yi-lai berhad 65, jalan suria 1, taman malim jaya, 75250 melaka darul azim, malaysia tel : 606-336...

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YI-LAI BERHAD (516043-K)

YI-LAI INDUSTRY BERHAD (165410-W)

YI-LAI MARKETING SDN. BHD. (459342-W)

HEAD OFFICE & FACTORY :LOT 7020, BATU 23, JALAN AIR HITAM, 810 0 0 KULAIJAYA,JOHOR DARUL TAKZIM, MALAYSIA.TEL : 607-652 2652 FAX : 607-652 3388, 652 4633www.alpha-ti les.com.my

MARKETING OFFICES & SHOWROOMS :CENTRAL REGION

NO. 8, JALAN 51A/241, SEKSYEN 51A,4610 0 PETALING JAYA, SELANGOR DARUL EHSAN, MALAYSIA.TEL : 603-7875 4388 FAX : 603-7874 4388, 603-7577 6561EMAIL : marketing@alpha-ti les.com.my ; [email protected]

SOUTHERN REGION

15 & 16, JALAN TROPIKA 1, TAMAN TROPIKA,810 0 0 KULAIJAYA, JOHOR DARUL TAKZIM, MALAYSIA.TEL : 607-663 7523, 663 7623 FAX: 607-663 6823EMAIL : jbmarketing@alpha-ti les.org

MARKETING OFFICES :MELAKA OFFICE:65, JALAN SURIA 1, TAMAN MALIM JAYA,75250 MELAKA DARUL AZIM, MALAYSIATEL : 606-336 7128 FAX : 606-336 9128

BUTTERWORTH OFFICE :NO. 5, PERSIARAN KERAPU, OFF JALAN PERMATANG PAUH,1340 0 BUTTERWORTH, PULAU PINANG, MALAYSIA.TEL : 604-323 3128 FAX : 604-331 1128

SINGAPORE OFFICE :

YI-LAI TRADING PTE. LTD. (198204735E)

NO. 50 LORONG 21, GEYLANG, SINGAPORE 388465TEL : 65-6842 0163 FAX : 65-6846 7937EMAIL : marketingsg@alpha-ti les.org

ANNUAL

REPORT2013

Corporate Information

Pro�le of Directors

Five Year Financial Highlights

Chairman’s Statement

Corporate Governance Statement

Other Information

Audit Committee Report

Statement on Risk Management & Internal Control

Sustainability Policy

Financial Statements

List of Landed Properties

Analysis of Shareholdings

Notice of Fourteenth Annual General Meeting

Statement Accompanying Notice of FourteenthAnnual General Meeting

Share Buy-Back Statement

Proxy Form

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3

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6

8

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CONTENTS

Annual Report 20132

Corporate Information

Board of DirectorsEncik Zabidi bin Md ZainIndependent Non-Executive Chairman

Mr Lim Oon KokManaging Director

Mr Hsieh Yu-TienExecutive Director

Ms Lim Yun-Li (Appointed on 12.9.2013)Non-Independent Non-Executive Director

Mr Ong Kheng SweeIndependent Non-Executive Director

Mr Ong Chin LinIndependent Non-Executive Director

Mr Soo Choon Siong (Appointed on 12.9.2013 and resigned on 17.3.2014)Executive Director

Audit CommitteeMr Ong Kheng Swee (Chairman)Mr Ong Chin LinEncik Zabidi bin Md Zain

Company SecretariesMs Ang Mui Kiow (LS 0001886) Mr Ng Chye Huat (CA 14186) (Appointed on 17.3.2014)Mr Soo Choon Siong (MIA 16981)(Resigned on 17.3.2014)

Registered OfficeSuite 7E, Level 7, Menara Ansar65, Jalan Trus, 80000 Johor BahruJohorTel : 607-224 1035Fax : 607-221 0891

RegistrarTricor Investor Services Sdn BhdLevel 17, The Gardens North TowerMid Valley CityLingkaran Syed Putra59200 Kuala LumpurTel : 603-2264 3883Fax : 603-2282 1886

Principal BankersUnited Overseas Bank (Malaysia) BhdMalayan Banking BerhadCIMB Bank Berhad

AuditorsKPMGChartered AccountantsLevel 14, Menara Ansar65, Jalan Trus, 80000 Johor BahruJohor

Website Addresswww.alpha-tiles.com.my

Corporate [email protected]

Date and Place of IncorporationIncorporated in Malaysia on 6 June 2000

Date of Listing3 May 2002

Stock ExchangeListingMain Market of the Bursa Malaysia Securities Berhad (“Bursa Securities”)Sector : Industrial ProductsStock Short Name : YILAIStock Code : 5048

Annual Report 2013 3

Profile of Directors

Encik Zabidi bin Md ZainIndependent Non-Executive ChairmanMalaysian, aged 58

Encik Zabidi bin Md Zain was appointed as the Non-Independent Non-Executive Director on 11 October 2001 and was appointed as the Chairman on 3 December 2001. On 19 September 2012, he was re-designated as the Independent Non-Executive Chairman. He is also the Chairman of the Remuneration Committee and Nomination Committee and a member of the Audit Committee.

Encik Zabidi holds a degree in Accountancy (Honours) from the University of Ulster, United Kingdom and is a Fellow of the Association of Chartered Certified Accountants of United Kingdom. Encik Zabidi was the Executive Director of Bantu Corporation Sdn Bhd, a property development company, from 1984 to 1988 and was the Managing Director of Smith Zain (Malaysia) Sdn Bhd, a member company of Bursa Securities from 1991 to 1997.

Encik Zabidi does not have any family relationship with any Director or substantial shareholder of the Company, nor does he have any conflict of interest with the Group. He has no directorship in other public companies and has not been convicted of any offences within the past ten (10) years.

Mr Lim Oon KokManaging DirectorSingaporean, aged 70

Mr Lim Oon Kok was appointed to the Board on 11 October 2001 and was appointed as the Managing Director on 3 December 2001.

Mr Lim is an entrepreneur and his previous business included trading in petroleum products, ceramic tiles, marble, granite and property development. Since 1992, he has ventured into manufacturing of ceramic tiles.

Mr Lim does not have any family relationship with any Director or substantial shareholder except with Ms Lim Yun-Li who is his daughter. Mr Lim also does not have any conflict of interest with the Group. He has no directorship in other public companies and has not been convicted of any offences within the past ten (10) years.

Mr Hsieh Yu-TienExecutive DirectorSingaporean, aged 57

Mr Hsieh Yu-Tien was appointed as the Executive Director on 11 October 2001.

Mr Hsieh holds a diploma in Electrical Engineering from Chung Hua Junior College of Industry, Taiwan. He began his career as an electrical technician in 1980. He was the deputy factory manager in Ta Hsin Pottery Co Ltd, Taiwan from 1982 to 1986 and subsequently he joined P.T. Cikarang Indah, Indonesia as production manager from 1986 to 1988. In 1988, he joined White Horse Ceramic Industries Co Ltd, Taiwan as deputy factory manager until 1993 when he left to join Yi-Lai Industry Berhad as Production Director.

Mr Hsieh does not have any family relationship with any Director or substantial shareholder of the Company, nor does he have any conflict of interest with the Group. He has no directorship in other public companies and has not been convicted of any offences within the past ten (10) years.

Ms Lim Yun-LiNon-Independent Non-Executive DirectorSingaporean, aged 27

Ms Lim Yun-Li was appointed to the Board on 12 September 2013.

Ms Lim holds a Bachelor of Arts and Sciences (majoring in Anatomy, Histology and Physiology), a Master of Business Law, a Master of International Business and a Master of Commerce, all from the University of Sydney, Australia.

Ms Lim does not have any family relationship with any Director or substantial shareholder except with Mr Lim Oon Kok who is her father. Ms Lim also does not have any conflict of interest with the Group. She has no directorship in other public companies and has not been convicted of any offences within the past ten (10) years.

Annual Report 20134

Mr Ong Kheng SweeIndependent Non-Executive DirectorMalaysian, aged 56

Mr Ong Kheng Swee was appointed as an Independent Non-Executive Director on 30 January 2002. He is the Chairman of the Audit Committee, a member of the Remuneration Committee and Nomination Committee.

Mr Ong is a Fellow of the Association of Chartered Certified Accountants of United Kingdom, a member of the Malaysian Institute of Accountants and a Fellow of the Chartered Tax Institute of Malaysia. He held various senior positions in both the professional sector (having worked with two major international accounting firms) and in the commercial sector as financial controller, group finance director and management consultant in various industries including petrochemicals, ceramic tiles, automotive components, minerals and glass. He is currently the Executive Director/Chief Financial Officer of Solid Automotive Berhad and an independent non-executive director of Power Root Berhad, both of which are listed on the Main Market of Bursa Securities.

Mr Ong does not have any family relationship with any Director or substantial shareholder of the Company, nor does he have any conflict of interest with the Group. He has not been convicted of any offences within the past ten (10) years.

Mr Ong Chin LinIndependent Non-Executive DirectorMalaysian, aged 66

Mr Ong Chin Lin was appointed as the Independent Non-Executive Director on 26 September 2002. He is a member of the Audit Committee, Remuneration Committee and Nomination Committee.

Mr Ong holds a Bachelor of Commerce (majoring in Accountancy) from the Nanyang University, Singapore and is a Fellow member of the Institute of Chartered Accountants in England and Wales. He is also a member of the Malaysian Institute of Accountants. He has vast working experiences as internal auditor, financial controller and financial consultant in a variety of industries including oil and gas, manufacturing and business consultancy. He is presently the independent non-executive director of Linair Technologies Limited and Old Chang Kee Ltd, both are listed on the Catalist of Singapore Exchange Limited.

Mr Ong does not have any family relationship with any Director or substantial shareholder of the Company, nor does he have any conflict of interest with the Group. He has not been convicted of any offences within the past ten (10) years.

Profile of Directorscont’d


Five Year Financial Highlights

2009 2010 2011 2012 2013

OPERATING RESULTS (RM’000)

Revenue 111,050 131,845 132,742 131,363 158,118

Interest income 818 911 1,158 615 510

Taxation (3,626) (4,428) (2,716) (3,623) (4,127)

Depreciation (8,391) (8,548) (8,239) (8,001) (8,006)

EBITDA * 23,008 27,385 20,395 21,682 24,266

Profit before tax 15,435 19,748 13,314 14,296 16,770

Profit after tax 11,809 15,320 10,598 10,673 12,643

Net profit attributable to equity holders 11,809 15,320 10,598 10,673 12,643

* EBITDA- Earnings Before Interest, Taxes, Depreciation and Amortisation

2009 2010 2011 2012 2013

KEY BALANCE SHEET HIGHLIGHTS (RM’000)

Total Assets 223,914 224,282 222,816 223,032 225,186

Total Borrowings - - - - -

Shareholders’ Equity 196,961 197,983 196,560 196,658 196,583

2009 2010 2011 2012 2013

KEY FINANCIAL INDICATORS

Return on Equity 6.0% 7.7% 5.4% 5.4% 6.4%

Return on Total Assets 5.3% 6.8% 4.8% 4.8% 5.6%

Gearing Ratio - - - - -

Net Asset per Share (RM) 1.25 1.26 1.25 1.26 1.27

Earnings per Share (sen) 7.50 9.74 6.76 6.85 8.15

Net Dividend per Share (sen) 6.00 7.00 7.00 7.00 8.00

Net Dividend Yield 8.6% 8.6% 8.3% 8.2% 8.2%

Price Earning (PE) Ratio 9.3 8.3 12.4 12.4 11.9

Share Price as at the Financial Year End (RM) 0.70 0.81 0.84 0.85 0.97

On behalf of Yi-Lai Berhad’s Board of Directors, I am pleased to present the Annual Report and Financial Statements of the Group and the Company for the financial year ended 31 December 2013.

CHAIRMAN’SSTATEMENT

Annual Report 20136


On behalf of Yi-Lai Berhad’s Board of Directors, I am pleased to present the Annual Report and Financial Statements of the Group and the Company for the financial year ended 31 December 2013.

CHAIRMAN’SSTATEMENT

Chairman’s Statementcont’d

Financial Highlights

For the current financial year ended 31 December 2013, the Group registered a record turnover of RM158.1 million. This represents a 20.3% rise in revenues over the previous financial year and is also the best ever turnover achieved in the Group’s history as a result of the robust property development activities in Malaysia, in particular the Iskandar Region in Johor.

The Group’s net profit after tax of RM12.6 million for the year ended 31 December 2013 was also an improvement of 17.8% from RM10.7 million recorded in the previous financial year.

The Current Year Under Review

In the current year under review, the United States statistical data of economic indicators has shown convincing signs of economic recovery. This led to the tapering of the Quantitative Easing (“QE”) since the end of 2013. The effect of this QE tapering to the financial and property markets in the United States and worldwide remain to be seen.

With the expectation that the US would be moving towards an exit from the QE, Asian countries such as China, Hong Kong and Singapore that introduced “cooling” economic measures had some measurable success in curbing escalating property prices. Similarly, Malaysia had also introduced a series of economic and fiscal measures to dampen the speculative elements of the property market which took effect in January 2014.

Another noteworthy development in the Malaysian economy is the “rationalisation” of government subsidies in essential items such as sugar, fuel and electricity. These measures will reduce national budget deficit but are also causing inflation to inch up.

As for the Malaysian ceramic tile industry, despite the commencement of minimum wage legislation in the early 2013 and increase in operating costs such as natural gas and electricity, the industry was buoyed by higher demand generated by the various Economic Zones especially the Iskandar Region in Johor. Our Group is strategically located at the heart of the Iskandar Region and managed to tap on the demand generated.

The Prospect for 2014

The Malaysian business operating environment is becoming increasingly challenging with additional pressure from the “economic rationalisation”. The ceramic tile industry would not be spared from this phenomenon, and this is adding to the already competitive landscape with intense competition amongst the local tile manufacturers and from imported tiles.

We are gearing up ourselves to meet the challenges of this changing operating environment. We have added new lines of the state-of-the-art tile manufacturing which are capable of producing high resolution tile prints that are highly sought after by the increasingly discerning and sophisticated consumers.

Further, we have strengthened our research and development team and will be launching new value-added concepts in the coming year. Our continued and sustained focus on improving operating efficiencies has stood us well and we will continue to enhance our operating efficiencies.

In addition to the production innovations, our sales and marketing team will continue to enhance its dedicated service and partnership with prominent property developers as well as reaching to the mass consumers via our distributors. We achieved our highest ever recorded revenue in the current financial year and we aim to maintain the momentum in the following years. We will continue to expand our business This is visible as the development activities in Iskandar Region in particular, as well as other Economic Regions in Malaysia. The Group will also continue with the market development plans for the overseas markets despite the global economic uncertainties.

Dividends

Since the end of the previous financial year, the Company paid:

i) a final single tier dividend of 4.0 sen per ordinary share totalling RM6,197,600 in respect of the year ended 31 December 2012 on 8 July 2013; and

ii) an interim single tier dividend of 4.0 sen per ordinary share totalling RM6,197,600 in respect of the year ended 31 December 2013 on 8 November 2013.

Subsequent to the financial year end, the Directors:

i) approved the distribution of a special share dividend on the basis of three (3) treasury shares for every one hundred (100) existing ordinary shares held by shareholders; and

ii) proposed a final single tier dividend of 3.0 sen per ordinary share totalling RM4,648,200 for the financial year ended 31 December 2013 subject to the approval of the shareholders at the forthcoming Annual General Meeting.

The financial statements do not reflect these special share and proposed final dividends, which will be accounted for in the statement of changes in equity as an appropriation of retained earnings in the year ending 31 December 2014.

Corporate Social Responsibility (“CSR”)

The Group is always mindful of our CSR towards our community, our environment, and our workplace. During the financial year, we have continued our High Achievement Award to reward the children of our employees who have achieved excellent academic results in the national examinations including UPSR, PMR, SPM and STPM. We have also made financial contributions to various charitable organisations including schools and orphanages.

Acknowledgement and Appreciations

On behalf of the Board, I would like to extend our greatest appreciation to our shareholders, valued customers, business associates for their continued support and confidence in the Group. I wish also to thank all our employees for their dedication, commitment and contribution to the success of the Group.

Zabidi bin Md ZainChairman

Annual Report 20138

Corporate Governance Statement

The Board is fully aware of the significance of sound corporate governance in preserving and enhancing shareholders’ value. Therefore, the Board is committed to ensure high standards of corporate governance are practiced and inculcated into our organisational culture.

This statement explains how the Company has applied the Corporate Governance Principles and the extent of compliance with the Recommendations as set out in the Malaysian Code of Corporate Governance 2012 (the “Code”) pursuant to Paragraph 15.25 of the Listing Requirements of the Bursa Securities throughout the financial year unless otherwise stated.

PRINCIPLES STATEMENT

The following statements set out how the Company has applied the Principles in the Code.

