leon fuat berhad (company no. 756407-d) ar 31... · with the accountancy qualification acca awarded...

LE

ON

FU

AT

BE

RH

AD

(Co

mp

an

y N

o. 7

56

40

7-D

)A

NN

UA

L R

EP

OR

T 2

01

3

LEON FUAT BERHAD(Company No. 756407-D)

Wisma Leon FuatNo. 11, Lorong Keluli 1BKawasan Perindustrian Bukit Raja SelatanSeksyen 740000 Shah AlamSelangor Darul EhsanTel: (603) 3375 3333Fax: (603) 3344 7777

www.leonfuat.com.my

CONTENTSCONTENTS02 Corporate Information03 Corporate Structure04 Board of Directors06 Profile of Directors10 Chairman’s Statement14 Management Review16 Corporate Governance Statement22 Report of the Nomination Committee 24 Report of the Audit Committee29 Report of the Remuneration Committee32 Statement on Risk Management and Internal Control33 Additional Compliance Information35 Financial Statements95 List of Properties97 Statistics on Shareholdings100 Notice of Seventh Annual General Meeting104 Statement Accompanying Notice of Annual General Meeting Proxy Form

STEEL IS OUR BUSINESS EXCELLENCE IS OUR COMMITMENT

2 ANNUAL REPORT 2013

100%LF HardwareLeon Fuat Hardware Sdn BhdTrading and processing of steel products

100%LF KlangLeon Fuat Hardware (Klang) Sdn BhdTrading and processing of steel products

100%Supreme SteelmakersSupreme Steelmakers Sdn BhdTrading and processing of stainless steel andother steel products

100%ASA SteelASA Steel (M) Sdn BhdTrading and processing of alloy steel and othersteel products

Corporate Information

Board of directors

dato’ Ng ah Hock @ Ng soon PorIndependent Non-Executive Chairman

ooi Bin KeongGroup Managing Director

ooi seng KhongExecutive Director

ooi Kong tiongExecutive Director

ooi shang HowExecutive Director

Ng Kok teongExecutive Director

chan Kee LoinIndependent Non-Executive Director

tan did HengIndependent Non-Executive Director

tan sack senIndependent Non-Executive Director

audit committee

Tan Did Heng (Chairman)Chan Kee LoinTan Sack Sen

NomiNatioN committee

Chan Kee Loin (Chairman)Tan Sack SenTan Did Heng

remuNeratioN committee

Tan Sack Sen (Chairman)Chan Kee LoinOoi Bin Keong

comPaNy secretaries

Yeoh Chong Keat (MIA 2736)Lim Fei Chia (MAICSA 7036158)

registered office

Suite 11.1A, Level 11Menara Weld76 Jalan Raja Chulan50200 Kuala Lumpur

Tel : (603) 2031 1988Fax : (603) 2031 9788

PriNciPaL PLace of BusiNess

Wisma Leon FuatNo.11, Lorong Keluli 1BKawasan Perindustrian Bukit Raja SelatanSeksyen 7, Shah Alam40000 Selangor Darul Ehsan

Tel : (603) 3375 3333Fax : (603) 3344 7777

auditors

Baker Tilly AC (formerly known as Moore Stephens AC) (AF001826)Baker Tilly MH TowerLevel 10, Tower 1, Avenue 559200 Kuala Lumpur

Tel : (603) 2297 1000Fax : (603) 2282 9980

sHare registrar

Symphony Share Registrars Sdn Bhd (378993-D)Level 6, Symphony HousePusat Dagangan Dana 1Jalan PJU1A/4647301 Petaling JayaSelangor Darul Ehsan

Tel : (603) 7841 8000Fax : (603) 7841 8150

PriNciPaL BaNKers

AmBank (M) Berhad (8515-D)Level 18, Menara DionJalan Sultan Ismail50250 Kuala Lumpur

Tel : (603) 2026 3939Fax : (603) 2026 6855

Hong Leong Bank Berhad (97141-X)Level 5, Wisma Hong Leong18 Jalan Perak50450 Kuala Lumpur

Tel : (603) 2164 2828Fax : (603) 2167 4457

stocK excHaNge ListiNg

Main Market of Bursa Malaysia Securities Berhad

3Leon Fuat Berhad (Company no. 756407-d)

100%LF HardwareLeon Fuat Hardware Sdn BhdTrading and processing of steel products

100%LF KlangLeon Fuat Hardware (Klang) Sdn BhdTrading and processing of steel products

100%Supreme SteelmakersSupreme Steelmakers Sdn BhdTrading and processing of stainless steel andother steel products

100%ASA SteelASA Steel (M) Sdn BhdTrading and processing of alloy steel and othersteel products

Corporate Structure


Board of Directors

From left to right:Tan Sack Sen, Ooi Shang How, Ooi Kong Tiong, Ooi Bin Keong, Dato’ Ng Ah Hock @ Ng Soon Por, Ng Kok

Teong, Ooi Seng Khong, Tan Did Heng, Chan Kee Loin


Profile of Directors

dato’ Ng aH HocK @ Ng sooN PorMalaysian , aged 64Independent Non-Executive Chairman

Dato’ Ng Ah Hock @ Ng Soon Por was appointed to the Board on 6 November 2012. He graduated from Tunku Abdul Rahman College in 1974 with the accountancy qualification ACCA awarded by the Association of Chartered and Certified Accountants of United Kingdom. He is a member of Malaysia Institute of Accountants, a Fellow Member of the Association of Chartered and Certified Accountants of United Kingdom, and also a member of the Malaysia Institute of Chartered Secretaries & Administrators.

He began his career in 1974 when he joined the audit firm Turquand, Youngs & Co./Azman, Wong, Salleh & Co. as an Auditor. In 1977, he left the audit firm and joined Spicers International Ltd, as a Finance Manager.

In 1982, he left Spicers International Ltd when he was elected as Selangor State Legislative Assemblyman for Sungei Pelek constituency, and held the position until 1995. During his tenure as an assemblyman, he was also a Selangor Executive Councillor from 1990 to 1995. Subsequently in 1995, he joined Paper Converting Industries Sdn Bhd as a Finance Director until 2005. He was also a member of the Selangor Public Service Commission from 2002 to 2007. From 2008 to date, he is involved in managing his own personal investment in commercial properties.

He is an Independent Non-Executive Director of Turbo-Mech Berhad, a company listed on the Main Market of Bursa Securities. He was appointed as the Independent Non-Executive Director of XingQuan International Sports Holdings Limited in 2009 and subsequently resigned in 2011.

He has no family relationship with any director and/or major shareholder of the Company and has no conflict of interest with the Company.

ooi BiN KeoNgMalaysian , aged 64

Group Managing Director

Ooi Bin Keong was appointed to the Board on 21 June 2012. He is a member of the Remuneration Committee of the Board. After completing his primary education in 1963, he worked at a coffee shop before he established Leong Huat Trading & Co in 1972 as a partnership, which was then mainly involved in the trading of steel products and undertook minor processing work. He currently oversees the overall management of the Group.

In 1982, he co-founded the Group together with Ooi Kong Tiong and the late Ng Chee Tiang, by establishing LF Hardware to take over the business of Leong Huat Trading & Co. They then established LF Klang, Supreme Steelmakers and ASA Steel in 1983, 1991 and 1995 respectively. As the co-founder and Group Managing Director, he has been instrumental in the growth and development. With approximately 40 years of experience in the steel industry, he has contributed significantly to the success particularly in driving the Group’s overall vision.

He is the 2nd Vice President of the Malaysia Steel and Metal Distributors’ Association (MSMDA) for the period 2011-2013.

He is the father of Ooi Shang How, brother of Ooi Seng Khong and Ooi Kong Tiong, and uncle of Ng Kok Teong. He has no conflict of interest with the Company.


Profile of DirectorsCont’d

ooi seNg KHoNgMalaysian, aged 52Executive Director

Ooi Seng Khong was appointed to the Board on 21 June 2012. He is currently responsible for the Group’s business development and procurement.

After completing his primary school education in 1975, he was involved in his family’s paper packaging business before joining Leong Huat Trading & Co as a machine operator in 1979. In 1982, he joined LF Hardware as a sales personnel and subsequently in 1983, he was appointed as Head of Operations of LF Klang. In 1999, he was appointed as Managing Director of LF Klang. As the Group’s Executive Director, he has been instrumental in the growth and development of the Group. With approximately 33 years of experience in the steel industry, he has contributed significantly to the Group’s success particularly in overseeing the business development and procurement activities of the Group.

He is the brother of Ooi Bin Keong and Ooi Kong Tiong, and uncle of Ng Kok Teong and Ooi Shang How. He has no conflict of interest with the Company.

ooi KoNg tioNgMalaysian, aged 60Executive Director

Ooi Kong Tiong was appointed to the Board on 21 June 2012. He currently oversees the Group’s sales operations and is responsible for the Group’s business planning and implementation.

After completing his primary education in 1967, he opted to join the working community and worked at a coffee shop before he joined Leong Huat Trading & Co in 1972 as a machine operator and sales executive. In 1982, he co-founded the Group together with Ooi Bin Keong and the late Ng Chee Tiang, by establishing LF Hardware to take over the business of Leong Huat Trading & Co. Together with Ooi Bin Keong and the late Ng Chee Tiang, he established LF Klang, Supreme Steelmakers and ASA Steel in 1983, 1991 and 1995 respectively. As the Group’s co-founder and Executive Director, he has been instrumental in the growth and development of the Group. With approximately 40 years of experience in the steel industry, he has contributed significantly to the Group’s success particularly in driving the sales operations for the Group. As such, he oversees the Group’s sales and business development requirements and is responsible for responding to the customers’ needs.

He is the brother of Ooi Bin Keong and Ooi Seng Khong, and uncle of Ng Kok Teong and Ooi Shang How. He has no conflict of interest with the Company.



Ng KoK teoNgMalaysian, aged 45Executive Director

Ng Kok Teong was appointed to the Board on 21 June 2012. He obtained his Diploma in Business Studies from Stamford College, Malaysia in 1989. He began his career in 1990 when he joined LF Hardware as a sales personnel. In 1999, he was appointed as Executive Director of LF Hardware. He currently oversees the procurement section of the Group.

He is the nephew of Ooi Bin Keong, Ooi Seng Khong and Ooi Kong Tiong and cousin of Ooi Shang How. He has no conflict of interest with the Company.

ooi sHaNg HowMalaysian, aged 34Executive Director

Ooi Shang How was appointed to the Board on 21 June 2012. He is in charge of the Group’s administration and information technology needs. In 1997, he obtained his Cambridge A-Level certificate from Taylor’s College, Malaysia. Between 1998 and 2001, he undertook studies in Monash University and RMIT in Australia, but, returned to Malaysia to assist the Group’s business.

He began his career in 2002 when he joined LF Klang as a sales and marketing personnel. Later, he was tasked to develop information technology capability for the company. In 2005, he was appointed as Executive Director of LF Klang where he was mainly involved in business development and procurement planning as well as information technology areas of the company. He currently oversees new business development area of the company.

He is the son of Ooi Bin Keong, nephew of Ooi Seng Khong and Ooi Kong Tiong and cousin of Ng Kok Teong. He has no conflict of interest with the Company.

cHaN Kee LoiN Malaysian, aged 50Independent Non-Executive Director

Chan Kee Loin was appointed to the Board on 21 June 2012. He is the Chairman of the Nomination Committee, a member of Audit Committee and Remuneration Committee of the Board. He was educated at Tunku Abdul Rahman College (“TAR College”), Malaysia, where he completed the three (3) year extra-mural course in Financial Accounting in 1987 and is currently a finalist in professional examination of the Association of Chartered Certified Accountants, United Kingdom.

He started his career in 1988 as an audit assistant with Messrs. Soh & Co., a firm of Public Accountants in Johor Bahru, and left in 1989 to join Messrs. Tet O. Chong & Co., a firm of Public Accountants in Kuala Lumpur. Messrs. Tet O. Chong & Co. had since evolved into the current Messrs. Baker Tilly AC, where he held the position of Director from 2000 until he left in 2009. His experience in these firms includes statutory audits, due diligence audits, share and business valuation and rendering professional services as adviser, co-ordinator and reporting accountants for corporate exercises. He had since ceased working fulltime. He currently sits on the Board of CAM Resources Berhad as an Independent Non-Executive Director.




taN did HeNgMalaysian, aged 43

Independent Non-Executive Director

Tan Did Heng was appointed to the Board on 21 June 2012. He is the Chairman of the Audit Committee and a member of Nomination Committee of the Board. From 1992 to 1994, he attended TAR College to undertake the course and examinations leading to membership with the Malaysian Institute of Certified Public Accountants (MICPA) and the Malaysian Institute of Accountants (MIA) in 1999.

In 1994 he joined Tai, Yapp & Co as an associate. He left the firm in 2000 and joined United Straits Amalgamated Berhad as an Accountant. Thereafter, he started D.H. Tan & Associates in 2001 as the managing proprietor to-date.

He is an Approved Company Auditor and Licensed Tax Agent since 2001 and 2005 respectively. He is also currently the managing proprietor of Y.W. Woon & Co.


taN sacK seNMalaysian, aged 38Independent Non-Executive Director

Tan Sack Sen was appointed to the Board on 21 June 2012. He is the Chairman of the Remuneration Committee, a member of Audit Committee and Nomination Committee of the Board. In 2007, he obtained his Bachelor of Law (Honours) Degree from the University of Wales, Cardiff, United Kingdom and has obtained the Certificate of Legal Practice from the Board of Legal Practice in 1998.

He began his career with Messrs. K.B.Chua & Co. and was admitted to the Bar in 1999. He then joined Messrs. T. G. Lim & Partners in 1999 and further his practice in banking litigation. Thereafter, he joined Messrs. Jal & Lim in 2001 to conduct in various defence work and general litigation matters. In 2002, he was invited by Messrs. Chong & Tiong to handle and manage the Litigation Department. In 2003, he started the firm Messrs. Yee How & Tan where he manages the main office at Kuala Lumpur.


Note:

None of the above Directors have committed any offences which require disclosure pursuant to the Main Market Listing Requirements of Bursa Malaysia Securities Berhad.

Chairman’sStatement

““

DATO' NG AH HOCK @ NG SOON PORChairman

On behalf of the Board of Directors of Leon Fuat Berhad (“Leon Fuat”), I am pleased to present to you our annual report, our first as a listed entity, for the financial year ended 31 December 2013 (“FY2013”).


Chairman’sStatement

““

DATO' NG AH HOCK @ NG SOON PORChairman

On behalf of the Board of Directors of Leon Fuat Berhad (“Leon Fuat”), I am pleased to present to you our annual report, our first as a listed entity, for the financial year ended 31 December 2013 (“FY2013”).

11LEON FUAT BERhAd (Company No. 756407-d)

The year 2013 was a landmark year for the Group as we took a huge step forward and listed on the Main Market of Bursa Malaysia Securities Berhad on 5 June 2013. Our initial public offering of 59.3 million shares at an issue price of RM0.60 per share was strongly received, where the public portion of the shares was oversubscribed by 23.32 times. We debuted on the first day of trading at a premium of 3.5 sen.

rewardiNg our sHareHoLders

I am pleased to announce that Leon Fuat achieved a revenue of RM455.27 million and a net profit of RM25.77 million for FY2013. On 26 August 2013, we also declared our first interim single-tier dividend of 1.5 sen per ordinary share in respect of FY2013, which was paid out on 8 October 2013. This is equivalent to a total payout of RM4.65 million.

In view of our performance in FY2013, the Board is also proposing a final single-tier dividend of 1.5 sen per ordinary share which is subject to shareholders’ approval at the forthcoming Annual General Meeting. This will amount to a total dividend declared of 3.0 sen which is equivalent to a total payout of approximately RM9.30 million in respect of FY2013. The total dividend payout ratio will be 36.1% of profit after tax (“PAT”) and is above our intended dividend payout ratio of up to 30% of PAT as set out in our Prospectus issued in conjunction with the initial public offering.

Chairman’s StatementCont’d

tHe year tHat was

Leon Fuat understands that the greatest asset a business can have is its people. As such, we have always advocated the fostering of togetherness and tolerance within the workplace. We believe that we should not work for one another but with each other.

Earlier this year, we organised an annual dinner for our staff at Setia City Convention Centre with the aim of having fun and making everyone feel special. Our staffs were our special VIPs and we dished out Best Dressed prizes to those who turned up in style. Throughout the dinner, we also recognised the contributions of our loyal employees by presenting 10 Years, 15 Years, 20 Years and 25 Years Service Awards. We also came up with a special award, Perfect Health Award, for employees that had taken zero medical leave for the entire 2013.

Despite being a business entity, having a sense of compassion is a value we uphold highly. In 2013, we decided to bring some cheer to the Handicapped and Disabled Children’s Association of Klang in Selangor and encouraged our employees to interact with the children. During the trip, they fed, played with and celebrated the birthdays of the children.

In an effort to continuously improve ourselves and keep abreast of matters affecting our industry in order to stay ahead of the ballgame, we have, among others, arranged for our staff to attend trainings and seminars, both in-house and external, intended to sharpen their skills and broaden their knowledge in their respective job fields. The range of trainings include Goods & Services Tax for the Finance department, product training for the Purchasing & Sales staffs and Minimum Retirement Age Act 2012 for Human Resource personnel. The Board of Directors also attended a Mandatory Accreditation Programme (MAP) for Directors of Public Listed Companies. Besides this, we also held a company-wide Fire Prevention Awareness Seminar and Anti-Crime Awareness Programme.

13LEON FUAT BERhAd (Company No. 756407-d)

Chairman’s StatementCont’d

wHat to exPect aHead

During our IPO in 2013, we had laid out our future plans which are focused in two key areas. The first was the construction of a new processing plant with warehousing facilities on a piece of land near to our head office at Wisma Leon Fuat. We had purchased the piece of freehold industrial land with an existing detached building with annexed office building in 2012. We intend to house two new slitting machines in the new plant with the remaining floor space being used to stock steel materials for trading and processing purposes. As of the date of this annual report, the timeline to commence construction of the plant in 2015 and start operations in 2016 is still on track.

A second key focus of our future plans is the purchase of new machinery for slitting process to add to the other processing services that we already offer. The purchase of the two slitting machines will be made in 2016 and will be housed in the new processing plant. This decision was brought on to enable us to add more value to our current customers and penetrate into new markets.

aPPreciatioN

On behalf of the Board, I would like to convey my thanks to our shareholders, customers, business partners and suppliers for their continued support and belief in us. Having being in the business for more than 40 years, we have managed to build a strong network of relationships. As we are well aware, our business thrives on trust and we are truly grateful to have customers and suppliers who have stood by us from the start and continue to deal with us until this very day.

My deepest appreciation is also extended to the regulators, namely Securities Commission of Malaysia and Bursa Malaysia for their guidance in ensuring a smooth listing. Also, to my fellow Board members for their wise counsel. Each of you has been instrumental in the growth of the Group and I look forward to achieving greater heights with all of you.

Last but not least, what is a company without its assets; the people. Our staffs make up the strong foundation on which our Group stands and their contribution has been significant in helping the Group to grow, even beyond its potential.

We look forward to better things, and remain committed to moving forward progressively and delivering another profitable year so that our shareholders and associates can share with us in reaping the fruits of our labour.

dato’ Ng ah Hock @ Ng soon PorChairman


ManagementReview

OOI BIN KEONGGroup Managing Director


ManagementReview

OOI BIN KEONGGroup Managing Director

fiNaNciaL review

In respect of FY2013, I am proud to announce that Leon Fuat achieved a revenue of RM455.27 million and a net profit of RM25.77 million. This was due to our two major segments, namely trading of steel products and processing of steel products that collectively contributed approximately 99.9% to our revenue. As expected, the processing segment continued to overtook the trading segment with a revenue contribution of 60.5%. The former also accounted for approximately 60.4% of our gross profit in respect of FY2013.

The trading segment recorded an improvement in gross profit margin as a result of lower average cost of input materials especially in regards to flat mild steel products whilst, the gross profit margin derived from the processing of steel products segment remained fairly stable.

oPeratioNs

When Leon Fuat was first founded in 1972, we were mainly involved in trading of steel products. 40 years on, the Group has diversified its business to include the processing of steel products as well, with a specialisation in rolled long and flat products. We have also incorporated in-house facilities to undertake cutting, levelling, shearing, profiling, bending and finishing of products as well as production of expanded metal.

Today, Leon Fuat operates from three production facilities located in Shah Alam, Sungai Besi and Jalan Chan Sow Lin. A new processing plant with warehousing facilities near Wisma Leon Fuat in Shah Alam is also expected to commence operations in 2016. Purchase of the piece of land on which the plant will be constructed was made in 2012 and comes with an existing detached building with annexed office building.

Initially, the trading of steel products segment was a major contributor to the Group’s revenue. However, in recent years, the processing of steel products segment has expanded tremendously to the extent of taking the lead in terms of revenue contribution, thanks to a conscious effort on our part. Since 2012, we have also been scaling down on the trading of low margin products, namely flat carbon steel products, in line with the Group’s strategy to optimise the utilisation of its operational and financial resources.

Our focus will remain on expanding our value-added services over the next few years as we intend to incorporate slitting services into our existing line of processing services. We target to purchase two new slitting machines by 2016, which will be housed in the new processing plant with warehousing facilities. We believe that the wider range of machinery will put us in a better position to meet the diverse needs of a larger base of customers to achieve higher processing sales.

outLooK

In view of the Malaysia Government’s initiatives as reflected in the 10th Malaysia Plan and Economic Transformation Programme that include the implementation of various development plans, will benefit user industries such as the construction and manufacturing sectors which will, in turn, have a positive flow-on effect to the Rolled Steel Industry.

The growth in the Malaysian production of steel for 2014 is forecast at 9.1% year-on-year. Domestic market, rather than imports, is also expected to drive demand in the sector1.

Additionally, demand outlook in 2014 remains positive for steel companies as it will be anchored by construction activities. Domestic consumption should remain buoyant as most infrastructure projects, especially rail, and property development projects are major off takers of steel products.

Barring unforeseen circumstances, we expect the Group’s prospects for the financial year 2014 to be positive. At the same time, we remain committed to upholding our reputation as a reliable provider of quality products and services which has helped us maintained long-term business relationships with our customers, and deliver another fruitful year to our shareholders.

ooi Bin KeongManaging Director

Management ReviewCont’d

1 Source: Malaysia Metals Report Q1 2014


The Board of Directors (“the Board’) of Leon Fuat Berhad (“the Company”) is committed to ensuring that the Company and its subsidiaries (“the Group”) comply with the high standards of corporate governance practices that are in accordance with the Malaysia Code on Corporate Governance 2012 (“the Code”) as part of the Board’s fundamental duties to deliver value to the Company’s shareholders. In order to uphold good corporate ethics, the Board has, since the listing of the Company on the Main Market of Bursa Malaysia Securities Berhad (“Bursa Malaysia’) continuously evaluate and where appropriate, implement relevant policies and procedures to ensure adherence to good corporate governance.

The following Statement outlines the manner and extend in which the Board has applied the Principles of the Code during the financial year ended 31 December 2013.

