raya international berhad (company no. 412406-t) · raya international berhad annual report 2016...

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RAYA INTERNATIONAL BERHAD (Company No. 412406-T)

No. 66B & C, Jalan Kg. Attap 50460 Kuala Lumpur. Tel : +603 2276 6664 Fax : +603 2276 6661

www.rayainternational.com.my

Raya International Berhad (Company No. 412406-T)

ReportAnnual 2016

CONTENTSCORPORATE INFORMATION 2

CORPORATE STRUCTURE 3

DIRECTORS’ PROFILE 4

CHAIRMAN’S STATEMENT 12

MANAGEMENT DISCUSSION & ANALYSIS 14

SENIOR MANAGEMENT TEAM 17

STATEMENT ON CORPORATE GOVERNANCE 18

AUDIT COMMITTEE REPORT 29

STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL 34

RESPONSIBILITY STATEMENT BY THE BOARD OF DIRECTORS 37

ADDITIONAL COMPLIANCE STATEMENT 38

FINANCIAL STATEMENTS

• Directors’ Report 40• Statement by Directors and Statutory Declaration 44• Independent Auditors’ Report 45• Statements of Profit or Loss and Other Comprehensive Income 50• Statements of Financial Position 51• Consolidated Statement of Changes in Equity 52• Statement of Changes in Equity 53• Statements of Cash Flows 54• Notes to the Financial Statements 56• Supplementary Information – Realised and Unrealised Profits or Losses 95

ANALYSIS OF SHAREHOLDINGS 96

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Raya InteRnatIonal BeRhad

2AUDIT COMMITTEE

Leong Fook Heng - ChairmanIndependent Non-Executive Director

YAM Dato’ Seri Tengku Baharuddin Ibni Sultan MahmudNon-Independent Non-Executive Director

Ho Fook MengIndependent Non-Executive Director

REGISTERED ADDRESSNo: 149A, 149B, 151BPersiaran Raja Muda Musa42000 Port Klang, Selangor Darul Ehsan.Tel : 603-3167 3830Fax : 603-3168 3830

BUSINESS ADDRESSNo: 66B & C Jalan Kampung Attap,50460 Kuala LumpurTel : 603-2276 6664Fax : 603-2276 6661Website : www.rayainternational.com.my

PRINCIPAL BANKERSPublic Bank BerhadCIMB Bank Berhad

CORPORATE INFORMATION

BOARD OF DIRECTORS

YAM Dato’ Seri Tengku Baharuddin Ibni Sultan MahmudNon-Independent Non-Executive Chairman

Dato’ Tan Seng HuManaging Director

Tan Sri Mohd Bakri Bin ZininNon-Independent Non-Executive Director

Dato’ Sri Ho Kam ChoyExecutive Director

Leong Fook HengIndependent Non-Executive Director

Ho Fook MengIndependent Non-Executive Director

Capt Tony Tan Han (Chen Han)Executive Director

Ho Hung MingAlternate Director toTan Sri Mohd Bakri Bin Zinin

NOMINATION & REMUNERATION COMMITTEE

Ho Fook Meng - ChairmanIndependent Non-Executive Director

Leong Fook HengIndependent Non-Executive Director

COMPANY SECRETARIES

Wan Haslinda Wan YusoffMAICSA 7055478

Sangar NallappanMACS 01413

AUDITORSSTYL AssociatesAF 1929No. 902, 9th Floor Block ADamansara IntanNo: 1, Jalan SS20/2747400 Petaling JayaTel : 603-7724 2128/ 2130/ 2136Fax : 603-7733 2125

SHARE REGISTRARTricor Investor & Issuing House Services Sdn BhdUnit 32-01, Level 32, Tower A,Vertical Business Suite,Avenue 3, Bangsar South, No. 8, Jalan Kerinchi59200 Kuala Lumpur Wilayah PersekutuanTel : 603- 27839299Fax : 603- 27839222Email: [email protected]

STOCK EXCHANGE LISTING

ACE Market of Bursa Malaysia Securities Berhad

STOCK NAME - RAYA

STOCK CODE - 0080

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CORPORATE STRUCTURE

Raya International Berhad412406-T

100%

70%

51%

- Envair Energy Sdn. Bhd.

- Quest Equipment & Services Sdn. Bhd.

- Quest Technology Sdn. Bhd.

- Raya Consumable Sdn. Bhd.

- Quest System & Engineering Sdn. Bhd.

- Youbicom Malaysia Sdn. Bhd.

- Selatan Bunker (M) Sdn. Bhd.

49%- Fajar Maritime and Logistics Sdn Bhd

100%- TMD Straits Ltd

- TMD Sturgeon Ltd

- Pan Logistics Ltd

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DIRECTORS’ PROFILE

YAM DATO’ SERI TENGKU BAHARUDDIN IBNI SULTAN MAHMUDNon-Independent and Non-Executive Chairman

Malaysian Male, aged 41, was appointed as Non-Independent and Non-Executive Director of the Company on 5 August 2016 and subsequently re-designated as Non-Independent and Non-Executive Chairman on 3 March 2017.

Qualifications & Working Experience and Occupation

He obtained a Hotel Management Certificate from Singapore Hotel and Tourism education Centre (SHATEC) in 1994.

In 2008, he was appointed as Director of Haisan Resources Berhad until his resignation in April 2016. Currently, he is a Director of Tumpuan Megah Development Sdn Bhd (“TMD”) and he also sits in the Board of other Private Companies.

Board Committees

He was appointed as a member of Audit Committee on 10 January 2017.

Family relationship with any director and / or major shareholder of the Company

He has no family relationship with other Directors or major Shareholders of the Company.

Conflict of Interest with the Company

By virtue of his directorship in TMD, he is deemed an interested party in the Collaboration Agreement executed between TMD and Selatan Bunker (M) Sdn Bhd, a 51% subsidiary of Raya International Berhad on 29 December 2015.

Save for the above, there are no other business arrangements with the Company in which he has personal interests.

Directorship of Public Companies and Listed Issuers

He does not hold any Directorships in other Public Companies or Listed Issuers.

Conviction of offences

Save for a public reprimand on 4 October 2011 by Bursa Malaysia Securities Berhad (“Bursa”) with a fine of RM 25,000.00 for breach of Paragraph 16.13(b) of the Main Market of Bursa Listing Requirements and penalties imposed by the Companies Commission of Malaysia which he had fully settled, he has no other convictions for any offences within the past five years and no public sanctions and/or penalties imposed on him by any regulatory bodies during the financial year ended 31 December 2016.

No. of Board Meetings Attended from 1 January 2016 to 31 December 2016

Since his appointment on 5 August 2016, he had attended all two Board meetings held from August 2016 to December 2016

Shareholdings in the Company

He does not hold any shares in the Company.

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DIRECTORS’ PROFILE (Cont’d)

DATO’ TAN SENG HUManaging Director

Malaysian Male, aged 41, was appointed as an Executive Director of the Company on 19 June 2014 and he was re-designated as the Managing Director on 30 June 2014.


He graduated with a Bachelor of Arts, Business Administration, Human Resource and Personnel from the Washington State University in 2001 and obtained a Master of Science, Economics from the University of Idaho in 2003. He has been involved in the construction industry for eleven years and is currently managing his own project management company since 2006. He is also board member of several private limited companies.

Board Committees

He is not a member of any Board Committees of the Company.


He has no family relationship with other Directors or major shareholders of the Company.


He has no conflict of interest with the Company or its subsidiary companies

Directorship of Public Companies or Listed Issuers

He is a Non-Independent Non-Executive Director of SHH Resources Holdings Berhad and also the Alternate Director to the Founder Director of Bina Puri Holdings Berhad, Dr Tan Cheng Kiat.


He has had no convictions for any offences within the past five years and no public sanctions by any regulatory bodies during the financial year ended 31 December 2016 other than penalties imposed by the Companies Commission of Malaysia which he had fully settled.


During the financial year, he attended all six meetings of the Board.


His shareholdings is disclosed at page 96 of the Annual Report

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TAN SRI MOHD BAKRI BIN MOHD ZININNon-Independent and Non-Executive Director

Malaysian Male, aged 63, was appointed as Non-Independent and Non-Executive Director of the Company on 3 June 2016.


He obtained his Diploma in Police Science from Universiti Kebangsaan Malaysia in 1989.

He started his career in the police force on 6 November 1975 as a probationary inspector. Tan Sri Mohd Bakri was appointed Deputy Inspector General of the Royal Malaysia Police Force on 17 May 2013. He served as Police Chief of Kudat, Sandakan, Police Chief and Deputy Police Chief of Kota Kinabalu, Seremban District Deputy Police Chief, Police Chief Lahad Datu District, Police Chief of Cheras and Dang Wangi District. Tan Sri Mohd Bakri has also served as Assistant Director of the Criminal Intelligence Unit in the Bukit Aman Criminal Investigation Department before being appointed as Sabah CID Chief in 2003.

In 2005, he was appointed as the Deputy Police Commissioner. In 2006, he was appointed Deputy Director (Intelligence / Operations) CID Narcotics and became its Director a year later. In 2008 he was appointed Director of the Criminal Investigation Department, Bukit Aman.

Board Committees



He has no family relationship with other Directors or major Shareholders of the Company.

Conflict of Interest with the Company and its subsidiaries

He has no conflict of interest with the Company or its subsidiary companies.


He does not hold any directorships in other Public Companies or Listed Issuers.




Since his appointment on 3 June 2016, he had attended one out of two Board meetings held from August 2016 to December 2016.



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DATO’ SRI HO KAM CHOYExecutive Director

Malaysian Male, aged 54, was appointed as Non-Independent and Non-Executive Director of the Company on 5 August 2016 and subsequently re-designated as Executive Director on 12 January 2017.


He obtained his GCE “A” Level from Christ Church Secondary School, Singapore in 1983. Dato’ Ho Kam Choy has approximately 29 years of experience in commercial management of vessels in the shipping industry. From 1988 to 1989, Dato’ Sri Ho Kam Choy joined Tai Kuang Hang Co. Pte. Ltd, Singapore as a Shipping Executive and was in-charge with ship chartering and operations of vessels. Subsequently, from 1989 to 1991, Dato’ Sri Ho Kam Choy joined a Hong Kong trading and shipping company, Kelway Entreprise Ltd as a Manager and was in charge for the commercial management of the company owned fleet vessels. Since 1991, he is a director of RH Pacific Shipping Agencies Ltd, a company involved in shipping and transportation of bulk/bagged cargo and shipping. He is also a director of TMD Bunker Labuan Sdn Bhd, a 50% subsidiary of Tumpuan Megah Development Sdn Bhd. (“TMD”).

Dato’ Sri Ho Kam Choy will be in charge of the strategic planning and business development of the Group.

Board Committees



Mr. Ho Hung Ming, an Alternate Director to Tan Sri Mohd Bakri Bin Mohd Zinin, is his son.


Dato’ Sri Ho Kam Choy is a Director in TMD Bunker Labuan Sdn Bhd. Since TMD Bunker Labuan is a 50% Subsidiary of TMD, which had entered into a Collaboration Agreement with Selatan Bunker (M) Sdn Bhd, a 51% Subsidiary of Raya International Berhad on 29 December 2015, he is therefore deemed to have conflict of interest with the Company and its Subsidiaries.

He is also deemed an interested party in the Proposed Acquisitions of Sturgeon and Straits 1 by Raya International Berhad via a Memorandum of Agreement dated 14 November 2016 with Sturgeon Asia Ltd and Straits Holdings Ltd respectively in which he is a Director and Shareholder.



He does not hold any directorships in other public companies or Listed Issuers.




Since his appointment on 5 August 2016, he had attended all two Board meetings held from August 2016 to December 2016.


His shareholdings is disclosed at page 96 of the Annual Report.

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LEONG FOOK HENGIndependent Non-Executive Director

Malaysian Male, aged 58, is an Independent Non-Executive Director of the Company. He was appointed to the Board on 17 August 2015.


He is an Associate Member of the Institute of Chartered Secretaries and Administrators (United Kingdom) and Associate Member of Chartered Institute of Management Accountants (United Kingdom). He is also a Member of the Malaysian Institute of Accountants

Mr. Leong began his career as the Marketing Officer/Branch Manager at a Credit & Leasing Company from 1981 to 1987 and thereafter was appointed as Senior Manager, Head of Corporate Banking, Equipment Finance/SME at a Financial Institution from 1987 to 2001 (14 years) . From 2001 to 2003, he had been appointed as Vice President and Head, Asset Based Finance and Director, Citicorp Capital (Malaysia) Bhd. In 2003, he held a position as General Manager, Business Banking at a local Bank for 5 years.

Subsequently, he was appointed as Group Head, Risk Management overseeing the Banks that operate in 14 Countries and also appointed as Regional CEO (2012 till July 2013) of 2 Banks among the countries that the Banking Group operate. Currently, he is a Principal owner of FH Leong Management Services providing training services for Leasing Associations and Financial Institutions.

Board Committees

He was appointed as a member of Audit Committee and Nomination& Remuneration Committee on 17 August 2015 and re-designated as Chairman of the Audit Committee on 26 February 2016.








He has had no convictions for any offences within the past five years and no public sanctions and/or penalties imposed on him by any regulatory bodies during the financial year ended 31 December 2016.




During the financial year, he attended five out of six meetings of the Board.

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HO FOOK MENGIndependent Non-Executive Director

Malaysian Male, aged 59, was appointed as an Independent Non-Executive Director of the Company on 24 March 2015.


He graduated from the University of Malaya, Kuala Lumpur with a Bachelor of Economics (Honours) degree in 1981 and holds a Masters of Business Administration from Kent State University, Ohio, USA.

Mr Ho started his career in the banking and financial services industry in 1981. He started as a Bank Officer at Bank of Commerce (M) Berhad in 1981. In 1993, he joined United Overseas Bank as a Team Leader in the Commercial Banking Department. Subsequently, Mr Ho joined AmBank (M) Berhad as a General Manager in the Business Banking Division from 2002 to 2014.

Mr Ho has over 30 years experience in the banking and financial services industry of which he specialized in emerging mid-cap corporations. As a senior banker he is very often tapped for his expertise and wide ranging experience by his banking clients and investors in their growth and expansion strategies.

He has established a very wide business network that was built over the years as banker and advisor to a wide range of his banking customers.

Board Committees

He was appointed as a Member of the Audit Committee and Nomination Committee on 24 March 2015 and re-designated as Chairman of the Nomination & Remuneration Committee on 26 February 2016.












His shareholdings is disclosed at page 96 of the Annual Report.

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CAPT TONY TAN HAN (CHEN HAN)Executive Director

Singaporean Male, aged 41, is an Executive Director of the Company. He was appointed to the Board as Independent Non-Executive Director on 24 March 2015 and subsequently re-designated as Executive Director on 12 January 2017


He obtained his Diploma in Nautical Studies from Singapore Polytechnics in 1999. In 2009, he obtained a Specialist Diploma in workplace Safety and Health from Ngee Ann Polytechnics. Captain Tony Tan has a Certificate of Competency (“COC”) Class 1 Master Mariner (foreign-going) issued by the Maritime and Port Authority of Singapore and also holds a Registered Safety Officer certificate issued by the Ministry of Manpower in 2011.

He started his career as a Marine Superintendent/ Senior Marketing Executive with EZRA Marine Services Pte Ltd in 2007 where he was responsible to ensure smooth implementation of the Safety and Environmental Management System on all the fleet vessels. Subsequently, he joined Hako Offshore Pte Ltd in 2010 as a Senior Safety Manager/ Designated Person Ashore where he was tasked to manage and implement the Safety Management System throughout the organisation and for the fleet vessels, addressing deficiencies pertaining to manning requirement and training, conducting internal audits and participating in the emergency response team, and ensuring that adequate resources and shore-based support are applied as required.

He established Skips Marine Services in Singapore in 2012 and is presently the Managing Director where he oversees the business and contractual obligation to the company’s clients and implementation of safety standards. Captain Tony Tan Han (Chen Han) is well versed in the maritime industry and has approximately 19 years of professional marine experience in both sea-going and shore-based operations which include container, tanker, oil and gas, offshore fleet and ship management, ship operations and marine safety operations.

He was also involved in audit, incident investigation as well as implementation of International Safety Management (“ISM”) appointments. Captain Tony Tan Han (Chen Han) will be in charge of the Group’s oil bunker and trading business segment. He will also be responsible for formulating strategies to secure oil related product supplies and building customer base.

Board Committees

He is not a member of any Board Committee of the Company.


He has no family relationship with other Directors or major shareholders of the Company. Conflict of Interest with the Company

Selatan Bunker (M) Sdn Bhd, a Subsidiary of the Company had on 25 January 2017 entered into a Ships Management Agreement with Skips Marine Services Pte Ltd (“Skips Marine”) to provide ship management services for the Proposed Acquisition of two vessels named Sturgeon and Straits 1 upon the completion of the said Proposed Acquisitions.

Captain Tony Tan Han (Chen Han) being the Executive Director of the Company, is also the Director and Shareholder of Skips Marine. He is therefore deemed an interested party and has conflict of interest.

The Company will be seeking a mandate from the Shareholders upon such time upon completion of the Proposed Acquisitions.









He does not hold any shares in the company.

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Ho Hung Ming Alternate Director

Malaysian Male, aged 25, was appointed as an Alternate Director to Tan Sri Mohd Bakri Bin Mohd Zinin on 12 January 2017.


He is the General Manager of Selatan Bunker. Ho Hung Ming holds a Bachelor Degree (Hons) in Economics and Politics and a Masters Degree in Project Management from Manchester Metropolitan University, UK obtained in 2013 and 2014 respectively. After graduation, Ho Hung Ming joined Tumpuan Megah as a management trainee and was attached to various functions of the company’s business operations, specifically in marketing division. He was then promoted as a manager of Tumpuan Megah in-charge specifically for sales and marketing and management. Tumpuan Megah is involved in the business of supplying bunkering services, oil trading and barging to customers in the shipping industry of Marine Gas Oil (MGO).

He joined Selatan Bunker as a General Manager in December 2016.

Board Committees



Ho Hung Ming is the son of Dato’ Sri Ho Kam Choy.


He is deemed interest by virtue of his father, Dato’ Sri Ho Kam Choy who is also a Director of TMD Bunker Labuan Sdn Bhd (“TMD Labuan”) which is a 50% subsidiary of Tumpuan Megah Development Sdn Bhd (“TMD”) had entered into a Collaboration Agreement with Selatan Bunker (M) Sdn Bhd , a 51% subsidiary of Raya International Berhad on 29 December 2015. On 14th November 2016, Raya International Berhad had also entered into a Memorandum of Agreement with Sturgeon Asia Ltd and Straits Holdings Ltd respectively in which Dato’ Sri Ho Kam Choy is also a director and shareholder.





He has had no convictions for any offences within the past five years and no public sanctions by any regulatory bodies during the financial year ended 31 December 2016.


N/A


Deemed interest by virtue of his father, Dato’ Sri Ho Kam Choy having direct shareholdings and is also a director of the Company.

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CHAIRMAN’S STATEMENT

Dear Shareholders,

On behalf of the Board of Directors of Raya International Berhad (“Raya” or “the Company”) , I am delighted to present you the Annual Report and Audited Financial Statements of Raya and its Subsidiaries (“the Group’) for the financial year ended (“FYE”) 31 December 2016.

Overview

During the financial year ended 31 December 2016, the Group mainly focused on oil trading as its core business activities while also continuing as a trader and intermediary to source for products such as water filter components and carbon granules directly from local and/or overseas suppliers and sell them to buyers who are mainly local manufacturers of end products.

The Group pleased to report that its effort throughout the year had bore fruits as it has managed to increase its revenue via the oil trading which is in turn enhances Shareholders’ value. The successful diversification is also in-line with the management’s strategy to improve the Group’s long term sustainable growth.

The Group also had been busy carrying out corporate exercises and re-organising its operations to implement a corporate turnaround of the Group in the coming years.

Financial Review

During the financial period under review, the Group achieved a total revenue of RM 68.5 million, as compared to RM 14.5 million in the previous financial year, as a result of higher revenue from oil trading.

The Group registered a profit before tax of RM 143,282, compared to a loss position of RM 284,888 in the previous year.

Prospects

The Group expects minimal contribution from its water filter trading activities due to intense competition from cheaper products in the market. The management also do not expect good prospects for trading and distribution of fast consumer goods for flood aid victims as this is highly dependent on weather and availability of government aid programs.

Since mid of 2016, the Group has diversified its principal activities to include oil bunkering and trading in oil products to increase its revenue streams and enhance the prospects of the Group.

The proceed from the Special Bumiputera issue, had been utilized for the expansion of the Group’s activity in oil trading mainly for the purchases of Marine Gas Oil (“MGO”) from local suppliers and suppliers from Singapore.

The Group also had announced a corporate exercise to acquire two (2) ships to carry out its oil bunkering activity and a fund raising exercise to raise working capital for this purpose and expects that the Group will commence its oil bunkering operations upon completion of the acquisition.

The Group remains cautious over the outlook of the economy and expects the year ahead to remain challenging in light of the current global economic conditions and also the competitive business conditions. The Group will continue to focus on its existing business activities and concentrate on its core competencies while at the same time, improve its operational efficiency and cost management.

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CHAIRMAN’S STATEMENT (Cont’d)

Appreciation

I would also like to congratulate my colleagues on the Board, the management and all the Raya family who have worked together and shared their wisdom and experience in strengthening the Group’s business this year.

Last but not least, our utmost gratitude and sincere thanks to all our business partners and shareholders for their continuing support and look forward to further mutual growth and success in the coming year.

Thank you.

YAM Dato’ Seri Tengku Baharuddin Ibni Sultan MahmudNon-Independent Non-Executive Chairman

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MANAGEMENT DISCUSSION AND ANALYSIS

ON BEHALF OF THE BOARD OF DIRECTORS OF RAYA INTERNATIONAL BERHAD, IT IS MY PLEASURE TO PRESENT TO YOU THE MANAGEMENT DISCUSSION AND ANALYSIS (“MDA”) OF THE GROUP.

THE OBJECTIVE OF THIS MDA IS TO PROVIDE SHAREHOLDERS WITH A BETTER UNDERSTANDING AND AN OVERVIEW OF THE GROUP’S BUSINESS, OPERATIONS, FINANCIAL POSITION IN THE YEAR 2016 AND OUTLOOK FOR THE YEAR 2017.

1. OVERVIEW OF BUSINESS ACTIVITIES

Raya International Berhad and its Subsidiaries (“Raya Group”) was established as manufacturers and traders of cleanroom filters and other water filtration products. The Group then had expanded its trading of filtration related products to include water filter cartridges and charcoal fines and granules which are basic semi processed materials and also trading and distribution of fast moving consumer products.

However, in the recent past years, the Group faced challenges in its filtration activities due to competition from cheaper products in the market. The Group plans to exit this business activity in the current financial year. The management is also of the view that prospects for trading and distribution of fast moving consumer goods especially for flood aid victims is highly dependent on weather condition and thus is unpredictable and cannot be depended upon as a sustainable business.

The Group then planned to diversify its principal activities to include oil bunkering and trading in oil products to increase its revenue streams and enhance the prospects of the Group in building a long term sustainable business model.

In 2015, the Group via its subsidiary Selatan Bunker (M) Sdn Bhd., had undertaken oil trading and bunkering business via a collaboration agreement with Tumpuan Megah Development Sdn Bhd.

Following this, Selatan Bunker’s intended activities will involve the provision of bunkering services to organisations with marine-based operations that own and/or operate ocean faring vessels, as well as offshore structures such as those used for exploration and production activities in the oil and gas industry. In addition, Selatan Bunker is also involved in trading of oil and oil related products.

In 2016, the Company had undertaken a Special Bumiputera Issue to comply with the Bumiputera Equity Condition. The proceeds from the said placement was mainly utilised for the purchase of Marine Gas Oil (“MGO”) for the oil trading activities.