Principle 1: Establish Clear Roles and Responsibilities

The Board has established clear functions reserved for the Board and those delegated to the management. The respective roles and responsibilities of the Board and management are clearly set out to ensure accountability of both parties.

In discharging its fiduciary and leadership functions, the Board has established and assumed the following roles and responsibilities:-

• ReviewingandadoptingastrategicplanfortheGroup;• OverseeingtheconductoftheGroup’sbusiness;• Identifyingprincipalrisksandensuringtheimplementationofappropriateinternalcontrolsandmitigatingmeasures;• Successionplanning;• Overseeingthedevelopmentandimplementationofshareholdercommunicationspolicy;• ReviewingtheadequacyandtheintegrityofthemanagementinformationandinternalcontrolssystemoftheGroup.

The Board has also formalised ethical standards through a code of conduct and ensured its compliance. The code of conduct is published on the Group’s corporate website. All employees play an important role in establishing, maintaining and enhancing the reputation, image and brand of the Group.

The Sustainability Policy furnished on page 21 outlines the Group’s strategies to promote sustainable business. This Policy is also published on the Group’s corporate website.

The Directors have full access to all information and records of the Group. Each Board member receives the monthly financial reports on performance and operating results of the Group. There are agreed procedures for Directors, whether as a full board or in their individual capacities, in furtherance of their duties, to take independent professional advice at the Company’s expense, if necessary.

In addition, all Directors have access to the advice and services of a suitably qualified and competent company secretaries.

The Board has developed its Board Charter to lay out the Board’s strategic intent and outlines the Board’s roles and responsibilities. The Board Charter is published on the Group’s corporate website and periodically reviewed.

Principle 2: Strengthen Composition

The Company’s Articles of Association provide that at least one-third of the Board is subject to retirement by rotation at each Annual General Meeting. The Directors to retire at each year are the Directors who have been longest in office since their last re-election. The Articles of Association also provide that a director who is appointed by the Board during the year shall be subject to re-election at the next Annual General Meeting to be held following his appointment.

The Nomination Committee is empowered by the Board and its terms of reference to bring to the Board recommendations as to the appointment of new Directors. The Committee comprises exclusively independent non-executive directors.

The Committee is charged with the responsibility to oversee the selection and assessment of directors. The Committee reviews the effectiveness of the Board, its Committees and the contributions of each individual Director, including independent non-executive directors, on an annual basis. The Committee also keeps under review the Board structure, size, composition, and mix of skills, business acumen and competencies required for the Board to effectively discharge its duties. For the financial year ended 31 December 2013, two nominations for new appointments to the Board were made.


Corporate Governance Statementcont’d

PRINCIPLES STATEMENT cont’d

Principle 2: Strengthen Composition cont’d

The memberships of the Nomination Committee during the year are as follows:-

Chairman : Encik Zabidi bin Md Zain Independent Non-Executive Director Members : Mr Ong Kheng Swee Independent Non-Executive Director

Mr Ong Chin Lin Independent Non-Executive Director

The Board through the Nomination Committee ensures that only individuals with the proper knowledge, experience, caliber, professionalism and integrity to fulfill the duties of a Director are recruited to the Board.

The Board recognises the need to structure the remuneration packages for Directors so as to be able to attract, retain and motivate Directors of the right caliber required to manage the Company and Group and to align the interests of the Directors with those of the shareholders.

The Remuneration Committee is responsible for recommending to the Board the remuneration framework and remuneration packages of the executive directors in all its forms. The Committee comprises exclusively independent non-executive directors.

None of the executive Directors participated in any way in determining their individual remuneration. The Board as a whole determines the remuneration for Non-Executive Directors with individual Directors abstaining from decisions pertaining to their own remuneration.

The memberships of the Remuneration Committee during the year are as follows:-

Chairman : Encik Zabidi bin Md Zain Independent Non-Executive Director

Members : Mr Ong Kheng Swee Independent Non-Executive Director

Mr Ong Chin Lin Independent Non-Executive Director

The Company Directors’ aggregate remuneration from the Group categorised into appropriate components for the financial year are as follows:-

Executive Directors #

Non-Executive Directors

RM’000 RM’000

Fees 283 318

Other Emoluments 1,973 -

Benefit in kind 6 -

Total 2,262 318

# Ms Lim Yun-Li, Non-Independent Non-Executive Director and Mr Soo Choon Siong, Executive Director were appointed to the Board of Directors on 12 September 2013. Hence their remuneration were taken up only for the period after 12 September 2013.

Annual Report 201310


Principle 2: Strengthen Composition cont’d

The number of Directors of the Company who served during the financial year and whose aggregate remuneration from the Group falling within the respective band are as follows:-

Number of Directors

Executive Directors

Non-Executive Directors

RM50,001 – RM100,000 - 3

RM100,001 – RM150,000 - 1

RM150,001 – RM200,000 1 -

RM500,001 – RM550,000 1 -

RM1,550,001 – RM1,600,000 1 -

3 4

The Nomination and the Remuneration Committee met twice during the financial year. The Executive Directors as well as the Head of Human Resources attended the meeting upon the invitation of the Chairman of the Committee.

Principle 3: Reinforce Independence

The Chairman of the Board is an Independent Director. There is a clear division of responsibilities between the Chairman and Managing Director to ensure a balance of power and authority. The responsibilities of the Chairman include leading the Board in the oversight of the Group. The Managing Director focuses on the business and day to day management and operations of the Group. This division is clearly defined in the Board Charter which is published on the Group’s corporate website.

The Independent Directors play a pivotal role in providing objective and independent judgment to the decision making of the Board. As part of the annual assessment of each Director, the Nomination Committee also undertakes an assessment of its Independent Directors annually. The assessment focuses beyond the Independent Directors’ background, economic and family relationships and considers whether the independent directors can continue to bring independent and objective judgment to board deliberations.

As stated in the Malaysian Code of Corporate Governance 2012, the tenure of an Independent Director should not exceed a cumulative term of nine years. The Group has not complied with this recommendation as two of the Independent Directors namely, Mr Ong Kheng Swee and Mr Ong Chin Lin have served on the Board as Independent Directors for more than nine years. However, the Board strongly feels that their independence is not in jeopardy or impaired by virtue of long tenures. The Nomination Committee has established a set of stringent criteria to assess the independence status of each Independent Director. The criteria include the following aspects:-

i. Consulting or similar arrangements. The Board views Independent Directors who have any current or recent consulting arrangements with the Group as disqualifying independence, regardless of the magnitude of the fees.

ii. Financial links to executive officers of the Group. The Board views Independent Directors who have any financial links with the executive officers of the Group as non-independent.

iii. Related party transactions. The Board views related party transactions with an Independent Director, his company or affiliated entity have negative implications for independence. The transactions cover procurement, sales, legal, investment, lending, financial or professional service arrangements.

iv. Family relationship. The Board views that Independent Directors with family relationship with any executives or substantial shareholders as impairing independence.

v. Board interlocks. Board interlocks refer to situation where two senior executives from different companies sit on each other’s board. The Board views this arrangement negatively and impairing independence.

vi. Donations to charities affiliated to Independent Directors. If the Independent Directors hold executive role in those charities, the Board views such donations as impairing their independence.

vii. Cross-shareholdings. The Independent Directors are not deemed to be independent by the Board if they sit on the board of another company that have material cross-shareholdings (more than 5%) with the Group.




Principle 3: Reinforce Independence cont’d

The Board of Directors and the Nomination Committee (with Mr Ong Kheng Swee and Mr Ong Chin Lin being members and removing themselves from the deliberations and decisions) have reviewed and evaluated the independence status of both Mr Ong Kheng Swee and Mr Ong Chin Lin and are of the view that both of the Independent Directors do not have any of the above situations that will jeopardize or impair their independence. Due to their varied experience in various industries and their expertise in their respective fields, coupled with their independent and objective mindset, their commitment and active contributions to the Board deliberations, their continuing tenure will be an invaluable contribution to the Board. Therefore, the Board will recommend and seek shareholders’ approval to retain them as Independent Directors at the forthcoming Annual General Meeting.

Principle 4: Foster Commitment

The Directors have devoted sufficient time to carry out their responsibilities.

Board agendas and papers are circulated to all directors at least seven (7) working days in advance of Board meeting. This is to ensure that Directors have sufficient time to consider and deliberate on the matters to be discussed at Board meetings.

There were four (4) board meetings during the financial year ended 31 December 2013 and the Directors’ attendance are as follows:-

Name Attendance

En Zabidi bin Md Zain 4 of 4 meetings

Mr Lim Oon Kok 4 of 4 meetings

Mr Hsieh Yu-Tien 4 of 4 meetings

Mr Soo Choon Siong (appointed on 12 September 2013)* 2 of 2 meetings

Ms Lim Yun-Li (appointed on 12 September 2013) 2 of 2 meetings

Mr Ong Kheng Swee 4 of 4 meetings

Mr Ong Chin Lin 4 of 4 meetings

Note *Mr Soo Choon Siong has resigned from the Board on 17 March 2014.

All Directors have complied with the minimum attendance at Board meetings as stipulated by the Bursa Securities Listing Requirements.

The Company conducts a briefing on the ceramic tile industry, organisation structure and business of the Group for new directors, including a tour of the factory’s operation and meetings with senior management staff. All Directors have completed the Mandatory Accreditation Program conducted by Bursa Malaysia Training Sdn Bhd.

In order to keep abreast of the latest development of the various issues in the continuously changing environment in which the Group operates, the Board has prescribed minimum Continuing Education Programs (“CEP”) points per annum to be attained by each Director. For the year ended 31 December 2013, the Board is pleased to inform that all directors have achieved the prescribed CEP points and the programs attended by the Directors were as follows:-

• E-CrimeConference• 2013ChinaInternationalExhibitionforCeramicsTechnology,EquipmentandProduct• VisitstovariousceramicmachineryandrawmaterialsuppliersinChina• MalaysianFinancialReportingStandards/FinancialReportingStandardsUpdate2013/2014• 2014BudgetandTaxPlanning• BuildingCEO• RiskManagementandInternalControlWorkshopsforAuditCommitteeMembers




Principle 5: Uphold Integrity In Financial Reporting

The Board aims to provide an understandable, true and fair assessment of the Group’s financial performance and a balanced assessment of the Group’s prospects principally through the quarterly financial reports to the Bursa Securities and the annual report to shareholders.

The Audit Committee reviews and monitors the suitability and independence of external auditors. The independence of external auditors can be impaired by the provision of non-audit services to the Group. Therefore, the Audit Committee has established policies governing the circumstances under which contracts for the provision of non-audit services can be entered into and procedures that must be followed by the external auditors.

The Audit Committee has obtained written assurance from the external auditors confirming that they are, and have been, independent throughout the conduct of the audit engagement in accordance with the terms of all relevant professional and regulatory requirements.

Directors’ Responsibility Statement in respect of the Audited Financial Statements:

The Companies Act 1965 requires the Directors to prepare financial statements which give a true and fair view of the state of affairs of the Group and the Company as at the end of the accounting period and of the results of the operations and cash flows for the period then ended. In preparing the financial statements, the Directors have ensured that the Group has selected and applied consistently suitable accounting policies and made reasonable and prudent judgments and estimates. Applicable approved accounting standards have been followed, subject to any material departures, disclosed and explained in the financial statements.

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

The Directors have also a general responsibility for taking reasonable steps to safeguard the assets of the Group and for the prevention and detection of fraud and other irregularities.

Principle 6: Recognise And Manage Risks

The Directors are fully aware of their responsibilities to maintain a sound system of internal control and risk management framework to safeguard shareholders’ investment and the Group’s assets.

The Statement on Risk Management and Internal Control furnished on pages 19 and 20 of this Annual Report provides an overview on the state of internal controls within the Group.

Principle 7: Ensure Timely And High Quality Disclosure

The Board has ensured that the Group complied with all the relevant disclosure requirements required by Bursa Malaysia Listing Requirements. The Board has also specifically dedicated an “Investor Relations” section on the corporate website to provide information such as announcements, financial results, Board Charter, Code of Conduct and Sustainability Policy.

Principle 8: Strengthen Relationship Between Company And Shareholders

The Board recognises the importance of maintaining active communication with its shareholders and timely dissemination of information concerning the Group’s business performance.

The key mean for communications with shareholders is the Annual General Meeting (“AGM”) where the Chairman will present his report on the performance of the Group and sufficient time will be allocated to obtain feedback from the shareholders or for shareholders to raise questions or concerns. Members of the Board, Senior Management and the auditors of the Company are present at the AGM to respond to any queries from the stockholders.

The Board may consider adopting poll voting at future general meetings.



Other Information

1. MATERIAL CONTRACTS

There were no material contracts involving the Company and its subsidiaries with directors and substantial shareholders since the end of the previous financial year.

2. SANCTIONS AND/OR PENALTIES

There was no sanction and/or penalty imposed on the Group, Directors or management by the relevant regulatory bodies during the financial year.

3. SHARE BUY-BACK

Details of share repurchased during the financial year ended 31 December 2013 are as follows:

MonthNo. of Shares Repurchased Purchase Price (RM)

Average Price paid

Total consideration

paid

Lowest Highest (RM) (RM)

Balance b/f 4,281,000 3,113,599

Jan 2013 - - - - -

Feb 2013 10,000 0.840 0.840 0.840 8,449

Mar 2013 669,000 0.835 0.835 0.835 560,719

Apr 2013 - - - - -

May 2013 100,000 0.928 0.928 0.928 93,339

Jun to Dec 2013 - - - - -

Balance c/f 5,060,000 - - - 3,776,106 The shares repurchased during the financial year are retained as treasury shares. There was no resale of treasury shares or

cancellation of shares during the financial year ended 31 December 2013.

On a cumulative basis, the Company has purchased 5,060,000 ordinary shares at a total cost of RM3,776,106. The average cost per share is RM0.75. All the shares repurchased are retained as treasury shares.


Audit Committee Report

A. ESTABLISHMENT AND COMPOSITION

The membership of the Audit Committee during the year is as follows:-

Chairman : Mr Ong Kheng Swee Independent Non-Executive Director

Members : Mr Ong Chin Lin Independent Non-Executive Director

Encik Zabidi bin Md Zain Independent Non-Executive Chairman

B. TERMS OF REFERENCE

The terms of reference of the Committee is summarised on pages 15 to 18 of this Annual Report.

C. MEETINGS

During the financial year, the Audit Committee held four (4) meetings. Details of each member’s meeting attendances are as follows:-

Name Attendance

Mr Ong Kheng Swee 4 of 4 meetings

Mr Ong Chin Lin 4 of 4 meetings

Encik Zabidi bin Md Zain 4 of 4 meetings

The meetings were appropriately structured through the use of agendas, which were distributed to the members with sufficient notification.

The executive directors and company secretaries together with representatives of the external auditors, Messrs KPMG were present by invitation at all the meetings.

D. SUMMARY OF ACTIvITIES DURING THE FINANCIAL YEAR

The Committee carried out its duties in accordance with its terms of reference during the year.

The main activities undertaken by the Audit Committee during the financial year included the following:-

1) Reviewed and recommended for Board approval the quarterly unaudited financial statements for announcement to the Bursa Securities;

2) In respect of the quarterly condensed financial statements as well as the semi-annual returns, reviewed the Company’s compliance with the Listing Requirements of the Bursa Securities, Malaysian Accounting Standards Board (“MASB”) and other legal and regulatory requirements;

3) Reviewed and recommended for Board approval the annual business budget;

4) Reviewed the audit report and observations made by the external auditors on the audited financial statements that require appropriate management action and the management’s response thereon and reported the same to the Board;

5) Considered and recommended to the Board for approval of the audit fees payable to the external auditors as disclosed in Note 12 to the financial statements;

6) Reviewed the external auditors’ scope of work and audit plan for the financial year 2013;


Audit Committee Reportcont’d

D. SUMMARY OF ACTIvITIES DURING THE FINANCIAL YEAR cont’d

The main activities undertaken by the Audit Committee during the financial year included the following:- cont’d

7) Reviewed the independence and objectivity of the external auditors and the services provided, including non-audit services. During the financial year ended 31 December 2013, the non-audit fees paid to the external auditors of the Group and of the Company amounted to RM121,200 and RM34,000 respectively mainly for the provision of quarterly review of the condensed financial statements;

8) Reviewed the report from the Risk Management Committee and management action plans for improvement opportunities in risk management, internal controls and governance processes;

9) Reviewed related party transactions entered into by the Group and ensured all transactions are at arms length’s basis;

10) Reviewed the annual report (which included the Corporate Governance Statement, Audit Committee Report and Statement on Risk Management and Internal Control) and audited financial statements of the Group and recommended to the Board for approval;

11) Reviewed the internal audit reports, which highlighted audit issues, recommendations and management response and action plans. Discussed with management actions taken to improve the system of internal controls based on the improvement opportunities identified in the internal audit reports;

12) Reviewed the internal audit department’s resources requirements, audit program and plan for the year under review; and

13) Held one meeting with the External Auditors without the presence of any management or executive directors to discuss any significant matters which the External Auditors may wish to raise.