1. estaBLisH cLear roLes aNd resPoNsiBiLities

1.1 functions of the Board and management

The Board is responsible for the proper stewardship of the Group to ensure the maximisation of shareholders’ value and safeguarding the stakeholders’ interests including securing sustainable long-term financial results and increasing shareholders’ value, with proper social and environmental considerations.

The Board is also responsible to promote and ensure effective execution of good corporate governance practice and a corporate culture of ethical conduct especially among its members and generally that would permeates throughout the Company vide effective communication including the establishment and adoption of the Board Charter by the Board in 2014 which sets out the roles and responsibilities of the Board and that of the Management/Group Managing Director .

1.2 Board roles and responsibilities

The Company is led and managed by the Board that comprises a group of individuals who collectively possess a wide range of experience and qualifications. The Board has the following major responsibilities, which facilitate the discharge of the Board’s fiduciary and leadership functions in the pursuit of the best interest of the Group:

(a) Adopting and reviewing a strategic plan of the Group;

(b) Overseeing the conduct of the Group’s business to evaluate whether the business is being properly managed and sustained;

(c) Identifying principal risks and ensuring the implementation of appropriate systems to manage these risks;

(d) Succession planning, including appointing, training, fixing the remuneration of and where appropriate, replacing senior management personnel of the Group;

(e) Developing and implementing an investor relations programme by way of analyst report for the Group and pro-active communication with shareholder during the AGM and EGM; and

(f) Reviewing the adequacy and integrity of the Group’s internal control systems and management information systems, including systems for compliance with applicable laws, regulations, rules, directives and guidelines.

Besides the Board, other Board Committees, namely the Audit Committee, Nomination Committee and Remuneration Committee have been established with written terms of references to bear some of the responsibilities of the Board in order to ensure the proper discharge of the Board’s fiduciary duties.

Corporate Governance Statement


1. estaBLisH cLear roLes aNd resPoNsiBiLities cont’d

1.3 code of ethics and conduct

The Board has adopted a Code of Ethics and Conduct which dictates the ethics and standard of good conduct expected of every director and employee.

1.4 Promoting sustainability

The Company will put in place its strategies to promote sustainability of environment, social and governance aspects of its business in due course.

1.5 access to information and advice

The Board members have ready and unrestricted access to the following parties in carrying out its roles and responsibilities to discharge their duties effectively:

l To all key management personnel for obtaining accurate and timely information pertaining to the Group; l To the Company Secretaries for procedural and regulatory advice, board policies and procedures; and l To the External and Internal Auditors of the Group for advice on accounting and internal control issues.

The Board members are also able to seek independent professional advice in the course of their duties at the expense of the Company as may be mutually agreed by the Board with the Chairman and/or the Group Managing Director.

Prior to Board meetings the agenda together with relevant meeting papers are distributed to the Directors to ensure that they have sufficient time to review and be prepared for discussion. The information provided can be of a financial or non-financial in nature, quantitative or qualitative to facilitate the review by the Board prior to arriving at a sound and informed decision.

1.6 company secretaries

The corporate secretarial function of the Company has been outsourced to Archer Corporate Services Sdn Bhd. The main responsibilities of the Company Secretaries, among others, are provision of secretarial services and keeping the Board abreast and appraised of regulatory legislations and corporate governance guidelines from time to time.

1.7 Board charter

The Board Charter was formalised in 2014 and will be reviewed from time to time to ensure that it remains current and relevant. The Board Charter is published on the Company’s website www.leonfuat.com.my.

2. streNgtHeN comPositioN

2.1 Nomination committee

The Board has established the Nomination Committee which comprises three (3) members, all of whom are Independent Non-Executive Directors.

The Board has identified the Chairman of the Nomination Committee as Senior Independent Director to whom all concerns of shareholders and stakeholders can be effectively directed.

The functions of the Nomination Committee and its activities are laid down in the Report of the Nomination Committee on pages 22 to 23.

Corporate Governance StatementCont’d


2. streNgtHeN comPositioN cont’d

2.2 recruitment and annual assessment of directors

The Nomination Committee’s responsibilities as set out in its Terms of Reference include assessing and recommending to the Board the candidate of directors having regard to the established criteria for recruitment as well as for annual assessment of directors.

The Board has not establish a gender diversity targets as it is of the view the board membership should be determined based on a candidate’s skills, experience and other quality regardless of gender but will nevertheless considers appointing more directors of a female gender where suitable.

2.3 remuneration Policies and Procedures

The Board has established the Remuneration Committee which comprises three (3) members the majority of whom are Independent Non-Executive Directors.

The Remuneration Committee is responsible for reviewing and recommending to the Board the policy and framework of the directors’ remuneration packages of the Executive Directors. The Board believes that fair remuneration is important to attract, retain and motivate Directors.

Other functions of the Remuneration Committee and its activities as well as the aggregate remunerations for services rendered by our Directors for the financial year under review are set out in the Remuneration Committee Report on pages 29 to 31.

3. reiNforce iNdePeNdeNce

3.1 annual assessment of independent directors

The Board has adopted the legal and regulatory definition of Independent Director as defined in the Listing Requirements, amongst other criteria to assess independent. The Nomination Committee has been tasked to carry out annual assessment of the independence of the Independent Directors annually, upon admission and when any new interest or relationship develops.

3.2 tenure of independent directors

None of the Company’s Independent Directors have served the Company for nine (9) years or a cumulative service of nine (9) years with intervals.

3.3 separation of the Position of chairman and group managing director

The Chairman and the Group Managing Director of the Company are held by different individual, to ensure balance of power and authority.

The Chairman is a Non-Executive member of the Board, he is responsible for ensuring the integrity and effectiveness of the governance processes of the Board and will consult with the Board promptly over any matter of major concern.

The Chairman will act as facilitator at meetings of the Board and ensure that no Board member, whether executive or non-executive, dominates the discussion, and that appropriate discussion takes place and that relevant opinion among Board members are forthcoming.

On the other hand, the key roles and functions of the Group Managing Director are to ensure the day to day business affairs of the Group is effectively managed as well as ensuring the Group’s strategies and corporate policies are effectively implemented.



3. reiNforce iNdePeNdeNce cont’d

3.4 Board composition

The Board currently comprises five (5) Executive Directors including the Group Managing Director and four (4) Independent Non-Executive Directors. This composition ensures that at least one third of the Board comprise of independent directors in accordance to the requirement of paragraph 15.02 of the Main Market Listing Requirements of Bursa Securities.

The presence of the Independent Non-Executive Directors ensures that views, consideration, judgment and discretion exercised by the Board in decision-making remains objective, unbiased and independent whilst assuring the interest of other parties such as minority shareholders are addressed and adequately protected as well as being accorded with due consideration.

4. foster commitmeNt

4.1 director’s time commitment

The Directors of the Company are expected to devote sufficient time to carry out their duties and responsibilities and are required to notify the Chairman of the Board before accepting any new directorship. During the financial year under review, two (2) meetings were held subsequent to the listing with the attendance records of the Directors set out below:

Name of directors attendance

Dato’ Ng Ah Hock @ Ng Soon PorOoi Bin KeongOoi Seng KhongOoi Kong TiongNg Kok TeongOoi Shang HowChan Kee LoinTan Did HengTan Sack Sen

2/22/22/22/22/22/22/22/22/2

All the members of the Board hold less than five (5) directorships in listed issuer, in compliance with paragraph 15.06 of the Main Market Listing Requirement of Bursa Securities thus expected to dedicate sufficient time and effort in discharging their duties and responsibilities effectively.

4.2 directors’ continuing education Programmes

All Directors of the Company have during the financial year under review attended the Mandatory Accreditation Programme as prescribed by Bursa Securities.

The Directors are encouraged to attend other appropriate training programmes to equip themselves with the knowledge and keep abreast of latest regulatory developments to effectively discharge their duties as Directors.



5. uPHoLd iNtegrity iN fiNaNciaL rePortiNg

5.1 compliance of financial statements with applicable financial reporting standards

The Audit Committee is tasked to assist the Board in fulfilling its fiduciary responsibilities and ensuring the financial statements comply with approved financial reporting standard, as laid down in the Audit Committee’s Terms of Reference.

The Board is responsible to ensure that the financial statements are properly drawn up in accordance with the provisions of the Companies Act, 1965 and approved accounting standards in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company as of financial year ended 31 December 2013 and of their financial performance and cash flows for the financial year then ended.

The Directors are satisfied that in preparing the financial statements of the Group for the year ended 31 December 2013, the Group has adopted suitable accounting policies and applied them consistently, prudently and reasonably. The Directors also consider that all applicable approved accounting standards have been followed in the preparation of the financial statements, subject to any material departures being disclosed and explained in the notes to the financial statements. The financial statements have been prepared on the going concern basis.

The Directors are responsible for ensuring that the Group keeps sufficient accounting records to disclose with reasonable accuracy the financial position of the Group and which enable them to ensure that the financial statements comply with the Companies Act, 1965.

5.2 assessment of suitability and independence of external auditors

The Audit Committee has established the relevant policies and procedures to assess the suitability and independence of External Auditors.

6. recogNise aNd maNage risKs

6.1 internal control and risk management

The Audit Committee has been entrusted by the Board to ensure effectiveness of the Group’s risk management and internal control systems. The activities of the outsourced Internal Auditors are reported regularly to the Audit Committee which provides the Board with the required assurance in relation to the adequacy and integrity of the Group’s system of internal controls. Information on the Group’s risk management and internal control is presented in the Statement on Risk Management and Internal Control set out in page 32 of this Annual Report.

7. eNsure timeLy aNd HigH QuaLity discLosure

7.1 corporate disclosure Policies and Procedures

The Board ensures that the Company complies with all applicable corporate disclosure laws and regulations.

7.2 dissemination of information

The Company has established a website at www.leonfuat.com.my where the public can access to the Company’s corporate information, products and services, share prices information, financial results, media releases as well as the Company’s announcements made to Bursa Malaysia.




8 streNgtHeN reLatioNsHiP BetweeN comPaNy aNd sHareHoLders

8.1 annual general meetings

The forthcoming Annual General Meeting is the Company’s first general meeting involving public shareholders since the listing. Notice of the Annual General Meeting will be sent to the shareholders at least twenty-one days before the Annual General Meeting and the notice will also be advertised in the newspaper giving shareholders sufficient time to prepare and/or to appoint proxy to attend and vote for their behalf.

The Company will consider and introduce electronic voting when appropriate.

8.2 Poll voting

The Board took cognisance and will consider putting substantive resolutions to vote by poll at general meetings. Shareholders will be informed of their right to demand for poll at the general meetings of the Company.

8.3 dialogue between the company and stakeholders

The Board believes that general meetings are the most effective communication platform between the Company and shareholders.

The Board will treat the annual general meetings and/or extraordinary general meetings as the most direct and effective way for the Company to reach our shareholders and stakeholders. It serves as a platform for the Company to convey business plans and strategies and for the shareholders to seek clarification or raise any queries on the resolutions to be tabled at the meeting, as well as to allow the shareholder to share their view and feedback on matters relating to the Group.

The above Statement was reviewed and approved by the Board on 25 April 2014.


Report of the Nomination Committee

The Nomination Committee of Leon Fuat Berhad (“NC” or “Committee”) is pleased to present the following report for the financial year ended 31 December 2013.

comPositioN of tHe NomiNatioN committee

The Nomination Committee consists of three (3) members, all of whom are Independent Non-Executive Directors.

The committee members are as follows:

directors Position

Chan Kee Loin Chairman of Nomination Committee & Independent Non-Executive Director

Tan Did Heng Independent Non-Executive Director

Tan Sack Sen Independent Non-Executive Director

terms of refereNce of tHe NomiNatioN committee

constitution

The Board has established a Committee of the Board to be known as the Nomination Committee.

membership

1. The Committee shall be appointed by the Board from amongst the Directors of the Company and shall comprise mainly of non-executive directors, majority of whom shall be independent. If a member of the Committee resigns or for any other reason ceases to be a member with the result that the number of members is reduced to below three (3), the Board of Directors shall, within three (3) months from the date of that event, appoint such number of new members as may be required to make up the minimum number of three (3) members.

2. The members of the Committee shall elect a Chairman from among their members.

3. The Company Secretary or his nominee or such other persons authorised by the Board shall act as the Secretary of the Committee.

meetings and minutes

4. The Chairman of the Committee may request for a meeting as and when deemed necessary. The quorum for the meeting of the Committee shall consist of not less than two (2) members.

5. The Committee shall report to the Board and its minutes tabled and noted by the Board of Directors. The books containing the minutes of proceedings of any meeting of the Committee shall be kept by the Company at the registered office or the principal office of the Company and shall be open for inspection of any member of the Committee and the Board of Directors.

6. The Chairman of the Committee shall be entitled, where deemed appropriate, to invite any other person to a meeting of the Committee at which that person’s expertise may be required having regard to the subject matter to be discussed.


Report of the Nomination CommitteeCont’d

terms of refereNce of tHe NomiNatioN committee cont’d

functions

7. Assess and recommend to the Board of Directors the candidates for directorships of the Company.

8. Recommend to the Board, directors to fill the seats on board committees.

9. To annually assess the effectiveness of the Board as a whole, Board Committees and the contributions of each individual Director, taking into consideration the required mix of skills, expertise, experience and other requisite qualities including core competencies where non–executive directors should bring to the Board.

10. Orientating and educating new directors as to the nature of the business, current issues within the company and the corporate strategies, the expectations of the company concerning input from the directors and the general responsibilities of directors.

11. To recommend to the Board the re-election of directors who retire at annual general meetings.

12. Periodically reporting to the Board on succession planning for the board Chairman and Group Managing Director, where appropriate and senior management. The Board should work with the Committee to evaluate potential successors.

13. Assessing independence of Independent Directors for recommendation to the shareholders for approval at the Company’s general meeting, where appropriate.

reporting Procedures

14. The actual decision as to who shall be appointed to the Board should be the responsibility of the full board after considering the recommendations of the committee.

15. Reporting to the full board from time to time its recommendations for consideration and implementation.

activities of tHe NomiNatioN committee

During the financial year ended 31 December 2013, the Nomination Committee met once on 26 August 2013 to note the Terms of Reference and to discuss the proposed annual assessment by the NC of the effectiveness of the Board and individual director which will be carried out immediately after the end of the financial year 2013, amongst other matters.

The NC took cognizance of its function in the review and assessment for appointment of new directors to the Board, taking into consideration inter-alia the suitability of the potential candidates, required mix of knowledge and skills before making recommendation to the Board.


Report of the Audit Committee

The Audit Committee of Leon Fuat Berhad is pleased to present the following report for the financial year ended 31 December 2013.

comPositioN of tHe audit committee

The Audit Committee consists of three (3) members, all of whom are Independent Non-Executive Directors. The Chairman of the Audit Committee is also a member of the Malaysian Institute of Accountants.


directors Position

Tan Did Heng Chairman of Audit Committee & Independent Non-Executive Director

Chan Kee Loin Independent Non-Executive Director

Tan Sack Sen Independent Non-Executive Director

meetiNgs aNd atteNdaNce

The Audit Committee held a total of three (3) meetings during the financial year ended 31 December 2013. Details of attendance are as follows:

directors attendance

Tan Did Heng 3 out of 3

Chan Kee Loin 3 out of 3

Tan Sack Sen 3 out of 3

The Secretary was present at all Audit Committee Meetings held during the financial year ended 31 December 2013.

terms of refereNce of tHe audit committee

constitution

The Board of Directors has established a Committee of the Board to be known as the Audit Committee (hereinafter referred to as “Committee”). The Committee assists the Board in fulfilling its fiduciary responsibilities relating to corporate accounting, financial reporting practices, system of internal control, the audit process and the process of monitoring compliance with laws and regulations.

membership

1. The Committee shall be appointed by the Board of Directors from amongst the Directors of the Company and shall comprise of at least three (3) members, all of whom must be non-executive directors, with a majority of them being independent.

2. At least one member of the Committee:-

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


Report of the Audit CommitteeCont’d

terms of refereNce of tHe audit committee cont’d

membership cont’d

2. At least one member of the Committee:- cont’d

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

he must have passed the examinations specified in Part I of the 1st Schedule of the Accountants Act 1967; or

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

(iii) either one of the following qualifications and at least three (3) years’ post qualification experience in accounting or finance:

a degree/masters/doctorate in accounting or finance; or a member of any professional accountancy organisation which has been admitted as a full member of the

International Federation of Accountants; or

(iv) at least seven (7) years’ experience being a chief financial officer of a corporation or having the function of being primarily responsible for the management of the financial affairs of a corporation.

3. No alternate director shall be appointed as a member of the Committee.

4. The members of the Committee shall elect a Chairman from among their number who shall be an Independent Director.


6. If a member of the Committee resigns or for any other reason ceases to be a member with the result that the number of members is reduced to below three (3), the Board of Directors shall, within three (3) months from the date of that event, appoint such number of new members as may be required to make up the minimum number of three (3) members.

7. The term of office and performance of the Committee and each of its members shall be reviewed by the Board of Directors at least once every three (3) years to determine whether such Committee and its members have carried out their duties in accordance with their terms of reference.


8. The Committee shall meet at least four (4) times in a financial year, although additional meetings may be called at any time at the Committee Chairman’s discretion.

9. The quorum for a meeting of the Committee shall consist of not less than two (2) members, majority of whom must be Independent Directors.

10. Other than in circumstances which the Chairman of the Committee considers inappropriate, the Chief Financial Officer, the representatives of the internal auditors and external auditors will attend any meeting of the Committee to make known their views on any matter under consideration by the Committee or which in their opinion, should be brought to the attention of the Committee. Other Board members, employees and external professional advisers shall attend any particular meetings upon invitation by the Committee.




meetings and minutes cont’d

11. At least twice in a financial year, the Committee shall meet with the external auditors without the Executive Directors being present.

12. The Committee shall report to the Board and its minutes tabled and noted by the Board of Directors. The books containing the minutes of proceedings of any meeting of the Committee shall be kept by the Company at the registered office or the principal office of the Company, and shall be open for inspection of any member of the Committee and the Board of Directors.

authority

13. The Committee is authorised by the Board to investigate any matter within the Committee’s terms of reference. It shall have full and unrestricted access to any information pertaining to the Group and shall have the resources it requires to perform its duties. All employees of the Group are required to comply with the requests made by the Committee.

14. The Committee is authorised by the Board to obtain external independent professional or other advice, the expenses of which will be borne by the Company and to invite outsiders to attend the Committee’s meetings if it considers necessary.

15. The Committee shall have direct communication channels with the external auditors and person(s) carrying out the internal audit function or activity.

16. The Committee shall be able to convene meetings with the external auditors, the internal auditors or both, excluding the attendance of other Directors and employees of the Company, whenever deemed necessary.

17. The Internal Auditors shall report directly to the Committee and shall have direct access to the Chairman of the Committee on all matters of control and audit.

functions and duties

18. The Committee shall, amongst others, discharge the following functions:-

18.1 Review the following and report the same to the Board of Directors of the Company:-

(a) with the external auditors, the audit plan, the nature and scope of work and ascertain that it will meet the needs of the Board, the shareholders and regulatory authorities;

(b) with the external auditors, their evaluation of the quality and effectiveness of entire accounting system, the adequacy and integrity of the internal control system and the efficiency of the Group’s operations;

(c) with the external auditors, their audit report;

(d) the assistance given by employees of the Group to the external and internal auditors;

(e) 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 including inter-alia the appointment of internal auditors;

(f) the internal audit programme, processes and results of the internal audit programme, processes, major findings of internal investigation and Management’s response and whether or not appropriate action is taken on the recommendations of the internal audit function;

(g) review any appraisal or assessment of the performance of members of the internal audit function;




functions and duties cont’d

18. The Committee shall, amongst others, discharge the following functions:- cont’d

18.1 Review the following and report the same to the Board of Directors of the Company:- cont’d

(h) the quarterly results and annual financial statements prior to the approval by the Board of Directors, focusing particularly on:-

(i) changes in or implementation of major accounting policies and practices;

(ii) significant and unusual events;

(iii) significant adjustments arising from the audit;

(iv) compliance with accounting standards, other statutory and legal requirements and the going concern assumption;

(v) the accuracy and adequacy of the disclosure of information essential to a fair and full presentation of the financial affairs of the Group;

(i) any related party transactions and conflict of interest situations that may arise within the Company or Group and any related parties outside the Group including any transaction, procedure or course of conduct that raises questions of management integrity;

(j) any letter of resignation from the external auditors of the Company;

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

(l) any significant audit findings, reservations, difficulties encountered or material weaknesses reported by the external and internal auditors, particularly any comments and responses in Management letters as well as the assistance given by the employees of the Group in order to be satisfied that appropriate action is being taken.

18.2 Review any matters concerning the appointment and dismissal of both the external and internal auditors, their audit fees and render its recommendations accordingly to the Board of Directors.

18.3 Promptly report to Bursa Malaysia Securities Berhad on any matter reported by it to the Board of the Company which has not been satisfactorily resolved resulting in a breach of Bursa Malaysia Securities Berhad’s Listing Requirements.

18.4 Verify the allocation of option pursuant to a share scheme for employees, if any, at the end of each financial year and to prepare a statement verifying such allocation in the annual reports.

18.5 Carry out any other functions that may be mutually agreed upon by the Committee and the Board of Directors which would be beneficial to the Company and ensure the effective discharge of the Committee’s duties and responsibilities.

18.6 Ensure the internal audit function of the Company reports directly to the Committee.


activities of tHe audit committee

During the financial year ended 31 December 2013, the activities carried out by the Audit Committee in the discharge of its duties and functions included, among others, the following:

l Reviewed the unaudited quarterly financial results prior to the Board of Directors’ approval for submission to Bursa Malaysia Securities Berhad;

l Reviewed and discussed with the External Auditors the scope of work and audit plan including the audit approach, the areas of audit emphasis, new developments on accounting standards and regulatory requirements;

l Reviewed the assistance provided by Management to the External Auditors during the course of their audit;

l Reviewed the recurrent related party transactions;

l Reviewed and discussed with the Internal Auditors risk assessment and management in the Group;

l Reviewed the audit plan of the Internal Auditors to ensure the adequacy of the scope;

l Reviewed the internal audit reports, audit recommendations made and management responses to these recommendations; and

l Reviewed the assistance provided by Management to the Internal Auditors during the course of their audit.

iNterNaL audit fuNctioN

The Company has outsourced its internal audit function to an independent professional consultancy firm with the aim of providing independent and systematic reviews on the systems of internal control within the Group. The Internal Audit function provides an independent and objective feedback to the Audit Committee and the Board on the adequacy, effectiveness and efficiency of the internal control system within the Group.

For the year under review, audits were performed to evaluate and identify any weaknesses of the internal controls affecting the Group, the adequacy of the existing system of control and to recommend measures to management to improve and rectify any weaknesses.

On quarterly basis, the Internal Auditors report to the Audit Committee on their audit findings, their recommendations of the corrective actions to be taken by the management together with the management’s responses in relation thereto.

The activities carried out by the Internal Auditors during the financial year under review were as follows:-

1) Reviewed and reported on Sales, Delivery and Credit Control Function of the major subsidiary, Leon Fuat Hardware (Klang) Sdn Bhd;

2) Reviewed and reported on Trade Purchasing Function of Leon Fuat Hardware (Klang) Sdn Bhd;

3) Reviewed and reported on Recurrent Related Party Transactions entered into by the Group; and

4) Conducted a risk assessment review of the Company and its subsidiaries with Executive Director and relevant key personnel of the Group and reported the findings to the AC.

