long-lasting excellence - 1855491441138.pdf...4. to re-elect mr. leong woay hong @ neoh woay hong, a...

Annual Report 2016www.eka.com.my

EKA NOODLES BERHAD (583565-U)

Lot 208, Phase II, Kuala Ketil Industrial Estate,09300 Kuala Ketil, Kedah Darul Aman.

Long-Lasting Excellence

1ANNUAL REPORT 2016

Financial Statements

Directors’ Report 31

Statement by Directors 36

Statutory Declaration 36

Independent Auditors’ Report 37

Statements of Profit or Loss and OtherComprehensive Income

40

Statements of Financial Position 42

Statements of Changes in Equity 43

Statements of Cash Flows 46

Notes to the Financial Statements 48

Supplementary Information on the Disclosure of Realised and Unrealised Profits or Losses

84

Analysis of Shareholdings 85

Analysis of Warrant Holdings 87

List of Properties 89

Proxy Form 91

CONTENTSNotice of Annual General Meeting 2

Statement Accompanying Notice of Annual General Meeting

4

Corporate Information 5

Corporate Structure 6

Management Discussion and Analysis 8

Directors’ Profiles 10

Corporate Governance Disclosures 13

Statement on Risk Management and Internal Control

21

Audit Committee Report 23

Additional Compliance Information 28

Corporate Social Responsibility Statement 29

Directors’ Responsibility Statement 30

Long-Lasting ExcellenceEKA Noodles Berhad (EKA) has been in Malaysia for nearly 15 years. With the ever-changing needs in the market, the company strives to improve its products and services in order to remain sustainable in the market. The noodles from EKA Noodles Berhad (EKA) are being picked up without losing its elasticity, showing that the company’s visions to the future are strong and long-lasting.





2 EKA NOODLES BERHAD (583565-U)

NOTICE OF ANNUAL GENERAL MEETING

NOTICE OF ANNUAL GENERAL MEETING

NOTICE IS HEREBY GIVEN that the 14th Annual General Meeting (“AGM”) of the Company will be held at Lot 208, Phase II, Kuala Ketil Industrial Estate, 09300 Kuala Ketil, Kedah Darul Aman on Friday, 26 May 2017 at 2.00 p.m. for the following purposes:-

AGENDAOrdinary Business 1. To receive the Audited Financial Statements for the financial year ended 31 December

2016 together with the Reports of Directors and Auditors thereon.Please refer

to Note 62. To re-elect Mr. Fong Yit Meng, a director who retires in accordance with the Article 102 of

the Company’s Constitution and who, being eligible, offers himself for re-election.Resolution 1

3. To re-elect Dato’ Dr. Chin Yew Sin (JP), a director who retires in accordance with the Article 102 of the Company’s Constitution and who, being eligible, offers himself for re-election.

Resolution 2

4. To re-elect Mr. Leong Woay Hong @ Neoh Woay Hong, a director who retires in accordance with the Article 102 of the Company’s Constitution and who, being eligible, offers himself for re-election.

Resolution 3

5. To re-elect Mr. Lim Choo Hooi, a director who retires in accordance with the Article 102 of the Company’s Constitution and who, being eligible, offers himself for re-election.

Resolution 4

6. To approve the payment of Directors’ Fees for the financial year ended 31 December 2016. Resolution 57. To approve the payment of Directors’ Benefits for the period from 31 January 2017 until

the conclusion of the next AGM of the Company.Resolution 6

8. To re-appoint Messrs. Afrizan Tarmili Khairul Azhar as auditors of the Company to hold office until the conclusion of the next AGM of the Company and to authorise the directors to fix their remuneration.

Resolution 7

As Special Business:To consider and if thought fit, to pass with or without modifications, the following resolution as an Ordinary Resolution:9. PROPOSED RENEWAL OF GENERAL MANDATE FOR THE DIRECTORS TO ALLOT AND

ISSUE SHARES IN THE COMPANY“That, subject always to the provisions of the Companies Act, 2016, the Company’s Constitution, the Listing Requirements of Bursa Malaysia Securities Berhad (“Bursa Securities”) and the regulations, guidelines and practice notes issued from time to time by Bursa Securities or any other regulatory authorities, approval be hereby given for the Directors of the Company to allot and issue shares in the Company at any time and upon such terms and conditions and for such purposes as the Directors may deem fit, PROVIDED THAT the aggregate number of shares to be issued does not exceed 10% of the total number of issued shares of the Company and that the approval conferred by this resolution shall take effect immediately upon the passing of this resolution and shall continue to be in force until:

Resolution 8

(a) the conclusion of the AGM of the Company held next after the approval was given;(b) the expiration of the period within which the next AGM of the Company is required

to be held after the approval was given,whichever is the earlier; or(c) revoked or varied at any time by an ordinary resolution passed by the shareholders

in a general meeting;whichever is the earlier;That, the Directors of the Company be hereby authorised to enter into such transactions, arrangements, agreements and documents as are necessary with full power to assent to any conditions, modifications, variations and/or amendments as may be required by the relevant authorities or as the Directors, in their absolute discretion deem fit and in the best interest of the Company.And that, any Executive Director and/or the Secretary of the Company be hereby authorised to obtain the approval from Bursa Securities for the listing and quotation of the additional shares to be issued and to do all such acts and things as are necessary to give full effect to such transactions as authorised by this resolution.”

10. To transact any other business of which due notice shall have been given in accordance with the Company’s Constitution and the Companies Act, 2016.

3ANNUAL REPORT 2016

NOTICE OF ANNUAL GENERAL MEETING (Cont’d)

FURTHER NOTICE IS HEREBY GIVEN THAT for the purpose of determining a member who shall be entitled to attend the 14th AGM, the Company shall be requesting Bursa Malaysia Depository Sdn Bhd to issue a General Meeting Record of Depositors as at 22 May 2017. Only a depositor whose name appears on the Record of Depositors as at 22 May 2017 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,

P’NG CHIEW KEEM (MAICSA 7026443)TAN TONG LANG (MAICSA 7045482)CHONG VOON WAH (MAICSA 7055003)Secretaries

PenangDate: 29 April 2017

NOTES ON APPOINTMENT OF PROXY(1) A proxy may but need not be a member of the Company.(2) For a proxy to be valid, the proxy form duly completed must be deposited at the registered office of the

Company at 51-21-A Menara BHL Bank, Jalan Sultan Ahmad Shah, 10050 Penang not less than forty-eight (48) hours before the time for holding the meeting.

(3) A member shall be entitled to appoint one (1) or more proxies to attend and vote instead of him at the same meeting and where a member appoints more than one (1) proxy to vote at the same meeting, such appointment shall be invalid unless he specify the proportion of his shareholding to be represented by each proxy.

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

(5) In the case of a corporate member, the proxy form must be executed under the corporation’s common seal or under the hand of an officer or attorney duly authorised.

EXPLANATORY NOTE ON ORDINARY BUSINESS(6) The Audited Financial Statements in Agenda 1 had been approved by the Board pursuant to Section 251(1)

of the Companies Act 2016. Hence, this agenda does not require formal approval of shareholders of the Company and is meant for discussion pursuant to Section 248(2) of the Companies Act 2016.

EXPLANATORY NOTE ON SPECIAL BUSINESS(7) The Resolution 8, if passed, will allow the Directors to allot and issue shares in the Company up to an

amount not exceeding 10% of the total number of issued shares of the Company for the time being for such purposes as the Directors consider will be in the best interest of the Company. This authority, unless revoked or varied by the shareholders of the Company in a general meeting will expire at the conclusion of the next AGM.As at the date of this notice, there were no ordinary shares issued and allotted pursuant to the general mandate granted at the last AGM of the Company. The proposed renewal of general mandate for issuance of shares will provide flexibility to the Company for any possible fund raising activities, including but not limited to further placing of shares for the purpose of funding future investment, working capital and/or acquisition.

2016 Annual ReportThe 2016 Annual Report is in CD-ROM format. Printed copy of the Annual Report shall be provided to the shareholder upon request within four (4) market days from the date of receipt of the verbal or written request. A copy of the Annual Report can also be downloaded at www.ekanoodles.com.my

Shareholders who wish to receive the printed Annual Report and who require assistance in viewing the CD-ROM, kindly contact Puan Nor Azimah Binti Bulat at telephone no. 03-27839299 or email your request to [email protected]


ELECTION OF DIRECTORS

No individuals are standing for election as directors at the forthcoming 14th Annual General Meeting of the Company.

GENERAL MANDATE FOR ISSUANCE OF SHARES

The Resolution 8 tabled under Special Business as per the Notice of 14th Annual General Meeting of the Company dated 29 April 2017 is a renewal of general mandate granted by shareholders of the Company at the last Annual General Meeting held on 26 May 2016.

The proposed renewal of general mandate for issuance of shares will provide flexibility to the Company for any possible fund raising activities, including but not limited to further placing of shares for the purpose of funding future investment, working capital and/or acquisition.

As at the date of notice of meeting, no new share has been issued pursuant to the general mandate granted at the last Annual General Meeting of the Company.

STATEMENT ACCOMPANYING NOTICE OF ANNUAL GENERAL MEETING (Pursuant to Paragraph 8.27(2) of Bursa Malaysia Securities Berhad Main Market Listing Requirements)

5ANNUAL REPORT 2016

CORPORATE INFORMATION

NOMINATING COMMITEELeong Woay Hong @ Neoh Woay Hong (Chairman) Dato’ Dr. Chin Yew Sin (JP)Lim Choo Hooi PRINCIPAL PLACE OF BUSINESS

Lot 208, Phase ıı,Kuala Ketil Industrial Estate,09300 Kuala Ketil,Kedah Darul Aman.

REMUNERATION COMMITEELim Choo Hooi (Chairman)Dato’ Dr. Chin Yew Sin (JP)Leong Woay Hong @ Neoh Woay Hong

AUDIT COMMITTEELeong Woay Hong @ Neoh Woay Hong (Chairman) Dato’ Dr Chin Yew Sin (JP)Lim Choo Hooi

STOCK EXCHANGE LISTINGMain Market of Bursa Malaysia Securities BerhadStock Code : 7182Stock Name : EKA

COMPANY SECRETARIESTan Tong Lang (MAICSA 7045482)P’ng Chiew Keem (MAICSA 7026443)Chong Voon Wah (MAICSA 7055003)

AUDITORSAfrizan Tarmili Khairul Azhar (AF1300)Chartered AccountantsN0. 2, Jalan Rampai Niaga 2Rampai Business Park53300 Kuala LumpurTel : 03-4143 9330Fax : 03-4142 9330

BANKERSPublic Bank BerhadBank Kerjasama Rakyat Malaysia BerhadBank Pertanian Malaysia Berhad

SOLICITORSS. Raman & CoTC Lim & Co

REGISTERED OFFICE51-21-A, Menara BHL BankJalan Sultan Ahmad Shah10050 PenangTel : 04-210 8833Fax : 04-210 8831

REGISTRARSTricor Investor & Issuing House Services Sdn. Bhd.Unit 32-01, Level 32, Tower A, Vertical Business Suite,Avenue 3, Bangsar SouthNo. 8, Jalan Kerinchi59200 Kuala LumpurTel : 03-2783 9299 Fax : 03-2783 9222

HEAD OFFICELot 208, Phase IIKuala Ketil Industrial Estate09300 Kuala KetilKedah Darul AmanTel : 04-416 2222Fax : 04-416 2022

BOARD OF DIRECTORS

Chairman / Independent Non-Executive Director

Dato’ Sohaimi Bin Shahadan

Group Managing Director

Dato’ Sri Chin Seak Huat (JP)

Executive Director

Fong Yit Meng

Independent Non-Executive Director

Dato’ Dr. Chin Yew Sin (JP)

Lim Choo Hooi

Leong Woay Hong @ Neoh Woay Hong


CORPORATE STRUCTURE

History and Principal Activities

EKA Noodles Berhad (“EKA”) was incorporated in Malaysia under the Companies Act, 1965 on 20 June 2002 as a public limited company under its present name. EKA is an investment holding company whilst the principal activities of its wholly-owned subsidiary companies, are as follows:-

Subsidiary CompanyDate and place of

IncorporateIssued and

Paid-Up Capital Current Activities

Kilang Bihun Bersatu Sdn Bhd 15.09.1988Malaysia

RM 17,441,860 Has ceased operation since January 2017

Rasayang Food Industries Sdn Bhd

10.06.1998Malaysia

RM 7,915,000 Has ceased operation since February 2017

Bersatu Noodles Industries Sdn Bhd

29.08.2006Malaysia

RM 1,000,000 Has ceased operation since May 2016

Bersatu Biotechnology (Johore) Sdn Bhd

24.10.2007Malaysia

RM 500,000 Has ceased operation since January 2017

Kilang Bihun Bersatu (East Malaysia) Sdn Bhd

18.04.2001Malaysia

RM 300,000 Has ceased operation since August 2016

Bersatu Sago Industries Sdn Bhd 23.12.2000Malaysia


Bersatu Sago Industries (Mukah) Sdn Bhd

26.06.2007Malaysia


EKA Foodstuff Sdn Bhd 28.02.2012Malaysia

RM 2 Has ceased operation since January 2017

7ANNUAL REPORT 2016

CORPORATE STRUCTURE (Cont’d)

EKA NOODLES BERHAD(583565-U)

Rasayang Food Industries

Sdn Bhd

BersatuBiotechnology

(Johore) Sdn Bhd

Kilang Bihun Bersatu

(East Malaysia) Sdn Bhd

Bersatu Sago Industries (Mukah)

Sdn Bhd

100%100%100%100%

Kilang BihunBersatuSdn Bhd

Bersatu NoodlesIndustries

Sdn Bhd

Bersatu Sago Industries

Sdn Bhd

EKA FoodstuffSdn Bhd

100%100%100%100%


MANAGEMENT DISCUSSION AND ANALYSIS

EKA Noodles Bhd and its subsidiaries (“EKA”) is principally engaged in the manufacturing and marketing of all types of rice and sago sticks (vermicelli) and other related products. Our group is established participant in its market since 2002 and holding about 30% share market in country in past few years.

In the past few years, we have strived to be the market leader of all types of rice and sago sticks (vermicelli) and other related products.

Our cost reduction exercise is ongoing and we will improve our operation efficiency through maximisation of our resources.

In order to maintain the popularity of our EKA brand and being a household name for more than a decade. We will also focus in the development of EKA brand through new innovative products, enhanced nutritional value and quality improvements to keep abreast with the fast changing market and consumers demand.

Financial Year/Period 30/06/12(18 Months)

30/6/13(12 Months)

30/06/14(12 Months)

30/12/15(18 Months)

31/12/16(12 Months)

Revenue (RM’000) 123,310 97,155 90,334 97,005 23,910Profit/(Loss) Before interest and tax(RM’000)

(26,892) 5,745 (31,634) (6,867) (30,352)

Finance cost (RM’000) 540 5,499 5,520 8,729 4,087Net profit/(loss) (RM’000) (26,708) 688 (37,032) (14,909) (34,106)Shareholders’ equity (RM’000) 22,280 22,702 13,702 12,500 (21,606)Total assets (RM’000) 114,507 114,396 97,768 94,761 (59,171)Borrowing (RM’000) 66,439 73,945 68,311 67,274 69,435Debt/Equity (%) 298 325 498 538 (321)Earnings/(Loss) per share (Cents) (22) 0.57 (15.43) (4.78) (10.93)Net assets per share (Cents) 18.56 18.91 5.71 4.00 (6.92)Dividend per share - - - - -

The Group registered a revenue of RM24.0 million for the financial year ended 31 December 2016 for 12 months result whilst, the revenue for the preceding financial period ended 31 December 2015 for 18 months result was RM97.0 million. Averagely, the monthly revenue for current financial year had decreased as compared to the preceding year end. This was mainly due to some of our existing customers had continually moved the consumption of bihun and laksa to other brands in the market since last financial period.

The Group suffered losses before tax of RM34.4 million for the financial year ended 31 December 2016 as compared with losses before tax of RM14.9 million in the preceding financial period ended 31 December 2015. The huge losses were the result from the high fixed operation cost incurred such as staff costs and finance costs, impairment of receivables and property, plant and equipment.

There are significant changes of total asset attributed by impairment of receivable and property, plant and equipment, uplifted of fixed deposits with licensed bank.

There are no significant changes of total liabilities except trade and other payables due to the payment made to creditors.

There is an increase of borrowing was solely due to interests charged by the banks in the financial year.

EKA is experiencing declining sales in big fall, the new players have tried to capture the market share with the lower prices offer to the consumers for bihun and laksa.

The group’s loss before interest and taxation increased 346% in from RM6.8 million in 2015 to RM30.3 million in 2016. The increase was mainly due to high fixed operation cost incurred such as staff costs and finance costs, impairment of receivables and property, plant and equipment.

With effect from January 2017, EKA have ceased operation for all plants to avoid more losses.

9ANNUAL REPORT 2016

EKA business is very competitive from other manufacturers operating in lower costs environment. In order to remain competitive in the market, EKA will emphasis on minimal wastage issue which may lower down the cost of products. This will be supported by continued training of production workers.

The demand of bihun and laksa will continually increase with the increase of population in the country. Bihun and laksa are the basic food for every household in the country.

Due to financial issue, EKA have ceased operation for all plants in West Malaysia and East Malaysia since January 2017 and expected for the new investor to restructure EKA.

The Board of Directors has approved a dividend payout policy of not less than 75% of its consolidated profit after tax (excluding exceptional items) for the financial year ending 31 December 2016 onwards.

However, such payments will depend upon a number of factors, including amongst others, the earnings, capital commitments, general financial conditions, distributable reserves and other factors to be considered by the Board.

MANAGEMENT DISCUSSION AND ANALYSIS (Cont’d)


DIRECTORS’ PROFILES

Dato’ Sohaimi Bin Shahadan, aged 48, Male, Malaysian.

Chairman,Independent Non-Executive Director

Dato’ Sohaimi Bin Shahadan was appointed as Independent Non-Executive Chairman on 3 October 2013.

He graduated from University Pertanian Malaysia with Masters in Corporate Communication, West Coast Institute Technology and Management, Perth, Australia with Masters in Business Administration, University Kebangsaan Malaysia with Bachelor in Business Administration.

Currently, he is the Chairman of Pelaburan MARA Berhad (PMB) since 2013, an investment entity for Majlis Amanah Rakyat (MARA) and the Chairman of PDZ Holdings Berhad and also BHS Industries Berhad.

While engaging in his business, Dato’ Sohaimi is also passionate in the political arena and holds the UMNO Supreme Council Member. In addition, he also served as Vice President IV of Malays Businessmen and Industrialist Association (PERDASAMA).

Currently, he is the Independent Non-Executive Director of KUB Malaysia Berhad and Damansara Realty Berhad.

He does not have any family relationship with any directors and/or major shareholders of the Company, nor any conflict of interest in any business arrangement involving the Company. He has no convictions for any offences within the past five (5) years other than traffic offences, if any.

Dato’ Sri Chin Seak Huat, SSAP, DIMP, AMP, AMK, JP, aged 51, Male, Malaysian.

Group Managing Director

Dato’ Sri Chin Seak Huat was appointed as Chief Executive Officer of the Company on 26 July 2010 and subsequently promoted to Managing Director on 22 June 2011. He is responsible for day-to-day operation of the Group such as finance & control and corporate affairs as well as the formulating of business strategies.

He started his business career as a sole proprietor and has been involved in the construction and property development business for the past 12 years. He formed a sole proprietor under the name of SH Construction Industries to undertake and execute his construction projects and has successfully completed some main projects over the years.

Except for property development business, he is also extensively involved in sofa and furniture manufacturing, telecommunication business and corrugated cartons and sheetboards industry.

Currently, he does not hold any other directorship of public companies and listed corporations.

