IRETEX AnnualReport2012

IRE-TEX CORPORATION BERHAD
576121-A
GOING FURTHER, DELIVERING MORE

ANNUAL REPORT
2012
01
IRE-TEX CORPORATION BERHAD Annual Report 2012
Contents
VISION
To be recognised as the world leader in global logistics in protective packaging.
2 3 4-6 7-8 9 - 16 17 18 19 - 21
Corporate Information Group Corporate Structure Profile of Board of Directors Chairmans Statement Corporate Governance Statement Corporate Social Responsibility Statement Statement on Risk Management & Internal Control Audit Committee Report Other Information Financial Statements List of Properties Analysis of Shareholdings Notice of Annual General Meeting Proxy Form
To provide customers with proactive and cost effective solution.
MISSION
22 - 25 26 - 101 102 103 - 105 106 - 108 109
02
Corporate Information
BOARD OF DIRECTORS Chairman - Independent Non-Executive Director YM Raja Said Abidin Bin Raja Shahrome Group Managing Director Dato Dr. Yap Tatt Keat Executive Director See Toh Kean Yaw Non-Executive Directors Timothy Ian OHearn Dr. Lee Yu Huat @ Lee Yew Huat Lim Poay Guan Independent Non-Executive Directors Fazrin Azwar Bin Dato Md. Nor Teh Eng Aun Dato' Shafee Bin Abu Bakar (resigned on 2 May 2013)
AUDIT COMMITTEE YM Raja Said Abidin Bin Raja Shahrome (Chairman) Teh Eng Aun Fazrin Azwar Bin Dato Md. Nor (appointed on 2 May 2013) Dato' Shafee Bin Abu Bakar (resigned on 2 May 2013) REGISTERED OFFICE 35, 1st Floor, Jalan Kelisa Emas 1 Taman Kelisa Emas 13700 Seberang Jaya Prai Penang Tel : 04-3976 672 Fax : 04-3976 675
REMUNERATION COMMITTEE Dr. Lee Yu Huat @ Lee Yew Huat (Chairman) Dato Dr. Yap Tatt Keat Lim Poay Guan
REGISTRARS Agriteum Share Registration Services Sdn Bhd 2nd Floor, Wisma Penang Garden 42 Jalan Sultan Ahmad Shah 10050 Penang Tel : 04-2282 321 Fax : 04-2272 391
NOMINATION COMMITTEE YM Raja Said Abidin Bin Raja Shahrome (Chairman) Dr. Lee Yu Huat @ Lee Yew Huat Fazrin Azwar Bin Dato Md. Nor (appointed on 2 May 2013) Dato' Shafee Bin Abu Bakar (resigned on 2 May 2013)
HEAD OFFICE COMPANY SECRETARIES Lim Kim Teck (MAICSA 7010844) Kong Sown Kaey (MAICSA 7047655) Plot 118 Jalan Perusahaan Bukit Tengah Industrial Park 14000 Bukit Mertajam Penang Tel : 04-5022 752 Fax : 04-5022 751 Website : www.iretex.com.my
AUDITORS Grant Thornton Chartered Accountants
STOCK EXCHANGE LISTING Main Market of Bursa Malaysia Securities Berhad Sector : Industrial Products Stock Name : IRETEX Stock Code : 7183
BANKERS CIMB Bank Berhad Public Bank Berhad Hong Leong Bank Berhad Bangkok Bank Berhad
Group Corporate Structure

03
IRE-TEX Corporation Berhad

(576121-A)
100%
Cal-Test Laboratory Sdn Bhd (523396-U)
100%
GH Packaging Sdn Bhd (251096-P)
100%
Ire-Tex (Malaysia) Sdn Bhd (351185-T) 70% Ire -Tex (KL) Sdn Bhd (867981-M)
100%
Ire-Tex Electronics Sdn Bhd (469196-A) 100% Ire-Tex Distribution Sdn Bhd (572601-U)
100%
Ire-Tex Paper Packaging Sdn Bhd (1012491-U)
70%
Ire-Tex (Johor) Sdn Bhd (497417-D)
70%
Jumbo Universe Sdn Bhd (859413-M)
55%
TFH Corporate Sdn Bhd (873099-H)
51%
Eppor-Pack Sdn Bhd (352964-M)
51%
Powertude Sdn Bhd (715976-T)
50.01%
Styrotex (Asia Pacific) Sdn Bhd (617998-X)
100%
Ire-Tex (Vietnam) Co Ltd (412043000350)
04
Profile of Board of Directors
YM Raja Said Abidin Bin Raja Shahrome, aged 67, Malaysian.

Chairman Independent Non-Executive Director
YM Raja Said Abidin Bin Raja Shahrome was appointed as the Chairman and Independent Non-Executive Director of Ire-Tex Corporation Berhad (ITCB) on 2 December 2003. He is also the Chairman of the Audit Committee and Nomination Committee. He graduated in Economics and Business Administration from the University of Malaya in 1969 and was a Bank Negara Scholar. He started his career as an Economic Research Student and Assistant with Bank Negara Malaysia in 1967 and was an Editor of the Bank Negara Staff Association Magazine, the Sri Kijang. After leaving Bank Negara, he worked in management positions in finance and marketing in several multi-national companies like Citibank Malaysia and Shell Malaysia from 1973 to 1984. He ventured into business in the mid 1980s and his current business includes trading, manufacturing, construction, property management and education. In education, he co-founded Sedaya International College (now UCSI University) and was its first President from 1988 to 1997. He is currently the Chairman of the Board of an international school in Selangor. Among several publicly listed companies, he was an Independent Non-Executive Director and Chairman of the Board of Tejari Technologies Berhad from 2009 to 2011. In the IOI Group of listed companies from 1997, he has been a director of IOI Properties Bhd, IOI Oleochemical Industries Berhad and Nissan IOI Bhd. He does not have any family relationship with any directors and/or major shareholder of ITCB, nor any conflict of interest in any business arrangement involving the Company. He has had no convictions for any offences within the past ten (10) years.
Dato Dr. Yap Tatt Keat, aged 47, Malaysian.

Group Managing Director
Dato Dr Yap Tatt Keat was appointed as the Group Managing Director of ITCB on 25 September 2003. He is also a member of Remuneration Committee. Dato Dr Yap is a co-founder and Group Managing Director of the Ire-Tex Group. He graduated with a Bachelor of Science Degree in Business Administration from Ohio State University, Columbus, Ohio, US in 1989. In 2001, he obtained Doctorate Business Entrepreneurship from Ansted University, United Kingdom. Upon his graduation from State, he has been in employment with General Electronics (Malaysia) Sdn Bhd, Sony Electronics (Malaysia) Sdn Bhd and Franklin Porcelain Sdn Bhd. He has valuable experiences in the electronics industry gained from his previous employments. In 1992, he left to set up Phoenix Base Sdn Bhd (PBSB), a company engaged in the manufacture of polyurethane foam. In 1995, he joint ventured with Austin Foam Plastics Inc (AFP) from United States and ILP Group Limited (ILP) from Ireland to establish Ire-Tex (Malaysia) Sdn Bhd (ITMSB). He has developed Ire-Tex Group to become a leading protective packaging solution provider in Asia Pacific Region. In addition, he also sits on the board of Directors of all the subsidiaries in ITCB Group and other private limited companies. Dato Dr Yap was awarded The Outstanding Young Malaysian Award in 2000, Chivas Regal Achievement Unlimited Award in 2001, The Yazhou Zhoukan Young Chinese Entrepreneur Award in 2002 and Global Man of The Year Golden Rim Award in 2003. He was also bestowed the Darjah Setia Pangkuan Negeri (D.S.P.N.) by the Governor of Penang in 2004. Dato Dr Yap is the nephew of Mr Lim Poay Guan who is the director of ITCB and the brother-in-law of Mr Lee Chee Cheang who is a major shareholder of ITCB. He has no conflict of interest in any business arrangement involving the Company. He has had no convictions for any offences within the past ten (10) years.
Profile of Board of Directors (Contd)

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See Toh Kean Yaw, aged 39, Malaysian.

Executive Director
See Toh Kean Yaw was appointed to the Board of ITCB as an Executive Director on 25 September 2003. He is a Chartered Accountant of the Malaysian Institute of Accountants and a fellow member of the Chartered Association of Certified Accountants, United Kingdom (ACCA). He also has a Master Degree in Business Administration from University of Portsmouth, United Kingdom. He is responsible in the formulation and implementation of the Groups corporate strategies as well as in charged of the corporate finance and investment management aspects of the Group. He has been with the Group responsible for the financial management and accounting functions since 1999. Prior to joining the Ire-Tex Group, he was attached to an international Public Accountant firm for 4 years from 1995. He is appointed as an Independent NonExecutive Director of KBB Resources Berhad in 2010. He does not have any family relationship with any directors and/or major shareholder of ITCB, nor any conflict of interest in any business arrangement involving the Company. He has had no convictions for any offences within the past ten (10) years.
Timothy Ian OHearn, aged 62, American.

Non-Executive Director
Timothy Ian OHearn was appointed as a Non-Executive Director of ITCB on 2 December 2003. He is one of the co-founder ITMSB. He completed his higher secondary education in 1971 and has been an Associate Member of the Institute of Packaging Professionals in Herndon, Virginia, USA since 1982. His involvement in the protective foam packaging industry started in 1978, when he joined AFP in Texas, USA as General Manager. He was appointed as president of AFP in 1983 and is also a substantial shareholder of AFP. His responsibilities in headquarter corporate liaison, product development and other corporate activities. He is a partner in KO in Texas, USA, a company engaged in business and real estate investment. He is also a partner and Director of Pacific Design Ltd Partnership in Texas, USA, a company engaged in the manufacture of carrying cases. He is also President of Technical Packaging Inc., a US company that is involve in the sales of stretch film, tape and other equipment. He also has equity interests in FX3 Enterprises Ltd, which is involved in logistics, warehousing and kitting. He also sits on the Board of Directors of ITP. He does not have any family relationship with any directors and/or major shareholder of ITCB, nor any conflict of interest in any business arrangement involving the Company. He has had no convictions for any offences within the past ten (10) years.
Dr. Lee Yu Huat @ Lee Yew Huat, aged 66, Malaysian.