E. INTERNAL AUDIT FUNCTION

The internal audit function is performed in-house and reports to the Audit Committee and is independent of the activities of the Group. The principal role of the internal audit department is to undertake independent, regular and systematic reviews of the risk management, internal controls and corporate governance system so as to provide reasonable assurance that such systems are operating and continue to operate satisfactorily and effectively.

The internal audit function provides the Audit Committee with independent and objective reports on the state of risk management control systems and governance of the Group and the extent of compliance with the Group’s policies and procedures as well as relevant statutory requirements and regulations.

The internal audit department submits regular reports on their activities, findings, recommendations for improvement opportunities, management responses and action plans at the Audit Committee meetings.

The costs incurred for the internal audit function in respect of the financial year ended 31 December 2013 amounted to RM79,000. Further details of the activities of the internal audit function are set out in the Statement on Risk Management and Internal Control on pages 19 to 20.

F. SUMMARY OF THE TERMS OF REFERENCE

Objectives

The primary function of the Audit Committee is to assist the Board of Directors in fulfilling the following oversight objectives on the Group activities:-

• AssesstheGroup’sprocessesrelatingtoitsrisksandcontrolenvironment;• Overseefinancialreporting;and• Evaluatetheinternalandexternalauditprocesses.



F. SUMMARY OF THE TERMS OF REFERENCE cont’d

Composition

The Board shall elect and appoint Committee members from amongst their members, comprising no fewer than three (3) Directors. All the Audit Committee members must be Non-Executive Directors, with a majority of them being Independent Non-Executive Directors. No alternate Director of the Board shall be appointed as a member of the Committee.

All members of the Committee should be financially literate and at least one (1) member of the Committee shall be:-

• AmemberoftheMalaysianInstituteofAccountants(“MIA”);or• IfheorsheisnotamemberofMIA,hemusthaveatleastthree(3)yearsofworkingexperienceand:-

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

- he or she must be a member of the associations of accountants specified in Part II of the Accountants Act 1967; or

• FulfilssuchotherrequirementsasprescribedorapprovedbytheBursaSecurities.

If a member of the Committee resigns or for any reason ceases to be a member with the result that the number of members is reduced below three (3), the Board shall within three (3) months of the event appoint such number of new members as may be required to fill the vacancy.

The Chairman of the Committee shall be an Independent Non-Executive Director.

The Board shall review the terms of office of each of its members at least once (1) every three (3) years.

Quorum and Committee’s Procedures

Meetings shall be conducted at least four (4) times annually, or more frequently as circumstances dictate.

In order to form a quorum for the meeting, the majority of the members present must be Independent Non-Executive Directors. In the absence of the Chairman, the members present shall elect a Chairman for the meeting from amongst the members present.

The Company Secretary or any other suitable person shall be appointed Secretary of the Committee (“the Secretary”). The Secretary, in conjunction with the Chairman, shall draw up an agenda, which shall be circulated together with the relevant support papers, at least one (1) week prior to each meeting to the members of the Committee. The minutes shall be circulated to members of the Board.

The Committee may, as and when deemed necessary, invite other Board members and senior management members to attend the meetings.

The Chairman shall submit an annual report to the Board summarising the Committee’s activities during the year and the related significant results and findings.

The Committee shall regulate the manner of proceedings of its meetings, having regard to normal conventions on such matter.

Authority

The Committee is authorised to seek any information it requires from employees, who are required to cooperate with any request made by the Committee.

The Committee shall have full and unlimited access to any information pertaining to the Group.




Authority cont’d

The Committee shall have direct communication channels with the internal and external auditors and with senior management of the Group and shall be able to convene meetings with the external auditors, the internal auditors or both, excluding the attendance of other directors and other employees of the Company, whenever deemed necessary. The Chairman of the Committee should engage on a continuous basis with senior management, the head of internal audit and the external auditors in order to be kept informed of matters affecting the Group.

The Committee shall have the resources that are required to perform its duties. The Committee can obtain, at the expense of the Company, outside legal or other independent professional advice it considers necessary.

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

Responsibilities and Duties

In fulfilling its primary objectives, the Committee shall undertake the following responsibilities and duties:

1) Review the appointment of external auditors, the audit fee and any question of resignation or dismissal before making recommendations to the Board;

2) Review the independence and objectivity of the external auditors and the services provided, including non-audit services and the professional fees, so as to ensure a proper balance between objectivity and value for money;

3) Review with the external auditor before the commencement of each audit, the audit scope and plan, including any changes to the planned scope of the audit plan;

4) Review major audit findings and the management’s response during the year with management, external auditors and internal auditors, including the status of previous audit recommendations;

5) To discuss any problems and reservations arising from the interim and final audits and any matters the auditor may wish to discuss (in the absence of management where necessary);

6) With respect to the Internal Audit function:-

6.1) Review the adequacy of the scope and plan, functions, competency and resources of the internal audit functions and that it has the necessary authority to carry out its work.

6.2) Review the internal audit program and the results of the internal audit process and where necessary action is taken on the recommendations of the internal audit function.

6.3) Review any appraisal or assessment of the performance of members of the internal audit function.

6.4) Approve any appointment or termination of senior staff members of the internal audit function.

6.5) Inform itself of resignations of internal audit staff members and provide the resigning staff an opportunity to submit his reasons for resigning.

7) Review the adequacy and integrity of internal control systems, including enterprise risk management, management information system, and the internal auditors’ and/or external auditors’ evaluation of the said systems;




Responsibilities and Duties cont’d

In fulfilling its primary objectives, the Committee shall undertake the following responsibilities and duties: cont’d

8) Review the quarterly results and the year end financial statements, prior to the approval by the Board focusing particularly on:-

- changes in or implementation of major accounting policy changes;- significant or unusual events;- compliance with accounting standards and other legal requirements; and- going concern assumptions

9) Review procedures in place to ensure that the Group is in compliance with the Companies Act 1965, Bursa Securities Listing Requirements and other legislative and reporting requirements;

10) Review any related party transaction and conflict of interest situation that may arise within the Company or the Group, including any transaction, procedure or course of conduct that raises question on management integrity;

11) Direct and where appropriate supervise any special projects or investigation considered necessary, and review investigation reports on any major defalcations, frauds and thefts;

12) Prepare reports as the circumstances dictate or at least once (1) a year, to the Board summarising the work performed in fulfilling the Committee’s primary responsibilities; and

13) Any other activities, as authorised by the Board.


Statement on Risk Management and Internal Control

INTRODUCTION

The Board is committed to maintaining a sound system of internal control in the Group and is pleased to provide the following statement which outlines the main features and scope of the risk management and internal control system of the Group during the year.

BOARD OF DIRECTORS’ RESPONSIBILITIES

The Board is responsible for the Group’s system of internal control and risk management, including the establishment of an appropriate control environment and framework as well as reviewing its adequacy and effectiveness. Because of the inherent limitations in any system of internal controls, such a system is designed to manage rather than eliminate the risk of failure to achieve business and corporate objectives, and can only provide reasonable but not absolute assurance against material misstatement or loss. The system of internal controls covers, interalia, risk management and financial, organisational, operational and compliance controls.

The Board has established an ongoing process for identifying, evaluating and managing the significant risks faced by the Group in its achievement of objectives and strategies. This process has been in place for the year under review and up to the date of approval of this statement for inclusion in the annual report. The review on the adequacy and effectiveness of the risk management and internal control system has been undertaken by the Board.

ENTERPRISE RISK MANAGEMENT FRAMEwORK

The Board, through the Audit Committee, continually reviews the risk management and internal control system and ensures that necessary actions have been taken to remedy any significant failings or weaknesses identified from that review.

The risk assessment process involves identification of risks, prioritisation and formulation of action plans to mitigate these risks and enhance the control systems, which operates independently of the activities in the Group.

The Risk Management Policies manual outlines the risk management framework for the Group and provides practical guidance to all employees on risk management issues.

As part of the risk management framework, the Risk Management Committee is tasked to identify, assess and monitor the on-going risk faced by the Group.

The on-going risk management processes are coordinated by the internal audit department in conjunction with the key management staff in each operating unit to prepare action plans, with implementation time-scales to continually identify and address any risks and control issues that may arise.

To further enhance the risk management process, on-going training for selected management and staff is carried out to instill a culture of risk awareness within the Group.

INTERNAL AUDIT

The internal audit function adopts a risk-based approach based on the risk profiles of the Group’s key activities with emphasis on significant risk areas. Internal audit independently reviews the risk identification procedures and control processes implemented by management based on the annual internal audit plan approved by the Audit Committee and reports to the Audit Committee on a quarterly basis.

The Audit Committee reviews the findings, recommendations and management response and action plans before reporting and making recommendations to the Board in enhancing the risk management, internal controls and governance systems. The Audit Committee presents its findings to the Board at the scheduled quarterly meetings or earlier as appropriate.


Statement on Risk Management and Internal Controlcont’d

OTHER KEY COMPONENTS OF INTERNAL CONTROL SYSTEM

Apart from risk management and the internal audit, the other key components of the Group’s internal control system are:-

(1) Organisational Structure

The Board has put in place an organisational structure with formally defined lines of responsibility and delegation of authority.

(2) Reporting and Review

Monthly management accounts and reports are submitted to the Board members which include among others financial and non-financial key performance indicators, the monitoring of results against budget, with major variances being explained and management action taken, where necessary.

(3) Operational Policies and Procedures

Documented operating procedures and policies manuals form an integral part of the internal control system to safeguard the Group’s assets and ensure accurate, timely and complete information for decision making.

The Board has reviewed the adequacy and effectiveness of the risk management and internal control system through the above processes and is not aware of any significant weaknesses or deficiencies in the Group’s risk management and internal control system for the year under review and to the date of this report. The Board has also received assurance from the Managing Director and Finance Manager that the Group’s risk management and internal control system is operating adequately and effectively, in all material aspects.


Sustainability Policy

OBjECTIvE

We aim to develop the Group as a long term, sustainable business that delivers value for all our stakeholders i.e. our shareholders, business partners, customers, suppliers, employees and the wider community. We believe that by managing our business responsibly, we will create a financially stable organisation and deliver value for our shareholders.

SCOPE & GOvERNANCE

This policy applies to all the Directors, key management and employees and relevant stakeholders of the Group. We ensure this policy is embedded into our business. This policy will be continuously monitored and reviewed and is shared with stakeholders through our corporate website and other channels as appropriate.

AREAS OF FOCUS

(I) Our Customers

We believe in delivering excellent products and services for our customers to meet their needs. We ensure that we meet their expectations responsibly while adhering to applicable quality requirements. We have robust policies and procedures in place to ensure we meet these requirements.

(II) Our employees

We value our employees and will use our best endeavours to ensure a safe workplace and maintain proper occupational health and safety practices commensurate with the Group’s business activities. Every employee is treated fairly and with respect and we do not accept any form of discrimination.

(III) Our supply chain

We aim to develop mutually beneficial relationships with our suppliers and we are committed to working with suppliers who meet our business and sustainability standards.

(Iv) Our environment

We are committed to identifying, managing and minimising the environmental impact of our business activities. We work closely with our environmental management consultants to help us manage our impacts and ensure that we comply with all relevant environmental legislations.

(v) Our community

We aim to engage with the local communities in which we conduct our business by providing financial and non-financial assistance to those groups whose needs are in alignment with our CSR objectives.


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Directors’ Report

Statement by Directors

Statutory Declaration

Independent Auditors’ Report

Statements of Financial Position

Statements of Pro�t or Loss

Statements of Pro�t or Loss and other Comprehensive Income

Consolidated Statement of Changes in Equity

Statement of Changes in Equity

Statements of Cash Flows

Notes to the Financial Statements

24

27

27

28

30

31

32

33

34

35

37

FINANCIALSTATEMENTS


Directors’ Reportfor the Year Ended 31 December 2013

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

PrinciPal activities

The Company is an investment holding company. The principal activities of its subsidiaries are disclosed in Note 4 to the financial statements. There has been no significant change in the nature of these activities during the financial year.

results

Group company

rM rM

Profit for the year 12,642,811 11,522,711

reserves and Provisions

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

dividends

Since the end of the previous financial year, the Company paid:

i) a final single tier dividend of 4.0 sen per ordinary share totalling RM6,197,600 in respect of the year ended 31 December 2012 on 8 July 2013; and

ii) an interim single tier dividend of 4.0 sen per ordinary share totalling RM6,197,600 in respect of the year ended 31 December 2013 on 8 November 2013.

Subsequent to the financial year end, the Directors:



The financial statements do not reflect these special share and proposed final dividends, which will be accounted for in the statement of changes in equity as an appropriation of retained earnings in the year ending 31 December 2014.

directors of the coMPany

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

En. Zabidi bin Md ZainMr. Lim Oon KokMr. Hsieh Yu-TienMr. Ong Kheng SweeMr. Ong Chin LinMs. Lim Yun-Li (appointed on 12 September 2013)Mr. Soo Choon Siong (appointed on 12 September 2013)


Directors’ Reportfor the Year Ended 31 December 2013

cont’d

directors’ interests in shares

The interests and deemed interests in the shares of the Company and of its related corporations (other than wholly-owned subsidiaries) of those who were Directors at financial year end (including the interests of the spouses or children of the Directors who themselves are not Directors of the Company) as recorded in the Register of Directors’ Shareholdings are as follows:

number of ordinary shares of rM0.50 each

name of directors interest

at1 January

2013/date ofappointment Bought sold

at31 december

2013

company

Mr. Lim Oon Kok Direct 35,058,942 - - 35,058,942

Deemed * 9,161,205 - - 9,161,205

En. Zabidi bin Md Zain Direct 9,338,281 - - 9,338,281

Deemed # 1,524,000 - - 1,524,000

Mr. Hsieh Yu-Tien Direct 400,006 - (100,000) 300,006

Ms. Lim Yun-Li Direct 4,000,000 - - 4,000,000

* By virtue of shares held by his spouse and his children.

# By virtue of shares held by Edufocus Computer Aided Learning Sdn. Bhd., a company in which he has interest.

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

directors’ Benefits

Since the end of the previous financial year, no Director of the Company has received nor become entitled to receive any benefit (other than a benefit included in the aggregate amount of emoluments received or due and receivable by Directors as shown in the financial statements) by reason of a contract made by the Company or a related corporation with the Director or with a firm of which the Director is a member, or with a company in which the Director has a substantial financial interest other than a Director who has significant financial interests in a company which received rental income from a subsidiary in the normal course of business.

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

issue of shares

There were no changes in the authorised, issued and paid-up capital of the Company during the financial year.

oPtions Granted over unissued shares

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


other statutory inforMation

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

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

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

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

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

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

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

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

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

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

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

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

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

auditors

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

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

liM oon KoK hsieh yu-tien

Johor BahruDate: 14 March 2014

Directors’ Reportfor the Year Ended 31 December 2013cont’d


In the opinion of the Directors, the financial statements set out on pages 30 to 67 are drawn up in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the Companies Act, 1965 in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company as of 31 December 2013 and of their financial performance and cash flows for the financial year then ended.

In the opinion of the Directors, the information set out in Note 21 on page 68 to the financial statements has been compiled in accordance with Guidance on Special Matter No.1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosures Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, issued by the Malaysian Institute of Accountants, and presented based on the format prescribed by Bursa Malaysia Securities Berhad.

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

liM oon KoK hsieh yu-tien


I, Soo Choon Siong, the Director primarily responsible for the financial management of YI-LAI BERHAD, do solemnly and sincerely declare that the financial statements set out on pages 30 to 68 are, to the best of my knowledge and belief, correct and I make this solemn declaration conscientiously believing the same to be true, and by virtue of the provisions of the Statutory Declarations Act, 1960.

Subscribed and solemnly declared by the above named in Johor Bahru in the State of Johor on 14 March 2014.

soo choon sionG

Before me:

norani Bt. haJi KhalidCommissioner For OathsNo: J-140

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 Yi-Lai 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, changes in equity and cash flows of the Group and of the Company for the year then ended, and a summary of significant accounting policies and other explanatory information, as set out on pages 30 to 67.

directors’ responsibility for the financial statements

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

auditors’ responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with approved standards on auditing in Malaysia. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgement, including the assessment of risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity’s preparation of financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Directors, as well as evaluating the overall presentation of the financial statements.

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

opinion

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

rePort on other leGal and reGulatory requireMents

In accordance with the requirements of the Companies Act, 1965 in Malaysia, we also report the following:

(a) In our opinion, the accounting and other records and the registers required by the Act to be kept by the Company and its subsidiaries of which we have acted as auditors have been properly kept in accordance with the provisions of the Act.

(b) We have considered the financial statements and the auditors’ report of the subsidiary of which we have not acted as auditors, which are indicated in Note 4 to the financial statements.