Group Financial Performance

Financial Performance of the Group are as follows:-

Item FYE 2016 (RM) FYE 2015 (RM) Variance (RM) Increase/(Decrease)

Revenue 68,525,521 14,473,509 54,052,012Cost of Sales (67,615,254) (13,808,273) 53,806,981Gross Profit 910,267 665,236 245,031Other Operating Income 158,775 586,416 (427,641)Administrative Expenses (925,270) (1,292,354) (367,084)Operating Profit/(Loss) 143,772 (40,702) 184,474Finance Cost – (244,186) (244,186)Share of Loss of Associate (490) – 490Profit/(Loss) Before Tax 143,282 (284,888) 428,170Taxation (43,239) (194,029) (150,790)Profit/(Loss) for the year 100,043 (478,917) 578,960

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MANAGEMENT DISCUSSION AND ANALYSIS (Cont’d)

OVERVIEW OF BUSINESS ACTIVITIES (CONT’D)

Revenue

The Group’s revenue for financial year 2016 (“FYE 2016”) had increased by RM 54,052,012 or 373% as compared to financial year 2015 (“FYE 2015”). This revenue growth was mainly contributed by higher revenue from oil trading activities.

The Group commenced oil trading in end 2015 with steady volumes consistently recorded throughout 2016. With the additional working capital raised from the Special Bumiputra issue completed in November 2016 and barring any unforeseen circumstances, the Group anticipates to increase the volume of oil trading in the coming financial year.

Gross Profit

Gross Profit increased by RM 245,031 to reach RM 910,267 for FYE 2016. The increase was mainly attributed to the higher oil trading activities which contributed a gross profit of RM 1,102,235 as compared to a gross loss of RM 206,968 from the trading of air filtration system.

Other Operating Income

The items included under Other Operating Income are unrealised gain from foreign exchange amounting to RM 124,786 and interest income from short term deposits with financial institutions amounting to RM 11,767.

The Group’s Other Operating Income had dropped to RM 158,775 from RM 586,416 due to a waiver of shareholders’ advances amounting to RM 447,085 recorded in FYE 2015.

Administrative Expenses

Administrative Expenses decreased by RM 367,084 due to impairment of goodwill, inventories written off and legal fees incurred in FYE 2015.

Profit After Tax

The Group achieved Profit After Tax of RM 100,043, as compared to a Loss of After Tax of RM 478,917 for FYE 2015.

This increase was due to higher revenue from oil trading activities and finance cost savings upon the settlement of term loans in FYE 2015.

2. OPERATIONS OVERVIEW

1) Segment

• AirFiltrationSystem,Fastmovingconsumerproducts,ancillarysupportservicesandgeneraltrading.

The Group had been incurring losses in the existing business for the past two (2) financial years due to stiff competition encountered by the Group in the industry.

The Group plans to exit this business activity in the current financial year.

2) Segment

• OilTradingandBunkeringServices

The improvement in the financial results of the Group is mainly due to higher revenue from oil trading.

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MANAGEMENT DISCUSSION AND ANALYSIS (Cont’d)

OPERATIONS OVERVIEW (CONT’D)

2) Segment (Cont’d)

• OilTradingandBunkeringServices(Cont’d)

The Group’s future plannning for the oil trading and bunkering business includes expanding the Group’s asset base, strengthen its operational capabilities and broadening its geographical coverage in order to capture growth opportunities in the oil bunkering industry in Malaysia.

The demand for the Group’s bunkering activities is not known at this juncture although the Management of Raya expects it to be encouraging. The Company will assess the demand from potential customers after undertaking its marketing activities and will utilise funds to be raised from a planned rights issue and internally generated funds to undertake the oil bunkering activities in the coming year.

With the Petroleum Development Act License (“PDA License”) secured on 5 September 2016 by Selatan Bunker, the Group intends to commence oil bunkering operations from the Pasir Gudang Port, Johor by the 2nd half of 2017 after the completion of the Proposed Acquisitions two vessels namely Sturgeon and Straits 1 in the forthcoming EGM.

3. OUTLOOK

The Group’s operations are dependent on the level of activity in the exploration, development and production of oil and natural gas, including the level of capital spending in the offshore oil and gas industry.

Despite the relatively positive outlook for the offshore oil and gas industry, the industry competition is expected to intensify further in view of the rising operating costs and fluctuations in foreign exchange rates. The Group will continue to take all reasonable steps and precautions to mitigate the impact of rising costs and intensifying market competition.

Dato’ Tan Seng HuManaging Director

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Hoh Chee Mun Financial ControllerRaya International Berhad

Age : 52, Malaysian Male

Qualifications

He is a Chartered Accountant and a Registered Goods and Services Tax agent. He completed his Malaysian Institute of Certified Public Accountant Professional (“MICPA”) Examination in 1993 (formerly known as Malaysian Association of Certified Public Accountant), and was admitted as a Member of MICPA on 29 January 1994, and subsequently admitted into the Malaysian Institute of Accountants (“MIA”) as a Chartered Accountant on 24 October 1994. Working Experience

He commenced his accountancy career in 1985, with a 4-year articleship with BDO Binder as an Article Clerk before furthering his career in 1990 with Ernst & Young as an Audit Assistant, where he had completed his MICPA examination. Thereafter, he left Ernst & Young in 1995 as an Audit Senior and joined OSK Research Sdn Bhd in 1995 as a Research Analyst before becoming the Group Accountant of the Fella Group, a regional furniture manufacturer cum retailer, in 1996. He was appointed as the Group Financial Controller in January 2004 and left in August 2004 while serving as its Group Financial Controller to set up his corporate secretarial practice. Between 2005 until 2012, he was the Finance Director in VHQ Post (M) Sdn Bhd, a regional post production house, headquartered in Singapore. The date the person was first appointed to the key senior management position

1 April 2017


None


None

Directorship of Public Companies or listed issuers

He is currently an independent Non-Executive Director of QES Group Berhad.


He has had no convictions for any offences within the past five years and no public sanctions by any regulatory bodies during the financial year ended 31 December 2016.

SENIOR MANAGEMENT

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STATEMENT ON CORPORATE GOVERNANCE

The Board of Directors (“the Board”) of Raya International Berhad (“Raya”) recognises the importance of practising good corporate governance throughout the Group as a fundamental part of discharging its responsibilities to protect and enhance shareholders’ value and the financial performance of the Company and is fully committed to ensuring that the Group practices the highest standard of corporate governance and transparency in line with the Malaysian Code on Corporate Governance 2012 (“Code”).

The Board is pleased to provide a Statement that explains the manner in which the Company has applied the Principles and Recommendations as set out in the Code during the financial year ended 31 December 2016 and any non-observation of the Recommendations of the Code, including the reason thereof, has been included in this Statement.

This statement also serves as a compliance with Rule 15.25 of the Bursa Securities Listing Requirements for ACE Market.

In order to provide the latest status update of the Company, the Statement of the Corporate Governance also includes the change in the composition of the Board of Directors up to 6 April 2017

1. ESTABLISH CLEAR ROLES AND RESPONSIBILITIES

a. Roles & Responsibilities

The Group is led and controlled by an effective Board, with high personal integrity, business acumen and management skills, which is primarily responsible for the strategic directions of the Company.

In line with the Code, the roles and responsibilities of the Chairman and Managing Director are separated. The responsibility of Chairman is primarily to ensure that the conduct and working of the Board is in an orderly and effective manner whilst the Managing Director manages the daily running of business and implementation of Board policies. There is a separation of the role of Managing Director and Chairman to ensure that there is an appropriate balance of power and authority with clear divisions of responsibilities and accountability.

The Managing Director is accountable for the operation and strategic development of the Group, and obliged to refer major matters to the Board. In addition, the Board also oversees the conduct of the Company‘s business, whereby it devises and puts in place adequate systems of control, focuses primarily on the mitigation of any foreseeable or potential risk besetting the Company. The Board understands the Board’s philosophy, principles, ethics, mission and vision and reflects this understanding on key issues throughout the year.

The Board delegates authority and vests accountability for the Group’s day to day operations with a Management team led by the Managing Director. The Management’s function is conducted by, or under the supervision of the Managing Director. The Managing Director is expected to keep the Board informed on all matters which may materially affect the Company and its business. Where possible, the Managing Director shall invite relevant key management personnel from time to time to attend the Board Meeting, to brief the Board on the management issue under their purview.

The Managing Director is responsible for the day-to-day management of the business and operations of the Group with respect to its operational functions. He is supported by two other Executive Directors and the Management team.

b. Board Charter

In order to create and promote clear understanding of the functions of the Board and Management, a Board Charter, which clearly sets out these functions, has been developed.

In addition, various Board Committees have also been set up to handle certain functions delegated by the Board in order to facilitate decision making.

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STATEMENT ON CORPORATE GOVERNANCE (Cont’d)

The Board Committees are:-

• AuditCommittee(“AC”);• Nomination&RemunerationCommittee(“NRC”)

The Board has overall responsibility for the performance of the Group and its responsibilities amongst others include the following:-

1. Establishing corporate objectives and developing a strategic plan for the Company.

2. Reviewing and adopting a strategic plan for the Group:

The Board provides insights and guidance to the Managing Director and Management to achieve corporate objectives of the Group. The Board reviews the strategic business plan presented by the Managing Director and Management overseeing the conduct of the Group’s business to evaluate whether the business is being properly managed.

The Managing Director is accountable to the Board to ensure effective implementation of the Group’s business plan and policies approved by the Board as well as to manage the daily conduct of the business to ensure its smooth operation.

The Managing Director, assisted by the Executive Directors, has overall responsibility in working towards achieving strategic goal and objectives for the Company together with the implementation of the Company’s policies, corporate strategies and decisions.

All Board members participate fully in decisions on key issues involving the Company. The Executive Directors are responsible for implementing the policies and decisions of the Board and managing the day to day operations.

3. Identifying principal business risks and ensuring the implementation of appropriate systems to manage risks:

The oversight of the Group’s risk management process is the responsibility of the Managing Director who is assisted by the Executive Directors.

The responsibility of reviewing the adequacy and integrity of the Group’s risk management and internal control system is delegated to the Audit Committee.

c. Directors’ Code of Conduct

The Board observes the Code of Ethics for Company Directors established by the Companies Commission of Malaysia in discharging its role effectively. The Code of Ethics requires all Directors to observe high ethical business standards and to apply these values to all aspects of the Group’s business and professional practices and to act in good faith in the best interest of the Group and its shareholders.

2. STRENGTHEN COMPOSITION OF THE BOARD

The Board is satisfied with its current composition which comprises a balanced mix of skills, knowledge and experience in the business and management fields which are relevant to enable the Board to carry out its responsibilities in an effective and efficient manner.

The current Board has seven (7) Directors comprising one (1) Managing Director, two (2) Executive Directors, two (2) Non-Independent Non-Executive Director and two (2) Independent Non-Executive Directors.

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The Independent Non-Executive Directors are persons of calibre and credibility with the ability to exercise independent judgment in the Board without fear or favour. Their role is to ensure that any decision of the Board is deliberated fully and objectively with regards to the long term interests of all stakeholders.

The Independent Directors are essential in providing unbiased and independent opinion, advice and judgement thus plays a key role in corporate accountability. All Independent Directors act independently of Management and are not involved in any other relationship with the Group that may impair their independent judgement and decision-making.

The profile of each member of the current Board is set out in page 4 to 11 of this Annual Report.

3. REINFORCE INDEPENDENCE

In line with the Code, the tenure of an Independent Director shall not exceed nine (9) years consecutively. Upon completion of the nine (9) years, an Independent Director may continue to serve on the Board subject to his re-designation as a Non-Independent Non-Executive Director should an Independent Director be retained after 9 years, his retention must be approved by the shareholders.

4. SENIOR INDEPENDENT DIRECTOR

The Board has not appointed a Senior Independent Director as there is no combination or overlapping of roles between the current Chairman who is a Non-Independent Non-Executive Director and the Managing Director of the Company as these two (2) positions are held by separate individuals.

The roles of the Chairman and the Managing Director are separated with clear division of responsibilities and the decision making process of the Board is based on collective decisions without any individual exercising any considerable concentration of power or influence.

The Board takes note that the Code recommends that the Chairman of the Nomination Committee should be the Senior Independent Director identified by the Board, which will from time to time review the recommendation and make the necessary appointment as and when it deems fit.

The Company also adopts non-discriminatory policy in employing talents to fulfill its human resource needs at all levels including Board especially in ensuring gender diversity. Presently, the Board is of the opinion that the current size and composition of the Board is appropriate to commensurate the group’s business skill requirement and effective decision making.

5. SUCCESSION PLANNING

The Board noted the importance of succession planning to the Group. The Board recognises that succession planning is an ongoing process designed to ensure that the Group identifies and develops a talent pool of employees through mentoring, training and job rotation for high level management positions that become vacant due to retirement, resignation, death or disability and/or new business opportunities.

Notwithstanding the above, the Board noted that the Company currently maintains a lean management structure which dispensed with the requirement of a chief executive officer as well as chief financial officer. In consequent thereto, the Managing Director is required to provide strong leadership and to turnaround the Group while keeping a lean Board composition. Until such time when the financial health of the Group be restored, the Board shall not consider any succession issue with respect to the position of the chief executive officer or chief financial officer.

The matter will be addressed when circumstances requires.

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6. COMMITMENT BY THE BOARD

To ensure that the Raya Group is managed properly, the current Board is scheduled to meet at least four (4) times a year, with additional meetings being convened when necessary. Besides that, the Board also approves matters through the circulation of Director’ Circular Resolution in accordance with the Articles of Association of the Company.

During the financial year ended 31 December 2016, the Board met six (6) times. The details of the Director’s attendances at the Board Meetings during their tenure in office are set out below:-

No Name of Directors No of Meetings attended during the time the Directors hold office

%

1. Ho Fook MengIndependent Non-Executive Director

5/6 83

2. Dato’ Tan Seng HuManaging Director

6/6 100

3. Capt Tony Tan Han (Chen Han)Executive Director(Appointed as Independent Director on 24 March 2015 and re-designated as Executive Director on 12 January 2017)

5/6 83

4. Mohd Fikry Bin RahmanIndependent Non-Executive Director(Resigned as Director on 6 October 2016)

5/5 100

5. Dato’ Abdul Latif Bin Abdul RahimNon- Independent Non-Executive Director(Resigned as Director on 26 October 2016)

4/5 80

6. Leong Fook HengIndependent Non-Executive Director

5/6 83

7. YAM Dato’ Seri Tengku Baharuddin Ibni Sultan Mahmud Non-Independent Non Executive Chairman(Appointed as Non-Independent Non Executive Director on 5 August 2016 and re-designated as Non-Independent Non Executive Chairman on 3 March 2017)

2/2 100

8. Tan Sri Mohd Bakri Bin Mohd ZininNon-Independent Non Executive Director(Appointed as Non-Independent Non Executive Director on 3 June 2016)

1/2 50

9. Dato’ Sri Ho Kam Choy(Appointed as Non-Independent Non Executive Director on 5 August 2016 and re-designated as Executive Director on 12 January 2017)

2/2 100

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7. ACCESS TO INFORMATION AND ADVICE

In ensuring an effective functioning of the Board, all Directors have individual and independent access to the advice and support services of the Company Secretaries and External Auditors and, may seek advice from the Management on issues under their respective purview. All directors have unrestricted access to the advice and services of the Company Secretary. The Board is provided with comprehensive board papers on a timely manner prior to board meetings. This is to ensure and enable the members of the Board to discharge their duties and responsibilities competently in a well-informed manner.

All Directors have the right and duty to make further enquiries where they consider necessary. All Directors have access to the advice and services of the Company Secretary who ensures compliance with statutory obligations, Bursa Securities Listing Requirements for ACE Market or other regulatory requirements.

In most instances, the Senior Management are invited to be in attendance at Board meetings to provide insight and to furnish clarification on issues that may be raised by the Board. Every Director also has unrestricted access to all information with regard to the activities of the Raya Group.

8. QUALIFIED AND COMPETENT COMPANY SECRETARIES

Every Director has ready and unrestricted access to the advice and the services of the Company Secretaries i.e Puan Wan Haslinda and Mr Sangar Nallappan who are members of the Malaysian Association of Institute of Chartered Secretaries and Administrators (MAICSA) and Malaysian Association of Company Secretaries (MACS) respectively in ensuring the effective functioning of the Board. The Company Secretaries ensure that Board Policies and procedures are both followed and reviewed regularly, and responsible to ensure that each Director is made aware of and provided with guidance as to his/her duties, responsibilities and powers.

The Board also are regularly updated and advised by the Company Secretaries on new statutory and regulatory requirements, and the resultant implications to the Company and Directors in relation to their duties and responsibilities. They are also responsible for ensuring the Group’s compliance with the relevant statutory and regulatory requirements.

9. CONTINUING EDUCATION AND TRAINING OF DIRECTORS

All the Directors have attended and successfully completed the Mandatory Accreditation Programme (MAP) in accordance to Bursa Securities Listing Requirements for ACE Market.

The Company made relevant training programmes available for Directors’ continuing education as the Board recognises the importance of continuing education for its Directors to ensure they are continually equipped with the necessary skills and knowledge to meet the challenges of the Board from time to time.

In addition, the Directors also attended development and training programmes and other professionally conducted seminars relevant to the Company’s business and/ or their respective skills during the year. The Directors will continue to attend training programmes endorsed by Bursa Securities to keep abreast of industry developments and trends.

Some of the training/courses attended by the Directors during the FYE 2016 are as follows:-

No Name of Director Training Attended during the financial year Date

1. Dato’ Tan Seng Hu Key Amendments of the Listing Requirements 2016

29 November 2016

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Other than as disclosed above, some of the Directors were not able to attend any seminar/training courses during the financial year due to their busy work schedule while others were also not able to attend any seminar/training courses due to travelling commitments and medical reasons.

However, the Directors have kept themselves abreast on the financial and business matters through readings to enable them to contribute to the Board. The Directors are mindful that they shall continue to participate in relevant training programmes to keep abreast with new regulatory developments and on corporate governance matters, from time to time.

In addition, the Directors were briefed at Board meetings and Audit Committee meetings on any updates or changes to the relevant guidelines on the regulatory and statutory requirements by the Company Secretary, Internal Auditors and External Auditors.

10. RE-ELECTION OF DIRECTORS

In accordance with the Company’s Articles of Association, one-third (1/3) of the directors shall retire from office and be eligible for re-election at each Annual General Meeting and all directors shall retire from office at least once in every three (3) years but shall be eligible for re-election. Directors appointed during the year will be subject to retirement and re-election by shareholders in the Annual General Meeting. In accordance with the Company’s Articles of Association, newly-appointed directors shall hold office until the next Annual General Meeting and shall then be eligible for re-election.

11. BOARD EFFECTIVENESS EVALUATION (BEE)

The BEE is conducted with the objectives to improve the Board’s effectiveness and to enhance the director’s awareness on the key areas that need to be addressed. The BEE was conducted through completion of questionnaires on the effectiveness of the Board as a whole as well as for the Board Committees.

A. BOARD COMMITTEES

The Board has also delegated certain responsibilities to other Board Committees, which operates within clearly defined terms of reference. The Committees of the Board includes the Audit Committee, Nomination and Remuneration Committee. The Board receives reports at its meetings from the Chairman of each committee on current activities and it is the general policy of the Company that all major decisions be considered by the Board as a whole.

The Board has set up the following Committees to assist the Board in discharging their duties and decisionmaking:-

(a) Audit Committee

The existing Audit Committee comprises three (3) members as follows:-

Chairman : Leong Fook Heng Independent Non-Executive Director

Member : YAM Dato’ Seri Tengku Baharuddin Ibni Sultan Mahmud Non-Independent Non-Executive Director

: Ho Fook Meng Independent Non-Executive Director

The Audit Committee Report is set out on page 29 to 33 of this Annual Report.

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(b) Nomination and Remuneration Committee

The Nomination Committee comprises the following members:-

Chairman : Ho Fook Meng Independent Non-Executive Director

Members : Leong Fook Heng Independent Non-Executive Director

The Nomination and Remuneration Committee comprising a majority of Independent Non-Executive Directors, is tasked with the responsibility to identify and select potential new Directors and to makerecommendations to the Board for the appointment of Director.

The Committee is responsible for reviewing candidates for appointment to the Board Committees, and making recommendations to the Board for approval. The review is conducted on an annual basis,and as and when the need arises, such as when a new Director is appointed.

The Company has an established framework of principles to evaluate performance and reward forExecutive Directors. Remuneration packages for the Executive Directors are formulated to be competitive and realistic, emphasis being placed on performance, with aims to attract, motivate andretain executive directors of high caliber to the Group. For non-executive directors, the level of remuneration commensurate with the level of responsibilities undertaken by them for the Company.

The Committee is responsible for making recommendation to the Board on the eligibility of the Directors to stand for re-election at the AGM.

The terms of reference of the Nomination and Remuneration Committee are as follows:-

• ToregularlyreviewtheBoardstructure,SizeandComposition.

• TorecommendcandidatesfortheapprovaloftheBoardtofillvacanciesintheBoard.

• Toannuallyreviewtherequiredmixofskills,experienceandotherqualitiesandcompetencieswhich non-executive directors should bring to the Board.

• ToannuallyassesstheeffectivenessoftheBoardasawhole,thecommitteeoftheBoardandcontributions of each individual director of the Board.

• Identifyingandrecommendingdirectorswhoaretobeputforwardforretirementbyrotation.

• ConsidergenderdiversitygenerallywhenmakingappointmentstotheBoard.

• Toreviewanddetermine,at leastonceannually,adjustmentstotheremunerationpackageincluding benefits-in-kind of each executive director, taking into account the performance of the individual, the inflation price index and where necessary, information from independent sources on remuneration packages for the equivalent jobs in the industry.

• Toreviewanddeterminethequantumofperformancerelatedbonuses,benefits-in-kindandEmployee Share Options, if available, to be given to the executive directors.

• Toconsiderandexecutetherenewaloftheservicecontractofexecutivedirectorsasandwhen due, as well as the service contracts and remuneration packages for newly appointed executive directors prior to their appointments.

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B. DIRECTORS’ REMUNERATION

The Directors are satisfied that the current level of remuneration is in line with the responsibilities expected.

The aggregate Directors’ remuneration paid or payable to all Directors of the Company categorised into appropriate components for the financial year ended 31 December 2016 are as follows:-

Remuneration (RM’000) Non-ExecutiveDirectors (“RM’000)

Executive Directors (RM’000)

Total(RM’000)

Fees 78,000 12,000 90,000

Other Emoluments 9,850 1,200 11,050

Total 87,850 13,200 101,050

Number of Director

Range of Remuneration Non-Executive Directors

Executive Directors

Total

RM 50,000 and below 6 1 7

C. RELATIONSHIP WITH SHAREHOLDERS

The Board fully recognises the rights of shareholders and encourages them to exercise of their rights at the Company’s AGM. The AGM remains the principal forum for dialogue with shareholders where they may seek clarifications on the Company’s business and reports. Shareholders are encouraged to meet and communicate with the Board at the AGM and to vote on all resolutions. The Board will respond to any question raised during the meeting.

Notice of the AGM, annual reports and circulars are sent out with sufficient notice before the date of the meeting to enable the shareholders to have full information about the meeting to facilitate informed decision-making. The explanatory notes on the proposed resolutions under Special Business are given to help the shareholders vote on the resolutions.

The Company communicates regularly with shareholders and investors through annual reports, quarterly financial reports and various announcements made via Bursa LINK as the Board acknowledges the importance of accurate and timely dissemination of information to its shareholders, potential investors and the public in general.

Poll voting

Pursuant to the ACE Market Listing Requirements of Bursa Securities, any resolution set out in the notice of any general meeting, or in any notice of resolution which may properly be moved and is intended to be moved at any general meeting, must be voted by poll. Hence, voting for all the resolutions as set out in the forthcoming and future general meetings will be conducted as such. An Independent scrutineer will be appointed to validate the votes cast at the general meetings.