Dr Lee Yu Huat @ Lee Yew Huat was appointed as a Non-Executive Director of ITCB on 25 September 2003. He is also the Chairman of Remuneration Committee and a member of Nomination Committee. He graduated from the University of Malaya with a Bachelor of Science Honours degree in 1971. He obtained a Master of Science Degree from the same institution in 1973 before gaining a PhD degree in 1977 from the University of Aston on Birmingham, United Kingdom. He was in the academic field for over 30 years. His academic career began in 1971 when he took up the post as a Tutor at the Faculty of Medicine at the University of Malaya. Between 1977 and 2001, he was a Lecturer in the School of Pharmaceutical Sciences, University of Science, Malaysia (USM), Penang. He assumed his present positions with the Group in 2001. He is also a shareholder of Sin Guan Hup Oil & Rice Mill Sdn Bhd. In addition, he also sits on the Directors of several private limited companies. Dr Lee is the uncle of Mr Lee Chee Cheang who is a major shareholder of ITCB. He has no conflict of interest in any business arrangement involving the Company. He has had no convictions for any offences within the past ten (10) years.
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Profile of Board of Directors (Contd)
Lim Poay Guan, aged 56, Malaysian.

Lim Poay Guan was appointed as a Non-Executive Director of ITCB on 25 September 2003. He is also a member of Remuneration Committee. He has been involved in the polyurethane foam business since 1976 after he completed his secondary education and started his working career with UCI Chemical Industries as Assistant Production Manager responsible in managing the daily production function in the manufacturing plant. In 1983, he was employed as a Production Manager at Kean Cheong Enterprise, which is also involved in the foam manufacturing and protective packaging industry. He is the co-founder of PBSB, major supplier and a customer of the ITCB Group and was appointed Managing Director of PBSB in 1992. His responsibilities cover all functions in PBSB and he has over 30 years experience in the manufacturing sector, especially in the upholstery and protective foam packaging industries. In addition, he also sits on the Directors of several private limited companies. Mr Lim is the uncle of Dato Dr Yap Tatt Keat. He has no conflict of interest in any business arrangement involving the Company. He has had no convictions for any offences within the past ten (10) years.
Fazrin Azwar Bin Dato Md. Nor, aged 46, Malaysian.

Independent Non-Executive Director
Fazrin Azwar Bin Dato Mohd Nor was appointed as an Independent Non- Executive Director of ITCB on 2 December 2003. He graduated in 1990 from University Malaya with a Bachelor of Law (LLB) Honours. He is an Advocate and Solicitor, being called to the Malaysian BAR in 1991. He is currently the Managing Partner of Messrs. Azwar & Associates. In relation to listed companies, he was appointed as an Independent Non-Executive Director of Tong Herr Resources Berhad in 1999, Poh Kong Holdings Berhad in 2004, Daya Materials Berhad in 2005. In 2006, he was appointed as the Independent Non-Executive Chairman of Mercury Industries Berhad. For non-listed companies, he is an Independent Non-Executive Director of Times Offset (M) Sdn Bhd and Non-Executive Director of the Kuchinta Group of Companies. He is a Chartered member of the Institute of Internal Auditors Malaysia and the Malaysian Institute of Directors. He does not have any family relationship with any directors and/or major shareholder of ITCB, nor any conflict of interest in any business arrangement involving the Company. He has had no convictions for any offences within the past ten (10) years.
Teh Eng Aun, aged 61, Malaysian.

Independent Non-Executive Director
Teh Eng Aun was appointed as an Independent Non-Executive Director of ITCB on 20 January 2009. He is also a member of Audit Committee. He obtained his Bachelor of Commerce degree from the University of Newcastle, New South Wales, Australia in 1975. He practised as a chartered accountant in a public accounting firm between 1981 and 1995. In 1996, he joined stock broking firm as a remisier. He has over 24 years of experience in corporate consultancy, financial management and auditing. He is presently a member of the Penang Chinese Chamber of Commerce and a member of the Malaysian Institute of Accountants. He is also an Independent Non-Executive Director of Muar Ban Lee Group Berhad and Multi Usage Holdings Berhad. He does not have any family relationship with any directors and/or major shareholder of ITCB, nor any conflict of interest in any business arrangement involving the Company. He has had no convictions for any offences within the past ten (10) years.
Chairmans Statement
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Dear Shareholders, On behalf of the Board of Directors, I have great pleasure to present the Annual Report and the Financial Statements of the Group for the financial year ended 31 December 2012.
The unfavorable global economic outlook in US owing to their debt burden and the Euro-Zone countries sovereign debt issue globally has made businesses more vulnerable and competition more intense. In the face of such challenging market conditions, we managed to weather the difficult times and performed satisfactorily with the sound business strategies and concerted efforts from all. This is further complimented by our consolidation of operations, effective cost cutting measures, improvement in efficiency and productivity and initiatives to increase customer satisfaction. Financial Review Against the backdrop of a weak global economy, the Group recorded a revenue of RM124.9 million and profit after tax of RM3.3 million for the year. Revenue was affected by weak demand in heavy duty packaging in conjunction with the slowdown in solar industry due to massive oversupply and overcapacity globally. In spite of the drop in revenue, the Group recorded higher profit after tax mainly due to the improved results recorded in the trading division especially on agricultural waste products. In this respect, it must be noted that the overall better than expected results of the Group was mainly attributed to the continued cost control, improved product quality and efficiency, despite the unstable global economy. Dividends The Board of Directors is recommending a first and final tax exempt dividend of one and a half (1.5) cents per share for the financial year ended 31 December 2012 at the forthcoming Annual General Meeting. Future Prospects The Group expects the operating environment to remain very challenging and competitive due to weak global sentiments, escalating production costs and effects on escalating labour costs due to the implementation or upward revision of minimum wages in Malaysia. Given the continued uncertainties in the global economy, the Group endeavours to continue its effort to strengthen and improve controls over procurement, manufacturing and marketing functions to maintain our price competitiveness and enhance our responsiveness to market needs.
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Chairmans Statement (Contd)
Appreciation On behalf of the Board, I wish to express our sincere appreciation to our valued customers and suppliers for their continued support and loyalty, to the relevant government authorities for their guidance and assistance, and to our associates, bankers and business partners for their continuous cooperation and trust. I wish to convey my gratitude to my fellow Directors for their advice and support, to the management and staff for their dedication and commitment in performing their duties. Our achievements are a result of the concerted efforts and contribution from the entire team. In closing, we would like to thank you, our shareholders, for your support and confidence in the Group and we wish to assure you that we will continue to strive hard and uphold your trust in us.
YM Raja Said Abidin Bin Raja Shahrome Chairman
Corporate Governance Statement

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The Board of Directors recognises the importance of good corporate governance and the need to ensure that the principles and recommendations on corporate governance are observed and practised throughout the Group. During the year, various steps has been undertaken to comply with the processes and recommendations as articulated in the Malaysian Code on Corporate Governance 2012 (Code). This Statement sets out the details on how the Group has applied the principles and the extent of compliance with recommendations of the Code.
BOARD OF DIRECTORS The Board recognizes that it is responsible for guiding and monitoring the Company on behalf of its shareholders. The Board has adopted a Board Charter that sets out the division of responsibilities between the Executive Directors, the NonExecutive Directors and the management team. Roles and responsibilities In fulfilling its function, the Board assumes, among others, the following main responsibilities: Reviewing and adopting a strategic plan Overseeing the conduct of the business Identifying principal risks and implementing appropriate internal controls and mitigating measures to manage risks identified Reviewing the adequacy and integrity of management information and internal control systems Planning for succession Overseeing the development and implementation of shareholder communication policy The Board as a whole sets the strategic direction of the Group. The Managing Director and the Executive Directors, assisted by the management team, are responsible for implementation of Board policies and decisions and day to day management of the business in line with the direction set by the Board. The Executive Directors are charged with the effective utilisation and management of the human, physical and financial resources of the Group to achieve the business objectives as set by the Board. In managing the day to day business, the Executive Directors set the key performance indicators to measure the performance of staff as well as the business. These performance indicators are monitored and reviewed periodically to assess performance of the business and corrective actions are taken as necessary. The Board measures Executive managements performance in terms of revenue growth and profitability of the Group. For new investment proposals, the Board will consider whether the investment fits in with the strategic business plan and the likely return on the investment. The Board regards risk management as an integral part of business operations and the Group has in place an ongoing process to identify principal risks faced by the Group and to take appropriate measures to manage risks identified. The Group also has in place an ongoing process to review the effectiveness, adequacy and integrity of its system of internal controls. The Executive Directors periodically report back to the Board on the Groups performance and where necessary obtain Board approval to implement recommendations on actions to be taken. The Board reviews the performance of the Executive Directors and rewards achievement accordingly. Functions reserved for the Board The Board delegates the day-to-day management of the business to the Executive Directors and the management team. However, certain functions are specifically reserved for the Board which includes the following: establishing strategies for the Group in conjunction with management,; approving the Groups annual business plan and budget; approving specific items of material capital expenditure, investments and disinvestments; appointing Directors to the Board; appointing and approving the terms and conditions of appointment of the Managing Director; approving any significant changes to accounting policies; approving the quarterly financial statements;
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Corporate Governance Statement (Contd)

Functions reserved for the Board (Contd) approving the annual financial statements approving any interim dividends and recommending any final dividends to shareholders; approving all circulars, statements and corresponding documents sent to shareholders; approving the terms of reference and membership of Board Committees; and approving Company policies which may be developed from time to time.
Board Committees The Board has delegated certain responsibilities to other Board Committees, which operate within approved Terms of Reference. These committees are the Audit Committee, Nominating Committee and Remuneration Committee. The composition and functions of the Audit Committee are detailed in the Audit Committee Report on pages 19 to 21 while the composition and functions of the Nominating Committee and Remuneration Committee are set out within this Statement. Board Charter The Board has formally adopted a Board Charter which provides guidance to the Board in the fulfillment of its roles, duties and responsibilities. The Board Charter was drawn up in line with and underlines the Boards commitment to comply with relevant legislations, regulations and the principles of good corporate governance. The Board Charter outlines the composition and structure of the Board, the Boards powers, duties and responsibilities including matters reserved for the Board and processes and procedures for Board meetings. The Board Charter is subject to periodic review and will be updated from time to time to reflect changes to the Companys policies, procedures and processes as well as changes to legislations and regulations. The Board Charter is available on the Companys website at http://www.iretex.com.my. Code of conduct In the carrying out the business of the Company, the Board is committed to uphold compliance with relevant requirements of laws and regulations including the Companys Memorandum and Articles of Association and the Listing Requirements of Bursa Malaysia Securities Berhad (Listing Requirements). The Company and its operating subsidiaries have a code of conduct which sets out the standards of responsibilities, obligations and ethical conduct for employees of the Group. In addition, the Directors observe the Company Directors Code of Ethics established by the Companies Commission of Malaysia. Sustainability In setting the Groups overall business strategy, the Board took into consideration and implemented strategies and practices that would promote sustainable growth for the Group. These strategies are integrated into the Groups Corporate Social Responsibility practices which cover the areas of the environment, community, marketplace and workplace. The efforts of the Group in these areas are detailed in the Corporate Social Responsibility Statement in this Annual Report.
APPOINTMENTS TO THE BOARD Nominating Committee The Company has a Nominating Committee which is empowered to bring to the Board recommendations as to the appointment of any new Executive or Non-Executive Director and the Directors to fill the seats on Board Committees. This Committee comprises wholly Non-Executive Directors, a majority of whom are independent. The Nominating Committee will assess the effectiveness of the Board of Directors as a whole, the Board Committees and each individual Director on an annual basis. In developing such recommendations, the Nominating Committee will consult all directors and reflects that consultation in any recommendation of the Nominating Committee brought forward to the Board. The Nominating Committee is chaired by YM Raja Said Abidin Bin Raja Shahrome and its members are En. Fazrin Azwar Bin Dato Md. Nor and Dr. Lee Yu Huat @ Lee Yew Huat. The Nominating Committee has met once during the financial year. YM Raja Said Abidin Bin Raja Shahrome has been appointed as the Senior Independent Non-Executive Director to whom concerns may be conveyed.