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

(d) The audit reports on the accounts of the subsidiaries did not contain any qualification or any adverse comment made under Section 174(3) of the Act.

Independent Auditors’ Reportto the members of Yi-Lai Berhad (Company No. 516043-K)(Incorporated in Malaysia)


other rePortinG resPonsiBilities

Our audit was made for the purpose of forming an opinion on the financial statements taken as a whole. The information set out in Note 21 on page 68 to the financial statements has been compiled by the Company as required by the Bursa Malaysia Securities Berhad Listing Requirements and is not required by the Malaysian Financial Reporting Standards or International Financial Reporting Standards. We have extended our audit procedures to report on the process of compilation of such information. In our opinion, the information has been properly compiled, in all material respects, in accordance with the Guidance on Special Matter No.1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosures Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, issued by the Malaysian Institute of Accountants and presented based on the format prescribed by Bursa Malaysia Securities Berhad.

other Matters

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

KPMG Wee BenG chuanFirm Number: AF 0758 Approval Number: 2677/12/14 (J)Chartered Accountants Chartered Accountant


Independent Auditors’ Reportto the members of Yi-Lai Berhad (Company No. 516043-K)

(Incorporated in Malaysia)cont’d


Group company

2013 2012 2013 2012

note rM rM rM rM

assets

Property, plant and equipment 3 79,397,418 83,672,106 - -

Investments in subsidiaries 4 - - 80,371,207 80,371,207

Deferred tax assets 5 49,000 58,000 - -

total non-current assets 79,446,418 83,730,106 80,371,207 80,371,207

Inventories 6 44,608,753 54,123,299 - -

Trade and other receivables 7 43,545,467 39,896,485 4,878,000 6,256,000

Current tax assets 82,258 1,567,211 82,258 80,058

Other investments 8 20,476,219 20,867,333 20,476,219 20,867,333

Cash and cash equivalents 9 37,027,329 22,847,690 1,228,191 986,947

total current assets 145,740,026 139,302,018 26,664,668 28,190,338

total assets 225,186,444 223,032,124 107,035,875 108,561,545

equity

Share capital 80,000,000 80,000,000 80,000,000 80,000,000

Reserves 116,583,407 116,658,397 26,876,875 28,411,871

total equity attributable to owners of the company/ total equity 10 196,583,407 196,658,397 106,876,875 108,411,871

liabilities

Deferred tax liabilities/

total non-current liabilities 5 6,772,000 7,755,000 - -

Trade and other payables 11 19,965,764 18,538,548 159,000 149,674

Taxation 1,865,273 80,179 - -

total current liabilities 21,831,037 18,618,727 159,000 149,674

total liabilities 28,603,037 26,373,727 159,000 149,674

total equity and liabilities 225,186,444 223,032,124 107,035,875 108,561,545

Statements of Financial Positionas at 31 December 2013

The accompanying notes form an integral part of the financial statements.


Statements of Profit or Lossfor the Year Ended 31 December 2013

Group company

2013 2012 2013 2012

note rM rM rM rM

revenue

Goods sold 157,497,515 130,965,368 - -

Dividend income from:

- Quoted investments 620,331 397,791 620,331 397,791

- Subsidiaries - - 11,282,000 11,005,900

158,117,846 131,363,159 11,902,331 11,403,691

Cost of goods sold (128,540,211) (106,726,189) - -

Gross profit 29,577,635 24,636,970 11,902,331 11,403,691

Other income 513,136 609,258 - -

Distribution expenses (7,292,952) (6,458,096) - -

Administrative expenses (5,789,543) (5,021,247) (369,435) (330,732)

Other expenses (748,484) (85,840) (11,445) (30,458)

results from operating activities 16,259,792 13,681,045 11,521,451 11,042,501

Interest income 509,991 615,186 - 258,297

Profit before tax 12 16,769,783 14,296,231 11,521,451 11,300,798

Tax (expense)/income 13 (4,126,972) (3,623,456) 1,260 (62,342)

Profit for the year 12,642,811 10,672,775 11,522,711 11,238,456

Basic earnings per ordinary share (sen) 14 8.15 6.85

Dividends per ordinary share paid (sen) - net 15 8.00 7.00 8.00 7.00



Group company

2013 2012 2013 2012

rM rM rM rM

Profit for the year 12,642,811 10,672,775 11,522,711 11,238,456

items that are or may be reclassified subsequently to profit or loss

Foreign currency translation differences for foreign operation/

other comprehensive income for the year, net of tax 339,906 325,661 - -

total comprehensive income for the year 12,982,717 10,998,436 11,522,711 11,238,456

total comprehensive income attributable to:

Owners of the Company/

total comprehensive income for the year 12,982,717 10,998,436 11,522,711 11,238,456

Statements of Profit or Loss and Other Comprehensive Incomefor the Year Ended 31 December 2013



attributable to owners of the company

non-distributable

sharecapital

sharepremium

exchangefluctuation

reservetreasury

shares

distributableretainedearnings

totalequity

note rM rM rM rM rM rM

Group

at 1 January 2012 80,000,000 24,376,066 915,714 (3,113,599) 94,382,110 196,560,291

Foreign currency translation differences for foreign operation/other comprehensive income for the year, net of tax - - 325,661 - - 325,661

Profit for the year - - - - 10,672,775 10,672,775

total comprehensive income for the year - - 325,661 - 10,672,775 10,998,436

Contributions by and distributions to owners of the Company

Dividends to owners of the Company/

total transactions with owners of the company 15 - - - - (10,900,330) (10,900,330)

at 31 december 2012 80,000,000 24,376,066 1,241,375 (3,113,599) 94,154,555 196,658,397

Foreign currency translation differences for foreign operation/other comprehensive income for the year, net of tax - - 339,906 - - 339,906

Profit for the year - - - - 12,642,811 12,642,811

total comprehensive income for the year - - 339,906 - 12,642,811 12,982,717


Own shares acquired - - - (662,507) - (662,507)

Dividends to owners of the Company 15 - - - - (12,395,200) (12,395,200)

total transactions with owners of the company - - - (662,507) (12,395,200) (13,057,707)

at 31 december 2013 80,000,000 24,376,066 1,581,281 (3,776,106) 94,402,166 196,583,407

Consolidated Statement of Changes in Equityfor the Year Ended 31 December 2013



attributable to owners of the company

non-distributable

sharecapital

sharepremium

treasuryshares

distributableretainedearnings

totalequity

note rM rM rM rM rM

company

at 1 January 2012 80,000,000 24,376,066 (3,113,599) 6,811,278 108,073,745

Profit and total comprehensive income for the year - - - 11,238,456 11,238,456


Dividends to owners of the Company/

total transactions with owners of the company 15 - - - (10,900,330) (10,900,330)

at 31 december 2012 80,000,000 24,376,066 (3,113,599) 7,149,404 108,411,871

Profit and total comprehensive income for the year - - - 11,522,711 11,522,711


Own shares acquired - - (662,507) - (662,507)

Dividends to owners of the Company 15 - - - (12,395,200) (12,395,200)

total transactions with owners of the company - - (662,507) (12,395,200) (13,057,707)

at 31 december 2013 80,000,000 24,376,066 (3,776,106) 6,276,915 106,876,875

Statement of Changes in Equityfor the Year Ended 31 December 2013



Group company

2013 2012 2013 2012

rM rM rM rM

cash flows from operating activities

Profit before tax 16,769,783 14,296,231 11,521,451 11,300,798

Adjustments for:-

Depreciation 8,005,550 8,001,214 - -

Dividend income from:

- Other investments (620,331) (397,791) (620,331) (397,791)

- Subsidiaries - - (11,282,000) (11,005,900)

Property, plant and equipment:

- Loss/(Gain) on disposal 575,329 (49,867) - -

- Written off 8,516 36,892 - -

Interest income (509,991) (615,186) - (258,297)

Inventory written down/(reversal) 987,612 (305,616) - -

Inventory written off 196,685 - - -

Allowance for slow moving inventories 227,212 320,901 - -

Changes in fair value of other investments 11,445 30,458 11,445 30,458

operating profit/(loss) before changes in working capital 25,651,810 21,317,236 (369,435) (330,732)

Changes in inventories 8,103,037 (1,608,624) - -

Changes in trade and other receivables (3,648,982) (4,220,744) - -

Changes in trade and other payables 1,766,785 573,135 9,326 12,674

Changes in amount due from subsidiaries - - 1,378,000 (44,000)

cash generated from/(used in) operations 31,872,650 16,061,003 1,017,891 (362,058)

Tax paid (1,830,925) (3,361,527) (940) (129,342)

net cash from/(used in) operating activities 30,041,725 12,699,476 1,016,951 (491,400)

Statements of Cash Flowsfor the Year Ended 31 December 2013



Group company

2013 2012 2013 2012

note rM rM rM rM

cash flows from investing activities

Acquisition of:

- Property, plant and equipment (4,539,219) (5,619,319) - -

- Other investments - (20,897,791) - (20,897,791)

Proceeds from disposal of property, plant and equipment 224,849 51,900 - -

Dividends received from:

- Subsidiaries - - 11,282,000 11,005,900

- Other investments 620,331 397,791 620,331 397,791

Interest received 509,991 811,415 - 454,526

Proceeds from disposal of other investments 379,669 - 379,669 -

net cash (used in)/from investing activities (2,804,379) (25,256,004) 12,282,000 (9,039,574)

cash flows from financing activities

Dividends paid to owners of the Company (12,395,200) (10,900,330) (12,395,200) (10,900,330)

Repurchase of treasury shares (662,507) - (662,507) -

net cash used in financing activities (13,057,707) (10,900,330) (13,057,707) (10,900,330)

net increase/(decrease) in cash and cash equivalents 14,179,639 (23,456,858) 241,244 (20,431,304)

cash and cash equivalents at 1 January 22,847,690 46,304,548 986,947 21,418,251

cash and cash equivalents at 31 december 9 37,027,329 22,847,690 1,228,191 986,947

Statements of Cash Flowsfor the Year Ended 31 December 2013cont’d



Notes to the Financial Statements

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

Principal place of businessLot 7020, Batu 23Jalan Air Hitam81000 KulaijayaJohor, Malaysia

registered officeSuite 7E, Level 7Menara Ansar65, Jalan Trus80000 Johor BahruJohor, Malaysia

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

The Company is an investment holding company. The principal activities of its subsidiaries are disclosed in Note 4.

These financial statements were authorised for issue by the Board of Directors on 14 March 2014.

1. Basis of PreParation

(a) statement of compliance

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

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

MFRSs, Interpretations and amendments effective for annual periods beginning on or after 1 January 2014

• AmendmentstoMFRS10,Consolidated Financial Statements: Investment Entities • AmendmentstoMFRS12,Disclosure of Interests in Other Entities: Investment Entities • AmendmentstoMFRS127,Separate Financial Statements (2011): Investment Entities • Amendments to MFRS 132, Financial Instruments: Presentation – Offsetting Financial Assets and Financial

Liabilities • AmendmentstoMFRS136,Impairment of Assets – Recoverable Amount Disclosures for Non-Financial Assets • Amendments toMFRS139,Financial Instruments: Recognition and Measurement – Novation of Derivatives and

Continuation of Hedge Accounting • ICInterpretation21,Levies

MFRSs, Interpretations and amendments effective for annual periods beginning on or after 1 July 2014

• AmendmentstoMFRS1,First-time Adoption of Malaysian Financial Reporting Standards (Annual Improvements 2011-2013 Cycle)

• AmendmentstoMFRS2,Share-based Payment (Annual Improvements 2010-2012 Cycle) • AmendmentstoMFRS3,Business Combinations (Annual Improvements 2010-2012 Cycle and 2011-2013 Cycle) • AmendmentstoMFRS8,Operating Segments (Annual Improvements 2010-2012 Cycle)


Notes to the Financial Statementscont’d

1. Basis of PreParation cont’d

(a) statement of compliance cont’d

MFRSs, Interpretations and amendments effective for annual periods beginning on or after 1 July 2014 cont’d

• AmendmentstoMFRS13,Fair Value Measurement (Annual Improvements 2010-2012 Cycle and 2011-2013 Cycle) • AmendmentstoMFRS116,Property, Plant and Equipment (Annual Improvements 2010-2012 Cycle) • AmendmentstoMFRS119,Employee Benefits – Defined Benefit Plans: Employee Contributions • AmendmentstoMFRS124,Related Party Disclosures (Annual Improvements 2010-2012 Cycle) • AmendmentstoMFRS138,Intangible Assets (Annual Improvements 2010-2012 Cycle) • AmendmentstoMFRS140,Investment Property (Annual Improvements 2011-2013 Cycle)

MFRSs, Interpretations and amendments effective from a date yet to be confirmed

• MFRS9,Financial Instruments (2009) • MFRS9,Financial Instruments (2010) • MFRS9,Financial Instruments – Hedge Accounting and Amendments to MFRS 9, MFRS 7 and MFRS 139 • AmendmentstoMFRS7,Financial Instruments: Disclosures – Mandatory Effective Date of MFRS 9 and Transition

Disclosures

The Group and the Company plan to apply the abovementioned standards, amendments and interpretations in the respective financial years when the above standards, amendments and interpretations become effective.

The initial application of these standards, amendments and interpretations are not expected to have any material financial impacts to the current and prior periods financial statements of the Group and the Company upon their first adoption.

(b) Basis of measurement

The financial statements have been prepared on the historical cost basis other than as disclosed in Note 2.

(c) functional and presentation currency

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

(d) use of estimates and judgements

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

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

There are no significant areas of estimation uncertainty and critical judgements in applying accounting policies that have significant effect on the amounts recognised in the financial statements other than those disclosed in Note 7 - Trade and other receivables.



2. siGnificant accountinG Policies

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

(a) Basis of consolidation

(i) Subsidiaries

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

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

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

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

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

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

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

(ii) Business combinations

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

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

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

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

assumed.

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

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

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



2. siGnificant accountinG Policies cont’d

(a) Basis of consolidation cont’d

(iii) Acquisitions of non-controlling interests

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

(iv) Loss of control

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

(v) Non-controlling interests

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

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

(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.

(b) foreign currency

(i) Foreign currency transactions

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

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

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

Foreign currency differences arising on retranslation are recognised in profit or loss, except for differences arising on the retranslation of available-for-sale equity instruments or a financial instrument designated as a hedge of currency risk, which are recognised in other comprehensive income.




(b) foreign currency cont’d

(ii) Operations denominated in functional currencies other than Ringgit Malaysia

The assets and liabilities of operations denominated in functional currencies other than RM, including goodwill and fair value adjustments arising on acquisition, are translated to RM at exchange rates at the end of the reporting period. The income and expenses of foreign operations are translated to RM at exchange rates at the dates of the transactions.

Foreign currency differences are recognised in other comprehensive income and accumulated in the foreign currency translation reserve (“FCTR”) in equity. However, if the operation is a non-wholly-owned subsidiary, then the relevant proportionate share of the translation difference is allocated to the non-controlling interests. When a foreign operation is disposed of such that control, significant influence or joint control is lost, the cumulative amount in the FCTR related to that foreign operation is reclassified to profit or loss as part of the gain or loss on disposal.

When the Group disposes of only part of its interest in a subsidiary that includes a foreign operation, the relevant proportion of the cumulative amount is reattributed to non-controlling interests. When the Group disposes of only part of its investment in an associate or joint venture that includes a foreign operation while retaining significant influence or joint control, the relevant proportion of the cumulative amount is reclassified to profit or loss.

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

(c) financial instruments

(i) Initial recognition and measurement

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

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

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




(c) financial instruments cont’d

(ii) Financial instrument categories and subsequent measurement

The Group and the Company categorise financial instruments as follows:

Financial assets

(a) Financial assets at fair value through profit or loss

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

Derivatives that are linked to and must be settled by delivery of unquoted equity instruments whose fair values cannot be reliably measured are measured at cost.

Other financial assets categorised as fair value through profit or loss are subsequently measured at their fair values with the gain or loss recognised in profit or loss.

(b) Held-to-maturity investments

Held-to-maturity investments category comprises debt instruments that are quoted in an active market and the Group or the Company has the positive intention and ability to hold to maturity.

Financial assets categorised as held-to-maturity investments are subsequently measured at amortised cost using the effective interest method.

(c) Loans and receivables

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

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

(d) Available-for-sale financial assets

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

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

All financial assets, except for those measured at fair value through profit or loss, are subject to review for impairment (see Note 2(h)(i)).





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

Financial liabilities

All financial liabilities are subsequently measured at amortised cost other than those categorised as fair value through profit or loss.

Fair value through profit or loss category comprises financial liabilities that are derivatives (except for a derivative that is a financial guarantee contract or a designated and effective hedging instrument) or financial liabilities that are specifically designated into this category upon initial recognition.

Derivatives that are linked to and must be settled by delivery of unquoted equity instruments whose fair values cannot be reliably measured are measured at cost.