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D. ACCOUNTABILITY AND AUDIT

i. Financial Reporting

The Directors are responsible to present a true and fair assessment of the Group’s position and prospects in the annual reports and quarterly reports. The quarterly financial results were reviewed by the Audit Committee and approved by the Board of Directors prior to submission to Bursa Malaysia Securities Berhad.

The Board aims to provide a balanced and understandable assessment of the Group’s financial position and prospects through the annual report as well as quarterly financial results to its shareholders.

It is the Board’s responsibility to ensure that the financial statements are prepared in accordance with the Companies Act and the applicable approved accounting standards set by Malaysian Accounting Standard Board so as to present a balanced and fair assessment of the Group’s financial position and prospects.

The Board through the Audit Committee endeavors to provide and present a balanced and meaningful

assessment of the Group’s financial performance and prospects to shareholders, primarily through the annual reports, quarterly announcements of the Group’s results and other price-sensitive public reports.

The Board is assisted by the Audit Committee in overseeing the Group’s financial reporting processes and the accuracy, consistency and appropriateness of the use and application of accounting policies and standards, as well as the reasonableness and prudence in making estimates, statements and explanations.

The Company maintains a formal and transparent and professional relationship with the Auditors. On a yearly basis, the Audit Committee would meet with the External Auditors to go through the Audit Planning Memorandum prior to the commencement of the audit.

In addition, the Audit Committee would also meet with the External Auditors to discuss with the External Auditors on their report to the Audit Committee following the completion of their audit. The External Auditors would share with the Audit Committee on any significant issues on the financial statements and regulatory updates. The Audit Committee would obtain the confirmation of the External Auditors with regards to the Company’s compliance with the applicable financial reporting standards.

ii. Relationships with Auditors

The appointment of the auditors is based on the discussion and review of the Audit Committee before tabling for approval in the Board Meeting and table at the AGM for shareholders’ approval.

The Board has established a formal and transparent arrangement for maintaining appropriate relationships with the external auditors in seeking professional advice and ensuring the compliance with the appropriate accounting standards.

The Audit Committee met with the external auditors to discuss their audit plan, audit findings and the financial statements. The Board has established a formal and transparent relationship with the auditor, Messrs. STYL Associates appointed by the Company and its subsidiaries within its fold.

The Audit Committee, has been accorded the authority to communicate directly with the external auditors. The auditors in turn are able to highlight matters which requires the attention of the Board effectively to the Audit Committee in terms of compliance with the accounting standards and other related regulatory requirements.

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iii. Statement of Directors’ Responsibility in respect of the Financial Statements

The Malaysian Company Law requires the Directors to prepare financial statements for each financial year, which give a true and fair view of the state of affairs of the Company and the results and cash flow of the Company for that period.

In preparing those financial statements, the Directors are required to:-

a) Selectsuitableaccountingpoliciesandthenapplythemconsistently;b) Statewhetherapplicableaccountingstandardshavebeenfollowed;c) Makejudgmentsandestimatesthatarereasonableandprudent;andd) Prepare the financial statements on a going concern basis unless it is inappropriate to presume that the Company will continue in business.

iv. Policies and procedures to assess suitability and independence of external auditors

The Audit Committee has in place an assessment of the External Auditors and would assess them on an annual basis and report to the Board its recommendation for the reappointment of the External Auditors at the annual general meeting. The External Auditors assures the Audit Committee that they were independent throughout the conduct of the audit engagement in accordance with the terms of all relevant professional and regulatory requirements.

Non-audit fees paid to the external auditors by the Group for the financial year amounted to RM6,000.

v. Internal Control

The Directors are responsible for the Group’s system of internal controls and its effectiveness. The principal aim of the system of internal controls is the management of financial and business risks that are significant to the fulfillment of the Company’s business objectives, which is to enhance the value of shareholders’ investment and safeguarding the Group’s assets.

The Board acknowledges its overall responsibility for maintaining a sound system of internal control, which encompasses risk management, financial, organisational, operational and compliance controls necessary for the Group to achieve its objectives within an acceptable risk profile to safeguard shareholders’ investment and the Group’s assets.

However, the Board recognizes that such system is structured to manage rather than eliminate the possibility of encountering risk of failure to achieve corporate objectives.

During the financial year ended 31 December 2016, based on the audit plan approved by the Audit Committee, the outsourced internal auditors carried out review of selected key processes of the Group, covering internal control framework, investment procedures, and risk management.

The Group has appointed an independent professional service provider to carry out the internal audit function, namely Chung Wan Ling & Co (CWL). The outsourced Internal Auditors report directly to the Audit Committee, providing the Board with a reasonable assurance of adequacy of the scope, functions and resources of the Internal Audit function.

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The purpose of the Internal Audit function is to provide the Board, through the Audit Committee, assurance of the effectiveness of the system of internal control in the Group. The internal controls are tested for effectiveness and efficiency by CWL. The report of the Internal Audit is tabled for the Audit Committee’s review and comments, and the audit findings will then be communicated to the Board.

Details of the internal control system are set out in the Statement on Risk Management and Internal Control of this Annual Report.

vi. Related Party Transactions

The Company practises an internal compliance framework in identifying and assessing related party transactions. The Board, through the Audit Committee reviews all related party transactions. A Director who has an interest in a transaction must abstain from deliberation and voting on the relevant resolution in respect of such transaction

E. ENSURE TIMELY AND HIGH QUALITY DISCLOSURE

The Company recognises the value of transparent, consistent and coherent communications with investment community consistent with commercial confidentiality and regulatory considerations.

The Board has yet to formalise a corporate disclosure policy. Nonetheless, the Board is committed to ensuring that communications to the investing public regarding the business, operations and financial performance of the Company are accurate, timely, factual, informative, consistent, broadly disseminated and where necessary, information filed with regulators is in accordance with applicable legal and regulatory requirements.

F. CORPORATE SOCIAL RESPONSIBILITIES

Whilst pursuing its corporate goals, the Group recognises and acknowledges the importance of a corporate culture that emphasises on being a good corporate citizen. In this regard, the Group is committed and endeavours on an ongoing basis, to integrate corporate social responsibility (“CSR”) practices into its day-to-day business operations

The Group subscribes to green policy in all its business and administrative processes during the financial year ended 31 December 2016.

This Statement on Corporate Governance is made in accordance with a resolution of the Board of Directors dated 19 April 2017

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AUDIT COMMITTEE REPORT

The Audit Committee was established with the primary objective to provide assistance to the Board in fulfilling its fiduciary responsibilities relating to the corporate governance and practices for the Group, to improve the business efficiency and enhance the independent role of external and internal auditors.

1. Composition of Audit Committee

The existing Audit Committee comprises three (3) members as follows:-

Chairman : Leong Fook Heng Independent Non-Executive Director

Member : YAM Dato’ Seri Tengku Baharuddin Ibni Sultan Mahmud Non-Independent Non-Executive Director

: Ho Fook Meng Independent Non-Executive Director

The Audit Committee Chairman, Mr. Leong Fook Heng is a member of the Malaysian Institute of Accountants (MIA) and Associate Member of Chartered Institute of Management Accountants (United Kingdom). In this respect, the Company complies with Rule 15.09(1)(c)(i) of the ACE Listing Requirements. The performance of the Audit Committee and its members are assessed by the Board through a board committee effectiveness evaluation.

The Board is satisfied that the Audit Committee members are able to discharge their functions, duties and responsibilities in accordance with the Terms of Reference of the Audit Committee, thereby supporting the Board in ensuring appropriate Corporate Governance standards within the Group.

2. TERMS OF REFERENCE

Composition

The Audit Committee shall be appointed by the Board from amongst their members, who fulfill the following requirements:-

a) The Audit Committee must be composed of no fewer than three (3) members. In the event of any vacancy in the Audit Committee resulting in the non-compliance of the above, the Company must fill the vacancy within three (3) months.

b) All the Audit Committee members must be non-executive directors, with a majority of them being independent directors.

c) All the Audit Committee members must be financially literate, with at least one member :-

• mustbeamemberoftheMalaysianInstituteofAccountants;or

• ifheisnotamemberoftheMalaysianInstituteofAccountants,hemusthaveatleastthree(3)years’working experience and:-• hemusthavepassedtheexaminationsspecifiedinPartIofthe1stScheduleoftheAccountants

Act1967;or• hemustbeamemberofoneoftheAssociationsofAccountantsspecifiedinPartIIofthe1st

ScheduleoftheAccountantsAct1967;or• fulfilssuchotherrequirementsasprescribedorapprovedbytheExchange.

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AUDIT COMMITTEE REPORT (Cont’d)

2. TERMS OF REFERENCE (CONT’D)

Composition (cont’d)

d) No alternate director shall be appointed as a member of the Audit Committee.

e) The member of the Audit Committee shall elect a Chairman from among themselves who shall be an Independent Director. The Chairman of the Audit Committee should engage on a continuous basis with senior management, the head of internal audit and the external auditors in order to be kept informed of matters affecting the Company.

All members of the Audit Committee, including the Chairman, will hold office only so long as they serve as Directors of the Company. The Board must review the term of office and performance of the Audit Committee and each of its members at least once every three (3) years to determine whether the Audit Committee has carried out its duties in accordance with its terms of reference.

Secretary of the Audit Committee

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

Duties and Responsibilities of the Audit Committee

The following are the main duties and responsibilities of the Audit Committee collectively:-

(a) Review the following and report the same to the Board of the Company:-

(i) overseetheCompany’sinternalcontrol;(ii) withtheexternalauditors,theauditplan;(iii) withtheexternalauditors,hisevaluationofthesystemofinternalcontrols;(iv) withtheexternalauditors,hisauditreport;(v) the assistance given by the employees of the Company to the external auditors and the internal

auditors;(vi) the adequacy of the scope, functions, competency and resources of the internal audit functions and

thatithasthenecessaryauthoritytocarryoutitswork;(vii) the internal audit programme, processes, the results of the internal audit programme, processes or

investigation undertaken and whether or not appropriate action is taken on the recommendations of theinternalauditfunction;

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

• changesinorimplementationofmajoraccountingpolicychanges;• significantandunusualevents;and• compliancewithaccountingstandardsandotherlegalrequirements;

(ix) any related party transaction and conflict of interest situation that may arise within the Company or group including any transaction, procedure or course of conduct that raises questions of management integrity;

(x) anyletterofresignationfromtheexternalauditorsandanyquestionsofresignationordismissal;and(xi) whether there is reason (supported by grounds) to believe that the Company’s external auditor is not

suitableforre-appointment;

(b) Oversee the Company’s internal control structure to ensure operational effectiveness and efficiency, reduce risk of inaccurate financial reporting, protect the Company’s assets from misappropriation and encourage legalandregulatorycompliance;

(c) Assist the Board in identifying the principal risks in the achievement of the Company’s objectives and ensuring theimplementationofappropriatesystemstomanagetheserisks;

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(d) Recommend to the Board on the appointment and re-appointment of the external auditors and their audit fee, after taking into consideration the independence and objectivity of the external auditors and the cost effectivenessoftheaudit;

(e) Discuss with the external auditors before the audit commences the nature and scope of the audit and ensureco-ordinationwheremorethanoneauditfirmisinvolved;

(f) Discuss problems and reservations arising from the audits and any matter the auditors may wish to discuss intheabsenceofthemanagementwherenecessary;

(g) Reviewtheexternalauditor’smanagementletterandmanagement’sresponsetherein;

(h) In relation to the internal audit function:-

a. review the adequacy of the scope, functions and resources of the internal audit function and that it hasthenecessaryauthoritytocarryoutitswork;

b. review the internal audit programme and results of the internal audit process and, where necessary, ensurethatappropriateactionsaretakenontherecommendationsoftheinternalauditfunction;

c. reviewanyappraisalorassessmentoftheperformanceofmembersoftheinternalauditfunction;d. approveanyappointmentofterminationofseniorstaffmembersoftheinternalauditfunction;ande. take cognizance of resignations of internal audit staff members and provide the resigning staff member

anopportunitytosubmithisreasonsforresigning;

(i) Considerthemajorfindingsofinternalinvestigationsandmanagement’sresponse;

(j) ToreviewtheeffectivenessoftheinternalcontrolsandriskmanagementprocessesoftheCompany;and

(k) Consider other matters as defined by the Board.

Rights of the Audit Committee

In carrying out its duties and responsibilities, the Audit Committee will:-

• havetheauthoritytoinvestigateanymatterwithinitstermsofreference;• havetheresourceswhicharerequiredtoperformitsduties;• havefullandunrestrictedaccesstoanyinformationpertainingtotheCompany;• havedirectcommunicationchannelswiththeexternalauditorsandperson(s)carryingouttheinternalaudit

functionoractivity;• beabletoobtainindependentprofessionalorotheradviceandtoinviteoutsiderswithrelevantexperience

andexpertisetoattendtheAuditCommitteemeeting(ifrequired)andtobrieftheAuditCommittee;and• beabletoconvenemeetingswiththeexternalauditors,theinternalauditorsorboth,excludingtheattendance

of other directors and employees of the Company, whenever deemed necessary.

Conduct of Meetings

a) The Audit Committee will meet at least four (4) times in each financial year although additional meetings may be called at any time, at the discretion of the Chairman of the Audit Committee.

b) The quorum shall consist of a majority of independent committee members and shall not be less than two (2).

c) Recommendations to the Audit Committee are submitted to the Board for approval.

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Conduct of Meetings (cont’d)

d) The Company Secretary shall be in attendance at each Audit Committee meeting and record the proceedings of the meeting thereat.

e) Minutes of each meeting shall be kept as part of the statutory record of the Company upon confirmation by the Audit Committee and a copy shall be distributed to each member of the Board.

f) The Managing Director and other officers may be invited to attend where their presence are considered appropriate as determined by the Audit Committee Chairman.

g) The internal auditors and/or external auditors have the right to appear and be heard at any meeting of the Audit Committee.

h) Upon the request of the internal auditors and/or external auditors, the Audit Committee Chairman shall also convene a meeting of the Audit Committee to consider any matter the auditor(s) believes should be brought to the attention of the Board or the shareholders.

i) The Audit Committee must be able to convene meetings with external auditors without the presence of the executive board members and management at least twice a year and whenever deemed necessary.

j) Where the Audit Committee is of the view that a matter reported by it to the Board has not been satisfactorily resolved resulting in a breach or Bursa Malaysia Securities Berhad requirements, the Audit Committee must promptly report such matter to Bursa Malaysia Securities Berhad.

k) The attendance at any particular Audit Committee meeting by other directors and employees of the Company shall be at the Audit Committee’s invitation and discretion and must be specific to the relevant meeting.

SUMMARY OF ACTIVITIES

The Audit Committee had held a total of four (4) meetings during the financial year 2016 and the details of attendance of the Committee members are as follows:-

No Name of Directors No of Meetings attended during the time the Directors hold office

%

1. Leong Fook HengChairman

5/5 100

2. Mohd Fikry Bin RahmanMember(Resigned as member on 6 October 2016)

4/4 100

3. Ho Fook MengMember

4/5 83

4. YAM Dato’ Seri Tengku Baharuddin Ibni Sultan MahmudMember(Appointed as member on 10 January 2017)

N/A N/A

During the year under review, the following were the activities of the Audit Committee:-

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SUMMARY OF ACTIVITIES (cont’d)

(a) Reviewed the quarterly financial results and ensured that the financial reporting and disclosure requirements of relevant authorities had been complied with, focusing particularly on:-

(1) changesinorimplementationofmajoraccountingpoliciesandpractices;(2) thegoingconcernassumption;(3) significant and unusual events and(4) compliance with accounting standards and other legal policies and requirements.

(b) Reviewed all related party transactions and conflict of interest situations within the Company and the Group including for proposed transactions, procedures or course of conducts that raised questions of management integrity in the ordinary course of business.

(c) Reviewed the audit strategy and plan of the external auditors.

(d) Meetings with external auditors.

The Audit Committee encouraged the External Auditors to raise with the Audit Committee any matter they considered important to bring to the Audit Committee’s attention. The Audit Committee Chairman also sought information on the communication flow between the External Auditors and the management which was necessary to allow unrestricted access to information for the External Auditors to effectively perform their duties.

During the Audit Committee meetings, all deliberations including the issues tabled and the rationale adopted for decisions, were duly minuted. Minutes of the Audit Committee meetings were tabled for confirmation at the next following Audit Committee meeting. The Audit Committee Chairman presented the Audit Committee’s recommendations together with the respective rationale to the Board for approval of the annual and quarterly financial statements.

Messrs. STYL Associates declared their independence and confirmed that they were not aware of any relationship between Messrs. STYL Associates and the Group that, in their professional judgement, might reasonably be thought to impair their independence.

INTERNAL AUDIT FUNCTION

The Internal Audit function is outsourced to Messrs. Chung Wan Ling & Co. The internal audit function is outsourced to a professional services firm to provide the Audit Committee with an independent assessment on the adequacy and effectiveness of the Group’s system of internal control.

The internal audit division conducts scheduled internal audits based on the audit plan presented to and approved by the Audit Committee.

During the financial year under review, the Internal Auditor reviewed compliance with policies, procedures and standards, relevant external rules and regulations, as well as assessed the adequacy and effectiveness of the Group’s system of internal control and recommended appropriate actions to be taken where necessary. In discharging its duties and responsibilities, the Internal Auditors receives instruction from and reports directly to the Audit Committee

The fee in respect of the Internal Audit function for the financial year ended 31 December 2016 is amounting to RM18,000.00

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STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL

INTRODUCTION

The Board acknowledges its responsibility to adopt sound risk management practices to safeguard Raya International Berhad’s business interest from risk events that may impede achievement of business strategy and action plan, enable value creation, process improvement and measuring achievement as assurance to the Group’s various stakeholders.

The Board is committed to the continuous improvement of internal controls and risk management practices within the Group to meet its business objectives.

THE BOARD’S RESPONSIBILITIES

The Board affirms its overall responsibility for the Group’s system of internal control which includes the establishment of an appropriate control environment and risk management framework as well as reviewing its adequacy and integrity.

Due to the limitations that are inherent in any internal control system, the Group’s system of internal control can only manage rather than eliminate the risk of failure to achieve business objectives and therefore can only provide reasonable and not absolute assurance against material misstatement, loss or fraud. Notwithstanding this, the Board requires that the procedures and controls in place are subject to regular review as part of an ongoing process for identifying, evaluating and managing the significant risks faced by the Group.

The Board has received confirmation from the Managing Director and the management team of the Group that the Group’s risk management and internal control systems have been operating adequately and effectively, in all material aspects, during the financial year under review and up to the date of this Statement.

The Board has extended the responsibilities of the Audit Committee (“AC”) to include the role of reviewing and monitoring the effectiveness of the Group’s internal control system. The AC receives assurance reports from the Internal Auditors on findings from audits carried out at operating units and the External Auditors on areas for improvement identified during the course of statutory audit.

RISK MANAGEMENT AND INTERNAL AUDIT FUNCTION

During the year under review, the adequacy and effectiveness of internal controls were reviewed by the Audit Committee (“AC”) based on the internal audits conducted by the outsourced Internal Auditor (“IA”) during the year.

Audit findings, recommendations and management replies to address the issues highlighted by IA were presented to the members during the AC meetings.

Apart from financial controls, the Group’s system of internal controls also cover operational and compliance controls and most importantly, risk management. As part of the risk management process, the Board assisted by the Audit Committee, is continuously identifying, assessing and managing significant business risks faced by the Group throughout the financial year.

Risk management is embedded in the Group’s management systems. The Board together with the AuditCommittee has established an on-going process for identifying, evaluating and managing the significant risks faced by the Group and this process includes updating of the system of internal controls when there are changes to business environment or regulatory guidelines.

The process will be regularly reviewed by the Board through the Audit Committee and is in accordance with the guidance as contained in the Internal Control Guidelines.

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

THE INTERNAL CONTROL PROCESS

The other key features of the Group’s internal control system include the following: • Anorganisationstructurewithdefinedlinesofresponsibilityandappropriatereportingstructureincludingproper

approvalandauthorisationlimitforapprovingcapitalexpenditureandexpenseswithintheGroup;

• TheAuditCommitteehadappointedanoutsourcedindependentprofessionalinternalauditserviceprovidertodischarge the internal audit function which performs regular and systematic review of the internal controls to assess and provide sufficient assurance on the effectiveness of the systems of internal control and to highlight significantrisksimpactingtheGroupwithrecommendationforimprovement;and

• TheAuditCommitteewillregularlyreviewsreportsbytheindependentprofessionalinternalauditserviceproviderand conducts annual assessment on the adequacy of the function’s scope of work and resources.

The internal audit function adopts a risk-based approach and prepares its strategies and plans for AC’s approval prior to execution of internal audit assessments. Internal audit team reviews the internal controls of the key activities in the Group’s businesses.

The internal audit team from Chung Wan Ling & Co (CWL), the independent consulting firm to which the internal audit function has been outsourced, assesses the adequacy and effectiveness of the internal control system based on the scope of work approved by the AC and reports to the AC on its findings and recommendations for improvement.

The Internal Auditor also reviews the extent to which its recommendations have been accepted and implemented by the Management. The AC reviews internal audit reports and management responses thereto and ensures significant findings especially control deficiencies are adequately addressed and rectified by the Management of the operating units concern.

The AC reviews internal control matters and updates the Board on significant issues for the Board’s attention and action. The Internal Auditors, which reports directly to the AC, conduct reviews on the adequacy and effectiveness of the Group’s system of internal controls that the management has put in place.

The Internal Auditors provide the AC with reports highlighting observations, recommendations and management action plans to improve the system of internal control.

During the financial year ended 31 December 2016, the AC with the assistance of CWL viewed the adequacy and integrity of the Group’s internal control systems relating to the following processes:-

• CoreBusiness• TheProposedAcquisitionofVessels• TheRecurrentRelatedPartyTransactions(RRPT)• StatutoryAuditandAuditCommittee• BoardMembers,Directors’RemunerationandMeetingAllowance• ProceduresandControlsinFinanceDepartment• CorporateGovernance• ReviewofFinancialandManagementAccounts• ReviewofDiversificationStrategy

The Board remains committed towards operating a sound internal control system. The internal control system will continue to be reviewed and updated, taking into consideration of the changing business environment. The Board will seek regular assurance on the continuity and effectiveness of the internal control system through independent appraisals by the internal auditors. The Board is of the view that the system of internal control in place for the financial period under review is sufficient to cater for the requirements of the Group at the existing level of operation and safeguard the Group’s interest.

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

During the FYE 2016, there were no weaknesses in the system of internal control that has resulted in any material losses, contingencies or uncertainties, which would require disclosure in the Company’s Annual Report. Identified minor control shortfalls have been addressed. The Directors have general responsibilities for taking such steps that are reasonably available to them to safeguard the assets of the Group to prevent and detect fraud and other irregularities.

Pursuant to Rule 15.23 of the ACE LR of Bursa Securities, the External Auditors have reviewed this Statement for inclusion in the 2016 Annual Report.

Based on their review, the External Auditors reported to the Board that nothing has come to their attention that causes them to believe that this Statement is inconsistent with their understanding of the processes adopted by the Board in reviewing the adequacy and integrity of the system of internal controls.

This Statement was approved by a resolution of the Board of Directors dated 19 April 2017.

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RESPONSIBILITY STATEMENTby the Board of Directors

In preparing the annual financial statements of the Group and of the Company, the Directors are collectively responsible to ensure that these financial statements have been prepared to give a true and fair view of the state of affairs of the Group and the Company at the end of the financial year and the results and cash flows of the Group and the Company in accordance with applicable approved accounting standards in Malaysia, the provisions of the Companies Act 2016 and the ACE Market Listing Requirements of Bursa Malaysia Securities Berhad.