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Criteria used in recruitment and annual assessment The Nominating Committees responsibilities include the development and review of the criteria to be used in the recruitment of Board members and the annual assessment of Directors. In recruiting potential Board candidates the Nominating Committee will consider the skills and experience appropriate for a candidate, having regard to those of the existing directors and the effect that the appointment would have on the overall balance of the composition of the Board. Upon identifying a potential candidate, the qualifications, competencies, other directorships and time availability of the candidate will be considered. In addition the independence of the candidate will also be assessed if an Independent Directors is being considered. Any candidate proposed must be approved by all existing Board members. An annual assessment of the Board is undertaken annually following the completion of the financial year. The evaluation is carried out by way of questionnaires sent to each Director. The questionnaires cover the composition, role, procedures and practices of the Board as a whole and the assessment of each Directors performance by each of his peers. The individual responses to the questionnaires are sent to the Chairman of the Nominating Committee and are confidential to each Director. Questionnaire responses are summarised for consideration by the Nominating Committee and subsequently reported back to the Board. An evaluation of the Board took place following the end of the financial year in accordance with the processes described above. Annual assessment of independent directors The role of the Independent Directors is to bring independent and objective judgment to the Board which mitigates risks arising from conflict of interest or undue influence from interested parties and protects the interest of minority shareholders. The Board recognizes that it is important to periodically assess whether a Director who is designated as independent continue to satisfy such designation. An assessment of independence is carried out on each of the Independent Directors annually. Each Independent Director was required to declare his compliance with the criteria of independence as set out in the Listing Requirements. In addition all the Board members were required to evaluate whether each of the Independent Director had continued to show independent and objective judgment in deliberations at Board meetings as well as his conduct outside of Board meetings in matters relating to the Groups affairs. Tenure of independent directors and shareholders approval to retain independent directors The MCCG 2012 recommends that the tenure of an Independent Director should not exceed a cumulative term of nine years. Upon completion of the nine years, an Independent Director may continue to serve on the Board subject to the Directors re-designation as a Non-Independent Director. YM Raja Said Abidin Bin Raja Shahrome and En. Fazrin Azwar Bin Dato Md. Nor have each served on the Board as Independent Directors for a tenure of nine (9) years. The Board believes that a Directors independence is a matter for assessment on a case by case basis and tenure of service does not necessarily interfere with a Directors independence. The Board has carried out an assessment of the Independent Directors and determined that both YM Raja Said Abidin Bin Raja Shahrome and En. Fazrin Azwar Bin Dato Md. Nor satisfied the criteria of independence recognized by the Board. The Board had thus determined that both YM Raja Said Abidin Bin Raja Shahrome and En. Fazrin Azwar Bin Dato Md. Nor should continue to serve as Independent Directors. Accordingly, the Board recommends that both YM Raja Said Abidin Bin Raja Shahrome and En. Fazrin Azwar Bin Dato Md. Nor seek shareholders approval to continue to be designated as Independent Directors at the forthcoming Annual General Meeting of the Company in accordance with the recommendation of MCCG 2012. Re-election of Directors In accordance with the Companys Articles of Association, at least one-third of the Directors are subject to retirement by rotation at each Annual General Meeting and all Directors shall retire from office at least once in every three years but shall be eligible for re-election. The Articles of Association also provide that all Directors appointed by the Board are subject to election by the shareholders at the next Annual General Meeting after their appointment. Separation of position of Chairman and Managing Director The positions of the Chairman of the Board and the Managing Director are held by different individuals. The Chairman, who is an Independent Non-Executive Director, is responsible for the conduct of Board meetings and ensures that Board deliberations are conducted in an environment that promotes open discussion to ensure that views from all Directors are considered before a decision is made. The Managing Director has the general responsibility for day-to-day running of the Groups business, implementation of Board policies and making of operational decisions duly assisted by the management team.
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Composition of the Board The Board presently has eight (8) members which comprise two (2) Executive Directors, three (3) Non-Independent NonExecutive Directors and three (3) Independent Non-Executive Directors. The current composition of the Board is such that no individual or group of individuals dominates the Boards decision making. The Directors have a mix of business knowledge, skills and experience necessary for managing the Groups business, ranging from exposure in the packaging industry, accounting, legal and general management. A profile of each Director is presented on pages 4 to 6. There is a clear division of responsibility between the Independent Non-Executive Chairman and the Group Managing Director to ensure the balance of power and authority. The presence of Independent and Non-Executive Directors on the Board provides a balanced and independent view and judgment on corporate issues dealt with at the Board level to safeguard the interest of public shareholders. Given the nature and scope of the Groups operations, the Board considers that the current size of the Board is adequate. Board meetings and time commitment of directors The Board meets at least four times a year to review and approve the quarterly and year end financial results. Additional meetings are convened as necessary when there are urgent and important matters that require the Boards deliberation. Board members may also be nominated to serve on Board Committees which hold their own meetings. Directors and Board Committee members are furnished with papers, reports and material relevant to the issues to be discussed prior to the meetings and are expected to review such material beforehand so that meaningful discussion can take place during meetings. This expectation of time commitment is communicated to new Board members before they are appointed. Directors should also notify the Chairman before accepting any new directorship in other listed companies to assess whether they will be able to devote sufficient time to the Company. During the financial year ended 31 December 2012, five (5) meetings were held. The details of attendance of each Director at the Board meetings held during the financial year are as follows: YM Raja Said Abidin Bin Raja Shahrome Dato Dr. Yap Tatt Keat See Toh Kean Yaw Timothy Ian O Hearn Dr. Lee Yu Huat @ Lee Yew Huat Lim Poay Guan Fazrin Azwar Bin Dato Md. Nor Teh Eng Aun Dato Shafee Bin Abu Bakar (resigned on 2 May 2013) 5/5 5/5 5/5 5/5 4/5 5/5 4/5 5/5 5/5
Access to information and advice Scheduled Board meetings are structured with a pre-set agenda. Each Director is provided with timely and relevant information to discharge their duties and responsibilities, including quarterly and annual financial statements, minutes of meetings and board papers and reports relevant to the issues of the meetings covering financial and operational matters. The Directors may access all information within the Group in furtherance of their duties. If required, the Directors may take independent professional advice in the furtherance of their duties at the Companys expense. Before incurring the professional fee, the Director concerned must seek the approval of the Board. Company Secretary The Directors have direct access to the advice and the services of the Company Secretaries to enable them to discharge their duties. The Company Secretaries convene all Board meetings and at least one of them attends all Board meetings to ensure that Board procedures are followed and accurate records of the proceedings and resolutions passed are maintained. The Company Secretaries also ensure that the statutory registers are properly maintained at the registered office of the Company.

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Company Secretary (Contd) The Company Secretaries update the Directors periodically when new statutes and requirements are issued by the regulatory authorities to ensure that the Directors are aware of regulatory developments that affect them in carrying out their responsibilities. The Company Secretaries also make announcements to Bursa Malaysia on behalf of the Company and brief the Board on proposed contents of material announcements prior to their release. The Board believes that the current Company Secretaries who are qualified and experienced are capable of carrying out their duties to assist the Board in ensuring adherence to Board policies and procedures. Directors Training All Directors have attended and successfully completed the Mandatory Accreditation Programme prescribed by Bursa Malaysia. During the year, the Directors have attended and participated at seminars, workshops and conferences for the continuing enhancement of their knowledge and to keep abreast of developments in the market place. These seminars, workshops and conferences include the following: Overview of Global Capital Market conducted by Am Bank Berhad Executive Supplier Forum conducted by First Solar Inc Malaysia Budget 2013: Highlights and Implications conducted by ACCA Transfer Pricing Seminar conducted by Lembaga Hasil Dalam Negeri Green Transformer Conference conducted by Internationale Bangkei Mengenai Industri Kertas dan Percetakan conducted by MIDA Finance Transformation: Expert insights on share-services and outsourcing conducted by ACCA The Case For Diversity In the Boardroom conducted by CSR Asia and Bursa Malaysia Latest Development In Technologies On Biomass Utilization organized by Malaysia Palm Oil Board Role of the Audit Committee in Assuring Audit Quality organized by MIA and Bursa Malaysia Corporate Governance Blueprint and Malaysia Code of Corporate Governance 2012 organized by Institute of Internal Auditors Malaysia and Bursa Malaysia Making the Most of The Chief Financial Officer Role: Everyones Responsibility organized by ICAEW and Bursa Malaysia
DIRECTORS REMUNERATION Remuneration Committee The Remuneration Committee which comprises mainly Non-Executive Directors recommends the remuneration for the Executive Directors. The determination of the remuneration of the Non-Executive Directors is a matter for the Board as a whole. Individual Directors abstain from discussing and being involved in deciding their own remuneration. The Board recognises that remuneration packages should be sufficient to attract, retain and motivate Directors with the qualities needed to run the Group successfully. The remuneration of Directors is generally based on market conditions, responsibilities held and the Groups overall financial performance. Decisions and recommendations of the Remuneration Committee are reported back to the Board for approval and where required by the rules and regulations governing the Company, for approval of Shareholders at the Annual General Meeting. The Remuneration Committee is chaired by Dr. Lee Yu Huat @ Lee Yew Huat and its members are Mr. Lim Poay Guan and Dato Dr. Yap Tatt Keat. The Remuneration Committee has met once during the financial year. The details of the Directors remuneration for the financial year ended 31 December 2012 are as follows:Aggregate remuneration (in RM) paid/payable to Categorisation Directors Fees Other Emoluments: Salary, bonus & allowance Contribution by employer to Provident Fund Benefit-in-kind (based on estimated money value) Total Executive Directors 24,000 784,684 105,923 14,700 929,307 Non-Executive Directors 96,000
96,000
14