Other financial liabilities categorised as fair value through profit or loss are subsequently measured at their fair values with the gain or loss recognised in profit or loss.

(iii) Financial guarantee contracts

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

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

(iv) Regular way purchase or sale of financial assets

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

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

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

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





(v) Derecognition

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

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

(d) Property, plant and equipment

(i) Recognition and measurement

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

Cost includes expenditures that are directly attributable to the acquisition of the asset and any other costs directly attributable to bringing the asset to working condition for its intended use, and the costs of dismantling and removing the items and restoring the site on which they are located. The cost of self-constructed assets also includes the cost of materials and direct labour. Cost also may include transfers from equity of any gain or loss on qualifying cash flow hedges of foreign currency purchases of property, plant and equipment.

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

The cost of property, plant and equipment recognised as a result of a business combination is based on fair value at acquisition date and in accordance to Note 2(o).

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

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

(ii) Subsequent costs

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




(d) Property, plant and equipment cont’d

(iii) Depreciation

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

Depreciation is recognised profit or loss on a straight-line basis over the estimated useful lives of each component of an item of property, plant and equipment. Leasehold land is amortised in equal instalments over the remaining lease period of 45 - 92 years while buildings are depreciated on a straight line basis over the shorter of 50 years or the lease period. Freehold land is not depreciated. Property, plant and equipment under construction are not depreciated until the assets are ready for their intended use.

The estimated useful lives for the current and comparative periods are as follows:

Plant and machinery 3 - 15 years Motor vehicles, office and other equipment 5 years

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

(e) leased assets

(i) Finance lease

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

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

Leasehold land which in substance is a finance lease is classified as property, plant and equipment.

(ii) Operating lease

Leases, where the Group or the Company does not assume substantially all the risks and rewards of ownership are classified as operating leases and the leased assets are not recognised in the statement of financial position.

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

Leasehold land which in substance is an operating lease is classified as prepaid lease payments.




(f) inventories

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

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

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

(g) cash and cash equivalents

Cash and cash equivalents consist of cash on hand, balances and deposits with banks and highly liquid investments which have an insignificant risk of changes in fair value. For the purpose of statement of the cash flows, cash and cash equivalents are presented net of bank overdrafts and pledged deposits.

(h) impairment

(i) Financial assets

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

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

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

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

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

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




(h) impairment cont’d

(ii) Other assets

The carrying amounts of other assets except for inventories and deferred tax assets are reviewed at the end of each reporting period to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated.

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

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

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

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

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

(i) equity instruments

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

(i) Issue expenses

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

(ii) Repurchase, disposal and reissue of share capital (treasury shares)

When share capital recognised as equity is repurchased, the amount of the consideration paid, including directly attributable costs, net of any tax effects, is recognised as a deduction from equity. Repurchased shares that are not subsequently cancelled are classified as treasury shares in the statement of changes in equity.

Where treasury shares are sold or reissued subsequently, the difference between the sales consideration net of directly attributable costs and the carrying amount of the treasury shares is recognised in equity.




(j) income tax

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

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

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

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

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

(k) revenue and other income

(i) Goods sold

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

(ii) Dividend income

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

(iii) Interest income

Interest income is recognised as it accrues using the effective interest method.




(l) employee benefits

(i) Short-term employee benefits

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

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

(ii) State plans

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

(m) earnings per ordinary share

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

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

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

(n) operating segments

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

(o) fair value measurement

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

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

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



3. ProPerty, Plant and equiPMent

land andbuildings

Plantand

machinery

Motorvehicles,

office and other

equipment

construction-in

-progress total

rM rM rM rM rM

Group

at cost

At 1 January 2012 50,826,672 158,374,905 8,504,140 1,644,829 219,350,546

Additions 591,538 3,072,939 212,321 1,742,521 5,619,319

Disposals - (57,278) (318,230) - (375,508)

Written off (37,840) (1,413,680) (40,567) - (1,492,087)

Transfers - 2,751,416 373,793 (3,125,209) -

Exchange differences - - 19,512 - 19,512

At 31 December 2012/ 1 January 2013 51,380,370 162,728,302 8,750,969 262,141 223,121,782

Additions 1,128,104 2,572,350 665,547 173,218 4,539,219

Disposals - (1,159,764) (553,754) - (1,713,518)

Written off - (165,835) (159,439) - (325,274)

Transfers - 175,734 139,883 (315,617) -


At 31 December 2013 52,508,474 164,150,787 8,872,000 119,742 225,651,003

accumulated depreciation

At 1 January 2012 8,370,974 117,550,424 7,336,333 - 133,257,731

Depreciation charge 724,637 6,611,189 665,388 - 8,001,214

Disposals - (56,551) (316,924) - (373,475)

Written off (6,193) (1,408,942) (40,060) - (1,455,195)


At 31 December 2012/ 1 January 2013 9,089,418 122,696,120 7,664,138 - 139,449,676

Depreciation charge 738,861 6,592,717 673,972 - 8,005,550

Disposals - (399,371) (513,969) - (913,340)

Written off - (158,575) (158,183) - (316,758)


At 31 December 2013 9,828,279 128,730,891 7,694,415 -- 146,253,585

carrying amounts

At 31 December 2013 42,680,195 35,419,896 1,177,585 119,742 79,397,418

At 31 December 2012 42,290,952 40,032,182 1,086,831 262,141 83,672,106



3. ProPerty, Plant and equiPMent cont’d

Group

2013 2012

rM rM

Carrying amounts of land and buildings

Freehold land 15,378,840 14,805,412

Leasehold land 5,180,793 5,295,482

Buildings 22,120,562 22,190,058

42,680,195 42,290,952

others

The gross amount of property, plant and equipment of the Group that are fully depreciated but still in use amounted to RM83,397,000 (2012: RM80,380,000).

4. investMents in suBsidiaries

company

2013 2012

rM rM

Unquoted shares, at cost 80,371,207 80,371,207

Details of the subsidiaries, all of which are 100% (2012: 100%) owned are as follows:

name of entity Principal activitiesPlace of

incorporation

Yi-Lai Industry Berhad Manufacture and sale of ceramic and homogeneous tiles Malaysia

Yi-Lai Marketing Sdn. Bhd. Trading and distribution of tiles Malaysia

Yi-Lai Trading Pte. Ltd.* Trading and distribution of tiles Singapore * Not audited by member firms of KPMG International



5. deferred tax assets/(liaBilities)

recognised deferred tax assets/(liabilities) Deferred tax assets and liabilities are attributable to the following:

assets liabilities net

2013 2012 2013 2012 2013 2012

rM rM rM rM rM rM

Property, plant and equipment

- capital allowances - - (7,588,000) (8,237,000) (7,588,000) (8,237,000)

Trade receivables 49,000 43,000 - - 49,000 43,000

Inventories 816,000 497,000 - - 816,000 497,000

865,000 540,000 (7,588,000) (8,237,000) (6,723,000) (7,697,000)

Set-off of tax (816,000) (482,000) 816,000 482,000 - -

Net tax assets/(liabilities) 49,000 58,000 (6,772,000) (7,755,000) (6,723,000) (7,697,000)

Deferred tax liabilities and assets are offset above where there is a legally enforceable right to set off current tax assets against current tax liabilities and where the deferred taxes relate to the same taxation authority.

Movement in temporary differences during the year are as follows:

Group

at1 January

2012

recognised in profit

or loss(note 13)

at 31 december

2012

recognised in profit

or loss(note 13)

at 31 december

2013

rM’000 rM’000 rM’000 rM’000 rM’000


- capital allowances (8,422) 185 (8,237) 649 (7,588)

Trade receivables 57 (14) 43 6 49

Inventories 483 14 497 319 816

Others 34 (34) - - -

(7,848) 151 (7,697) 974 (6,723)

6. inventories

Group

2013 2012

rM rM

Raw materials 11,615,132 14,282,000

Work-in-progress 1,477,347 1,161,124

Finished goods 21,376,486 28,086,451

Consumable stores 10,139,788 10,593,724

44,608,753 54,123,299



6. inventories cont’d

Recognised in profit or loss:

Group

2013 2012

rM rM

Inventories recognised as cost of goods sold 128,540,211 106,726,189

Write-down/(Reversal) of inventories 987,612 (305,616)

The write-down/(reversal) is included in cost of goods sold.

7. trade and other receivaBles

Group company

2013 2012 2013 2012

rM rM rM rM

Trade receivables 42,897,308 39,447,298 - -

Other receivables, deposits and repayments 648,159 449,187 2,000 2,000

Due from subsidiaries - - 4,876,000 6,254,000

43,545,467 39,896,485 4,878,000 6,256,000

Included in the trade receivables of the Group are impairment losses of RM121,419 (2012: RM167,945). Impairment loss on trade receivables is made for debtors where management considers the recoverability to be doubtful. On a quarterly basis, the management reviews trade debtors’ ageing report, repayment history and any other available evidence of possible default by debtors.

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

8. other investMents

Group/company

2013 2012

rM rM

unit trusts quoted in Malaysia

Current

Financial assets at fair value through profit or loss:

- Held for trading 20,476,219 20,867,333

Market value of quoted investments 20,476,219 20,867,333



9. cash and cash equivalents

Group company

2013 2012 2013 2012

rM rM rM rM

Cash and bank balances 14,883,177 6,505,051 1,228,191 986,947

Short term deposits with licensed banks 22,144,152 16,342,639 - -

37,027,329 22,847,690 1,228,191 986,947

Cash and bank balances of the Group denominated in currencies other than the functional currency comprise RM7,000,279 (2012: RM1,263,234) of cash and bank balances denominated in Singapore Dollar.

10. caPital and reserves

share capital

Group/company Group/company

number of shares

2013 2012 2013 2012

rM rM

Ordinary shares of RM0.50 each:

Authorised 500,000,000 500,000,000 1,000,000,000 1,000,000,000

Issued and fully paid 80,000,000 80,000,000 160,000,000 160,000,000

reserves

Group company

2013 2012 2013 2012

rM rM rM rM

Non-distributable

Share premium 24,376,066 24,376,066 24,376,066 24,376,066

Exchange fluctuation reserve 1,581,281 1,241,375 - -

Treasury shares (3,776,106) (3,113,599) (3,776,106) (3,113,599)

22,181,241 22,503,842 20,599,960 21,262,467

Distributable

Retained earnings 94,402,166 94,154,555 6,276,915 7,149,404

116,583,407 116,658,397 26,876,875 28,411,871



10. caPital and reserves cont’d

treasury shares

The shareholders of the Company, by a special resolution passed in a general meeting held on 21 May 2013, approved the Company’s plan to repurchase its own shares. The Directors of the Company are committed to enhancing the value of the Company to its shareholders and believe that the repurchase plan can be applied in the best interests of the Company and its shareholders.

During the financial year, the Company repurchased 779,000 (2012: NIL) of its issued share capital from the open market. The average price paid for the shares repurchased was RM0.85 (2012: NIL) per share including transaction costs and the repurchase transactions were financed by internally generated funds. The shares repurchased are held as treasury shares.

At 31 December 2013, the Company holds 5,060,000 (2012: 4,281,000) of the Company’s shares as treasury shares. The number of outstanding ordinary shares of RM0.50 each in issue after the set off is 154,940,000 (2012: 155,719,000).

11. trade and other PayaBles

Group company

2013 2012 2013 2012

rM rM rM rM

Trade payables 9,931,544 10,627,893 - -

Other payables and accrued expenses 10,034,220 7,910,655 159,000 149,674

19,965,764 18,538,548 159,000 149,674



12. Profit Before tax

Group company

2013 2012 2013 2012

rM rM rM rM

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

Auditors’ remuneration:

- Audit fees

Company’s auditors 94,000 88,000 28,000 25,000

Other auditors 17,150 18,779 - -

- Non-audit fee

KPMG Malaysia 34,700 34,700 31,000 31,000

Local affiliates of KPMG Malaysia 86,500 17,500 3,000 3,000

Allowance for slow-moving inventories 227,212 320,901 - -

Bad debts (recovered)/written off (60,296) 60,109 - -

Depreciation 8,005,550 8,001,214 - -

Inventory/(Reversal of ) written down 987,612 (305,616) - -

Inventory written off 196,685 - - -

Property, plant and equipment:

- Written off 8,516 36,892 - -

- Loss/(Gain) on disposal 575,329 (49,867) - -

Personnel expenses (including key management personnel):

- Contributions to state plans 1,593,403 1,535,147 - -

- Wages, salaries and others 24,260,963 21,102,210 - -

Rental of premises 292,111 297,667 - -

Trade receivables:

- Impairment loss 107,459 - - -

- Impairment loss recovered (33,282) (70,516) - -

Realised gain on foreign exchange (313,153) (368,736) - -

Changes in fair value of other investments 11,445 30,458 11,445 30,458



12. Profit Before tax cont’d

Key management personnel compensation

The key management personnel compensation are as follows:

Group company

2013 2012 2013 2012

rM rM rM rM

Directors

- Fees 600,991 369,786 130,000 110,000

- Remuneration 1,972,558 1,809,157 - -

Total short-term benefits 2,573,549 2,178,943 130,000 110,000

Other key management personnel:

- Short term employee benefits 851,253 971,705 - -

3,424,802 3,150,648 130,000 110,000

The estimated monetary value of Directors’ benefits-in-kind is RM5,900 (2012: RM5,900).

Other key management personnel comprise persons other than the Directors of the Group entities, having authority and responsibility for planning, directing and controlling the activities of the entities either directly or indirectly.

13. tax exPense

recognised in profit or loss

Major components of income tax expense include:

Group company

2013 2012 2013 2012

rM rM rM rM

current tax expense

Malaysia

- Current year 5,020,000 3,670,000 - 65,000

- Prior year 55,806 47,680 (1,260) (2,658)

5,075,806 3,717,680 (1,260) 62,342

Overseas

- Current year 68,121 56,776 - -

- Prior year (42,955) - - -

25,166 56,776 - -

deferred tax income

- Origination and reversal of temporary difference (996,000) (121,000) - -

- Prior year 22,000 (30,000) - -

(974,000) (151,000) - -

4,126,972 3,623,456 (1,260) 62,342



13. tax exPense cont’d

recognised in profit or loss cont’d

Major components of income tax expense include: cont’d

rM’000 rM’000 rM’000 rM’000

reconciliation of tax expense

Profit before tax 16,770 14,296 11,521 11,301

Income tax calculated using Malaysian tax rate of 25% 4,193 3,575 2,880 2,825

Non-deductible expenses 249 217 96 83

Tax exempt income (202) (149) (2,976) (2,843)

Effect of different tax rate in foreign jurisdiction (80) (45) - -

Others (68) 7 - -

4,092 3,605 - 65

Under/(Over) provision in prior years 35 18 (1) (3)

Tax expense 4,127 3,623 (1) 62

14. Basic earninGs Per ordinary share

Basic earnings per ordinary share

The calculation of basic earnings per ordinary share at 31 December 2013 was based on the profit attributable to ordinary shareholders and a weighted average number of ordinary shares outstanding, calculated as follows:

Group

2013 2012

rM rM

Profit for the year attributable to ordinary shareholders 12,642,811 10,672,775

Weighted average number of ordinary shares

Group

2013 2012

Issued ordinary shares at 1 January 160,000,000 160,000,000

Effect of treasury shares held (4,914,000) (4,281,000)

Weighted average number of ordinary shares at 31 December 155,086,000 155,719,000

Basic earnings per ordinary share (sen) 8.15 6.85

diluted earnings per ordinary share

There are no dilutive potential ordinary shares. Accordingly, diluted earnings per ordinary share is not presented.



15. dividends

Dividends recognised by the Company are:

sen pershare

totalamount date of payment

rM

2013

2013 - Interim, single tier 4.0 6,197,600 8 November 2013

2012 - Final, single tier 4.0 6,197,600 8 July 2013

total amount 8.0 12,395,200

2012

2012 - Interim, single tier 3.00 4,671,570 8 November 2012

2011 - Final, single tier 4.00 6,228,760 9 July 2012

total amount 7.00 10,900,330

After the end of the reporting period, the Directors:



The financial statements do not reflect these special share and proposed final dividends, which will be accounted for in the statement of changes in equity as an appropriation of retained earnings in subsequent financial period upon approval by the owners of the Company.

16. oPeratinG seGMents

No segment reporting has been prepared as the Group principally operates in Malaysia and contribution of its Singapore operation is insignificant (less than 10%). The business activities of the Group are mainly relating to the manufacture and sale of ceramic and homogeneous tiles.

Major customers

The following are major customers with revenue equal or more than 10% of the Group’s total revenue:

revenue segment

2013 2012

rM’000 rM’000

Customer - A 29,442 36,895 Malaysia

Customer - B 20,408 18,443 Malaysia



17. caPital coMMitMents

Group

2013 2012

rM’000 rM’000


Contracted but not provided for 2,332 539

18. financial instruMents

18.1 categories of financial instruments

The table below provides an analysis of financial instruments categorised as follows:

(a) Loans and receivables (“L&R”); (b) Fair value through profit or loss (“FVTPL”): - Held for trading (“HFT”), and (c) Other financial liabilities measured at amortised cost (“FL”).