In preparing the financial statements for the financial year ended 31 December 2016 set out on pages 40 to 95 of this Annual Report, the Directors have applied appropriate accounting policies on a consistent basis and made judgments and estimates that are reasonable and prudent.

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

The Directors have overall responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Group and to prevent and detect fraud and other irregularities.

This statement is made in accordance with a resolution of the Board of Directors dated 25 April 2017

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ADDITIONAL COMPLIANCE INFORMATION

1. UTILISATION OF PROCEEDS RAISED FROM CORPORATE PROPOSALS

In November 2016, the Company completed the Special Bumiputera Issue and 20,500,000 new ordinary shares were issued pursuant to Private Placement at an issue price of RM 0.16 in accordance with the Shareholders’ Mandate at the Extraordinary General Meeting of the Company on 3 June 2016.

A total proceed of RM 3,280,000.00 had been raised from the said Private Placement. As at 31 March 2017, the Company had mainly utilized the proceeds for purchase of Marine Gas Oil (“MGO”) for its oil trading activities.

2. AUDIT AND NON-AUDIT FEES

The amount of Audit and Non-Audit Fees paid/payable to external auditors by the Company for the financial year ended 31 December 2016 are set out in Note 7 to the Financial Statements for the financial year ended 31 December 2016 on page 74 of this Annual Report.

3. MATERIAL CONTRACTS

1. Selatan Bunker (M) Sdn. Bhd., a subsidiary of Raya International Berhad had on 29 December 2015 entered into a Collaboration Agreement with Tumpuan Megah Development Sdn. Bhd to jointly explore and develop the business of carrying out the provision of bunkering services for marine fuel, petroleum and petroleum-based products, comprising the operations as well as marketing and sales of bunkering services in Pasir Gudang Port area and to work on mutually agreed projects.

On 28 December 2016, the duration of the Collaboration Agreement was renewed for subsequent period of one (1) year up to 28 December 2017 and on 6 March 2017, both Parties have agreed to expand the Business Collaboration pursuant to the Collaboration Agreement to include Kemaman Port, Kuantan Port, Labuan Port and any other area as may be mutually agreed between the Parties.

The amendment to the Collaboration Agreement as stated above allows Selatan Bunker to pursue offering oil bunkering business in other seaports in Malaysia. Other terms and conditions of the Collaboration Agreement dated 29 December 2015 shall remain the same.

2. On 14 November 2016, the Company had entered into the following agreements:

a) Memorandum of Agreement (“MOA”) with Sturgeon Asia Ltd., where the Company or its nominated wholly-owned subsidiary will acquire Sturgeon (vessel) for a consideration of RM3.20 million to be satisfiedviaissuanceof20,000,000newRayaShares(“MemorandumofAgreement1”);

b) Memorandum of Agreement (“MOA”) with Straits Holdings Ltd., where the Company or its nominated wholly-owned subsidiary will acquire Straits 1 (vessel) for a consideration of RM2.80 million to be satisfied via cash (“Memorandum of Agreement 2”).

However, both MOAs are subjected to conditions precedent which are yet to be fulfilled by both parties.

Other than the above, there were no other material contract entered into by the Group involving the interest of directors and major shareholders, either still subsisting at the end of the financial year ended 31 December 2016 or entered into since the end of the previous financial year.

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FINANCIAL STATEMENTS

• Directors’ Report 40• Statement by Directors and Statutory Declaration 44• Independent Auditors’ Report 45• Statements of Profit or Loss and Other Comprehensive Income 50• Statements of Financial Position 51• Consolidated Statement of Changes in Equity 52• Statement of Changes in Equity 53• Statements of Cash Flows 54• Notes to the Financial Statements 56• Supplementary Information – Realised and Unrealised Profits or Losses 95

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DIRECTORS’ REPORTCompany No:412406-T

PRINCIPAL ACTIVITIES

RESULTS OF OPERATIONS

The results of operations of the Group and of the Company for the financial year are as follows:

GROUP COMPANYRM RM

Profit/(Loss) for the year 100,043 (653,278)

Attributable to:Owners of the Company 48,596 (653,278)Non-controlling interests 51,447 -

100,043 (653,278)

DIVIDENDS

RESERVES AND PROVISIONS

ISSUE OF SHARES AND DEBENTURES

The resultant share premium arising from the shares issued during the financial year of RM1,230,000 hasbeen credited to the share premium account. All the new ordinary shares issued rank pari passu with the thenexisting ordinary shares of the Company.

The Company has not issued any debentures during the financial year.

RAYA INTERNATIONAL BERHAD(Incorporated in Malaysia)

DIRECTORS’ REPORT

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

As approved by the shareholders at the Extraordinary General Meeting held on 3 June 2016, the issued andpaid-up share capital of the Company was increased from RM14,345,238 to RM16,395,238 during the financialyear by way of a special bumiputera issue of 20,500,000 new ordinary shares of RM0.10 each in the Companyat an issue price of RM0.16 per new ordinary share for cash.

There have been no significant changes in the nature of the principal activities of the Company and itssubsidiaries during the financial year.

No dividend has been paid or declared by the Company since the end of the previous financial year. Thedirectors also do not recommend the payment of any dividend in respect of the current financial year.

There were no material transfers to or from reserves or provisions during the financial year other than thosedisclosed in the Financial Statements.

In the opinion of the directors, the results of operations of the Group and of the Company during the financialyear have not been substantially affected by any item, transaction or event of a material and unusual nature.

The Company is principally engaged in investment holding activities and the provision of managementservices. The principal activities of the subsidiaries are as disclosed in Note 14 to the Financial Statements.

1

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DIRECTORS’ REPORT (Cont’d)

Company No:412406-T

SHARE OPTIONS

DIRECTORS

The names of the directors in office since the date of the last report and as at the date of this report are:

Dato' Tan Seng HuTony Tan Han (Chen Han)Leong Fook HengHo Fook MengTan Sri Mohd Bakri Bin Mohd Zinin (appointed on 3 June 2016)YAM Tengku Baharuddin Ibni Sultan Mahmud (appointed on 5 August 2016)Dato' Sri Ho Kam Choy (appointed on 5 August 2016)Dato' Sri Ahmad Said Bin Hamdan (appointed on 3 June 2016; resigned on 4 August 2016)Dato' Abdul Latif Bin Abdul Rahim (resigned on 26 October 2016)Mohd Fikry Bin Rahman (resigned on 6 October 2016)

DIRECTORS’ BENEFITS

Balance as at 1.1.2016/date of Balance as at

appointment Bought Sold 31.12.2016Shares in the Company

Direct interest

Dato' Tan Seng Hu 5,860,000 40,000 (3,340,000) 2,560,000Ho Fook Meng 2,000,000 - - 2,000,000Dato' Sri Ho Kam Choy 12,723,300 3,300,000 (8,000,000) 8,023,300

No shares have been issued during the financial year by virtue of the exercise of any options to take upunissued shares of the Company. As at the end of the financial year, there were no unissued shares of theCompany under options.

The shareholdings in the Company of those who were directors at the end of the financial year, as recorded inthe Register of Directors' Shareholdings kept by the Company under Section 134 of the Companies Act, 1965,are as follows:

Number of ordinary shares of RM0.10 each

No options have been granted by the Company to any parties during the financial year to take up unissuedshares of the Company.

DIRECTORS' INTERESTS

Since the end of the previous financial year, none of the directors of the Company has received or becomeentitled to receive any benefits (other than the benefit included in the aggregate amount of emolumentsreceived or due and receivable by directors as shown in the financial statements or the fixed salary of a fulltime employee of the Company or of related corporations) by reason of a contract made by the Company or arelated corporation with the director or with a firm of which the director is a member, or with a company inwhich the director has a substantial financial interest.

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

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Company No:412406-T

OTHER STATUTORY INFORMATION

a)

(i)

(ii)

b) At the date of this report, the directors are not aware of any circumstances:

(i)

(ii)

(iii)

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

(i)

(ii)

d)

e)

f)

which would render the amount written off as bad debts or the amount of the allowance for doubtfuldebts in the financial statements of the Group and of the Company inadequate to any substantialextent; or

any contingent liability of the Group and of the Company which has arisen since the end of thefinancial year.

In the opinion of the directors, there has not arisen in the interval between the end of the financial year andthe date of this report any item, transaction or event of a material and unusual nature likely to affectsubstantially the results of operations of the Group and of the Company for the financial year in which thisreport is made.

which would render the values attributable to current assets in the financial statements of the Groupand of the Company misleading; or

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

which have arisen which render adherence to the existing method of valuation of assets or liabilities ofthe Group and of the Company misleading or inappropriate.

to ensure that any current assets which were unlikely to realise in the ordinary course of business theirvalues as shown in the financial statements of the Group and of the Company have been written downto an amount which they might be expected to realise.

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

None of the other directors in office at the end of the financial year held shares or had beneficial interest in theshares of the Company or its related companies during and at the end of the financial year.

No contingent liability or other liability of the Group and of the Company has become enforceable, or islikely to become enforceable within the period of twelve months after the end of the financial year which inthe opinion of the directors, will or may substantially affect the ability of the Group and of the Company tomeet their obligations as and when they fall due.

By virtue of the above directors' interests in the shares of the Company, the abovementioned directors are alsodeemed to have an interest in the shares of the subsidiaries to the extent that the Company has interest.

to ascertain that proper action had been taken in relation to the writing off of bad debts and the makingof allowance for doubtful debts and satisfied themselves that all known bad debts had been written offand that adequate allowance had been made for doubtful debts; and

Before the statements of profit or loss and other comprehensive income and statements of financialposition of the Group and of the Company were made out, the directors took reasonable steps:

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Company No:412406-T

AUDITORS

HO FOOK MENGDirector Director

Kuala Lumpur

Date:

The auditors, STYL Associates, retire and are not seeking for re-appointment.

DATO' TAN SENG HU

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

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25 April 2017

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STATEMENT BY DIRECTORS

Company No:412406-T

DATO' TAN SENG HU HO FOOK MENG Director

Kuala Lumpur

Date:

DATO' TAN SENG HU

Subscribed and solemnly declared by theabovenamed DATO' TAN SENG HU,at Petaling Jaya in the state of Selangor Darul Ehsan, on

Before me:

WONG CHOY YIN NO. B 508

We, DATO' TAN SENG HU and HO FOOK MENG, being two of the directors of Raya International Berhad,do hereby state that, in the opinion of the directors, the accompanying financial statements are drawn up inaccordance with Malaysian Financial Reporting Standards, International Financial Reporting Standardsand the requirements of the Companies Act, 1965 in Malaysia so as to give a true and fair view of thefinancial position of the Group and of the Company as at 31 December 2016 and of their financialperformance and cash flows for the year then ended.

PURSUANT TO SECTION 251(1)(b) OF THE COMPANIES ACT, 2016STATUTORY DECLARATION

The supplementary information set out in Note 31 to the Financial Statements has been prepared in allmaterial respects, in accordance with Guidance on Special Matter No.1 Determination of Realised andUnrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities BerhadListing Requirements, as issued by the Malaysian Institute of Accountants and the directive of BursaMalaysia Securities Berhad.

I, DATO' TAN SENG HU, being the director primarily responsible for the financial management of RayaInternational Berhad, do solemnly and sincerely declare that the accompanying financial statements are, inmy opinion, correct and I make this solemn declaration conscientiously believing the same to be true, andby virtue of the provisions of the Statutory Declarations Act, 1960.




Director

5

STATUTORY DECLARATIONPURSUANT TO SECTION 251(1)(b) OF THE COMPANIES ACT 2016

Company No:412406-T


Kuala Lumpur

Date:

DATO' TAN SENG HU


Before me:









Director

5

Company No:412406-T


Kuala Lumpur

Date:

DATO' TAN SENG HU


Before me:









Director

5

Company No:412406-T


Kuala Lumpur

Date:

DATO' TAN SENG HU


Before me:









Director

5

25 April 2017

25 April 2017

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Company No:412406-T

REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS

Opinion

Basis for Opinion

Independence and Other Ethical Responsibilities

Key Audit Matters

STYL Associates (AF1929)No: 902 9th Floor, Block A, Damansara Intan, No: 1, Jalan SS20/27, 47400 Petaling Jaya

Tel: 03 -7724 2128/2130/2136 Fax: 03 -7733 2125 Email: [email protected]

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

INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF

In our opinion, the accompanying financial statements give a true and fair view of the financial position of theGroup and of the Company as at 31 December 2016, and of their financial performance and their cash flows forthe year then ended in accordance with Malaysian Financial Reporting Standards, International FinancialReporting Standards and the requirements of the Companies Act, 1965 in Malaysia.

We conducted our audit in accordance with approved standards on auditing in Malaysia and InternationalStandards 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 auditevidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

We are independent of the Group and of 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 EthicsStandards Board for Accountants' Code of Ethics for Professional Accountants ("IESBA Code"), and we havefulfilled our other ethical responsibilities in accordance with the By-Laws and the IESBA Code.

RAYA INTERNATIONAL BERHAD

We have audited the financial statements of Raya International Berhad, which comprise the statements offinancial position as at 31 December 2016 of the Group and of the Company, and the statements of profit orloss and other comprehensive income, statements of changes in equity and statements of cash flows of theGroup and of the Company for the year then ended, and notes to the financial statements, including a summaryof significant accounting policies, as set out on pages 50 to 94.

(Incorporated in Malaysia)

6

INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF RAYA INTERNATIONAL BERHAD(Incorporated in Malaysia)

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INDEPENDENT AUDITORS’ REPORT (Cont’d)Company No:412406-T

•

•

•

•

•

•

•

Information Other than the Financial Statements and Auditors' Report Thereon

the Group's control over credit control andreceivable recovery in particular how the Groupidentifies and assesses the impairment ofreceivables and makes the accounting estimatesfor impairment.

Evaluating the reasonableness and adequacy ofthe allowance for impairment recognised foridentified exposures.

Reviewing the ageing analysis of receivables andtesting the reliability of the analysis, testing theadequacy and reasonableness of the allowance forimpairment against the trade receivable balancesby taking into account the ageing of receivables atyear end and collections received after year end.Reviewing subsequent collections for majorreceivables and overdue amounts.Making inquiries of management regarding theaction plans to recover overdue amounts.


The directors of the Company are responsible for the other information. The other information comprises theinformation included in the annual report but does not include the financial statements of the Group and of theCompany and our auditors' report thereon.

How our audit addressed the key audit matterKey audit matter

The Group has significant trade receivables asdisclosed in Note 18 to the Financial Statementswhich is subject to major credit risk exposures.The impairment of trade receivables is a key auditmatter as significant judgement and estimationuncertainty is involved in analysing historical baddebts, customer concentration, customercreditworthiness, current economic trends,customer payment terms, etc. Managementmakes an assessment of the recoverability ofindividual debt and determine the appropriateimpairment amount. The assessment includes areview of the movement during 2017 of balancesthat were outstanding as at 31 December 2016.

We assessed the adequacy of the following auditprocedures performed by the component auditors:

We developed an understanding of:

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

Based on the above procedures performed, we noted theresults of management's impairment assessment to beconsistent with the outcome of our evaluation of the Group'sprovision for impairment.


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

Impairment of trade receivables (Refer to Notes 3,5 and 18 to the Financial Statements).

Comparing and challenging management's view onthe recoverability of overdue amounts to historicalpatterns of collections.Examining other evidence including customercorrespondences, proposed or existing settlementplans, repayment schedules, etc.

7

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INDEPENDENT AUDITORS’ REPORT (Cont’d)

Company No:412406-T

Responsibilities of the Directors for the Financial Statements

Auditors' Responsibilities for the Audit of the Financial Statements

•

•

•



If, based on the work we have performed, we conclude that there is a material misstatement of this otherinformation, we are required to report that fact. We have nothing to report in this regard.

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

The directors of the Company are responsible for the preparation of financial statements of the Group and of theCompany 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. Thedirectors are also responsible for such internal control as the directors determine is necessary to enable thepreparation of financial statements of the Group and of the Company that are free from material misstatement,whether due to fraud or error.

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

In preparing the financial statements of the Group and of the Company, the directors are responsible forassessing the ability of the Group and of the Company 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 eitherintend to liquidate the Group or the Company or to cease operations, or have no realistic alternative but to doso.

Obtain an understanding of internal control relevant to the audit in order to design audit procedures that areappropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of theinternal control of the Group and of the Company.

Identify and assess the risks of material misstatement of the financial statements of the Group and of theCompany, 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 notdetecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraudmay involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

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

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Company No:412406-T

•

•

•

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

a)

b)

c)


STYL Associates (AF1929)



We also provide the directors with a statement that we have complied with relevant ethical requirementsregarding independence, and to communicate with them all relationships and other matters that may reasonablybe thought to bear on our independence, and where applicable, related safeguards.

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

In our opinion, the accounting and others records and the registers required by the Act to be kept by theCompany and its subsidiaries of which we have acted as auditors have been properly kept in accordancewith the provisions of Act.

No: 902 9th Floor, Block A, Damansara Intan, No: 1, Jalan SS20/27, 47400 Petaling Jaya

Conclude on the appropriateness of the director's use of the going concern basis of accounting and, basedon the audit evidence obtained, whether a material uncertainty exists related to events or conditions that maycast significant doubt on the ability of the Group or of the Company to continue as a going concern. If weconclude that a material uncertainty exists, we are required to draw attention in our auditors' report to therelated disclosures in the financial statements of the Group and of the Company or, if such disclosures areinadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the dateof our auditors' report. However, future events or conditions may cause the Group or the Company to ceaseto continue as a going concern.

Evaluate the overall presentation, structure and content of the financial statements of the Group and of theCompany, including the disclosures, and whether the financial statements of the Group and of the Companyrepresent the underlying transactions and events in a manner that gives a true and fair view.

Obtain sufficient appropriate audit evidence regarding the financial information of the entities or businessactivities within the Group to express an opinion on the financial statements of the Group. We areresponsible for the direction, supervision and performance of the group audit. We remain solely responsiblefor our audit opinion.

We are satisfied that the financial statements of the subsidiaries that have been consolidated with thefinancial statements of the Company are in form and content appropriate and proper for the purposes of thepreparation of the consolidated financial statements and we have received satisfactory information andexplanations required by us for those purposes.

We have considered the financial statements and the auditors' reports of all the subsidiaries of which wehave not acted as auditors, which are indicated in Note 14 to the Financial Statements, being financialstatements that have been included in the consolidated financial statements.

From the matters communicated with the directors, we determine those matters that were of most significancein the audit of the financial statements of the Group and of the Company for the current year and are thereforethe key audit matters. We describe these matters in our auditors' report unless law or regulation precludespublic disclosure about the matter or when, in extremely rare circumstances, we determine that a matter shouldnot be communicated in our auditor's report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits of such communication.

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

9

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Company No:412406-T

d)

OTHER REPORTING RESPONSIBILITIES

OTHER MATTERS

STYL ASSOCIATES LEE KIM WAHNo. AF 1929 No: 3166/07/17(J)Chartered Accountants Chartered Accountant

Date:

Petaling Jaya, Selangor Darul Ehsan

This report is made solely to the members of the Company, as a body, in accordance with Section 266 of theCompanies Act, 2016 in Malaysia and for no other purpose. We do not assume responsibility to any otherperson for the content of this report.

The supplementary information set out in Note 31 is disclosed to meet the requirement of Bursa MalaysiaSecurities Berhad and is not part of the financial statements. The directors are responsible for the preparation ofthe supplementary information in accordance with Guidance on Special Matter No.1, Determination of Realisedand Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities BerhadListing Requirements, as issued by the Malaysian Institute of Accountants ("MIA Guidance") and the directive ofBursa Malaysia Securities Berhad. In our opinion, the supplementary information is prepared, in all materialrespects, in accordance with the MIA Guidance and the directive of Bursa Malaysia Securities Berhad.

The auditors' reports on the financial statements of the subsidiaries were not subject to any qualification orany adverse comment required to be made under Section 174(3) of the Act.

10

Company No:412406-T

d)


OTHER MATTERS


Date:





10

Company No:412406-T

d)


OTHER MATTERS


Date:





10

25 April 2017

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STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOMEFOR THE YEAR ENDED 31 DECEMBER 2016

Company No:412406-T

2016 2015 2016 2015Note RM RM RM RM

Revenue 6 68,525,521 14,473,509 - -

Other operating income 7 158,775 586,416 61,068 160,654Raw materials and consumables used (49,422) (66,454) - -

(169,341) (275,934) - -Purchases and other direct costs (67,396,491) (13,465,885) - -Employee benefits expenses 8 (148,033) (98,516) (129,595) (98,516)Depreciation of property,

plant and equipment (37,858) (112,595) (33,932) (28,408)Directors' remuneration 9 (101,050) - (101,050) -Other operating expenses 7 (638,329) (1,081,243) (449,234) (223,888)

Profit/(Loss) from operations 143,772 (40,702) (652,743) (190,158)

Finance costs 10 - (244,186) - -Share of loss of associate (490) - - -

Profit/(Loss) before tax 143,282 (284,888) (652,743) (190,158)

Income tax expense 11 (43,239) (194,029) (535) (329)

Profit/(Loss) for the year representing total comprehensive income/(loss) for the year 100,043 (478,917) (653,278) (190,487)

Profit/(Loss) attributable to:Owners of the Company 48,596 (484,182) (653,278) (190,487)Non-controlling interests 51,447 5,265 - -

100,043 (478,917) (653,278) (190,487)

Total comprehensive income/(loss) attributable to:Owners of the Company 48,596 (484,182) (653,278) (190,487)Non-controlling interests 51,447 5,265 - -

100,043 (478,917) (653,278) (190,487)

Earnings/(Loss) per share attributable to owners of the Company:

Basic (sen) 12 0.03 (0.37)

Diluted (sen) 12 0.03 (0.37)

Changes in inventories of finished goods

The accompanying Notes form an integral part of the Financial Statements.


STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2016

GROUP COMPANY

11

Company No:412406-T

2016 2015 2016 2015Note RM RM RM RM

Revenue 6 68,525,521 14,473,509 - -

Other operating income 7 158,775 586,416 61,068 160,654Raw materials and consumables used (49,422) (66,454) - -

(169,341) (275,934) - -Purchases and other direct costs (67,396,491) (13,465,885) - -Employee benefits expenses 8 (148,033) (98,516) (129,595) (98,516)Depreciation of property,

plant and equipment (37,858) (112,595) (33,932) (28,408)Directors' remuneration 9 (101,050) - (101,050) -Other operating expenses 7 (638,329) (1,081,243) (449,234) (223,888)

Profit/(Loss) from operations 143,772 (40,702) (652,743) (190,158)

Finance costs 10 - (244,186) - -Share of loss of associate (490) - - -

Profit/(Loss) before tax 143,282 (284,888) (652,743) (190,158)

Income tax expense 11 (43,239) (194,029) (535) (329)

Profit/(Loss) for the year representing total comprehensive income/(loss) for the year 100,043 (478,917) (653,278) (190,487)

Profit/(Loss) attributable to:Owners of the Company 48,596 (484,182) (653,278) (190,487)Non-controlling interests 51,447 5,265 - -

100,043 (478,917) (653,278) (190,487)

Total comprehensive income/(loss) attributable to:Owners of the Company 48,596 (484,182) (653,278) (190,487)Non-controlling interests 51,447 5,265 - -

100,043 (478,917) (653,278) (190,487)

Earnings/(Loss) per share attributable to owners of the Company:

Basic (sen) 12 0.03 (0.37)

Diluted (sen) 12 0.03 (0.37)

Changes in inventories of finished goods



STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2016

GROUP COMPANY

11

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STATEMENTS OF FINANCIAL POSITIONAS AT 31 DECEMBER 2016

Company No:412406-T

2016 2015 2016 2015Note RM RM RM RM

ASSETSNon-current AssetsProperty, plant and equipment 13 543,956 226,339 208,304 234,440Investment in subsidiaries 14 - - 719,769 752,800Investment in associate 15 - - 490 -Goodwill on consolidation 16 - - - -Total Non-current Assets 543,956 226,339 928,563 987,240

Current AssetsInventories 17 184,089 402,852 - -Trade receivables 18 6,267,984 3,437,846 - -Other receivables, deposits and

prepaid expenses 19 3,891,471 407,719 584,219 30,597Amount owing by subsidiaries 14 - - 16,351,928 12,216,549Amount owing by associate 15 5,910 - 2,910 -Tax recoverable 7,871 124,871 - -Cash and cash equivalents 20 1,158,866 4,122,287 208,963 2,126,769

11,516,191 8,495,575 17,148,020 14,373,915Asset held for sale 21 - - - -Total Current Assets 11,516,191 8,495,575 17,148,020 14,373,915

Total Assets 12,060,147 8,721,914 18,076,583 15,361,155

EQUITY AND LIABILITIESCapital and ReservesShare capital 22 16,395,238 14,345,238 16,395,238 14,345,238Reserves 23 (5,162,071) (6,233,323) 1,243,482 874,104Equity Attributable to Owners

of the Company 11,233,167 8,111,915 17,638,720 15,219,342Non-controlling interests 206,594 155,147 - -Total Equity 11,439,761 8,267,062 17,638,720 15,219,342

Non-current LiabilitiesDeferred tax liabilities 24 7,055 - - -Total Non-current Liabilities 7,055 - - -

Current LiabilitiesTrade payables 25 - 97,137 - -Other payables and

accrued expenses 26 582,387 354,120 399,143 128,243Amount owing to subsidiaries 14 - - 36,308 11,365Tax liabilities 30,944 3,595 2,412 2,205Total Current Liabilities 613,331 454,852 437,863 141,813Total Liabilities 620,386 454,852 437,863 141,813

Total Equity and Liabilities 12,060,147 8,721,914 18,076,583 15,361,155


STATEMENTS OF FINANCIAL POSITION AS AT 31 DECEMBER 2016

GROUP COMPANY


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CONSOLIDATED STATEMENT OF CHANGES IN EQUITYFOR THE YEAR ENDED 31 DECEMBER 2016

Com

pany

No:

4124

06-T

<---

----

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RM

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RM

GR

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2,88

26,

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Prof

it/(L

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tota

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me/

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) for

the

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)-

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147,

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304,

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6,64

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0,74

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Bala

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514

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78,

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Prof

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280,

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Shar

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(207

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(207

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(207

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)To

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Com

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2,05

0,00

0-

1,02

2,65

6-

3,07

2,65

6-

3,07

2,65

6

Bala

nce

as a

t 31

Dec

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r 201

616

,395

,238

(15,

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10,4

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93-

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6720

6,59

411

,439

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RAY

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13

Com

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No:

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Bala

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inan

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Sta

tem

ents

.

13

ANNUAL REPORT 2016

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STATEMENT OF CHANGES IN EQUITYFOR THE YEAR ENDED 31 DECEMBER 2016

Com

pany

No:

4124

06-T

Non

Dis

tribu

tabl

e -

Shar

eAc

cum

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edSh

are

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l ca

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Bala

nce

as a

t 1 J

anua

ry 2

015

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38(8

,338

,046

)8,

825,

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13,5

29,0

80

Loss

for t

he y

ear r

epre

sent

ing

tota

l com

preh

ensi

ve lo

ss fo

r the

yea

r -

(190

,487

)-

(190

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14

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STATEMENTS OF CASH FLOWSFOR THE YEAR ENDED 31 DECEMBER 2016

Company No:412406-T

2016 2015 2016 2015RM RM RM RM

CASH FLOWS FROM OPERATING ACTIVITIESProfit/(Loss) before tax 143,282 (284,888) (652,743) (190,158)Adjustments for: Bad debts written off 32,206 - - - Depreciation of property, plant and

equipment 37,858 112,595 33,932 28,408 Finance costs - 244,186 - - Impairment of goodwill - 95,527 - - Impairment loss on trade receivables 33,009 - - - Impairment loss on investment in a

subsidiary - - 92,004 - Inventories written down 78,042 14,986 - - Inventories written off 127,312 275,118 - - Property, plant and equipment written off - 5 - - Share of loss of associate 490 - - - Waiver of shareholder's advance - (447,085) - (159,340) Gain on disposal of property, plant and

equipment - (138,016) - - Interest income (11,767) (1,314) (2,227) (1,314) Reversal of impairment loss on investment

in subsidiaries - - (58,841) - Waiver of interest expense on bank overdraft (22,153) - - - Unrealised gain on foreign exchange (124,786) - - -Operating Profit/(Loss) Before Working Capital Changes 293,493 (128,886) (587,875) (322,404)Changes in working capital: Decrease in inventories 13,409 52,284 - - (Increase)/Decrease in trade receivables (2,770,567) 962,179 - - Increase in other receivables,

deposits and prepaid expenses (3,483,752) (341,399) (553,622) (29,957) (Increase)/Decrease in amount owing

by subsidiaries - - (4,135,379) 254,760 Increase in amount owing by associate (5,910) - (2,910) - Decrease in trade payables (97,137) (2,454,371) - - Increase/(Decrease) in other payables and

accrued expenses 250,420 (38,941) 270,900 (120,450)- 447,085 - 159,340

Increase/(Decrease) in amount owing to subsidiaries - - 24,943 (10,501)

Cash Used In Operations (5,800,044) (1,502,049) (4,983,943) (69,212) Tax paid (3,518) (251,224) (328) - Tax refunded 111,683 - - -Net Cash Used In Operating Activities (5,691,879) (1,753,273) (4,984,271) (69,212)

(Forward)


STATEMENTS OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER 2016

GROUP COMPANY

Increase in amount owing to directors

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STATEMENTS OF CASH FLOWSFOR THE YEAR ENDED 31 DECEMBER 2016(Cont’d)

Company No:412406-T

2016 2015 2016 2015RM RM RM RM

CASH FLOWS FROM INVESTING ACTIVITIES Purchase of property, plant and equipment (355,475) (132,278) (7,796) (132,278) Purchase of investment in associate (490) - (490) - Proceeds from disposal of

property, plant and equipment - 8,335,000 - - Acquisition of investment in

subsidiaries (Note 14) - 147,000 (132) (153,000) Interest received 11,767 1,314 2,227 1,314Net Cash From/(Used In)

Investing Activities (344,198) 8,351,036 (6,191) (283,964)

CASH FLOWS FROM FINANCING ACTIVITIES Repayment of term loans - (4,031,726) - - Proceeds from issuance of shares 3,280,000 1,956,150 3,280,000 1,956,150 Expenses incurred for issuance of shares (207,344) (75,401) (207,344) (75,401) Finance costs paid - (244,186) - -Net Cash From/(Used In)

Financing Activities 3,072,656 (2,395,163) 3,072,656 1,880,749

NET INCREASE/(DECREASE) IN CASHAND CASH EQUIVALENTS (2,963,421) 4,202,600 (1,917,806) 1,527,573

CASH AND CASH EQUIVALENTSBROUGHT FORWARD 4,122,287 (80,313) 2,126,769 599,196

CASH AND CASH EQUIVALENTS CARRIED FORWARD (NOTE 20) 1,158,866 4,122,287 208,963 2,126,769




GROUP COMPANY

16

Company No:412406-T

2016 2015 2016 2015RM RM RM RM

CASH FLOWS FROM INVESTING ACTIVITIES Purchase of property, plant and equipment (355,475) (132,278) (7,796) (132,278) Purchase of investment in associate (490) - (490) - Proceeds from disposal of

property, plant and equipment - 8,335,000 - - Acquisition of investment in

subsidiaries (Note 14) - 147,000 (132) (153,000) Interest received 11,767 1,314 2,227 1,314Net Cash From/(Used In)

Investing Activities (344,198) 8,351,036 (6,191) (283,964)

CASH FLOWS FROM FINANCING ACTIVITIES Repayment of term loans - (4,031,726) - - Proceeds from issuance of shares 3,280,000 1,956,150 3,280,000 1,956,150 Expenses incurred for issuance of shares (207,344) (75,401) (207,344) (75,401) Finance costs paid - (244,186) - -Net Cash From/(Used In)

Financing Activities 3,072,656 (2,395,163) 3,072,656 1,880,749

NET INCREASE/(DECREASE) IN CASHAND CASH EQUIVALENTS (2,963,421) 4,202,600 (1,917,806) 1,527,573

CASH AND CASH EQUIVALENTSBROUGHT FORWARD 4,122,287 (80,313) 2,126,769 599,196

CASH AND CASH EQUIVALENTS CARRIED FORWARD (NOTE 20) 1,158,866 4,122,287 208,963 2,126,769




GROUP COMPANY

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NOTES TO THE FINANCIAL STATEMENTSCompany No:412406-T

1) GENERAL INFORMATION

The financial statements are presented in Ringgit Malaysia (RM).

2) BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS

MFRS 14Amendments to MFRS 11Amendments to MFRS 101Amendments to MFRS 127Amendments to MFRS 10, MFRS 12

and MFRS 128Amendments to MFRS 116 and MFRS 138

Amendments to MFRS 116 and MFRS 141Annual improvements to MFRSs 2012 - 2014 Cycle


NOTES TO THE FINANCIAL STATEMENTS

The following Standards, Amendments to MFRSs and Annual Improvements to Standards became effective forthe financial year under review:

Equity Method in Separate Financial StatementsInvestment Entities: Applying the Consolidation Exception

Clarification of Acceptable Methods of Depreciation and

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

The Company is principally engaged in investment holding activities and the provision of management services.The principal activities of the subsidiaries are as disclosed in Note 14 to the Financial Statements. There havebeen no significant changes in the nature of the principal activities of the Company and its subsidiaries duringthe financial year.

The registered office of the Company is located at No: 149A, 149B, 151B, Persiaran Raja Muda Musa, 42000Port Klang, Selangor Darul Ehsan.

The principal place of business of the Company is located at No: 66, 3rd Floor, Jalan Kampung Attap, 50460Kuala Lumpur.

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

Accounting for Acquisitions of Interests in Joint OperationsDisclosure Initiative

The adoption of the above pronouncements did not have any material impact on the financial statements of theGroup and of the Company.

Agriculture: Bearer Plants

Regulatory Deferral Accounts

The financial statements have been authorised by the Board of Directors for issuance on 25 April 2017.

Adoption of Standards, Amendments to MFRSs and Annual Improvements to Standards

Amortisation

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NOTES TO THE FINANCIAL STATEMENTS(Cont’d)

Company No:412406-T

Standards Issued but not yet Effective

Amendments to MFRS 107 Disclosure Initiative 1 January 2017Amendments to MFRS 112 Recognition of Deferred Tax Assets for Unrealised Losses 1 January 2017Annual improvements to MFRSs 2014 - 2016 Cycle 1 January 2017- Amendments to MFRS 12 Disclosure of Interests in Other EntitiesMFRS 9 Financial Instruments (IFRS 9 as issued by 1 January 2018

International Accounting Standards Board ("IASB") in July 2014)

MFRS 15 Revenue from Contracts with Customers 1 January 2018Amendments to MFRS 15 Clarifications to MFRS 15 Revenue Contracts with Customers 1 January 2018

Foreign Currency Transactions and Advance Consideration 1 January 2018Amendments to MFRS 2 Classification and Measurement of Share-based 1 January 2018

Payment TransactionsAmendments to MFRS 4 Applying MFRS 9 Financial Instruments with MFRS 4 1 January 2018

Insurance ContractsAmendments to MFRS 140 Transfers of Investment Property 1 January 2018Annual improvements to MFRSs 2014 - 2016 Cycle 1 January 2018- Amendments to MFRS 1 First-time Adoption of Malaysian Financial Reporting Standards- Amendments to MFRS 128 Investments in Associates and Joint VenturesAmendments to MFRS 10 Deferred and MFRS 128 and its Associate or Joint Venture MFRS 16 Leases 1 January 2019

(a)

Identify the contract(s) with a customer

Step 4: Allocate the transaction price to the performance obligations in the contractStep 5:

Step 2: Identify the performance obligations in the contract

As at the date of authorisation of these financial statements, the following Standards, Amendments and AnnualImprovements have been issued by the Malaysian Accounting Standards Board ("MASB") but are not yeteffective and have not been adopted by the Group and the Company:

IC Interpretation 22

MFRS 15 Revenue from Contracts with Customers

MFRS 15 Revenue from Contracts with Customers was issued in September 2014 and established a five-step model that will apply to revenue recognition arising from contracts with customers as follows:

Step 1:

The Group and the Company will adopt the above pronouncements where applicable when they becomeeffective in the respective financial periods. These pronouncements are not expected to have any material effectto the financial statements of the Group and of the Company upon their initial application other than thestandards described below, for which the effects of adoption of the above pronouncements are still beingassessed by the directors:

Recognise revenue when (or as) the entity satisfies the performance obligations

Step 3: Determine the transaction price

Sale or Contribution of Assets between an Investor

Effective for annual period

beginning on or after

Under this Standard, revenue is recognised at an amount that reflects the consideration to which an entityexpects to be entitled in exchange for transferring goods or services to a customer. The principle of thisStandard is to provide a more structured approach to measuring and recognising revenue.

18

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Company No:412406-T

(b)

(c)

3) FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

Foreign currency risk management

Market risk

The right-of-use asset is depreciated in accordance with the principles in MFRS 116 Property, Plant andEquipment and the lease liability is accreted over time with interest expenses recognised in profit or loss.For lessors, MFRS 16 retains most of the requirements in MFRS 117. Lessors continue to classify all leasesas either operating leases or finance leases and account for them differently.

In November 2014, the MASB issued the final version of MFRS 9 Financial Instruments, replacing MFRS139. This Standard makes changes to the requirements for classification and measurement, impairmentand hedge accounting. There is now a new expected credit losses model on impairment for all financialassets that replaces the incurred loss impairment model used in MFRS 139. The expected credit lossesmodel is forward-looking and eliminates the need for a trigger event to have occurred before credit lossesare recognised.

MFRS 16 Leases supersedes MFRS 117 Leases and the related interpretations. Under MFRS 16, a leaseis a contract (or part of a contract) that conveys the right to control the use of an identified asset for a periodof time in exchange for consideration.

The operations of the Group are subject to a variety of financial risks, including market risk (foreign currency riskand interest rate risk), credit risk, and liquidity risk. The Group has adopted a financial risk managementframework with the principal objective of effectively managing these risks and minimising any potential adverseeffects on the financial performance of the Group.

MFRS 9 Financial Instruments

MFRS 16 Leases

The Group is exposed to transactional currency risk primarily through sales and purchases that aredenominated in a currency other than the functional currency of the operations to which they relate. Thecurrency giving rise to this risk is primarily Singapore Dollars ("SGD"). Foreign exchange exposures intransactional currencies other than functional currency of the operating entities are kept to an acceptable level.

Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuatebecause of changes in foreign exchange rates.

Currently under MFRS 117 Leases, leases are classified either as finance leases or operating leases. Alessee recognises on its statement of financial position, assets and liabilities arising from the finance leases.MFRS 16 eliminates the distinction between finance and operating leases for lessees. All leases will bebrought onto its statement of financial position except for short-term and low value asset leases.

The new general hedge accounting requirements retain the three types of hedge accounting mechanismscurrently available in MFRS 139. Under MFRS 9, greater flexibility has been introduced to the types oftransactions eligible for hedge accounting, specifically broadening the types of instruments that qualify forhedging instruments and the types of risk components of non-financial items that are eligible for hedgeaccounting. In addition, the effectiveness test has been overhauled and replaced with the principle of an"economic relationship". Retrospective assessment of hedge effectiveness is also no longer required.Enhanced disclosure requirements about any entity's risk management activities have also been introduced.

19

Company No:412406-T

(b)

(c)

3) FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

Foreign currency risk management

Market risk

The right-of-use asset is depreciated in accordance with the principles in MFRS 116 Property, Plant andEquipment and the lease liability is accreted over time with interest expenses recognised in profit or loss.For lessors, MFRS 16 retains most of the requirements in MFRS 117. Lessors continue to classify all leasesas either operating leases or finance leases and account for them differently.

In November 2014, the MASB issued the final version of MFRS 9 Financial Instruments, replacing MFRS139. This Standard makes changes to the requirements for classification and measurement, impairmentand hedge accounting. There is now a new expected credit losses model on impairment for all financialassets that replaces the incurred loss impairment model used in MFRS 139. The expected credit lossesmodel is forward-looking and eliminates the need for a trigger event to have occurred before credit lossesare recognised.

MFRS 16 Leases supersedes MFRS 117 Leases and the related interpretations. Under MFRS 16, a leaseis a contract (or part of a contract) that conveys the right to control the use of an identified asset for a periodof time in exchange for consideration.

The operations of the Group are subject to a variety of financial risks, including market risk (foreign currency riskand interest rate risk), credit risk, and liquidity risk. The Group has adopted a financial risk managementframework with the principal objective of effectively managing these risks and minimising any potential adverseeffects on the financial performance of the Group.

MFRS 9 Financial Instruments

MFRS 16 Leases

The Group is exposed to transactional currency risk primarily through sales and purchases that aredenominated in a currency other than the functional currency of the operations to which they relate. Thecurrency giving rise to this risk is primarily Singapore Dollars ("SGD"). Foreign exchange exposures intransactional currencies other than functional currency of the operating entities are kept to an acceptable level.

Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuatebecause of changes in foreign exchange rates.

Currently under MFRS 117 Leases, leases are classified either as finance leases or operating leases. Alessee recognises on its statement of financial position, assets and liabilities arising from the finance leases.MFRS 16 eliminates the distinction between finance and operating leases for lessees. All leases will bebrought onto its statement of financial position except for short-term and low value asset leases.

The new general hedge accounting requirements retain the three types of hedge accounting mechanismscurrently available in MFRS 139. Under MFRS 9, greater flexibility has been introduced to the types oftransactions eligible for hedge accounting, specifically broadening the types of instruments that qualify forhedging instruments and the types of risk components of non-financial items that are eligible for hedgeaccounting. In addition, the effectiveness test has been overhauled and replaced with the principle of an"economic relationship". Retrospective assessment of hedge effectiveness is also no longer required.Enhanced disclosure requirements about any entity's risk management activities have also been introduced.

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Company No:412406-T

2016 2015RM RM

55,112 N/A

The ageing analysis of trade receivables as at the end of the reporting period are as follows:

2016 2015RM RM

Neither past due nor impaired 2,924,398 2,277,797

Past due 31 - 120 days not impaired 1,550,752 318,186 Past due more than 120 days not impaired 1,792,834 841,863

3,343,586 1,160,049

Impaired 119,712 86,703 6,387,696 3,524,549

Credit risk

No sensitivity analysis is prepared as the Group does not expect any material effect on the Group's profit or lossarising from the effects of reasonably possible changes to interest rates on interest bearing financial instrumentsat the end of reporting period.

Interest rate risk management

The Group's exposure to changes in interest rates relates primarily to the Group's short-term deposits. It has nosignificant interest-bearing financial assets or liabilities other than the short-term deposits. The short-termdeposits are placed with reputable banks. The Group does not use derivative financial instruments to hedge itsrisk.

GROUP

GROUP

An equivalent weakening of the foreign currency as shown above would have resulted in an equivalent, butopposite, impact.

Management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis. TheGroup determines concentration of credit risk by monitoring the segment profits of its trade receivables on anongoing basis. As at 31 December 2016, the Group has a receivable balance owing by a single customer. TheGroup monitors closely collections from this customer and as at the end of the reporting period, there was noindication that the receivable would default on repayment. As at the end of the reporting period, the maximumexposures to credit risk arising from receivables and amount owing by subsidiaries is represented by thecarrying amounts in the statements of financial position.

SGD - strengthens by 5% against RM

Management has taken reasonable steps to ensure that receivables that are neither past due nor impaired aremeasured at their realisable values. A significant portion of these receivables are regular customers that havebeen transacting with the Group. The Group uses ageing analysis to monitor the credit quality of the receivables.Any receivables having significant balances past due more than 120 days, which are deemed to have highercredit risk, are monitored individually. The Company does not specifically monitor the ageing of the advances tothe subsidiaries. Nevertheless, these advances are not considered overdue and are repayable on demand.Impairment losses are provided when there is an indication that the advances given to the subsidiaries are notrecoverable.

Credit risk is the risk of a financial loss to the Group if a customer or counterparty to a financial instrument failsto meet its contractual obligations. The Group's exposure to credit risk arises principally from its receivablesfrom customers. The Company's exposure to credit risk arises principally from loans and advances tosubsidiary.

The following table demonstrates the sensitivity of the Group's profit net of tax to a reasonably possible changein the SGD against the functional currency of the Group with all other variables held constant:

20

Company No:412406-T

2016 2015RM RM

55,112 N/A


2016 2015RM RM



3,343,586 1,160,049

Impaired 119,712 86,703 6,387,696 3,524,549

Credit risk




GROUP

GROUP







20

Company No:412406-T

2016 2015RM RM

55,112 N/A


2016 2015RM RM



3,343,586 1,160,049

Impaired 119,712 86,703 6,387,696 3,524,549

Credit risk




GROUP

GROUP







20

Company No:412406-T

2016 2015RM RM

55,112 N/A


2016 2015RM RM



3,343,586 1,160,049

Impaired 119,712 86,703 6,387,696 3,524,549

Credit risk




GROUP

GROUP







20

Company No:412406-T

2016 2015RM RM

55,112 N/A


2016 2015RM RM



3,343,586 1,160,049

Impaired 119,712 86,703 6,387,696 3,524,549

Credit risk




GROUP

GROUP







20

Company No:412406-T

2016 2015RM RM

55,112 N/A


2016 2015RM RM



3,343,586 1,160,049

Impaired 119,712 86,703 6,387,696 3,524,549

Credit risk




GROUP

GROUP







20

Company No:412406-T

2016 2015RM RM

55,112 N/A


2016 2015RM RM



3,343,586 1,160,049

Impaired 119,712 86,703 6,387,696 3,524,549

Credit risk




GROUP

GROUP







20

Company No:412406-T

2016 2015RM RM

55,112 N/A


2016 2015RM RM



3,343,586 1,160,049

Impaired 119,712 86,703 6,387,696 3,524,549

Credit risk




GROUP

GROUP







20

Company No:412406-T

2016 2015RM RM

55,112 N/A


2016 2015RM RM



3,343,586 1,160,049

Impaired 119,712 86,703 6,387,696 3,524,549

Credit risk




GROUP

GROUP







20

Company No:412406-T

2016 2015RM RM

55,112 N/A


2016 2015RM RM



3,343,586 1,160,049

Impaired 119,712 86,703 6,387,696 3,524,549

Credit risk




GROUP

GROUP







20

Company No:412406-T

2016 2015RM RM

55,112 N/A


2016 2015RM RM



3,343,586 1,160,049

Impaired 119,712 86,703 6,387,696 3,524,549

Credit risk




GROUP

GROUP







20

Company No:412406-T

2016 2015RM RM

55,112 N/A


2016 2015RM RM



3,343,586 1,160,049

Impaired 119,712 86,703 6,387,696 3,524,549

Credit risk




GROUP

GROUP







20

Company No:412406-T

2016 2015RM RM

55,112 N/A


2016 2015RM RM



3,343,586 1,160,049

Impaired 119,712 86,703 6,387,696 3,524,549

Credit risk




GROUP

GROUP







20

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Company No:412406-T

i) Receivables that are neither past due nor impaired

ii) Receivables that are past due but not impaired

iii) Receivables that are impaired

2016 2015RM RM

119,712 86,703(119,712) (86,703)

- -

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

2016 2015RM RM

As at beginning of year 86,703 2,796,565Bad debts written off - (2,709,862)Additional impairment 33,009 -As at end of year 119,712 86,703

Liquidity risk

Trade receivables - Nominal amount

The Group practises prudent liquidity risk management to minimise the mismatch of financial assets andliabilities and to maintain sufficient funds for contingent funding requirement of working capital.