He does not have any family relationship with any directors and/or major shareholders of the Company, nor any conflict of interest in any business arrangement involving the Company. He has no convictions for any offences within the past five (5) years other than traffic offence, if any.

11ANNUAL REPORT 2016

DIRECTORS’ PROFILES (Cont’d)

Fong Yit Meng, Aged 34, Male, Malaysian.

Executive Director

Fong Yit Meng was appointed as the Executive Director of the Company on 14 March 2017.

He graduated with Bachelor Degree in Information Technology from Multimedia University.

He runs a wholesale, distribution and industrial supplies business in Malaysia with presence in Bangkok, Thailand. He established Airbel Technologies Sdn Bhd, a MSC status company providing business process automation solution and cloud-based solutions. Presently he is also managing Stickerson Trading Sdn Bhd, a printing company in Penang.

He is responsible for the finance and corporate affairs of the group as well as formulation and implementation of the group’s corporate and business strategies to enhance profitability and growth.


He does not have any family relationship with any directors and/or major shareholder of the Company, nor any conflict of interest in any business arrangement involving the Company. He has no convictions for any offences within the past five (5) years other than traffic offences, if any.

Dato’ Dr. Chin Yew Sin (JP), aged 57, Male, Malaysian.


Dato’ Dr. Chin Yew Sin (JP) was appointed as Independent Non-Executive Director of the Company on 14 March 2017. He is also a member of the Audit Committee, Nominating Committee and Remuneration Committee.

He graduated from Universiti Malaya, Malaysia with a Bachelor of Jurisprudence Degree, Universiti Teknologi Malaysia with a Bachelor Degree of Engineering (Hons) Mechanical Engineering Degree, University of Bolton, UK with an Accountancy Degree, Heriot-Watt University, Scotland with a Master of Business Administration Degree, University of Newcastle, Australia with a Master of Marketing and Southern Cross University, Australia with a Doctorate in Business Administration.

He was the Group Managing Director of Metronic Global Berhad from 2013 to 2014. Prior to that, he was the Group Deputy Chairman of Metronic Global Berhad from 2012 to 2013. Currently, he is the Executive Chairman of Dansomar (M) Sdn Bhd and also the Deputy Chairman of IBG Manufacturing Sdn Bhd. He is the Academic Advisor of Lim Kok Wing University of Creative Technology and also a Director of Southern University College, Skudai, Johore since 2011.




DIRECTORS’ PROFILES (Cont’d)

Lim Choo Hooi, aged 47, Male, Malaysian.


Lim Choo Hooi was appointed as Independent Non-Executive Nominating Director on 14 March 2017. He is also the chairman of the Remuneration Committee, a member of Audit Committee and a member of Nominating Committee.

Lim Choo Hooi graduated from the University of Malaya LLB (Hons) Malaya in 1995, He was admitted and enrolled as an advocate & solicitor of the High Court of Malaya in February 1996

He chambered and later practiced as Legal Assistant in Messrs. Ban Eng, Annual & Foong from 1996 until 1997 where he formed and set up a partnership legal firm under the name of Messrs. J. Tan & C. H. Lim. He provides wide range of civil and commercial litigation such as land matters, banking litigation, corporate litigation, commercial litigation and other matters. His conveyancing practices offer practical and cost effective legal services on investigation, acquisition, financing, construction, development and sales of every type of commercial and residential project.



Leong Woay Hong @ Neoh Woay Hong, aged 50, Male, Malaysian.


Leong Woay Hong @ Neoh Woay Hong was appointed as Independent Non-Executive Director on 14 March 2017. He is also the Chairman of the Audit Committee, Chairman of Nominating Committee and a member of Remuneration Committee.

He graduated with a Diploma in Commerce (Financial Accounting) from Kolej Tunku Abdul Rahman. He later obtained his Association of Chartered Certified Accountants, United Kingdom qualification and was admitted as a member of both the Malaysian Institute of Accountant (MIA) and the Association of Chartered Certified Accountants, United Kingdom (ACCA) in 1996. He is currently a Chartered Accountant registered with MIA and a Fellow of ACCA, United Kingdom. He is also a Certified Financial Planner with Financial Planning Association of Malaysia.

He began his career in 1991 as an Audit Assistant in Neoh WM Lam & Co and was promoted to an Audit Manager in 2004. Subsequently in 2010, he was promoted to Principal of Aljeffridean Chartered Accountants. Presently, he is also a Partner of Tax Advisory PLT, a position he has held since 2013.




CORPORATE GOVERNANCE DISCLOSURES

The Board of Directors of EKA Noodles Berhad is pleased to provide this statement which sets out the corporate governance practices of the Company with reference to the Principles and Recommendations of the Malaysian Code of Corporate Governance 2012 (“Code”).

This statement is made in compliance with Paragraph 15.25 of the Main Market Listing Requirements of Bursa Securities.

PRINCIPLE 1 – CLEAR ROLES AND RESPONSIBILITIES

The Board

There are presently 6 Board members, comprising 4 independent non-executive directors and 2 executive directors. The current composition of the Board represents a mix of skills, knowledge, ethnicity and age which assists the Board in discharging its stewardship and responsibilities. The profile of each director is set out in the Directors’ Profile section of this Annual Report.

The Board is well balanced with the presence of independent non-executive directors. The roles of the independent non-executive directors are vital as they provide independent views and added perspectives to the Board’s decision making process.

The Board is assisted by 4 Board Committees namely, the Audit Committee, Nominating Committee, Remuneration Committee and Risk Management Committee, each with predefined terms of references and responsibilities. The Chairman of the respective Board Committees shall then report the outcome of their meetings to the Board.

On ad-hoc matters which are to be resolved urgently, the Board will set up a task force committee comprising wholly the senior management. The task force committee reports to the Managing Director whose role is to ensure the task are accomplished within the timeframe set by the Board.

Roles and Responsibilities

The Board, in discharging its stewardship role delegates authority and vests accountability in respect of the Group’s day to day operations with a management team led by the Managing Director. The Group’s organisation chart has clear reporting lines and authorities of the Board and those applicable to the management.

Key matters reserved for the Board’s approval are inclusive of but not limited to approving of financial statements and quarterly results, new appointments to the Board, material purchases and/or disposals of the Group’s fixed assets, new investments, corporate restructuring, joint ventures set up and related party transactions.

Additionally, the Board also assumed the oversight role in relation to the Group’s business performances, succession planning, risk management and implementation of appropriate systems to manage identified risks, investor relations, systems of internal control as well as compliances of relevant applicable laws and regulations.

There is a clear division of responsibilities between the Chairman and the Managing Director. The Chairman of the Company, Dato’ Sohaimi Shahadan is an independent director. He has no executive function and is responsible for orderly conduct and proceedings of meetings.

The Managing Director of the Company, Dato’ Sri Chin Seak Huat (JP) is responsible for formulating policies and strategies, the corporate affairs of the Company and the overall operation and financial performance of the Group. The Managing Director is assisted by the management team in implementation of policies and running the day-to-day operations of the Group.

Board Charter

The primary objective of the Board Charter is to provide guidance to the Board in discharging its roles, functions, duties and responsibilities.

The Board Charter will be reviewed from time to time to ensure their relevance and compliance. The last review of the Board Charter was on 25 April 2017 and the updated Board Charter is available on the Company’s website (www.ekanoodles.com).


CORPORATE GOVERNANCE DISCLOSURES (Cont’d)

PRINCIPLE 1 – CLEAR ROLES AND RESPONSIBILITIES (CONT’D)

Whistle Blowing Policy

The Board had established a Whistle-Blowing Policy which sets out a formal communication channel for employees and stakeholders of the Group to communicate matters of concern in good faith and without fear of reprisal.

The Whistle-Blowing Policy is available on the Company’s website (www.ekanoodles.com).

Code of Business Conduct

As part of governance process, the Board had formalised and adopted the Code of Business Conduct which outlines the business conducts and practices in the Group which is applicable to all directors, employees and any other persons who represent the Group in executing their duties and functions of the Group.

The Code of Business Conduct is available on the Company’s website (www.ekanoodles.com).

Business Sustainability

The Group’s sustainability strategies ideally cover community, marketplace, workplace and environment. The details are set out in Corporate Social Responsibility Statement section of this Annual Report.

Supply of Information

All directors have unrestricted access to any information pertaining to the Group including direct access to the management, Company Secretaries as well as other advisers, if any, appointed by the Company in facilitating their decision making process and discharging their duties effectively.

The directors may also seek independent professional advice at the Company’s expense. However, the director concerned must seek the approval of the Board before incurring such expenses.

Meeting agendas and relevant board papers are circulated at least 7 days in advance to directors to enable them to participate effectively in the meetings. Senior managements are invited to Board meetings to provide explanations, information or updates on the Group’s business operation matters that may be raised by the Board.

The proceedings of all meetings of the Board and Board Committees are duly compiled in the minutes and the said minutes are kept at the registered office of the Company. All statutory records and minutes of the Company are accessible by the directors at the registered office during office working hours.

Company Secretaries

The Company Secretaries are responsible for the secretarial function of the Company. The Company Secretaries issue notices of meetings after the agendas are firmed by the management and shall attend the meetings of the Board, Board Committees and shareholders to record the proceedings of such meetings. The Company Secretaries also ensures the statutory registers are properly updated and maintained at the registered office of the Company.

Every member of the Board is provided with the Company’s Corporate Calendar that has details of compliance issues, closed periods, meeting schedules and events. The directors are also regularly updated on circulars received from Bursa Securities as well as amendments or changes to the Listing Requirements which are relevant to the Company.

All the Company Secretaries are qualified to act as company secretaries under Section 235(2) of the Companies Act, 2016 and they regularly attend continuous development programmes conducted by various professional bodies including the programmes in corporate governance organised by Bursa Malaysia.



PRINCIPLE 2 - STRENGTHEN COMPOSITION

Nominating Committee

The Nominating Committee was established on 14 February 2004, comprising exclusively non-executive directors, a majority of whom are independent and the existing members are:-

Chairman : Leong Woay Hong @ Neoh Woay Hong (Appointed on 25 April 2017) Members : Dato’ Dr Chin Yew Sin (JP) (Appointed on 25 April 2017) Lim Choo Hooi (Appointed on 25 April 2017)

The Nominating Committee was established with defined terms of reference and in particular, the following duties relating to assessment or selection of directors:-

1. new candidates for appointment to the Board or to fill casual vacancies;2. the directors who are seeking re-election;3. the effectiveness of the Board as a whole & its Board Committees;4. the performance of individual directors;5. the independence of independent directors;6. Boardroom Diversity, Directors Trainings and any other duties as required by the Board; and7. term of office and the performance of Audit Committee and its members.

The Nominating Committee had met once during the financial year ended (FYE) 31 December 2016 with full members being present.

During the FYE 31 December 2016, the Nominating Committee had carried out the following activities:

1. Assessment of the Board and Board Committees 2. Assessment of the performance of individual directors3. Assessment of the independence of independent directors 4. Assessment of the directors seeking for re-elections at the forthcoming annual general meeting5. Assessment of the term of office and the performance of the Audit Committee and its members

Annual Assessment

The assessment of the Board and Board Committees are carried out by way of questionnaires in regard to mix of skills, knowledge, competency, proceeding of meetings, experiences, timely reporting and so forth. Whilst the assessments of individual directors and independent director are carried out by way of self-assessment questionnaires sent to the directors concerned. The questionnaires cover amongst others the character, integrity, contributions in meetings, quality of input, understanding of role, time commitment and so forth.

The responses to the questionnaires are then sent to the Nominating Committee for evaluations. The Nominating Committee will deliberate based on their ratings and makes its recommendations to the Board.

The Nominating Committee, upon its recent annual assessment carried out, is satisfied that the current size and composition of Board, Board Committees and its directors are adequately appropriate for its purpose with relevant mix of skills, experience, ethnicity and age.

Appointment & Re-election

The Nominating Committee is also responsible to assess the suitability of new candidates before appointment to the Board as well as recommending the directors who are standing for re-election at the annual general meeting of the Company.

The assessment of new candidate is based on his education, relevant skills, experience, professionalism, integrity, sound judgement and independency. The Nominating Committee will assess and table its recommendation to the Board. The Board will then consider the recommendation of the Nominating Committee and make the final decision as to the new appointment of director. The Company Secretary then ensures the relevant procedures relating to the appointment of the new director are properly executed.



PRINCIPLE 2 - STRENGTHEN COMPOSITION (CONT’D)

Appointment & Re-election

On the assessment of existing directors who are seeking re-election at the annual general meeting of the Company, the Nominating Committee will assess amongst others their regular and timely attendance at meetings, performance, contributions and so forth.

Boardroom Diversity

The Board acknowledges the recommendation of the Code to establish a policy formalising its approach to boardroom diversity and to take steps to ensure that women candidates are sought as part of its recruitment exercise. In this regards, the Nominating Committee will consider woman representative on the Board in its future selection process should need arises.

Apart from gender diversity in boardroom, the Board embraces diversity in ethnicity and age as essential combinations to strengthen the composition of the Board. Currently, the composition of the Board has a diverse blend of ethnicity, age, culture and expertise required in facilitating different insights and perspectives in achieving an effective board stewardship.

The Nominating Committee, upon its recent assessment carried out, is satisfied with the current composition of the Board and is of the view that a fixed policy is not required at this juncture.

Remuneration Committee

The Remuneration Committee was established on 14 February 2004, comprising mainly independent non-executive directors and the members are:-

Chairman : Lim Choo Hooi (Appointed on 25 April 2017)Members : Leong Woay Hong @ Neoh Woay Hong (Appointed on 25 April 2017)

: Dato’ Dr Chin Yew Sin (JP) (Appointed on 25 April 2017)

The Remuneration Committee is responsible for reviewing and recommending the remuneration package of executive directors to the Board. The Remuneration Committee is objective, fair and transparent in its process to ensure a competitive remuneration are in place to motivate, reward and retain calibre directors to manage the business of the Group. None of the executive directors participate in determining their respective remuneration packages.

The remuneration framework is reflective of the executive directors’ level of responsibilities, experiences, length of services and individual performances. The Remuneration Committee will also consider the similar industry remuneration as a benchmark and the financial performance of the Group when making its recommendations to the Board.

The Remuneration Committee also review the remuneration to be paid to non-executive directors based on their level of responsibilities and commitment required. However, the Board as a whole determines the remuneration of the non-executive directors, and the individual director concerned shall abstain from deliberation on his own remuneration. The directors’ fees determined by the Board are subject to shareholders’ approval at the annual general meeting.

Details of the directors’ remuneration for FYE 31 December 2016 are as follows:-

Company Level

Total (RM)

Group Level

Total (RM)

Executive Directors

Non-Executive Directors

Executive Directors


Salaries & Allowances 486,923 – 486,923 486,923 – 486,923Statutory Contributions 58,470 – 58,470 58,470 – 58,470Fees – – – – – –Benefits-in-kind 92,052 – 92,052 92,052 – 92,052Meeting Allowances 11,000 22,000 33,000 11,000 22,000 33,000



PRINCIPLE 2 - STRENGTHEN COMPOSITION (CONT’D)

Remuneration Committee (Cont’d)

The number of directors whose total remuneration falls into the following bands comprises:-

Remuneration bands (RM)

Company Level Group LevelExecutive Directors


Executive Directors


Less than RM50,000 2 4 2 450,001 to 100,001 – – – –550,001 to 600,000 1 – 1 –

PRINCIPLE 3 - REINFORCE INDEPENDENCE

Assessment of Independent Directors

The Board values the importance of the role of independent directors to strengthen the Board as a whole. The role of independent directors is to bring independent and objective judgment to the Board which mitigates risks arising from conflict of interests or undue influence from interested parties. Where any director has an interest in any matter under deliberation, he is required to declare his interest and abstain from participating in the discussions and voting on the matter.

There are presently 4 independent non-executive directors representing more than 1/3 of the Board. None of the tenure of the independent directors exceeds a cumulative term of 9 years. The Nominating Committee is responsible to assess the independent directors who have serves the Company for more than 9 years, in which the directors’ concern are assessed by the ratings of their self-assessment questionnaires. The Board will then consider and recommend the independent directors for re-appointment at the annual general meeting.

The Nominating Committee will assess the independence of the independent directors annually. The assessment is carried out by way of questionnaires sent to the independent directors to self-evaluate their “independence” in addition to the criteria of independence set out in the Main Market Listing Requirements. The Nominating Committee will then assess and table its recommendations to the Board.

The Nominating Committee, upon its recent annual assessment carried out, is satisfied that the independent directors of the Company have been able to discharge their responsibilities in an independent manner.

PRINCIPLE 4 – FOSTER COMMITMENT

Board Commitments

The Board meets on a scheduled basis, at least four (4) times a year to review and approve the quarterly and year end financial results. Additional meetings will be convened as necessary when there are urgent and important matters that require the Board’s deliberations. The Board also resolves and approves certain Company’s matters via circular resolution. The Circular resolutions are drawn up with detailed information and must be signed by a majority of the directors.

For governance practices, the existing directors are encouraged to notify the Board before they accept any new directorships and of his time commitment to make positive contributions to the Board. Any Board members or substantial shareholders is responsible to ensure his recommended candidate is able to commit in fulfilling the role as a director of the Company before sending the candidate’s profile to the Nominating Committee for evaluation. None of the directors of the Company hold more than 5 directorships in public listed companies.




Board Commitments (Cont’d)

The Nominating Committee, upon its recent annual assessment carried out, is satisfied with the level of commitment given by the directors towards fulfilling their roles and responsibilities.

During the FYE 31 December 2016, all the directors had attended at least 91.42% of the total number of Board meetings held. Meanwhile, full attendance was recorded for meetings of Board Committees held. The Board is satisfied that its directors including the non-executive directors holding multiple board representations are able to and have been devoting sufficient time to discharge their responsibilities adequately.

During the FYE 31 December 2016, a total of 5 Board of Directors meetings held. The attendances of the directors are set below:-

Directors Number of meetings attendedDato’ Sohaimi Bin Shahadan 5/5Dato’ Sri Chin Seak Huat (JP) 5/5Khor Wooi Lip (Resigned on 29 November 2016) 5/5Low Beng Seng (Resigned on 02 December 2016) 5/5Raja Nazrin Bin Raja Ghazilla (Resigned on 14 March 2017) 4/5Dato’ Ahmad Zaffry Bin Sulaiman (Resigned on 14 March 2017) 3/5Yee Yit Yang (Resigned on 25 April 2017) 5/5


Directors’ Training

The Board acknowledges the importance of continuous development of its directors and encourages them to partake in continuous development or training programmes to further enhance their skills and knowledge. In this respect, the Board has not set a training policy and therefore, its directors need to, on continuous basis evaluate and determine their training needs especially on recent developments in corporate governance, regulations and laws.

All the directors had attended the Mandatory Accreditation Programme (MAP) prescribed by Bursa Securities.

During the FYE 31 December 2016, trainings or seminars attended by the directors are as follows:

Name Description of TrainingYee Yit Yang Company Law 2016 - Total revamp with huge tax planning opportunities

Save as disclosed above, the other directors did not participate in any structured trainings during the financial period due to their work commitments.

PRINCIPLE 5 – UPHOLD INTEGRITY IN FINANCIAL REPORTING

Financial Reporting

The board aims to provide and present a balance and meaningful assessment of the group’s financial performance and prospects at the end of the financial period, primarily through the annual financial statements and quarterly announcements of financial results as well as the chairman’s statement in the annual report. The board is assisted by the audit committee in overseeing the group’s financial reporting quality and processes.

The Board assumes the responsibilities in ensuring the financial statements of the Group and of Company give a true and fair view of the state of affairs of the Group and of the Company as at the end of the financial year and of their results and cash flows for the financial year then ended.