Remuneration Committee (Contd) The number of Directors whose remuneration for the financial year ended 31 December 2012 fall into the respective bands are as follows:Remuneration Band (in RM) Below 50,000 50,000 to 300,000 300,001 to 350,000 350,001 to 600,000 600,001 to 650,000 Total SHAREHOLDERS Corporate disclosure policies and procedures The Board abides with the corporate disclosure policies as set out in the Listing Requirements. It is the policy of the Company that immediate disclosure is made of material information. Information is considered material if it is reasonable to expect that it will have a material effect on the price, value or market activity of the Companys securities or it will affect the decision of an investor or holder of the Companys securities in determining his choice of action. However, in exceptional circumstances, the Company may temporarily withhold the disclosure of material information to a more appropriate time such as instances where immediate disclosure would affect the ability of the Company to pursue its corporate objectives, when the facts of the matter at hand is in a state of flux or where company or securities laws may restrict the extent of permissible disclosure. Material information which is withheld will be restricted to persons on a strict need-to-know basis and all persons with such information will be informed of the requirement to maintain strict confidentiality. In the event that material information that has been withheld has or is believed to have been inadvertently disclosed or where the information has become generally available to the public, the Company will immediately announce the information. The Company strives to ensure that information that is released is in a manner that would obtain wide public dissemination. Disclosure of material information by the Company is first made by an announcement to Bursa Malaysia. All announcements are also made available on the Companys website. Press conferences may be held if the Board is of the opinion that it would draw better attention to the information that is to be disseminated. However, the Company will ensure that any such information will be first released or simultaneously released to Bursa Malaysia. The Company will ensure that material information will not be made on an individual or selective basis to any individual or group if it has not been disclosed and disseminated to the public. While the Company endeavours to provide information to its shareholders and stakeholders it is also mindful of the requirement to refrain from misleading promotional disclosure activity. All Board members and parties who are insiders are aware of the provisions of the Capital Markets and Services Act 2007 and the Companies Act, 1965 with regards to prohibition of trading in the securities of the Company on the basis of material information which is not known to the public. In addition, affected persons are notified of the restrictions in dealing in the Companys securities while in possession of price-sensitive information and during closed periods unless the procedures for dealings during closed periods as set out in the Listing Requirements have been complied with. Use of information technology to disseminate information Shareholders and investors are kept informed of all major development within the Group by way of announcements via the Bursa Malaysias LINK, the Companys annual reports and where appropriate, circulars to shareholders. Other information about the Company is also made available at the Companys website at http://www.iretex.com.my. Shareholder participation at general meetings The Annual General Meeting (AGM) is the principal forum for dialogue with shareholders. Notice of AGM and annual reports are sent to shareholders at least 21 days before the meeting. At each AGM, the Board presents the progress and performance of the business as contained in the annual report and encourages shareholders to participate in a question and answer session. The Directors are available to provide responses to questions from the shareholders during the meeting. Executive Directors Non-Executive Directors 7
1 1 2

15
Shareholder participation at general meetings (Contd) In addition, Extraordinary General Meetings (EGMs) are held as and when needed to obtain shareholders approval on certain business or corporate proposals. Adequate notice of EGM, in compliance with regulatory requirements, are sent to shareholders together with comprehensive Circulars/Statements setting out details and explaining the rationale with regards to the matters for which shareholders approval are being sought. Poll voting At the commencement of each general meeting, the Chairman will inform the shareholders of their right to demand a poll vote. The Board will consider putting substantive resolutions to vote by poll if it feels that it is necessary to gauge the support of shareholders for particular resolutions. When a resolution has been put to vote by poll, the Chairman will announce the number of votes cast for and against the resolution at the general meeting and an announcement of such result will also be made to Bursa Malaysia. The Board will consider employing electronic means for poll voting when the infrastructure for employing such means becomes available at reasonable cost and taking into consideration the number of attendees who normally attend general meetings. Communication and proactive engagement with shareholders AGMs and EGMs, where appropriate, remain the most common platform for the Company and the Board to have effective communication and engagement with shareholders about performance, corporate governance and other matters affecting shareholders interest. In addition, the Board may hold press conference where appropriate to keep shareholders informed of the Groups affairs. Information released to the public will also be made available on the Companys website for shareholders to have easy access.
ACCOUNTABILITY AND AUDIT Compliance with applicable financial reporting standards The directors have a responsibility to present a fair assessment of the Groups financial performance, position and prospects. This is achieved mainly by way of financial reporting through the quarterly reports to Bursa Malaysia and the annual report to shareholders. Pursuant to the Companies Act, 1965, the Directors are required to prepare financial statements for each financial year which give a true and fair view of the state of affairs of the Group and of the Company as at the end of the financial year and of the results and cash flows of the Group and of the Company for the financial year then ended. The Directors consider that, in preparing the financial statements, the Group has used appropriate accounting policies, consistently applied and supported by reasonable and prudent judgements and estimates. The Directors also consider that all applicable approved accounting standards have been followed, and confirm that the financial statements have been prepared on a going concern basis. The Directors are responsible for ensuring that the Group and the Company keep accounting records which disclose with reasonable accuracy at any time the financial position of the Group and of the Company and which enable them to ensure that the financial statements are properly drawn up in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 1965. The Board aims to ensure that it fulfills its responsibility in the area of financial reporting by appointing a suitably qualified accountant to oversee the financial reporting function. The Board is also assisted by the Audit Committee to oversee the Groups financial reporting process and the quality of its financial reporting. Towards this end the Audit Committee meets to discuss and review the quarterly results and the year end financial statements together with finance personnel and the external auditors where applicable before the financial reports are recommended to the Board for approval and public release. Suitability and independence of external auditors The external auditors fulfill an essential role in giving assurance to the shareholders and other parties of the reliability of the financial statements of the Company. The Company has always maintained a formal and transparent relationship with the external auditors in ensuring the Companys compliance with applicable approved accounting standards and statutory requirements.
16

Suitability and independence of external auditors (Contd) The Audit Committee is responsible for recommending the appointment or re-appointment of external auditors. The role of the Audit Committee in relation to the external auditors is described in the Audit Committees terms of reference as detailed on pages 19 to 21 of the Annual Report. In assessing the suitability of external auditors, the Audit Committee will ensure that only firms which have experience in the audit of listed companies and are registered with the Audit Oversight Board will be considered. The Audit Committee recognizes that the regular provision of non-audit services by the external auditors may lead to impairment of the external auditors independence and objectivity. The external auditors are therefore not normally engaged for non-audit related services. However, the external auditors may be engaged for services related to corporate exercises carried out by the Group from time to time, which are not regular in nature, for which the engagement of the external auditors may be deemed to be more effective for the Group. During the financial year, no non-audit fees were paid to the external auditors of the Company, other than the tax services fee totalling RM18,100 paid/payable to a company in which certain partners of the audit firm are shareholders and directors. The external auditors have affirmed that members of their engagement team and the firm have complied with the relevant ethical requirements regarding independence in the conduct of their audit engagement of the Group for the financial year ended 31 December 2012. Framework to manage risks The Board acknowledges that it is responsible for establishing a sound framework to manage risks and maintaining a sound system of internal controls to safeguard shareholders investment and the Companys assets. The Directors also have a general responsibility for taking reasonable steps to prevent and detect fraud and other irregularities. An overview of risk management and the state of internal control within the Group is set out in the Statement on Risk Management and Internal Control on page 18 of this Annual Report. Internal audit function The Group has set up an in-house internal audit function which conducts audits and monitors compliance with Group policies and procedures and the effectiveness of the Groups internal control systems. The internal audit function reports directly to the Audit Committee. The Audit Committee Report set out on pages 19 to 21 of this Annual Report provides a summary of the internal audit function and the internal audit activities carried out during the financial year. Compliance Statement Save as disclosed, throughout the financial year ended 31 December 2012, the Group has complied with all the principles and recommendations of the MCCG 2012. This statement was made in accordance with a Board of Directors resolution dated 16 May 2013.
Corporate Social Responsibility Statement

17
The Group is driven by the belief that in pursuit of any business objective we need to strike a balance between profitability and contributions to the social and environmental responsibilities which in the long run will ensure sustainability for the Group. With such belief, the Group is committed and uses it best endeavor, on ongoing basis, to integrate Corporate Social Responsibility (CSR) practices into its business strategies and day to day business operations to ensure sustainable growth for the Group. Our CSR practices cover the areas of the environment, community, marketplace and workplace.
COMMUNITY As a responsible corporate citizen, the Group strives to give back to the community in which it operates. The Group focuses its attention on the areas of education and caring for the well being of the under privileged. Towards this end the Group has made cash donations to schools and the activities of various charitable societies and organizations. The Group also supports internship programs from various local universities/colleges. Students from these universities/colleges are placed as interns in various positions in the Groups operations with the aim of giving practical training to these students in their particular job area as well as to let them gain insight into how business organizations operate in general. Such internship program also enables the Group to tap into the talent pool available in local universities/colleges upon their graduation.
ENVIRONMENT The Group strives to adopt eco-friendly practices in its manufacturing process to protect the environment such as promoting 3R (Reduce, Reuse and Recycle) concept on the usage of raw materials like paper and polymer compounds in the production process and minimizing the use of hazardous compound. Waste water and sludge from production are treated before being discharged and noise and air pollution levels are in compliance with environmental regulations and laws. One of the initiatives of the Group to promote greater environmental responsibility is its undertaking on the generation of energy using biomass. This undertaking through its subsidiary company Powertude Sdn Bhd, uses biomass as fuel to generate energy, instead of using traditional diesel oil, for part of the Groups production process. Biomass, which is an agricultural waste product, is a renewable resource and its use is more environmentally friendly than the use of diesel which is derived from fossil fuel and is a depleting resource. In addition, the Group is also continuously implementing energy conservation projects throughout the organisation. The Group is also involved in the business of collection, treatment and sale of sludge palm oil for use as biodiesel by third parties.
MARKETPLACE The Group maintains an online platform via its website which provides information on the Group encompassing quarterly and financial annual results and updates on the Groups performance as well as formal announcements on developments in the Group with the objective of fostering and maintaining good relations with and providing timely information to various stakeholders of the Group.
WORKPLACE Our employees are the most valuable assets of the Group and their interests and safety are our priority. The Group cultivates awareness among its employees on the importance of learning from personal development to occupational safety & health as enacted by the law. Workshops and courses on the latest technology are provided to enhance employees job-related skills and knowledge. The Group also promotes safety and health among its employees through external as well as internal programs on occupational safety and health. To enhance the quality of life and better social interaction, Inter-company or Inter-Department sports competition (such as Futsal Competition, Badminton Competition and etc) are also being organized to foster closer relationship within the Group of companies, customers and suppliers while at the same time creating a healthy lifestyle and culture.
18
Statement on Risk Management & Internal Control