The allowance account in respect of receivable is used to record impairment losses. Unless the Group issatisfied that recovery of the amount is possible, the amount considered irrecoverable is written off against thereceivable directly.

In determining the recoverability of a trade receivable, the Group considers any change in the credit quality ofthe trade receivable from the date credit was initially granted up to the end of the reporting period.

GROUP

Trade receivables that are individually determined to be impaired at the reporting date relate to receivables thatare in significant financial difficulties and have defaulted on payments. These receivables are not secured by anycollateral or credit enhancements.

The Group did not impair the past due trade receivables which are unsecured in nature. The Group monitorsthese receivables closely and is confident of their eventual recovery.

None of the Group's trade receivables that are neither past due nor impaired have been renegotiated during thefinancial year.

Trade receivables that are neither past due nor impaired are creditworthy receivables with good paymentrecords with the Group.

The Group's trade receivables and the movement of the allowance accounts used to record the impairment is asfollow:

Liquidity risk is the risk that the Group will not be able to meet its financial obligations as and when they fall due.

GROUP

The maturity profile of the Group's and the Company's liabilities are repayable on demand or within one year.

Allowance for impairment

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Company No:412406-T

4) SIGNIFICANT ACCOUNTING POLICIES

a) Basis of Accounting

(i)

(ii)

(iii)

b)

(i) has power over the investee;

(ii) is exposed, or has rights, to variable returns from its involvement with the investee; and

(iii) has the ability to use its power to affect its returns.

The primary objective of the Group's capital management is to safeguard the Group's ability to continue as agoing concern, so as to maintain investor, creditor and market confidence and to sustain future development ofthe business.

The Group manages its capital structure and makes adjustments to it in light of changes in economic conditions.No changes were made in the Group's approach to capital management during the financial year.

Subsidiaries and Basis of Consolidation

The Group recognises transfers between levels of the fair value hierarchy as at the date of the event orchange in circumstances that caused the transfers.

The Group is not subject to any externally imposed capital requirements.

Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that theentity can access at the measurement date;

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

The consolidated financial statements comprise the financial statements of the Company and entitiescontrolled by the Company. Control is achieved when the Company:

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

Capital Risk Management

In addition, for financial reporting purposes, fair value measurements are categorised into Level 1, 2 or 3based on the degree to which the inputs to the fair value measurements are observable and the significanceof the inputs to the fair value measurement in its entirety, which are described as follows:

The financial statements are prepared under the historical cost convention unless otherwise indicated in theaccounting policies below. Historical cost is generally based on the fair value of the consideration given inexchange for assets. Fair value is the price that would be received to sell an asset or paid to transfer aliability in an orderly transaction between market participants at the measurement date, regardless ofwhether that price is directly observable or estimated using another valuation technique. In estimating thefair value of an asset or a liability, the Group takes into account the characteristics of the asset or liability ifmarket participants would take those characteristics into account when pricing the asset or liability at themeasurement date.

The Company reassesses whether or not it controls an investee if facts and circumstances indicate thatthere are changes to one or more of the three elements of control listed above.

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Company No:412406-T

•

•

•

•

Changes in the Group's ownership interests in existing subsidiaries

Disposal of Subsidiaries

When necessary, adjustments are made to the financial statements of subsidiaries to bring their accountingpolicies into line with the Group's accounting policies. Inter-company transactions, balances, income andexpenses on transactions between Group companies are eliminated.

Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and ceaseswhen the Company loses control of the subsidiary. Specifically, income and expenses of a subsidiaryacquired or disposed of during the year are included in the consolidated statement of profit or loss and othercomprehensive income from the date the Company gains control until the date when the Company ceasesto control the subsidiary.

Profit or loss and each component of other comprehensive income are attributed to the owners of theCompany and to the non-controlling interests. Total comprehensive income of subsidiaries is attributed tothe owners of the Group and to the non-controlling interests even if this results in the non-controllinginterests having a deficit balance.

rights arising from other contractual arrangements; and

When the Company has less than a majority of the voting rights of an investee, it has power over theinvestee when the voting rights are sufficient to give it the practical ability to direct the relevant activities ofthe investee unilaterally. The Company considers all relevant facts and circumstances in assessing whetheror not the Company's voting rights in an investee are sufficient to give it power, including:

potential voting rights held by the Company, other vote holders or other parties;

the size of the Company's holding of voting rights relative to the size and dispersion of holdings of the other vote holders;

any additional facts and circumstances that indicate that the Company has, or does not have, thecurrent ability to direct the relevant activities at the time that decisions need to be made, includingvoting patterns at previous shareholders' meetings.

Changes in the Group's ownership interests in subsidiaries that do not result in the Group losing control areaccounted for as equity transactions. The carrying amounts of the Group's interests and the non-controllinginterests are adjusted to reflect the changes in their relative interests in the subsidiaries. Any differencebetween the amount by which the non-controlling interests are adjusted and the fair value of theconsideration paid or received is recognised directly in equity and attributed to owners of the Company.

When the Group loses control of a subsidiary, a gain or loss is recognised in profit or loss and is calculatedas the difference between (i) the aggregate of the fair value of the consideration received and the fair valueof any retained interest and (ii) the previous carrying amount of the assets (including goodwill), and liabilitiesof the subsidiary and any non-controlling interests. When assets of the subsidiary are carried at revaluedamounts or fair values and the related cumulative gain or loss has been recognised in other comprehensiveincome and accumulated in equity, the amounts previously recognised in other comprehensive income areaccounted for as if the Group had directly disposed of the relevant assets (i.e. reclassified to profit or loss ortransferred directly to retained earnings as specified by applicable Standards). The fair value of anyinvestment retained in the former subsidiary at the date when control is lost is regarded as the fair value oninitial recognition for subsequent accounting under MFRS 139 Financial Instruments: Recognition andMeasurement or, when applicable, the cost on initial recognition of an investment in an associate or jointventure.

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Company No:412406-T

c)

-

-

- assets (or disposal groups) that are classified as held for sale in accordance with MFRS 5 Non-currentAssets Held for Sale and Discontinued Operations are measured in accordance with that Standard.

Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree, and the fair value of the acquirer’s previously held equity interest in theacquiree (if any) over the net of the acquisition-date amounts of the identifiable assets acquired and theliabilities assumed. If, after reassessment, the net of the acquisition-date amounts of the identifiable assetsacquired and liabilities assumed exceeds the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree and the fair value of the acquirer’s previously held equity interest in theacquiree (if any), the excess is recognised immediately in profit or loss as a bargain purchase gain.

Non-controlling interests that are present ownership interests and entitle their holders to a proportionateshare of the entity’s net assets in the event of liquidation may be initially measured either at fair value or atthe non-controlling interests’ proportionate share of the recognised amounts of the acquiree’s identifiablenet assets. The choice of measurement basis is made on a transaction-by-transaction basis. Other types ofnon-controlling interests are measured at fair value or, when applicable, on the basis specified in anotherStandard.

liabilities or equity instruments related to the replacement by the Group of an acquiree's share-basedpayment awards are measured in accordance with MFRS 2 Share-based Payment; and

At acquisition date, the identifiable assets acquired and liabilities assumed are recognised at their fairvalues, except that:

Transactions with Non-controlling Interest

Business Combinations

Acquisition of subsidiaries are accounted for using the acquisition method. The consideration transferred ina business combination is measured at fair value, which is calculated as the sum of the acquisition-date fairvalues of assets transferred by the Group, liabilities incurred by the Group to the former owners of theacquiree and equity instruments issued by the Group in exchange for control of the acquiree. Acquisition-related costs are recognised in profit or loss as incurred.

deferred tax assets or liabilities and assets or liabilities related to employee benefit arrangements arerecognised and measured in accordance with MFRS 112 Income Taxes and MFRS 119 EmployeeBenefits respectively;

Where the consideration transferred by the Group in a business combination includes assets or liabilitiesresulting from a contingent consideration arrangement, the contingent consideration is measured at itsacquisition-date fair value. Changes in the fair value of the contingent consideration that qualify asmeasurement period adjustments are adjusted retrospectively, with corresponding adjustments againstgoodwill. Measurement period adjustments are adjustments that arise from additional information obtainedduring the “measurement period” (which cannot exceed one year from the acquisition date) about facts andcircumstances that existed at the acquisition date.

Non-controlling interest represents the portion of profit or loss and net assets in subsidiaries not held by theGroup and are presented separately in profit or loss of the Group and within equity in the consolidatedstatement of financial position, separately from the parent shareholder's equity. Transactions with non-controlling interest are accounted for using the entity concept method, whereby, transactions with non-controlling interest are accounted for as transactions with owners. On acquisition of non-controlling interest,the difference between the consideration and book value of the share of the net assets acquired isrecognised directly in equity. Gain or loss on disposal to non-controlling interest is recognised directly inequity.

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Company No:412406-T

d) Investment in Subsidiaries

e) Goodwill

Goodwill is initially recognised as an asset at cost and is subsequently measured at cost less anyaccumulated impairment losses.

Where a business combination is achieved in stages, the Group’s previously held equity interests in theacquiree is remeasured to its acquisition-date fair value and the resulting gain or loss, if any, is recognisedin profit or loss. Amounts arising from interests in the acquiree prior to the acquisition date that havepreviously been recognised in other comprehensive income are reclassified to profit or loss, where suchtreatment would be appropriate if that interest was disposed of.

The subsequent accounting for changes in the fair value of contingent consideration that do not qualify asmeasurement period adjustments depends on how the contingent consideration is classified. Contingentconsideration that is classified as equity is not remeasured at subsequent reporting dates and itssubsequent settlement is accounted for within equity. Contingent consideration that is classified as an assetor liability is remeasured at subsequent reporting dates in accordance with MFRS 139 or MFRS 137Provisions, Contingent Liabilities and Contingent Assets, as appropriate, with the corresponding gain or lossbeing recognised in profit or loss.

The policy described above is applied to all business combinations that take place on or after 1 January2011.

In the Company's separate financial statements, investment in subsidiaries is stated at cost lessaccumulated impairment losses. On disposal of such investment, the difference between the net disposalproceed and its carrying amount is recognised in profit or loss.

On disposal of a subsidiary, the attributable amount of goodwill is included in the determination of the profitor loss on disposal.

If the initial accounting for a business combination is incomplete by the end of the reporting period in whichthe combination occurs, the Group reports provisional amounts for the items for which the accounting isincomplete. Those provisional amounts are adjusted during the measurement period (see above), oradditional assets or liabilities are recognised, to reflect new information obtained about facts andcircumstances that existed as at the acquisition date that, if known, would have affected the amountsrecognised at that date.

For the purpose of impairment testing, goodwill is allocated to each of the Group's cash-generating unitsexpected to benefit from the synergies of the combination. Cash-generating units to which goodwill hasbeen allocated are tested for impairment annually, or more frequently when there is an indication that theunit may be impaired. If the recoverable amount of the cash-generating unit is less than the carrying amountof the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated tothe unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset inthe unit. An impairment loss recognised for goodwill is not reversed in a subsequent period.

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Company No:412406-T

f) Associates

g) Revenue Recognition

Associates are all entities in which the Group has significant influence but not control or joint control,generally accompanying a shareholding of between 20% and 50% of the voting rights. Significant influenceis the power to participate in the financial and operating policy decisions of the associates but not the powerto exercise control over those policies. Investments in associates are accounted for using the equity methodof accounting. Under the equity method, the investment in an associate is initially recognised at cost, andadjusted thereafter to recognise the Group's share of the post-acquisition profits or losses of the associatein profit or loss, and the Group's share of movements in other comprehensive income of the associate inother comprehensive income. Dividend received or receivable from an associate are recognised as areduction in the carrying amount of the investment.

When the Group ceases to equity account its associate because of a loss of significant influence, anyretained interest in the entity is remeasured to its fair value with the change in carrying amount recognisedin profit or loss. This fair value becomes the initial carrying amount for the purposes of subsequentlyaccounting for the retained interest as a financial asset. In addition, any amount previously recognised inother comprehensive income in respect of the entity is accounted for as if the Group had directly disposedof the related assets or liabilities. This may mean that amounts previously recognised in othercomprehensive income are reclassified to profit or loss.

When the Group's share of losses in an associate equals or exceeds its interests in the associate, includingany long-term interests that, in substance, form part of the Group's net investment in the associate, theGroup does not recognise further losses, unless it has incurred legal or constructive obligations or madepayments on behalf of the associate. The Group's investment in associate includes goodwill identified onacquisition.

The Group determines at each reporting date whether there is any objective evidence that the investment inassociate is impaired. If this is the case, the Group calculates the amount of impairment as the differencebetween the recoverable amount of the associate and its carrying value and recognises the amountadjacent to 'share of profit/(loss) of an associate' in profit or loss.

Profit and losses resulting from upstream and downstream transactions of the Group and its associate arerecognised in the Group's financial statements only to the extent of unrelated investor's interests in theassociates. Unrealised losses are also eliminated unless the transaction provides evidence of animpairment of the asset transferred. Accounting policies of associates have been changed where necessaryto ensure consistency with the policies adopted by the Group.

If the ownership interest in an associate is reduced but significant influence is retained, only a proportionateshare of the amounts previously recognised in other comprehensive income is reclassified to profit or losswhere appropriate.

Dilution gains and losses arising in investments in associates are recognised in profit or loss.

Revenue from goods sold is recognised upon the transfer of significant risks and rewards of ownership ofthe goods to the customers. Revenue from services is recognised when services are rendered. Grossdividend income from investment is recognised when the right to received payment is established.Management fee, administrative charges, rental income and interest income are recognised on accrualbasis, taking into account the effective yield on asset.

Revenue is recognised to the extent that it is probable that the economic benefits associated with thetransaction will flow to the enterprise and the amount of the revenue can be measured reliably. Revenue ismeasured at the fair value of consideration received or receivable, net of returns, allowances and tradediscounts.

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Company No:412406-T

h) Employee Benefits

(i) Short Term Benefits

(ii) Defined Contributions Plans

i) Foreign Currency Conversion

(i) Functional and Presentation Currency

(ii) Foreign Currency Transactions

j) Income Taxes

(i) Current tax

(ii) Deferred tax

The Group and its eligible employees are required by law to make monthly contributions to EmployeesProvident Fund ("EPF"), a statutory defined contribution plan, at certain prescribed rates based on theemployees' salaries. The Group's and the Company's contributions to EPF are charged to profit orloss. Once the contributions have been paid, there are no further payment obligations.

The individual financial statements of each entity in the Group are measured using the primaryeconomic environment in which the entity operates ("the functional currency"). The consolidatedfinancial statements are presented in Ringgit Malaysia (RM), which is also the Company's functionalcurrency.

Current tax assets and liabilities are measured at the amount expected to be recovered from or paid tothe taxation authorities. The tax rates and tax laws used to compute the amount are those that areenacted or substantially enacted by the financial year end.

Other than as disclosed above, the Group and the Company do not make contributions to otheremployee retirement plans.

Deferred tax is recognised using the liability method on temporary differences between the carryingamounts of assets and liabilities in the financial statements and the corresponding tax bases used inthe computation of taxable profit. Deferred tax liabilities are generally recognised for all taxabletemporary differences. Deferred tax assets are generally recognised for all deductible temporarydifferences, unutilised tax losses and unused tax credits to the extent that it is probable that taxableprofits will be available against which those deductible temporary differences, unutilised tax losses andunused tax credits can be utilised.

Foreign currency transactions are translated into the functional currency using the exchange ratesprevailing at the dates of the transactions. Foreign exchange gains and losses resulting from thesettlement of such transactions and from the translation at year end exchange rates of monetaryassets and liabilities denominated in foreign currencies are recognised in profit or loss.

Short-term benefits such as salaries, bonuses, wages and social security contributions are recognisedas an expense in the year in which associated services are rendered by the employees. Short termaccumulating compensated absences such as paid annual leave are recognised when services arerendered by employees that increase their entitlement to future compensated absences, and shortterm non-accumulating compensated absences such as sick leave are recognised when the absencesoccur.

Current taxes are recognised in profit or loss, except to the extent that the tax relates to itemsrecognised outside profit or loss, either in other comprehensive income or directly in equity.

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Company No:412406-T

k) Property, Plant and Equipment

%

Furniture, fittings and office equipment 15Tools and equipment 15Motor vehicles 20Computers 10 - 15Renovation 10

An item of property, plant and equipment is derecognised upon disposal or when no future economicbenefits are expected from its use or disposal. Gain or loss arising from the disposal of an asset isdetermined as the difference between the estimated net disposal proceed and the carrying amount of theasset, and is recognised in profit or loss.

All items of property, plant and equipment are initially recorded at cost. The cost of an item of property, plantand equipment is recognised as an asset if, and only if, it is probable that future economic benefitsassociated with the item will flow to the Group and the Company and the cost of the item can be measuredreliably.

Property, plant and equipment are stated at cost less accumulated depreciation and any accumulatedimpairment losses.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period andreduced to the extent that it is no longer probable that sufficient taxable profits will be available to allowall or part of the asset to be utilised.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in theperiod in which the liability is settled or the asset is realised, based on tax rates (and tax laws) thathave been enacted or substantively enacted at the end of the reporting period. The measurement ofdeferred tax liabilities and assets reflects the tax consequences that would follow from the manner inwhich the Group and the Company expect, at the end of the reporting period, to recover or settle thecarrying amount of its assets and liabilities.

The carrying values of property, plant and equipment are reviewed for impairment when events or change incircumstances indicate that the carrying value may not be recoverable. The residual values, useful lives anddepreciation methods are reviewed at each financial year end, and adjusted prospectively, if appropriate.

Subsequent to the initial recognition, costs are included in the asset's carrying amount or recognised as aseparate asset, as appropriate, only when it is probable that future economic benefits associated with theitem will flow to the Group and the Company and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to profit or lossduring the financial year in which they are incurred.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off currenttax assets against current tax liabilities and when they relate to income taxes levied by the sametaxation entity and the same taxation authority and the Group and the Company intend to settle itscurrent tax assets and liabilities on a net basis.

Depreciation of property, plant and equipment, other than capital work-in-progress which is not depreciatedas this asset is not available for use, is calculated to write off the cost of the property, plant and equipmenton a straight-line basis over the expected useful lives of the property, plant and equipment concerned. Theannual depreciation rates used are as follows:

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Company No:412406-T

l) Inventories

m) Financial Instruments

i)

ii)

a)

Effective interest method

The effective interest method is a method of calculating the amortised cost of a financial instrumentand of allocating interest income or expense over the relevant period. The effective interest rate is therate that exactly discounts estimated future cash receipts or payments through the expected life of thefinancial instrument, or (where appropriate) a shorter period, to the net carrying amount on initialrecognition. Income or expense is recognised on an effective interest basis for debt instruments otherthan those financial instruments classified as at fair value through profit or loss.

Inventories are valued at the lower of cost (determined principally on the first-in, first-out method) and netrealisable value. Cost consists of purchases and other direct costs incurred in bringing the inventories to itspresent condition and location.

Financial assets are classified as financial assets at FVTPL if they are held for trading or aredesignated as such upon initial recognition. Financial assets are classified as held for trading ifthey are acquired principally for sale in the near term or are derivatives that do not meet the hedgeaccounting criteria (including separated embedded derivatives).

Initial recognition and measurement

Net realisable value is the estimated selling price in the ordinary course of business, less the costs ofcompletion and selling expenses.

Financial instruments are initially measured at fair value, plus transaction costs, except for thosefinancial assets classified as at fair value through profit or loss, which are initially measured at fairvalue.

Financial instrument categories and subsequent measurement

Financial assets

Subsequent to initial recognition, financial assets at FVTPL are measured at fair value. Any gainsor losses arising from changes in fair value are recognised in profit or loss. Net gains or net losseson financial assets at fair value through profit or loss do not include exchange differences, interestand dividend income. Exchange differences, interest and dividend income on financial assets atFVTPL are recognised separately in profit or loss as part of other income or other losses.

The Group and the Company classify its financial assets in the following categories: at fair valuethrough profit or loss (FVTPL), held-to-maturity investments, loans and receivables and available-for-sale (AFS) financial assets. The classification depends on the nature and purpose for which thefinancial assets were acquired. Management determines the classification at initial recognition.

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

The Group and the Company categorise financial instruments as follows:

Where the purchase or sale of financial assets is under a contract whose terms require delivery of thefinancial assets within the timeframe established by the market concerned, such financial assets arerecognised and derecognised on trade date.

Financial assets at FVTPL

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Company No:412406-T

b)

c)

d)

Loans and receivables are non-derivative financial assets with fixed or determinable payments thatare not quoted in an active market. Loans and receivables are measured at amortised cost usingthe effective interest method, less any impairment. Interest income is recognised by applying theeffective interest rate, except for short-term receivables when the recognition of interest would beimmaterial.

AFS financial assets are non-derivatives that are either designated in this category or are notclassified in any of the three preceding categories. After initial recognition, AFS financial assets aremeasured at fair value. Any gains or losses from changes in fair value of the financial assets arerecognised in other comprehensive income, except that impairment losses, foreign exchangegains and losses on monetary instruments and interest calculated using the effective interestmethod are recognised in profit or loss. The cumulative gain or loss previously recognised in othercomprehensive income is reclassified from equity to profit or loss as a reclassification adjustmentwhen the financial asset is derecognised. Interest income calculated using the effective interestmethod is recognised in profit or loss. Dividends on AFS equity instrument are recognised in profitor loss when the Group's and the Company's right to receive payment is established.

Held-to-maturity investments are non-derivative financial assets with fixed or determinablepayments and fixed maturity dates that the Group and the Company have the positive intention and ability to hold to maturity. Subsequent to initial recognition, held-to-maturity investments aremeasured at amortised cost using the effective interest method. Gains and losses are recognisedin profit or loss through the amortisation process and when the held-to-maturity investments areimpaired or derecognised. Held-to-maturity investments are classified as non-current assets,except for those having maturity within 12 months after the financial year end which are classifiedas current.

The Group and the Company do not have any AFS financial assets at the current and previousfinancial year ends.

AFS financial assets which are not expected to be realised within 12 months after the financial yearend are classified as non-current assets.

Financial assets are de-recognised when the contractual rights to receive cash flows from the assetshave expired. On derecognition of a financial asset in its entirety, the difference between the carryingamount and the sum of the consideration received and any cumulative gain or loss that had beenrecognised in other comprehensive income is recognised in profit or loss.

The Group and the Company do not have any financial assets at FVTPL at the current andprevious financial year ends.

AFS financial assets

Financial assets at FVTPL could be presented as current or non-current. Financial assets that areheld primarily for trading purposes are presented as current whereas financial assets that are notheld primarily for trading purposes are presented as current or non-current based on thesettlement date.

The Group and the Company have not designated any financial assets as held-to-maturityinvestments at the current and previous financial year ends.

Held-to-maturity investments

Loans and receivables

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Company No:412406-T

Financial liabilities

a) Financial liabilities at FVTPL

A financial liability is classified as held for trading if:

a) it has been acquired principally for the purpose of repurchasing it in the near term; or

b)

c)

a)

b)

c)

b) Other financial liabilities

on initial recognition it is part of a portfolio of identified financial instruments that the Group and the Company manage together and has a recent actual pattern of short-term profit-taking; or

such designation eliminates or significantly reduces a measurement or recognitioninconsistency that would otherwise arise; or

it is a derivative that is not designated and effective as a hedging instrument.

the financial liability forms part of a group of financial assets or financial liabilities or both, whichis managed and its performance is evaluated on a fair value basis, in accordance with theGroup's and the Company's documented risk management or investment strategy, andinformation about the grouping is provided internally on that basis; or

Financial liabilities are classified as FVTPL when the financial liability is either held for trading or itis designated as FVTPL.

