contemplated and/or authorised by this mandate.”

8. Ordinary Resolution Proposed Renewal of Shareholder’s Mandate for Share Buy-Back by the Company “THAT, subject to the Companies Act, 1965 (“Act”), the Listing Requirements of Bursa Malaysia Securities Berhad and the approval of all relevant governmental and/or regulatory authorities, the Company be and is authorised to purchase such number of ordinary shares of RM0.50 each in the Company (“Proposed Share Buy-Back”) as may be determined by the Board from time to time on Bursa Malaysia Securities Berhad upon such terms conditions as the Board may deem fit and expedient in the interest of the Company provided that the aggregate number of shares purchased pursuant to this resolution does not exceed ten percent (10%) of the issued and paid-up share capital of the Company which is 110,517,500 ordinary shares of RM0.50 each as at 15 May 2013 and an amount not exceeding the total retained earnings of RM26.7 million and share premium account of RM0.2 million based on the latest audited accounts of the Company as at 31 December 2012, be allocated by the Company for the Proposed Share Buy-Back; THAT such authority shall commence upon the passing of this resolution and shall remain in force until the conclusion of the next AGM of the Company unless earlier revoked or varied by ordinary resolution of the shareholders of the Company in general meeting; THAT authority be and is hereby given to the Directors of the Company to decide in their discretion to retain the ordinary shares in the Company so purchased by the Company as treasury shares and/or cancel them and/or resell the treasury shares or distribute them as share dividend and/or subsequently cancel them;

Resolution 7

133133133

NOTICE OF ANNUAL GENERAL MEETING (CONTINUED) AND THAT authority be and is hereby given to the Directors of the

Company to take all such steps as are necessary (including executing all such documents as may be required) and to enter into any agreements and arrangements with any party or parties to implement, finalise and give full effect to the aforesaid with full powers to assent to any conditions, modifications, variations and/or amendments (if any) as may be imposed by the relevant authorities and to do all such acts and things as the Directors may deem fit and expedient in the interest of the Company.”

9. Ordinary Resolution Authority to continue in office as Independent Non-Executive Director “THAT authority be and are hereby given to the following Directors to continue to act as Independent Non-Executive Directors of the Company until the conclusion of the next AGM in accordance with the Malaysia Code on Corporate Governance 2012.” (a) Mok Yuen Lok (b) Ismail Bin Mahayudin

Resolution 8 Resolution 9

10. Special Resolution Proposed Amendment to the Articles of Association of the Company “THAT the proposed amendments to the Articles of Association of the Company as contained in Appendix I of the Annual Report 2012 (“Proposed Amendments”) be and are hereby approved and adopted.”

Resolution 10

11. To transact any other business of the Company of which due notice shall have been given.

By Order of the Board Foo Siew Loon (MAICSA 7006874) Company Secretary Selangor Darul Ehsan 5 June 2013

134

NOTICE OF ANNUAL GENERAL MEETING (CONTINUED) Notes: 1. The Agenda item is meant for discussion only as the provision of Section 169(1) of the Companies Act, 1965

does not require a formal approval of the shareholders and hence, is not put forward for voting. 2. A member of the Company entitled to attend and vote at the meeting may appoint not more than two (2) proxies

to attend and vote instead of him. Where a member appoints two (2) proxies, he shall specify the proportion of his shareholdings to be represented by each proxy. A member of the Company who, is an authorised nominee as defined under the Securities Industry (Central Depositories) Act 1991, 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. A proxy need not be a member of the Company. 4. The instrument appointing a proxy shall be in writing under the hand of the appointer or of his attorney duly

authorised in writing or, if the appointer is a corporation, either under its common seal or in some other manner approved by its Directors.

5. The instrument of proxy must be deposited at the Company’s registered office at Level 33A, Menara 1MK, Kompleks 1 Mont’ Kiara, No.1, Jalan Kiara, Mont’ Kiara, 50480 Kuala Lumpur, not later than forty-eight (48) hours before the time appointed for holding the meeting.

6. Only depositors whose names appear in the Record of Depositors as at 20 June 2013 be regarded as members and entitled to attend and vote at the meeting.

EXPLANATORY NOTES ON SPECIAL BUSINESS: A) Resolution 5

The proposed Ordinary Resolution under item no. 6 of the agenda, if passed, will avoid any delay and cost involved in convening a general meeting and will empower the Directors to allot and issue up to 10% of the issued share capital of the Company. This authority will, unless revoked or varied by the Company in a general meeting, expire at the conclusion of the next Annual General Meeting or the expiration of the period within which the next Annual General Meeting is required by law to be held, whichever is earlier. The proposed Ordinary Resolution is a renewal of the mandate on the authority granted to Directors to allot and issue shares pursuant to Section 132D of the Companies Act, 1965 passed at the previous Annual General Meeting held on 21 June 2012, which is expiring at the conclusion of the 10th Annual General Meeting. No new shares in the Company were allotted or issued by the Directors pursuant to the same mandate granted last year. The renewal of this mandate will provide flexibility to the Company for any possible fund raising exercise, including but not limited to further placing of shares, for purpose of funding current and/or future investment projects, working capital and/or acquisitions.