The costs incurred for the internal audit function in respect of the financial year ended 31 December 2013 amounted to RM15,900.



Report of the Remuneration Committee

The Remuneration Committee of Leon Fuat Berhad (“Remuneration Committee” or “Committee”) is pleased to present the following report for the financial year ended 31 December 2013.

comPositioN of tHe remuNeratioN committee

The Remuneration Committee consists of three (3) members, the majority of whom are Non-Executive Directors.


directors Position

Tan Sack Sen Chairman of Remuneration Committee & Independent Non-Executive Director

Ooi Bin Keong Group Managing Director

Chan Kee Loin Independent Non-Executive Director

terms of refereNce of tHe remuNeratioN committee

constitution

The Board has established a Committee of the Board to be known as the Remuneration Committee.

membership

1. The Committee shall be appointed by the Board from amongst the Directors of the Company and shall comprise wholly or mainly of non-executive directors of not less than three (3) members. If a member of the Committee resigns or for any other reason ceases to be a member with the result that the number of members is reduced to below three (3), the Board of Directors shall, within three (3) months from the date of that event, appoint such number of new members as may be required to make up the minimum number of three (3) members.

2. The members of the Committee shall elect a Chairman from among their members.



4. The Chairman of the Committee may request for a meeting as and when deemed necessary. The quorum for the meeting of the Committee shall consist of not less than two (2) members.

5. The Committee shall report to the Board and its minutes tabled and noted by the Board of Directors. The books containing the minutes of proceedings of any meeting of the Committee shall be kept by the Company at the registered office or the principal office of the Company and shall be open for inspection of any member of the Committee and the Board of Directors.

6. The Chairman of the Committee shall be entitled, where deemed appropriate, to invite any other person to a meeting of the Committee at which that person’s expertise may be required having regard to the subject matter to be discussed.


terms of refereNce of tHe remuNeratioN committee cont’d

functions

7. Review and recommend to the board the framework of remuneration and its cost, and the remuneration package for executive directors and key management personnel, taking into account the performance of the individual, the inflation price index and information from independent sources on the rates of salary for similar jobs in a selected group of comparable companies.

8. Review and recommend to the Board the remuneration structure and policy for executive directors and key management personnel, the terms of employment or service contract, where relevant, any benefit, pension or incentive scheme entitlement, performance related bonuses, fees and expenses, compensation arrangement, and to review for changes to the policy, where necessary.

9. To reimburse reasonable expenses incurred by the directors in the course of their duties as directors.

10. To review annually the executive directors’ service contracts, if any.

11. To ensure the levels of remuneration be sufficiently attractive and be able to retain the Directors and key management personnel needed to run the Group successfully.

12. Ensure corporate accountability and governance in respect of the remuneration of the Directors and key management personnel and other relevant functions.

reporting Procedures

13. The remuneration of Directors shall be the ultimate responsibility of the Board after considering the recommendations of the Committee.

14. Directors do not participate in deliberation and decisions on their respective remuneration packages.

activities of tHe remuNeratioN committee

The Remuneration Committee met on 26 August 2013 during the financial year ended 31 December 2013 to review and discuss the existing remuneration packages of the Executive Directors of the Company and its subsidiaries which comprise inter-alia salary, bonus and other benefits-in-kind.

The RC also reviewed the Directors’ Fees and meeting allowance for the Directors in respect of the financial year under review.

The RC discussed the establishment of a remuneration framework for Executive Directors which should include remuneration packages of the Executive Directors of the Company and its subsidiaries and other applicable key management personnel, to ensure the remuneration packages offered to the Executive Directors is reasonable and appropriate in the light of the Company’s performance, to attract and retain directors and key personnel.

Report of the Remuneration CommitteeCont’d


Report of the Remuneration CommitteeCont’d

directors’ remuNeratioN

The aggregate remunerations for services rendered by our Directors in all capacities to the Group for the financial year under review are as follows:

executive directors

Non-executive directors

rm’000 rm’000

Salaries and other emoluments 3,671 -

Fees 600 220

total 4,271 220

The Board’s remunerations, which comprise salaries, bonuses, fees, allowances and other benefits-in-kind are required to be considered and recommended by the Remuneration Committee and subsequently by the Board. Our Directors’ Fees are subject to shareholders’ approval at Annual General Meeting.

The number of Directors of the Company whose total remuneration falls into the each band of RM50,000 distinguishing between Executive and Non-Executive Directors is as follows:

executive directors Non-executive directors

Up to RM50,000 - 3

RM50,001 to RM100,000 - 1

RM700,001 to RM750,000 1 -

RM750,001 to RM800,000 1 -

RM800,001 to RM850,000 1 -

RM850,001 to RM900,000 1 -

RM900,001 to RM950,000 - -

RM950,001 to RM1,000,000 - -

RM1,000,001 to RM1,050,000 - -

RM1,050,001 to RM1,100,000 1 -


Statement on Risk Management and Internal Control

Pursuant to Paragraph 15.26 (b) of the Bursa Malaysia Securities Berhad’s Main Market Listing Requirements, the board of directors of a listed issuer is to include in its Annual Report a statement about the state of risk management and internal control of the listed issuer as a group.

The Malaysian Code on Corporate Governance 2012 under Principle 6 states that the Board should establish a sound risk management framework and internal controls system.

The Board of Leon Fuat acknowledges its overall responsibility for maintaining a sound internal control system for the Group to safeguard the shareholders’ investment and the Group’s assets, and to discharge their stewardship responsibilities in identifying risks and ensuring the implementation of appropriate system to manage these risks in accordance with the best practices of the Malaysian Code on Corporate Governance.

The Board also recognises that in establishing such system of risk management and internal control, the systems designed can only manage but not eliminate the risk of failure to achieve business objectives of the Group and that it can only provide reasonable assurance against material misstatement or loss.

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

In addition, Senior Management of the Group has been entrusted to continuously monitor the effectiveness and integrity of the system of risk management and internal control, which among others, include the following processes : -

l A risk management framework has been adopted as an on-going process for identifying, evaluating and managing the significant risks faced by the Group since 23 October 2013 and it has been in place up to the date of this statement.

l A Risk Management Committee has been established on 11 October 2013 to review issues relating to risk affecting the Group and to formulate risk management strategy to mitigate the potential risk.

l The Risk Management Committee reports to the Board.

l The Board receives and reviews on quarterly basis since the listing of the Company in June 2013 the reports on key financial data and performance. Quarterly results are compared with the immediate preceding quarter and variances are highlighted and explained by the Chief Financial Officer to the Board.

l The Audit Committee reviews internal and external audit findings and holds discussions with the management on action to be taken on accounting and internal control issues identified by the internal audit function and the external auditors.

The internal audit function of the Group was outsourced to an independent professional service provider to facilitate in the risk assessment and conduct internal control reviews based on the approved internal audit plan.

During the financial year, there were no material losses, contingencies or uncertainties arising from weaknesses in the internal control system that would require disclosure in the Group’s Annual Report.

Based on the foregoing, the Board is of the view that the Group’s risk management and internal control system implemented is adequate and effective while recognising that these require continuous improvement.

The above Statement on Risk Management and Internal Control was reviewed and approved by the Board on 25 April 2014.


Additional Compliance Information

1. utiLisatioN of Proceeds from tHe PuBLic issue

On 5 June 2013, the entire enlarged issued and paid-up share capital of the Company comprising 310,000,000 ordinary shares of RM0.50 each (“Shares”) was listed on the Main Market of Bursa Malaysia Securities Berhad.

In conjunction with and as an integral part of the listing, the Company undertook a public issue of 59,310,000 new Shares at an issue price of RM0.60 per Share.

The gross proceeds raised from the Public Issue amounting to RM35.59 million and the status of utilisation is as follows:

Proposed utilisation(1)

actual utilisation deviation Balance

intended timeframe for

utilisation (from the listing date)

Purposes rm’000 rm’000 rm’000 % rm’000

Purchase of new industrial land with building

13,000 (12,677) (323)(2) (2.5%) - Within 1 year

Construction of new processing plant with warehousing facilities

6,000 - - - 6,000 Within 3 years

Purchase of new machines 6,000 - - - 6,000 Within 3 Years

Working capital 7,786 (7,655) (131)(2)(3) (1.7%) - Within 1 year

Estimated listing expenses 2,800 (3,254)(3) 454(3) 16.2% - Upon listing

Total gross proceeds 35,586 (23,586) - - 12,000

Note:

(1) The proposed utilisation of proceeds as disclosed above should be read in conjunction with the Prospectus of the Company dated 13 May 2013.

(2) In respect of excess of proposed utilisation over the actual early settlement sum (including a one-off fee of RM0.15 million levied by the bank for early settlement) for a term loan facility used to fund the purchase of the new industrial land with building. In accordance to the Prospectus dated 13 May 2013, any variation to the actual term loan and overdraft facility repayment shall be adjusted against the proposed utilisation for working capital.

(3) Actual listing expenses incurred were more than the estimated listing expenses by RM0.45 million mainly due to higher printing and advertisement costs as well as other incidental costs incurred in connection to the listing exercise. In accordance to the Prospectus dated 13 May 2013, the excess of listing expenses shall be adjusted against the proposed utilisation for working capital.

2. sHare Buy-BacK

The Company does not have a share buy-back programme in place.

3. oPtioNs or coNvertiBLe securities

The Company did not issue any options or convertible securities during the financial year under review.

4. dePository receiPt Programme

The Company did not sponsor any depository receipt programme during the financial year under review.


Additional Compliance InformationCont’d

5. imPositioN of saNctioNs aNd/or PeNaLties

There were no public sanctions and/or penalties imposed on the Company and its subsidiaries, Directors or Management by the relevant regulatory bodies during the financial year.

6. NoN-audit fees

The amount of non-audit fees paid and payable to the External Auditors for services rendered for the financial year under review amounted to RM89,000.

7. variatioN iN resuLts

There was no material variation between the audited results for the financial year under review and the unaudited results of the Group previously announced.

8. Profit estimates, forecast or ProJectioN

The Company did not issue any profit estimate, forecast or projection for the financial year under review.

9. Profit guaraNtee

The Company is not subject to any profit guarantee during the financial year under review.

10. materiaL coNtract iNvoLviNg directors aNd maJor sHareHoLders

There were no material contracts entered into by the Company and its subsidiaries which involved the interests of the Directors and major shareholders, either still subsisting at the end of the financial year under review, or which were entered into since the end of the previous financial year other than contracts entered into in the normal course of business.

11. recurreNt reLated Party traNsactioNs

The relevant recurrent related party transactions of a revenue nature incurred by the Group for the period from 5 June 2013 (date of listing) to 31 December 2013 are set out in Note 26 of the audited financial statements for year ended 31 December 2013.

Financial StatementsFinancial Statements36 Directors’ Report41 Statement by Directors41 Statutory Declaration42 Independent Auditors’ Report44 Statements of Profit or Loss and Other Comprehensive Income45 Statements of Financial Position46 Consolidated Statement of Changes in Equity47 Statement of Changes in Equity48 Statements of Cash Flows50 Notes to the Financial Statements94 Supplementary Information on The Diclosure of Realised and Unrealised Profit or Loss


Directors’ Report

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

PRINCIPAL ACTIVITIES

The principal activities of the Company are investment holding and the provision of management services to its subsidiaries upon the completion of the listing scheme on 5 June 2013, details of which are as disclosed in Note 30 to the financial statements. The principal activities of the subsidiaries are disclosed in Note 10 to the financial statements. There have been no significant changes in the nature of these activities during the financial year.

RESULTS

Group Company RM RM

Profit for the financial year 25,773,411 10,971,767

Attributable to:

Owners of the Company 25,773,411 10,971,767

DIVIDEND

Since the end of the previous financial year, the Company declared the first interim single tier exempt dividend of 1.5 sen per share amounting to RM4,650,000 in respect of the current financial year which was paid on 8 October 2013.

The directors recommended a final single tier exempt dividend of 1.5 sen per share amounting to RM4,650,000 based on the number of outstanding ordinary shares in issue as at the date of this report, in respect of the current financial year, subject to the approval of the shareholders at the forthcoming Annual General Meeting. The financial statements for the current financial year do not reflect this proposed dividend. Such dividend, if approved by the shareholders, will be accounted for in equity as an appropriation of retained earnings in the financial year ending 31 December 2014.

RESERVES AND PROVISIONS

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

BAD AND DOUBTFUL DEBTS

Before the statements of profit or loss and other comprehensive income and statements of financial position of the Group and of the Company were made out, the directors took reasonable steps to ascertain that action had been taken in relation to the writing off of bad debts and the making of provision for doubtful debts and have satisfied themselves that all known bad debts had been written off and that adequate provision had been made for doubtful debts.

At the date of this report, the directors are not aware of any circumstances which would render the amount written off for bad debts or the amount of provision for doubtful debts in the financial statements of the Group and of the Company inadequate to any substantial extent.


Directors’ ReportCont’d

CURRENT ASSETS

Before the statements of profit or loss and other comprehensive income and statements of financial position of the Group and of the Company were made out, the directors took reasonable steps to ensure that any current assets, other than debts, which were unlikely to realise in the ordinary course of business including their values as shown in the accounting records of the Group and of the Company had been written down to an amount which they might be expected so to realise.

At the date of this report, the directors are not aware of any circumstances which would render the values attributed to the current assets in the financial statements of the Group and of the Company misleading.

VALUATION METHODS

At the date of this report, the directors are not aware of any circumstances 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.

CONTINGENT AND OTHER LIABILITIES

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 or other liability of the Group and of the Company has become enforceable, or is likely to become enforceable within the period of twelve months after the end of the financial year which, in the opinion of the directors, will or may affect the ability of the Group and of the Company to meet their obligations as and when they fall due.

CHANGE OF CIRCUMSTANCES

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

ITEMS OF AN UNUSUAL NATURE

In the opinion of the directors:

(i) the results of the operations of the Group and of the Company for the financial year were not substantially affected by any item, transaction or event of a material and unusual nature; and

(ii) there has not arisen in the interval between the end of the financial year and the date of this report any item, transaction or event of a material and unusual nature likely to affect substantially the results of the operations of the Group and of the Company for the financial year in which this report is made.


ISSUE OF SHARES AND DEBENTURES

During the financial year, the Company has increased its:

(i) authorised share capital from RM100,000 to RM500,000,000 by the creation of an additional 999,800,000 ordinary shares of RM0.50 each;

(ii) issued and paid-up share capital from RM3 to RM155,000,000 by way of:

(a) Acquisition of Leon Fuat Hardware Sdn. Bhd. (“LF Hardware”)

The Company acquired the entire issued and paid-up share capital in LF Hardware comprising 2,000,000 ordinary shares of RM1.00 each for a total purchase consideration of RM28,978,000 which was entirely satisfied by the issuance of 57,956,000 new ordinary shares of RM0.50 each in the Company at an issue price of RM0.50 per share, credited as fully paid;

(b) Acquisition of Leon Fuat Hardware (Klang) Sdn. Bhd. (“LF Klang”)

The Company acquired the entire issued and paid-up share capital in LF Klang comprising 10,000,000 ordinary shares of RM1.00 each for a total purchase consideration of RM76,793,997 which was entirely satisfied by the issuance of 153,587,994 new ordinary shares of RM0.50 each in the Company at an issue price of RM0.50 per share, credited as fully paid;

(c) Acquisition of Supreme Steelmakers Sdn. Bhd. (“Supreme Steelmakers”)

The Company acquired the entire issued and paid-up share capital in Supreme Steelmakers comprising 2,000,000 ordinary shares of RM1.00 each for a total purchase consideration of RM12,188,000 which was entirely satisfied by the issuance of 24,376,000 new ordinary shares of RM0.50 each in the Company at an issue price of RM0.50 per share, credited as fully paid; and

(d) Acquisition of ASA Steel (M) Sdn. Bhd. (“ASA Steel”)

The Company acquired the entire issued and paid-up share capital in ASA Steel comprising 1,800,000 ordinary shares of RM1.00 each for a total purchase consideration of RM7,385,000 which was entirely satisfied by the issuance of 14,770,000 new ordinary shares of RM0.50 each in the Company at an issue price of RM0.50 per share, credited as fully paid.

(e) Public Issue

The Company issued 59,310,000 new ordinary shares of RM0.50 each at an issue price of RM0.60 each per share for public issue and listing.

The new ordinary shares issued during the financial year rank pari passu in all respects with the existing ordinary shares of the Company.

There were no issues of debentures by the Company.

DIRECTORS OF THE COMPANY

The directors in office since the date of the last report are:-

DATO’ NG AH HOCK @ NG SOON POROOI BIN KEONGOOI SENG KHONGOOI KONG TIONGOOI SHANG HOWNG KOK TEONGTAN DID HENGCHAN KEE LOINTAN SACK SEN



DIRECTORS’ INTEREST

The interests of the directors in office as at the end of the financial year in the ordinary shares of the Company and of the related corporations during the financial year ended 31 December 2013 are as follows:-

Shareholdings in the holding company- Leon Fuat Holdings Sdn. Bhd.

Number of ordinary share of RM1 each At

1.1.2013 Bought Sold At

31.12.2013

Direct interestsOoi Bin Keong 2,500,000 - - 2,500,000 Ooi Seng Khong 600,000 - - 600,000 Ooi Kong Tiong 1,800,000 - - 1,800,000 Ooi Shang How 600,000 - - 600,000 Ng Kok Teong 1,000,000 - - 1,000,000

Deemed interestsNg Kok Teong (1) 2,300,000 - - 2,300,000

Shareholdings in the Company

Number of ordinary share of RM0.50 each At

1.1.2013 Bought Sold At

31.12.2013

Direct interestsDato’ Ng Ah Hock @ Ng Soon Por - 100,000 - 100,000 Ooi Bin Keong - 200,000 - 200,000 Ooi Seng Khong - 200,000 - 200,000 Ooi Kong Tiong - 200,000 - 200,000 Ooi Shang How - 200,000 - 200,000 Ng Kok Teong - 200,000 - 200,000 Tan Did Heng - 100,000 - 100,000 Chan Kee Loin - 100,000 - 100,000 Tan Sack Sen - 100,000 - 100,000

Deemed interestsOoi Bin Keong (2) (3) - 219,728,000 - 219,728,000 Ooi Kong Tiong (2) - 219,690,000 - 219,690,000 Ng Kok Teong (2) - 219,690,000 - 219,690,000

Notes:

(1) Shares held through a corporation in which the director has substantial financial interests.(2) 219,690,000 shares held through the holding company, Leon Fuat Holdings Sdn. Bhd. (3) 38,000 shares held by children of the director who herself/himself is not director of the Company.

By virtue of their substantial interests in the shares of the Company, Ooi Bin Keong, Ooi Kong Tiong and Ng Kok Teong are also deemed interested in the shares of the subsidiaries during the financial year to the extent that the Company has an interest.



DIRECTORS’ BENEFITS

Since the end of the previous financial year, no director of the Company has received or become entitled to receive any benefit (other than benefits included in the aggregate amount of the emoluments received or due and receivable by the directors and benefits-in-kind as disclosed in the financial statements or the fixed salary of a full time employee of the Company) by reason of a contract made by the Company or a related corporation with the director or with a firm of which the director is a member, or with a company in which the director has a substantial financial interest except for the deemed benefit which may arise from transactions disclosed in Note 26 to the financial statements.

Neither during nor at the end of the financial year, was the Company a party to any arrangements whose object is to enable the directors to acquire benefits by means of the acquisition of shares in or debentures of the Company or any other body corporate.

ULTIMATE HOLDING COMPANY

The directors regard Leon Fuat Holdings Sdn. Bhd., a private limited company incorporated in Malaysia, as the ultimate holding company of the Company.

SIGNIFICANT EVENTS

Details of significant events during the financial year are disclosed in Note 30 to the financial statements.

AUDITORS

The auditors, Messrs. Baker Tilly AC have expressed their willingness to continue in office.

Signed on behalf of the Board in accordance with a resolution of the directors dated 25 April 2014.

OOI BIN KEONG OOI KONG TIONG



We, the undersigned, being two of the directors of Leon Fuat Berhad, do hereby state that in the opinion of the directors, the accompanying financial statements as set out on pages 44 to 93 are drawn up in accordance with the Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company as at 31 December 2013 and of their financial performance and cash flows for the financial year then ended.

The supplementary information set out on page 94 has been prepared in accordance with the Guidance on Special Matter No.1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirement, as issued by the Malaysian Institute of Accountants and presented based on the format as prescribed by Bursa Malaysia Securities Berhad.

Signed on behalf of the Board in accordance with a resolution of the directors dated 25 April 2014.

OOI BIN KEONG OOI KONG TIONG

I, Tan Kien Yap, being the officer primarily responsible for the financial management of Leon Fuat Berhad, do solemnly and sincerely declare that, to the best of my knowledge and belief, the financial statements as set out on pages 44 to 93 and the supplementary information set out on page 94 are correct and I make this solemn declaration conscientiously believing the same to be true and by virtue of the provisions of the Statutory Declarations Act, 1960.

Subscribed and solemnly declared atKuala Lumpur in the Federal Territoryon 25 April 2014

TAN KIEN YAP

Before me

ZULKIFLA MOHD DAHLIM (W541)Commissioner for Oaths

Statement by DirectorsPursuant to Section 169(15) of the Companies Act, 1965

Statutory DeclarationPursuant to Section 169(16) of the Companies Act, 1965


Report on the Financial Statements

We have audited the financial statements of Leon Fuat Berhad, which comprise the statements of financial position as at 31 December 2013 of the Group and of the Company, and the statements of profit or loss and other comprehensive income, statements of changes in equity and statements of cash flows of the Group and of the Company for the financial year then ended, and a summary of significant accounting policies and other explanatory information, as set out on pages 44 to 93.

Directors’ Responsibility for the Financial Statements

The directors of the Company are responsible for the preparation of financial statements so as to give a true and fair view in accordance with the 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 controls as the directors determine are 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 whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgement, including the assessment of risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal controls 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 controls. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial statements.

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

Opinion

In our opinion, the financial statements give a true and fair view of the financial position of the Group and of the Company as at 31 December 2013 and of their financial performance and cash flows for the financial year then ended in accordance with the 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 Companies Act, 1965 in Malaysia 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 Companies Act, 1965 in Malaysia.

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

(c) The auditors’ reports on the financial statements of the subsidiaries did not contain any qualification or any adverse comment made under Section 174(3) of the Companies Act, 1965 in Malaysia.

Independent Auditors’ ReportTo the Members of Leon Fuat Berhad(Incorporated in Malaysia)


Other Reporting Responsibilities

The supplementary information set out on page 94 to the financial statements is disclosed to meet the requirement of Bursa Malaysia Securities Berhad and is not part of the financial statements. The directors are responsible for the preparation of the supplementary information in accordance with the Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants (“MIA Guidance”) and the directive of Bursa Malaysia Securities Berhad. In our opinion, the supplementary information is prepared, in all material respects, in accordance with the MIA Guidance and the directive of Bursa Malaysia Securities Berhad.