Pursuant to Paragraph 15.26(b) of the Bursa Malaysia Securities Berhad (Bursa Malaysia) Listing Requirements, the Board of Directors (the Board) is pleased to provide the following statement on risk management and internal control of the Group, which had been prepared in accordance with the Statement on Risk Management and Internal Control: Guidelines for Directors of Listed Issuers (the Internal Control Guidelines) as adopted by the Bursa Malaysia. Responsibility The Board recognizes the importance of maintaining a sound internal control system covering risk management and the financial, operational and compliance controls to safeguard shareholders investments and the Groups assets. The Board acknowledges that it is responsible for the Groups risk management and internal control system to safeguard shareholders investments and the Groups assets and for the continuing review of their adequacy and integrity. The internal control system is designed to cater for the Groups needs and to manage the risks to which it is exposed. It should be noted that such systems are designed to manage rather than to eliminate the risk of failure to achieve business objectives and can only provide reasonable, and not absolute, assurance against material misstatement or loss. The Group has in place an on going process to review the effectiveness, adequacy and integrity of the system of internal controls. Risk Management and Internal Control System The Board regards risk management as an integral part of business operations. The Board undertakes to identify potential risks faced by the Group through a risk assessment and evaluation framework, where the following factors are considered: The nature and extent of risks faced by the Group; The extent and categories of risk which are regarded as acceptable to the Group; The likelihood of the risks concerned materializing; The Groups ability to reduce the incidence of risks that may materialize and their impact on the business; and The costs of operating particular controls relative to the benefit thereby obtained in managing the related risks.
The key elements of the framework of risk management and internal control system of the Group are as follows: Operating procedures that set out the policies, procedures and practices adopted in the Group are properly documented and communicated to staff member so as to ensure clear accountabilities. The effectiveness of internal control procedures are subject to continuous assessments, reviews and improvements; The organizational structure is well defined, with clear line of responsibilities and delegation of authorities. Key responsibilities are properly segregated; The Board meets regularly and is kept updated on the Groups activities and operations and significant changes in the business and external environment, if any, which may result in significant risks; Financial results, including key performance indicators are reviewed quarterly by the Board and the Audit Committee; Executive Directors and Heads of Departments meet regularly to discuss operational, corporate, financial and key management issues; Effective reporting system, which provides for a documented and auditable trail of accountability to ensure timely information for management review, has been put in place, and The Group is strongly committed to an environment of sound governance, sound internal controls and culture that will safeguard stakeholders interest and the Groups assets. Conclusion The external auditors have reviewed this Statement on Risk Management and Internal Control pursuant to paragraph 15.23 of the Listing Requirements of Bursa Malaysia, and have reported to the Board that it appropriately reflects the processes that the Board has adopted in reviewing the adequacy and integrity of the risk management and internal control system. The Board is of the opinion that based on the current level of activities, the Groups risk management and internal control system is adequate and accords with the guidelines provided by the Internal Control Guidelines adopted by Bursa Malaysia. The Board has received assurance from the top management and CEO that the companys risk management and internal control system is operating adequately and effectively, in all material aspects, based on the risk management and internal control system of the Company. Statement made in accordance with a resolution dated 24 April 2013.
Audit Committee Report

19
MEMBERS OF THE AUDIT COMMITTEE The present members of the Audit Committee are as follows:Chairman : YM Raja Said Abidin Bin Raja Shahrome Members : Teh Eng Aun : Fazrin Azwar Bin Dato Md. Nor (Appointed on 2 May 2013) : Dato Shafee Bin Haji Abu Bakar (Resigned on 2 May 2013) - Independent Non-Executive Director - Independent Non-Executive Director - Independent Non-Executive Director - Independent Non-Executive Director
TERMS OF REFERENCE The Directors have approved and adopted the following Terms of Reference, which set out the roles and responsibilities of the Audit Committee.
OBJECTIVES To assist the Board of Directors in discharging their responsibilities as they relate to the Groups management including risk management, internal controls, financial reporting and compliance with statutory and legal requirements; To provide, by way of regular meetings, a direct line of communication between the Board of Directors, senior management, external and internal auditors; To oversee and review the quality of the audits conducted by the external and internal auditors; and To enhance the perceptions of interested parties, such as shareholders, regulators, creditors and employees, of the credibility and objectivity of the financial reports.
COMPOSITION The Audit Committee shall be appointed by the Board of Directors from amongst the Directors of the Company and shall consist of not less than three (3) members, all of whom shall be Non-Executive Directors with a majority being Independent Non-Executive Directors. No Alternate Directors shall be appointed a member of the Audit Committee. At least one member of the Audit Committee:(i) Must be a member of the Malaysian Institute of Accountants; or (ii) If he is not a member of the Malaysian Institute of Accountants, he must have at least three (3) years working experience and - he must have passed the examination specified in Part I of the 1st Schedule of the Accountants Act, 1967; or - he must be a member of one of the associations of accountants specified in Part II of the 1st Schedule of the Accountants Act, 1967. (iii) fulfils such other requirements as prescribed or approved by Bursa Malaysia Securities Berhad (Bursa Malaysia). If the membership for any reason falls below three members, the Board of Directors must fill the vacancy within three months.
Chairman The Chairman shall be an independent director elected by the members of the Audit Committee.
Secretary The Secretary of the Audit Committee shall be the Company Secretary of the Board of Directors.
20
Audit Committee Report (Contd)
COMPOSITION (Contd) Quorum A quorum shall be two (2) members and a majority of the members present must be Independent Directors. In the absence of the Chairman, the members present shall elect a chairman for the meeting from amongst the members present.
Meetings The Audit Committee shall regulate its own proceedings. The Committee shall meet at least four (4) times a year. The Audit Committee has the discretion to invite relevant personnel to their meeting. The presence of senior management, external and internal auditors may be requested, if required. Other members of the Board of Directors may attend meetings upon the invitation of the Audit Committee. The external and internal auditors may request a meeting by notifying the Secretary of the Audit Committee if they consider it necessary.
Authority The Audit Committee is authorised by the Board of Directors to investigate any matter within its terms of reference. The Committee shall have the resources which are required to perform its duties and have full and unrestricted access to any information and personnel pertaining to the Group. The Committee has a direct communication channel with the external and internal auditors and may obtain independent professional advice as and when necessary to discharge their duties.
Functions The functions of the Audit Committee shall be: To review and discuss with the external auditors the following:(i) the audit plan (including the nature and scope of audit); (ii) their audit report; (iii) their evaluation of the system of internal control; (iv) problems and reservations arising from the external audits, and any matters the external auditors may wish to discuss (in the absence of management, where necessary); and (v) their management letter and managements response; Consider and recommend the nomination, appointment and re-appointment of external auditors, their fees and any questions on resignation and dismissal; Review the quarterly results and year end financial statements, prior to submission to the Board of Directors for approval, focusing particularly on:(i) going concern assumptions; (ii) changes in major accounting policies and practices; (iii) major judgemental areas, significant and unusual events; (iv) significant adjustments arising from the audit; and (v) compliance with approved accounting standards, regulatory and other legal requirements; Review any related party transaction and conflict of interest situation that may arise within the Company or the Group, including any transaction, procedure or course of conduct that raises questions of management integrity, and to ensure that the Directors report such transactions annually to the shareholders via the Annual Report; Review and approve the draft Annual Report prior to presentation to the Board of Directors for approval; Review the following in respect of the internal audit functions:(i) approval of the internal audit plan; (ii) adequacy of the scope, functions and resources of the internal audit functions and whether it has the necessary authority to carry out its work; (iii) scope of internal audit programme, the results of the internal audit findings, and the adequacy of managements response and corrective actions to be taken; (iv) effectiveness of the internal audit function; and (v) approve any appointment or termination of internal auditors and to provide the opportunity for the internal auditors to submit his reasons for resigning; Prepare reports, if the circumstances arise or at least once a year, to the Board of Directors summarising the work performed in fulfilling the Audit Committees primary responsibilities; and Act on any matters as may be directed by the Board of Directors.
Audit Committee Report (Contd)