B) Resolution 6

The proposed Ordinary Resolution under item no. 7 of the agenda, if passed, will renew the mandate to allow the Company and its subsidiaries to enter into Recurrent Related Party Transactions of a Revenue or Trading Nature and to enable the Company to comply with Paragraph 10.09, Part E of Listing Requirements of Bursa Malaysia Securities Berhad. The mandate will take effect from the date of the passing of the ordinary resolution until the next Annual General Meeting of the Company. Please refer to the Circular to Shareholders dated 5 June 2013 for further information.

C) Resolution 7

The proposed Ordinary Resolution under item no. 8 of the agenda, if passed, will renew the mandate for the Company to buy back its own shares. The mandate shall continue to be in force until the next Annual General Meeting of the Company unless earlier revoked or varied by the ordinary resolution of the Company in the general meeting and is subject to annual renewal. Please refer to the Circular to Shareholders dated 5 June 2013 for further information.

135135135

NOTICE OF ANNUAL GENERAL MEETING (CONTINUED) D) Resolutions 8 and 9

The proposed Ordinary Resolutions under item no. 9 of the agenda, if passed, will allow the named directors to continue to act as independent directors notwithstanding that they have served a cumulative term of over nine (9) years as independent directors.

(a) Mok Yuen Lok

Mr Mok Yuen Lok was appointed Independent Non-Executive Director of the Company on 20 May 2004.

As at the date of the notice of the AGM, he has served the Company for nine (9) years. Mr Mok has met the independence guidelines as set out in Chapter 1 of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad and the Board considers him to be independent and recommends that he should be re-appointed and retained as Independent Non-Executive Director, in particular his experience and contributions to the Board.

(b) Ismail Bin Mahayudin

Encik Ismail Bin Mahayudin was appointed Independent Non-Executive Director of the Company on 20

May 2004. As at the date of the notice of the AGM, he has served the Company for nine (9) years. Encik Ismail has met the independence guidelines as set out in Chapter 1 of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad and the Board considers him to be independent and recommends that he should be re-appointed and retained as Independent Non-Executive Director, in particular his experience and contributions to the Board.

E) Resolution 10

The proposed Special Resolution under item no. 10 of the agenda, if passed, will render the Articles of Association of the Company to be in line with the amendments made to the Main Market Listing Requirements of Bursa Malaysia Securities Berhad. The details of the Proposed Amendments are set out in Appendix I of this Annual Report.

136

STATEMENT ACCOMPANYING NOTICE OF ANNUAL GENERAL MEETING 1. Directors standing for re-election

No individual is seeking election as a Director at the forthcoming Tenth Annual General Meeting of the Company.

GOODWAY INTEGRATED INDUSTRIES BERHAD

(Company No. 618972-T)

PROXY FORM *I/We,……………………………………NRIC/Passport/Company No. ……….………………..….... of ……………………………………………………………………………...............................being a member of GOODWAY INTEGRATED INDUSTRIES BERHAD (Company No.: 618972-T), do hereby appoint………………………….. NRIC/Passport No…………..….……………….… or failing *him/her…………………………NRIC/Passport No…………..….……………….…………. or failing *him/her the Chairman of the Meeting as *my/our proxy to vote for *me/us on my/our behalf at the Eighth Annual General Meeting of the Company to be held at Crown Theater, Empire Hotel Subang, Jalan SS16/1, 47500 Subang Jaya, on Thursday, 27 June 2013 at 10.00 a.m. and at any adjournment thereof as indicated: - NO. RESOLUTIONS FOR AGAINST 1. Ordinary Resolution 1 2. Ordinary Resolution 2 3. Ordinary Resolution 3 4. Ordinary Resolution 4 5. Ordinary Resolution 5 6. Ordinary Resolution 6 7. Ordinary Resolution 7 8. Ordinary Resolution 8 9. Special Resolution 9

Please indicate with a cross (X) in the spaces provided whether you wish your votes to be cast for or against the resolutions. In the absence of specific directions, your proxy will vote or abstain as *he/she thinks fit. Signed this ….….. day of ……….…………. 2013 No of Shares Held *CDS Account No.: ………………………………………………………Signature(s)/Common Seal of Member(s)

*CDS – Central Depository System Notes: 1. A member of the Company entitled to attend and vote at the meeting may appoint not more than two (2) proxies to attend and vote

instead of him. Where a member appoints two (2) proxies, he shall specify the proportion of his shareholdings to be represented by each proxy. A member of the Company who, is an authorised nominee as defined under the Securities Industry (Central Depositories) Act 1991, 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.

2. A proxy need not be a member of the Company. 3. The instrument appointing a proxy shall be in writing under the hand of the appointer or of his attorney duly authorised in writing or, if

the appointer is a corporation, either under its common seal or in some other manner approved by its Directors. 4. The instrument of proxy must be deposited at the Company’s registered office at Level 33A, Menara 1 MK, Kompleks 1 Mont’ Kiara,

No.1, Jalan Kiara, Mont’ Kiara 50480 Kuala Lumpur, not later than forty-eight (48) hours before the time appointed for holding the meeting.

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