Other Matters

This report is made solely to the members of the Company, as a body, in accordance with Section 174 of the Companies Act, 1965 in Malaysia and for no other purpose. We do not assume responsibility to any other person for the contents of this report.

BAKER TILLY AC LEE KONG WENGAF 001826 2967/07/15(J)Chartered Accountants Chartered Accountant

Kuala LumpurDate: 25 April 2014

Independent Auditors’ ReportTo the Members of Leon Fuat Berhad

(Incorporated in Malaysia)Cont’d


Group Company

2013 2012 2013 2012

Note RM RM RM RM

Operating revenue 4 455,267,630 437,202,806 12,998,818 -

Direct operating costs 5 (389,260,200) (376,438,726) - -

Gross profit 66,007,430 60,764,080 12,998,818 -

Other operating income 1,722,202 1,173,302 313,572 -

Distribution costs (4,532,197) (4,612,662) - -

Administrative costs (18,786,978) (16,221,973) (1,150,763) (6,763)

Other operating costs (2,226,523) (2,179,087) (1,116,760) (1,346,888)

(25,545,698) (23,013,722) (2,267,523) (1,353,651)

Profit/(Loss) from operations 42,183,934 38,923,660 11,044,867 (1,353,651)

Finance costs (6,832,930) (5,499,805) - -

Profit/(Loss) before tax 6 35,351,004 33,423,855 11,044,867 (1,353,651)

Tax expense 7 (9,577,593) (9,314,506) (73,100) -

Profit/(Loss) for the financial year 25,773,411 24,109,349 10,971,767 (1,353,651)

Other comprehensive income, net of tax:

Item that may be reclassified subsequently to profit or loss:

Fair value gain on available-for-sale financialasset 14,700 - - -

Total comprehensive income for the financial year 25,788,111 24,109,349 10,971,767 (1,353,651)

Profit attributable to:


Total comprehensive income attributable to:


Earnings per ordinary share (sen)

Basic 8 9.02 9.62

Diluted 8 9.02 9.62

Statements of Profit or Loss and Other Comprehensive IncomeFor the financial year ended 31 December 2013

The annexed notes form an integral part of, and should be read in conjunction with, these financial statements.


Group Company

2013 2012 2013 2012

Note RM RM RM RM

ASSETS

Non-current assets

Property, plant and equipment 9 84,170,355 83,293,724 - -

Investments in subsidiaries 10 - - 125,344,997 -

Other investment 11 47,600 32,900 - -

84,217,955 83,326,624 125,344,997 -

Current assets

Inventories 12 149,550,819 95,614,935 - -

Trade and other receivables 13 123,573,771 123,509,561 4,500 69,000

Amounts owing by subsidiaries 14 - - 20,471,206 -

Dividend receivables - - 5,140,000 -

Deposits with licensed banks 15 15,624,998 4,412,580 14,224,698 -

Cash and bank balances 16 6,701,225 4,051,693 639,512 3

295,450,813 227,588,769 40,479,916 69,003

TOTAL ASSETS 379,668,768 310,915,393 165,824,913 69,003

EQUITY AND LIABILITIES

Equity

Share capital 17 155,000,000 125,345,000 155,000,000 3

Reserves 18 47,532,091 21,299,620 10,042,147 (1,373,980)

Total Equity 202,532,091 146,644,620 165,042,147 (1,373,977)

Non-current liabilities

Borrowings 19 688,217 12,170,106 - -

Deferred tax liabilities 20 3,080,267 2,852,200 - -

3,768,484 15,022,306 - -

Current liabilities

Trade and other payables 21 32,703,272 22,817,698 492,540 4,316

Amounts owing to subsidiaries 14 - - 223,126 1,438,664

Borrowings 19 137,069,722 122,570,066 - -

Tax liabilities 3,595,199 3,860,703 67,100 -

173,368,193 149,248,467 782,766 1,442,980

Total liabilities 177,136,677 164,270,773 782,766 1,442,980

TOTAL EQUITY AND LIABILITIES 379,668,768 310,915,393 165,824,913 69,003


Statements of Financial PositionAs at 31 December 2013


Attributable to Owners of the Company

Non-distributable Distributable

Share Capital

Share Premium

Merger Deficit

Capital Reserve

Fair Value Reserve

Retained Earnings

Total Equity

Group RM RM RM RM RM RM RM

At 1.1.2012 3 - - - - - 3

Effect arising from merger method of accounting 125,344,997 - (109,544,997) 923 (26,750) 106,761,095 122,535,268

Profit for the financial year, representing total comprehensive income for the financial year - - - - - 24,109,349 24,109,349

At 31.12.2012 125,345,000 - (109,544,997) 923 (26,750) 130,870,444 146,644,620

At 1.1.2013 125,345,000 - (109,544,997) 923 (26,750) 130,870,444 146,644,620

Comprehensive income

Profit for the financial year - - - - - 25,773,411 25,773,411

Other comprehensive income

Fair value gain in available-for-sale financial asset - - - - 14,700 - 14,700

Total other comprehensive income - - - - 14,700 - 14,700

Total comprehensive income - - - - 14,700 25,773,411 25,788,111

Transactions with owners

Issuance of shares pursuant to public issue 29,655,000 5,931,000 - - - - 35,586,000

Listing expenses - share issue expenses - (836,640) - - - - (836,640)

Dividend (Note 22) - - - - - (4,650,000) (4,650,000)

Total transactions with owners 29,655,000 5,094,360 - - - (4,650,000) 30,099,360

At 31.12.2013 155,000,000 5,094,360 (109,544,997) 923 (12,050) 151,993,855 202,532,091

Consolidated Statement of Changes in EquityFor the financial year ended 31 December 2013



Share Capital

Non- distributable

Share Premium

(Accumulated Losses)/

Distributable Retained Earnings

Total Equity

RM RM RM RM

At 1.1.2012 3 - (20,329) (20,326)

Loss for the financial year, representing totalcomprehensive income for the financial year - - (1,353,651) (1,353,651)

At 31.12.2012 3 - (1,373,980) (1,373,977)

Profit for the financial year, representing totalcomprehensive income for the financial year - - 10,971,767 10,971,767

Transactions with owners

Issuance of shares pursuant to acquisition ofsubsidiaries 125,344,997 - - 125,344,997

Issuance of shares pursuant to public issue 29,655,000 5,931,000 - 35,586,000

Listing expenses - share issue expenses - (836,640) - (836,640)

Dividend (Note 22) - - (4,650,000) (4,650,000)

Total transactions with owners 154,999,997 5,094,360 (4,650,000) 155,444,357

At 31.12.2013 155,000,000 5,094,360 4,947,787 165,042,147

Statement of Changes in EquityFor the financial year ended 31 December 2013



Group Company

2013 2012 2013 2012

Note RM RM RM RM

Cash Flows from Operating Activities

Profit/(Loss) before tax 35,351,004 33,423,855 11,044,867 (1,353,651)

Adjustments for:

Bad debts written off - 27,135 - -

Depreciation of property, plant and equipment 5,867,980 5,470,261 - -

Impairment loss on trade receivables 531,121 - - -

Interest expense 6,193,831 4,843,926 - -

Property, plant and equipment written off 45,937 5,589 - -

Dividend income (1,732) (1,615) (12,640,000) -

Gain on disposal of property, plant andequipment (263,667) (41,161) - -

Loss on disposal of other investments - 546 - -

Interest income (518,383) (242,731) (313,572) -

Reversal of impairment loss on tradereceivables (260,401) (93,315) - -

Unrealised gain on foreign exchange (22,442) - - -

Operating profit/(loss) before working capitalchanges 46,923,248 43,392,490 (1,908,705) (1,353,651)

Increase in inventories (53,935,884) (17,824,487) - -

(Increase)/Decrease in receivables (2,371,032) (1,413,880) 64,500 114,041

Increase/(Decrease) in payables 9,846,189 (2,730,969) 488,224 1,239,610

Cash generated from/(used in) operations 462,521 21,423,154 (1,355,981) -

Interest paid (6,193,831) (4,843,926) - -

Interest received 518,383 242,731 313,572 -

Real property gain tax refunded - 95,000 - -

Income tax paid (9,615,030) (7,707,201) (6,000) -

Net cash (used in)/from operating activities (14,827,957) 9,209,758 (1,048,409) -

Statements of Cash FlowsFor the financial year ended 31 December 2013


Group Company

2013 2012 2013 2012

Note RM RM RM RM

Cash Flows from Investing Activities

Dividend received 1,732 1,615 7,500,000 -

Purchase of property, plant and equipment 9 (4,759,187) (12,066,169) - -

Prepayment on purchase of property, plant andequipment - (2,069,915) - -

Addition to deposits pledged with licensedbanks (11,771) (10,608) - -

Proceeds from disposal of other investment - 4,454 - -

Proceeds from disposal of property, plant andequipment 302,221 109,000 - -

Net cash (used in)/from investing activities (4,467,005) (14,031,623) 7,500,000 -

Balance (19,294,962) (4,821,865) 6,451,591 -

Cash Flows from Financing Activities

Net advances to subsidiaries - - (21,686,744) -

Proceeds from issuance of shares 35,586,000 - 35,586,000 -

Payment of share issue expenses (836,640) - (836,640) -

Dividend paid (4,650,000) (17,000,000) (4,650,000) -

Repayments of ABBA facilities (676,353) (1,439,069) - -

Payments to finance lease payables (3,378,740) (4,244,630) - -

Repayments of term loans (10,256,966) (343,274) - -

Net drawdown of bankers’ acceptances 15,299,000 2,945,000 - -

Net cash from/(used in) financing activities 31,086,301 (20,081,973) 8,412,616 -

Net increase/(decrease) in cash and cashequivalents 11,791,339 (24,903,838) 14,864,207 -

Effect of exchange rate changes on cash andcash equivalents 28,014 - - -

Cash and cash equivalents at beginning of the financial year (7,170,406) 17,733,432 3 3

Cash and cash equivalents at end of thefinancial year 23 4,648,947 (7,170,406) 14,864,210 3


Statements of Cash FlowsFor the financial year ended 31 December 2013

Cont’d


Notes to the Financial Statements31 December 2013

1. CORPORATE INFORMATION

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

The registered office is located at Suite 11.1A, Level 11, Menara Weld, 76 Jalan Raja Chulan, 50200 Kuala Lumpur.

The principal place of business of the Company is located at No.11, Lorong Keluli 1B, Kawasan Perindustrian Bukit Raja Selatan, Seksyen 7 Shah Alam, 40000 Selangor Darul Ehsan.

The principal activities of the Company are investment holding and the provision of management services to its subsidiaries upon the completion of the listing scheme on 5 June 2013, details of which are as disclosed in Note 30. The principal activities of the subsidiaries are disclosed in Note 10. There have been no significant changes in the nature of these activities during the financial year.

The holding company of the Company during the financial year is Leon Fuat Holdings Sdn. Bhd., a private limited company incorporated in Malaysia.

The financial statements were authorised for issue in accordance with a Board of Directors’ resolution dated 25 April 2014.

2. BASIS OF PREPARATION

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

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

The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in Note 2(d).

(a) New and Revised MFRSs, Amendments/Improvements to MFRSs, New IC Interpretations (“IC Int”)

and Amendments to IC Int

(i) Adoption of New and Revised MFRSs, Amendments/Improvements to MFRSs, New IC Int and Amendments to IC Int

The Group and the Company had adopted the following new and revised MFRSs, amendments/improvements to MFRSs, new IC Int and amendments to IC Int that are mandatory for the current financial year:-

New MFRSsMFRS 10 Consolidated Financial StatementsMFRS 11 Joint ArrangementsMFRS 12 Disclosure of Interests in Other EntitiesMFRS 13 Fair Value Measurement

Revised MFRSsMFRS 119 Employee BenefitsMFRS 127 Separate Financial StatementsMFRS 128 Investments in Associates and Joint Ventures


notes to the Financial Statements31 december 2013

Cont’d

2. BASIS OF PREPARATION cont’d

(a) New and Revised MFRSs, Amendments/Improvements to MFRSs, New IC Interpretations (“IC Int”) and Amendments to IC Int cont’d

(i) Adoption of New and Revised MFRSs, Amendments/Improvements to MFRSs, New IC Int and Amendments to IC Int cont’d

The Group and the Company had adopted the following new and revised MFRSs, amendments/improvements to MFRSs, new IC Int and amendments to IC Int that are mandatory for the current financial year:- cont’d

Amendments/Improvements to MFRSsMFRS 1 First-time Adoption of Malaysian Financial Reporting StandardsMFRS 7 Financial Instruments: DisclosuresMFRS 10 Consolidated Financial StatementsMFRS 11 Joint ArrangementsMFRS 12 Disclosure of Interests in Other EntitiesMFRS 101 Presentation of Financial StatementsMFRS 116 Property, Plant and EquipmentMFRS 132 Financial Instruments: PresentationMFRS 134 Interim Financial Reporting

New IC IntIC Int 20 Stripping Costs in the Production Phase of a Surface Mine

Amendments to IC IntIC Int 2 Members’ Shares in Co-operative Entities & Similar Instruments

The adoption of the new and revised MFRSs, amendments/improvements to MFRSs, new IC Int and amendments to IC Int do not have any effect on the financial statements of the Group and of the Company except for those as discussed below:-

MFRS 13 Fair Value Measurement

MFRS 13 defines fair value and sets out a framework for measuring fair value, and the disclosure requirements about fair value. This standard is intended to address the inconsistencies in the requirements for measuring fair value across different accounting standards. As defined in this standard, fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. As a result of the guidance in MFRS 13, the Group reassessed its policies for measuring fair values, in particular, its valuation inputs such as non-performance risk for fair values measurement of liabilities.

Application of MFRS 13 has not materially impacted the fair value measurements of the Group. MFRS 13 requires more extensive disclosures. Additional disclosures where required, are provided in the individual notes relating to the assets and liabilities whose fair values were determined. Fair value hierarchy is provided in Note 28.

Amendments to MFRS 101 Presentation of Financial Statements

The amendments to MFRS 101 introduce a grouping of items presented in other comprehensive income. Items that will be reclassified to profit or loss at future point in time have to be presented separately from items that will not be reclassified.

The amendments also introduce new terminology, whose use is not mandatory, for the statement of comprehensive income and income statement. Under the amendments, the ‘statement of comprehensive income’ is renamed as the ‘statement of profit or loss and other comprehensive income’.

The above amendments affect presentation only and have no impact on the Group’s financial position or performance.


Notes to the Financial Statements31 December 2013Cont’d



(ii) New MFRS, Amendments/Improvements to MFRSs and New IC Int that are issued, but not yet effective and have not been early adopted

The Group and the Company have not adopted the following new MFRS, amendments/improvements to MFRSs and new IC Int that have been issued by the Malaysian Accounting Standards Board (“MASB”) as at the date of authorisation of these financial statements but are not yet effective for the Group and the Company:-

Effective for financial periods beginning on

or after

New MFRSMFRS 9 Financial Instruments To be announced by

MASB

Amendments/Improvements to MFRSsMFRS 1 First-time Adoption of Malaysian Financial Reporting Standards 1 July 2014MFRS 2 Share-based Payment I July 2014MFRS 3 Business Combinations 1 July 2014MFRS 7 Financial Instruments: Disclosures Applies when MFRS 9 is

appliedMFRS 8 Operating Segments 1 July 2014MFRS 9 Financial Instruments To be announced

by the MASBMFRS 10 Consolidated Financial Statements 1 January 2014MFRS 12 Disclosure of Interests in Other Entities 1 January 2014MFRS 13 Fair Value Measurement 1 July 2014MFRS 116 Property, Plant and Equipment 1 July 2014MFRS 119 Employee Benefits 1 July 2014MFRS 124 Related Party Disclosures 1 July 2014MFRS 127 Separate Financial Statements 1 January 2014MFRS 132 Financial Instruments: Presentation 1 January 2014MFRS 136 Impairment of Assets 1 January 2014MFRS 138 Intangible Assets 1 July 2014MFRS 139 Financial Instruments: Recognition and Measurement 1 January 2014 and

Applies when MFRS 9 is applied

MFRS 140 Investment Property 1 July 2014

New IC IntIC Int 21 Levies 1 January 2014

A brief discussion on the above significant new MFRS, amendments/improvements to MFRSs and new IC Int are summarised below. Due to the complexity of these new standards, the financial effects of their adoption are currently still being assessed by the Company.



Cont’d



(ii) New MFRS, Amendments/Improvements to MFRSs and New IC Int that are issued, but not yet effective and have not been early adopted cont’d

MFRS 9 Financial Instruments

MFRS 9 specifies how an entity should classify and measure financial assets and financial liabilities.

This standard requires all financial assets to be classified based on how an entity manages its financial assets (its business model) and the contractual cash flow characteristics of the financial asset. Financial assets are to be initially measured at fair value. Subsequent to initial recognition, depending on the business model under which these assets are acquired, they will be measured at either fair value or at amortised cost.

In respect of the financial liabilities, the requirements are generally similar to the former MFRS 139. However, this standard requires that for financial liabilities designated as at fair value through profit or loss, changes in fair value attributable to the credit risk of that liability are to be presented in other comprehensive income, whereas the remaining amount of the change in fair value will be presented in the profit or loss.

Amendments to MFRS 8 Operating Segments

Amendments to MFRS 8 requires an entity to disclose the judgements made by management in applying the aggregation criteria to operating segments. This includes a brief description of the operating segments that have been aggregated and the economic indicators that have been assessed in determining that the aggregated operating segments share similar economic characteristics.

The Amendments also clarifies that an entity shall provide reconciliations of the total of the reportable segments’ assets to the entity’s assets if the segment assets are reported regularly to the chief operating decision maker.

Amendments to MFRS 13 Fair Value Measurement

Amendments to MFRS 13 relates to the IASB’s Basis for Conclusions which is not an integral part of the Standard. The Basis for Conclusions clarifies that when IASB issued IFRS 13, it did not remove the practical ability to measure short-term receivables and payables with no stated interest rate at invoice amounts without discounting, if the effect of discounting is immaterial.

The Amendments also clarifies that the scope of the portfolio exception of MFRS 13 includes all contracts accounted for within the scope of MFRS 139 Financial Instruments: Recognition and Measurement or MFRS 9 Financial Instruments, regardless of whether they meet the definition of financial assets or financial liabilities as defined in MFRS 132 Financial Instruments: Presentation.

Amendments to MFRS 124 Related Party Disclosures

Amendments to MFRS 124 clarifies that an entity providing key management personnel services to the reporting entity or to the parent of the reporting entity is a related party of the reporting entity.

Amendments to MFRS 132 Financial Instruments: Presentation

Amendments to MFRS 132 does not change the current offsetting model in MFRS 132. The amendments clarify the meaning of ‘currently has a legally enforceable right of set-off’, that the right of set-off must be available today (not contingent on a future event) and legally enforceable for all counterparties in the normal course of business. The amendments clarify that some gross settlement mechanisms with features that are effectively equivalent to net settlement will satisfy the MFRS 132 offsetting criteria.





(ii) New MFRS, Amendments/Improvements to MFRSs and New IC Int that are issued, but not yet effective and have not been early adopted cont’d

Amendments to MFRS 136 Impairment of Assets

Amendments to MFRS 136 clarifies that disclosure of the recoverable amount (based on fair value less costs of disposal) of an asset or cash generating unit is required to be disclosed only when an impairment loss is recognised or reversed. In addition, there are new disclosure requirements about fair value measurement when impairment or reversal of impairment is recognised.

(b) Basis of measurement

The financial statements of the Group and of the Company have been prepared on the historical cost convention except for those as disclosed in the significant accounting policies note.

(c) 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 financial statements of the Group and of the Company are presented in Ringgit Malaysia (RM) which is also the Company’s functional currency. All financial information presented in RM has been rounded to the nearest RM, unless otherwise stated.

(d) Significant Accounting Estimates and Judgements

Significant areas of estimation uncertainty and critical judgements used in applying accounting principles that have significant effect on the amount recognised in the financial statements are as follows:

(i) Tax expense (Note 7) – Significant judgement is required in determining the capital allowances, reinvestment allowances and deductibility of certain expenses when estimating the provision for taxation. There were transactions during the ordinary course of business for which the ultimate tax determination of whether additional taxes will be due is uncertain. The Group and the Company recognise liabilities for tax based on estimates of assessment of the tax liability due. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the income tax and deferred tax in the periods in which the outcome is known.

(ii) Depreciation of property, plant and equipment (Note 9) – The cost of property, plant and equipment is depreciated on a straight line method over the assets’ useful lives. Management estimates the useful lives of these property, plant and equipment to be 5 to 50 years based on common life expectancies of the industry. The management anticipates that the residual values of the assets will be insignificant and as such, residual values are not being taken into consideration for the computation of the depreciation amount. Changes in the expected level of usage and technological developments could impact the economic useful lives and residual values of these assets resulting in revision for future depreciation charges.

(iii) Impairment loss on receivables (Note 13) – The Group assesses at each reporting date whether there is any objective evidence that a receivable is impaired. Allowances are applied where events or changes in circumstances indicate that the balances may not be collectable. To determine whether there is objective evidence of impairment, the Group considers factors such as the probability of insolvency or significant financial difficulties of the debtor and default or significant delay in payments. Where the expectation is different from the original estimate, such difference will impact the carrying amount of receivables at the reporting date.



Cont’d

3. SIGNIFICANT ACCOUNTING POLICIES

(a) Basis of Consolidation

Subsidiaries

The consolidated financial statements incorporate the audited financial statements of the Company and all of its subsidiaries which are disclosed in Note 10 made up to the end of the financial year.

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

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

Control exists when the Group is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The Group reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the elements of control as mentioned above.

When the Group has less than majority of the voting rights of an investee, it has power over the investee when the voting rights are sufficient to give it the practical ability to direct the relevant activities of the investee unilaterally. The Group considers all relevant facts and circumstances in assessing whether or not the Group’s voting rights in an investee are sufficient to give it power, including:

l the size of the Group’s holding of voting rights relative to the size and dispersion of holdings of the other holders;

l potential voting rights, if such rights are substantive, held by the Group, other vote holders or other parties;

l rights arising from other contractual arrangements; l the nature of the Group’s relationship with other parties and whether those other parties are acting on its

behalf (i.e. they are ‘de facto agents’); and l any additional facts and circumstances that indicate that the Group has, or does not have, the current

ability to direct the relevant activities at the time that decisions need to be made, including voting patterns at previous shareholders’ meetings.

(i) Merger accounting for common control business combinations

A business combination involving entities under common control is a business combination in which all the combining entities or subsidiaries are ultimately controlled by the same party and parties both before and after the business combination, and that control is not transitory. Subsidiaries acquired which have met the criteria for pooling of interest are accounted for using merger accounting principles. Under the merger method of accounting, the results of the subsidiaries are presented as if the merger had been effected throughout the current financial year.

The assets and liabilities combined are accounted for based on the carrying amounts from the perspective of the common control shareholder at the date of transfer. No amount is recognised in respect of goodwill and excess of the acquirer’s interest in the net fair value of the acquiree’s identifiable assets and liabilities and contingent liabilities over cost at the time of the common control business combination to the extent of the continuation of the controlling party and parties’ interests.