Other financial liabilities, including borrowings, are initially measured at fair value, net of transaction costs and are subsequently measured at amortised cost using the effective interest method, withinterest expense recognised on an effective yield basis.

Financial liabilities at FVTPL are stated at fair value, with any gains or losses arising onremeasurement recognised in profit or loss. The net gain or loss recognised in profit or lossincorporates any interest paid on the financial liability and is included in the 'other gains and losses'line item in the statements of profit or loss and other comprehensive income.

The Group derecognises financial liabilities when, and only when, the Group's obligations aredischarged, cancelled or expired.

it forms part of a contract containing one or more embedded derivatives, and MFRS 139Financial Instruments: Recognition and Measurement permits the entire combined contract(asset or liability) to be designated as at FVTPL.

Regular way purchases or sales are purchases or sales of financial assets that require delivery ofassets within the period generally established by regulation or convention in the marketplaceconcerned. All regular way purchases and sales of financial assets are recognised or derecognised onthe settlement date, i.e. the date that the asset is delivered to or by the Group and the Company.

Financial liabilities are classified according to the substance of the contractual arrangements enteredinto and the definition of a financial liability.

A financial liability other than a financial liability held for trading may be designated as financialliability at FVTPL upon initial recognition if:

Financial liabilities are recognised in the statements of financial position when, and only when, theGroup and the Company become parties to the contractual provisions of the financial instrument.Financial liabilities are classified as either financial liabilities at FVTPL or other financial liabilities.

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Company No:412406-T

iii)

- significant financial difficulty of the issuer or counterparty; or

- it becoming probable that the borrower will enter bankruptcy or financial re-organisation.

n) Impairment of Non-financial Assets

- default or delinquency in interest or principal payments; or

For financial assets carried at amortised cost, the amount of the impairment loss recognised is thedifference between the asset’s carrying amount and the present value of estimated future cash flows,discounted at the financial asset’s original effective interest rate.

For certain categories of financial asset, such as trade receivables, assets that are assessed not to beimpaired individually are, in addition, assessed for impairment on a collective basis. Objectiveevidence of impairment for a portfolio of receivables could include the Group’s and the Company'spast experience of collecting payments, an increase in the number of delayed payments in the portfoliopast the average credit period, as well as observable changes in national or local economic conditionsthat correlate with default on receivables.

The carrying amount of the financial asset is reduced by the impairment loss directly for all financialassets with the exception of trade receivables, where the carrying amount is reduced through the useof an allowance account. When a trade receivable is considered uncollectible, it is written off againstthe allowance account. Subsequent recoveries of amounts previously written off are credited againstthe allowance account. Changes in the carrying amount of the allowance account are recognised inprofit or loss.

For equity investments classified as AFS, a significant or prolonged decline in the fair value of thesecurity below its cost is considered to be objective evidence of impairment.

If, in a subsequent period, the amount of the impairment loss decreases and the decrease can berelated objectively to an event occurring after the impairment was recognised, the previouslyrecognised impairment loss is reversed through profit or loss to the extent that the carrying amount ofthe investment at the date the impairment is reversed does not exceed what the amortised cost wouldhave been had the impairment not been recognised.

At the end of each reporting period, the Group reviews the carrying amounts of its non-current assets todetermine whether there is any indication that those assets have suffered an impairment loss. If any suchindication exists, the recoverable amount of the asset is estimated in order to determine the extent of theimpairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset,the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs.

Recoverable amount is the higher of fair value less costs to sell and value-in-use. In assessing value-in-use,the estimated future cash flows are discounted to their present value using a pre-tax discount rate thatreflects current market assessments of the time value of money and the risk specific to the asset. If therecoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount,the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. Animpairment loss is recognised immediately in profit or loss unless the asset is carried at a revalued amount,in which case the impairment loss is treated as a revaluation decrease.

For all other financial assets, objective evidence of impairment could include:

Impairment of Financial Assets

Financial assets, other than those at FVTPL, are assessed for indicators of impairment at the end ofeach reporting period. Financial assets are considered to be impaired when there is objective evidencethat, as a result of one or more events that occurred after the initial recognition of the financial assets,the estimated future cash flows of the investment have been affected.

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Company No:412406-T

o)

p) Provisions

q)

r) Cash and Cash Equivalents

s)

An equity instrument is any contract that evidences a residual interest in the assets of the Group and theCompany after deducting all of its liabilities. Ordinary shares are equity instruments.

Non-current Assets Held for Sale

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

All other borrowing costs are recognised as finance costs in profit or loss in the financial year in which theyare incurred.

Borrowing Costs

Cash and cash equivalents consist of cash on hand, balances and deposits with banks and highly liquidinvestments which have an insignificant risk of changes in fair value with original maturities of three monthsor less, and are used by the Group and the Company in the management of their short term commitments.For the purpose of the statements of cash flows, cash and cash equivalents are presented net of bankoverdrafts and pledged deposits, if any.

Provisions are reviewed at each financial year end and adjusted to reflect the current best estimate. If it isno longer probable that an outflow of economic resources will be required to settle the obligation, theprovision is reversed. If the effect of the time value of money is material, provisions are discounted using acurrent pre tax rate that reflects, where appropriate, the risks specific to the liability. When discounting isused, the increase in the provision due to the passage of time is recognised as finance cost.

Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generatingunit) is increased to the revised estimate of its recoverable amount, but so that the increased carryingamount does not exceed the carrying amount that would have been determined had no impairment lossbeen recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss isrecognised immediately in profit or loss, unless the asset is carried at a revalued amount, in which case thereversal of the impairment loss is treated as a revaluation increase.

Non-current assets are classified as held for sale if their carrying amount will be recovered principallythrough a sale transaction rather than continuing use. This condition is regarded as met only if the sale ishighly probable and the asset is available for immediate sale in its present condition subject only to termsthat are usual and ordinary. Non-current assets held for sale are measured at the lower of the previouscarrying amount and fair value less cost to sell.

Ordinary shares are recorded at the proceeds received, net of directly attributable incremental transactioncosts. Ordinary shares are classified as equity. Dividends on ordinary shares are recognised in equity in theperiod in which they are declared.

Provisions are recognised when the Group and the Company have a present obligation (legal orconstructive) as a result of a past event, it is probable that an outflow of economic resources will be requiredto settle the obligation and the amount of the obligation can be estimated reliably.

Equity Instruments

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Company No:412406-T

u)

v) Operating Segments

5) CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

Critical Judgements in Applying the Group's and the Company's Accounting Policies

Key Sources of Estimation Uncertainty

(i) Impairment of Receivables

(ii)

The Group assesses at each reporting date whether there is any objective evidence that a receivable isimpaired. To determine whether there is objective evidence of impairment, the Group considers factorssuch as the probability of insolvency or significant financial difficulties of the debtor and default or significantdelay in payments. Where there is objective evidence of impairment, the amount and timing of future cashflows are estimated based on historical loss experience for assets with similar credit risk characteristics.Where the explanation is different from the original estimate, such difference will impact the carrying valueof the receivables in the period in which such estimate has been changed.

Contingent liabilities and assets are not recognised in the statements of financial position in the current andprevious financial years.

Recoverability of Investment in Subsidiaries

In the process of applying the Group's and the Company's accounting policies, the directors are of the opinionthat there are no instances of application of judgement which are expected to have significant effect on theamounts recognised in the financial statements.

An operating segment is a component of the Group that engages in business activities from which it mayearn revenues and incur expenses, including revenues and expenses that relate to transactions with any ofthe Group's other components. Operating segment results are reviewed regularly by the chief operatingdecision maker, which in this case is the Managing Director of the Group, to make decisions aboutresources to be allocated to the segment and assess its performance, and for which discrete financialinformation is available.

The preparation of financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and the disclosure of contingentliabilities at the reporting date.

Contingencies

A contingent liability or asset is a possible obligation or benefit that arises from past events, and theexistence of which will be confirmed only by the occurrence or non-occurrence of uncertain future event(s)not wholly within the control of the Group and of the Company.

The Group assesses at each reporting date whether there is any objective evidence that the investment insubsidiaries are impaired. To determine whether there is objective evidence of impairment, the Groupconsiders factors such as the probability of insolvency or significant financial difficulties of the subsidiaries.

The directors believe that there are no key assumptions made concerning the future, and other key sources ofestimation uncertainty at the end of the reporting date that have a significant risk of causing a materialadjustment to the carrying amounts of assets and liabilities within the next financial year other than as disclosedbelow:

35

Company No:412406-T

t)

u) Operating Segments





(ii)







Operating Leases

An operating lease is a lease other than a finance lease. Lease payments under operating lease arerecognised as an expense in the profit or loss on a straight line basis over the lease period.



34

Company No:412406-T

t)

v) Operating Segments





(ii)







Operating Leases

An operating lease is lease other than a finance lease. Lease payment under operating leases arerecognised as an expense in the profit or loss on straight line over the lease period



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Company No:412406-T

6) REVENUE

2016 2015RM RM

Air filtration system, fast moving consumer product, ancillary support services and general trading 17,645 13,293,217 Oil trading and bunkering services 68,492,876 1,005,292 Consultancy services 15,000 170,000 Technology - 5,000

68,525,521 14,473,509

7)

Included in other operating expenses/(income) are the following charges/(credits):

2016 2015 2016 2015RM RM RM RM

Auditors' remuneration Statutory audit: - Auditors of the Company - current year 38,800 25,000 35,800 25,000 - underprovision in prior year - 3,000 - 3,000 - Other auditors - current year 35,000 17,900 - - - underprovision in prior year 2,000 4,000 - - Non-audit services: - Auditors of the Company - current year - 3,000 - 3,000 - underprovision in prior year 6,000 - 6,000 - - Other auditors - current year 6,200 - 6,200 - - underprovision in prior year 3,000 - 3,000 - Bad debts written off 32,206 - - - Impairment of goodwill - 95,527 - - Impairment loss on trade receivables 33,009 - - - Impairment loss on investment in a

subsidiary - - 92,004 - Inventories written down 78,042 14,986 - - Inventories written off 127,312 275,118 - - Property, plant and equipment written off - 5 - - Rental of premises 45,300 11,750 - 1,800 Reversal of impairment loss on investment

in subsidiaries - - (58,841) - Settlement of legal case - 138,075 - - Gain on disposal of property, plant

and equipment - (138,016) - - Waiver of interest expense on bank

overdraft (22,153) - - - Waiver of shareholder's advance - (447,085) - (159,340) Unrealised gain on foreign exchange (124,786) - - - Interest income from short-term deposits (11,767) (1,314) (2,227) (1,314)

GROUP

OTHER OPERATING EXPENSES/(INCOME)

COMPANY

GROUP

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Company No:412406-T

8) EMPLOYEE BENEFITS EXPENSES

2016 2015 2016 2015RM RM RM RM

Salaries and allowance 129,752 85,962 112,552 85,962Defined contribution plan - EPF 16,976 11,179 15,959 11,179Social security contributions 992 1,204 771 1,204Other staff related expenses 313 171 313 171

148,033 98,516 129,595 98,516

9)

2016 2015RM RM

Executive director: Fees 12,000 - Other emoluments 1,200 -

13,200 -Non-executive directors: Fees 78,000 - Other emoluments 9,850 -

87,850 -101,050 -

2016 2015

Executive director:

RM50,000 and below 1 -

Non-executive directors:

RM50,000 and below 6 -

10) FINANCE COSTS

2016 2015RM RM

Interest on: Bank overdraft - 54,029 Term loans - 190,157

- 244,186

Number of directors

GROUP AND COMPANY

COMPANYGROUP

The number of directors of the Company whose total remuneration during the financial year fell within thefollowing bands is analysed below:

There is no other key management personnel other than the directors and past directors of which theirremuneration has been disclosed above.

GROUP

DIRECTORS' REMUNERATION

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Company No:412406-T

11) INCOME TAX EXPENSE

2016 2015 2016 2015RM RM RM RM

Current tax expense:Current year 34,384 1,719 535 329Underprovision in prior year 1,800 202 - -Real property gain tax (RPGT) - 139,117 - -

36,184 141,038 535 329Deferred tax in respect of:

Tax assets (Note 24) - 52,991 - -Tax liabilities (Note 24) 7,055 - - -

7,055 52,991 - -43,239 194,029 535 329

2016 2015 2016 2015RM RM RM RM

Accounting profit/(loss) before tax 143,282 (284,888) (652,743) (190,158)

Tax at the applicable statutory income tax rate of 24% (2015: 25%) 34,388 (71,222) (156,658) (47,540)Tax effects in respect of: Expenses that are not deductible for tax purposes 163,671 294,604 152,972 83,725 Difference between corporate tax rate of 25% and RPGT rate of 5% on gain on

disposal of freehold land and building - (20,603) - - Underprovision of income tax in prior year 1,800 202 - - Notional allowance - 2,444 - 2,444 Real property gain tax - 139,117 - - Reversal of deferred tax assets - 52,991 - - Recognition of previously unrecognised deferred tax assets - (184,994) - - Income not subject to tax - (91,168) - (39,835) Net deferred tax assets not recognised 7,423 72,658 4,221 1,535 Utilisation of previously unrecognised deferred tax assets (164,043) - - -Income tax expense 43,239 194,029 535 329

COMPANY

Income tax is calculated at the Malaysian statutory tax rate of 24% (2015: 25%) of the estimated assessableprofit/(loss) for the year.

GROUP

A numerical reconciliation between the income tax expense and the product of accounting profit/(loss) multipliedby the applicable statutory income tax rate, is as follows:

GROUP COMPANY

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Company No:412406-T

12) EARNINGS/(LOSS) PER ORDINARY SHARE

Basic earnings/(loss) per share

2016 2015

Profit/(Loss) attributable to owners of the Company (RM) 48,596 (484,182)Weighted average number of ordinary shares in issue 146,986,627 130,554,295

Basic earnings/(loss) per share (sen) 0.03 (0.37)

Diluted earnings/(loss) per share

GROUP

Basic earnings/(loss) per share is calculated by dividing the profit/(loss) for the year attributable to owners of theCompany by the weighted average number of ordinary shares in issue during the financial year as follows:

The calculation of diluted earnings/(loss) per share is the same with basic earnings/(loss) per share as there areno dilutive potential ordinary shares.

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Com

pany

No:

4124

06-T

13)

PRO

PER

TY, P

LAN

T AN

D E

QU

IPM

ENT

GR

OU

PFu

rnitu

re, f

ittin

gs a

nd

Tool

s an

dM

otor

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apita

l wor

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ent

vehi

cles

Ren

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ion

prog

ress

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lR

MR

MR

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725,

604

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795

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r 201

669

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Accu

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Dec

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r 201

664

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5

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2

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car

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at 3

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58,9

44

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543,

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015

2,61

7,89

4

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119,

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108,

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Addi

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95

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)

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80,0

00)

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ten

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(1,9

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(127

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)

(2

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)

(119

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)

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As

at 3

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ecem

ber 2

015

725,

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-

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7

-

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Accu

mul

ated

dep

reci

atio

nAs

at 1

Jan

uary

201

52,

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005

14

1,99

2

18

2,12

0

11

9,67

0

-

2,

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787

C

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r the

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r97

,222

2,88

5

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-

-

(180

,000

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00)

Writ

ten

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(127

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)

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)

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)

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As

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655,

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as

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70,4

58

1,

902

-

15

3,97

9

-

22

6,33

9

2016

Cos

t

2015

Cos

t

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Com

pany

No:

4124

06-T

13)

PRO

PER

TY, P

LAN

T AN

D E

QU

IPM

ENT

CO

MPA

NY

Furn

iture

, fitt

ings

and

C

apita

l wor

k-in

-C

ompu

ters

offic

e eq

uipm

ent

Ren

ovat

ion

prog

ress

Tota

lR

MR

MR

MR

MR

M

Cos

tAs

at 1

Jan

uary

201

645

,829

110,

040

166,

467

-

32

2,33

6

Ad

ditio

ns7,

796

-

-

-

7,

796

As a

t 31

Dec

embe

r 201

653

,625

110,

040

166,

467

-

33

0,13

2

Accu

mul

ated

dep

reci

atio

nAs

at 1

Jan

uary

201

644

,130

31,2

78

12,4

88

-

87,8

96

Cha

rge

for t

he y

ear

780

16,5

06

16,6

46

-

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32

As a

t 31

Dec

embe

r 201

644

,910

47,7

84

29,1

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-

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828

Net

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g am

ount

as

at 3

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8,71

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Cos

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uary

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at 1

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201

543

,958

15,5

30

-

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59,4

88

Cha

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for t

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ear

172

15,7

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12,4

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-

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As a

t 31

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r 201

544

,130

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78

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88

-

87,8

96

Net

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ryin

g am

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at 3

1 D

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1,69

9

78,7

62

153,

979

-

23

4,44

0

Incl

uded

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oper

ty,p

lant

and

equi

pmen

tof

the

Gro

upan

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the

Com

pany

are

fully

depr

ecia

ted

asse

tsw

hich

are

still

inus

e,co

stin

gR

M66

0,95

8(2

015:

RM

585,

330

and

RM

84,5

64 (2

015:

RM

48,2

18) r

espe

ctiv

ely.

2015

2016

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Company No:412406-T

14) INVESTMENT IN SUBSIDIARIES

2016 2015RM RM

Unquoted shares - At cost 1,643,132 1,643,000Less: Accumulated Impairment loss (923,363) (890,200)Net 719,769 752,800

The details of the subsidiaries, all of which are incorporated in Malaysia, are as follows:

2016 2015Name of Company % %

Envair Energy Sdn. Bhd. # 100 100

100 100

100 100

100 100

COMPANY

Proportion of

Quest Equipment & Services Sdn. Bhd. # Principally involved in installationof cleanroom systems, sale of airfilters and cleanroom equipmentand trading of carbon filtercartridges.

Raya Consumable Sdn. Bhd. # @

the Company

Distribution and manufacturing ofair filters. Also involved in theprovision of consultancy servicesand trading of carbon filtercartridges.

Principal Activities

Voting Rights held by Ownership Interest/

Manufacturing and trading ofwater filters, beauty products andhealthcare products. During thefinancial year, the company isalso engaged in the provision ofoil trading and bunkering servicesfor marine fuel and petroleumbased products.

Quest Technology Sdn. Bhd. # @ Trading in air filters, cleanroomequipment and vinyl flooring andinstallation of cleanroom systems.Also, principally engaged ingeneral trading. During thefinancial year, the company isalso engaged in the provision ofoil trading and bunkering servicesfor marine fuel and petroleumbased products.

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Company No:412406-T


100 100

70 70

Selatan Bunker (M) Sdn. Bhd. # 51 51

Pan Logistics Ltd * 100 -

TMD Sturgeon Ltd * 100 -

TMD Straits Ltd * 100 -

# The financial statements of these subsidiaries were examined by another firm of auditors.* Incorporated in the Federal Territory of Labuan, Malaysia.

Youbicom Malaysia Sdn. Bhd. #

The company has notcommenced business operations.Its intended principal activity is toengage in offshore trading andinvestment holding activities.



Provision of oil trading andbunkering services for marine fueland petroluem based products.

Voting Rights held by

Quest System & Engineering Sdn. Bhd. #


the Company

The amount owing by/(to) subsidiaries, which arose mainly from expenses paid on behalf and advances given,is unsecured, interest-free and repayable on demand.

Selling, installation, maintenanceand servicing of water treatmentequipment, sale of cleanroomfilters and equipment. Alsoprincipally involved in theprovision of other ancillaryservices. However, the companyhas been temporarily inactiveduring the financial year.

Proportion ofOwnership Interest/

Distribution of wireless energysaving products and the provisionof website development services.However, the company has beentemporarily inactive during thefinancial year.

@ The auditors' reports on the financial statements of these subsidiaries contain a material uncertainty relatedto going concern paragraphs in view of their capital deficiency positions as at the end of the financial year. Thefinancial statements of these subsidiaries have been prepared on a going concern basis as the Company hasundertaken to continue providing financial support to these subsidiaries.

42

Company No:412406-T


100 100

70 70

Selatan Bunker (M) Sdn. Bhd. # 51 51

Pan Logistics Ltd * 100 -

TMD Sturgeon Ltd * 100 -

TMD Straits Ltd * 100 -

# The financial statements of these subsidiaries were examined by another firm of auditors.* Incorporated in the Federal Territory of Labuan, Malaysia.

Youbicom Malaysia Sdn. Bhd. #




Provision of oil trading andbunkering services for marine fueland petroluem based products.

Voting Rights held by

Quest System & Engineering Sdn. Bhd. #


the Company

The amount owing by/(to) subsidiaries, which arose mainly from expenses paid on behalf and advances given,is unsecured, interest-free and repayable on demand.

Selling, installation, maintenanceand servicing of water treatmentequipment, sale of cleanroomfilters and equipment. Alsoprincipally involved in theprovision of other ancillaryservices. However, the companyhas been temporarily inactiveduring the financial year.

Proportion ofOwnership Interest/

Distribution of wireless energysaving products and the provisionof website development services.However, the company has beentemporarily inactive during thefinancial year.

@ The auditors' reports on the financial statements of these subsidiaries contain a material uncertainty relatedto going concern paragraphs in view of their capital deficiency positions as at the end of the financial year. Thefinancial statements of these subsidiaries have been prepared on a going concern basis as the Company hasundertaken to continue providing financial support to these subsidiaries.

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Company No:412406-T

2016 2015RM RM

Cash and bank balances 132 300,000Non-controlling interests measured at proportionate share of net assets - (147,000)Total cash consideration 132 153,000Less: Cash and cash equivalents of subsidiaries acquired (132) (300,000)Cash flow on acquisition, net of cash and cash equivalents acquired - (147,000)

a)

2016 2015 2016 2015RM RM RM RM

347,680 - - - 4,960,075 1,308,277 13,697 24,289 5,307,755 1,308,277 13,697 24,289

414,626 303,855 11,423 22,083

7,055 - - - 4,886,074 1,004,422 2,274 2,206 4,893,129 1,004,422 2,274 2,206

5,307,755 1,308,277 13,697 24,289

of the financial year 203,167 148,889 3,427 6,625

Non-current assets

During the financial year, the Group acquired 100% equity interest in Pan Logistics Ltd, TMD Sturgeon Ltd andTMD Straits Ltd, all incorporated in Federal Territory of Labuan, for a total cash consideration of RM132. In2015, the Group acquired 51% equity interest in Selatan Bunker (M) Sdn. Bhd., a company incorporated inMalaysia, for a total consideration of RM153,000.

non-controlling interests at the end

Liabilities

The fair value of net assets acquired and cash flow arising from the acquisition is as follows:

Equity attributable to owners of the

Net assets attributable to

Total assets

Non-current liabilitiesCurrent liabilities

Summarised statements of financial position

Current assets

The summarised financial information of Selatan Bunker (M) Sdn. Bhd. ("SBSB") and Youbicom Malaysia Sdn.Bhd. ("YMSB") that have non-controlling interests, is as follows:

Total equity and liabilities

GROUP

Company

YMSBSBSB

Assets

Total liabilities

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Company No:412406-T

b)

2016 2015 2016 2015RM RM RM RM

17,520,469 1,005,292 - 5,000

147,108 4,140 (10,660) 13,033 (35,587) (1,035) - (557)

the financial year/period 111,521 3,105 (10,660) 12,476

54,645 1,522 (3,198) 3,743

c)

2016 2015 2016 2015RM RM RM RM

235,618 2,985 - (66) (347,680) - - - - 300,000 - -

(112,062) 302,985 - (66)

302,985 - 7,924 7,990

190,923 302,985 7,924 7,924

15) INVESTMENT IN ASSOCIATE

2016 2015 2016 2015RM RM RM RM

Unquoted shares, at cost 490 - 490 -Share of post-acquisition reserves (490) - - -

- - 490 -

Cash and cash equivalents at the end

equivalents

YMSB

Revenue

Summarised statements of profit or loss and other comprehensive income

Profit/(Loss) for the year/period

Total comprehensive income/(loss) for

of year

Net changes in cash and cash

controlling interests

SBSB

beginning of year/date of acquisition

income/(loss) allocated to non-

YMSB

Summarised statements of cash flows

Net cash from/(used in) operating

Income tax expense

GROUP COMPANY

Net cash from financing activities

activities

SBSB

representing total comprehensive

During the financial year, Fajar Maritime and Logistics Sdn. Bhd., was incorporated in Malaysia in which theCompany holds 49% equity interest. The associate is currently inactive during the financial year and its intendedprincipal activity is in provision of oil trading and bunkering services for marine fuel, petroleum, and petroleumbased products, traders and suppliers of oil fuel and related products and services. The Group has notrecognised loss related to this associate amounting to RM936 since the Group has no obligation in respect ofthis loss.