PRINCIPLE 5 – UPHOLD INTEGRITY IN FINANCIAL REPORTING (CONT’D)

Financial Reporting (Cont’d)

In preparing the financial statements, the directors have ensured the Malaysian Financial Reporting Standards (“MFRS”) and the Malaysian Companies Act, 1965 have been complied. Further, the directors have selected and applied consistently suitable accounting policies and made reasonable and prudent judgments and estimates where applicable.

During the FYE 31 December 2016, the Audit Committee assisted the Board in reviewing the financials and statutory compliance of the quarterly financial statements and the annual audited financial statements of the Company.

External Auditors

The Audit Committee meets with the External Auditors at least twice a year to discuss the conduct and concerns arising from their audit without the presence of the executive directors or management of the Company.

The External Auditors report their audit findings including any other pertinent matters pertaining to the audit of the Group’s financial statements to the Audit Committee. The Audit Committee will then report to the Board on matters that necessitate the Board’s attention.

The Audit Committee is responsible to appraise and assess the performance and independence of the External Auditors by way of questionnaires and discussions with the audit engagement partner to ensure their independence, objectivity and professionalism. The questionnaires cover amongst others the quality of work, competency, manpower resources and so forth.

The existing auditors, Messrs. Afrizan Tarmili Khairul Azhar (“AFTAAS”) had confirmed to the Audit Committee in writing 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.

The Audit Committee, upon its recent annual assessment carried out, is satisfied with the suitability of AFTAAS based on their work done and independence and had recommended to the Board for their re-appointment at the forthcoming annual general meeting.

PRINCIPLE 6 – RECOGNISE AND MANAGE RISK

Risk Management

The Board acknowledges its responsibility for establishing a sound framework to manage risks and maintaining a sound systems of internal control to safeguard the shareholders’ investment and the Group’s assets.

An overview of risk management and the state of internal control within the Group is set out in the Statement on Risk Management and Internal Control section of this Annual Report.

Internal Audit Function

The internal audit function of the Group is outsourced to an independent firm to audit and monitor the compliance of the Group’s policies, procedures and the effectiveness of the Group’s internal control systems.

The Internal Auditors reports directly to the Audit Committee. The Internal Auditors will review the systems of internal control of the Group covering functional areas based on the audit plan approved by the Audit Committee. The Internal Auditors will then report their findings, recommendations for improvements and the management responses to the Audit Committee. The progress in the implementation of the agreed actions is being monitored through follow up reviews by the Internal Auditors. The Audit Committee will report to the Board on the progress and findings of the internal audit function.

Further details of the internal audit function are set out in the Audit Committee Report section of this Annual Report.



PRINCIPLE 7 – ENSURE TIMELY AND HIGH QUALITY DISCLOSURE

Corporate Disclosure Policies and Procedures

The Company has in place an internal corporate disclosure policies and procedures to ensure accurate and timely disclosures to the regulatory authorities, shareholders and stakeholders of the Company. The internal policies sets out the standard operating procedures for the management to observe including but not limited to disclosures of information that conforms with the rules and regulations of Bursa Securities, press releases, updating the information published on the Company’s websites and so forth. The executive directors are assigned with the responsibility in ensuring the accuracy of the contents released to the regulatory authorities and/or the public.

To augment the process for effective dissemination of information, the Company had established a website (www.ekanoodles.com) for the shareholders, investment community and stakeholders to have easy and convenient access to information of the Group.

Shareholders, investment community and stakeholders are also kept informed through other communication channels such as press conference and briefings.

PRINCIPLE 8 – STRENGTHEN RELATIONSHIP BETWEEN COMPANY AND SHAREHOLDERS

Greater Shareholders’ Participation

The Board encourages the participation of shareholders and investors, both individual and institutional, at general meetings and welcomes briefings from press and investment analysts.

The Company’s annual general meeting is a vital forum used to communicate and interact with shareholders. The Company’s Annual Report, together with notice of annual general meeting, is sent to shareholders at least 21 days before the date of each annual general meeting.

Each item of special business included in the notice of annual general meeting will be accompanied by explanatory statement to facilitate a full understanding and evaluation of the proposed resolution.

The executive directors, senior management and the external auditors are in attendance at annual general meeting of the Company to response to the shareholders’ enquiries.

Shareholders are also encouraged to ask questions on any resolutions being proposed and/or to clarify issues that they may have at the forthcoming 14th Annual General Meeting of the Company to be held at Lot 208, Phase II, Kuala Ketil Industrial Estate, 09300 Kuala Ketil, Kedah Darul Aman on Friday, 26 May 2017 at 2.00 p.m.

This statement was made in accordance with a Board resolution on 25 April 2017.


STATEMENT ON RISK MANAGEMENT ANDINTERNAL CONTROL

INTRODUCTION

The Board acknowledges its responsibilities for overseeing the Group’s internal control and risk management systems and for reviewing their adequacy and effectiveness. This process lends support to the role of the management of implementing the various policies on risk and control.

Due to limitations that are inherent in any system of internal controls, these systems are designed to manage rather than eliminate, the respective inherent risks that exist in achieving the Group’s business objectives. Therefore, such systems of internal controls and risk management can only provide reasonable, and not absolute, assurance against material misstatement or loss.

RISK MANAGEMENT

The Group has an on-going process for identifying, evaluating and managing principal risks. The process of risk identification, management and treatment are conducted by the Heads of Department. Such risks are then deliberated at the management operation meetings attended by the Risk Management Committee comprising the Managing Directors as the Chairman and Heads of Departments as members of the Committee.

The Group maintains a risk register together with the management action plans to mitigate the principal risks identified. The risks are categorised as follows:

• Strategic risks, which are risks that affect the Group’s overall direction and objectives.

• Operational risks, which are risks that affect the Group’s operations.

• Financial risks, which are risks associated with Group’s financials and liquidity.

• Compliance risks, which are risks associated in relation to legal, statutory and corporate governance.

The Managing Director is to report to the Board on any significant changes in the business and external environment which affect the principal risks identified.

INTERNAL AUDIT FUNCTION

Internal control is embedded in the Group’s operations as follows:

• Organisational chart of the Group with defined roles and responsibilities, levels of authority and lines of accountability of each division.

• Standard operating procedures are in place for the Group’s day to day operations to be carried out.

• Regular management operation meetings to monitor the effectiveness of the Group’s systems of internal control and to take actions where necessary.

• The Code of Business Conducts for the directors and employees to uphold the Group’s corporate cultures, values, conducts and practices.

• The Whistle Blowing Policy for employees and stakeholders to communicate matters of concern in good faith and without fear of reprisal.

• The internal audit function provides assurance on the effectiveness of the system of internal control within the Group.

• The Audit Committee reviews the internal audit reports and follow-up findings reported in previous quarters and subsequently, reports to the Board on the progress of the internal audit function.


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

BOARD ASSESSMENT

The Board had received assurance from the Managing Director that the Group’s risk management and internal control system is operating adequately as there were no material losses incurred based on the risk management and internal control systems of the Group.

The Board is of the opinion that the risk management and systems of internal control are ongoing processes. The identification, monitoring, review and reporting arrangements in place provide reasonable assurance that the structure of controls and its operations are appropriate to the Group’s businesses.

REVIEW OF STATEMENT BY THE EXTERNAL AUDITORS

The external auditors had reviewed this statement in accordance to Paragraph 15.23 of the Main Market Listing Requirements of Bursa Securities.

The review was performed in accordance with Recommended Practice Guide (RPG) 5 (Revised 2015) issued by the Malaysian Institute of Accountants. RPG 5 (Revised 2015) does not require the external auditors to form an opinion on the adequacy and effectiveness of the risk management and internal control systems of the Group.

This Statement is issued in accordance with a resolution of the Board dated 25 April 2017.


AUDIT COMMITTEE REPORT

MEMBERS OF THE AUDIT COMMITTEE

The present members of the Audit Committee are as follows:-

Chairman : Leong Woay Hong @ Neoh Woay Hong - Independent Non-Executive Director (Appointed on 25 April 2017)Members : Dato’ Dr. Chin Yew Sin (JP) - Independent Non-Executive Director (Appointed on 25 April 2017) Lim Choo Hooi - Independent Non-Executive Director (Appointed on 25 April 2017)

TERMS OF REFERENCE

OBJECTIVES

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

• To assist the Board of Directors in discharging their responsibilities as they relate to the Group’s management including risk management, internal controls, financial reporting and compliance with statutory and legal requirements;

• To oversee and review the quality of the auditors conducted by the external and internal auditors;

• To enhance the perceptions of interested parties, such as shareholders, regulators, creditors and employees, of the credibility and objectivity of the financial reports.

COMPOSITION

The Audit Committee shall consist of at least three members appointed by the Board from amongst the Directors. All the members of the Audit Committee must be Non-Executive Directors with a majority of them being Independent Directors. The members of the Committee shall elect the Chairman from among their members who shall be an Independent Non-Executive Director. An Alternate Director shall not be appointed as a member of the Audit Committee.

The members of the Committee should be able to read, analyses and interpret financial statements.

At least one member of the Committee:-

• must be a member of the Malaysia Institute of Accountants; or

• if he is not a member of Malaysia Institute of Accountants, he must have at least three years of working experience and:-• he must have passed the examinations specified in Part I of the First Schedule of the Accountants Act,

1967, or• he must be a member of one of the associations of accountants specified in Part II of the Fist Schedule

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

Malaysia”).

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

Chairman

The Chairman shall be an Independent Non-Executive Director elected by the members of the Audit Committee.

Secretary

The Secretary of the Audit Committee shall be the Company Secretary of the Board of Directors.


AUDIT COMMITTEE REPORT (Cont’d)

TERMS OF REFERENCE (CONT’D)

COMPOSITION (CONT’D)

Quorum

A quorum shall be two (2) members and a majority of the members present must be Independent Directors. In the absence of the Chairman, the members present shall elect a Chairman for the meeting from amongst the members present.

Meetings

The Committee shall regularise its own proceedings. The Committee shall meet not less than four (4) times a year. Additional meetings may be held at the discretion of the Committee or at the request of external auditors.

The presence of senior management external and internal auditors may be requested, if required.

Other board members may attend meetings upon the invitation of the Audit Committee.

Committee should meet with the external auditors without Executive Board Members present at least twice a year.

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

Authority

The Audit Committee is authorised by the Board of directors to investigate any matter within its terms of reference. The Committee shall have the resources which are required to perform its duties and have full unrestricted access to any information and personnel pertaining to the Group. The Committee has a direct communication channel with the external and internal auditors and may obtain independent professional advice as and when necessary to discharges their duties.

Functions

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

• To consider the appointment and annual re-appointment of external auditors, their audit fees and any question of their resignation or dismissal and to recommend to the Board.

• To discuss with the external auditors before the audit commences or plan, the nature and scope of their audit, their evaluation of the system of internal accounting controls and to ensure co-ordination where than one audit firm is involved.

• To review and discuss with the external auditors’ audit report.

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

• To review with the external auditor’s management letter and management’s response.

• To do the following, in relation to the internal audit function:-• Approval of the internal audit plan;• Review the adequacy of the scope, functions and resources of the internal audit function, and that it has

necessary authority to carry out its work;• Review the internal audit programme and result of the internal audit process and, where necessary,

ensure that appropriate actions are taken on the recommendations of the internal audit function;• Review any appraisal or assessment of the performance of members of the internal audit function; • Effectiveness of the internal audit function; and• Approve any appointment or termination of senior members of the internal audit function.



TERMS OF REFERENCE (CONT’D)

COMPOSITION (CONT’D)

Functions (Cont’d)

The Audit Committee shall, amongst others, discharge the following functions (Cont’d):-

• To review the quarterly results and financial statements of the Group and of the Company, prior to the approval by the Broad, whilst ensuring that they are prepared in a timely and accurate manner, focusing particularly on:-• Changes in accounting policies;• Implementation of major accounting policies and practices;• Going concern assumption;• Significant and unusual events; and• Compliance with accounting standards and other legal requirements.

• To consider or review any related party transactions and conflict of interest situation that may arise within the Company or Group including any transaction, procedure or course of conduct that raise questions of management integrity.

• To consider the major findings of internal investigations and management’s response.

• To review and verify the allocation of share options granted to employees to the Employee Share Option Scheme.

• To review and approve the draft Annual Reports prior to presentation to the Board of Directors for approval;

• To review with external auditor the assistance given by the employees of the Company.

• To review with the Board of Directors of the Company whether there is reason (supported by grounds) to believe that the listed issuer’ external auditor is not suitable for re-appointment.

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

• To provide a framework that enables future activity to take place in a consistent and controlled manner.

• To improve decision making, planning and prioritisation by comprehensive and structured understanding of business activity, volatility and project opportunity or threats.

• To optimise operational efficiency and minimising risks.

• To deliberate and make recommendations to the Board the necessary risk management procedures.

• To consider or perform any other topics or functions as authorised by the Board.

The Nominating Committee must review the terms of office and performance of the Audit Committee and each of its members every year to determine whether such Audit Committee and members have carried out their duties in accordance with their terms of reference.



SUMMARY OF WORKS

The Audit Committee met 5 times during the financial year (FYE) 31 December 2016 and the details of attendance are as follows:-

Audit Committee Member Designation/Directorate No. of meetings attendance

Raja Nazrin Bin Raja Ghazilla (Resigned on 14 March 2017)

Chairman, Independent Non-Executive Director 4/5

Khor Wooi Lip (Resigned on 29 November 2016)

Member, Non-Independent Non-Executive Director

5/5

Yee Yit Yang (Resigned on 25 April 2017) Member, Independent Non-Executive Director 5/5Dato’ Sohaimi Bin Shahadan Member, Independent Non-Executive Director 1/1

During the FYE 31 December 2016, the works carried out are summarised below:-

• Reviewed the quarterly unaudited financial results and audited annual financial statements of the Company and of the Group with the executive directors, focusing particularly on accounting policies and practices, adjustments arising from the audits, compliance with accounting standards and other statutory and regulatory requirements before recommending them to the Board for approval.

• Obtained assurance from the executive directors that the quarterly unaudited financial results and audited annual financial statements did not contained material misstatements and give a true and fair view of the financial position of the Company and of the Group for financial year 2016.

• Reviewed the report by the management in respect of any recurrent related party transactions transacted to ensure they were undertaken on an arm’s length basis and on normal commercial terms, consistent with the Group’s usual business practices and policies, which are not more favourable to the related parties than those generally available to the public and are not detrimental to the minority shareholders of the Company. During the period under review, there were no related party transactions involving the interest of the directors or major shareholders of the Company.

• Reviewed the audit plan, nature and scope of the audit plan and coordination of the external auditors to meet the key deliverables timeline.

• Discussed the audit report, significant accounting issues, findings and evaluation of the Group’s systems of internal control

• Assessed the independence, resources and performance of the external auditors and upon assessment, recommended them to the Board for re-appointment.

• Held private sessions with the external auditors without the presence of the executive directors or the management of the Company to reinforce the independence of the external audit function of the Company.

• Held private sessions with the external auditors without the presence of the executive directors or the management of the Company to enquire about any extraordinary matters or material concerns related to the Group which required immediate attention of the Audit Committee.

• Reviewed and deliberated the internal audit reports and following up on the progress of remedial action.

• Reviewed the corrective actions taken by the management in addressing and/or resolving key issues.

• Reviewed the Statement on Risk Management and Internal Control, Audit Committee Report and Corporate Governance Disclosures and recommended to the Board for inclusion in the Company’s Annual Report.

• Deliberated on the report by the Managing Director in respect of the Group‘s regularisation plan and following up on the progress and actions taken by the Managing Director in addressing the Company’s PN17 status.



INTERNAL AUDIT FUNCTION

The Board recognises that an internal audit function is vital in ensuring the effectiveness of the Group’s systems of internal control and is an integral part of the risk management process. The Board has established an internal audit function which is independent of the activities in audits. The Internal Auditors reports directly to the Audit Committee.

The Audit Committee reviews and approves the internal audit plan and assess the adequacy of the internal audit function. The internal auditors will independently review the systems of internal control of selected auditable or functional areas and present their findings and recommendations for improvements in the internal audit report to the Audit Committee.

The Audit Committee will use its reasonable efforts to carry out its obligations in ensuring appropriate actions are being taken for the Group to maintain a sound systems of internal control. The total cost incurred in managing the internal audit function for the financial year was RM17,723.20.

During the FYE 31 December 2016, the Group’s internal auditors tabled their reports in relation to the review of the internal control systems on property, plant and equipment management. The scope of the audits generally covered the areas in maintenance of register, capitalisation and depreciation policies, identification and maintenance of assets, acquisition, disposal and transfer of assets and safeguarding of assets.

The internal auditors had also tabled their follow-up review on the audit findings reported in the prior financial quarters.


ADDITIONAL COMPLIANCE INFORMATION

1. AUDIT AND NON-AUDIT FEES

The amount of audit fees and non-audit fees paid or payable to the external auditors or a firm or corporation affiliated to the audit firm by the Company and the Group for the financial year ended 31 December 2016 are follows:-

Group (RM) Company (RM)

Fees paid payable to the external auditors - Audit Fees 136,700 47,200 - Non Audit Fees 0 0

47,200 136,700

2. MATERIAL CONTRACTSThere were no material contracts with the Company and its subsidiaries involving directors and major shareholders, either still subsisting at the end of the financial year or entered into since the date of the previous financial year end.

3. RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING NATUREThere were no recurrent related party transactions of a revenue or trading nature conducted pursuant to the shareholders’ mandate during the FYE 31 December 2016.


CORPORATE SOCIAL RESPONSIBILITY STATEMENT

The Board of Directors acknowledges the importance of Corporate Social Responsibility (“CSR”) and the Group has been playing its role in maintaining CSR in its business and operations.

The CSR initiatives undertaken by the Group are as follows:

THE COMMUNITY

• The Group has given giving its support unconditionally to the people in need by sponsoring the Group’s products namely beehoon and/or noodles to various non-profitable organisations, schools and other local authorities. Besides that, the Group also extended its care and concern to the under-privileged groups through monetary contributions.

THE MARKETPLACE

• The Group focuses in ethical procurement practices by adopting standard procedures in vendors’ qualifications and ensures that the raw materials supplied are in accordance to the Group’s materials requirements.

• The Group regularly improves its qualities, technologies, processes, services and innovative in products development for better nutritional values to meet changes in customers’ demand.

THE WORKPLACE

• The Group is committed to ensure fairness in careers’ opportunities and treat all employees equally regardless of their religions, ethnicity, genders, age and nationalities towards harmonious working environment, at the same time creating a healthy lifestyle and working cultures.

• The Group provides a healthy and safe working environment for its employees in the workplace.• The Group conducts various trainings and safety workshops to ensure awareness of safety requirements at

all levels.• The Group does not have a policy in workplace diversity. Nevertheless, the current workforce has a diverse mix

of gendered, ethnicity and age demographics.

THE ENVIRONMENT

• The Group acknowledges its responsibility in environmental conservation in the course of carrying out its business activities. The Group has own waste treatment plants that adheres to the waste management requirements provided by Department of Environmental.

• The Group prioritised in recycling and encourages its employees to reduce paper usages and practices the culture of recycling waste materials.


DIRECTORS’ RESPONSIBILITIES STATEMENT

The Directors acknowledge that they are responsible for the Annual Audited Financial Statements so as to give a true and fair view of the state of affairs as at the end of the financial year of the Group and of the Company and of their results and their cash flows.

In preparing the financial statements for the FYE 31 December 2016, the Directors had:-

1. applied reasonable and prudent judgement and estimates; and2. followed all applicable approved accounting standards in Malaysia.

The Directors had ensured the Company maintains appropriate accounting policies that disclose with reasonable accuracy of the financial position of the Group and of the Company, and which enable them to ensure that the financial statements comply with the Companies Act, 1965.