When the merger method is used, the cost of investment in the Company’s books is recorded at the nominal value of shares issued. The difference between the carrying value of the investment and the nominal value of the shares of the subsidiaries is treated as a merger deficit or merger reserve as applicable. The results of the subsidiaries being merged are included for the full financial year.



3. SIGNIFICANT ACCOUNTING POLICIES cont’d

(a) Basis of Consolidation cont’d

Subsidiaries cont’d

(ii) Business Combinations under acquisition method

Business combinations are accounted for using the acquisition method from the acquisition date, which is the date on which control is transferred to the Group.

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

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

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

assumed.

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

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

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

(iii) Acquisitions of Non-controlling Interests

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

(iv) Loss of Control

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

(v) Non-controlling Interests

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

(vi) Transactions Eliminated on Consolidation

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



Cont’d


(b) Foreign Currency Transactions

Transactions in currencies other than the Group entities’ functional currency (foreign currencies) are translated into the Group entities’ functional currency at the rate of exchange ruling at the time of the transaction date. Monetary assets and liabilities denominated in foreign currencies at the reporting date are retranslated to the functional currency at the exchange rate at that date. Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are retranslated to the functional currency at the exchange rate at the date that the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction. Foreign currency differences arising on the settlement of monetary items and on retranslation are recognised in profit or loss.

(c) Tax Expense

Tax expense in profit or loss represents the aggregate amount of current and deferred tax. Current tax is the expected amount payable in respect of taxable income for the financial year, using tax rates enacted or substantially enacted by the reporting date and any adjustments recognised for prior years’ tax. When an item is recognised outside profit or loss, the related tax effect is recognised either in other comprehensive income or directly in equity.

Deferred tax is recognised using the liability method, on all temporary differences between the tax base of assets and liabilities and their carrying amounts in the financial statements. Deferred tax is not recognised if the temporary difference arises from goodwill or from the initial recognition of an asset or liability in a transaction, which is not a business combination and at the time of the transaction, affects neither accounting nor taxable profit or loss. Deferred tax is measured at the tax rates that are expected to apply in the period in which the assets are realised or the liabilities are settled, based on tax rates and tax laws that have been enacted or substantially enacted by the reporting date.

Deferred tax assets are recognised only to the extent that there are sufficient taxable temporary differences relating to the same taxable entity and the same taxation authority to offset or when it is probable that future taxable profits will be available against which the assets can be utilised.

Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefits will be realised. Unrecognised deferred tax assets are reassessed at each reporting date and are recognised to the extent that it has become probable that future taxable profit will be available for the assets to be utilised.

Deferred tax assets relating to items recognised outside profit or loss is recognised outside profit or loss. Deferred tax items are recognised in correlation to the underlying transactions either in other comprehensive income or directly in equity and deferred tax arising from business combination is adjusted against goodwill on acquisition or the amount of any excess of the acquirer’s interest in the net fair value of the acquirer’s identifiable assets, liabilities and contingent liabilities over the acquisition cost

(d) Revenue Recognition

i. Sales of Goods

Revenue from the sale of goods is measured at 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. Dividend Income

Dividend income is recognised when the rights to receive payment is established.




(d) Revenue Recognition cont’d

iii. Interest Income

Interest income is recognised on an accrual basis using the effective interest method.

iv. Rental Income

Rental income is recognised in profit or loss on an accrual basis.

v. Management Fees

Management fees are recognised when services are rendered.

(e) Employee Benefits

i. Short Term Employee Benefits

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

ii. Defined Contribution Plans

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

(f) Property, Plant and Equipment and Depreciation

Property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses, if any. Cost includes expenditure that are directly attributable to the acquisition of the asset. Subsequent costs are included in the assets’ carrying amount or recognised as separate asset as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The costs of the day-to-day servicing of property, plant and equipment are recognised in the profit or loss as incurred.

Leasehold land is depreciated over the lease term ranges from 43 to 60 years. Freehold land is not depreciated and all other property, plant and equipment are depreciated to write off the cost of the property, plant and equipment over their estimated useful lives.

The principal annual rates used for this purpose are:

Buildings 2%Furniture, fittings & electrical fittings 10% Office equipment 10% - 20%Forklifts, plant and machinery 10% - 20%Motor vehicles 20%

The residual values, useful lives 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. These are adjusted prospectively, if appropriate.



Cont’d


(f) Property, Plant and Equipment and Depreciation cont’d

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 the profit or loss.

Fully depreciated property, plant and equipment are retained in the financial statements until they are no longer in use and no further charge for depreciation is made in respect of these property, plant and equipment.

(g) Inventories

Inventories are stated at the lower of cost and net realisable value. Cost is determined on the weighted average basis. Cost includes the actual cost of purchase materials and incidentals in bringing the inventories into store.

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

(h) Impairment of Non-Financial Assets

The carrying amounts of non-financial assets other than inventories and deferred tax assets are reviewed at each reporting date to determine whether there is any indication of impairment. If such an indication exists, the asset’s recoverable amount is estimated. The recoverable amount is the higher of fair value less cost of disposal and the value in use, which is measured by reference to discounted future cash flows and is determined on an individual asset basis, unless the asset does not generate cash flows that are largely independent of those from other assets. If this is the case, recoverable amount is determined for the cash-generating unit to which the asset belongs to. An impairment loss is recognised whenever the carrying amount of an item of asset exceeds its recoverable amount. An impairment loss is recognised as expense in profit or loss. Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to the units and then to reduce the carrying amount of the other assets in the unit (group of units) on a pro-rata basis.

Any subsequent increase in recoverable amount of an asset, other than goodwill, due to a reversal of impairment loss is restricted to the carrying amount that would have been determined (net of accumulated depreciation, where applicable) had no impairment loss been recognised in prior financial years. The reversal of impairment loss is recognised in profit or loss.

(i) Financial Assets

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

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

The Group and the Company determine the classification of their financial assets at initial recognition, and the categories include financial assets at loans and receivables and available-for-sale financial assets.

i. Loans and Receivables

Financial assets with fixed or determinable payments that are not quoted in an active market are classified as loans and receivables.

Subsequent to initial recognition, loans and receivables are measured at amortised cost using the effective interest method. Gains and losses are recognised in profit or loss when the loans and receivables are derecognised or impaired, and through the amortisation process.

Loans and receivables are classified as current assets, except for those having maturity dates later than 12 months after the reporting date which are classified as non-current.




(i) Financial Assets cont’d

ii. Available-for-sale Financial Assets

Available-for-sale are financial assets that are designated as available for sale or are not classified in financial assets at fair value through profit or loss, held-to-maturity investments and loans and receivables.

After initial recognition, available-for-sale financial assets are measured at fair value. Any gains or losses from changes in fair value of the financial asset are recognised in other comprehensive income, except that impairment losses, foreign exchange gains and losses on monetary instruments and interest calculated using the effective interest method are recognised in profit or loss. The cumulative gain or loss previously recognised in other comprehensive income is reclassified from equity to profit or loss as a reclassification adjustment when the financial asset is derecognised. Interest income calculated using the effective interest method is recognised in profit or loss. Dividends on an available-for-sale equity instrument are recognised in profit or loss when the Group’s right to receive payment is established.

Available-for-sale financial assets are classified as non-current assets unless they are expected to be realised within 12 months after the reporting date.

A financial asset is derecognised where the contractual right to receive cash flows from the asset has expired. On derecognition of a financial asset in its entirety, the difference between the carrying amount and the sum of the consideration received and any cumulative gain or loss that had been recognised in other comprehensive income is recognised in profit or loss.

Regular way purchases or sales are purchases and sales of financial assets that require delivery of assets within the period generally established by regulation or convention in the market place concerned. All regular way purchases and sales of financial assets are recognised or derecognised on the trade date i.e. the date that the Group and the Company commit to purchase or sell the asset.

The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the debt instrument, or where appropriate, a shorter period to the net carrying amount on initial recognition.

(j) Impairment of Financial Assets

The Group and the Company assess at each reporting date whether there is any objective evidence that a financial asset is impaired.

i. Trade and Other Receivables and Other Financial Assets Carried at Amortised Cost

To determine whether there is objective evidence that an impairment loss on financial assets has been incurred, the Group and the Company consider factors such as the probability of insolvency or significant financial difficulties of the debtor and default or significant delay in payments. For certain categories of financial assets, such as trade receivables, assets that are assessed not to be impaired individually are subsequently assessed for impairment on a collective basis based on similar risk characteristics. Objective evidence of impairment for a portfolio of receivables could include the Group’s and the Company’s past experience of collecting payments, an increase in the number of delayed payments in the portfolio past the average credit period and observable changes in national or local economic conditions that correlate with default on receivables.

If any such evidence exists, the amount of impairment loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the financial asset’s original effective interest rate. The impairment loss is recognised in profit or loss.



Cont’d


(j) Impairment of Financial Assets cont’d

i. Trade and Other Receivables and Other Financial Assets Carried at Amortised Cost cont’d

The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables, where the carrying amount is reduced through the use of an allowance account. When a trade receivable becomes uncollectible, it is written off against the allowance account.

If in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed to the extent that the carrying amount of the asset does not exceed its amortised cost at the reversal date. The amount of reversal is recognised in profit or loss.

ii. Available-for-sale Financial Assets

Significant or prolonged decline in fair value below cost, significant financial difficulties of the issuer or obligor, and the disappearance of an active trading market are considerations to determine whether there is objective evidence that investment securities classified as available-for-sale financial assets are impaired.

If an available-for-sale financial asset is impaired, an amount comprising the difference between its cost (net of any principal payment and amortisation) and its current value, less any impairment loss previously recognised in profit or loss, is transferred from equity to profit or loss.

Impairment losses on available-for-sale equity investments are not reversed in profit or loss in the subsequent periods. Increase in fair value, if any, subsequent to impairment loss is recognised in other comprehensive income. For available-for-sale debt investments, impairment losses are subsequently reversed in profit or loss if an increase in the fair value of the investment can be objectively related to an event occurring after the recognition of the impairment loss in profit or loss.

(k) Cash and Cash Equivalents

Cash and cash equivalents comprise cash at bank and on hand, demand deposits, and short-term highly liquid investments which are subject to an insignificant risk of changes in value. For the purposes of the statements of cash flows, cash and cash equivalents are presented net of bank overdrafts.

(l) Share Capital

An equity instrument is any contract that evidences a residual interest in the assets of the Group and the Company after deducting all of its liabilities. Ordinary shares are equity instruments. Ordinary shares are recorded at the proceeds received, net of directly attributable incremental transaction costs. Ordinary shares are classified as equity. Dividends on ordinary shares are recognised in equity in the period in which they are declared.

(m) Borrowing Costs

Borrowing costs are capitalised as part of a qualifying assets if they are directly attributable to the acquisition, construction or production of that asset. Capitalisation of borrowing costs commences when the activities to prepare the assets for its intended use or sales are in progress and the expenditures and borrowing costs are incurred. Borrowing costs are capitalised until the assets are substantially completed for their intended use or sale.

All other borrowing costs are recognised in profit or loss in the period in which they are incurred. Borrowing costs consist of interest and other costs that the Group and the Company incurred in connection with the borrowing of funds.




(n) Leases

(i) Finance Lease – the Group as lessee

Assets acquired by way of hire purchase or finance lease where the Group and the Company assumes substantially all the benefits and risks of ownership are classified as property, plant and equipment.

Finance lease are capitalised at the inception of the lease at the lower of the fair value of the leased property and the present value of the minimum lease payments. Each lease payment is allocated between the liability and finance charges so as to achieve a periodic constant rate of interest on the remaining balance. The corresponding rental obligations, net of finance charges, are included in borrowings. The interest element of the finance charge is charged to profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period.

(ii) Operating Lease – the Group as lessee

Operating lease payments are recognised as an expense on a straight-line basis over the term of the relevant lease. The aggregate benefit of incentives provided by the lessor is recognised as a reduction of rental expense over the lease term on the straight-line basis.

In the case of a lease of land, the minimum lease payments or the up-front payments made represent prepaid lease payments and are amortised on a straight-line basis over the lease term.

(o) Al-Bai Bithaman Ajil (“ABBA”) Facility

Cost of property, plant and equipment acquired under the ABBA facility are capitalised as property, plant and equipment and depreciated in accordance with the Group’s policy on depreciation of property, plant and equipment. The ABBA facility obligations are included in borrowings and the related financing charges are allocated to profit or loss on a systematic basis over the period of the financing.

(p) Financial Liabilities

Financial liabilities are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability.

Financial liabilities, within the scope of MFRS 139, are recognised in the statements of financial position when, and only when, the Group and the Company become a party to the contractual provisions of the financial instrument. Financial liabilities are classified as either financial liabilities at fair value through profit or loss or other financial liabilities. The Group and the Company classified their financial liabilities as other financial liabilities.

Other Financial Liabilities

The Group’s and the Company’s other financial liabilities include trade and other payables including accruals, loans and borrowings.

Trade and other payables are recognised initially at fair value plus directly attributable transaction costs and subsequently measured at amortised cost using the effective interest method.

Loans and borrowings are recognised initially at fair value, net of transaction costs incurred, and subsequently measured at amortised cost using the effective interest method. Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the reporting date.

For other financial liabilities, gains and losses are recognised in profit or loss when the liabilities are derecognised, and through the amortisation process.



Cont’d


(p) Financial Liabilities cont’d

Other Financial Liabilities cont’d

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

(q) Financial Guarantee Contracts

A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due.

Financial guarantee contracts are recognised initially as a liability at fair value, net of transaction costs. Subsequent to initial recognition, financial guarantee contracts are recognised as income in profit or loss over the period of the guarantee. If the debtor fails to make payment relating to financial guarantee contract when it is due and the Group and the Company, as the issuer, is required to reimburse the holder for the associated loss, the liability is measured at the higher of the best estimate of the expenditure required to settle the present obligation at the reporting date and the amount initially recognised less cumulative amortisation.

(r) Segment Reporting

For management purposes, the Group is organised into operating segments based on their products and services which are independently managed by their respective segment managers responsible for the performance of the respective segments under their charge. The segment managers report directly to the chief decision makers 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 disclosed in Note 24, including the factors used to identify the reportable segments and the measurement basis of segment information.

(s) Fair value measurements

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

4. OPERATING REVENUE

Group Company

2013 2012 2013 2012

RM RM RM RM

Sale of goods 455,267,630 437,202,806 - -

Management fees - - 358,818 -

Dividend income from subsidiaries - - 12,640,000 -

455,267,630 437,202,806 12,998,818 -



5. DIRECT OPERATING COSTS

Group2013 2012 RM RM

Cost of sales 374,770,215 363,778,452 Other direct operating costs 14,489,985 12,660,274

389,260,200 376,438,726

The cost of sales represents the cost of inventories recognised as expense.

6. PROFIT/(LOSS) BEFORE TAX

Profit/(Loss) before tax is arrived at after charging/(crediting):-

Group Company

2013 2012 2013 2012

RM RM RM RM

Auditors’ remuneration- statutory audit services 127,000 82,800 32,000 1,000- other services 89,000 108,000 89,000 108,000Bad debts written off - 27,135 - -Dividend income (1,732) (1,615) (12,640,000) -Depreciation of property, plant and equipment 5,867,980 5,470,261 - -Gain on disposal of property, plant and equipment (263,667) (41,161) - -Loss on disposal of other investments - quoted

shares - 546 - -Insurance claimed (201,759) (9,024) - -Gain on foreign exchange:- realised (34,003) (202,000) - -- unrealised (22,442) - - -Impairment loss on trade receivables 531,121 - - -Interest expense in respect of:- ABBA facility 71,787 152,553 - -- bank overdrafts 1,269,036 217,660 - -- bankers’ acceptances 4,305,016 3,977,928 - -- finance lease 206,956 343,051 - -- term loans 341,036 152,734 - -Listing expenses 1,112,240 1,346,888 1,112,240 1,346,888Property, plant and equipment written off 45,937 5,589 - -Personnel expenses (including key management

personnel)- contributions to defined contribution plan 1,618,715 1,417,673 51,810 -- salaries and others 17,084,141 14,698,052 906,269 -Rental of crane and equipment 57,225 50,908 - -Rental of premises 240,000 180,000 - -Rental income (314,324) (306,265) - -Interest income from deposits (518,383) (242,731) (313,572) -Reversal of impairment loss on trade receivables (260,401) (93,315) - -



Cont’d

6. PROFIT/(LOSS) BEFORE TAX cont’d

6.1 DIRECTORS’ REMUNERATION

Included in staff costs is the aggregate amount of remuneration received and receivable by the directors of the Company and its subsidiaries during the financial year as follows:

Group Company

2013 2012 2013 2012

RM RM RM RM

Directors of the Company

Executive directors

- Fees 600,000 350,000 250,000 -

- Other emoluments 3,540,440 3,139,649 - -

4,140,440 3,489,649 250,000 -

Non-executive

directors

- Fees 220,000 - 220,000 -

220,000 - 220,000 -

4,360,440 3,489,649 470,000 -

Directors of subsidiaries

Executive Directors

- Fees 150,000 150,000 - -

- Other emoluments 1,681,860 1,480,750 - -

1,831,860 1,630,750 - -

6,192,300 5,120,399 470,000 - During the financial year, certain directors of the Company and its subsidiaries have acquired the benefit of

using the Group’s property, plant and equipment, the estimated monetary value amounting to RM181,372 (2012: RM218,125).



7. TAX EXPENSE

Group Company

2013 2012 2013 2012

RM RM RM RM

Current tax

- Current financial year 9,432,796 9,115,300 73,100 -

- (Over)/Under provision in prior financial year (83,270) 145,995 - -

9,349,526 9,261,295 73,100 -

Deferred tax (Note 20)

Origination and reversal of temporary differences 250,267 203,100 - -

(Over)/Under provision in prior financial year (22,200) 12,400 - -

228,067 215,500 - -

Real property gain tax

Over provision in prior financial year - (162,289) - -

- (162,289) - -

Tax expense 9,577,593 9,314,506 73,100 - The reconciliation from the tax amount at statutory income tax rate to the Group’s and the Company’s tax expense is

as follows:

Group Company

2013 2012 2013 2012

RM RM RM RM

Profit/(Loss) before tax 35,351,004 33,423,855 11,044,867 (1,353,651)

Tax at Malaysian statutory income tax rate of 25% 8,837,800 8,356,000 2,761,200 (338,400)

Tax effect of:

- non-deductible expenses 892,818 1,022,117 471,900 338,400

- non-taxable income (755) (14,917) (3,160,000)

Tax effect of double deduction of expenses (46,800) (44,800) - -

(Over)/Under provision in prior financial year:

- current tax (83,270) 145,995 - -

- deferred tax (22,200) 12,400 - -

- real property gain tax - (162,289) - -

Tax expense 9,577,593 9,314,506 73,100 -

Domestic income tax is calculated at the Malaysian statutory income tax rate of 25% (2012: 25%) of the estimated assessable profit for the financial year. In the Budget Speech 2014, the Government announced that the domestic corporate tax rate would be reduced to 24% from the current year’s rate of 25% with effect from year of assessment 2016.



Cont’d

8. EARNINGS PER SHARE (a) Earnings per share

The basic earnings per share of the Group is calculated by dividing the Group’s profit for the financial year attributable to equity holders of the Company of RM25,773,411 (2012: RM24,109,349) by the weighted average number of ordinary shares in issue during the financial year of 285,626,027 (2012: 250,690,000) ordinary shares of RM0.50 each.

(b) Diluted Earnings per share

Diluted earnings per share is equivalent to the basic earnings per share as there were no potential dilutive ordinary shares.

9. PROPERTY, PLANT AND EQUIPMENT

Group

Freehold Industrial

Land

Long Term

Leasehold Land

Short Term

Leasehold Land Buildings

Furniture, Fittings

and Electrical

Fittings Office

Equipment

Forklift, plant and

Machinery Motor

Vehicles Total

RM RM RM RM RM RM RM RM RM

Cost

At 1.1.2013 25,107,881 2,062,056 621,321 36,093,825 1,677,409 2,772,441 36,764,374 10,228,652 115,327,959

Reclassification - (2,062,056) 2,062,056 - - - - - -

Additions - - - - 176,700 184,497 4,086,353 2,381,552 6,829,102

Disposals - - - - - - (283,811) (550,168) (833,979)

Written off - - - - - - - (172,262) (172,262)

At 31.12.2013 25,107,881 - 2,683,377 36,093,825 1,854,109 2,956,938 40,566,916 11,887,774 121,150,820

AccumulatedDepreciation

At 1.1.2013 - 343,677 86,694 3,740,542 756,674 1,607,373 17,697,914 7,801,361 32,034,235

Reclassification - (343,677) 343,677 - - - - - -

Charge for the financial year - - 48,816 722,536 151,092 212,271 3,387,534 1,345,731 5,867,980

Disposals - - - - - - (283,808) (511,617) (795,425)

Written off - - - - - - - (126,325) (126,325)

At 31.12.2013 - - 479,187 4,463,078 907,766 1,819,644 20,801,640 8,509,150 36,980,465

Net Carrying Amount

At 31.12.2013 25,107,881 - 2,204,190 31,630,747 946,343 1,137,294 19,765,276 3,378,624 84,170,355



9. PROPERTY, PLANT AND EQUIPMENT cont’d

Group

Freehold Industrial

Land

Long Term

Leasehold Land

Short Term

Leasehold Land Buildings

Furniture, Fittings

and Electrical

Fittings Office

Equipment

Forklift, plant and

Machinery Motor

Vehicles Total

RM RM RM RM RM RM RM RM RM

Cost

At 1.1.2012 9,426,281 2,062,056 621,321 31,889,493 1,656,214 2,674,356 32,897,387 9,756,257 90,983,365

Additions 15,681,600 - - 4,204,332 21,195 108,202 3,866,987 669,123 24,551,439

Disposals - - - - - - - (196,728) (196,728)

Written off - - - - - (10,117) - - (10,117)

At 31.12.2012 25,107,881 2,062,056 621,321 36,093,825 1,677,409 2,772,441 36,764,374 10,228,652 115,327,959

Accumulated Depreciation

At 1.1.2012 - 309,309 72,245 3,082,940 608,424 1,397,286 14,761,615 6,465,572 26,697,391

Charge for the financial year - 34,368 14,449 657,602 148,250 214,615 2,936,299 1,464,678 5,470,261

Disposals - - - - - - - (128,889) (128,889)

Written off - - - - - (4,528) - - (4,528)

At 31.12.2012 - 343,677 86,694 3,740,542 756,674 1,607,373 17,697,914 7,801,361 32,034,235

Net Carrying Amount

At 31.12.2012 25,107,881 1,718,379 534,627 32,353,283 920,735 1,165,068 19,066,460 2,427,291 83,293,724

The short term leasehold land has unexpired lease period of less than 50 years while the long term leasehold land has

unexpired lease period of more than 50 years.