21
SUMMARY OF ACTIVITIES The Audit Committee met five (5) times during the financial year ended 31 December 2012 and details of attendance are as follows:-. Audit Committee Member YM Raja Said Abidin Bin Raja Shahrome Teh Eng Aun Dato Shafee Bin Haji Abu Bakar (Resigned on 2 May 2013) Designation Independent Non-Executive Director Independent Non-Executive Director Independent Non-Executive Director Attendance 5/5 5/5 5/5
In discharging its functions and duties, the Committee has considered, reviewed and discussed the following: Reviewed the quarterly and yearly results/announcements of the Company and ensured compliance with approved accounting standards and adherence to other legal and regulatory requirements as well as making relevant recommendations to the Board for approval; Reviewed and discussed the unusual and significant related parties transactions; Reviewed the Audit Planning Memorandum presented by the external auditors; Discussed the external audit plan with the external auditors; Reviewed and considered the assistance given by the companys officers and staff to the external auditors; Assessed the findings of the external auditors and their reports; Evaluated and approved the audit plan of the Internal Auditors; Reviewed and appraised the audit reports prepared by the Internal Auditors and the risk management and internal control system in place; Reviewed corporate governance statement, statement on risk management and internal control and audit committee report and recommended the same to the Board for inclusion in the Annual Report; and Appraised and evaluated the performance of external auditors and recommended their re-appointment to the Board of Directors of the Company.
INTERNAL AUDIT FUNCTION The Internal Audit function plays a key role in assisting the Audit Committee to oversee that the Management has in place a sound system of internal control, monitoring and governance. The Internal Audit Department carries out its audits according to the audit plan approved by the Audit Committee. Risk identification and assessment is carried out as part of the routine audit process, where audit emphasis was given on high and critical risk areas. Internal Auditors regularly submit audit reports on their activities and findings which are tabled at the Audit Committee meetings. The Head of Internal Audit department attends the Audit Committee meetings to present internal audit findings and make appropriate recommendations to the Audit Committee on areas of concern within the Group for the Committees deliberation and recommendation to the Board. Due to the nature of the function, the Internal Auditors are able to undertake investigations on operational failures reported to them within the Group, on behalf of the Audit Committee. Such regular monitoring enables the Group to maintain and enhance the integrity and effectiveness of the Groups system of internal control. The Group has an in-house Internal Audit Department whose principal responsibility is to undertake regular and systematic reviews of the system of internal control to ensure the adequacy and effectiveness of such system, anticipate any potential risks and recommend improvements, where necessary. The cost incurred for the internal audit function in respect of the financial year ended 31 December 2012 was approximately RM85,402.00.
22
Other Information
Material Contracts Save as disclosed below, there have been no material contracts involving Directors and major shareholders interests, either still subsisting at the end of the year ended 31 December 2012 or, if not then subsisting, entered into since the end of the previous financial period:(a) Tenancy Agreement dated 1 January 2012 between Lee Yew Lee, Dr. Lee Yu Huat @ Lee Yew Huat and Ong Mooi Eng as landlord and Eppor-Pack Sdn Bhd (EPSB) as tenant in respect of the letting of the premises known as 2211, Permatang Kling, 14300 Nibong Tebal, Penang for a fixed term of 2 years commencing on 1 January 2012 and expiring on 31 December 2013 for RM16,500 per month. Dr. Lee Yu Huat @ Lee Yew Huat and Lee Chee Cheang are Directors of EPSB. Dr. Lee Yu Huat @ Lee Yew Huat is also a Director and shareholder of Ire-Tex Corporation Berhad (ITCB). Ire-Tex Holdings Sdn Bhd (ITHSB) is a major shareholder of ITCB and Lee Chee Cheang is deemed interested by virtue of his shareholdings in ITHSB. Lee Yew Lee and Ong Mooi Eng are persons connected to Dr. Lee Yu Huat @ Lee Yew Huat as Lee Yew Lee is the brother of Dr. Lee Yu Huat @ Lee Yew Huat and Ong Mooi Eng is the sister-inlaw of Dr. Lee Yu Huat @ Lee Yew Huat. Lee Yew Lee is a person connected to Lee Chee Cheang as he is the father of Lee Chee Cheang. (b) Tenancy Agreement dated 1 January 2012 between Sin Guan Hup Oil & Rice Mill Sdn Bhd (SGHORM) as landlord and EPSB as tenant in respect of the letting of the premises known as 2211, Permatang Kling, 14300 Nibong Tebal, Penang for a fixed term of 2 years commencing on 1 January 2012 and expiring on 31 December 2013 for RM2,500 per month. Dr. Lee Yu Huat @ Lee Yew Huat and Lee Chee Cheang are Directors of EPSB. Dr. Lee Yu Huat @ Lee Yew Huat is also a Director and shareholder of Ire-Tex Corporation Berhad (ITCB). Ire-Tex Holdings Sdn Bhd (ITHSB) is a major shareholder of ITCB and Lee Chee Cheang is deemed interested by virtue of his shareholdings in ITHSB. Lee Yew Lee, Dr. Lee Yu Huat @ Lee Yew Huat, Lee Chee Cheang and Ong Mooi Eng are major shareholders of SGHORM. Lee Yew Lee and Ong Mooi Eng are Directors of SGHORM. Lee Yew Lee and Ong Mooi Eng are persons connected to Dr. Lee Yu Huat @ Lee Yew Huat as Lee Yew Lee is the brother of Dr. Lee Yu Huat @ Lee Yew Huat and Ong Mooi Eng is the sister-in-law of Dr. Lee Yu Huat @ Lee Yew Huat. Lee Yew Lee is a person connected to Lee Chee Cheang as he is the father of Lee Chee Cheang. (c) Tenancy Agreement dated 1 January 2012 between Lee Yew Lee and Ong Mooi Eng as landlord and Eppor-Pack Sdn Bhd (EPSB) as tenant in respect of the letting of the premises known as 2211, Permatang Kling, 14300 Nibong Tebal, Penang for a fixed term of 2 years commencing on 1 January 2012 and expiring on 31 December 2013 for RM8,640 per month. Dr. Lee Yu Huat @ Lee Yew Huat and Lee Chee Cheang are Directors of EPSB. Dr. Lee Yu Huat @ Lee Yew Huat is also a Director and shareholder of Ire-Tex Corporation Berhad (ITCB). Ire-Tex Holdings Sdn Bhd (ITHSB) is a major shareholder of ITCB and Lee Chee Cheang is deemed interested by virtue of his shareholdings in ITHSB. Lee Yew Lee and Ong Mooi Eng are persons connected to Dr. Lee Yu Huat @ Lee Yew Huat as Lee Yew Lee is the brother of Dr. Lee Yu Huat @ Lee Yew Huat and Ong Mooi Eng is the sister-in-law of Dr. Lee Yu Huat @ Lee Yew Huat. Lee Yew Lee is a person connected to Lee Chee Cheang as he is the father of Lee Chee Cheang. (d) Tenancy Agreement dated 1 January 2012 between Lee Yew Lee, Dr. Lee Yu Huat @ Lee Yew Huat and Ong Mooi Eng as landlord and Powertude Sdn Bhd (PTSB) as tenant in respect of the letting of the premises known as 2211, Permatang Kling, 14300 Nibong Tebal, Penang for a fixed term of 2 years commencing on 1 January 2012 and expiring on 31 December 2013 for RM13,000 per month. Lee Chee Cheang is a Director of PTSB. Ire-Tex Holdings Sdn Bhd (ITHSB) is a major shareholder of ITCB and Lee Chee Cheang is deemed interested by virtue of his shareholdings in ITHSB. Dr. Lee Yu Huat @ Lee Yew Huat is a Director and shareholder of Ire-Tex Corporation Berhad (ITCB). Lee Yew Lee and Ong Mooi Eng are persons connected to Dr. Lee Yu Huat @ Lee Yew Huat as Lee Yew Lee is the brother of Dr. Lee Yu Huat @ Lee Yew Huat and Ong Mooi Eng is the sister-in-law of Dr. Lee Yu Huat @ Lee Yew Huat. Lee Yew Lee is a person connected to Lee Chee Cheang as he is the father of Lee Chee Cheang. (e) Tenancy Agreement dated 1 April 2011 between Lee Chee Cheang and Lee Chee Chow as landlord and EPSB as tenant in respect of the letting of the premises known as 2211, Permatang Kling, 14300 Nibong Tebal, Penang for a fixed term of 2 years commencing on 1 April 2011 and expiring on 31 March 2013 for RM20,000 per month. Lee Chee Cheang is a Director of EPSB. Ire-Tex Holdings Sdn Bhd (ITHSB) is a major shareholder of ITCB and Lee Chee Cheang is deemed interested by virtue of his shareholdings in ITHSB. Lee Chee Chow is a person connected to Lee Chee Cheang as he is the brother of Lee Chee Cheang.
Other Information (Contd)

23
Material Contracts Relating to Loans The Company and its subsidiaries do not have any material contracts relating to loan involving the interest of its Directors and major shareholders. Share Buy-Backs During the financial year, there were no share buy-backs by the Company. Option, Warrants or Convertible Securities The Company has in place an Employee Share Option Scheme (ESOS). Salient features of the ESOS are disclosed in Note 14 to the financial statements. Details of options granted, exercised and outstanding options pursuant to the ESOS during the financial year are as follows :Grant date Expiry date Exercise price (RM) 1.40 1.00 Balance at 01.01.2012 750,800 1,887,000 Number of Share Options Exercised Lapsed/ Granted and Forfeited Accepted (134,000) (33,000) Balance at 31.12.2012 750,800 1,720,000
17.02.2004 24.08.2004
16.01.2014 16.01.2014
Details of ESOS granted to the Chief Executive and Directors during the financial year are as follows :Number of Options over ordinary Shares of RM1.00 each
Balance at 01.01.2012 Chief Executive Dato Dr Yap Tatt Keat Director See Toh Kean Yaw Granted Exercised Balance at 31.12.2012
359,000
359,000
341,500
(40,000)
301,500
The aggregate maximum allowable allocation and the actual ESOS allocation to the Directors and senior management personnel are as follows :
Aggregate maximum allowable allocation of ESOS in each year since commencement from the offer date Year Directors Senior Management Personnel 2004 20.00% 30.00% 2005 20.00% 30.00% 2006 20.00% 30.00% 2007 20.00% 30.00% 2008 20.00% 30.00% 2009 20.00% 30.00% 2010 20.00% 30.00% 2011 20.00% 30.00% 2012 20.00% 30.00%
The actual allocation of ESOS in each year since commencement from the offer date Year Directors Senior Management Personnel 2004 4.93% 10.90% 2005 2006 2007 12.62% 10.32% 2008 2009 2010 2011 2012 -
Depository Receipt Programme The Company does not sponsor any depository receipt programme. Imposition of Sanction / Penalties There was no sanction and / or penalties imposed on the Company and its subsidiaries, directors or management by the relevant regulatory bodies during the financial year. Profit forecast or profit guarantee There were no profit forecast given or profit guarantee received by the Company in respect of the financial year ended 31 December 2012.
24
Recurrent Related Party Transactions Set out below are the recurrent related party transactions of the Group for the financial year ended 31 December 2012 that were carried out in the normal course of business on an arms length basis:Company in the Group Interested Related involved Party Lee Yew Lee, Dr. Lee Yu Huat @ Lee Yew Huat and Ong Mooi Eng (1)
Nature of Transaction
Interested Directors/Major Shareholders and persons connected Lee Yew Lee, Dr. Lee Yu Huat @ Lee Yew Huat, Ong Mooi Eng, Lee Chee Cheang and ITHSB (1)
RM 301,680
Rental of factory located at EPSB 2211 Permatang Kling, 14300 Nibong Tebal by EPSB from Lee Yew Lee, Dr. Lee Yu Huat @ Lee Yew Huat and Ong Mooi Eng Rental of premises located at PTSB 2211 Permatang Kling, 14300 Nibong Tebal by PTSB from Lee Yew Lee, Dr. Lee Yu Huat @ Lee Yew Huat and Ong Mooi Eng Rental of factory located at EPSB 2211 Permatang Kling, 14300 Nibong Tebal by EPSB from SGHORM Rental of factory located at EPSB 2211 Permatang Kling, 14300 Nibong Tebal by EPSB from Lee Chee Cheang and Lee Chee Chow Sale of energy to SGHORM by PTSB PTSB
Lee Yew Lee, Dr. Lee Yu Huat @ Lee Yew Huat and Ong Mooi Eng (2)
Lee Yew Lee, Dr. Lee Yu Huat @ Lee Yew Huat, Ong Mooi Eng, Lee Chee Cheang and ITHSB (2)
156,000
SGHORM (3)
Lee Yew Lee, Dr. Lee Yu Huat @ Lee Yew Huat, Ong Mooi Eng, Lee Chee Cheang and ITHSB (3)
30,000
Lee Chee Cheang Lee Chee Cheang, ITHSB and and Lee Chee Chow (4) Lee Chee Chow (4)
240,000
SGHORM (5)
Lee Yew Lee, Dr. Lee Yu Huat @ Lee Yew Huat, Ong Mooi Eng, Lee Chee Cheang and ITHSB (5) Lim Poay Guan and Dato Dr. Yap Tatt Keat (6)
75,000
Purchase of expanded polyurethane foam and protective packaging products from PBSB
ITMSB ITJSB EPSB GHPSB
PBSB (6) PBSB (6) PBSB (6) PBSB (6) PBSB (6) PBSB (6) YNPL (7)
2,431,795 2,067,510 8,479 13,716
Sales of packaging materials EPSB to PBSB by EPSB Sale of carton board and boxes to PBSB by GHPSB Payment of commission to YNPL by SAPSB GHPSB SAPSB
Lim Poay Guan and Dato Dr. Yap Tatt Keat (6) Lim Poay Guan and Dato Dr. Yap Tatt Keat (6) Zane Masao Ernest Yoshida (7)
971 34,000 85,995