2013carrying amount

l & r/(fl)

fvtPl(hft)

rM’000 rM’000 rM’000

financial assets

Group

Other investments 20,476 - 20,476

Trade and other receivables 43,545 43,545 -

Cash and cash equivalents 37,027 37,027 -

101,048 80,572 20,476

company




26,582 6,106 20,476



18. financial instruMents cont’d

18.1 categories of financial instruments cont’d

2012carrying amount

l & r/(fl)

fvtPl(hft)

rM’000 rM’000 rM’000

financial assets

Group




83,611 62,744 20,867

company



Cash and cash equivalents 986 986 -

28,109 7,242 20,867

2013

financial liabilities

Group

Trade and other payables (19,966) (19,966) -

company

Trade and other payables (159) (159) -

2012

financial liabilities

Group

Trade and other payables (18,539) (18,539) -

company

Trade and other payables (150) (150) -




18.2 net gains and losses arising from financial instruments

Group company

2013 2012 2013 2012

rM rM rM rM

Net gains on:

- Loan and receivables 809 995 - 258

- Fair value through profit or loss:

- Held for trading 609 368 609 368

1,418 1,363 609 626

18.3 financial risk management

The Group has exposure to the following risks from its use of financial instruments:

• Credit risk • Liquidity risk • Market risk

18.4 credit risk

Credit risk is the risk of a financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations. The Group’s exposure to credit risk arises principally from its receivables from customers. The Company’s exposure to credit risk arises principally from loans and advances to subsidiaries and financial guarantees given to banks for credit facilities granted to subsidiaries.

The Group trades extensively with a few established distributors which the Group has a long standing business relationship. As at the end of the reporting period, the Group’s four largest distributors constitute approximately 41% (2012: 51%) of total trade receivables. These distributors do not have any significant outstanding balances exceeding their normal credit terms as at the end of the reporting period.

The maximum exposure to credit risk for the Group is represented by the carrying amounts of each financial asset.

Receivables

Risk management objectives, policies and processes for managing the risk

Management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis. Normally financial guarantees of banks, shareholders or directors of customers are obtained, and credit evaluations are performed on customers requiring credit over a certain amount.

Exposure to credit risk, credit quality and collateral

As at the end of the reporting period, the maximum exposure to credit risk arising from receivables is represented by the carrying amounts in the statement of financial position.

Management has taken reasonable steps to ensure that trade receivables that are neither past due nor impaired are measured at their realisable values. A significant portion of these trade receivables are regular customers that have been transacting with the Group. The Group uses ageing analysis to monitor the credit quality of the receivables. Any trade receivables having significant balances past due more than 30 days which are deemed to have higher credit risk, are monitored individually.

Trade receivables amounting to RM33,113,000 (2012: RM36,063,000) of the Group are secured by financial guarantees given by banks, shareholders or directors of the customers.




18.4 credit risk cont’d

Receivables cont’d

Impairment losses

The Group maintains an ageing analysis in respect of trade receivables only. The ageing of trade receivables as at the end of the reporting period was:

Grossindividual

impairment net

rM’000 rM’000 rM’000

2013

Not past due 33,281 - 33,281

Past due 1 - 30 days 7,696 - 7,696

Past due 31 - 120 days 1,901 (14) 1,887

Past due more than 120 days 140 (107) 33

43,018 (121) 42,897

2012

Not past due 30,317 - 30,317

Past due 1 - 30 days 6,819 (9) 6,810

Past due 31 - 120 days 2,282 - 2,282

Past due more than 120 days 197 (159) 38

39,615 (168) 39,447

The movements in the allowance for impairment losses of receivables during the financial year were:

Group

2013 2012

rM’000 rM’000

At 1 January 168 238

Impairment loss for the year 107 -

Impairment loss recovered (33) (70)

Impairment loss written off (121) -

At 31 December 121 168

18.5 liquidity risk

Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s exposure to liquidity risk arises principally from its various payables.

The Group maintains a level of cash and cash equivalents and bank facilities deemed adequate by the management to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they fall due.




18.6 Market risk

Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and other prices that will affect the Group’s financial position or cash flows.

Currency risk

The Group is exposed to foreign currency risk on sales and purchases that are denominated in a currency other than the functional currency. The currencies giving rise to this risk are primarily Singapore Dollar (SGD), US Dollar (USD) and EURO.

The Group does not generally hedge its exposure to fluctuations in foreign exchange rates.

Exposure to foreign currency risk

The Group’s exposure to foreign currency (a currency which is other than the currency of the Group entities) risk, based on carrying amounts as at the end of the reporting period was:

denominated in

usd sGd euro

rM’000 rM’000 rM’000

2013

Cash and cash equivalents - 7,000 -

Trade and other payables (1,197) (7) (338)

Intra-group balances - 785 -

(1,197) 7,778 (338)

2012

Cash and cash equivalents - 1,263 -

Trade and other payables (2,399) (8) (275)

Intra-group balances - 430 -

(2,399) 1,685 (275)

Currency risk sensitivity analysis

Foreign currency risk arises from Group entities which has a Ringgit Malaysia functional currency. The exposure to currency risk of Group which do not have a Ringgit Malaysia functional currency is not material and hence, sensitivity analysis is not presented.




18.6 Market risk cont’d

Currency risk cont’d

Currency risk sensitivity analysis cont’d

A 10% (2012: 10%) strengthening of the Ringgit Malaysia against the following currencies at the end of the reporting period would have increased (decreased) equity and post-tax profit or loss by the amounts shown below. This analysis is based on foreign currency exchange rate variances that the Group considered to be reasonably possible at the end of the reporting period. This analysis assumes that all other variables, in particular interest rates, remained constant and ignores any impact of forecasted sales and purchases.

Profit or loss

2013 2012

rM’000 rM’000

USD 89 180

SGD (583) (126)

EURO 25 21

A 10% (2012: 10%) weakening of Ringgit Malaysia against the above currencies at the end of the reporting period would have had equal but opposite effect on the above currencies to the amounts shown above, on the basis that all other variables remained constant.

Interest rate risk

The Group’s exposure to change in interest rates relate primarily to interest-earning deposits.

Exposure to interest rate risk

The interest rate profile of the Group’s significant interest-bearing financial instruments, based on carrying amounts as at the end of the reporting period was:

2013 2012

rM’000 rM’000

fixed rate instruments

Financial assets 22,144 16,343

Fair value sensitivity analysis for fixed rate instruments

The Group does not account for any fixed rate financial assets and liabilities at fair value through profit or loss, and the Group does not designate derivatives as hedging instruments under a fair value hedged accounting model. Therefore, a change in interest rates at the end of the reporting period would not affect profit or loss.




18.7 fair value information

The carrying amounts of cash and cash equivalents, short term receivables and payables approximate fair values due to the relatively short term nature of these financial instruments.

The table below analyses financial instruments carried at fair value and those not carried at fair value for which fair value is disclosed, together with their fair values and carrying amounts shown in the statement of financial position.

Group/company

fair value of financial

instruments carried at fair

valuelevel 2

carrying amount

rM’000 rM’000

2013

Quoted unit trusts in Malaysia 20,476 20,476

2012

Quoted unit trusts in Malaysia 20,867 20,867

Policy on transfer between levels

The fair value of an asset to be transferred between levels is determined as of the date of the event or change in circumstances that caused the transfer.

level 1 fair value

Level 1 fair value is derived from quoted price (unadjusted) in active markets for identical financial assets or liabilities that the entity can access at the measurement date.

level 2 fair value

Level 2 fair value is estimated using inputs other than quoted prices included within Level 1 that are observable for the financial assets or liabilities, either directly or indirectly.

19. caPital ManaGeMent

The Group’s objectives when managing capital is to maintain a strong capital base and safeguard the Group’s ability to continue as a going concern, so as to maintain investors, creditors and market confidence and to sustain future development of the business. The Directors monitor and maintain an optimal capital and liquidity ratio that enables the Group to operate effectively without external borrowings.

There were no changes in the Group’s approach to capital management during the financial year.



20. related Parties

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

Related parties also include key management personnel defined as those persons having authority and responsibility for planning, directing and controlling the activities of the Group either directly or indirectly. Key management personnel includes all the Directors of the Group, and certain members of senior management of the Group.

The Group has related party relationship with its subsidiaries and key management personnel.

There are no significant related party transactions during the year other than key management personnel compensation as disclosed in Note 12 and rental expense of RM151,341 (2012: RM148,267) paid by a subsidiary to a company in which a Director has significant financial interest.



21. suPPleMentary financial inforMation on the BreaKdoWn of realised and unrealised Profits or losses

The breakdown of the retained earnings of the Group and of the Company as at 31 December, into realised and unrealised profits, pursuant to Paragraphs 2.06 and 2.23 of Bursa Malaysia Main Market Listing Requirements, are as follows:

Group company

2013 2012 2013 2012

rM’000 rM’000 rM’000 rM’000

Total retained earnings of the Company and its subsidiaries:

- realised profits 169,863 170,679 6,277 7,149

- unrealised losses (6,765) (7,828) - -

163,098 162,851 6,277 7,149

Less: Consolidated adjustments (68,696) (68,696) - -

Total retained earnings 94,402 94,155 6,277 7,149

The determination of realised and unrealised profits is based on the Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosures Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, issued by the Malaysian Institute of Accountants on 20 December 2010.


List of Landed Properties

locationdescription/ existing use

approximate age of

building (years)

approximate land/built-up

area tenure

net book value at 31 dec 2013rM’000

Lot 7020, Mukim of Senai-Kulai, District of Johor Bahru, Johor(Acquired on 15 April 1989)

Factory building 23 years 4.0519 hectares

Freehold 7,682

Lot 7022, Mukim of Senai-Kulai, District of Johor Bahru, Johor (Acquired on 7 August 1997)

Factory building and warehouse

14 years 4.04686 hectares

Freehold 13,974

PTD 19564, Mukim Senai-Kulai, District of Johor Bahru, Johor (Acquired on 28 April 1992)

Double storey intermediate

terrace house for hostel purposes

25 years 143 square meter

Freehold 73

PN 4478, Lot 409, Section 32, Bandar Petaling Jaya, Selangor (Acquired on 27 September 2004)

Marketing office, showroom cum

warehouse

9 years 5,772.3 square meter

Leasehold 99 years expiring

on 3 June 2058

6,026

H.S.(D) 438320 PTD 95217 & H.S.(D) 438321 PTD 95218, Mukim of Senai-Kulai, District of Johor Bahru, Johor (Acquired on 1 December 2005)

Warehouse 7 years 19,461.3 square meter

Freehold 7,954

Geran 225856 (Geran 26456) Lot 7019, Mukim of Senai-Kulai, District of Kulaijaya, Johor (Acquired on 12 May 2010)

Vacant land N/A 4.0468 hectares

Freehold 5,368

HSM No 2580, Lot PT 6599, Mukim Bachang, Daerah Melaka Tengah, Melaka (Acquired on 1 September 2010)

Marketing office 7 years 146 square meter

Leasehold 99 years expiring on 5 Nov

2105

427

15 & 16, Jalan Tropika 1, Taman Tropika, 81000 Kulaijaya, Johor (Acquired on 24 February 2011)

Marketing office cum showroom


Freehold 984

1545, Jalan Lagenda 53, Taman Lagenda Putra, 81000 Kulaijaya, Johor (Acquired on 12 May 2011)

Double storey intermediate

terrace house for hostel purposes


Freehold 193


Analysis of Shareholdings as at 31 March 2014

Authorised Share Capital : RM500,000,000Issued and Paid-up Share Capital : RM80,000,000 divided into 160,000,000 shares of RM0.50 eachClass of Shares : Ordinary shares of RM0.50 eachVoting Right : One vote per ordinary shareNumber of Shareholders : 3,319

a. distriBution of shareholders as at 31 March 2014

size of holdingsno. of

shareholders% of

shareholders no. of shares% of issued

capital

1 – 99 9 0.27 264 0.00

100 – 1,000 611 18.41 567,495 0.35

1,001 – 10,000 1,860 56.04 9,403,104 5.88

10,001 – 100,000 740 22.30 22,604,000 14.13

100,001 – 7,999,999 96 2.89 73,228,195 45.77

8,000,000 and above 3 0.09 54,196,942 33.87

total 3,319 100.00 160,000,000 100.00

B. thirty larGest securities account holders as at 31 March 2014 (as shown in the record of depositors)

no. nameno. of shares

held% of issued

capital

1. Lim Oon Kok 28,858,942 18.04

2. Lembaga Tabung Haji 16,000,000 10.00

3. Citigroup Nominees (Tempatan) Sdn Bhd - Pledged Securities Account for Zabidi Bin Md Zain (473846)

9,338,000 5.84

4. Chan Bon Chin @ Chan Siew Keow 6,228,184 3.89

5. Addeen Transport Sdn Bhd 6,050,100 3.78

6. Gan Thian Chin 5,653,100 3.53

7. Yi-Lai Berhad – Share Buy-Back Account

5,060,000 3.16

8. UOB Kay Hian Nominees (Asing) Sdn Bhd -Exempt An For UOB Kay Hian Pte Ltd (A/C Clients)

4,757,303 2.97

9. Lim Oon Kok 4,700,000 2.94

10. HDM Nominees (Asing) Sdn Bhd - DBS Vickers Secs (S) Pte Ltd for Liao Feun Chu

4,408,730 2.76

11. HDM Nominees (Asing) Sdn Bhd - DBS Vickers Secs (S) Pte Ltd for Lim Yun-An

4,220,172 2.64

12. HDM Nominees (Asing) Sdn Bhd - DBS Vickers Secs (S) Pte Ltd for Lim Yun-Li

4,000,000 2.50

13. Amanahraya Trustees Berhad - Public Islamic Opportunities Fund

2,062,800 1.29

14. Citigroup Nominees (Asing) Sdn Bhd - Exempt An for OCBC Securities Private Limited (Client A/C – NR)

1,929,500 1.20

15. Edufocus Computer Aided Learning Sdn Bhd 1,524,000 0.95


Analysis of Shareholdings as at 31 March 2014

cont’d

B. thirty larGest securities account holders as at 31 March 2014 (as shown in the record of depositors) cont’d

no. nameno. of shares

held% of issued

capital

16. Cimsec Nominees (Asing) Sdn Bhd - Exempt An for CIMB Securities (Singapore) Pte Ltd (Retail Clients)

1,445,900 0.90

17. Zulkifli Bin Hussain 1,111,300 0.69

18. DB (Malaysia) Nominee (Asing) Sdn Bhd - Deutsche Bank AG Singapore for British and Malayan Trustees Limited (Yeoman 3-Rights)

850,000 0.53

19. Liao, Hsin-Wei 725,000 0.45

20. Ng Keng Kock 690,000 0.43

21. Kenanga Nominees (Asing) Sdn Bhd -Monex Boom Securities (HK) Limited for Chen LiPing

615,000 0.38

22. HLB Nominees (Tempatan) Sdn Bhd - Pledged Securities Account for Teh Chee Tong

600,000 0.38

23. Yap Ma Tit 530,000 0.33

24. Rampai Dedikasi Sdn Bhd 500,000 0.31

25. Tay Ying Lim @ Tay Eng Lim 489,100 0.31

26. Maybank Nominees (Asing) Sdn Bhd -Exempt An for DBS Bank Limited (Client A/C)

488,000 0.31

27. HLB Nominees (Tempatan) Sdn Bhd - Pledged Securities Account for Lim Kim Wah

486,700 0.30

28. Heng Ah Lik 442,000 0.28

29. Tew Peng Hwee @ Teoh Peng Hwee 437,000 0.27

30. Chan Heng Koon 434,000 0.27

total 114,634,831 71.63

c. suBstantial shareholders as at 31 March 2014

no. of shares held Percentage

no. name direct deemed (%)

1. Lim Oon Kok 35,058,942 9,161,205 (a) 28.54

2. Liao Feun Chu 4,408,730 39,811,417 (b) 28.54

3. Zabidi bin Md Zain 9,338,281 1,524,000 (c) 7.01

4. Anyta Hanim Binti Anuar - 10,862,281 (d) 7.01

5. Lembaga Tabung Haji 16,000,000 - 10.33


d. directors’ interest in shares as at 31 March 2014

no. of shares held Percentage

no. name direct deemed (%)

1. Lim Oon Kok 35,058,942 9,161,205 (a) 28.54

2. Zabidi bin Md Zain 9,338,281 1,524,000 (c) 7.01

3. Hsieh Yu-Tien 300,006 - 0.19

4. Lim Yun-Li 4,000,000 - 2.58

5. Ong Kheng Swee - - -

6. Ong Chin Lin - - -

Notes:

(a) Deemed interest by virtue of the shareholdings of his spouse, Madam Liao Feun Chu and his children, Ms Lim Yun-An and Ms Lim Lih Tyng who themselves are not Directors of the Company.