The Directors had also taken steps that are reasonably available to them to maintain an appropriate system of internal control to safeguard the assets of the Group and of the Company and to enable the preparation of financial statements of the Group and of the Company that are free from material misstatement, whether due to fraud or error.

This statement was made in accordance with a resolution of the Directors dated 25 April 2017.


DIRECTORS’ REPORT

The Directors hereby submit their report together with the audited financial statements of the Group and Company for the financial year ended 31 December 2016.

PRINCIPAL ACTIVITY

The Company is principally engaged in the business of investment holding. The principal activities of the subsidiaries are set out in Note 8 to the financial statements.

There have been no significant changes in the nature of these activities during the financial year.

FINANCIAL RESULTS

The Group The CompanyGroup Company

RM RM

Loss for the financial year (34,106,415) (47,318,799)

Attributable to:Owners to the company (34,106,415) (47,318,799)Non-Controlling interests – –

(34,106,415) (47,318,799)

DIVIDENDS

There were no dividends proposed, declared or paid by the Company since the end of the previous financial period. The directors also do not recommend any final dividend in respect of the current financial year.

RESERVES AND PROVISIONS

All material transfers to or from reserves or provisions during the financial year are disclosed in the financial statements.

ISSUE OF SHARES AND DEBENTURES

The Company did not issue any debentures during the year

OPTIONS GRANTED OVER UNISSUED SHARES

During the financial period, no options were granted by the Company to any person to take up any unissued shares in the Company.


DIRECTORS’ REPORT (Cont’d)

BAD AND DOUBTFUL DEBTS

Before the financial statements of the Group and of the Company were made out, the directors took reasonable steps to ascertain that action had been taken in relation to the writing off the bad debts and the making of allowance for impairment losses on receivables, and satisfied themselves that all known bad debts had been written off and that adequate allowance had been made for impairment losses on receivables.

At the date of this report, the directors are not aware of any circumstances that would require the further writing off of bad debts, or the additional allowance for the impairment losses on receivables in the financial statements of the Group and the Company.

CURRENT ASSETS

Before the financial statements of the Group and of the Company were made out, the directors took reasonable steps to ascertain that any current assets other than debts, which were unlikely to be realised in the ordinary course of business, including their value as shown in the accounting records of the Group and of the Company, have been written down to an amount which there might be expected so to realise.

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

VALUATION METHODS

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

CONTINGENT AND OTHER LIABILITIES

The contingent liabilities are disclosed in Note 31 to the financial statements. At the date of this report, there does exist:-

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

(b) Any contingent liability of the Group and of the Company which has arisen since the end of the financial year.

No contingent or other liability of the Group and of the Company has become enforceable or is likely to become enforceable with in the year of twelve months after the end of the financial period 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 when the fall due.

CHANGE OF CIRCUMSTANCES

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

ITEMS OF AN UNUSUAL NATURE

The results of the operations of the Group and of the Company during the financial year were not, in the opinion of the Directors, substantially affected by any item, transaction or event of a material and unusual nature.

There has not arisen in the interval between the end of the financial year and the date of this report any item, transaction or event of a material and unusual nature likely, in the opinion of the Directors, to affect substantially the results of the operations of the Group and of the Company for the financial year.



DIRECTORS

The Directors in office since the date of the last report:-

Dato’ Sohaimi Bin Shahadan

Dato’ Sri Chin Seak Huat (JP)

Yee Yit Yang

Dato’ Dr Chin Yew Sin (JP)

Fong Yit Meng

Leong Woay Hong @ Neoh Woay Hong

Lim Choo Hooi

Dato’ Ahmad Zaffry Bin Sulaiman

Raja Nazrin Bin Raja Ghazilla

Low Beng Seng

Khor Wooi Lip

(Resigned on 25 April 2017)

(Appointed on 14 March 2017)




(Resigned on 14 March 2017)

(Resigned on 14 March 2017)

(Resigned on 2 December 2016)

(Resigned on 29 November 2016)

DIRECTORS’ INTERESTS

According to the register of the Directors’ shareholdings, the interests of Directors holding office at the end of the financial year in shares and options over shares of the company and its related corporations during the financial year are as follows:-

<----- Number of Ordinary Shares Of RM0.15 Each----->At At

1.1.2016 Bought Sold 31.12.2016

Direct interests in the CompanyDato’ Sri Chin Seak Huat (JP) 33,300,000 – – 33,300,000

Indirect interest in the Company* Khor Wooi Lip 120,000 – – 120,000

The Directors, by virtue of their interest in shares of the Company, are also deemed to have interests in shares of the subsidiaries to the extent that the Company has an interest.

Other than as disclosed above and according to the register of directors’ shareholdings, none of the Directors in office at the end of the financial year hold any interest in shares and options over ordinary shares in the Company and its related corporations during the financial year.

DIRECTORS’ BENEFITS

During and at the end of the financial year, there is no arrangement subsisted to which the Company or its related companies is a party with the object or objects 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.

Since the date of the last report, no Director has received or become entitled to receive any benefit by reason of a contract made by the Company or a related corporation with the Director or with a firm of which he is a member, or with a company in which he has a substantial financial interest.



DIRECTORS’ REMUNERATION

The amounts of the remunerations of the Directors or past Directors of the Company comprising remunerations received/receivable from the Company during the year are as follows:

Group CompanyRM RM

Remuneration 670,445 670,445

IDEMNIFYING DIRECTORS, OFFICERS OR AUDITORS

No indemnities have been given or insurance premiums paid, during or since the end of the year, for any person who is or has been the Director, officer or auditor of the Company.

OTHER STATUTORY INFORMATION

Before the statement of profit or loss and other comprehensive income and statement of financial position of the Group and of the Company were made out, the Directors took reasonable steps:

(a) to ascertain that proper action had been taken in relation to the writing off of bad debts and the making of allowance for doubtful debts, and had satisfied themselves that no known bad debts need to be written off and that adequate allowance had been made for doubtful debts; and

(b) to ensure that any current assets which were unlikely to realise their book values in the ordinary course of business had been written down to their estimated realisable values.

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

(a) which would require the writing off of bad debts or render the amount of allowance for doubtful debts in the financial statements of the Group and of the Company inadequate to any substantial extent; or

(b) which would render the values attributed to current assets in the financial statements of the Group and of the Company misleading; or

(c) 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

(d) not otherwise dealt with in this report or financial statements which 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:

(a) any charge on the assets of the Group and of the Company which has arisen since the end of the year which secures the liability of any other person; or

(b) any contingent liability of the Group and of the Company which has arisen since the end of the year.

No contingent or other liability has become enforceable or is likely to become enforceable within the period of twelve months after the end of the 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.

No item, transaction or event of a material and unusual nature has arisen in the interval between the end of the year and the date of this report which is likely to affect substantially the results of operations of the Company for the succeeding year.


AUDITORS’ REMUNERATION

The total amounts paid to or receivable by the auditors as remunerations for their services as auditors are as follows:

Group CompanyRM RM

Statutory audit 136,000 47,200

AUDITORS

The auditors, AFRIZAN TARMILI KHAIRUL AZHAR, have expressed their willingness to continue in office.

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

DATO’ SRI CHIN SEAK HUAT (JP)Director

FONG YIT MENGDirector

Kuala Lumpur, Malaysia

Date : 25 April 2017



STATEMENT BY DIRECTORSPursuant to Section 169 (15) of the Companies Act, 1965

STATUTORY DECLARATIONPURSUANT TO SECTION 169 (16) OF THE COMPANIES ACT, 1965

We,DATO’ SRI CHIN SEAK HUAT (JP) and FONG YIT MENG, being two of the Directors of EKA NOODLES BERHAD, do hereby state that, in the opinion of the Directors, the accompanying financial statements of the Group and of the Company are drawn up in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of Companies Act,1965 in Malaysia so as to give a true and fair view of the state of affairs of the Group and of the Company as at 31 December 2016 and of the results of the operations and the cash flows for the financial year ended on that date.

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

DATO’ SRI CHIN SEAK HUAT (JP) Director

FONG YIT MENGDirector


Date: 25 April 2017

I, DATO’ SRI CHIN SEAK HUAT (JP), being the director primarily responsible for the financial management of EKA NOODLES BERHAD, do solemnly and sincerely declare that the accompanying financial statements of the Group and of the Company, 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 at Kuala Lumpur in this Federal Territory on 25 April 2017

}

}

} DATO’ SRI CHIN SEAK HUAT (JP)

Before me,

Commissioner for Oaths



INDEPENDENT AUDITOR’S REPORT to the Members of Eka Noodles Berhad Company No: 583565-U

Qualified Opinion

We have audited the financial statements of EKA NOODLE BERHAD., which comprise the statement of financial position as at 31 December 2016 of the Group and the Company, and the statement of profit or loss and other comprehensive income, statement of changes in equity and statement of cash flows of the Group and the Company for the year then ended, and notes to the financial statements, including a summary of significant accounting policies, as set out on pages 40 to 83.

In our opinion, except for the effects of the matter described in the Basis for Qualified Opinion section of our report, the accompanying financial statements give a true and fair view of the financial position of the Group and Company as at 31 December 2016, and of its financial performance and its 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.

Basis for Qualified Opinion

As disclosed in Note 2(a) to the financial statements, the financial statements of the Company have been prepared on the break up basis.

As the Company has ceased its operation with no intention to resume business operations, the preparations of the financial statements for the year ended 31 December 2016 on the going concern basis is no longer appropriate. Accordingly, the financial statements, expressed in Ringgit Malaysia (RM), are prepared on a basis that the Company is not a going concern and on the breakup basis. The actual values realised may differ from the carrying values of assets and liabilities included in these financial statements. We are unable to obtain sufficient appropriate audit evidence to determine the estimated realised values of the Company’s property, plant and equipments as the Company is unable to provide clear basis on arriving at the value of those assets in the statement of financial position.

We conducted our audit in accordance with approved standards on auditing in Malaysia and International Standards on Auditing. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Financial Statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Independence and Other Ethical Responsibilities

We are independent of the Group and the Company in accordance with the By-Laws (on Professional Ethics, Conduct and Practice) of the Malaysian Institute of Accountants (“By-Laws”) and the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (“IESBA Code”), and we have fulfilled our other ethical responsibilities in accordance with the By-Laws and the IESBA Code.

Key Audit Matters

Key audit matters are those matters that, in our professional judgement, were of most significant in our audit of the financial statements of the Group and the Company for the current year. These matters were addressed in the context of our audit of the financial statements of the Group and the Company as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Except for matters has been describe in the Basis for Qualified Opinion section, we have determined that there are no key audit matters to communicate in our report.

Information Other than the Financial Statements and Auditors’ Report Thereon

The directors of the Group and the Company are responsible for the other information. The other information does not include the financial statements of the Group and the Company and our auditors’ report thereon.

Our opinion on the financial statements of the Group and the Company does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements of the Group and the Company, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements of the Group and the Company or our knowledge obtained in the audit or otherwise appears to be materially misstated.

If, based on the work we have performed, we have nothing to report in this regard.


INDEPENDENT AUDITOR’S REPORT (Cont’d)to the Members of Eka Noodles Berhad Company No: 583565-U

Responsibilities of the Directors for the Financial Statements

The directors of the Group and the Company are responsible for the preparation of financial statements of the Company that 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 of the Company that are free from material misstatement, whether due to fraud or error. In preparing the financial statements of the Company, the directors are responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so.

Auditors’ Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements of the Company as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with approved standards on auditing in Malaysia and International Standards on Auditing will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with approved standards on auditing in Malaysia and International Standards on Auditing, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the financial statements of the Company, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.

• Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related dis-closures in the financial statements of the Company or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Company to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the financial statements of the Company, includ-ing the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

Report on Other Legal and Regulatory Requirements

In accordance with the requirements of the Companies Act, 1965 in Malaysia, we also report that in our opinion, the accounting and other records and the registers required by the Act to be kept by the Company have been properly kept in accordance with the provisions of the Act.


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.

AFRIZAN TARMILI KHAIRUL AZHAR MOHD AFRIZAN HUSAINAF : 1300 Chartered AccountantChartered Accountants (Malaysia) 1805/11/18 (J) PartnerKuala Lumpur, Malaysia

Date: 25 April 2017

INDEPENDENT AUDITOR’S REPORT (Cont’d)to the Members of Eka Noodles Berhad Company No: 583565-U


STATEMENT OF PROFIT OR LOSS ANDOTHER COMPREHENSIVE INCOMEfor the Financial Year ended 31 December 2016

The Group The Company1.1.2016 1.7.2014 1.1.2016 1.7.2014

to to to to31.12.2016 31.12.2015 31.12.2016 31.12.2015

Note RM RM RM RM

Revenue 4 23,909,858 97,004,743 - - Cost of sales (32,100,191) (87,702,649) - - Gross loss (8,190,333) 9,302,094 - -

Other income 948,171 3,187,627 1,836,000 2,754,001 Administrative expenses (23,109,497) (19,357,282) (49,151,100) (4,533,003)Loss from operations (30,351,659) (6,867,561) (47,315,100) (1,779,002)

Finance cost (4,087,513) (8,729,061) (3,699) (1,720,177)Loss before tax 5 (34,439,172) (15,596,622) (47,318,799) (3,499,179)

Tax credit 6 332,757 687,740 - - Loss for the financial year/ period (34,106,415) (14,908,882) (47,318,799) (3,499,179)

Other comprehensive income, net of taxItems that are or may be reclassified subsequently to profit or loss- Realisation of foreign exchange translation reserve - - - - - Foreign curency translation difference - - - - - Revaluation of property - 2,907,409 - -

- 2,907,409 - -

Total comprehensive expense for the year/ period (34,106,415) (12,001,473) (47,318,799) (3,499,179)

Loss for the financial year attributable to:-Owner of the Company (34,106,415) (14,908,882) (47,318,799) (3,499,179)Non-controlling interests - - - - Loss for the financial year/ period (34,106,415) (14,908,882) (47,318,799) (3,499,179)

The accompanying notes form an integral part of the financial statements


The Group The Company

1.1.2016 1.7.2014 1.1.2016 1.7.2014to to to to

31.12.2016 31.12.2015 31.12.2016 31.12.2015Note RM RM RM RM

Total comprehensive expense attributable to:-Owner of the Company (34,106,415) (12,001,473) (47,318,799) (3,499,179)Non-controlling interests - - - -

Total comprehensive expense for the year/period (34,106,415) (12,001,473) (47,318,799) (3,499,179)

Loss per share (Sen)Basic 7 (10.93) (4.78)

Diluted Not applicable Not applicable

STATEMENT OF PROFIT OR LOSS ANDOTHER COMPREHENSIVE INCOME (Cont’d)for the Financial Year ended 31 December 2016



STATEMENT OF FINANCIAL POSITION as at 31 December 2016


The Group The Company2016 2015 2016 2015

RM RM RM RM

AssetsInvestment in subsidiaries 8 - - 18,640,637 18,640,637 Property, plant and equipment 9 57,990,900 68,101,620 109,064 129,336 Other investment 10 1 1 1 1 Intangible assets 11 1 97,611 - - Amount due from subsidiaries 12 - - - 42,957,815 Inventories 13 - 6,156,740 - - Trade receivables 14 13,700,169 - - Other receivables, deposits and prepayments 15 609,198 4,511,556 - 157,808 Tax recoverable 59,451 185,981 - - Fixed deposit 16 - 1,100,000 - - Cash and cash equivalent 511,219 907,870 72,880 261,973 Total current assets 59,170,770 94,761,548 18,822,582 62,147,570

Total assets 59,170,770 94,761,548 18,822,582 62,147,570

EquityShare capital 17 46,800,000 46,800,000 46,800,000 46,800,000 Share premium 18 3,600,000 3,600,000 3,600,000 3,600,000 Reserve 19 14,041,732 14,041,732 4,837,366 4,837,366 Accumulated profits (86,047,951) (51,941,536) (100,805,828) (53,487,030)Total equity (21,606,219) 12,500,196 (45,568,462) 1,750,336

LiabilitiesHire purchase 20 535,206 612,908 76,234 91,483 Bank Borrowing 21 58,662,769 66,661,444 53,400,163 59,430,098 Deferred taxation 22 - 529,821 - - Trade payable 23 8,570,508 10,824,094 - - Other payables and accruals 24 12,957,363 3,558,942 10,914,647 875,653 Provision for taxation 51,143 74,142 - - Total current liabilities 80,776,989 82,261,351 64,391,044 60,397,234 Total liabilities 80,776,989 82,261,351 64,391,044 60,397,234

Total equity and liabilities 59,170,770 94,761,548 18,822,582 62,147,570


STATEMENT OF CHANGES IN EQUITY for the Financial Year ended 31 December 2016

<--

----

----

----

----

Non

-Dis

trib

utab

le -

----

----

----

----

-->

Dis

trib

utab

leFo

reig

nEx

chan

geA

ttri

buta

ble to

Non

-co

ntro

lling

Shar

e Sh

are

Capi

tal

Tran

sala

tion

Reva

luat

ion

Acc

umul

ated

ow

ners

of

the

Tota

l

capi

tal

prem

ium

Rese

rve

Rese

rve

Rese

rve

Loss

esco

mpa

nyin

tere

stEq

uity

The

Gro

upRM

RMRM

RMRM

RMRM

Bala

nce

at 1

.7.2

014

36,0

00,0

00

3,60

0,00

0 4,

837,

366

-

6,29

6,95

7 (3

7,03

2,65

4)13

,701

,669

-

13

,701

,669

Issu

ance

of s

hare

s10

,800

,000

-

-

-

-

-

10

,800

,000

-

10

,800

,000

Loss

for

the

finan

cial

per

iod

-

-

-

-

-

(14,

908,

882)

(14,

908,

882)

-

(14,

908,

882)

Oth

er c

ompr

ehen

sive

inco

me

fo

r th

e fin

anci

al y

ear

- Re

valu

atio

n of

pro

pert

y, p

lant

and

equi

pmen

t -

-

-

-

2,

907,

409

-

2,90

7,40

9 -

2,

907,

409

Tota

l com

preh

ensi

ve e

xpen

se

fo

r th

e fin

anci

al p

erio

d -

-

-

-

2,

907,

409

(14,

908,

882)

(12,

001,

473)

-

(12,

001,

473)

Bala

nce

at 3

1.12

.201

546

,800

,000

3,

600,

000

4,83

7,36

6 -

9,

204,

366

(51,

941,

536)

12,5

00,1

96

-

12,5

00,1

96

The

acco

mpa

nyin

g no

tes

form

an

inte

gral

par

t of t

he fi

nanc

ial s

tate

men

ts


STATEMENT OF CHANGES IN EQUITY (Cont’d)for the Financial Year ended 31 December 2016

<--

----

----

----

----

----

-- N

on-D

istr

ibut

able

---

----

----

----

----

----

----

>D

istr

ibut

able

Fore

ign

Att

ribu

tabl

eEx

chan

geto

Shar

eSh

are

Capi

tal

Tran

sala

tion

Reva

luat

ion

Acc

umul

ated

owne

rs o

f th

eN

on-

cont

rolli

ngTo

tal

capi

tal

prem

ium

Rese

rve

Rese

rve

Rese

rve

Loss

esco

mpa

nyin

tere

stEq

uity

The

Gro

upRM

RMRM

RMRM

RMRM

RMRM

Bala

nce

at 1

.1.2

016

46,8

00,0

00

3,60

0,00

0 4,

837,

366

-

9,20

4,36

6 (5

1,94

1,53

6)12

,500

,196

-

12

,500

,196

Loss

for

the

finan

cial

yea

r -

-

-

-

-

(3

4,10

6,41

5) (3

4,10

6,41

5) -

(3

4,10

6,41

5)O

ther

com

preh

ensi

ve in

com

e

for

the

finan

cial

yea

r-

Real

isat

ion

of fo

reig

n cu

rren

cy

tran

slat

ion

diffe

renc

e -

-

-

-

-

-

-

-

-

-

Reva

luat

ion

of p

rope

rty,

pla

nt

an

d eq

uipm

ent

-

-

-

-

-

-

-

-

-

Tota

l com

preh

ensi

ve e

xpen

se

fo

r th

e fin

anci

al y

ear

-

-

-

-

-

(34,

106,

415)

(34,

106,

415)

-

(34,

106,

415)

Tran

sact

ion

with

ow

ners

Capi

tal r

educ

tion

-

-

-

-

-

-

-

-

-

Righ

t iss

ues

-

-

-

-

-

-

-

-

-

Bala

nce

at 3

1.12

.201

646

,800

,000

3,

600,

000

4,83

7,36

6 -

9,

204,

366

(86,

047,

951)

(21,

606,

219)

-

(21,

606,

219)

The

acco

mpa

nyin

g no

tes

form

an

inte

gral

par

t of t

he fi

nanc

ial s

tate

men

ts


STATEMENT OF CHANGES IN EQUITY (Cont’d)for the Financial Year ended 31 December 2016

<--

----

----

-- N

on-D

istr

ibut

able

---

----

--->

Dis

trib

utab

leA

ttri

buta

ble

toN

on-

Shar

e Sh

are

Capi

tal

Acc

umul

ated

ow

ners

of

the

cont

rolli

ngTo

tal

capi

tal

prem

ium

Rese

rve

Loss

esco

mpa

nyin

tere

stEq

uity

The

Com

pany

RMRM

RMRM

RM

Bala

nce

at 1

.7.2

014

36,0

00,0

00

3,60

0,00

0 4,

837,

366

(49,

987,

850)

(5,5

50,4

84)

-

(5,5

50,4

84)

Issu

ance

of s

hare

s10

,800

,000

-

-

-

10

,800

,000

-

10

,800

,000

Loss

for

the

finan

cial

yea

r -

-

-

(3

,499

,179

) (3

,499

,179

) -

(3

,499

,179

)

Bala

nce

at 3

1.12

.201

5 /

1.1.