25
Notes (1) Dr. Lee Yu Huat @ Lee Yew Huat and Lee Chee Cheang are Directors of EPSB. Dr. Lee Yu Huat @ Lee Yew Huat is also a Director and shareholder of ITCB. ITHSB is a major shareholder of ITCB and Lee Chee Cheang is deemed interested by virtue of his shareholdings in ITHSB. Lee Yew Lee and Ong Mooi Eng are persons connected to Dr. Lee Yu Huat @ Lee Yew Huat as Lee Yew Lee is the brother of Dr. Lee Yu Huat @ Lee Yew Huat and Ong Mooi Eng is the sister-in-law of Dr. Lee Yu Huat @ Lee Yew Huat. Lee Yew Lee is a person connected to Lee Chee Cheang as he is the father of Lee Chee Cheang. (2) Lee Chee Cheang is a Director of PTSB. ITHSB is a major shareholder of ITCB and Lee Chee Cheang is deemed interested by virtue of his shareholdings in ITHSB. Dr. Lee Yu Huat @ Lee Yew Huat is a Director and shareholder of ITCB. Lee Yew Lee and Ong Mooi Eng are persons connected to Dr. Lee Yu Huat @ Lee Yew Huat as Lee Yew Lee is the brother of Dr. Lee Yu Huat @ Lee Yew Huat and Ong Mooi Eng is the sister-in-law of Dr. Lee Yu Huat @ Lee Yew Huat. Lee Yew Lee is a person connected to Lee Chee Cheang as he is the father of Lee Chee Cheang. (3) Dr. Lee Yu Huat @ Lee Yew Huat and Lee Chee Cheang are Directors of EPSB. Dr. Lee Yu Huat @ Lee Yew Huat is also a Director and shareholder of ITCB. ITHSB is a major shareholder of ITCB and Lee Chee Cheang is deemed interested by virtue of his shareholdings in ITHSB. Lee Yew Lee, Dr. Lee Yu Huat @ Lee Yew Huat, Lee Chee Cheang and Ong Mooi Eng are major shareholders of SGHORM. Lee Yew Lee and Ong Mooi Eng are Directors of SGHORM. Lee Yew Lee and Ong Mooi Eng are persons connected to Dr. Lee Yu Huat @ Lee Yew Huat as Lee Yew Lee is the brother of Dr. Lee Yu Huat @ Lee Yew Huat and Ong Mooi Eng is the sister-in-law of Dr. Lee Yu Huat @ Lee Yew Huat. Lee Yew Lee is a person connected to Lee Chee Cheang as he is the father of Lee Chee Cheang. The principal activity of SGHORM is rice milling. (4) Lee Chee Cheang is a Director of EPSB. ITHSB is a major shareholder of ITCB and Lee Chee Cheang is deemed interested by virtue of his shareholdings in ITHSB. Lee Chee Chow is a person connected to Lee Chee Cheang as he is the brother of Lee Chee Cheang. (5) Lee Chee Cheang is a Director of PTSB. ITHSB is a major shareholder of ITCB and Lee Chee Cheang is deemed interested by virtue of his shareholdings in ITHSB. Dr. Lee Yu Huat @ Lee Yew Huat is a Director and shareholder of ITCB. Lee Yew Lee, Dr. Lee Yu Huat @ Lee Yew Huat, Lee Chee Cheang and Ong Mooi Eng are major shareholders of SGHORM. Lee Yew Lee and Ong Mooi Eng are Directors of SGHORM. Lee Yew Lee and Ong Mooi Eng are persons connected to Dr. Lee Yu Huat @ Lee Yew Huat as Lee Yew Lee is the brother of Dr. Lee Yu Huat @ Lee Yew Huat and Ong Mooi Eng is the sister-in-law of Dr. Lee Yu Huat @ Lee Yew Huat. Lee Yew Lee is a person connected to Lee Chee Cheang as he is the father of Lee Chee Cheang. The principal activity of SGHORM is rice milling. (6) Dato Dr. Yap Tatt Keat is a Director of ITMSB, ITJSB, EPSB, GHPSB and a Director and major shareholder of ITCB. He is also a shareholder of PBSB. Lim Poay Guan is a Director of EPSB, GHPSB and a Director and shareholder of ITCB. He is also a Director and major shareholder of PBSB. The principal activity of PBSB is manufacturing of polyurethane. (7) Zane Masao Ernest Yoshida is a Director of SAPSB and is deemed to have an indirect interest of 17.5% in SAPSB by virtue of Section 6A(4) of the Companies Act, 1965 held through his 100% interest in YNPL. The principal activity of YNPL is investment holding and providing consultancy services. Definitions EPSB GHPSB ITCB ITHSB ITJSB ITMSB PBSB PTSB SAPSB SGHORM YNPL : : : : : : : : : : : Eppor-Pack Sdn. Bhd. GH Packaging Sdn. Bhd. Ire-Tex Corporation Berhad Ire-Tex Holdings Sdn. Bhd. Ire-Tex (Johor) Sdn. Bhd. Ire-Tex (Malaysia) Sdn. Bhd. Phoenix Base Sdn. Bhd. Powertude Sdn. Bhd. Styrotex (Asia Pacific) Sdn. Bhd. Sin Guan Hup Oil & Rice Mill Sdn. Bhd Yoshida Nominees Pty Ltd
26
Financial Statements
27 - 30 31 31 32 - 33 34 35 - 36 37 - 38 39 40 - 43 44 - 100 101 Directors Report Directors Statement Statutory Declaration Independent Auditors Report To The Members Statements of Financial Position Statements of Comprehensive Income Consolidated Statement of Changes In Equity Statement of Changes In Equity Statements of Cash Flows Notes To The Financial Statements Supplementary Information
For The Year Ended 31 December 2012

Directors Report
27
The directors have pleasure in submitting their report and the audited financial statements of the Group and of the Company for the financial year ended 31 December 2012.
PRINCIPAL ACTIVITIES The principal activities of the Company consist of investment holding and the provision of management services to its subsidiaries. The principal activities of the subsidiaries are set out in Note 5 to the financial statements. There have been no significant changes in the nature of these activities during the financial year.
RESULTS GROUP RM Profit after taxation for the year Attributable to : Owners of the parent Non-controlling interests 3,298,982 COMPANY RM 699,417
2,791,696 507,286 3,298,982
699,417 699,417
In the opinion of the directors, the results of the operations of the Group and of the Company for the financial year ended 31 December 2012 have not been substantially affected by any item, transaction or event of a material and unusual nature nor has any such item, transaction or event occurred in the interval between the end of that financial year and the date of this report, other than the impairment loss on investment in subsidiaries amounting to RM395,528 recognised in profit or loss of the Company during the financial year under review.
RESERVES AND PROVISIONS There were no material transfers to or from reserves or provisions during the financial year other than those disclosed in the financial statements.
DIVIDENDS Since the end of the previous financial year, the Company has paid a first and final tax exempt dividend of 1.5 sen per share amounting to RM674,355 for the financial year ended 31 December 2011, as proposed in the directors report of that year. At the forthcoming Annual General Meeting, a first and final tax exempt dividend of 1.5 sen per share amounting to RM675,165 in respect of the financial year ended 31 December 2012 will be proposed for shareholders approval. The financial statements for the current financial year do not reflect this proposed dividend. Such dividend, if approved by the shareholders will be accounted for in equity as an appropriation of retained profits in the financial year ending 31 December 2013.
28
(Contd) For The Year Ended 31 December 2012
Directors Report
SHARE CAPITAL AND DEBENTURE During the financial year, the Company increased its issued and paid-up capital from RM44,877,000 to RM45,011,000 by way of allotments of 134,000 ordinary shares of RM1 each at an exercise price of RM1 per share for cash pursuant to the ESOS. The proceeds were used for working capital purposes. The new shares issued during the year rank pari passu in all respects with the existing ordinary shares of the Company. Other than the foregoing, the Company did not issue any other share or debenture and did not grant any option to anyone to take up unissued shares of the Company.
EMPLOYEE SHARE OPTION SCHEME (ESOS) Pursuant to the ESOS which became effective on 17 February 2004, options to subscribe for ordinary shares of RM1 each were granted to eligible employees and executive directors of the Group. The Company has extended the existing ESOS for another five years until 16 January 2014 in accordance with terms of the ESOS By-Laws. The details of options over unissued ordinary shares granted to eligible employees and executive directors of the Group during the financial year are as follows: Number of Share Options Granted and Lapsed/ Accepted Exercised Forfeited
Grant date
Expiry date
Exercise price RM 1.40 1.00
Balance at 1.1.12
Balance at 31.12.12
17.2.04 24.8.07
16.1.14 16.1.14
750,800 1,887,000
(134,000)
(33,000)
750,800 1,720,000
The salient features of the ESOS are disclosed in the notes to the financial statements. There was no option granted under the ESOS during the financial year ended 31 December 2012. Details of options granted to directors are disclosed in the section on directors interests in this report.
DIRECTORS The directors who served since the date of the last report are as follows : YM Raja Said Abidin Bin Raja Shahrome Dato Dr. Yap Tatt Keat See Toh Kean Yaw Timothy Ian OHearn Dr. Lee Yu Huat @ Lee Yew Huat Lim Poay Guan Fazrin Azwar Bin Dato Md. Nor Dato Shafee Bin Abu Bakar Teh Eng Aun