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

Group

2013 2012

RM RM

Additions of property, plant and equipment 6,829,102 24,551,439

Less: Transfer from prepayments (2,069,915) -

Less: Financed by term loan - (10,000,000)

Less: Financed by finance lease arrangements - (2,485,270)

Cash payment on purchase of property, plant and equipment 4,759,187 12,066,169



Cont’d

9. PROPERTY, PLANT AND EQUIPMENT cont’d

The net carrying amount of property, plant and equipment pledged as security for banking facilities granted to the subsidiaries as mentioned in Note 19 is as follows:

Group

2013 2012

RM RM

Freehold land 25,107,881 25,107,881

Leasehold land 2,204,190 2,253,006

Buildings 31,630,747 32,353,283

58,942,818 59,714,170 The net carrying amount of property, plant and equipment held under finance lease arrangements is as follows:

Group

2013 2012

RM RM

Motor vehicles - 1,225,686

Plant and machinery 5,007,750 10,194,039

5,007,750 11,419,725

10. INVESTMENTS IN SUBSIDIARIES

Company

2013 2012

RM RM

Unquoted shares, at cost 125,344,997 - The details of subsidiaries are as follows:

Name of Company

Principal Place of Business/Country of

Incorporation Principal Activities

Effective Ownership Interest/Voting Rights

2013 2012

Leon Fuat Hardware Sdn. Bhd.

Malaysia Trading and processing of steel products

100% -

Leon Fuat Hardware (Klang) Sdn. Bhd.

Malaysia Trading and processing of steel products

100% -

Supreme Steelmakers Sdn. Bhd.

Malaysia Trading and processing of stainless steel and other steel products

100% -

ASA Steel (M) Sdn. Bhd. Malaysia Trading and processing of alloy steel and other steel products

100% -

There are no restrictions in the ability of the Group to access or use the assets and settle the liabilities of the subsidiaries.



11. OTHER INVESTMENT

Group

2013 2012

RM RM

Available-for-sale financial asset

Quoted shares in Malaysia, at fair value 47,600 32,900

Market value 47,600 32,900

12. INVENTORIES

Group

2013 2012

RM RM

At cost,

Trading inventories 149,550,819 95,614,935

13. TRADE AND OTHER RECEIVABLES

Group Company

2013 2012 2013 2012

RM RM RM RM

Trade receivables

External parties 119,420,450 114,592,472 - -

Related parties 378,430 1,711,794 - -

119,798,880 116,304,266 - -

Less: Allowance for impairment loss (739,262) (1,724,815) - -

Trade receivables, net 119,059,618 114,579,451 - -

Other receivables

Sundry receivables 86,545 360,636 - -

Advances to suppliers 245,496 2,750,468 - -

Deposits 2,987,946 2,374,743 4,500 -

Prepayments 1,194,166 3,444,263 - 69,000

4,514,153 8,930,110 4,500 69,000

123,573,771 123,509,561 4,500 69,000



Cont’d

13. TRADE AND OTHER RECEIVABLES cont’d

(a) The Group’s normal credit term range from 30 to 120 days (2012: 30 to 120 days). They are recognised at their original invoice amounts which represent their fair values on initial recognition.

Included in trade receivables of the Group are:

(i) an amount of RM77,900 (2012: RM1,170,119) owing by companies in which certain directors of the subsidiaries have substantial financial interests; and

(ii) an amount of RM300,530 (2012: RM541,675) owing by a company which was deemed related to the Group by virtue of certain of its directors being connected to certain directors of the Company.

The amounts owing by the above related parties are subject to normal trade term.

(b) Included in deposits of the Group are: (i) an amount of RM2,000,000 (2012: RM 2,000,000) being security deposits paid to a supplier for purchase

of trading goods;

(ii) an amount of RM50,000 (2012: RM50,000) represents rental and utilities deposits paid to a company in which certain directors of the Company have substantial financial interests; and

(iii) an amount of RM587,090 (2012: Nil) being down payments for purchase of motor vehicle and machinery.

(c) In previous financial year, included in prepayments of the Group was an amount of RM2,069,915 being prepayments for purchase of machinery.

(d) Ageing analysis of trade receivables

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

Group

2013 2012

RM RM

Neither past due nor impaired 40,557,038 58,271,136

1 to 30 days past due not impaired 25,927,595 28,482,518




More than 121 days past due not impaired 6,926,194 3,071,218

78,502,580 56,308,315

Impaired 739,262 1,724,815

119,798,880 116,304,266 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 that are neither past due nor impaired have been renegotiated during the financial year.



13. TRADE AND OTHER RECEIVABLES cont’d

(d) Ageing analysis of trade receivables cont’d

Receivables that are past due but not impaired The Group have trade receivables amounting RM78,502,580 (2012: RM56,308,315) that are past due at

reporting date but not impaired because there have been no significant changes in credit quality of the debtors and the amounts are still considered recoverable. The Group does not hold any collateral or credit enhancements over these balances. Based on historic default rates, the Group believe that no collective impairment loss is necessary in respect of trade receivables past due.

Receivables that are impaired

The movement of allowance accounts used to record the impairment are as follows:

Group

2013 2012

RM RM

At 1 January 1,724,815 1,818,130

Charge for the financial year (Note 6) 531,121 -

Reversal (Note 6) (260,401) (93,315)

Written off (1,256,273) -

At 31 December 739,262 1,724,815 Trade receivables that are individually determined to be impaired at the reporting date relate to debtors that are

in significant financial difficulties and have defaulted on payments. These receivables are not secured by any collateral or credit enhancements.

14. AMOUNTS OWING BY/(TO) SUBSIDIARES

These amounts are non-trade in nature, unsecured, interest free and repayable on demand by cash.

15. DEPOSITS WITH LICENSED BANKS

Group Company

2013 2012 2013 2012

RM RM RM RM

Deposits with licensed banks

- pledged 392,547 380,776 - -

- not pledged 15,232,451 4,031,804 14,224,698 -

15,624,998 4,412,580 14,224,698 - Deposits with licensed banks of the Group and the Company bear effective interest at rates ranging from 3.10% to

3.18% (2012: 3.10% to 3.18%) and 3.18% (2012: Nil) per annum respectively.

The maturity of the deposits ranging from 30 to 365 days (2012: 30 to 365 days).



Cont’d

16. CASH AND BANK BALANCES

The foreign currency profile of cash and bank balances is as follows:

Group

2013 2012

RM RM

United States Dollar (“USD”) 677,559 166,815

17. SHARE CAPITAL

Company

2013 2012

Number of shares RM

Number of shares RM

Ordinary share of RM0.50 each

Authorised:

At 1 January 200,000 100,000 200,000 100,000

Created during the financial year 999,800,000 499,900,000 - -

At 31 December 1,000,000,000 500,000,000 200,000 100,000

Issued and fully paid:

At 1 January 6 3 6 3

Issuance during the financial year

- pursuant to acquisition of subsidiaries 250,689,994 125,344,997 * - -

- pursuant to public issue 59,310,000 29,655,000 - -

At 31 December 310,000,000 155,000,000 6 3 * In the consolidated financial statements, the share capital of RM125,344,997 is presented as if the merger had been effected

throughout the financial years under the merger method of accounting.

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



18. RESERVES

Group Company

2013 2012 2013 2012

RM RM RM RM

Distributable

Retained earnings/

(Accumulated losses) 151,993,855 130,870,444 4,947,787 (1,373,980)

Non-distributable

Share premium 5,094,360 - 5,094,360 -

Merger deficit (109,544,997) (109,544,997) - -

Capital reserve 923 923 - -

Fair value reserve (12,050) (26,750) - -

(104,461,764) (109,570,824) 5,094,360 -

47,532,091 21,299,620 10,042,147 (1,373,980)

(a) Share premium

Group/Company

2013 2012

RM RM

At 1 January - -

Premium from public issue 5,931,000 -

Listing expenses (836,640) -

At 31 December 5,094,360 - The total listing expenses for the Initial Public Offering exercise for the financial year amounted to RM1,948,880

(2012: RM1,346,888) of which RM836,640 were written off against share premium. The balance of the listing expenses of RM1,112,240 were recognised in profit or loss as disclosed in Note 6.

The share premium is not distributable by way of dividends and may be utilised in the manner set out in Section 60(3) of the Companies Act, 1965 in Malaysia.

(b) Merger deficit

The merger deficit was resulted from the difference between the carrying value of the investments in subsidiaries and the nominal value of the shares of the Company’s subsidiaries upon consolidation under the merger accounting principle.

(c) Capital reserve

This is arising from the takeover of the unincorporated business of Leong Huat Trading & Co. by a subsidiary.

(d) Fair value reserve

This relates to the fair valuation of financial assets categorise as available-for-sale.



Cont’d

19.

BO

RR

OW

ING

S

Sec

ured

Uns

ecur

ed

Ter

m

Loa

ns

(Not

e 19

.1)

Ban

kers

’ A

ccep

tanc

es

(Not

e 19

.2)

Ban

k

Ove

rdra

fts

(Not

e 19

.2)

AB

BA

F

acili

ty

(Not

e 19

.3)

Fina

nce

Leas

e P

ayab

les

(Not

e 19

.4)

Sub

-tot

al

Ban

kers

’ A

ccep

tanc

es

(Not

e 19

.2)

Ban

k

Ove

rdra

fts

(Not

e 19

.2)

Sub

-tot

al

Tot

al

RM

R

M

RM

R

M

RM

R

M

RM

R

M

RM

R

M

Gro

up

2013

Cur

rent

liab

ilitie

s

Due

in 1

yea

r or l

ess

283

,244

6

4,06

2,00

0 1

4,79

1,02

2 5

44,3

67

1,7

05,3

82

81,

386,

015

53,

190,

000

2,4

93,7

07

55,

683,

707

137

,069

,722

Non

-cur

rent

liab

ilitie

s

Due

in m

ore

than

1 y

ear

but n

ot m

ore

than

2

year

s 1

74,5

26

-

-

-

513

,691

6

88,2

17

-

-

-

688

,217

Due

in m

ore

than

2 y

ears

bu

t not

mor

e th

an 3

ye

ars

-

-

-

-

-

-

-

-

-

-

Due

in m

ore

than

3 y

ears

bu

t not

mor

e th

an 4

ye

ars

-

-

-

-

-

-

-

-

-

-

Due

in m

ore

than

4 y

ears

bu

t not

mor

e th

an 5

ye

ars

-

-

-

-

-

-

-

-

-

-

174

,526

-

-

-

5

13,6

91

688

,217

-

-

-

6

88,2

17

457

,770

6

4,06

2,00

0 1

4,79

1,02

2 5

44,3

67

2,2

19,0

73

82,

074,

232

53,

190,

000

2,4

93,7

07

55,

683,

707

137

,757

,939



19.

BO

RR

OW

ING

S

cont

’d

Sec

ured

Uns

ecur

ed

Ter

m

Loa

ns

(Not

e 19

.1)

Ban

kers

’ A

ccep

tanc

es

(Not

e 19

.2)

Ban

k

Ove

rdra

fts

(Not

e 19

.2)

AB

BA

F

acili

ty

(Not

e 19

.3)

Fin

ance

L

ease

P

ayab

les

(Not

e 19

.4)

Sec

ured

S

ub-t

otal

Ban

kers

’ A

ccep

tanc

es

(Not

e 19

.2)

Ban

k

Ove

rdra

fts

(Not

e 19

.2)

Uns

ecur

ed

Sub

-tot

al

Tot

al

RM

R

M

RM

R

M

RM

R

M

RM

R

M

RM

R

M

Gro

up

2012

Cur

rent

liab

ilitie

s

Due

in 1

yea

r or l

ess

1,3

08,1

20

53,

371,

000

13,

953,

391

676

,303

3

,378

,740

7

2,68

7,55

4 4

8,58

2,00

0 1

,300

,512

4

9,88

2,51

2 1

22,5

70,0

66

Non

-cur

rent

liab

ilitie

s

Due

in m

ore

than

1 y

ear

but n

ot m

ore

than

2

year

s 1

,291

,244

-

-

5

44,4

17

1,7

05,3

82

3,5

41,0

43

-

-

-

3,5

41,0

43

Due

in m

ore

than

2 y

ears

bu

t not

mor

e th

an 3

ye

ars

1,1

82,5

26

-

-

-

513

,691

1

,696

,217

-

-

-

1

,696

,217

Due

in m

ore

than

3 y

ears

bu

t not

mor

e th

an 4

ye

ars

1,0

08,0

00

-

-

-

-

1,0

08,0

00

-

-

-

1,0

08,0

00

Due

in m

ore

than

4 y

ears

bu

t not

mor

e th

an 5

ye

ars

1,0

08,0

00

-

-

-

-

1,0

08,0

00

-

-

-

1,0

08,0

00

Due

in m

ore

than

5 y

ears

4,9

16,8

46

-

-

-

-

4,9

16,8

46

-

-

-

4,9

16,8

46

9,4

06,6

16

-

-

544

,417

2

,219

,073

1

2,17

0,10

6 -

-

-

1

2,17

0,10

6

10,

714,

736

53,

371,

000

13,

953,

391

1,2

20,7

20

5,5

97,8

13

84,

857,

660

48,

582,

000

1,3

00,5

12

49,

882,

512

134

,740

,172



Cont’d

19. BORROWINGS cont’d

19.1 Term loans – Secured

Details of the repayment terms are as follows:-

Group

2013 2012

RM RM

Term loan I

Repayable by 119 equal monthly instalments of RM8,340 and a final instalment of RM7,540 commenced November 2005 and bears interest at rate of 4.18% per annum for first year, 5.00% per annum for second year, 1.00% per annum above prevailing base lending rate from the third to sixth year and subsequently at 0.5% per annum below the prevailing base lending rate. 83,204 183,284

Term loan II

Repayable by 119 equal monthly instalments of RM16,670 and a final instalment of RM16,270 commenced March 2006 and bears interest at rate of 4.18% per annum for first year, 5.00% per annum for second year, 1.00% per annum above prevailing base lending rate from third to the fifth year nine months and subsequently at 0.5% below the prevailing base lending rate. 374,566 574,606

Term loan III

Repayable by 120 equal monthly instalments of RM84,000 and a final instalment of RM4,000 commenced November 2012 and bears interest at rate of 4.85% per annum for first year and subsequently at 1.75% below prevailing based lending rate - 9,956,846

457,770 10,714,736

Less: Repayable within 1 year included in current liabilities (283,244) (1,308,120)

Repayable after 1 year 174,526 9,406,616 The term loans bear effective interest at rates of 6.10% (2012: 4.85% to 6.10%) per annum.

Term loan 1 and 2 is secured and supported by:

(i) a joint and several guarantees by certain directors of a subsidiary; (ii) a corporate guarantee from the company; and (iii) legal charges over the leasehold properties of a subsidiary.

Term loan 3 is secured by a legal charge over a freehold land and buildings of a subsidiary.

19.2 Bankers’ acceptances and overdrafts – Secured

The secured bankers’ acceptances and bank overdrafts bear effective interest at rates ranging from 3.74% to 4.16% (2012: 3.70% to 4.03%) per annum and 7.60% to 7.85% (2012: 7.60%) per annum respectively. The secured bankers’ acceptances and bank overdrafts are secured and supported by:

(i) legal charge over the properties of subsidiaries and holding company; (ii) jointly and severally guaranteed by certain directors of the subsidiaries; (iii) corporate guarantee given by a subsidiary and holding company; (iv) fixed deposits of certain directors of the susbidiaries; and (v) corporate guarantee given by the Company.




19.2 Bankers’ acceptances and overdrafts – Secured cont’d

Bankers’ acceptances – Unsecured

The unsecured bankers’ acceptances and bank overdrafts bear effective interest at rates ranging from 3.75% to 4.25% (2012: 3.81% to 4.06%) per annum and 7.60% (2012: 7.60% to 7.85%) per annum respectively. The unsecured bankers’ acceptances are supported as follows:

(i) pledge of third parties’ fixed deposits belonging to certain directors of subsidiaries; (ii) corporate guarantees given by the holding company; and (iii) jointly and severally guaranteed by certain directors of subsidiaries.

19.3 Al-Bai Bithaman Ajil (“ABBA”) facility – Secured

Group

2013 2012

RM RM

Gross instalments 559,993 2,214,782

Less: Future finance charges (15,626) (994,062)

544,367 1,220,720

Less: Repayable within 1 year included in current liabilities (544,367) (676,303)

Repayable after 1 year - 544,417 The ABBA facility of the Group is repayable over a period of 96 months commencing in April 2008 respectively.

The facility has a financing charge at 7.85% (2012: 7.85%) per annum and are secured and supported as follows:

(i) legal charge over a freehold land and building of a subsidiary; (ii) jointly and severally guaranteed by certain directors of a subsidiary; and (iii) corporate guarantees given by a subsidiary.

19.4 Finance lease payables

Group

2013 2012

RM RM

Future minimum lease payments 2,298,211 5,885,582


Total present value of minimum lease payments 2,219,073 5,597,813



Cont’d


19.4 Finance lease payables cont’d

Group

2013 2012

RM RM

Current liabilities

Payable within one year

Future minimum lease payments 1,776,119 3,587,372


Present value of minimum lease payments 1,705,382 3,378,740

Non-current liabilities

Payable after one year but not later than five years

Future minimum lease payments 522,092 2,298,210


Present value of minimum lease payments 513,691 2,219,073

Total present value of minimum lease payments 2,219,073 5,597,813

The finance lease payables bear effective interest at rates ranging from 5.09% to 5.73% (2012: 4.85% to 5.73%) per annum.

20. DEFERRED TAX LIABILITIES

Group

2013 2012

RM RM

At 1 January 2,852,200 2,636,700

Recognised in profit or loss (Note 7) 228,067 215,500

At 31 December 3,080,267 2,852,200 Presented after appropriate offsetting as follows:

Group

2013 2012

RM RM

Deferred tax liabilities 3,167,403 2,852,200

Deferred tax assets (87,136) -

3,080,267 2,852,200



20. DEFERRED TAX LIABILITIES cont’d

This is in respect of estimated deferred tax liabilities/(assets) arising from temporary differences as follows:

Group

2013 2012

RM RM

Deferred tax liabilities

Difference between the carrying amount of property, plant and equipment and its tax base 3,161,792 2,852,200

Unrealised foreign exchange gain 5,611 -

3,167,403 2,852,200

Deferred tax assets

Unrealised profits on inventories (87,136) -

3,080,267 2,852,200

21. TRADE AND OTHER PAYABLES

Group Company

2013 2012 2013 2012

RM RM RM RM

Trade payables

External parties 29,806,457 18,829,192 - -

Related parties 467,323 180,036 - -

30,273,780 19,009,228 - -

Other payables

Sundry payables 1,048,976 2,948,679 - -

Deposits received 54,387 89,041 - -

Accruals 1,326,129 770,750 492,540 4,316

2,429,492 3,808,470 492,540 4,316

32,703,272 22,817,698 492,540 4,316 (a) The Company’s normal trade credit term ranges from 30 to 120 days (2012: 30 to 120 days).

Included in trade payables of the Group are:

(i) an amount of RM379,736 (2012: RM44,948) owing to companies in which certain directors of the subsidiaries have substantial financial interests; and

(ii) an amount of RM87,587 (2012: RM135,088) owing to a company which was deemed related to the Group by virtue of certain of its directors being connected to a director of the Company.

(b) Included in accruals of the Group and of the Company are directors’ fees amounting to RM970,000 (2012: RM500,000) and RM470,000 (2012: Nil) respectively.



Cont’d

21. TRADE AND OTHER PAYABLES cont’d

(c) The foreign currency exposure profile of trade payables of the Group is as follows:-

Group

2013 2012

RM RM

USD 1,563,320 2,459,021

Singapore Dollar (“SGD”) 1,160 8,064

Euro Dollar (“EURO”) 53,430 -

22. DIVIDEND

Group/Company

2013 2012

RM RM

First interim single tier exempt dividend of 1.5 sen per share in respect of financial year ended 31 December 2013 4,650,000 -

The directors recommended a final single tier exempt dividend of 1.5 sen per share amounting to RM4,650,000

based on the number of outstanding ordinary shares in issue as at the date of this report, in respect of the current financial year, subject to the approval of the shareholders at the forthcoming Annual General Meeting. The financial statements for the current financial year do not reflect this proposed dividend. Such dividend, if approved by the shareholders, will be accounted for in equity as an appropriation of retained earnings in the financial year ending 31 December 2014.

23. CASH AND CASH EQUIVALENTS

Group Company

2013 2012 2013 2012

RM RM RM RM

Cash and bank balances 6,701,225 4,051,693 639,512 3

Deposits with licensed banks (Note 15) 15,624,998 4,412,580 14,224,698 -

As per statements of financial position 22,326,223 8,464,273 14,864,210 3

Less: Bank overdrafts (Note 19) (17,284,729) (15,253,903) - -

Less: Deposits with licensed banks pledged (Note 15) (392,547) (380,776) - -

As per statements of cash flows 4,648,947 (7,170,406) 14,864,210 3



24. SEGMENT INFORMATION

General Information

The Group are principally engaged in trading and processing of steel related products.

The Group has arrived at three (3) reportable segments that are based on information reported internally to the Management and the Board of Directors. The reportable segments are summarised as follows:

(i) Trading of steel products; (ii) Processing of steel products; and (iii) Others

The accounting policies of the segments are the same as the Group’s accounting policies described in Note 3.

Measurement of Reportable Segment

The Group evaluates performance based on segment operating revenue and gross profit. Inter-segment transactions are entered in the ordinary course of business based on terms mutually agreed upon by the parties concerned.

Segment results, assets and liabilities information are neither included in the internal management reports nor provided regularly to the management. Hence, no disclosures are made on segment results, assets and liabilities. All results, assets and liabilities are managed on a group basis.

Trading of Steel

Products

Processing of Steel

Products Others Elimination Total

RM RM RM RM RM

2013

Revenue

External revenue 179,092,846 275,633,018 541,766 - 455,267,630

Direct operating costs (153,049,988) (235,760,144) (450,068) - (389,260,200)

Gross profit 26,042,858 39,872,874 91,698 - 66,007,430

2012

Revenue

External revenue 162,700,257 274,030,631 471,918 - 437,202,806

Direct operating costs (141,495,443) (234,497,882) (445,401) - (376,438,726)

Gross profit 21,204,814 39,532,749 26,517 - 60,764,080

Geographical Segment

The activities of the Group mainly carried out in Malaysia and as such, geographical segmental reporting is not presented.

Information about Major Customers

There is no single customer with revenue equal or more than 10% of the Group revenue.



Cont’d

25. CAPITAL COMMITMENTS

Group

2013 2012

RM RM

Contracted but not provided for

- purchase of motor vehicles 64,355 -

- purchase of machinery 2,240,890 -

2,305,245 -

26. RELATED PARTY DISCLOSURES

(a) Identity of Related Parties

For the purposes of these financial statements, parties are considered to be related to the Group if the Group has the ability, directly or indirectly to control the party or exercise significant influence over the party in making financial and operating decision, or vice versa, or where the Group and the party are subject to common control or common significant influence. Related parties may be individuals or other entities.

The Group have a related party relationship with its subsidiaries, holding company, related parties, key management personnel and persons connected to key management personnel. Related parties refer to companies in which the directors or persons connected to directors of the company or the subsidiaries have substantial interest.