2016

46,8

00,0

00

3,60

0,00

0 4,

837,

366

(53,

487,

029)

1,75

0,33

7 -

1,

750,

337

Issu

ance

of s

hare

s -

-

-

-

-

-

-

Loss

for

the

finan

cial

per

iod

-

-

-

(47,

318,

799)

(47,

318,

799)

-

(47,

318,

799)

Bala

nce

at 3

1.12

.201

646

,800

,000

3,

600,

000

4,83

7,36

6 (1

00,8

05,8

28)

(45,

568,

462)

-

(45,

568,

462)

The

acco

mpa

nyin

g no

tes

form

an

inte

gral

par

t of t

he fi

nanc

ial s

tate

men

ts


STATEMENT OF CASH FLOWSfor the Financial Year ended 31 December 2016


Note RM RM RM RM(18 months) (18 months)

Cash flows from/(used in)operating activities

Loss before taxation (34,439,172) (14,908,882) (47,318,799) (3,499,179)Adjustments for:Allowance for impairment loss on trade receivables 8,147,783 - - -

Allowance for impairment loss onother receivables 2,210,036 – – –

Bad debts written off – 4,781 - - Depreciation charge for the period 7,326,780 11,312,442 20,272 30,409 (Gain)/Loss on disposal property, plant and equipment (32,867) (11,639) - -

Impairment loss on subsidaries - - 46,179,731 - Impairment loss on intangible asset 97,610 - - - Interest income (163,178) (7,539) - - Interest expense 4,087,515 8,729,061 3,699 1,720,177 Allowance for impairment loss on property, plant and equipment 2,908,755 - - -

Reversal of impairment loss on trade receivables - (169,966) - -

Deposit written off - - - - Provision for doubtful debt - 479,421 - - Waiver of debts - 980,761 - -

Operating profit/(loss) before workingcapital changes (9,856,718) 6,408,440 (1,115,097) (1,748,593)Decrease in inventories 6,156,740 675,222 - - Decrease in trade and other receivables 7,244,708 4,516,480 - 169,458

(Increase)/Decrease in trade and other payables (2,792,219) (45,628) 101,940 484,035

Cash generated from/ (used in) operation 752,511 11,554,514 (1,013,157) (1,095,100)Interest received 124,187 7,539 - - Interest paid (498,985) (8,729,061) (3,699) (1,720,177)Tax paid (93,533) (725,247) - - Net cash from/(used in)operating activities 284,180 2,107,745 (1,016,856) (2,815,277)



STATEMENT OF CASH FLOWS (Cont’d)for the Financial Year ended 31 December 2015


Note RM RM RM RM(18 months) (18 months)

Cash flows from/(used in) investing activities

Purchase of property, plant and equipment 25 (125,902) (12,466,242) - -

Proceed from disposal of property, plant and equipment 33,934 79,426 - -

Withdrawal/(Placement) of fixed deposits 1,100,000 (343,687) - -

Advance to subsidiaries - - (3,221,916) (7,002,578)Net cash from/(used in) investing activities 1,008,032 (12,730,503) (3,221,916) (7,002,578)

Cash flows from/(used in) financing activities

Proceed from issuance of sharecapital - 10,800,000 - 10,800,000

Repayment of other short term borrowings - - - (6,515,828)

Repayment of hire purchases (77,703) (170,850) (15,249) (21,475)(Repayment)/Proceed of term loans (1,611,160) (1,097,820) 3,907,119 5,600,981 Net cash from/(used in) financing activities (1,688,863) 9,531,330 3,891,870 9,863,678

Net (decrease)/increase in cash and cash equivalents (396,651) (1,091,428) (189,092) 45,823

Cash and cash equivalents as at beginning of the financialyear/period 907,870 1,999,298 261,973 216,150

Cash and cash equivalents as at end of the financialyear/period 26 511,219 907,870 72,880 261,973



NOTES TO THE FINANCIAL STATEMENTSfor the Financial Year ended 31 December 2016

1. GENERAL INFORMATION

The Company is a public company limited by share and is incorporated under the Companies Act, 1965 in Malaysia. The domicile of the Company is Malaysia.

The registered office of the Company is located at 51-21-A, Menara BHL Bank, Jalan Sultan Ahmad Shah, 10050 Penang. The principal place of business is located at Lot 208 Phase II, Kuala Ketil Industrial Estate 09300 Kuala Ketil, Kedah.

The Company is principally engaged in the business of investment holding. The principal activities of the subsidiaries are set out in Note 8 to the financial statement. There have been no significant changes in the nature of these activities during the financial year.

The financial statements are presented in Ringgit Malaysia (RM)

2. BASIS PREPARATION OF FINANCIAL STATEMENTS

The financial statements of the Company are prepared in accordance with the break-up basis and in compliance with Malaysian Financial Reporting Standards (“MFRSs”), International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia.

The break up basis is adopted pursuant to the Group commencement of cessation of business operation with no intention to resume business operations and thus, the preparation of the financial statements for the year ended 31 December 2016 on the going concern basis is no longer appropriate.

Accordingly, the financial statements, expressed in Ringgit Malaysia (RM), are prepared on a basis that the Company is not a going concern i.e. on the breakup basis. The actual values realised may differ from the carrying values of assets and liabilities included in these financial statements.

2.1 STANDARDS ISSUED BUT NOT YET EFFECTIVE

The following are accounting standards, amendments and interpretations of the MFRSs 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 2016

• MFRS 14, Regulatory Deferral Accounts• Amendments to MFRS 5, Non-current Assets Held for Sale and Discontinued Operations (Annual

Improvements 2012-2014 Cycle)• Amendments to MFRS 7, Financial Instruments: Disclosures (Annual Improvements 2012-2014

Cycle)• Amendments to MFRS 10, Consolidated Financial Statements and MFRS 128, Investments in As-

sociates and Joint Ventures – Sale or Contribution of Assets between an Investor and its Associate or Joint Venture

• Amendments to MFRS 10, Consolidated Financial Statements, MFRS 12, Disclosure of Interests in Other Entities and MFRS 128, Investments in Associates and Joint Ventures – Investment Entities: Applying the Consolidation Exception

• Amendments to MFRS 11, Joint Arrangements – Accounting for Acquisitions of Interests in Joint Operations

• Amendments to MFRS 101, Presentation of Financial Statements – Disclosure Initiative• Amendments to MFRS 134, Interim Financial Reporting (Annual Improvements to MFRSs 2012-2014

Cycle)• Amendments to MFRS 116, Property, Plant and Equipment and MFRS 138, Intangible Assets –

Clarification of Acceptable Methods of Depreciation and Amortisation• Amendments to MFRS 116, Property, Plant and Equipment and MFRS 141,Agriculture – Agriculture

: Bearer Plants• Amendments to MFRS 119, Employee Benefits (Annual Improvements 2012-2014 Cycle)• Amendments to MFRS 127, Separate Financial Statements – Equity Method in Separate Financial

Statements


NOTES TO THE FINANCIAL STATEMENTS (Cont’d)for the Financial Year ended 31 December 2016

2. BASIS PREPARATION OF FINANCIAL STATEMENTS

2.1 STANDARDS ISSUED BUT NOT YET EFFECTIVE


• Amendments to MFRS 107, Statement of Cash Flows - Disclosure Initiative • Amendments to MFRS 112, Income Taxes - Recognition of Deferred Tax Assets for Unrealised Losses • Amendments to MFRS 12, Disclosure of Interests in Other Entities (Annual Improvements to MFRS

Standards 2014-2016 Cycle)


• MFRS 9, Financial Instruments• MFRS 15, Revenue from Contracts with Customers• Amendments to MFRS 1, First-time Adoption of Malaysian Financial Reporting Standards (Annual

Improvements to MFRS Standards 2014-2016)• Amendments to MFRS 2, Classification and Measurement of Share-based Payment Transactions• Amendments to MFRS 140, Investment Property – Transfers of Investment Property• IC Interpretation 22, Foreign Currency Transactions and Advance Consideration


• MFRS 16, Leases

None of the standards listed above are expected to have a significant effect on the financial statements of the Group and of the Company upon initial application, except for the following:

• Amendments to MFRS 107, Statement of Cash Flows - Disclosure Initiative (effective from 1 January 2017) introduce an additional disclosure on changes in liabilities arising from financing activities.

• MFRS 9, Financial Instruments (effective 1 January 2018) will replace MFRS 139 Financial Instru-ments: Recognition and Measurement.

MFRS 9 retains but simplifies the mixed measurement model in MFRS 139 and establishes three primary measurement categories for financial assets: amortised cost, fair value through profit or loss and fair value through other comprehensive income (“OCI”). The basis of classification depends on the entity’s business model and the contractual cash flow characteristics of the financial asset. Investments in equity instruments are always measured at fair value through profit or loss with an irrevocable option at inception to present changes in fair value in OCI (provided the instrument is not held for trading). A debt instrument is measured at amortised cost only if the entity is holding it to collect contractual cash flows and the cash flows represent principal and interest.

For liabilities, the standard retains most of the MFRS 139 requirements. These include amortised cost accounting for most financial liabilities, with bifurcation of embedded derivatives. The main change is that, in cases where the fair value option is taken for financial liabilities, the part of a fair value change due to an entity’s own credit risk is recorded in OCI rather than the profit or loss, unless this creates an accounting mismatch.

MFRS 9 introduces an expected credit losses model on impairment that replaces the incurred loss impairment model used in MFRS 139. The expected credit losses model is forward-looking and eliminates the need for a trigger event to have occurred before credit losses are recognised.

The Group and the Company are currently still in process of assessing the impact of the new standards upon initial application of these standards.



3. SIGNIFICANT ACCOUTING POLICIES

3.1 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS

Estimates and judgements are continually evaluated by the directors and the management and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The estimates and judgements that affect the application of the Company’s accounting policies and disclosure, and have a significant risk of causing a material adjustment to the carrying amount of assets, liabilities, income and expenses are discussed below:-

(a) Key sources of estimation uncertainty

(i) Depreciation of Property, Plant and Equipment

The estimates for the residual values, useful lives and related depreciation charges for the property, plant and equipment are based on the commercial factors which could change significantly as a result of technical innovations and competitors’ actions in response to the market conditions. The Company anticipates that the residual values of its property, plant and equipment will be insignificant. As a result residual values are not being taken into consideration for the computation of the depreciation amount. Changes in the expected level of usage and technological development could impact the economic useful lives and the residual values of these assets, therefore future depreciation charges could be revised.

(ii) Impairment of investments in subsidiaries and amount owing by subsidiaries

The Company reviews the investments in subsidiaries for impairment when there is an indication of impairment and assesses the impairment of receivables on the amount owing by subsidiaries when the receivables are long outstanding.

The recoverable amount of investment in subsidiaries and amount owing by subsidiaries is assessed by reference to the higher of its fair value less cost to sell and its value in use of the respective subsidiaries.

The value in use is the net present value of the projected future cash flows derived from the business operations of the respective subsidiaries discounted at an appropriate discount rate. Such a discounted cash flow method involves the use of estimated future results and a set of assumptions to reflect their income and cash flows. Judgment was also used to determine the discount rate for the cash flows and the future growth of the businesses of the subsidiaries.

(a) Income Taxes

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

(b) Deferred tax assets and liabilities

Deferred tax implications arising from the changes in corporate income tax rates are measured with reference to the estimated realisation and settlement of temporary differences in future periods in which tax rates are expected to apply, based on the tax rates enacted or substantively enacted at the reporting period. While management’s estimates on the realisation and settlement of temporary differences are based on the available information at the reporting period, changes in business strategy, future operating performance and other factors could potentially impact on the actual amount and the estimated amount would be recognised in the profit or loss in the period in which actual realisation and settlement occurs.




3.1 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS

(c) Impairment of Non-Financial Assets

When the recoverable amount of an asset is determined based on the estimate of the value-in-use of the cash-generating unit to which the asset is allocated, the management is required to make an estimate of the expected future cash flows from the cash-generating unit and also to apply a suitable discount rate in order to determine the present value of those cash flows.

(d) Write-down of Inventories

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

(e) Impairment of Receivables

An impairment loss is recognised when there is objective evidence that a financial asset is impaired. Management specifically reviews its loans and receivables financial assets and analyses historical bad debts, customer concentrations, customer creditworthiness, current economic trends and changes in the customer payment terms when making a judgement to evaluate the adequacy of the allowance for the impairment losses. Where there is objective evidence of impairment, the amount and timing of future cash flows are estimated based on historical loss experience for assets with similar credit risk characteristics. If the expectation is different from the estimation, such difference will impact the carrying value of receivables.

(f) Revaluation of Property, Plant and Equipment

Certain properties of the Group are reported at valuation which is based on valuations performed by independent professional valuers

The independent professional valuers have exercised judgment in determining discount rates, estimates of the future cash flows, capitalisation rate, terminal year value, market freehold rental and other factors used in the valuation process. Also, judgment has been applied in estimating prices for less readily observable external parameters. Other factors such as model assumptions, market dislocations and unexpected correlations can also materially affect these estimates and the resulting valuation estimates.

(g) Classification of Leasehold Land

The classification of leasehold land as a finance lease or an operating lease requires the use of judgment in determining the extent to which risks and rewards incidental to its ownership lie. Despite the fact that there will be no transfer of ownership by the end of the lease term and that the lease term does not constitute the major part of the indefinite economic life of the land, management considered that the present value of the minimum lease payments approximated to the fair value of the land at the inception of the lease. Accordingly, management judged that the Group has acquired substantially all the risks and rewards incidental to the ownership of the land through a finance lease.

(h) Fair Value Estimates for Certain Financial Assets and Liabilities

The Company carries certain financial assets and liabilities at fair value, which requires extensive use of accounting estimates and judgment. While significant components of fair value measurement were determined using verifiable objective evidence, the amount of changes in fair value would differ if the Company uses different valuation methodologies. Any changes in fair value of these assets and liabilities would affect profits and/or equity.



3.2 BASIS OF CONSOLIDATION

The consolidated financial statements include the financial statements of the Company and its subsidiaries made up to 31 December 2016.

Subsidiaries are entities (including structured entities) controlled by Group. The Group controls an entity when the Group is exposed to, or has right to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity.

Subsidiaries are consolidated from the date on which control is transferred to the Group up to the effective date on which control ceases, as appropriate.

Intergroup transaction, balances, income and expenses are eliminated on consolidation. Where necessary, adjustment is made to the financial statements of subsidiaries to ensure consistency of accounting policies with those of the Group.

(a) Business Combinations

Acquisitions of businesses are accounted for using the acquisition method. Under the acquisition method, the consideration transferred for acquisition of a subsidiary is the fair value of the assets transferred, liabilities incurred and the equity interests issued by the Group at the acquisition date. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Acquisition-related costs, other than the costs to issue debt or equity securities, are recognised in profit or loss when incurred.

In a business combination achieved in stages, previously held equity interest in the acquiree are remeasured to fair value at the acquisition date and any corresponding gain or loss is recognised in profit or loss.

Non-controlling interest in the acquiree may be initially measured either at fair value or at the non-controlling interests’ proportionate share of the fair value of the acquiree’s identifiable net assets at the date of acquisition. The choice of measurement basis is made on a transaction-by-transaction basis.

(b) Non-Controlling Interests

Non-Controlling interests are presented within equity in the consolidated statement of financial position, separately from the equity attributable to owners of the Company. Profit or loss and each component of other comprehensive income are attributed to the owners of the Company and to the non-controlling interests. Total comprehensive income is attributed to non-controlling interests even if these results in the non-controlling interests have a deficit balance.

At the end of each reporting period, the carrying amount of non-controlling interests is the amount of those interests at initial recognition plus the non-controlling interests’ share of subsequent changes in equity.

(c) Change In Ownership Interests In Subsidiaries Without Change of Control

All changes in the parent’s ownership interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions. Any difference between the amount by which the non-controlling interest is adjusted and the fair value of consideration paid or received is recognised directly in equity of the Group.



3. SIGNIFICANT ACCOUTING POLICIES (Cont’d)

3.2 BASIS OF CONSOLIDATION (Cont’d)

(d) Loss of Control

Upon the loss of control of a subsidiary, the Group recognises any gain or loss on disposal in profit or loss which is calculated as the difference between:-

(i) the aggregate of the fair value of the consideration received and the fair value of any retained interest in the former subsidiary; and

(ii) the previous carrying amount of the assets (including goodwill), and liabilities of the former subsidiary and any non-controlling interests.

Amounts previously recognised in other comprehensive income in relation to the former subsidiary are accounted for in the same manner as would be required if the relevant assets or liabilities were disposed of (i.e. reclassified to profit or loss or transferred directly to retained profits). The fair value of any investments retained in the former subsidiary at the date when control is lost is regarded as the fair value on initial recognition for subsequent accounting under MFRS 139 or, when applicable, the cost on initial recognition of an investment in an associate or a joint venture.

3.3 FUNCTIONAL AND PRESENTATION CURRENCY

The individual financial statements of each entity in the Group are presented in the currency of the primary economic environment in which the entity operates, which is the functional currency.

The consolidated financial statements are presented in Ringgit Malaysia (“RM”), which is the company’s functional and presentation currency.

3.4 FINANCIAL INSTRUMENT

Financial instruments are recognised in the statement of the financial position when the Company has become a party to the contractual provisions of the instruments.

Financial instruments are classified as liabilities or equity in accordance with the substance of the contractual arrangement. Interest, dividends, gains and losses relating to a financial instrument classified as a liability, are reported as an expense or income. Distributions to the holders of the financial instruments classified as equity are charged directly to equity.

Financial instruments are offset when the Group has a legally enforceable right to offset and intends to settle either on a net basis or to realise the asset and settle the liability simultaneously.