(b) Deemed interest by virtue of the shareholdings of her spouse, Mr Lim Oon Kok and her children, Ms Lim Yun-An and Ms Lim Lih Tyng who themselves are not Directors of the Company.

(c) Deemed interest by virtue of the shareholdings of Edufocus Computer Aided Learning Sdn. Bhd., a company in which he and his spouse have interest.

(d) Deemed interest by virtue of the shareholdings of her spouse, Encik Zabidi Bin Md Zain and Edufocus Computer Aided Learning Sdn. Bhd., a company in which she and her spouse have interest.

Analysis of Shareholdings as at 31 March 2014cont’d


Notice of Fourteenth Annual General Meeting

notice is hereBy Given that the Fourteenth Annual General Meeting (“14th AGM”) of yi-lai Berhad (“YLB” or “the Company”) will be held at Lot 7020, Batu 23, Jalan Air Hitam, 81000 Kulaijaya, Johor Darul Ta’zim on Wednesday 21 May 2014 at 10.00 am for the purpose of considering and, if thought fit, passing the following resolutions:-

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.

2. To approve the payment of a final single tier dividend of 3.0 sen per ordinary share of RM0.50 each for the financial year ended 31 December 2013.

3. To approve the payment of Directors’ fees totalling RM130,000 for the financial year ended 31 December 2013.

4. To re-elect Mr Lim Oon Kok who retires pursuant to Section 129(2) of the Companies Act, 1965.

5. To re-elect the following Directors retiring in accordance with the Company’s Articles of Association:-

(a) Encik Zabidi Bin Md Zain - Article 81 (b) Ms Lim Yun-Li - Article 77

6. To re-appoint the retiring Auditors, Messrs KPMG as Auditors and to authorise the Directors to fix their remuneration.

sPecial Business

To consider and, if thought fit, to pass the following resolutions as Ordinary Resolutions:

7. ordinary resolution Proposed authority to issue shares pursuant to section 132d of the companies act, 1965 “THAT, subject always to the Companies Act, 1965, the Articles of Association of the Company and

the approvals of the relevant governmental/regulatory authorities, the directors be and are hereby empowered, pursuant to Section 132D of the Companies Act, 1965, to issue shares in the Company from time to time and upon such terms and conditions and for such purposes as the directors may deem fit provided that the aggregate number of shares issued pursuant to this resolution does not exceed ten percent (10%) of the issued and paid-up share capital of the Company for the time being and that such authority shall continue in force until the conclusion of the next Annual General Meeting of the Company.”

8. ordinary resolution Proposed renewal of share Buy-Back scheme of ylB to purchase its own shares of up to 10% of

the issued and paid-up share capital of the company

“THAT, subject to the Company’s compliance with all applicable rules, regulations, orders and guidelines made pursuant to the Companies Act, 1965, the provisions of the Company’s Memorandum and Articles of Association and the requirements of Bursa Malaysia Securities Berhad (“Bursa Securities”), the Company be and is hereby authorised to the fullest extent permitted by law, to buy-back and/or hold from time to time and at anytime such amount of ordinary shares of RM0.50 each in the Company as may be determined by the Directors of the Company from time to time through Bursa Securities upon such terms and conditions as the Directors may deem fit and expedient in the interests of the Company (“Proposed Share Buy-Back”) provided that:

(Please refer to Note No. 1)

RESOLUTION 1

RESOLUTION 2

RESOLUTION 3

RESOLUTION 4RESOLUTION 5

RESOLUTION 6

RESOLUTION 7


Notice of Fourteenth Annual General Meeting cont’d

(a) the maximum number of shares which may be purchased and/or held by the Company at any point of time pursuant to the Proposed Share Buy-Back shall not exceed ten percent (10%) of the total issued and paid-up share capital of the Company for the time being quoted on Bursa Securities;

(b) the maximum amount of funds to be allocated by the Company pursuant to the Proposed Share Buy-Back shall not exceed the sum of retained profits and the share premium account of the Company based on its latest audited financial statements available up to the date of a transaction pursuant to the Proposed Share Buy-Back;

THAT the shares purchased by the Company pursuant to the Proposed Share Buy-Back may be dealt with in all or any of the following manner (as selected by the Company):

(i) the shares so purchased may be cancelled; and/or

(ii) the shares so purchased may be retained as treasury shares in accordance with the relevant rules of Bursa Securities for distribution as dividend to the shareholders and/or resell through Bursa Securities and/or subsequently cancelled; and/or

(iii) part of the shares so purchased may be retained as treasury shares with the remainder being cancelled;

THAT such authority shall commence upon the passing of this resolution, until the conclusion of the next Annual General Meeting of the Company or the expiry of the period within which the next Annual General Meeting is required by law to be held unless revoked or varied by ordinary resolution of the shareholders of the Company in general meeting but so as not to prejudice the completion of a purchase made before such expiry date;

AND THAT the Directors of the Company be and are hereby authorised to take all steps as are necessary or expedient to implement or to give effect to the Proposed Share Buy-Back with full powers to amend and/or assent to any conditions, modifications, variations or amendments (if any) as may be imposed by the relevant governmental/regulatory authorities from time to time and with full power to do all such acts and things thereafter in accordance with the Companies Act, 1965, the provisions of the Company’s Memorandum and Articles of Association and the requirements of the Bursa Securities and all other relevant governmental/regulatory authorities.”

9. ordinary resolution retention of indePendent director, Mr. onG KhenG sWee

THAT Mr. Ong Kheng Swee be retained as Independent Non-Executive Director of the Company in accordance with the Malaysian Code on Corporate Governance 2012.

10. ordinary resolution retention of indePendent director, Mr. onG chin lin

THAT Mr. Ong Chin Lin be retained as Independent Non-Executive Director of the Company in accordance with the Malaysian Code on Corporate Governance 2012.

11. To transact any other business for which due notice shall have been given in accordance with the Company’s Articles of Association and the Companies Act, 1965.

RESOLUTION 8

RESOLUTION 9

RESOLUTION 10



notice of dividend entitleMent and PayMent

Subject to the approval of the shareholders at the Fourteenth Annual General Meeting, a final single tier dividend of 3.0 sen per ordinary share of RM0.50 each for the financial year ended 31 December 2013, will be paid on 8 July 2014 to those registered in the Record of Depositors at the close of business on 10 June 2014.

A depositor shall qualify for entitlement to dividend only in respect of:

a. Shares transferred into the Depositor’s Securities Account before 4 p.m. on 10 June 2014 in respect of ordinary transfers; and

b. Shares bought on the Bursa Securities on a cum entitlement basis according to the Rules of the Bursa Malaysia Securities Berhad.

Further notice is hereby given that for the purpose of determining a member who shall be entitled to attend the Fourteenth Annual General Meeting, the Company shall be requesting Bursa Malaysia Depository Sdn. Bhd. to issue a General Meeting Record of Depositors as at 12 May 2014. Only a depositor whose name appears on the Record of Depositors as at 12 May 2014 shall be entitled to attend the said meeting or appoint proxies to attend and/or vote on his/her behalf.

By Order of the Board

nG chye huatanG Mui KioWSecretaries

Johor Bahru28 April 2014

NOTES:

1. Audited Financial Statements

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 members/shareholders for the Audited Financial Statements. Hence, this Agenda item is not put forward for voting.

2. Form of Proxy

i. A member of the Company entitled to attend and vote at the above meeting is entitled to appoint not more than two (2) proxies to attend and vote in his stead. A proxy need not be a member of the Company and the provisions of Section 149(1)(b) of the Companies Act, 1965 shall not apply to the Company. There shall be no restriction as to the qualification of the proxy.

ii. Where a Member of the Company 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.

iii. Where a member or authorized nominee appoints two (2) proxies, or where an Exempt Authorised Nominee appoints two (2) or more proxies, the appointments shall be invalid unless he specifies the proportions of his holdings to be represented by each proxy.

iv. The instrument appointing a proxy shall be in writing under the hand of the appointor or of his attorney duly authorised in writing or, if the appointor is a corporation, either under Seal or under the hand of an officer or attorney duly authorised.

v. All forms of proxy must be deposited at the Registered Office of the Company situated at Suite 7E, Level 7, Menara Ansar, 65, Jalan Trus, 80000 Johor Bahru, Johor Darul Ta’zim, Malaysia not less than 48 hours before the time appointed for holding the meeting or any adjournment thereof.


3. Explanatory Notes on Special Business

i. Proposed authority to issue shares pursuant to Section 132D of the Companies Act, 1965

The Proposed authority to issue shares, Ordinary Resolution No. 7, if passed, will give the Directors of the Company, from the date of the above Annual General Meeting, authority to issue not more than ten percent (10%) of the issued and paid-up share capital of the Company. Such issuance of shares will still be subject to the approvals of the Securities Commission and Bursa Malaysia Securities Berhad. This authority, unless revoked or varied at a general meeting, will expire at the conclusion of the next Annual General Meeting of the Company.

Pursuant to Paragraph 6.03(3) of the Bursa Malaysia Securities Berhad’s Main Market Listing Requirements, the Company is seeking renewal of the proposed authority to issue shares. There was no issuance of shares and thus no proceeds being raised since the last renewal was sought. The renewed general mandate will provide flexibility to the Company for any possible fund raising activities and there is no specific purpose and utilisation for the proceeds to be raised under this mandate. Hence, the proceeds to be raised, if any, may be used for funding future investment and working capital.

ii. Proposed Authority for Renewal of Share Buy-Back

The Proposed Renewal of Share Buy-Back, Ordinary Resolution No. 8, if passed, will empower the Company to purchase and/or hold up to ten percent (10%) of the issued and paid-up share capital of the Company. This authority, unless revoked or varied at a general meeting, will expire at the next Annual General Meeting of the Company. For further information on the Proposed Renewal of Share Buy-Back, please refer to the Share Buy-Back Statement on pages 78 to 84 of the Annual Report 2013.

iii. Retention as Independent Non-Executive Directors of the Company pursuant to the Malaysian Code on Corporate Governance 2012 (Resolution 9 and Resolution 10)

(a) Mr. Ong Kheng Swee

Mr. Ong Kheng Swee was appointed as an Independent Non-Executive Director of the Company on 30 January 2002 and has, therefore served for more than nine (9) years. As at the date of the notice of the 14th AGM, he has served the Company for 12 years. However, he has met the independence guidelines as set out in Chapter 1 of the Bursa Malaysia Securities Berhad Main Market Listing Requirements (“MMLR”). The Board, therefore, considers him to be independent and believes that he should be retained as Independent Non-Executive Director.

(b) Mr. Ong Chin Lin

Mr. Ong Chin Lin was appointed as an Independent Non-Executive Director of the Company on 26 September 2002 and has, therefore served for more than nine (9) years. As at the date of the notice of the 14th AGM, he has served the Company for 11 years. However, he has met the independence guidelines as set out in Chapter 1 of the MMLR. The Board, therefore, considers him to be independent and believes that he should be retained as Independent Non-Executive Director.



Statement Accompanying Notice of Fourteenth Annual General Meeting

Pursuant to Paragraph 8.27(2) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad

The Directors standing for re-appointment under Section 129(6) of the Companies Act, 1965 and re-election are:

(a) Mr Lim Oon Kok - RESOLUTION 3(b) Mr Zabidi Bin Md Zain - RESOLUTION 4(c) Ms Lim Yun-Li - RESOLUTION 5

Further details of the above named Directors and their interest in the securities of the Company are set out in the profile of Directors on page 3 of the annual report.


Share Buy-Back Statementin relation to the Proposed Renewal of Shareholders’ Approvalfor Share Buy-Back by the Company (“Proposed Share Buy-Back”)

1. disclaiMer stateMent

Bursa Malaysia Securities Berhad (“Bursa Securities”) has not perused this Share Buy-Back Statement prior to its issuance as it is an exempt statement. Bursa Securities takes no responsibility for the contents of this statement, makes no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this Share Buy-Back Statement.

2. introduction

At the Annual General Meeting of Yi-Lai Berhad (“YLB” or “the Company”) held on 21 May 2013, YLB obtained the renewal of shareholders’ approval for the Company to purchase and/or hold up to ten percent (10%) of the total issued and paid-up share capital of the Company through Bursa Securities. Pursuant to the Listing Requirements of the Bursa Securities, this approval will expire at the conclusion of the forthcoming Fourteenth Annual General Meeting (“14th AGM”) of the Company scheduled to be held on 21 May 2014.

On 3 April 2014, YLB announced its intention to seek renewal of shareholders’ approval for the Proposed Share Buy-Back at the forthcoming 14th AGM.

The purpose of this Statement is to provide you with the relevant information on the Proposed Share Buy-Back and to seek the renewal of your approval for the Proposed Share Buy-Back by your approval of the ordinary resolution to be tabled at the forthcoming 14th AGM to be convened on 21 May 2014, notice of which is set out on pages 73 to 76 of the Company’s Annual Report 2013.

3. Purchases and cancellation of shares and resale of treasury shares Made Pursuant to the existinG aPProval

The total number of YLB Shares purchased by the Company and held as Treasury Shares for the previous twelve (12) months preceding the date of this Statement, i.e. up to and including 31 March 2014 was 5,060,000. All the YLB Shares purchased have been retained as treasury shares, and the total number of YLB Shares retained as Treasury Shares as at 31 March 2014 was 5,060,000. There was no re-sale of Treasury Shares or cancellation of shares during the financial year ended 31 December 2013 and up to 31 March 2014. However, on 7 April 2014, the Company has transferred a total of 4,648,192 Treasury Shares as share dividend to the entitled shareholders as at the entitlement date of 24 March 2014.

During the financial year ended 31 December 2013, the Company has purchased a total of 779,000 YLB Shares and further information on the YLB Shares purchased is set out on page 13 of the Annual Report 2013.

4. ProPosed reneWal of aPProval for share Buy-BacK

As at 31 March 2014, the total issued and paid-up share capital of YLB is RM80,000,000 comprising 160,000,000 ordinary shares of RM0.50 each. The maximum number of YLB Shares which may be purchased by the Company will be ten percent (10%) of the existing issued and paid-up share capital of the Company or 16,000,000 YLB Shares.

The Board of Directors of YLB proposes to seek the renewal of approval from the shareholders of YLB to purchase, hold, cancel, distribute or resell up to a maximum of ten percent (10%) of the issued and paid-up share capital of YLB or the equivalent of 16,000,000 ordinary shares as at 31 March 2014 through the Bursa Securities subject to the compliance with the Listing Requirements and any other relevant authorities and upon such terms and conditions that in the opinion of the Directors will be in the interest of the Company.


Share Buy-Back Statementin relation to the Proposed Renewal of Shareholders’ Approval

for Share Buy-Back by the Company (“Proposed Share Buy-Back”)cont’d

4. ProPosed reneWal of aPProval for share Buy-BacK cont’d

The renewed authority for the Proposed Share Buy-Back will be effective immediately upon the passing of the ordinary resolution and will continue to be in force until:

i. the conclusion of the next Annual General Meeting of the Company at which time it shall lapse unless by an ordinary resolution passed at that meeting, the authority is renewed, either unconditionally or subject to conditions; or

ii. the expiration of the period within which the next Annual General Meeting after that is required by law to be held; or

iii. revoked or varied by ordinary resolution passed by the shareholders of the Company in general meeting;

whichever is the earliest.

5. rationale for the ProPosed share Buy-BacK

The Proposed Share Buy-Back will enable YLB to utilise any of its surplus financial resources to purchase its own shares from the market. It may stabilise the supply and demand of its shares traded on the Main Market of Bursa Securities and thereby support its fundamental value. Further, this is expected to enhance shareholder value in the event that such purchased shares are cancelled as the resultant reduction in the issued and paid-up share capital of YLB is expected to increase the earnings per share (“EPS”), thereby making the shares more attractive to investors.

In addition, the purchased shares may be held as Treasury Shares and distributed to shareholders as dividend and/or resold in the open market with the intention of realising a potential capital appreciation on the shares without affecting the total issued and paid-up share capital of the Company.

6. quantuM and fundinG

The actual number of YLB Shares which may be purchased and the timing of the purchase(s) will depend on, inter-alia, market conditions, the availability of retained profits/share premium and financial resources of the Company as well as Bursa Securities requirement to maintain the necessary shareholding spread and minimum issued and paid-up share capital.

Pursuant to the Listing Requirements, we will purchase YLB Shares entirely out of our retained profits and/or the share premium account. Therefore, the Board proposes that the maximum amount of funds to be used for any purchase of our own shares will not exceed the aggregate of our retained profits and share premium account.