(b) Related Party Transactions

In addition to the transactions and balances detailed elsewhere in the financial statements, the Group and the Company had the following transactions with related parties during the financial year:

Group Company

2013 2012 2013 2012

RM RM RM RM

Transactions with holding company

- Management fees paid and payable - 256,967 - -

Transactions with subsidiaries

- Management fees received and receivables - - (358,818) -

- Dividend income received and receivables - - (12,640,000) -

Transactions with related parties

- Sales (5,882,948) (7,417,088) - -

- Purchases 2,060,165 4,150,215 - -

- Rental expense 240,000 180,000 - -

- Factory consumables 792 4,879 - -

- Transport charge 95 270 - -

Transactions with a director

- Purchase of motor vehicle - 140,000 - -



26. RELATED PARTY DISCLOSURES cont’d

(c) Related Party Balances

Information on outstanding balances with related parties of the Group is disclosed in Notes 13, 14 and 21.

(d) Compensation of Key Management Personnel

Key management personnel include personnel having authority and responsibility for planning, directing and controlling the activities of the entities, directly or indirectly, including any director of the Group. The compensation of the key management personnel is as follows:

Group Company

2013 2012 2013 2012

RM RM RM RM

Non-executive directors

- fees 220,000 - 220,000 -

Executive directors

- fees 750,000 500,000 250,000 -

- Short term employee benefits 4,663,100 4,123,099 - -

- Post employment benefits 559,200 497,300 - -

- Estimated monetary value of benefits-in-kind 181,372 218,125 - -

6,153,672 5,338,524 250,000 -

6,373,672 5,338,524 470,000 -

27. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

(a) Categories of Financial Instruments

The following table analyses the financial assets and liabilities in the statements of financial positions by the class of financial instruments to which they are assigned, and therefore by the measurement basis:

2013Loans and

receivablesAvailable-

for-sale Total

Group RM RM RM

Financial assets

Other investment - 47,600 47,600

Trade and other receivables 121,547,019 - 121,547,019

(exclude advances to suppliers, down payments andprepayments)

Deposits with licensed banks 15,624,998 - 15,624,998

Cash and bank balances 6,701,225 - 6,701,225

143,873,242 47,600 143,920,842



Cont’d

27. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES cont’d

(a) Categories of Financial Instruments cont’d

The following table analyses the financial assets and liabilities in the statements of financial positions by the class of financial instruments to which they are assigned, and therefore by the measurement basis cont’d:

2013

Financialliabilities at

amortised cost Total

Group RM RM

Financial liabilities

Trade and other payables 32,703,272 32,703,272

Borrowings 137,757,939 137,757,939

170,461,211 170,461,211

2012Loans and

receivablesAvailable-

for-sale Total Group RM RM RM

Financial assets

Other investment - 32,900 32,900

Trade and other receivables 117,314,830 - 117,314,830

(exclude advances to suppliers, down payments andprepayments)

Deposits with licensed banks 4,412,580 - 4,412,580

Cash and bank balances 4,051,693 - 4,051,693

125,779,103 32,900 125,812,003

Financial liabilities at

amortised cost Total RM RM


Trade and other payables 22,817,698 22,817,698

Borrowings 134,740,172 134,740,172

157,557,870 157,557,870

2013Loans and

receivables Total Company RM RM

Financial assets

Other receivables 4,500 4,500

Amounts owing by subsidiaries 20,471,206 20,471,206

Deposits with licensed banks 14,224,698 14,224,698

Cash and bank balances 639,512 639,512

35,339,916 35,339,916




(a) Categories of Financial Instruments cont’d

The following table analyses the financial assets and liabilities in the statements of financial positions by the class of financial instruments to which they are assigned, and therefore by the measurement basis: cont’d

2013



Company RM RM


Other payables 492,540 -

2012Loans and

receivables Total

Company RM RM

Financial assets

Other receivables 69,000 69,000

Cash and bank balances 3 3

69,003 69,003



RM RM


Other payables 4,316 4,316

Amounts owing to subsidiaries 1,438,664 1,438,664

1,442,980 1,442,980

(b) Financial risk management policies

The Group and the Company are exposed to financial risks arising from their operations and the use of financial instruments. The key financial risks include credit risk, interest rate risk, liquidity risk, foreign currency risk and market price risk.

It is, and has been throughout the current and previous financial year, the Group’s policy that no derivatives shall be undertaken. The Group and the Company do not apply hedge accounting.



Cont’d


(b) Financial risk management policies cont’d

The Group’s and the Company’s exposure to the financial risks and the objectives, policies and processes put in place to manage these risks are discussed below.

(i) Credit Risk

Credit risk is the risk of loss that may arise on outstanding financial instruments should a counterparty default on its obligations.

The Group’s exposure to credit risk arises primarily from trade and other receivables and the maximum risk associated with recognised financial assets is the carrying amount as presented in the consolidated statement of financial position and statement of financial position.

The Group has a credit policy in place and the exposure to credit risk is managed through the application of credit approvals, credit limits and monitoring procedures. For other financial assets, the Group minimises credit risks by dealing with high rating counterparties.

The Group does not have any significant exposure to any individual customer.

Financial guarantee

The Company provides unsecured financial guarantees to banks in respect of banking facilities granted to a subsidiary as mentioned in the Note 19.

The Company monitors on an ongoing basis the repayments made by the subsidiary and its financial performance.

The maximum exposure to credit risk amounts to RM1,413,048 (2012: Nil) representing the outstanding banking facilities at the reporting date. At the reporting date, there was no indication that the subsidiary would default on its repayment.

The financial guarantee has not been recognised as the fair value on initial recognition since the financial guarantees provided by the Company did not contribute towards credit enhancement of the subsidiary’ borrowings in view of the securities pledged by the subsidiary and it is unlikely the subsidiaries will default within the guarantee period.

(ii) Interest Rate Risk Interest rate risk is the risk that the fair value or future cash flows of the Group’s financial instruments will

fluctuate because of changes in market interest rates.

The Group’s and the Company’s exposure to interest rate risk arises primarily relates to deposits with licensed banks and interest bearing financial liabilities which include finance lease payables, ABBA financing facility, term loans, bankers’ acceptances and bank overdrafts.

Borrowings at floating rate amounting to RM135,538,866 (2012: RM129,142,359) expose the Group to cash flow interest rate risk whilst borrowings at fixed rate amounting to RM2,219,073 (2012: RM5,597,813) expose the Group’s to fair value interest rate risk.

The Group manages its interest rate risk exposure by maintaining a prudent mix of fixed and floating rate borrowings. The Group also monitors the interest rate on borrowings closely to ensure that the borrowings are maintained at favourable rates.

Sensitivity analysis for interest rate risk

If the interest rate had been 50 basis point higher/lower and all other variables held constant, the Group’s profit for the financial year ended 31 December 2013 would decrease/increase by RM508,270 (2012: RM484,284) as a result of exposure to floating rate borrowings.





(iii) Liquidity Risk

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’s objective is to maintain a balance between continuity of funding and flexibility through use of stand-by credit facilities.

The Group manages its operating cash flows by maintaining sufficient level of cash to meet its working capital requirements and availability of funding through an adequate amount of credit facilities.

Analysis of financial instruments by remaining contractual maturities

The table below summarises the maturity profile of the Group’s financial liabilities at the reporting date based on contractual undiscounted repayment obligations:

Carrying Amount

Contractual Cash Flows

On demand or within

1 year1 to 2 years

RM RM RM RM

2013

Group


Trade and other payables 32,703,272 32,703,272 32,703,272 -

Term loans 457,770 484,266 304,266 180,000

Bankers’ acceptances 117,252,000 117,252,000 117,252,000 -

Bank overdrafts 17,284,729 17,284,729 17,284,729 -

ABBA facility 544,367 559,993 559,993 -

Finance lease payables 2,219,073 2,298,211 1,776,119 522,092

170,461,211 170,582,471 169,880,379 702,092

Carrying Amount

Contractual Cash Flows

On demand

or within1 year

1 to 2 years

2 to 5 years

After5 years

RM RM RM RM RM RM

2012

Group


Trade and other payables 22,817,698 22,817,698 22,817,698 - - -

Term loans 10,714,736 13,229,442 1,348,752 1,312,266 3,204,000 7,364,424

Bankers’ acceptances 101,953,000 101,953,000 101,953,000 - - -

Bank overdrafts 15,253,903 15,253,903 15,253,903 - - -

ABBA facility 1,220,720 2,214,782 748,140 748,140 718,502 -

Finance lease payables 5,597,813 5,885,582 3,587,372 1,776,119 522,091 -

157,557,870 161,354,407 145,708,865 3,836,525 4,444,593 7,364,424



Cont’d



(iii) Liquidity Risk cont’d

Analysis of financial instruments by remaining contractual maturities cont’d

2013/2012 Company

The Company’s financial liabilities at the reporting date are either mature within one year or repayable on demand.

(iv) Foreign Currency Risk

Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates.

The Group has foreign currency exposure primarily arising from its trade payables and cash at bank which is denominated in USD as disclosed in Notes 16 and 21.

Sensitivity analysis for foreign currency risk The changes in the foreign currency is not expected to have significant impact on the Group’s financial

statements. (v) Market Price Risk

Market price risk is the risk that the fair value or future cash flows of the Group’s financial instruments will fluctuate because of changes in market prices.

The Company is exposed to equity price risk arising from its investment in quoted shares listed on the Bursa Malaysia Securities Berhad. These instruments are classified as available-for-sale. As the amount of the investment is minimal, the Group’s income and operating cash flows are not excessively exposed to changes in the market prices.

(c) Fair value of financial instruments

The methods and assumptions used to estimate the fair values of the following classes of financial assets and liabilities are as follows:-

(i) Cash and cash equivalents, trade and other receivables, trade and other payables

The carrying amounts are reasonable approximation of fair values due to short term nature of these financial instruments.

(ii) Quoted investment

The fair values of quoted investments is determined by reference to stock exchange quoted market bid prices at the close of the business on the reporting date.

(iii) Borrowings

The carrying amounts of the current portion of borrowings are reasonable approximation of fair values due to the insignificant impact of discounting.

The carrying amounts of long term floating rate loans are reasonable approximation of fair values as the loans will be re-priced to market interest rate on or near reporting date.

The fair value of finance lease payables is estimated using discounted cash flow analysis, based on current lending rate for similar types of lease arrangements.



27. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES cont’d (c) Fair value of financial instruments cont’d

The carrying amounts and fair value of financial instruments, other than those with carrying amounts are reasonable approximation of fair values are as follows:

Group

CarryingAmount

Fair Value

RM RM

2013

Financial liability

Finance lease payables 2,219,073 2,284,485

2012

Financial liability

Finance lease payables 5,597,813 5,881,970

28. FAIR VALUE HIERARCHY

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

(i) Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities;

(ii) Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and

(iii) Level 3 fair value measurements are those derived from inputs for the asset or liability that are not based on observable market data (unobservable inputs).

The following table provides the fair value measurement hierarchy of the Group’s assets and liabilities:

Assets measured at fair value

Fair value measurement using

Fair Value Level 1 Level 2 Level 3

Group RM RM RM RM

2013


- quoted shares in Malaysia 47,600 47,600 - -

2012


- quoted shares in Malaysia 32,900 32,900 - -



Cont’d

28. FAIR VALUE HIERARCHY cont’d

Liabilities for which fair values are disclosed:

Fair value measurement using

Fair Value Level 1 Level 2 Level 3

Group RM RM RM RM

2013

Finance lease payables 2,284,485 - 2,284,485 -

2012

Finance lease payables 5,881,970 - 5,881,970 - During the financial year ended 31 December 2013, there was no transfer between Level 1 and 2 of the fair value

measurement hierarchy.

29. CAPITAL MANAGEMENT

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

The Group manages its capital structure and makes adjustments to it, in light of changes in economic and business conditions. To maintain or adjust the capital structure, the Group may adjust the dividend payment to shareholders, return capital to shareholders, or issue new shares.

There were no changes in the Group approach to capital management since the financial year ended 31 December 2012.

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

The Group monitors capital using a gearing ratio, which is net debts divided by total capital plus net debts. Net debts comprise ABBA facilities, bankers’ acceptances, bank overdrafts, term loans and finance lease payables less deposits with licensed banks, cash and bank balances whilst total capital is total equity of the Group.

Group

2013 2012

RM RM

Total interest-bearing borrowings 137,757,939 134,740,172

Less: Deposits with licensed banks, cash and bank balances (22,326,223) (8,464,273)

Total net debts 115,431,716 126,275,899

Total equity 202,532,091 146,644,620

Total net debts plus equity 317,963,807 272,920,519

Gearing ratio 36% 46%



30. SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR

On 5 June 2013, the Company’s application was approved by the Securities Commission (“SC”) for the listing on the Main Market of Bursa Malaysia Securities Berhad (“Bursa Securities”) of its entire enlarged issued and paid-up share capital which involved the following events:

(i) Acquisitions

(a) Acquisition of Leon Fuat Hardware Sdn. Bhd. (“LF Hardware”)

Acquisition by the Company of the entire issued and paid-up share capital in LF Hardware comprising 2,000,000 ordinary shares of RM1.00 each for a total purchase consideration of RM28,978,000 which was entirely satisfied by the issuance of 57,956,000 new ordinary shares of RM0.50 each in the Company at an issue price of RM0.50 per share, credited as fully paid;

(b) Acquisition of Leon Fuat Hardware (Klang) Sdn. Bhd. (“LF Klang”)

Acquisition by the Company of the entire issued and paid-up share capital in LF Klang comprising 10,000,000 ordinary shares of RM1.00 each for a total purchase consideration of RM76,793,997 which was entirely satisfied by the issuance of 153,587,994 new ordinary shares of RM0.50 each in the Company at an issue price of RM0.50 per share, credited as fully paid;

(c) Acquisition of Supreme Steelmakers Sdn. Bhd. (“Supreme Steelmakers”)

Acquisition by the Company of the entire issued and paid-up share capital in Supreme Steelmakers comprising 2,000,000 ordinary shares of RM1.00 each for a total purchase consideration of RM12,188,000 which was entirely satisfied by the issuance of 24,376,000 new ordinary shares of RM0.50 each in the Company at an issue price of RM0.50 per share, credited as fully paid; and

(d) Acquisition of ASA Steel (M) Sdn. Bhd. (“ASA Steel”)

Acquisition by the Company of the entire issued and paid-up share capital in ASA Steel comprising 1,800,000 ordinary shares of RM1.00 each for a total purchase consideration of RM7,385,000 which was entirely satisfied by the issuance of 14,770,000 new ordinary shares of RM0.50 each in the Company at an issue price of RM0.50 per share, credited as fully paid.

The Acquisitions were completed on 2 January 2013.

(ii) Public Issue

The Company has undertaken a public issue of 59,310,000 new ordinary shares (“Public Issue Shares”), representing approximately 19.13% of the Company’s enlarged issued and paid-up share capital at an issue price of RM0.60 per share allocated in the following manner:

(a) 15,500,000 Public Issue Shares, representing approximately 5.00% of the Company’s enlarged issued and paid-up share capital, for application by the Public, of which at least 50% shall be set aside for Bumiputera investors including individuals, companies, societies, co-operatives and institutions;

(b) 10,000,000 Public Issue Shares, representing approximately 3.23% of the Company’s enlarged issued and paid-up share capital, for subscription by eligible directors, employees and persons who have contributed to the success of the Group; and

(c) 33,810,000 Public Issue Shares, representing approximately 10.91% of the Company’s enlarged issued and paid-up share capital, for placement to selected investors.



Cont’d

30. SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR cont’d

(iii) Offer for Sale

Concurrent with the Public Issue, Leon Fuat Holdings Sdn. Bhd., being the substantial shareholder of the Company, offered for sale of up to 31,000,000 shares at an offer price of RM0.60 per share of the Company (“Share”), representing approximately up to 10.00% of the Company’s enlarged issued and paid-up share capital, to Bumiputera investors approved by the Ministry of International Trade and Industry.

(iv) Listing and Quotation on Bursa Securities

The listing and quotation of the Company’s entire enlarged issued and paid-up share capital of RM155,000,000 comprising 310,000,000 ordinary shares of RM0.50 each on the Main Market of Bursa Securities.

The Public Issue amounting to 59,310,000 new ordinary shares of RM0.50 each at an issue price of RM0.60 per share, and the Offer for Sale amounting to 31,000,000 shares at an offer price of RM0.60 per Share were completed upon the allotment and transferred of the shares to the successful investors on 31 May 2013.

The Company was listed and quoted on the Main Market of Bursa Malaysia Securities Berhad of its entire enlarged issued and paid-up capital comprising of 310,000,000 shares on 5 June 2013.

31. COMPARATIVE FIGURES

The comparative figures of the Group were presented based on the financial statements of subsidiaries accounted for by using the merger method of accounting, as these subsidiaries were under common control by the same parties both before and after the acquisitions by the Company, and that control is not transitory.


Supplementary Information on the Disclosure ofRealised and Unrealised Profit or Loss

The following analysis of realised and unrealised retained earnings/(accumulated losses) of the Group and of the Company is presented in accordance with the directive issued by Bursa Malaysia Securities Berhad (“Bursa Securities”) dated 25 March 2010 and prepared in accordance with Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants.

The retained earnings/(accumulated losses) of the Group and of the Company as at reporting date are analysed as follows:-

Group

2013 2012

RM RM

Total retained earnings of the Company and its subsidiaries

- realised 158,768,195 137,180,359

- unrealised (3,958,180) (3,687,600)

154,810,015 133,492,759

Less: Consolidation adjustments (2,816,160) (2,622,315)

Total retained earnings of the Group 151,993,855 130,870,444

Company

2013 2012

RM RM

Total retained earnings/(accumulated losses) of the Company

- realised 4,947,787 (1,373,980)

- unrealised - -

Total retained earnings/(accumulated losses) 4,947,787 (1,373,980) The disclosure of realised and unrealised profit or loss above is solely for complying with the disclosure requirements stipulated in the directive of Bursa Securities and should not be applied for any other purpose.


List of PropertiesAs at 31 December 2013

Reg

iste

red

/B

enefi

cial

O

wne

rT

itle

/Ad

dre

ssD

escr

ipti

on/

Exi

stin

g U

seTe

nure

Land

/ B

uilt

–u

p A

reas

(sq

. ft.

**)

Ap

pro

xim

ate

Ag

e o

f B

uild

ing

s(N

o. o

f Ye

ars)

NB

V A

t G

roup

Le

vel a

s at

31

Dec

emb

er

2013

(RM

)

Year

of

Acq

uisi

tio

n/R

eval

uati

on

LF K

lang

11 L

oron

g K

elul

i 1B

, K

awas

an P

erin

dust

rian

Buk

it R

aja

Sel

atan

, S

eksy

en 7

, 400

00 S

hah

Ala

m, S

elan

gor

Dar

ul E

hsan

he

ld u

nder

GR

N 2

9061

3,

Lot

2610

2, (f

orm

erly

H.S

. (D

) 30

968,

Lot

No.

PT

1739

5),

Muk

im K

apar

, Dae

rah

Kla

ng,

Neg

eri S

elan

gor

Dar

ul E

hsan

A u

nit

of s

ingl

e st

orey

de

tach

ed fa

ctor

y cu

m

war

ehou

se b

uild

ing

with

an

ann

exed

4 s

tore

y of

fice

and

a un

it of

sin

gle

stor

ey

fact

ory

cum

war

ehou

se

build

ing

with

ann

exed

si

ngle

sto

rey

offic

e an

d 2

stor

ey s

tore

/ U

sed

as

a st

eel p

roce

ssin

g pl

ant,

war

ehou

se a

nd o

ffice

Free

hold

179,

736

/19,

754

(offi

ce

built

-up

area

) &

102

,882

(fa

ctor

y bu

ilt-

up a

rea)

6O

ffice

and

fa

ctor

y N

BV:

20

,551

,822

&

land

NB

V:

6,89

0,00

0

2004

LF K

lang

6, L

oron

g K

elul

i 1B

, K

awas

an P

erin

dust

rian

Buk

it R

aja

Sel

atan

, S

eksy

en 7

, 400

00 S

hah

Ala

m, S

elan

gor

Dar

ul E

hsan

he

ld u

nder

GR

N 2

9061

2,

Lot

2610

4, (f

orm

erly

H.S

. (D

) 30

970,

Lot

No.

PT

1739

7),

Muk

im K

apar

, D

aera

h K

lang

, N

eger

i Sel

ango

r D

arul

Ehs

an

A u

nit

of 4

½ o

ffice

with

an

ann

exed

2 u

nits

of

sing

le s

tore

y w

areh

ouse

cu

m fa

ctor

y/U

sed

as a

st

eel p

roce

ssin

g pl

ant,

war

ehou

se a

nd o

ffice

Free

hold

116,

928/

29,6

00 (o

ffice

bu

ilt-u

p ar

ea)

& 5

1,20

0 (fa

ctor

y bu

ilt-

up a

rea)

17O

ffice

and

fa

ctor

y N

BV:

3,

497,

596

& la

nd N

BV:

2,

536,

281

1991

LF K

lang

No.

16,

Lor

ong

Kel

uli 1

B,

Kaw

asan

Per

indu

stria

n B

ukit

Raj

a S

elat

an,

Sek

syen

7, 4

0000

Sha

h A

lam

, S

elan

gor

Dar

ul E

hsan

hel

d un

der

H.S

. (D

) 309

72, L

ot

No.

PT

1739

9), M

ukim

Kap

ar,

Dae

rah

Kla

ng, N

eger

i Sel

ango

r D

arul

Ehs

an

A u

nit

of d

oubl

e-st

orey

de

tach

ed fa

ctor

y bu

ildin

g w

ith a

nnex

ed d

oubl

e-st

orey

of

fice

build

ing

/C

urre

ntly

vac

ant

Free

hold

130,

680/

##

Bui

ldin

g N

BV

3,

863,

302

and

land

NB

V:

15,6

81,6

00

2012


Reg

iste

red

/B

enefi

cial

O

wne

rT

itle

/Ad

dre

ssD

escr

ipti

on/

Exi

stin

g U

seTe

nure

Land

/ B

uilt

–u

p A

reas

(sq

. ft.

**)

Ap

pro

xim

ate

Ag

e o

f B

uild

ing

s(N

o. o

f Ye

ars)

NB

V A

t G

roup

Le

vel a

s at

31

Dec

emb

er

2013

(RM

)

Year

of

Acq

uisi

tio

n/R

eval

uati

on

LF H

ardw

are

No.

6A

, Jal

an T

iga,

Off

Jala

n S

unga

i Bes

i, K

awas

an

Per

usah

aan

Sun

gai B

esi,

Kua

la

Lum

pur

held

und

er P

N 3

7429

, Lo

t N

o. 4

43 (f

orm

erly

H.S

. (D

) 669

62, L

ot N

o. P

.T. 4

13),

Sek

syen

92,

Ban

dar

Kua

la

Lum

pur,

Dae

rah

Kua

la L

umpu

r, W

ilaya

h P

erse

kutu

an K

uala

Lu

mpu

r

A u

nit

of s

ingl

e st

orey

de

tach

ed fa

ctor

y/

Who

le u

nit

is r

ente

d to

S

upre

me

Ste

elm

aker

s an

d it

is u

sed

as a

ste

el

proc

essi

ng p

lant

Leas

ehol

d ex

pirin

g on

09

.07.