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, the transaction costs that are directly attributable to the acquisition or issue of the financial instrument.

Financial instruments recognised in the statements of financial position are disclosed in the individual policy statement associated with each item.

a) Financial Assets

On initial recognition, financial assets are classified as either financial assets at fair value through profit or loss, held-to-maturity investments. Loans and receivables, or available-for-sale, as appropriate.




3.4 FINANCIAL INSTRUMENT (cont’d)

a) Financial Assets (Cont’d)

(i) Financial assets at Fair Value through Profit or Loss

Financial assets are classified as financial assets at fair value through profit or loss when the financial asset is either held for trading or is designated to eliminate or significantly reduce a measurement or recognition inconsistency that would otherwise arise. Derivatives are also classified as held for trading unless they are designated as hedges.

Financial assets at fair value through profit or loss are stated at fair value, with any gains or losses arising in measurement recognised in profit or loss. Dividend income from this category of financial assets is recognised in profit or loss when the Company’s right to receive payment is established.

As at the end of the reporting period, there were no financial assets classified under this category.

(i) Held-to-maturity Investments

Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturities that the management has the positive intention and ability to hold to maturity. Held-to-maturity investments are measured at amortised cost using the effective interest method less any impairment loss, with interest income recognised in profit or loss on an effective yield basis.


(ii) Loans and Receivables Financial Assets

Trade receivables and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as loans and receivables financial assets. Loans and receivables financial assets are measured at amortised cost using the effective interest method, less any impairment loss. Interest income is recognised by applying the effective interest rate, except for the short-term receivables when the recognition of interest would be immaterial.

(iii) Available-for-sale Financial Assets

Available-for-sale financial assets are non-derivative financial assets that are designated in this category or are not classified in any of the other categories.

After initial recognition, available-for-sale financial assets are remeasured to their fair values at the end of each reporting period. Gains and losses arising from changes in fair value are recognised in other comprehensive income and accumulated in the fair value reserve, with the exception of impairment losses. On derecognition, the cumulative gain or loss previously accumulated in the fair value reserve is reclassified from equity into profit or loss.

Dividends on available-for-sale equity instruments are recognised in profit or loss when the Company’s right to received payments is established.

Investments in equity instruments whose fair value cannot be reliably measured are measured at cost less accumulated impairment losses, if any.





3.4 FINANCIAL INSTRUMENT (Cont’d)

(b) Financial Liabilities

All financial liabilities are initially at fair value plus directly attributable transaction costs and subsequently measured at amortised cost using the effective interest method other than those categorised as fair value through profit or loss.

Fair value through profit of loss category comprises financial liabilities that are either held for trading or are designated to eliminate or significantly reduce a measurement or recognition inconsistency that would otherwise arise. Derivatives are also classified as held for trading unless they are designated as hedges.

(c) Equity Instruments

Ordinary shares classified as equity are measured at cost and are not remeasured subsequently. Incremental costs directly attributable to the issue of new ordinary shares or options are shown in equity as a deduction, net of tax, from proceeds.

Dividends on ordinary shares are recognised as liabilities when approved for appropriation.

(d) 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 or 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.

3.5 INVESTMENTS IN SUBSIDIARIES

Investment in subsidiaries are stated at cost in the statement of financial position of the Company, and are reviewed for impairment at the end of reporting period if events or changes in circumstances indicate that the carrying values may not be recoverable. The cost of the investments includes transaction costs.

On the disposal of the investments in subsidiaries, the difference between the net disposal proceeds and the carrying amount of the investments is recognised in profit or loss.

3.6 PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment, other than freehold land, leasehold land and building are stated at cost less accumulated depreciation and impairment losses, if any.

Freehold land is stated at valuation less impairment losses, if any.

Leasehold land and building are stated at revalued amount less accumulated depreciation and impairment losses recognised after the date of the revaluation.

Freehold land, leasehold land and building are revalued periodically, at least once in every five (5) periods or earlier if circumstances indicate that the carrying amount may differ significantly from the market value.




3.6 PROPERTY, PLANT AND EQUIPMENT

Depreciation is charged to profit or loss on the straight-line method to write off the depreciable amount of the assets over their estimated useful lives. Freehold land is not depreciated. Depreciation of an as-set begins when it is ready for its intended use. Depreciation of an asset does not cease when the asset becomes idle or is retired from active use unless the asset is fully depreciated. The principle annual rates used for this purpose are:-

Leasehold land Over the lease periods of 21 and 54 yearsShop house, factory buildings and improvement 2% to 10%Plant, machinery and equipment 5% to 25%Vessel 10%Motor vehicles 10% to 20%Furniture, fitting and office equipment 10%

The depreciation method, useful lives and residual values are reviewed, and adjusted if appropriate, at the end of each reporting period to ensure that the amounts, method and periods of depreciation are consistent with previous estimates and the expected pattern of consumption of the future economic benefits embodied in the items of the property, plant and equipment.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when the cost is incurred and it is probable that the future economic benefits associated with the asset will flow to the Company and the cost of the asset can be measured reliably. The carrying amount of parts that are replaced is derecognised. The costs of the day-to-day servicing of property, plant and equipment are recognised in profit and loss as incurred. Cost also comprises the initial estimate of dismantling and removing the asset and restoring the site on which it is located for which the Company is obligated to incur when the asset is acquired, if applicable.

An item of property and equipment is derecognised upon disposal or when no future economic benefits are expected from its use. Any gain or loss arising from derecognition of the asset is recognised in profit or loss. The revaluation reserve include in equity is transferred directly to retained profits on retirement or disposal of the asset.

3.7 INTANGIBLE ASSETS

Trademarks

Trademarks are initially measured at cost. Following the initial recognition, trademarks with definite life are stated at cost less accumulated amortisation and impairment losses while trademarks with indefinite life are stated at cost of less accumulated amortisation and impairment losses. Trademarks with indefinite useful lives are not amortised but tested for impairment annually or more frequently if the events or changes in circumstances indicate that the carrying value may be impaired either individually or at the cash-generation unit level. The useful life of a trademark with an indefinite life is also reviewed annually to determine whether the useful life assessment continues to be supportable.

3.8 IMPAIRMENT

(a) Impairment of Financial Assets

All financial assets (other than those categorised at fair value through profit or loss), are assessed at the end of each reporting period 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.

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




3.8 IMPAIRMENT (Con’t)

(a) Impairment of Financial Assets (cont’d)

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

(b) Impairment of Non-Financial Assets

The carrying values of assets, other than those to which MFRS 136 – Impairment of Assets does not apply, are reviewed at the end of each reporting period for impairment when there is an indication that the assets might be impaired. Impairment is measured by comparing the carrying values of the assets with their recoverable amounts. The recoverable amount of the assets is the higher of the assets’ fair value less costs to sell and their value-in-use, which is measured by reference to discounted future cash flows.

An impairment loss is recognised in profit or loss immediately unless the asset is carried at its revalued amount. Any impairment loss of a revalued asset is treated as a revaluation decrease to the extent of a previous recognised revaluation surplus for the same asset.

When there is a change in the estimates used to determine the recoverable amount, a subsequent increase in the recoverable amount of an asset is treated as a reversal of the previous impairment loss and is recognised to the extent of the carrying amount of the asset that would have been determined (net of amortisation and depreciation) had no impairment loss been recognised. The reversal is recognised in profit or loss immediately.

3.9 ASSET UNDER HIRE PURCHASE

Assets acquired under hire purchase are capitalised in the financial statements at the lower of the fair value of the leased assets and the present value of the minimum lease payments and, are depreciated in accordance with policy set out in Note 3.6 above. Each hire purchase payment is allocated between the liability and finance charges so as to achieve a constant rate on the finance balance outstanding. Finance charges so as to achieve a constant rate on the finance balance outstanding. Finance charges are recognised in profit or loss over the period of respective hire purchase agreements.

3.10 INVENTORIES

Inventories are stated at the lower of cost and the net realisable value. Cost is determined on the first-in-first-out basis and comprises direct material, direct labour costs and overheads that have been incurred in bringing the inventories to their present location and condition.

Net realisable value represents the estimated selling price less the estimated cost necessary to make the sale.

3.11 INCOME TAXES

Income tax for the period comprises current and deferred tax.

Current tax is the expected amount of income taxes payable in respect of the taxable profit for the reporting period and is measured using the tax rates that have been enacted or substantively enacted at the end of the reporting period.

Deferred tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred tax liability is recognised for all taxable temporary differences.




3.11 INCOME TAXES

Deferred tax assets are recognised for all deductible temporary differences, unused tax loses and unused tax credits to the extent that it is probable that future taxable profits will be available against which the deductible temporary differences, unused tax loses and unused tax credits can be utilised. The carrying amounts of deferred tax assets are reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient future taxable profits will be available to allow all or part of the deferred tax assets to be utilised.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period when the asset is realised or the liability is settled, based on the tax rates that have been enacted or substantively enacted at the end of the reporting period.

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

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

3.12 CASH AND CASH EQUIVALENTS

Cash and cash equivalents comprise cash in hand, bank balances, demand deposits, deposits pledged with financial institutions, bank overdrafts and short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value with original maturities period three months or less.

3.13 PROVISIONS

Provision are recognised when the Group has a present obligation as a result of past events, when it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and when a reliable estimate of the amount can be made. Provisions are reviewed at the end of each reporting period and adjusted to reflect the current best estimate. Where the effect of the time value of money is material, the provision is the present value of the estimated expenditure required to settle the obligation. The unwinding of the discount is recognised as interest expense in profit or loss.

3.14 EMPLOYEE BENEFITS

(a) Short-term Benefits

Wages, salaries, paid annual leave and sick leave, bonuses and non-monetary benefits are measured on an undiscounted basis and are recognised in profit or loss in the period in which the associated services are rendered by employees of the Group.

(b) Defined Contribution Plans

The Group’s contributions to defined contribution plans are recognised in profit or loss in the period to which they relate. Once the contributions have been paid, the Group has no further liability in respect of the defined contribution plans.




3.15 LEASES

(a) As Lessee

Finance leases, which transfer to the Group substantially all the risks and rewards incidental to ownership of the leased item, are capitalised at the inception of the lease at the fair value of the leased asset or, if lower, at the present value of the minimum lease payments.

Any initial direct costs are also added to the amount capitalised. Lease payments are apportioned between the finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability so as to achieve a constant rate of interest on the remaining balance of the liability.

Finance charges are charged to profit and loss. Contingent rents, if any, are charged as expenses in the period in which they are incurred.

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

Operating lease payments are recognised as an expense in profit or loss on a straight-line basis over the lease term. The aggregate benefit of incentives provided by the lessor is recognised as reduction of rental expense over the lease term on a stright0line basis.

(b) As Lessor

Leases where the Group retains substantially all risks and rewards of ownership of the asset are classified as operation lease. Initial direct costs incurred in negotiating an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same bases as rental income. The accounting policy for rental income is set out in Note 3.19

3.16 RELATED PARTIES

A party is related to an entity (referred to as the “reporting entity”) if:-

(a) A person or a close member of that person’s family is related to are porting entity if that person:-

(i) Has control or joint control over the reporting entity;(ii) Has significant influence over the reporting entity; or(iii) Is a member of the key management personnel of the reporting entity or of a parent of the

reporting entity

(b) An entity is related to a reporting entity if any of the following conditions applies:-

(i) The entity and the reporting entity are members of the same group (which means that each parent, subsidiary and fellow subsidiary is related to the others).

(ii) One entity is an associate or joint venture of the other entity (or an associate or joint venture of a member of a group of which the other entity is a member).

(iii) Both entities are joint ventures of the same third party.(iv) One entity is a joint venture of a third entity and the other entity is an associate of the third

party.(v) The entity is a post-employment benefit plan for the benefit of the employees of either the

reporting entity or an entity related to the reporting entity. If the reporting entity is itself such a plan, the sponsoring employers are also related to the reporting entity.

(vi) The entity is controlled or jointly controlled by a person identified in (a) above.(vii) A person identified in (a)(i) above has significant influence over the entity or is a member of

the key management personnel of the entity (or of a parent of the entity).

Close members of the family of a person are those family members who may be expected to influence, or be influence by, that person in their dealings with the entity.




3.17 CONTINGENT LIABILITIES

A contingent liability is a possible obligation that arise from past events and whose existence will only be confirmed by the occurrence of one of more uncertain future events not wholly within the control of the Company. If can also be a present obligation arising from past events that is not recognised because it is not probable that an outflow of economic resources will be required of that the amount of obligation cannot be measured reliably.

A contingent liability is not recognised but is disclosed in the notes to the financial statements. When a charge in the probability of an outflow occurs so that the outflow is probable, it will then recognised as a provision.

3.18 FAIR VALUE MEASUREMENTS

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using a valuation technique. The measurement assumes that the transaction 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’s 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.

For financial reporting purposes, the fair value measurements are analysed into level 1 to level 3 as follows:-

Level 1: Inputs are quoted prices (unadjusted) in active markets for identical assets or, liability that the entity can access at the measurement date;

Level 2: Inputs are inputs, other than quoted prices included within level 1, that are observable for the asset or liability, either directly or indirectly; and

Level 3: Inputs are unobservable inputs for the asset or liability.

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

3.19 REVENUE AND OTHER INCOME

(a) Sale of goods

Revenue is measured at fair value of the consideration received or receivable and is recognised upon delivery of goods and customers’ acceptance and where applicable, net or returns and trade discounts.

(b) Management fee

Management fee is recognised on an accrual basis when services are rendered.

(c) Interest income

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

(d) Rental income

Rental income is recognised on an accrual basis.




3.20 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. An operating segment’s operating results are reviewed regularly by the chief operating decision maker to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available.

3.21 BORROWING COSTS

Borrowing costs, directly attributable to the acquisition, construction or production of a qualifying asset are capitalised as part of the cost of those assets, until such time as assets are ready for their intended use or sale. Capitalisation of borrowing costs is suspended during extended periods in which active development is interrupted.

All other borrowing costs are recognised in profit or loss as expenses in the period in which they incurred.

4. REVENUE

Revenue represents the gross invoiced value of goods sold less returns and discounts allowed.



5. LOSS BEFORE TAXATION

Loss before taxation is stated after charging/(crediting) the following items :-


to to to to31.12.2016 31.12.2015 31.12.2016 31.12.2015

RM RM RM RM

Audit fee 136,700 332,400 47,200 94,400 Bad debts written off - 4,781 - - Depreciation charge for the year/period 7,326,780 11,312,442 20,272 30,409

Director’s remuneration 670,445 1,342,080 670,445 1,342,080 Allowance for impairment loss:- trade receivables 5,237,941 479,421 283,376 - - other receivables 3,647,935 - – –

Impairment loss on property, plant and equipment 2,908,775 - - -

Interest expense:- hire purchase 34,877 49,892 3,698 6,947 - term loans 3,975,753 8,004,245 - 1,713,230 - revolving credit - 619,338 - - - others 76,885 55,586 - -

Rental of motor vehicles 157,776 304,928 - - Rental of premises 499,700 756,800 - - Staff cost:- salaries and other benefits 5,416,160 10,774,170 565,515 848,258 Bad debts recovered (59,249) (169,966) - - Interest income (163,178) (7,539) - - Gain on disposal of property,plant and equipment (32,867) (13,499) - -

Rental income (95,236) (1,242,982) - - Waiver of debt - (980,761) - -



6. INCOME TAX CREDIT


to to to to31.12.2016 31.12.2015 31.12.2016 31.12.2015

RM RM RM RM

Taxation based on the result for thefinancial year:Malaysian income tax 11,000 21,109 - - Deferred taxation (Note 22) - - - -

11,000 21,109 - - Under/(Over) provision in prior yearsMalaysian income tax 186,064 33,013 - - Deferred taxation (Note 22) (529,821) (741,862) - -

(332,757) (687,740) - -

A reconciliation of income tax credit applicable to the loss before taxation at the statutory tax rate to income tax credit at the effective rate of the Group and the Company is a follows:-


to to to to31.12.2016 31.12.2015 31.12.2016 31.12.2015

RM RM RM RM

Loss before taxation (34,439,172) (15,596,622) (47,318,799) (3,499,179)

Tax at the statutory tax rate of 24% (2015:25%) (8,265,401) (3,899,156) (11,356,512) (874,795)

Tax effect of:-Non-taxable income (12,963) (38,642) - - Non-deductable expense 2,808,070 5,238,189 11,154,626 874,795 Deferred tax assets not recognised during the financial year/period 5,481,294 - 201,886 -

(Over)/Underprovision of income taxin the prior financial year/period 186,064 33,013 - -

Overprovision of deferred taxation in prior financial year/period (529,821) (741,862) - -

Utilisation of tax losses previously not recognised - (1,279,282) - -

Income tax credit for the financial year/period (332,757) 591,542 - -



6. INCOME TAX CREDIT (Cont’d)

Deferred tax assets have not been recognised in respect of the following items:


to to to to31.12.2016 31.12.2015 31.12.2016 31.12.2015

RM RM RM RM

Unabsorbed capital allowances 16,879,006 19,431,999 - -

Unabsorbed reinvestment allowances 15,060,000 15,060,000 - -

Unutilised tax losses 66,862,311 47,041,730 - -

7 LOSS PER SHARE

The GroupContinuing operations 1.1.2016 1.7.2014

to to31.12.2016 31.12.2015

RM RM

Loss attributable to owners of the Company (RM) (34,106,415) (14,908,882)

Weighted average number of ordinary shares at 31 December (Note 17) 312,000,000 312,000,000

Basic loss per share (Sen) (10.93) (4.78)

The diluted (loss)/profit per share were not presented as there were no dilutive potential ordinary shares outstanding at the end of the reporting period.

8. INVESTMENT IN SUBSIDIARIES

Company2016 2015

RM RM

Unqouted shares, at cost 51,760,348 51,760,348 Accumulated impairment losses (33,119,711) (33,119,711)

18,640,637 18,640,637



8. INVESTMENT IN SUBSIDIARIES (Cont’d)

The details of the subsidiaries are as follows:-

Name of Subsidiary Country of Incorporation

Effective Equity interest

Principal Activities

2016 2015% %

Kilang Bihun Bersatu Sdn. Bhd. Malaysia 100 100 Has ceased operation since January 2017

Kilang Bihun Bersatu (East Malaysia) Sdn. Bhd.

Malaysia 100 100 Has ceased operation since August 2016

Rasayang Food Industries Sdn. Bhd.

Malaysia 100 100 Has ceased operation since February 2017

Bersatu Noodles Industries Sdn. Bhd

Malaysia 100 100 Has ceased operation since May 2016

Bersatu Sago Industries Sdn. Bhd. Malaysia 100 100 Has ceased operation since January 2017

Bersatu Sago Industries (Mukah) Sdn. Bhd.

Malaysia 100 100 Has ceased operation since January 2017

Bersatu Biotechnology (Johore) Sdn. Bhd.

Malaysia 100 100 Has ceased operation since January 2017

EKA Foodstuff Sdn. Bhd. Malaysia 100 100 Has ceased operation since January 2017



9.