The audited retained earnings and share premium account of the Company as at 31 December 2013 is RM6,276,915 and RM24,376,066 respectively. Based on the latest unaudited management accounts as at 31 March 2014, the retained earnings and share premium account of the Company amounted to approximately RM6,331,754 and RM24,376,066 respectively.

The Proposed Share Buy-Back will be financed through internally generated funds and/or borrowings and shall be made out of the retained earnings and/or share premium account of the Company. In the event the purchase is funded by borrowings, the Company expects that it will be capable of repaying such borrowings and that such funding is not expected to have any material effect on the cash flow of the Company.

The Proposed Share Buy-Back will reduce the cash of the Company by an amount dependent on the purchase price of the YLB Shares and the actual number of YLB Shares bought back.


Share Buy-Back Statementin relation to the Proposed Renewal of Shareholders’ Approvalfor Share Buy-Back by the Company (“Proposed Share Buy-Back”)cont’d

7. Potential advantaGes and disadvantaGes of the ProPosed share Buy-BacK

The financial resources of YLB may increase pursuant to the resale of the purchased shares held as Treasury Shares at prices higher than the purchase price. The other advantages of the Proposed Share Buy-Back are outlined in item 5 of this Statement.

However, the Proposed Share Buy-Back, if implemented, would reduce the financial resources of the Company. This may result in the Company foregoing future investment opportunities and/or any income that may be derived from alternative uses of such funds.

Nevertheless, the Directors will be mindful of the interests of YLB and its shareholders in implementing the Proposed Share Buy-Back.

8. effect of the ProPosed share Buy-BacK

8.1 share capital

Assuming the Proposed Share Buy-Back is carried out up to 10% of the existing issued and paid-up share capital of YLB of 160,000,000 ordinary shares of RM0.50 each as at 31 March 2014, the number of YLB Shares allowed to be purchased by the Company is 16,000,000 shares.

In the event that all the shares purchased are to be cancelled, the effect of the Proposed Share Buy-Back on the issued and paid-up share capital of the Company would be as follows:

no. of ordinary shares of rM0.50 each

Issued and paid-up share capital as at 31 March 2014# 160,000,000

Upon completion of the Proposed Share Buy-Back* (assuming all cancelled) (16,000,000)

Reduced share capital after the Proposed Share Buy-Back 144,000,000

# The issued and paid-up ordinary share capital stated above is inclusive of the 5,060,000 treasury shares held by the Company as at 31 March 2014.

* Assuming the Company purchased up to the maximum number of YLB Shares that may be purchased pursuant to the Proposed Share Buy-Back i.e. 10% of the existing issued and paid-up share capital of the Company.

However, the Proposed Share Buy-Back is not expected to have any effect on the issued and paid-up share capital if all the shares purchased are to be retained as Treasury Shares, resold or distributed to our shareholders.

8.2 net tangible assets (“nta”)

If the purchased shares are kept as Treasury Shares, the NTA per share would decrease, unless the cost per share of the Treasury Shares purchased is below the NTA per share at the relevant point in time. This is because the Treasury Shares, which are required to be carried at cost, must be offset against equity and therefore would result in a decrease in NTA of the Company.

Similarly, if the purchased shares are cancelled, the NTA per share of the YLB Group will decrease, unless the cost per share of the purchased shares is below the NTA per share at the relevant point in time.

In the case where the purchased shares are treated as Treasury Shares and subsequently resold on Bursa Securities, the NTA per share of the YLB Group will increase if the Company realises a gain from the resale, and vice-versa. If the Treasury Shares are distributed as share dividends, the NTA of the YLB Group will decrease by the cost of the Treasury Shares.




8. effect of the ProPosed share Buy-BacK cont’d

8.3 Working capital

The Proposed Share Buy-Back is likely to reduce the working capital of the Group, the quantum of which will depend on the actual purchase price and number of shares to be bought back.

8.4 cashflow

The Proposed Share Buy-Back is not expected to be implemented to the extent that it will adversely affect the cashflow of the Company. The exact effect on the cashflow of the Company will depend on the quantum and price at which the shares are bought back.

8.5 earnings

The effects of the Proposed Share Buy-Back on the earnings of our Group are dependent on the purchase prices of YLB Shares and the effective funding cost or loss in interest income to our Group.

Assuming that the YLB Shares so purchased are retained as treasury shares and subsequently resold, the effects on the earnings of our Group are dependent on the actual selling price, the number of treasury shares resold, the effective gain or interest savings arising from the exercise, and the manner in which the proceeds arising therefrom are utilised.

If the YLB Shares so purchased are cancelled, the Proposed Share Buy-Back will increase the EPS of our Group provided the income foregone and if any, interest expense incurred on the shares purchased are less than the consolidated EPS before the Proposed Share Buy-Back.




8.6 directors’ and substantial shareholders’ shareholdings

(i) Directors

Assuming that the Proposed Share Buy-Back is implemented in full and that the YLB Shares are purchased from shareholders other than our Directors and Persons Connected to the Directors of the Company, the proforma effects of the Proposed Share Buy-Back on the shareholdings of the Directors and Persons Connected to the Directors of the Company as at 31 March 2014, being the most practicable date prior to the printing of this Statement, are set out as follows:

as at 31 March 2014 after full exercise of Proposed share Buy-Back

direct indirect direct indirect

no. of shares %

no. of shares %

no. of shares %#

no. of shares %#

directors

Zabidi Bin Md Zain 9,338,281 6.03 1,524,000 a 0.98 9,338,281 6.48 1,524,000 a 1.06

Lim Oon Kok 35,058,942 22.63 9,161,205 b 5.91 35,058,942 24.35 9,161,205 b 6.36

Hsieh Yu-Tien 300,006 0.19 - - 300,006 0.21 - -

Lim Yun-Li^ 4,000,000 2.58 - 4,000,000 2.78 - -

Ong Kheng Swee - - - - - - - -

Ong Chin Lin - - - - - - - -

Persons connected

Liao Feun Chu 4,408,730 2.85 39,811,417 c 25.69 4,408,730 3.06 39,811,417 c 27.65

Dr. Anyta Hanim Binti Anuar - - 10,862,281 d 7.01 - - 10,862,281 d 7.54

Edufocus Computer Aided Learning Sdn Bhd@ 1,524,000 0.98 - - 1,524,000 1.06 - -

Lim Yun-An* 4,220,172 2.72 - - 4,220,172 2.93 - -

Lim Lih Tyng~ 532,303 0.34 - - 532,303 0.37 - -

Notes :

# Percentage computed based on the total number of shares in issue of 160,000,000 and after assuming the deduction of a total of 16,000,000 (being the maximum shares that may be bought back i.e. 10% of the total number of shares issued) shares bought back and retained as treasury shares as at 31 March 2014.

@ Edufocus Computer Aided Learning Sdn. Bhd. is a company in which Encik Zabidi Bin Md Zain and Dr. Anyta Hanim Binti Anuar has substantial interest.

^ Ms. Lim Yun-Li is the daughter of Mr. Lim Oon Kok. * Ms. Lim Yun-An is the daughter of Mr. Lim Oon Kok. ~ Ms. Lim Lih Tyng is the daughter of Mr. Lim Oon Kok. a By virtue of his interest in Edufocus Computer Aided Learning Sdn. Bhd.. b By virtue of his interest in the shareholdings of his spouse, Mdm. Liao Feun Chu and his children, Ms. Lim Yun-An and Ms. Lim Lih Tyng who

themselves are not Directors of the Company. c By virtue of her interest in the shareholdings of her spouse, Mr. Lim Oon Kok and her children, Ms. Lim Yun-An and Ms. Lim Lih Tyng who

themselves are not Directors of the Company. d By virtue of her interest in Edufocus Computer Aided Learning Sdn. Bhd. and the shareholdings of her spouse, Encik Zabidi Bin Md Zain.





8.6 directors’ and substantial shareholders’ shareholdings cont’d

(ii) Substantial Shareholders

Assuming that the Proposed Share Buy-Back is implemented in full and that the YLB Shares are purchased from shareholders other than our existing substantial shareholders and Persons Connected to the substantial shareholders of the Company, the proforma effects of the Proposed Share Buy-Back on the shareholdings of the substantial shareholders and Persons Connected to the substantial shareholders of the Company as at 31 March 2014, being the most practicable date prior to the printing of this Statement, are set out as follows :

as at 31 March 2014 after full exercise of Proposed share Buy-Back

direct indirect direct indirect

no. of shares %

no. of shares %

no. of shares %#

no. of shares %#

substantial shareholders

Zabidi Bin Md Zain 9,338,281 6.03 1,524,000 a 0.98 9,338,281 6.48 1,524,000 a 1.06

Lim Oon Kok 35,058,942 22.63 9,161,205 b 5.91 35,058,942 24.35 9,161,205 b 6.36

Liao Feun Chu 4,408,730 2.85 39,811,417 c 25.69 4,408,730 3.06 39,811,417 c 27.65

Dr. Anyta Hanim Binti Anuar - - 10,862,281 d 7.01 - - 10,862,281 d 7.54

Lembaga Tabung Haji 16,000,000 10.33 - - 16,000,000 11.11 - -

Persons connected

Edufocus Computer Aided Learning Sdn Bhd@ 1,524,000 0.98 - - 1,524,000 1.06 - -

Lim Yun-An* 4,220,172 2.72 - - 4,220,172 2.93 - -

Lim Lih Tyng~ 532,303 0.34 - - 532,303 0.37 - -

Lim Yun-Li^ 4,000,000 2.58 - - 4,000,000 2.78 - -

Notes :

# Percentage computed based on the total number of shares in issue of 160,000,000 and after assuming the deduction of a total of 16,000,000 (being the maximum shares that may be bought back i.e. 10% of the total number of shares issued) shares bought back and retained as treasury shares as at 31 March 2014.

@ Edufocus Computer Aided Learning Sdn. Bhd. is a company in which Encik Zabidi Bin Md Zain and Dr. Anyta Hanim Binti Anuar has substantial interest.

^ Ms. Lim Yun-Li is the daughter of Mr. Lim Oon Kok. * Ms. Lim Yun-An is the daughter of Mr. Lim Oon Kok. ~ Ms. Lim Lih Tyng is the daughter of Mr. Lim Oon Kok. a By virtue of his interest in Edufocus Computer Aided Learning Sdn. Bhd.. b By virtue of his interest in the shareholdings of his spouse, Mdm. Liao Feun Chu and his children, Ms. Lim Yun-An and Ms. Lim Lih Tyng who

themselves are not Directors of the Company. c By virtue of her interest in the shareholdings of her spouse, Mr. Lim Oon Kok and her children, Ms. Lim Yun-An and Ms. Lim Lih Tyng who

themselves are not Directors of the Company. d By virtue of her interest in Edufocus Computer Aided Learning Sdn. Bhd. and the shareholdings of her spouse, Encik Zabidi Bin Md Zain.




8.7 dividends

The Board has proposed a final single tier dividend of 3.0 sen per ordinary share of RM0.50 each in respect of the financial year ended 31 December 2013 subject to the shareholders’ approval at the forthcoming 14th AGM.

The Proposed Share Buy-Back may reduce the amount of distributable reserves available for dividends. However, assuming the Proposed Share Buy-Back is implemented in full and YLB’s quantum of dividends is maintained at historical level, the Share Buy-Back will have the effect of increasing the dividend rate of YLB as a result of the reduction in the issued and paid-up share capital of YLB.

9. PuBlic shareholdinG sPread

As at 31 December 2013, the public shareholding spread of the Company is 47.33%. The public shareholding spread would be reduced to approximately 43.33% assuming, the Proposed Share Buy-Back is implemented in full and all the shares purchased are from public shareholders and are either cancelled or held as Treasury Shares.

The Board is mindful of the public shareholding spread requirement and will continue to be mindful of the requirement when making any purchase of YLB Shares pursuant to the Proposed Share Buy-Back.

10. iMPlications relatinG to the Malaysian code on taKe-over and MerGer 2010 (“code”)

Pursuant to Part III and Practice Note 9 of the Code, a person together with persons acting in concert with him (if any), who has obtained control in a company or who holds more than 33% but less than 50% of the voting shares of a company, who as a result of a purchase of the Company of its own shares, increases his holding in any period of six (6) months by an additional 2% or more of the voting shares of the Company, the person together with persons acting in concert with him (if any) are obligated to extend a mandatory take-over offer to acquire the remaining shares not already held by them.

The Board is mindful of any potential implications relating to Part II of the Code and in the event that obligations relating to Part II of the Code is expected to be triggered as a result of the Proposed Renewal of Share Buy-Back, which is an action outside any group of persons acting in concert’s direct participation, they will apply to the Securities Commission for an exemption from undertaking a take-over offer for all the remaining shares in YLB not already held by them under Practice Note 9 of the Code.

11. directors’ and suBstantial shareholders’ interests

Save for the inadvertent increase in the percentage shareholding and/or voting rights of the shareholders as a consequence of the Proposed Share Buy-Back, none of the Directors and substantial shareholders of the Company or persons connected to them has any interest, direct or indirect, in the Proposed Share Buy-Back.

12. directors’ recoMMendation

The Directors, having considered all aspects of the Proposed Share Buy-Back, are of the opinion that the Proposed Share Buy-Back is in the best interest of the Company. Accordingly, they recommend that you vote in favour of the ordinary resolution for the Proposed Share Buy-Back to be tabled at the forthcoming 14th AGM.

13. directors’ resPonsiBility stateMent

This Statement has been seen and approved by the Board and they collectively and individually accept full responsibility for the accuracy of the information given and confirm that after making all reasonable enquiries and, to the best of their knowledge and belief, there are no other facts the omission of which would make any statement herein false or misleading.

This Share Buy-Back Statement is dated 28 April 2014.

I/We................................................................................................................................................................................. (NRIC No. .....................................................)

of ...............................................................................................................................................................................................................................................................

being a member/members of yi-lai Berhad (“the Company”) do hereby appoint ..................................................................................................

........................................................................................................................................................................................ (NRIC No. .....................................................)

of ..............................................................................................................................................................................................................................................................

or failing him/her, .................................................................................................................................................. (NRIC No. .....................................................)

of .............................................................................................................................................................................................................................................................

or failing him/her, the Chairman of the Meeting, as my/our proxy to vote for me/us on my/our behalf at the Fourteenth Annual General Meeting of the Company to be held at Lot 7020, Batu 23, Jalan Air Hitam, 81000 Kulaijaya, Johor Darul Ta’zim on Wednesday, 21 May 2014 at 10.00 am and at any adjournment thereof.

Please indicate clearly with an “X” where appropriate against each resolution how you wish your proxy to vote. If no specific direction to voting is given, the proxy will vote or abstain at his/her discretion.

no. resolutions for aGainst

1 Approval of a final single tier dividend of 3.0 sen per ordinary share of RM0.50 each

2 Approval of Directors’ fees

3 Re-election of retiring Director pursuant to Section 129(2) of the Companies Act, 1965 - Lim Oon Kok

4 Re-election of retiring Director under Article 81 - Zabidi Bin Md Zain

5 Re-election of retiring Director under Article 77 - Lim Yun-Li

6 Re-appointment of KPMG as Auditors and authorise the Directors to fix their remuneration

7 Empower directors to issue shares pursuant to Section 132D of the Companies Act, 1965

8 Approval of Proposed Renewal of Share Buy-Back

9 Retention of Ong Kheng Swee as Independent Non-Executive Director

10 Retention of Ong Chin Lin as Independent Non-Executive Director

Signed this day of 2014

Signature of Member(s)

NOTES:

i. A member of the Company entitled to attend and vote at the above meeting is entitled to appoint not more than two (2) proxies to attend and vote in his stead. A proxy need not be a member of the Company and the provisions of Section 149(1)(b) of the Companies Act, 1965 shall not apply to the Company. There shall be no restriction as to the qualification of the proxy.

ii. Where a Member of the Company 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.

iii. Where a member or authorized nominee appoints two (2) proxies, or where an Exempt Authorised Nominee appoints two (2) or more proxies, the appointments shall be invalid unless he specifies the proportions of his holdings to be represented by each proxy.

iv. The instrument appointing a proxy shall be in writing under the hand of the appointor or of his attorney duly authorised in writing or, if the appointor is a corporation, either under Seal or under the hand of an officer or attorney duly authorised.

v. All forms of proxy must be deposited at the Registered Office of the Company situated at Suite 7E, Level 7, Menara Ansar, 65, Jalan Trus, 80000 Johor Bahru, Johor Darul Ta’zim, Malaysia not less than 48 hours before the time appointed for holding the meeting or any adjournment thereof.

FORM OF PROXY

number of ordinary shares held

1st Fold Here

Then Fold Here

AFFIXSTAMP

The Company Secretary

yi-lai Berhad (516043-K)

Suite 7E, Level 7Menara Ansar 65 Jalan Trus80000 Johor BahruJohor Darul Ta’zimMalaysia

yi-lai berhad 65, jalan suria 1, taman malim jaya, 75250 melaka darul azim, malaysia tel : 606-336...

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