2050

30,5

91/

14,0

00 (f

acto

ry

built

-up

area

)

16O

ffice

and

fa

ctor

y N

BV:

45

4,89

1

Land

NB

V:

520,

178

1991

Sup

rem

e S

teel

mak

ers

No.

8, J

alan

Tig

a, O

ff Ja

lan

Sun

gai B

esi,

Kaw

asan

P

erus

ahaa

n S

unga

i Bes

i, K

uala

Lu

mpu

r h

eld

unde

r P

N 3

5203

, Lo

t N

o. 5

07, (

form

erly

H.S

. (D

) 10

1568

, Lo

t N

o. P

.T. 4

80),

Sek

syen

92,

Ban

dar

Kua

la

Lum

pur,

Dae

rah

Kua

la L

umpu

r, W

ilaya

h P

erse

kutu

an K

uala

Lu

mpu

r

A u

nit

of s

ingl

e st

orey

de

tach

ed fa

ctor

y cu

m

war

ehou

se w

ith a

n an

nexe

d 4-

stor

ey o

ffice

bui

ldin

g/

Use

d as

a s

teel

pro

cess

ing

plan

t, of

fice

and

war

ehou

se

(par

t of

whi

ch a

mou

ntin

g to

5,

460

sq. f

t. is

ren

ted

out

to A

SA

Ste

el a

nd it

is u

sed

as a

ste

el p

roce

ssin

g pl

ant)

Leas

ehol

d ex

pirin

g on

21

.04.

2062

40,1

06/1

0,92

0 (o

ffice

bui

lt-up

are

a) &

: 15

,600

(fac

tory

bu

ilt-u

p ar

ea)

6O

ffice

and

fa

ctor

y N

BV:

3,

263,

136

& la

nd N

BV:

1,

684,

012

2003

Not

es:

**

conv

ersi

on o

f orig

inal

mea

sure

men

ts fo

r pr

oper

ties

in s

quar

e m

eter

s (s

q m

) to

squa

re fe

et (s

qft)

at 1

m²

=10

.763

9 ft²

.#

A

s di

sclo

sed

in S

ectio

n 6.

18.1

(a)o

f ou

r P

rosp

ectu

s da

ted

13 M

ay 2

013,

thi

s la

nd w

ith e

xist

ing

doub

le-s

tory

det

ache

d bu

ildin

g w

ith a

nnex

ed d

oubl

e-st

orey

offi

ce b

uild

ing

was

ac

quire

d on

2 J

uly

2012

and

is c

urre

ntly

und

ergo

ing

stre

ngth

enin

g of

floo

r fo

unda

tion

as w

ell a

s m

ajor

ren

ovat

ion

on it

s ex

istin

g bu

ildin

g. T

he c

ertifi

cate

of

fitne

ss w

ill be

obt

aine

d in

due

cou

rse

prio

r to

occ

upyi

ng t

he b

uild

ing

in 2

016.

List of PropertiesAs at 31 December 2013Cont’d


Statistics on ShareholdingsAs at 30 April 2014

SHARE CAPITAL

Authorised Share Capital : RM500,000,000 divided into 1,000,000,000 ordinary shares of RM0.50 eachIssued and Paid-up Share Capital : RM155,000,000 divided into 310,000,000,000 ordinary shares of RM0.50 eachClass of Shares : Ordinary shares of RM050 eachVoting Rights : On a show of hands - one vote : On a poll – one vote for each share held

DISTRIBUTION OF SHAREHOLDINGS

Size of Shareholdings No. of

Shareholders % of

Shareholders No. of

Shares Held % of Issued

Share Capital

Less than 100 0 0.00 0 0.00 100 - 1,000 65 3.59 44,100 0.01 1,001 - 10,000 777 42.88 5,260,400 1.70 10,001 - 100,000 858 47.35 26,140,300 8.43 100,001 to less than 5% of issued shares 110 6.07 41,808,200 13.49 5% and above of issued shares 2 0.11 236,747,000 76.37

Total 1,812 100.00 310,000,000 100.00 DIRECTORS’ SHAREHOLDINGSAS PER THE REGISTER OF DIRECTORS’ HOLDINGS

Direct Indirect

Name of Directors

No. of Ordinary

Shares held %

No. of Ordinary

Shares held %

Dato’ Ng Ah Hock @ Ng Soon Por 100,000 0.03 - - Ooi Bin Keong 200,000 0.06 219,690,000(1) 70.87Ooi Seng Khong 200,000 0.06 - -Ooi Kong Tiong 200,000 0.06 219,690,000(1) 70.87Ooi Shang How 200,000 0.06 - -Ng Kok Teong 200,000 0.06 219,690,000(2) 70.87Chan Kee Loin 100,000 0.03 - -Tan Did Heng 100,000 0.03 - -Tan Sack Sen 100,000 0.03 - -

Others(3)

Ooi Siew Shen(4) 13,000 0.004 - -Ooi Shang Yao(5) 20,000 0.006 - -Ooi Shang Chieh(5) 5,000 0.002 - -

Notes:

1 Deemed interest by virtue of his interest in Leon Fuat Holdings Sdn Bhd pursuant to Section 6A of the Companies Ac, 1965 (“Act”). 2 Deemed interest by virtue of his interest in NCT & Sons Sdn Bhd, a substantial shareholder of Leon Fuat Holdings Sdn Bhd

pursuant to Section 6A of the Act.3 Disclosure of interests pursuant to Section 134(12)(c) of the Act.4 Ooi Siew Shen is the daughter of Ooi Bin Keong.5 Ooi Shang Yao and Ooi Shang Chieh are the sons of Ooi Bin Keong.


Statistics on ShareholdingsAs at 30 April 2014Cont’d

SUBSTANTIAL SHAREHOLDERS’ SHAREHOLDINGS AS PER THE REGISTER OF SUBSTANTIAL SHAREHOLDERS

Direct Indirect

Name of Substantial Shareholders

No. of Ordinary

Shares held %

No. of Ordinary

Shares held %

Leon Fuat Holdings Sdn Bhd 219,690,000 70.87 - - Lembaga Tabung Angkatan Tentera 17,057,000 5.50 - -Ooi Bin Keong 200,000 0.06 219,690,000(1) 70.87Ooi Kong Tiong 200,000 0.06 219,690,000(1) 70.87NCT & Sons Sdn Bhd - - 219,690,000(1) 70.87Ng Kok Teong 200,000 0.06 219,690,000(2) 70.87Ng Kok Wee 200,000 0.06 219,690,000(2) 70.87Ong Mung Hsia - - 219,690,000(2) 70.87Ng Bee Fong - - 219,690,000(2) 70.87 Notes:

1 Deemed interest by virtue of his interest in Leon Fuat Holdings Sdn Bhd pursuant to Section 6A of the Act. 2 Deemed interest by virtue of his/her interest in NCT & Sons Sdn Bhd, a substantial shareholder of Leon Fuat Holdings Sdn Bhd

pursuant to Section 6A of the Act.

30 LARGEST SHAREHOLDERS

No. Name of Shareholders No. of Shares %

1 LEON FUAT HOLDINGS SDN BHD 219,690,000 70.87

2 LEMBAGA TABUNG ANGKATAN TENTERA 17,057,000 5.50

3 ALLIANCE GROUP NOMINEES (TEMPATAN) SDN BHDPLEDGED SECURITIES ACCOUNT FOR MOHD FAIRUS BIN SHAFIE (8109673)

4,673,300 1.51

4 TEOH GUAN KOK & CO. SDN. BERHAD 2,019,500 0.65

5 STEPHEN WONG YEE ONN 1,800,000 0.58

6 NEOH KIM WAH 1,501,900 0.48

7 HO CHU CHAI 1,017,000 0.33

8 JEFFREY NG POW KONG 1,003,500 0.32

9 AIBB NOMINEES (TEMPATAN) SDN BHDPLEDGED SECURITIES ACCOUNT FOR BATU BARA RESOURCES CORPORATION SDN BHD

1,000,000 0.32

10 CHOON SIEW THONG 963,000 0.31

11 HLIB NOMINEES (TEMPATAN) SDN BHD HONG LEONG BANK BHD FOR TEOH LIANG HUAT @ TEOH LEAN HUAT

846,300 0.27

12 TAN AH TA 819,800 0.26

13 LOW SONG SIEW 753,400 0.24

14 WONG WOON YOW 600,000 0.19

15 WONG WOON YOW 600,000 0.19

16 THING YEW LAN 508,000 0.16

17 RHB CAPITAL NOMINEES (TEMPATAN) SDN BHDPLEDGED SECURITIES ACCOUNT FOR GURDEEP SINGH A/L SARDARA SINGH (CEB)

500,000 0.16


30 LARGEST SHAREHOLDERS cont’d

No. Name of Shareholders No. of Shares %

18 SOH CHOO KIAN 470,000 0.15

19 PANG CHEW YIT 466,700 0.15

20 LOO CHEE LAIN 453,700 0.15

21 HO PHEA KEAT 430,000 0.14

22 SOH KIAN HUAT 417,000 0.13

23 CHAN LEE SAM 416,700 0.13

24 CHEW HAN GIAN 416,700 0.13

25 LIM CHOON HOOK 416,700 0.13

26 LIM FOOK CHEE & SONS SDN.BHD. 416,700 0.13

27 LIM GUAT HWA 416,700 0.13

28 LIM LEE TEANG 416,700 0.13

29 MURUGAYAH A/L KARUPPIAH 416,700 0.13

30 NANG CHAN CHAI 416,700 0.13

TOTAL 260,923,700 84.17

Statistics on ShareholdingsAs at 30 April 2014

Cont’d


Notice of Seventh Annual General Meeting

NOTICE IS HEREBY GIVEN THAT the Seventh Annual General Meeting (“AGM”) of Leon Fuat Berhad (“LFB”) will be held at Ballroom I, Tropicana Golf & Country Resort, Jalan Kelab Tropicana, 47410 Petaling Jaya, Selangor Darul Ehsan on Wednesday, 25 June 2014 at 11.00 a.m. for the following purposes:

ORDINARY BUSINESS

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

Explanatory Note A

2. To approve a final single tier dividend of 1.5 sen per share for the financial year ended 31 December 2013.

Resolution 1

3. To approve the payment of Directors’ fees of RM470,000 for the financial year ended 31 December 2013.

Resolution 2

4. To re-elect the following Directors who retire in accordance with Article 85 of the Company’s Articles of Association:

4.1 Ooi Bin Keong;4.2 Ooi Seng Khong; and4.3 Ooi Kong Tiong.

Resolution 3Resolution 4Resolution 5

5. To re-appoint Messrs Baker Tilly AC as the Company’s Auditors and to authorise the Directors to fix their remuneration.

Resolution 6

SPECIAL BUSINESS

To consider and if thought fit, to pass with or without modifications, the following Resolutions:

6. ORDINARY RESOLUTIONAUTHORITY UNDER SECTION 132D OF THE COMPANIES ACT, 1965 FOR THE DIRECTORS TO ISSUE SHARES

“THAT pursuant to Section 132D of the Companies Act, 1965, and subject to the approvals of the relevant governmental and/or regulatory authorities, the Directors be and are hereby empowered to issue new shares in the Company at any time, at such price, upon such terms and conditions and for such purposes and to such person or persons whomsoever as the Directors may, in their absolute discretion, deem fit, provided that the aggregate number of shares issued pursuant to this resolution in any one financial year does not exceed 10% of the total issued share capital of the Company for the time being AND THAT the Directors be and are also empowered to obtain the approval from Bursa Malaysia Securities Berhad (“Bursa Securities”) for the listing of and quotation for the additional shares so issued AND THAT such authority shall continue to be in force until the conclusion of the next AGM of the Company.”

Resolution 7


7. ORDINARY RESOLUTIONPROPOSED SHAREHOLDERS’ RATIFICATION FOR RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING NATURE

“THAT pursuant to the authority granted by Bursa Securities, all the recurrent related party transactions entered or to be entered into by the Company and/or its subsidiaries of a revenue or trading nature, details as set out in Section 2.5 of the Circular to Shareholders dated 3 June 2014 with the specified classes of related parties mentioned therein which are necessary for the day-to-day operations of the Group from 5 June 2013, being the date of listing of the Company on the Main Market of Bursa Securities until the date of the Seventh AGM of the Company, on normal commercial terms which are not more favourable to the related parties than those generally available to the public and are not detrimental to the minority shareholders of the Company, be and is hereby approved and ratified.

AND THAT the execution of all necessary documents and all acts, deed and things done by the Directors of the Company as they considered necessary or expedient in order to give effect to the said recurrent related party transactions, be and is hereby approved and ratified.”

Resolution 8

8. ORDINARY RESOLUTIONPROPOSED SHAREHOLDERS’ MANDATE FOR RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING NATURE (“PROPOSED RRPT MANDATE”)

“THAT subject always to the provisions of the Listing Requirements of Bursa Securities, approval be and is hereby given to the Company and/or its subsidiaries to enter into recurrent related party transactions of a revenue or trading nature, details as set out in Section 2.5 of the Circular to Shareholders dated 3 June 2014 with the specified classes of related parties mentioned therein which are necessary for the Group’s day-to-day operations and are carried out in the ordinary course of business and are on normal commercial terms which are not more favourable to the related parties than those generally available to the public and are not detrimental to the minority shareholders of the Company.

THAT the approval shall continue to be in force until:

(i) the conclusion of the next AGM of the Company following the AGM at which such mandate was passed, at which time it will lapse, unless by a resolution passed at the AGM whereby the authority is renewed; or

(ii) 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 Companies Act, 1965 (“the Act”) (but must not extend to such extension as may be allowed pursuant to Section 143(2) of the Act); or

(iii) revoked or varied by a resolution passed by the shareholders in a general meeting;

whichever is the earlier;

AND THAT the Directors of the Company be and are hereby authorised to complete and do all such acts and things (including executing all such documents as may be required) as they may consider expedient or necessary or in the interests of the Company to give effect to the Proposed RRPT Mandate.”

Resolution 9

Notice of Seventh Annual General MeetingCont’d


9. SPECIAL RESOLUTIONPROPOSED AMENDMENT TO THE COMPANY’S ARTICLES OF ASSOCIATION (“PROPOSED AMENDMENT”)

“THAT approval be and is hereby given to the Company to amend Article 84 of the Articles of Association of the Company, with details as set out below AND THAT the Directors and/or the Secretary of the Company be hereby authorised to take all steps as they may consider necessary and expedient in order to give full effect to the Proposed Amendment, for and on behalf of the Company: -

Article 84 (Number of Directors)

Existing provision:

All the Directors of the Company shall be natural persons and unless otherwise determined by General Meeting, the number of Directors (excluding alternate directors) shall not be less than two (2) and not more than nine (9). A Director need not be a Member of the Company.

New provision:

All the Directors of the Company shall be natural persons and unless otherwise determined by General Meeting, the number of Directors (excluding alternate directors) shall not be less than two (2) and not more than ten (10). A Director need not be a Member of the Company.”

Resolution 10

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

NOTICE OF DIVIDEND ENTITLEMENT AND PAYMENT

NOTICE IS HEREBY GIVEN THAT a final single tier dividend of 1.5 sen per share for the financial year ended 31 December 2013, if approved by the shareholders at the forthcoming Seventh AGM, will be paid on 5 August 2014 to depositors registered in the Record of Depositors at the close of business on 18 July 2014.

A depositor shall qualify for entitlement only in respect of:

a) Shares transferred into the depositor’s securities account before 4.00 p.m. on 18 July 2014 in respect of transfer; and

b) Shares bought on Bursa Securities on a cum entitlement basis according to the Rules of Bursa Securities.

BY ORDER OF THE BOARD

YEOH CHONG KEAT (MIA 2736)LIM FEI CHIA (MAICSA 7036158)Secretaries

Kuala Lumpur 3 June 2014



Notes:

(i) In respect of deposited securities, only members whose names appear in the Record of Depositors on 19 June 2014 (General Meeting Record of Depositors) shall be eligible to attend, speak and vote at this meeting.

(ii) A proxy may but need not be a member of the Company, an advocate, an approved company auditor or a person approved by the Registrar (the provisions of Section 149(1)(b) of the Companies Act, 1965 shall not apply).

(iii) To be valid, the original proxy form, duly completed must be deposited at the registered office of the Company situated at Suite 11.1A, Level 11, Menara Weld, 76 Jalan Raja Chulan, 50200 Kuala Lumpur not less than forty-eight (48) hours before the time for holding the meeting or any adjournment thereof.

(iv) A member shall be entitled to appoint not more than two (2) proxies to attend and vote at this meeting. Where a member appoints two (2) proxies, he/she shall specify the proportions of his/her shareholdings to be represented by each proxy failing which, the appointment shall be invalid.

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

(vi) If the appointor is a corporation this form must be executed under its common seal or under the hand of an officer or attorney duly authorised.

Explanatory Note A

This agenda item is meant for discussion only as the provision of Section 169(1) of the Companies Act, 1965 does not require a formal approval of the shareholders for the audited financial statements. As such, this item is not put forward for voting.

Explanatory Notes under Special Business

(a) Resolution 7 - Authority under Section 132D of the Companies Act, 1965 for the Directors to issue shares

The proposed resolution is for the purpose of granting a general mandate (“General Mandate”) and empowering the Directors to issue shares in the Company up to an amount not exceeding in total 10% of the nominal value of the issued and paid-up share capital of the Company for any possible fund raising activities, funding of future investments, working capital and/or acquisitions without having to convene separate general meeting to seek shareholders’ approval for issuance of shares when such opportunities or needs arise.

This is the first General Mandate sought from the shareholders of the Company after the listing of the Company on the Main Market of Bursa Securities on 5 June 2013. This General Mandate, unless revoked or varied at a general meeting, will expire at the conclusion of the next AGM of the Company.

(b) Resolution 8 – Proposed Shareholders’ Ratification for Recurrent Related Party Transactions

This proposed resolution, if passed, will ratify all recurrent related party transactions of a revenue or trading nature entered /to be entered by the Company and/or its subsidiaries, particulars of which are as set out in Section 2.5 of the Circular to Shareholders dated 3 June 2014 despatched together with the Company’s Annual Report 2013, from the date of listing of the Company on the Main Market of Bursa Securities on 5 June 2013 up to the date of the Seventh AGM of the Company.

(c) Resolution 9 – Proposed RRPT Mandate

This proposed resolution, if passed, will authorise the Company and/or its subsidiaries to enter into recurrent related party transactions of a revenue or trading nature, particulars of which are as set out in Section 2.5 of the Circular to Shareholders dated 3 June 2014 despatched together with the Company’s Annual Report 2013. This authority, unless revoked or varied by the Company in a general meeting, will expire at the next AGM of the Company.

(d) Resolution 10 – Proposed Amendment to the Company’s Articles of Association

This proposed resolution, if passed, will empower the Company to amend the existing Article 84 of the Company’s Articles of Association for administrative efficiency.



Statement Accompanying Notice of Annual General Meeting

DIRECTORS WHO ARE STANDING FOR RE-ELECTION AT THE SEVENTH ANNUAL GENERAL MEETING

1. Directors retiring in accordance with Article 85 of the Company’s Articles of Association:

(i) Ooi Bin Keong; (ii) Ooi Seng Khong; and (iii) Ooi Kong Tiong.

Details of the above Directors are set out in the Directors’ Profile from pages 6 to 9.

LEON FUAT BERHAD (756407-D)(Incorporated in Malaysia)

PROXY FORM

I/We, NRIC/Company No. (Full name in block letters)

of (Full address)

being a member/members of LEON FUAT BERHAD do hereby appoint (Full name in block letters)

of (Full address)

or failing

him/her, of (Full name in block letters) (Full address)

or failing him/her, the Chairman of the meeting as my/our proxy to vote for me/us on my/our behalf at the Seventh Annual General Meeting of the Company to be held at Ballroom I, Tropicana Golf & Country Resort, Jalan Kelab Tropicana, 47410 Petaling Jaya, Selangor Darul Ehsan on Wednesday, 25 June 2014 at 11.00 a.m. and at any adjournment thereof on the following resolutions referred to in the Notice of Annual General Meeting.

My/Our proxy(ies) is/are to vote as indicated hereunder:

RESOLUTIONS *FOR *AGAINST

1. To approve a final single tier dividend of 1.5 sen per share for the financial year ended 31 December 2013

2. To approve the payment of Directors’ fees of RM470,000 for the financial year ended 31 December 2013

3. To re-elect Ooi Bin Keong who retires in accordance with Article 85 of the Company’s Articles of Association

4. To re-elect Ooi Seng Khong who retires in accordance with Article 85 of the Company’s Articles of Association

5. To re-elect Ooi Kong Tiong who retires in accordance with Article 85 of the Company’s Articles of Association

6. To re-appoint Messrs Baker Tilly AC as the Company’s auditors and to authorise the Directors to fix their remuneration

7. To authorise Directors to issue shares pursuant to Section 132D of the Companies Act, 1965

8. Proposed Shareholders’ Ratification for Recurrent Related Party Transactions9. Proposed RRPT Mandate10. Proposed Amendment to the Company’s Articles of Association

* Please indicate with an “X” in the spaces provided how you wish your vote to be cast. If you do not do so, the proxy will vote or abstain from voting at his discretion.

Dated this day of 2014

Signature or Common Seal of Shareholder(s)

Notes:

(i) In respect of deposited securities, only members whose names appear in the Record of Depositors on 19 June 2014 (General Meeting Record of Depositors) shall be eligible to attend, speak and vote at this meeting.

(ii) A proxy may but need not be a member of the Company, an advocate, an approved company auditor or a person approved by the Registrar (the provisions of Section 149(1)(b) of the Companies Act, 1965 shall not apply).

(iii) To be valid, the original proxy form, duly completed must be deposited at the registered office of the Company situated at Suite 11.1A, Level 11, Menara Weld, 76 Jalan Raja Chulan, 50200 Kuala Lumpur not less than forty-eight (48) hours before the time for holding the meeting or any adjournment thereof.

(iv) A member shall be entitled to appoint not more than two (2) proxies to attend and vote at this meeting. Where a member appoints two (2) proxies, he/she shall specify the proportions of his/her shareholdings to be represented by each proxy failing which, the appointment shall be invalid.

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

(vi) If the appointor is a corporation this form must be executed under its common seal or under the hand of an officer or attorney duly authorised.

No. of Shares held

CDS Account No.

AFFIXSTAMP

1st Fold Here

Fold This Flap For Sealing

Then Fold Here

The Company Secretaries

LEON FUAT BERHAD (756407-D)

Suite 11.1A, Level 11Menara Weld76 Jalan Raja Chulan50200 Kuala LumpurMalaysia

LE

ON

FU

AT

BE

RH

AD

(Co

mp

an

y N

o. 7

56

40

7-D

)A

NN

UA

L R

EP

OR

T 2

01

3

LEON FUAT BERHAD(Company No. 756407-D)

Wisma Leon FuatNo. 11, Lorong Keluli 1BKawasan Perindustrian Bukit Raja SelatanSeksyen 740000 Shah AlamSelangor Darul EhsanTel: (603) 3375 3333Fax: (603) 3344 7777

www.leonfuat.com.my

leon fuat berhad (company no. 756407-d) ar 31... · with the accountancy qualification acca awarded...

Documents