PRO

PERT

Y, P

LAN

T AN

D E

QUI

PMEN

T

Free

hold

La

nd

Leas

ehol

d La

ndBu

ildin

gsM

otor

Ve

hicl

esPl

ant,

Mac

hine

ry

and

Equi

pmen

t

Furn

itur

e,

Fitt

ings

an

d O

ffice

Eq

uipm

ent

Tota

l

The

Gro

upRM

RMRM

RMRM

RMRM

Net

boo

k va

lue

As a

t 1 Ja

nuar

y 20

164,

376,

267

6,57

1,79

7 30

,992

,687

53

4,50

8 25

,156

,982

46

9,37

9 68

,101

,620

Re

valu

atio

n -

Ad

ditio

ns -

-

19

,628

4,

535

42,5

70

59,1

69

125,

902

Dis

posa

l -

-

(6

2,05

8) (1

25,4

92)

(2,6

27,8

66)

(94,

426)

(2,9

09,8

42)

Dep

reci

atio

n ch

arge

for

the

year

-

(129

,235

) (8

14,2

13)

(171

,442

) (6

,125

,989

) (8

5,90

1) (7

,326

,780

)As

at 3

1 D

ecem

ber

2016

4,37

6,26

7 6,

442,

562

30,1

36,0

44

242,

109

16,4

45,6

97

348,

221

57,9

90,9

00

As

at 3

1 D

ecem

ber

2016

Cost

4,37

6,26

7 7,

369,

685

41,1

53,9

54

4,39

4,49

2 95

,836

,303

2,

363,

108

155,

493,

809

Accu

mul

ated

dep

reci

atio

n -

(9

27,1

23)

(11,

017,

910)

(4,1

52,3

83)

(79,

390,

606)

(2,0

14,8

87)

(97,

502,

909)

Net

boo

k va

lue

4,37

6,26

7 6,

442,

562

30,1

36,0

44

242,

109

16,4

45,6

97

348,

221

57,9

90,9

00

As

at 3

1 D

ecem

ber

2015

Cost

4,37

6,26

7 7,

369,

685

41,1

96,3

84

4,51

5,44

9 98

,421

,599

2,

398,

365

158,

277,

749

Accu

mul

ated

dep

reci

atio

n -

(7

97,8

88)

(10,

203,

697)

(3,9

80,9

41)

(73,

264,

617)

(1,9

28,9

86)

(90,

176,

129)

Net

boo

k va

lue

4,37

6,26

7 6,

571,

797

30,9

92,6

87

534,

508

25,1

56,9

82

469,

379

68,1

01,6

20



9. PROPERTY, PLANT AND EQUIPMENT (Cont’d)

Motor Vehicles

Office Equipment

Total

The CompanyRM RM RM

Net book valueAs at 31 December 2015 123,500 5,836 129,336 Depreciation for the year (19,500) (772) (20,272)As at 31 December 2015 104,000 5,064 109,064

As at 31 December 2016Cost 195,000 7,721 202,721 Accumulated depreciation (91,000) (2,657) (93,657)Net book value 104,000 5,064 109,064

As at 31 December 2015Cost 195,000 7,721 202,721 Accumulated depreciation (71,500) (1,885) (73,385)Net book value 123,500 5,836 129,336

(a) Included in the assets of the Group at the end of the year were plant, machinery and equipment with a total net book value of RM581,247 (2015: RM663,116) which were acquired under hire purchase terms.

(b) The freehold land, leasehold land and buildings of the Group have been pledged to licensed banks as securities for banking facilities granted to the Group with a total net carrying amount of RM40,869,820 (2015: RM41,940,751).

(c) Freehold land, leasehold land, factory buildings and improvement have been revalued in the financial period 31 December 2015 based on valuations performed by Mark Saw Khay Liang, FRICS, FRISM a valuer from PPC International (Penang) Sdn Bhd. The firms is independent firm of professional valuers, and the valuations were arrived at using the ‘Comparison method’ and ‘Cost method’ of valuation.

10. OTHER INVESTMENT

The Group/The Company2016 2015

RM RM

Secondary bonds 2,000,000 2,000,000 Less: Impairment loss (1,999,999) (1,999,999)

1 1

The secondary bonds with the maturity date on 26 January 2012 have been charged to the Trustee for the benefit of the Bondholders pursuant to primary collateralised loan obligations transactions entered into by the lending bank.

The impairment loss arose from the non-receipt of funds on maturity of the secondary bonds.



11. INTANGIBLE ASSETS

The Group2016 2015

RM RMCost:At 1 January/1 July 97,611 193,411 Disposal during the financial period (97,610) (95,800)At 31 December 1 97,611

Intangible assets of the Group related to the trademarks.

12. AMOUNTS DUE FROM SUBSIDIARIES COMPANY

The Company2016 2015

RM RM

Non-trade balance 46,179,731 42,957,815 Less: Allowance for impairment losses (46,179,731) - Amortisation - -

- 42,957,815 Allowance for impairment losses:-At 1 January/1 July - - Written-off during the financial period/year - -

At 31 December - -

Amortisation:-At 1 january/1 July - - Written-off during the financial period/year - -

At 31 December - -

The non-trade balances represent unsecured interest-free advances and payments made on behalf.

The amount owing from a related company is unsecured, non-interest bearing, and have an average maturity of 10 years.

13. INVENTORIES

The Group2016 2015

RM RMAt cost:Raw materials - 1,322,077 Work-in-progress - 3,496,996 Finished goods - 626,084 Consumables - 711,584

- 6,156,740



14. TRADE RECEIVABLES

The Group2016 2015

RM RM

Trade receivables 13,979,653 19,702,005 Allowance for impairment losses (13,979,653) (6,001,836)

- 13,700,169 Allowance for impairment losses:-At 1 January/1 July 6,001,836 5,692,381 Addition during the financial period 8,147,783 479,421 Reversal during the financial period (169,966) (169,966)At 31 December 13,979,653 6,001,836

(a) The Group’s normal trade credit terms range from 30 to 120 (2015: 30 to 120) days.

(b) The allowance for impairment losses is made mainly on those trade receivables in significant financial difficulties and has defaulted on payments.

15. OTHER RECEIVABLES, DEPOSITS AND PREPAYMENTS


RM RM RM RM

Other receivables 1,736,668 3,024,632 - 5,907 Deposits and prepayments 1,082,566 1,486,925 283,376 151,901 Allowance for impairment loss (2,210,036) - - -

609,198 4,511,557 283,376 157,808

16. FIXED DEPOSITS WITH A LICENSED BANK

The Group’s and the Company’s fixed deposits are pledged to licensed banks for bank guarantee granted to a subsidiary and banking facilities granted to the Company as disclosed in Note 21 to the financial statement.

The interest rate for fixed deposits is 3.00% (2015: 3.00%) per annum.



17. SHARE CAPITAL

The movements in the authorised and paid-up share capital of the Company are as follows:-

The Company2016 2015 2016 2015Number Of Shares RM RM

AuthorisedOrdinary shares of RM0.15/RM0.50 eachAt 1 January/1 July 400,000,000 400,000,000 60,000,000 60,000,000 Par value reduction - - - - Increase during the year - - - - At 31 December 400,000,000 400,000,000 60,000,000 60,000,000

Issued and Fully Paid-UpOrdinary shares of RM0.15/RM0.50 eachAt 1 January/1 July 312,000,000 240,000,000 36,000,000 36,000,000 Par value reduction - - - - Issuance of shares - 72,000,000 - - At 31 December 312,000,000 312,000,000 36,000,000 36,000,000

18. SHARE PREMIUM

The movement in the share premium of the Group and the Company are as follows:-


RM RM

At 1 January/1 July 3,600,000 - Issuance of shares - 3,600,000 At 31 December 3,600,000 3,600,000

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

19. RESERVE


RM RM RM RM

Non-distributableCapital reserve 4,837,366 4,837,366 4,837,366 4,837,366 Foreign currency translationreserve - - - - Revaluation reserve 9,204,366 9,204,366 - -

14,041,732 14,041,732 4,837,366 4,837,366

Capital reserve arises from capital reduction exercise took place during the year.

The revaluation reserve relates to the revaluation of freehold land, leasehold land, factory buildings and improvement.



20. HIRE PURCHASE PAYABLES


RM RM RM RM

Minimum hire purchase payments- not later than one year 102,144 71,668 18,946 33,644 - later than one year 519,293 662,349 64,701 68,951

621,437 734,017 83,647 102,595 Less: Future finance charges (86,231) (121,108) (7,413) (11,112)Present value of hire purchase 535,206 612,909 76,234 91,483

CurrentNot later than one year 535,206 61,400 76,234 30,000

Non-CurrentLater than one year - 551,509 - 61,483

21. BANK BORRROWINGS


RM RM RM RM

CurrentRevolving credit 2,524,000 2,782,186 - - Term loans 56,138,769 3,300,000 53,400,163 3,000,000

58,662,769 6,082,186 53,400,163 3,000,000

Non-CurrentTerm loans - 60,579,258 - 56,430,098

The revolving credit and term loans bore a weighted average of 8.35% (2015: 8.35%) per annum at the end of the reporting period/year and are secured by:-

(i) Legal charges over the property, plant and equipment as disclosed in Note 9 to the financial statements;(ii) A debenture by way of fixed and floating charge over all present and future assets belonging to the

Group;(iii) A pledge of fixed deposits as disclosed in Note 16 to the financial statements; and(iv) Personal guaranteed by a director of the Company.

22. DEFERRED TAXATION

The Group2016 2015

RM RM

At 1 January/1 July 529,821 1,271,683 Recognised in profit or loss (Note 8) (529,821) (741,862)At 31 December - 529,821



22. DEFERRED TAXATION (Cont’d)

The Group2016 2015

RM RM

Property, plant and equipment - - Revaluation reserve - 529,821 Unabsorbeb reinvestment allowance - -

- 529,821

The deferred tax liabilities were attributable to the revaluation reserve.

23. TRADE PAYABLES

The normal trade credit term granted to the Company is 30 to 90 (2013: 30 to 90) days.

24. OTHER PAYABLES, DEPOSITS ANDACCRUALS


RM RM RM RM

Other payables 11,730,205 1,534,787 10,190,614 233,214 Accruals 826,716 1,370,213 348,891 236,397 Deposits received 25,300 247,900 - - Amount due to directors 375,142 406,042 375,142 406,042

12,957,363 3,558,942 10,914,647 875,653

Included in other payables is an amount of RM9,937,054 payable to a financial institution for loan facility which represents principal and interests amounts payable during the financial year.

25. PURCHASE OF PROPERTY, PLANT AND EQUIPMENT


RM RM RM RM

Cost of property, plant and equipment purchased (Note 9) 125,902 12,696,741 - - Amount financed through hire purchase - (230,499) - - Cash disbursed for purchase of property, plant and equipment 125,902 12,466,242 - -



26. CASH AND CASH EQUIVALENTS

For the purpose of the statement of cash flows, cash and cash equivalents comprise the following:-


RM RM RM RM

Cash and cash equivalent 511,219 907,870 72,880 261,973

27. DIRECTORS’ REMUNERATION

(a) The aggregate amounts of emoluments received and receivable by directors of the Group and of the Company during the financial period/year are as follows:-


RM RM

Executive directors:- fee - - - non-fee emoluments 648,445 1,176,596

Non-Executive directors- fee – 101,484 - non-fee emoluments 22,000 64,000

670,445 1,342,080

(b) Details of directors’ emoluments of the Company received/receivable for the financial period/year in bands of RM100,000 are as follows:-

The Company2016 2015

Executive directors:-Below RM100,000 1 1RM100,001 to RM200,000 - -RM200,001 to RM300,000 - -Above RM300,001 1 2

Non-Executive directorBelow RM100,000 2 7RM100,001 to RM200,000 1 -

5 10

28. SIGNIFICANT RELATED PARTY DISCLOSURES

(a) Identities of related parties

The Company has related party relationship with:-

(i) Its holding company as disclosed in Note 12 to the financial statements;(ii) Its related companies which one its follow subsidiaries; and(iii) The directors who are the key management personnel.



28. SIGNIFICANT RELATED PARTY DISCLOSURES (Cont’d)

(b) Other than those disclosed elsewhere in the financial statements, the Group and the Company also carried out the following significant transactions with the related parties during the financial year/period:-


RM RM RM RM

Management fees received/receivable from subsidiaries - - 1,836,000 2,754,000 Rental paid/payable to a director company in which a Company’s has substantial financial interests - - - - Key management personnel compensation:- short-term employee benefits - - - -

29. OPERATING SEGMENTS

The Group operates predominantly in manufacturing and marketing of all type of rice and sago sticks (vermicelli), sago starch and related products in Malaysia. Accordingly, the information by business and geographical segment is no presented.

MAJOR CUSTOMERS

The group client base consists mainly of small wholesalers and retailers and hence disclosure for major customers is not representable and irrelevant.

30. OPERATING LEASE COMMITMENTS

30.1 LEASES AS LEASEE

The Group leases a number of factory facilities and warehouse under operating leases. The lease period range from 1 to 10 years with an option to renew after that date.

The future minimum lease payments under the non-cancellable operating leases are as follows:-

The Group2016 2015

RM RM

Not more than one year 1,543,080 1,543,080 Later than one year and not later than five years 3,491,250 3,491,250 Later than five years - -



30. OPERATING LEASE COMMITMENTS (Cont’d)

30.2 LEASE AS LESSOR

The Group leases out its investment properties. The future minimum lease payments under the non-cancellable operating leases are as follows:-

The Group2016 2015

RM RM

Not more than one year 350,000 350,000 Later than one year 2,170,000 2,170,000

31 CONTINGENT LIABILITIES


RM RM RM RM

Unsecured

Corporate guarantees given to licensed banks for credit facilitiesgranted to subsidiaries 8,625,000 8,625,000 8,625,000 8,625,000

32. FINANCIAL INSTRUMENTS

The Group’s activities are exposed to a variety of market risk (including foreign currency risk, interest rate risk and equity price risk), credit risk and liquidity risk. The Group’s overall financial risk management policy focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group’s financial performance.

32.1 FINANCIAL RISK MANAGEMENT POLICIES

The Group’s policies in respect of the major areas of treasury activity are as follows:-

(a) Market Risk

(i) Foreign Currency Risk

The Group does not have any transactions or balances denominated in foreign currencies and hence not exposed to foreign currency risk.

(ii) Interest Rate Risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Group’s exposures to interest rate risk arise mainly from interest-bearing financial liabilities. The Group’s policy is to obtain the most favourable interest rates available. Any surplus funds of the Company will be placed with licensed financial institutions to generate interest income.

Information relating to the Group’s exposure to the interest rate risk of the financial liabilities is disclosed in Note 32.1 (c) to the financial statements.

Interest rate risk sensitivity analysis

The following table details the sensitivity analysis to a reasonably possible change in the interest rates at the end of the reporting period, with all other variables held constant:-



32. FINANCIAL INSTRUMENTS (Cont’d)

32.1 FINANCIAL RISK MANAGEMENT POLICIES (Cont’d)

(a) Market Risk (Cont’d)

(ii) Interest Rate Risk (Cont’d)


Increase/ Increase/ Increase/ Increase/ (Decrease) (Decrease) (Decrease) (Decrease)

RM RM RM RM

Effect on Profit After TaxationIncrease of 10 bp - 50,546 - 44,694 Decrease of 10 bp - (50,546) - (44,694)

(iii) Equity Price Risk

The Company does not have any quoted investments and hence is not exposed to equity price risk.

(b) Credit Risk

The Group’s exposure to credit risk, or the risk of counterparties defaulting, arises mainly from trade and other receivables. The Group manages its exposure to credit risk by the application of credit approvals, credit limits and monitoring procedures on an ongoing basis. For other financial assets (including cash and bank balances), the Group minimises credit risk by dealing exclusively with high credit rating counterparties.

The Group establishes an allowance for impairment that represents its estimate of incurred losses in respect of the trade and other receivables as appropriate. The main components of this allowance are a specific loss component that relates to individually significant exposures, and a collective loss component established for groups of similar assets in respect of losses that have been incurred but not yet identified. Impairment is estimated by management based on prior experience and the current economic environment.

(i) Credit risk concentration profile

The Group does not have any major concentration of credit risk related to any individual customer or counterparty.

(ii) Exposure to credit risk

As the Group does not have any major concentration of credit risk related to any individual customer or counterparty.





(b) Credit Risk

(iii) Ageing analysis

The ageing analysis of the Group’s trade receivables (including amount owing by related parties) at the end of the reporting period as follows:-

Gross Individual Collective Carrying Amount Impairment Impairment Value

RM RM RM RM

The Group

2016

Not past due - - - -

Past due:1 to 30 days past due date - - - - 31 to 60 days past due - - - - 61 to 90 days past due - - - - more than 91 days past due - - - -

- - - -

Gross Individual Collective Carrying Amount Impairment Impairment Value

The Group RM RM RM RM

2015

Not past due 3,755,594 - - 3,755,594

Past due: - 1 to 30 days past due date 3,344,285 - - 3,344,285 31 to 60 days past due - - - - 61 to 90 days past due - - - - more than 91 days past due 12,602,126 (6,001,836) - 6,600,290

19,702,005 (6,001,836) - 13,700,169





(b) Credit Risk (Cont’d)

(iii) Ageing analysis (Cont’d)

At the end of reporting period, trade receivables that are individually impaired were those in significant financial difficulties and have defaulted on payments. These receivable are not secured by any collateral or credit enhancement.

The collective impairment allowance is determined based on estimated irrecoverable amounts from the sale of goods, determined by reference to past default experience.

Trade receivables that are past due but not impaired

The Group believes that no impairment allowance is necessary in respect of these trade receivable. They are substantially companies with good collection track record and no recent history of default.

Trade receivables that are neither past due nor impaired

A significant portion of trade receivables that are neither past due nor impaired are regular customers that have been transacting with the Group. The Group uses ageing analysis to monitor the credit quality of the trade receivable. Any receivables having significant balance past due or more than 91 days, which are deemed to have higher credit risk, are monitored individually.

(c) Liquidity Risk

Liquidity risk arises mainly from general funding and business activities. The Company practices prudent risk management by maintaining sufficient cash balances and the availability of funding through certain committed credit facilities.

The following table sets out the maturity profile of the financial liabilities at the end of the reporting period based on contractual undiscounted cash flows (including interest payments computed using contractual rates or, if floating, based on the rates at the end of the reporting period):-





(c) Liquidity Risk (Cont’d)

WeightedAverage Contractual Effective Carrying Undiscounted Within Over

Rate Amount Cash Flows 1 Year 1 YearThe Group % RM RM RM RM

2016

Hire purchase payables 3.86 535,206 535,206 535,206 -

Revolving credit 8.35 2,524,000 2,524,000 2,524,000 - Term loans 8.35 56,138,769 56,138,769 56,138,769 - Trade payables - 8,570,508 8,570,508 8,570,508 - Other payables

and accruals - 12,957,363 12,957,363 12,957,363 - 80,725,846 80,725,846 80,725,846 -

2015

Hire purchase payables 3.86 612,909 734,017 71,668 662,349

Revolving credit 8.35 2,782,186 2,782,186 2,782,186 - Term loans 8.35 63,879,258 63,879,258 3,300,000 60,579,258 Trade payables - 10,824,094 10,824,094 10,824,094 - Other payables

and accruals - 3,558,942 3,558,942 3,558,942 - 81,657,389 81,778,497 20,536,890 61,241,607





(c) Liquidity Risk (Cont’d)

WeightedAverage Contractual Effective Carrying Undiscounted Within Over

Rate Amount Cash Flows 1 Year 1 YearThe Company % RM RM RM RM

2016

Hire purchase payables 2.42 76,234 681,821 18,946 662,875 Revolving credit - Term loans 8.35 53,400,163 59,337,217 4,300,000 55,037,217 Other payables and accruals - 10,914,647 977,593 977,593 -

64,391,044 60,996,631 5,296,539 55,700,092

2015

Hire purchase payables 2.42 91,483 102,595 33,644 68,951 Term loans 8.35 59,430,098 59,430,098 3,000,000 56,430,098 Other payables and accruals - 875,653 875,653 875,653 -

60,397,234 60,408,346 3,909,297 56,499,049




32.2 CAPITAL RISK MANAGEMENT

The Group manages its capital by maintaining an optimal capital structure so as to support their businesses and maximise shareholder(s) value. To achieve this objective, the Company may make adjustments to the capital structure in view of changes in the economic conditions, such as adjusting the amount of dividend payment, returning of capital to shareholders or issuing new shares.