Net cash used in investing activities

Cash and cash equivalents at the

The summarised financial information represents the amount before inter-company eliminations.

Profit/(Loss) before tax

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Company No:412406-T

(a)2016RM

-(2,910)(2,910)

(b)2016RM

4,000(5,910)(1,910)

16) GOODWILL ON CONSOLIDATION

2016 2015RM RM

Balance as at beginning of the year 95,527 95,527Accumulated impairment loss (95,527) (95,527)Balance as at end of the year - -

Key Assumptions Used in Value-In-Use Calculations

17) INVENTORIES

2016 2015RM RM

At cost:Raw materials 18,225 85,424Finished goods 38,772 267,414

56,997 352,838At net realisable value:Raw materials 17,777 -Finished goods 109,315 50,014

127,092 50,014184,089 402,852

A pre-tax rate of 3.4% was applied in determining the recoverable amount of the respective CGU. The discountrate was based on the average inflation rate. Based on this review, an impairment loss was recognised in theprevious financial year to write down the entire carrying amount of goodwill on the basis that the carrying amountof the goodwill exceeded its recoverable amount.

GROUP

Goodwill in respect of acquisition of the subsidiary by the Group has been allocated to its cash-generating unit(CGU) where the recoverable amount of CGU has been based on value-in-use calculations using five yearfinancial projections. No revenue and expenses growth were projected from sixth year to perpetuity.

Net liabilities

The summarised financial information represents the amounts in the financial statements of the associate andnot the Group's share of those amounts.

Summarised statements of comprehensive income:

Total comprehensive loss

Total liabilities

GROUP

Summarised statements of financial position:

RevenueLoss for the financial period

Total assets

The amount owing by associate arose mainly from expenses paid on behalf. The balance is unsecured, interest-free and repayable on demand.

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Company No:412406-T

18) TRADE RECEIVABLES

2016 2015RM RM

Trade receivables 6,387,696 3,524,549Less: Allowance for impairment (119,712) (86,703)Net 6,267,984 3,437,846

The currency profile of trade receivables is as follows:

2016 2015RM RM

Singapore Dollar 4,475,149 1,005,291Ringgit Malaysia 1,792,835 2,432,555

6,267,984 3,437,846

19)

Other receivables, deposits and prepaid expenses consist of:

2016 2015 2016 2015RM RM RM RM

Other receivables 52,475 50,209 38,588 8,957Less: Allowance for impairment (12,756) - - -Net 39,719 50,209 38,588 8,957Fixed deposit interest receivable 2,851 - - -Advance payment for purchase of

marine oil 3,200,000 - - -Refundable deposits 104,910 337,510 1,640 1,640Deferred expenditure 543,991 - 543,991 -Prepaid expenses - 20,000 - 20,000

3,891,471 407,719 584,219 30,597

The other receivables are all denominated in Ringgit Malaysia.

GROUP

Advance payment comprises upfront cash payment to designated supplier of marine oil. The purchases weremade subsequent to year end.

COMPANY

Trade receivables comprise amounts receivable from the sale of goods. The credit period granted to theircustomers are assessed and approved on a case by case basis.

Deferred expenditure of the Group and of the Company represents professional charges and expenses incurredin connection with the corporate exercise of the Company as mentioned in Note 29. The deferred expenditure iswritten off against share premium upon the successful completion of the said exercise.

OTHER RECEIVABLES, DEPOSITS AND PREPAID EXPENSES

GROUP

GROUP

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Company No:412406-T

20) CASH AND CASH EQUIVALENTS

2016 2015 2016 2015RM RM RM RM

Deposits with licensed banks 486,689 - - -Cash on hand and at bank 672,177 4,122,287 208,963 2,126,769

1,158,866 4,122,287 208,963 2,126,769

2016 2015% %

2.95 N/A

2016 2015days days

30 N/A

21) ASSET HELD FOR SALE

2016 2015RM RM

- 8,196,984 - (8,196,984) - -

In 2015, the Group completed the disposal of the said property for a cash consideration equivalent toapproximately RM8,300,000 and recorded a gain on disposal of RM103,016.

As at end of year

GROUP

As at 31 December 2014, the Group intended to dispose of a freehold land and building, comprising one parcelof freehold land together with corner three storey office block annexed to a one and a half storey warehousebuilding, held by Raya Consumable Sdn. Bhd., a subsidiary. No impairment loss was recognised onreclassification of the property as held for sale as the directors expected the fair value (estimated based on offerletter received) less costs to sell to be higher than the carrying amount.

The Group's deposits, cash and bank balances are all demoninated in Ringgit Malaysia.

DisposalAs at beginning of year

GROUP

Licensed banks and other financial institutions

GROUP

The weighted average effective interest rates at the end of the reporting period for deposits are as follow:

GROUP

Licensed banks

Freehold land and building held for sale:

The average maturities of deposits as at end of the reporting period are as follows:

COMPANY

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Company No:412406-T

22) SHARE CAPITAL

2016 2015RM RM

Authorised250,000,000 ordinary shares of RM0.10 each 25,000,000 25,000,000

2016 20152016 2015 RM RM

Issued and fully paidBalance as at beginning of year 143,452,380 130,411,380 14,345,238 13,041,138Issued during the year 20,500,000 13,041,000 2,050,000 1,304,100Balance as at end of year 163,952,380 143,452,380 16,395,238 14,345,238

(i)

(ii)

The resultant share premium arising from the shares issued during the financial year of RM1,230,000 (2015:RM652,050) has been credited to the share premium account. All the new ordinary shares issued rank paripassu with the then existing ordinary shares of the Company.

As approved by the shareholders at the Extraordinary General Meeting held on 3 June 2016, the issued andpaid-up share capital of the Company was increased from RM14,345,238 to RM16,395,238 during the financialyear by way of a special bumiputera issue of 20,500,000 new ordinary shares of RM0.10 each in the Companyat an issue price of RM0.16 per new ordinary share for cash.

GROUP AND COMPANY

Any newly issued shares will no longer be tied with the nominal value when the company was incorporated.A company may issue shares at a price depending on the factors affecting the current circumstances andneeds of the company. Hence, upon commencement of the CA 2016, any amount standing to the credit of acompany's share premium account shall become part of the company's share capital. However, companieshave a transitional period of 24 months to utilise the existing balances credited in the share premiumaccount in a manner specified by the CA 2016.

Subsequent to the end of the financial year, the Companies Act, 2016 ("CA 2016") was enacted to replace theCompanies Act, 1965. The CA 2016 which was gazetted on 15 September 2016 became effective on 31January 2017, except for Section 241 and Division 8 of Part III of the CA 2016.

Under the CA 2016:

A company is no longer required to state its authorised share capital. Instead, a company is required tonotify the Companies Commission of Malaysia its issued and paid-up share capital and the related changesthrough the return of allotments.

GROUP AND COMPANY

GROUP AND COMPANY

RM0.10 each

As approved by the shareholders at the Annual General Meeting held on 25 June 2015, the issued and paid-upshare capital of the Company was increased from RM13,041,138 to RM14,345,238 in 2015 by the allotment andissuance of 13,041,000 new ordinary shares of RM0.10 each in the Company at an issue price of RM0.15 perordinary share for cash by way of private placement.

No. of ordinary shares of Amount

The adoption of the CA 2016 is not expected to have any financial impact on the Group and on the Company forthe financial year ended 31 December 2016 as any accounting implications will only be applied prospectively ifapplicable, and the effect of adoption mainly will be on the disclosures to the annual report and financialstatements of the Group and of the Company for the financial year ending 31 December 2017.

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Company No:412406-T

23) RESERVES

2016 2015 2016 2015RM RM RM RM

Non-Distributable reserves: Share premium 10,425,293 9,402,637 10,425,293 9,402,637 Revaluation reserve - - - -

10,425,293 9,402,637 10,425,293 9,402,637

Accumulated loss (15,587,364) (15,635,960) (9,181,811) (8,528,533)(5,162,071) (6,233,323) 1,243,482 874,104

Share premium reserve

2016 2015RM RM

Balance as at beginning of year 9,402,637 8,825,988Issuance of new shares via private placement - 652,050Issuance of new shares pursuant to a special bumiputra issue 1,230,000 -Share issuance expenses (207,344) (75,401)Balance as at end of year 10,425,293 9,402,637

2016 2015RM RM

Balance as at beginning of year - 2,727,687 Transfer due to realisation of revaluation reserve - (2,727,687)Balance as at end of year - -

24) DEFERRED TAXATION

2016 2015RM RM

Deferred tax assetsBalance as at beginning of the year - 52,991Recognised in profit or loss (Note 11) - (52,991)Balance as at end of the year - -

Deferred tax liabilitiesBalance as at beginning of the year - -Recognised in profit or loss (Note 11) 7,055 -Balance as at end of the year 7,055 -

Net - Deferred tax liabilities 7,055 -

GROUP

GROUP

Revaluation reserve

The reserve comprises the premium paid on subscription of shares in the Company over and above the parvalue of the shares net of share issuance expenses.

COMPANY

GROUP AND COMPANY

GROUP

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Company No:412406-T

23) RESERVES

2016 2015 2016 2015RM RM RM RM

Non-Distributable reserves: Share premium 10,425,293 9,402,637 10,425,293 9,402,637 Revaluation reserve - - - -

10,425,293 9,402,637 10,425,293 9,402,637

Accumulated loss (15,587,364) (15,635,960) (9,181,811) (8,528,533) (5,162,071) (6,233,323) 1,243,482 874,104

Share premium reserve

2016 2015RM RM

Balance as at beginning of year 9,402,637 8,825,988 Issuance of new shares via private placement - 652,050 Issuance of new shares pursuant to a special bumiputra issue 1,230,000 - Share issuance expenses (207,344) (75,401) Balance as at end of year 10,425,293 9,402,637

2016 2015RM RM

Balance as at beginning of year - 2,727,687 Transfer due to realisation of revaluation reserve - (2,727,687)Balance as at end of year - -

24) DEFERRED TAXATION

2016 2015RM RM

Deferred tax assetsBalance as at beginning of the year - 52,991 Recognised in profit or loss (Note 11) - (52,991) Balance as at end of the year - -

Deferred tax liabilitiesBalance as at beginning of the year - - Recognised in profit or loss (Note 11) 7,055 - Balance as at end of the year 7,055 -

Net - Deferred tax liabilities 7,055 -

* The deferred tax liabilities are in respect of unrealised gain on foreign exchange

GROUP

GROUP

Revaluation reserve

The reserve comprises the premium paid on subscription of shares in the Company over and above the parvalue of the shares net of share issuance expenses.

COMPANY

GROUP AND COMPANY

GROUP

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Company No:412406-T

2016 2015 2016 2015RM RM RM RM

7,545,283 8,176,604 1,226,164 1,226,164 1,536,415 1,455,318 71,218 4,593 (24,594) - - - 9,057,104 9,631,922 1,297,382 1,230,757

25) TRADE PAYABLES

The trade payables in 2015 are all denominated in Ringgit Malaysia.

26)

Other payables and accrued expenses comprise:

2016 2015 2016 2015RM RM RM RM

Other payables 462,787 137,504 330,243 68,821Accrued expenses 119,600 216,616 68,900 59,422

582,387 354,120 399,143 128,243

The other payables are all denominated in Ringgit Malaysia.

Unutilised tax losses

COMPANY

Details of unutilised tax losses and unabsorbed capital allowances which have not been recognised in thefinancial statements due to uncertainty of realisation are as follows:

Other temporary differences

GROUP

Unabsorbed capital allowances

OTHER PAYABLES AND ACCRUED EXPENSES

GROUP COMPANY

Trade payables comprise amounts outstanding for trade purchases. The normal credit terms granted to theGroup and the Company for trade purchases range from 30 to 60 days and certain credit terms granted by thesuppliers were based on negotiation.

The unutilised tax losses and unabsorbed capital allowances are available for offset against future taxableprofits.

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Com

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No:

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Com

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No:

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Company No:412406-T

27) SEGMENTAL INFORMATION

Secondary Reporting - Geographical Segments

2016 2015RM RM

Customer A - Provision of oil trading and bunkering services for marine fuel and petroleum based products 68,492,876 -

Customer B - Air filtration system, fast moving consumer product, ancillary support services and general trading segment - 12,588,960

28) FAIR VALUE OF FINANCIAL INSTRUMENTS

Fair Value Information:

i)

Note

Trade receivables 18Other receivables and refundable deposits 19Amount owing by subsidiaries 14Amount owing by associate 15Trade payables 25Other payables 26Amount owing to subsidiaries 14

ii) Unquoted equity instruments

Financial instruments that are not carried at fair value and whose carrying amounts are reasonableapproximation of fair value.

The Group's operations are entirely located in Malaysia. Therefore, information on geographical segments is notpresented.

Major Customers

The following are the major customers individually accounting for 10% or more of group revenue for current andprior years:

It is not practical to estimate the fair value of the Company's investment in unquoted shares because of thelack of quoted market prices and the variability to estimate fair value. However, the management believesthat the carrying amount represents the recoverable value.

The carrying amounts of these financial assets and liabilities are reasonable approximation of fair valuesdue to their relatively short-term nature.

Revenue

The following are classes of financial instruments that are not carried at fair value and whose carryingamounts are reasonable approximation of fair value:

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Company No:412406-T

iii) Classification of financial instruments

2016 2015 2016 2015RM RM RM RM

Financial assets Loans and receivables: Trade receivables 6,267,984 3,437,846 - - Other receivables and refundable

deposits 144,629 387,719 40,228 10,597 Amount owing by subsidiaries - - 16,351,928 12,216,549 Amount owing by associate 5,910 - 2,910 - Deposits, cash and bank balances 1,158,866 4,122,287 208,963 2,126,769

7,577,389 7,947,852 16,604,029 14,353,915

Financial liabilities at amortised costs Trade payables - 97,137 - - Other payables 462,787 137,504 330,243 68,821 Amount owing to subsidiaries - - 36,308 11,365

462,787 234,641 366,551 80,186

iv) Fair value hierarchy

As at 31 December 2016, there were no financial instruments carried at fair value.

29)

(i)

(ii)

(iii)

(iv)

(a)

(b)

(i)(ii)

(iii)

Proposed acquisition of one (1) vessel known as "Straits 1" for a consideration of RM2,800,000 to besatisfied via cash from the proceeds raised from the Proposed Rights Issue of Shares with Warrants (asdefined herein); and

The Company is currently undertaking the following proposals:

up to 183,952,000 new Raya Shares to be issued pursuant to the Proposed Rights Issue of Shareswith Warrants; and

Proposed reduction of the share capital of the Company pursuant to Section 116 of the Companies Act,2016 and such credit will be utilised to set-off against the accumulated loss of the Company;

Proposed acquisition of one (1) vessel known as "Sturgeon" for a consideration of RM3,200,000 to besatisfied via the issuance of new ordinary shares in the Company ("Raya Shares");

GROUP

Admission to the Official List and the initial listing and quotation of up to 183,952,000 warrants to be issuedpursuant to the Proposed Rights Issue of Shares with Warrants; and

Bursa Securities had, vide its letter dated 18 April 2017 approved the following, subject to fulfilment of certainconditions:

Proposed renounceable rights issue of up to 183,952,000 new Raya Shares ("Rights Shares") on the basisof one (1) Rights Share for every one (1) existing Raya Share held on an entitlement date to be determinedlater, together with up 183,952,000 free detachable new warrants ("Warrants") on the basis of one (1)Warrant for every one (1) Rights Share subscribed by the entitled shareholders ("Proposed Rights Issue ofShares With Warrants") {Each warrant will entitle its holder to subscribe for one (1) Raya Share at theexercise price to be determined later}.

COMPANY

20,000,000 new Raya Shares to be issued pursuant to the proposed acquisition of Sturgeon;

Listing of:

CORPORATE PROPOSALS

up to 183,952,000 new Raya Shares to be issued pursuant to the exercise of the warrants.

54

Company No:412406-T

30)

2016 2015RM RM

45,600 - 85,500 - 131,100 -

Later than one year and not later than five yearsNot later than one year

OPERATING LEASE COMMITMENTS

As at 31 December 2016, the operating commitments in respect of rental of premises are as follows:

The above proposals are subject to the approval of the shareholders and also relevant authorities.

GROUP

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NOTES TO THE FINANCIAL STATEMENTS(Cont’d)Company No:

412406-T

30)

2016 2015RM RM

45,600 - 85,500 - 131,100 -

Later than one year and not later than five yearsNot later than one year

OPERATING LEASE COMMITMENTS

As at 31 December 2016, the operating lease commitments in respect of rental of premises are as follows:

The above proposals are subject to the approval of the shareholders and also relevant authorities.

GROUP

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Company No:412406-T

31) SUPPLEMENTARY INFORMATION - REALISED AND UNREALISED PROFITS OR LOSSES

2016 2015 2016 2015RM RM RM RM

(16,268,831) (16,549,587) (9,181,811) (8,528,533)(124,786) - - -

(16,393,617) (16,549,587) (9,181,811) (8,528,533)Add: Consolidation adjustments 806,253 913,627 - -Total accumulated loss (15,587,364) (15,635,960) (9,181,811) (8,528,533)

Accumulated loss carried forward are analysed as follows:

- Unrealised- Realised

The breakdown of the accumulated loss of the Group and of the Company as at 31 December 2016 intorealised and unrealised loss is presented in accordance with the directive issued by Bursa Malaysia SecuritiesBerhad dated 25 March 2011 and prepared in accordance with Guidance on Special Matter No.1, Determinationof Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia SecuritiesBerhad Listing Requirements, as issued by the Malaysian Institute of Accountants.

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ANALYSIS OF SHAREHOLDINGSAS AT 6 APRIL 2017

Issued and Fully Paid-up : RM 16,395,238.00 divided into 163,952,380 Share Capital Ordinary Shares

Class of Shares : Ordinary Shares

Voting Rights : One (1) vote per Ordinary Shares

Distribution of Shareholdings

Size of Shareholdings No of Shareholders % No of Shares %

1-99 20 1.624 900 0.001100-1,000 136 11.039 49,676 0.0301,001-10,000 368 29.870 2,577,900 1.57210,001-100,000 563 45.698 23,650,200 14.425100,001-8,197,618 (*) 143 11.607 100,673,704 61.4048,197,619 and above (**) 2 0.162 37,000,000 22.568

Total 1,232 100.00 163,952,380 100.000

Remark : * - Less than 5% of issued shares ** - 5% and above of issued shares

List of Substantial Shareholders (5% and above)

No Name of Substantial Shareholders

Direct Indirect

No of Shares % No of Shares %

1. Rithauddin Hussein Jamalatiff Bin Jamaluddin 20,500,000 12.503 – –

2. Ang Tun Young 16,500,000 10.063 – –

List of Directors’ Shareholdings

No Name of Director Direct Indirect

No of Shares % No of Shares %

1. Ho Fook Meng 2,000,000 1.219 – –

2. Dato’ Tan Seng Hu 2,560,000 1.561 – –

3. Capt Tony Tan Han (Chen Han) – – – –

4. Leong Fook Heng – – – –

5. Dato’ Sri Ho Kam Choy 8,023,300 4.893 – –

6. YAM Dato’ Seri Tengku Baharuddin Ibni Sultan Mahmud

– – – –

7. Tan Sri Mohd Bakri Bin Zinin – – – –

8. * Ho Hung MingAlternate Director to Tan Sri Mohd Bakri Bin Zinin

– – 8,023,300 4.893

* Note : Deemed Interest by virtue of his father, Dato’ Sri Ho Kam Choy’s direct shareholdings in Raya.

ANNUAL REPORT 2016

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ANALYSIS OF SHAREHOLDINGS AS AT 6 APRIL 2017(Cont’d)

LIST OF THIRTY (30) LARGEST SHAREHOLDERS

No Name of Shareholders No of Shares %

1. RITHAUDDIN HUSSEIN JAMALATIFF BIN JAMALUDDIN 20,500,000 12.5032. ANG TUN YOUNG 16,500,000 10.0633. CIMSEC NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT FOR HO KAM CHOY 8,023,300 4.8934. YAP POH ONN 7,603,200 4.6375. YONG CHEAN PENG 6,041,000 3.6846. CHIA BEE CHIN 5,196,800 3.1697. RHB NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT FOR BJS OFFSHORE SDN BHD 5,005,000 3.0528. CHIA GUIT NGA 5,000,000 3.0499. DHARMINDER SINGH A/L AMAR SINGH 3,925,300 2.39410. PUBLIC INVEST NOMINEES (TEMPATAN) SDN BHD EXEMPT AN FOR PHILLIP SECURITIES PTE LTD (CLIENTS) 2,303,000 1.40411. HO FOOK MENG 2,000,000 1.21912. RHB NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT FOR KOON POH TAT 1,902,300 1.16013. CIMSEC NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT FOR CHIA GUIT NGA 1,817,600 1.10814. TAN SENG HU 1,700,000 1.03615. TEO KER-WEI 1,700,000 1.03616. PALANI A/L RAMASAMY 1,517,500 0.92517. SUCHA SINGH @ GURMEJ SINGH 1,500,000 0.91418. YAP POH SOON 1,380,000 0.84119. NG ENG KEONG 1,330,500 0.81120. YOONG SIN KUEN 1,308,000 0.79721. NORA LAI BT ABDULLAH 1,100,000 0.67022. RANJIT SINGH A/L HARCHAND SINGH 1,100,000 0.67023. MAYBANK SECURITIES NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT FOR TEO KER-WEI (MARGIN) 1,000,000 0.60924. PUBLIC NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT FOR NG CHOY YOON (E-SKN) 1,000,000 0.60925. TOH GAIK BEE 1,000,000 0.60926. ALLIANCEGROUP NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT FOR KOON POH TAT (8062495) 941,500 0.57427. CHUN SOO CHIN 928,900 0.56628. AMSEC NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT FOR JAYESKUMAR A/L CHAMANLAL RUGNATH 877,000 0.53429. YOW FOOK LEONG 865,000 0.52730. MAYBANK NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT FOR TAN SENG HU 859,900 0.524 TOTAL 105,925,800 64.607

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Dear Shareholders,

Kindly be informed that the Notice of 20th Annual General Meeting of the Company together with the Proxy Form will be sent to you in due course.

Thank you.

By Order of the BoardRAYA INTERNATIONAL BERHAD (412406-T)

WAN HASLINDA BINTI WAN YUSOFF (MAICSA 7055478)SANGAR NALLAPPAN (MACS 01413)Company Secretaries

Port Klang25 April 2017

IMPORTANT NOTICE

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RAYA INTERNATIONAL BERHAD (Company No. 412406-T)

No. 66B & C, Jalan Kg. Attap 50460 Kuala Lumpur. Tel : +603 2276 6664 Fax : +603 2276 6661

www.rayainternational.com.my

Raya International Berhad (Company No. 412406-T)

ReportAnnual 2016

raya international berhad (company no. 412406-t) · raya international berhad annual report 2016...

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