The Group manages its capital based on debt-to-equity ratio that complies with debt covenants and regulatory, if any. The debt-to-equity ratio is calculated as total borrowings from financial institutions divided by total equity.

There was no change in the Group’s approach to capital management during the financial period.

The debt-to-equity ratio of the Group and of the Company at the end of the reporting period was as follow:-


RM RM RM RM

Hire purchase payables 535,206 612,909 76,234 91,483 Bank borrowings 61,775,823 66,661,444 59,337,217 59,430,098

62,311,029 67,274,353 59,413,451 59,521,581 Less: Fixed deposits with

licensed banks - (1,100,000) - - Less: Cash and bank

balances (511,219) (907,870) (72,880) (261,973)Net debt 61,799,810 65,266,483 59,340,571 59,259,608

Total equity (21,949,976) 12,500,196 (45,568,462) 1,750,337

Debt-to-equity ratio (2.82) 5.22 (1.30) 33.86




32.3 CLASSIFICATION OF FINANCIAL INSTRUMENTS


RM RM RM RM

Financial assets

Available-for-sale financial assetsOther investment 1 1 1 1

Loans and receivables financial assetsAmount owing by

subsidiaries - - - 42,957,815 Trade receivables - 13,700,169 - - Other receivables and

deposits 609,198 4,511,556 - 157,808 Fixed deposits with

licensed banks - 1,100,000 - - Cash and bank balances 511,219 907,870 72,880 261,973

1,120,417 20,219,595 72,880 43,377,596

Financial Liabilities

Other financial liabilitiesTrade payables 8,570,508 10,824,094 - - Other payables and

accruals 12,957,363 3,558,942 977,593 875,653 Hire purchase payables 535,206 612,909 76,234 91,483 Bank borrowings 58,662,769 66,661,444 63,337,217 59,430,098

80,725,846 81,657,389 64,391,044 60,397,234




32.4 FAIR VALUE MEASUREMENTS

At the end of the reporting period, there were no financial instruments carried at fair values.

The fair values of the financial assets and financial liabilities approximated their carrying amounts due to the relatively short-term maturity of the financial instruments (maturing within the next 12 months and/or undefined repayment term). The fair values are included in level 2 of the fair value hierarchy.

The fair value of the non-current portion of receivables and payables equal the carrying amounts as the impact of discounting is not material.

33. SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR

In September 2016, a trading company initiated legal proceedings against the subsidiaries of the Company for the sum of RM1,976.65 being interest of 4% on the outstanding amount of RM581,835.68 calculated on per annum basis from 18 July 2016.

On 7 December 2016, The Board of Directors of the Company has announced that the High Court of Malaya in Penang has granted the Order dated 09 September 2016 a further period of 90 days effective from 07 December 2016 to restrain all further proceedings or actions against EKA Group by any party including the scheme creditors but not limited to any winding-up proceeding or taking of any action or proceeding, and so on, or in any way under any form of guarantee or indemnity granted to or conferred by Group, any enforcement, detention, or any other form of execution of any judgement or order against the Group, any execution of the rights or remedies or powers of appointment of any receiver and manager over any of the Group (including but not limited to the taking of any actions or proceedings or continuing with the exercise or rights or remedies under any Debenture, the sale of any asset that is the subject of any security interest created by the Group, repossession of any plant, equipment or machinery under lease or hire purchase and any arbitration proceedings.

34. SUBSEQUENT EVENT

Subsequent to the financial period, the Group has announced that its subsidiary company Kilang Bihun Bersatu Sdn. Bhd. (“KBBSB”) and EKA Foodstuff Sdn. Bhd. (“EFSB”), the had resolved to close their manufacturing plant and cease their operations with effect from January 2017.

An extension to the announcement, the Group also resolve that, their other subsidiary company Bersatu Noodles Industries Sdn Bhd (“BNISB”) and Kilang Bihun Bersatu (East Malaysia) Sdn Bhd (“KBBEMSB”) already ceased the operation since May 2016 and August 2016 respectively.

The Group has intended to cease its whole operation starting on 15 December 2016.

35. APPROVAL OF FINANCIAL STATEMENTS

The financial statements have been approved for issue in accordance with a resolution of the Board of Directors on the date of these financial statements.



SUPPLEMENTARY INFORMATIONDisclosure of Realised and Unrealised Profits/Losses

The breakdown of the retained profits of the Group and the Company at the end of the reporting period into realised and unrealised profits/(losses) are presented in accordance with the directive issued by Bursa Malaysia Securities Berhad and prepared in accordance with Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants, as follows:-


RM RM RM RM

Total accumulated losses of theCompany and its subsidiaries:• realised (80,283,721) (16,767,853) (100,805,828) (53,487,029)•unrealised - (529,821) - -

(80,283,721) (17,297,674) (100,805,828) (53,487,029)Less: Consolidation

adjustments 46,177,306 2,388,792 - - At 31 December (34,106,415) (14,908,882) (100,805,828) (53,487,029)

The accompanying notes does not form an integral part of the financial statements


ANALYSIS OF SHAREHOLDINGSAs at 31 March 2017

Issued and fully paid-up Share Capital : RM46,800,000.00 Class of Shares : Ordinary shares Voting Rights : One vote per ordinary share

ANALYSIS BY SIZE OF SHAREHOLDINGS

Size of Shareholdings No. of Shareholders %

No. of Shares %

Less then 100 21 0.932 942 0.000100 to 1,000 132 5.858 77,979 0.0241,001 to 10,000 727 32.268 4,259,350 1.36510,001 to 100,000 1,027 45.583 46,784,950 14.995100,001 to less than 5% of issued shares 344 15.268 199,576,779 63.9665% and above of issued shares 2 0.088 61,300,000 19.647TOTAL : 2,253 100.00 312,000,000 100.00

SUBSTANTIAL SHAREHOLDERS

Substantial Shareholders

No. of ordinary shares of RM0.15 each held

DirectInterest %

IndirectInterest %

Vibrant Class Sdn Bhd 61,300,000N1 19.65 - -

Notes :(N1) Inclusive of shares held through M&A Nominees (Tempatan) Sdn Bhd, Genting Utama Sdn Bhd

DIRECTORS’ SHAREHOLDINGS

Directors

No. of ordinary shares of RM0.15 each held

DirectInterest %

IndirectInterest %

Dato’ Sohaimi Bin Shahadan - - - -Dato’ Sri Chin Seak Huat (JP) - - - -Fong Yit Meng 7,125,700 2.28 - -Leong Woay Hong@Neoh Woay Hong - - - -Dato’ Dr Chin Yew Sin (JP) - - - -Lim Choo Hooi - - - -


ANALYSIS OF SHAREHOLDINGS (Cont’d)As At 31 March 2016

Thirty (30) Largest Shareholders As At 31 March 2017According to the Record of Depositors, the 30 largest shareholders of the Company as at 31 March 2017 are as follows:-

No. NameNumber

of Shares % 1 M&A NOMINEES (TEMPATAN) SDN BHD

GENTING UTAMA SDN BHD FOR VIBRANT CLASS SDN. BHD.33,000,000 10.673

2 VIBRANT CLASS SDN BHD 28,000,000 8.9743 LIM ZHONG YONG 14,800,000 4.7434 MR. SERM JUTHAMONGKHON 7,890,600 2.5295 YEOH PHAIK SUAN 7,500,000 2.4036 FONG YIT MENG 7,125,700 2.2837 NAVANEETHAKRISHNER A/L KATHIRGAMATAMBY 5,900,000 1.8918 SELLACHY A/P KATHIRGAMATAMBY 5,628,300 1.8039 HARUMI TAKIZAWA 5,471,700 1.753

10 TAN SEAM KHENG 5,000,000 1.60211 YEN SWEE FOONG 5,000,000 1.60212 SOW SUU TANG 4,000,000 1.28213 MAYBANK NOMINEES (TEMPATAN) SDN BHD

PLEDGED SECURITIES ACCOUNT FOR CHONG WING CHEONG 3,585,200 1.149

14 PUBLIC NOMINEES (TEMPATAN) SDN BHDPLEDGED SECURITIES ACCOUNT FOR TAN CHEOK HUEY(E-JBU)

3,200,000 1.025

15 PUBLIC NOMINEES (TEMPATAN) SDN BHDPLEDGED SECURITIES ACCOUNT FOR NG GUAN SING(E-JBU)

3,000,000 0.961

16 CHEW CHEE PENG 2,000,000 0.64117 YAP SOO KEONG 2,000,000 0.64118 CHUA KENG KIONG 1,830,000 0.58619 BOEY TZE NIN 1,643,100 0.52620 PUBLIC NOMINEES (TEMPATAN) SDN BHD

PLEDGED SECURITIES ACCOUNT FOR CHONG CHOON TONG (E-BMM) 1,568,500 0.502

21 CHONG WAH CHAI 1,550,000 0.49622 KENANGA NOMINEES (TEMPATAN) SDN BHD

PLEDGED SECURITIES ACCOUNT FOR CHEW KAM WENG (002) 1,502,000 0.481

23 AFFIN HWANG NOMINEES (TEMPATAN) SDN. BHD.PLEDGED SECURITIES ACCOUNT FOR PRONOB KUMAR SEN GUPTA (M06)

1,500,000 0.480

24 CIMSEC NOMINEES (TEMPATAN) SDN BHDPLEDGED SECURITIES ACCOUNT FOR KHOR LEONG KEE (PENANG-CL)

1,500,000 0.480

25 KHOR EOW SAM 1,500,000 0.48026 KHOR LEONG KEE 1,500,000 0.48027 SUCHITRA CHAKRABARTY A/P S K CHAKRABARTY 1,500,000 0.48028 LIM CHOON CHERNG 1,499,000 0.48029 PUBLIC NOMINEES (TEMPATAN) SDN BHD

PLEDGED SECURITIES ACCOUNT FOR LEE ZHEN XIAN(E-TAI/KMT)

1,450,000 0.464

30 CHOONG CHIN CHIANG 1,430,700 0.458163,374,800 52.363


ANALYSIS OF WARRANT HOLDINGSAs at 31 March 2017

Total Number of Warrant Issued : 120,000,000Total Number of Warrant Outstanding : 120,000,000Exercise period : The exercise period is any time within a period 5 years from

the date issue up to the expiry date of 22 January 2019.Exercise Price Per Warrant : RM0.20 each and subject to adjustments (where applicable)

with the conditions provided in the Deed Poll.Warrant Entitlement : Each Warrant entitles the warrant holder during the Exercise

period to subscribe for one new ordinary share.

ANALYSIS BY SIZE OF WARRANT HOLDINGS

Size of Holdings No. of Holders %

No. ofWarrant %

Less then 100 3 0.374 100 0.000100 to 1,000 34 4.244 20,550 0.0171,001 to 10,000 163 20.349 1,009,000 0.84010,001 to 100,000 372 46.441 21,991,550 18.326100,001 to less than 5% of issued warrants 229 28.589 96,978,800 80.8155% and above of issued warrants 0 0.000 0 0.000TOTAL : 801 100.00 120,000,000 100.00

DIRECTORS’ WARRANT HOLDINGS

DirectorsNo. of Warrant

DirectInterest %

IndirectInterest %

Dato’ Sohaimi Bin Shahadan - - - -Dato’ Sri Chin Seak Huat (JP) - - - -Fong Yit Meng - - - -Leong Woay Hong @ Neoh Woay Hong - - - -Dato’ Dr Chin Yew Sin (JP) - - - -Lim Choo Hooi - - - -


ANALYSIS OF WARRANT HOLDINGS (Cont’d)As at 31 March 2017

Thirty (30) Largest Warrant holders As At 31 March 2017According to the Record of Depositors, the 30 largest warrant holders of the Company as at 31 March 2017 are as follows:-

No. NameNumber of

Warrant %1 YEN SWEE FOONG 5,005,400 4.1712 CHEH KAH MUN 2,400,000 2.0003 CIMSEC NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT

FOR KHOR KIM HOCK (B BKLANG-CL)2,225,100 1.854

4 LEONG KHOON HUAT 2,000,000 1.6665 YEOH PHAIK SUAN 2,000,000 1.6666 UOB KAY HIAN NOMINEES (TEMPATAN) SDN BHD

PLEDGED SECURITIES ACCOUNT FOR CHEAH CHEE CHOONG1,600,000 1.333

7 WONG KOOK CHEE 1,500,000 1.2508 TING TZE LIN 1,420,000 1.1839 RHB CAPITAL NOMINEES (TEMPATAN) SDN BHD

MOHD FALIQ BIN ZAINAL AZMI1,344,000 1.120

10 LIM LI PIEN 1,193,000 0.99411 LING SING TIONG 1,138,000 0.94812 PUBLIC NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT

FOR CHONG CHOON TONG(E-BMM)1,115,100 0.929

13 PUBLIC NOMINEES (TEMPATAN) SDN BHDPLEDGED SECURITIES ACCOUNT FOR KANG CHIN HONG(E-PPG)

1,100,000 0.916

14 LIM TING YAM 1,090,000 0.90815 MOHAMMAD HAIKAL BIN ABDUL HALIM 1,040,000 0.86616 AFFIN HWANG NOMINEES (TEMPATAN) SDN. BHD.

PLEDGED SECURITIES ACCOUNT FOR CHEH KAH MUN1,000,000 0.833

17 ANWAR YASSER BIN ZULKIFLI 1,000,000 0.83318 LEE ENG HOCK 1,000,000 0.83319 LEE SH YONG 1,000,000 0.83320 LIM CHENG TEN 1,000,000 0.83321 LYNCHER WUNG WEI FONG 1,000,000 0.83322 ROSMIZA WAHIDA BINTI ABDULLAH 1,000,000 0.83323 TAN KOK KEAT 1,000,000 0.83324 OOI ENG HOOI 900,000 0.75025 CHAANG KOK LEONG 800,000 0.66626 TA NOMINEES (TEMPATAN) SDN BHD

PLEDGED SECURITIES ACCOUNT FOR CHEAH SOW KIEN800,000 0.666

27 WONG CHEE KHEONG 800,000 0.66628 YEAP POH GAN 800,000 0.66629 YAU YIK LIAN 741,200 0.61730 YEOW BOON LEONG 725,000 0.604

39,736,800 33.114


LIST OF PROPERTIES

Location/AddressExisting

Use

Land/Built-up

Area (m2)

Approximate Age of

Building/Land (year)

Tenure(Expiry Date)

Net Carrying

Amount @ 31.12.2016

(RM’000)

Date of Valuation/

AcquisitionLot 208, Kawasan Perindustrian Kuala Ketil , Mukim Tawar, District of Baling, Kedah Darulaman

Factory & office

premises

25,264/ 10,045

14 Leasehold60 years

with a possi-bility to extend for a further 39

years

23,132 19.08.2015 (Valuation)

Lot 1178, Block 19, Seduan Land District, Sarawak

Factory & office

premises

4,073/ 1,072

20 Leasehold

60 years (16.9.2051)

4,705 30.06.2015 (Valuation)

Lot 3162, Retus Land District, Ulu Sungai Danan, Batang Igan, Sibu, Sarawak

Factory & office

premises

1,153/ 2,205

10 Freehold 73 30.06.2015 (Valuation)

Lot 3161,3164,3319, Retus Land District, Ulu Sungai Danan, Batang Igan, Sibu, Sarawak

Agriculture Land

& building

34,945

3,845

Lot 3319 & 3161 – 46

Lot 3164 – 47

LeaseholdLot 3319 &

316199 years

(31.12.2068)

Lot 3164 99 years

(31.12.2067)

2,419 30.06.2015 (Valuation)

30.06.2015 (Valuation)

Lot 259, Block 134, Mukah Land Distict, Sawarak

Factory Land&

building

17,446 9 Leasehold

99 years (31.12.2035)

3,546 30.06.2015 (Valuation)

Geran 1713, Lot 1145, Mukim Semeling, Daerah Kuala Muda, KedahGeran 1714, Lot 1146, Mukim Semeling, Daerah Kuala Muda, Kedah

Land & Factory

35,446/ 4,404

24,159

8 Freehold 5,140 30.06.2015 (Valuation)

Lot 3875, Mukim Simpang Kanan, Tempat Sungei Simpang Kanan, Daerah Batu Pahat, Johor

Land & Factory

4,502/ 2,378

8 Freehold 1,870 30.06.2015 (Valuation)

Lot 59 Parcel 1 Block 136 Mukah Land District, Sarawak

Land &Factory

8,984 / 3,083

8 Leasehold

99 years (15.11.2035)

55 30.06.2015 (Valuation)

This page is intentionally left blank


PROXY FORM

EKA NOODLES BERHAD (Company No. 583565-U)(Incorporated in Malaysia)

*I/We ........................................................................ (*I/C No. / Passport No. / Company No. ...............................)of............................................................................................................................ being a *member/members of the abovenamed Company, hereby appoint .........................................................................(*I/C No. / Passport No. .........................................................) of ................................................................................................................or failing whom, the Chairman of the meeting as *my/our proxy to vote for *me/us on *my/our behalf at the 14th Annual General Meeting of the Company to be held at Lot 208, Phase II, Kuala Ketil Industrial Estate, 09300 Kuala Ketil, Kedah Darul Aman on Friday, 26 May 2017 at 2.00 p.m. and at any adjournment thereof.

NO. RESOLUTIONS FOR AGAINST1 To re-elect Mr. Fong Yit Meng as a Director.2 To re-elect Dato’ Dr. Chin Yew Sin (JP) as a Director.3 To re-elect Mr. Leong Woay Hong @ Neoh Woay Hong as a Director.4 To re-elect Mr. Lim Choo Hooi as a Director.5 To approve the payment of Directors’ fees.6 To approve the payment of Directors’ benefits.7 To re-appoint Messrs. Afrizan Tarmili Khairul Azhar as auditors of the

Company.8 To authorise the Directors to allot and issue new shares.

Please indicate with an “x” in the appropriate spaces provided above on how you wish your vote to be cast. If no specific direction as to voting is given, the proxy may vote as he thinks fit.

Signed this ................ day of ..........................., 2017.

For appointment of two (2) proxies, percentage of shareholdings to be represented by the proxies:

No. of shares held No. of Shares %Proxy 1

Proxy 2

.................................................................................. 100Signature(s)/Common Seal of member(s)

Notes:-1. A proxy may but need not be a member of the Company.2. For a proxy to be valid, this form, duly completed must be deposited at the Registered Office of the Company,

51-21-A Menara BHL Bank, Jalan Sultan Ahmad Shah, 10050 Penang not less than forty-eight (48) hours before the time appointed for holding the meeting.

3. A member shall be entitled to appoint one (1) or more proxies to attend and vote instead of him at the same meeting and where a member appoints more than one (1) proxy to vote at the same meeting, such appointment shall be invalid unless he specify the proportion of his shareholding to be represented by each proxy.

4. Where a member is an Exempt Authorised Nominee which holds ordinary shares in the Company for multiple beneficial owners in one securities account (“omnibus account”) there is no limit to the number of proxies which the Exempt Authorised Nominee may appoint in respect of each omnibus account it holds.

5. In the case of a corporate member, this form must be executed under the corporation’s common seal or under the hand of an officer or attorney duly authorised.

6. In respect of deposited securities, only a depositor whose name appears on the Record of Depositors as at 22 May 2017 shall be eligible to attend the meeting or appoint proxies to attend and/or vote on his/her behalf.

*strike out whichever is not desired.

Please fold across the line and close

stamp

Please fold across the line and close

The Company SecretariesEKA NOODLES BERHAD

(583565-U)

51-21-A, Menara BHL BankJalan Sultan Ahmad Shah

10050 Penang

long-lasting excellence - 1855491441138.pdf...4. to re-elect mr. leong woay hong @ neoh woay hong, a...

Documents