Directors Report
29
DIRECTORS INTERESTS IN SHARES According to the Register of Directors Shareholdings, the interests of directors in office at the end of the financial year in shares and in options in the Company during the financial year are as follows: Number of ordinary shares of RM1 each Balance at 1.1.12 Balance at 31.12.12
The Company Direct Interest : YM Raja Said Abidin Bin Raja Shahrome Dato Dr. Yap Tatt Keat See Toh Kean Yaw Timothy Ian OHearn Dr. Lee Yu Huat @ Lee Yew Huat Lim Poay Guan Fazrin Azwar Bin Dato Md. Nor Deemed Interest : Timothy Ian OHearn
Bought
Sold
100,000 5,455,354 18,500 20,000 20,000 20,000 10,100
40,000 -
100,000 5,455,354 58,500 20,000 20,000 20,000 10,100
5,319,434
5,319,434
Details of ESOS granted to executive directors are as follows: Number of options over ordinary shares of RM1 each Balance Balance at at 1.1.12 Granted Expired 31.12.12 Dato Dr. Yap Tatt Keat See Toh Kean Yaw 359,000 341,500 (40,000) 359,000 301,500
Other than as disclosed above, none of the other directors holding office at 31 December 2012 had any interest in the ordinary shares and options over shares of the Company and of its related corporations during the financial year.
DIRECTORS' BENEFITS Since the end of the previous financial year, no director of the Company has received or become entitled to receive any benefit (other than a benefit included in the aggregate amount of emoluments received or due and receivable by the directors shown in the financial statements) by reason of a contract made by the Company or a related corporation with a director or with a firm of which the director is a member, or with a company in which the director has a substantial financial interest, other than those related party transactions disclosed in the notes to the financial statements. During and at the end of the financial year, no arrangements subsisted to which the Company is a party, with the objects of enabling directors of the Company to acquire benefits by means of the acquisition of shares in or debentures of the Company or any other body corporate, other than those arising from the share options granted under the ESOS.
30
Directors Report
OTHER STATUTORY INFORMATION Before the financial statements of the Group and of the Company were made out, the directors took reasonable steps: (i) to ascertain that proper action had been taken in relation to the writing off of bad debts and the making of allowance for doubtful debts and satisfied themselves that all known bad debts had been written off and that adequate allowance had been made for doubtful debts, and (ii) to ensure that any current assets which were unlikely to realise their value as shown in the accounting records in the ordinary course of business had been written down to an amount which they might be expected so to realise. At the date of this report, the directors are not aware of any circumstances: (i) that would render the amount written off for bad debts, or the amount of the allowance for doubtful debts in the Group and in the Company inadequate to any substantial extent, and (ii) that would render the value attributed to the current assets in the financial statements of the Group and of the Company misleading, and (iii) that would render any amount stated in the financial statements of the Group and of the Company misleading, and (iv) which have arisen which render adherence to the existing methods of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate. At the date of this report, there does not exist: (i) any charge on the assets of the Group and of the Company that has arisen since the end of the financial year which secures the liabilities of any other persons, and (ii) any contingent liability in respect of the Group and of the Company that has arisen since the end of the financial year. No contingent liability or other liability of the Group and of the Company has become enforceable, or is likely to become enforceable, within the period of twelve months after the end of the financial year which, in the opinion of the directors, will or may substantially affect the ability of the Group and of the Company to meet their obligations as and when they fall due.
SIGNIFICANT EVENTS Details of significant events are disclosed in Note 35 to the financial statements.
AUDITORS The auditors, Grant Thornton, have expressed their willingness to continue in office. Signed in accordance with a resolution of the directors :
Dato Dr. Yap Tatt Keat Penang, Date : 24 April 2013
See Toh Kean Yaw
Directors Statement
31
We, Dato Dr. Yap Tatt Keat and See Toh Kean Yaw, being two of the directors of Ire-Tex Corporation Berhad state that in the opinion of the directors, the financial statements set out on pages 34 to 100 are properly drawn up in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the Companies Act, 1965 in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company as at 31 December 2012 and of their financial performance and cash flows for the financial year then ended. In the opinion of the Directors, the information set out in Note 36 on page 101 to the financial statements has been compiled in accordance with the Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosures Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, issued by the Malaysian Institute of Accountants, and presented based on the format prescribed by Bursa Malaysia Securities Berhad. Signed in accordance with a resolution of the directors:
Dato Dr. Yap Tatt Keat Date : 24 April 2013
See Toh Kean Yaw
Statutory Declaration
I, See Toh Kean Yaw, the director primarily responsible for the financial management of Ire-Tex Corporation Berhad do solemnly and sincerely declare that the financial statements set out on pages 34 to 101 are to the best of my knowledge and belief, correct and I make this solemn declaration conscientiously believing the same to be true and by virtue of the provisions of the Statutory Declarations Act, 1960. Subscribed and solemnly declared by ) the abovenamed at Penang, this 24th ) day of April 2013. ) ) See Toh Kean Yaw
Before me,
Goh Suan Bee No. : P125 Persuruhjaya Sumpah Malaysia Commissioner for Oaths
32
Independent Auditors Report to the Members of IRE-TEX Corporation Berhad

Company No. 576121-A (Incorporated In Malaysia)
Report on the Financial Statements We have audited the financial statements of Ire-Tex Corporation Berhad, which comprise the statements of financial position as at 31 December 2012 of the Group and of the Company, and the statements of comprehensive income, statements of changes in equity and statements of cash flows of the Group and of the Company for the financial year then ended, and a summary of significant accounting policies and other explanatory notes as set out on pages 34 to 100. Directors Responsibility for the Financial Statements The directors of the Company are responsible for the preparation of these financial statements so as to give a true and fair view in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia. The directors are also responsible for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with approved standards on auditing in Malaysia. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgement, including the assessment of risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entitys preparation of financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entitys internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements give a true and fair view of the financial position of the Group and of the Company as at 31 December 2012 and of their financial performance and cash flows for the financial year then ended in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia. Report on Other Legal and Regulatory Requirements In accordance with the requirements of the Companies Act, 1965 in Malaysia, we also report the following: (a) In our opinion, the accounting and other records and the registers required by the Act to be kept by the Company and its subsidiaries of which we have acted as auditors have been properly kept in accordance with the provisions of the Act, (b) We have considered the accounts and the auditors reports of all the subsidiaries of which we have not acted as auditors, which are indicated in Note 5 to the financial statements, (c) We are satisfied that the accounts of the subsidiaries that have been consolidated with the Companys financial statements are in form and content appropriate and proper for the purposes of the preparation of the financial statements of the Group and we have received satisfactory information and explanations required by us for those purposes, and (d) The auditors reports on the accounts of the subsidiaries did not contain any qualification or any adverse comment made under Section 174(3) of the Act.
Independent Auditors Report to the Members (Contd) of IRE-TEX Corporation Berhad

Company No. 576121-A (Incorporated In Malaysia)
33
Other Reporting Responsibilities The supplementary information set out in Note 36, on page 101 is disclosed to meet the requirement of Bursa Malaysia Securities Berhad and is not part of the financial statements. The directors are responsible for the preparation of the supplementary information in accordance with Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants (MIA Guidance) and the directive of Bursa Malaysia Securities Berhad. In our opinion, the supplementary information is prepared, in all material respects, in accordance with the MIA Guidance and the directive of Bursa Malaysia Securities Berhad. Other Matters 1. As stated in Note 2.2 to the financial statements, Ire-Tex Corporation Berhad adopted Malaysian Financial Reporting Standards on 1 January 2012 with a transition date of 1 January 2011. These standards were applied retrospectively by directors to the comparative information in these financial statements, including the statements of financial position as at 31 December 2011 and 1 January 2011, and the statement of comprehensive income, statement of changes in equity and statement of cash flows for the financial year ended 31 December 2011 and related disclosures. We were not engaged to report on the MFRS transition comparative information, and it is unaudited. Our responsibilities as part of our audit of the financial statements of the Group and of the Company for the financial year ended 31 December 2012 have, in these circumstances, included obtaining sufficient appropriate audit evidence that the opening balances as at 1 January 2012 do not contain misstatements that materially affect the financial position as at 31 December 2012 and financial performance and cash flows for the financial year then ended. 2. This report is made solely to the members of the Company, as a body, in accordance with Section 174 of the Companies Act, 1965 in Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of this report.
Grant Thornton No. AF : 0042 Chartered Accountants Date : 24 April 2013 Penang
Tan Chee Beng No. 2664/02/15 (J) Chartered Accountant
34
Statements of Financial Position

As At 31 December 2012
ASSETS Non-current assets Property, plant and equipment Investment properties Investment in subsidiaries Investment in associates Other investments Deferred tax assets
GROUP 31.12.2012 31.12.2011 NOTE RM RM
1.1.2011 RM
31.12.2012 RM
COMPANY 31.12.2011 RM
1.1.2011 RM
3 4 5 6 7 18
31,826,484 30,105,195 5,061,024 5,061,024 2,324,023 2,324,023 190,000 40,000 39,251,531 37,680,242
29,026,011 5,864,441 2,272,212 507,400 349,000 38,019,064
44,484 21,994,854 844,243 22,883,581
131,811 78,181 22,290,382 24,613,782 900,000 507,400 844,243 150,000 150,000 23,362,806 26,302,993
Current assets Inventories Trade receivables Other receivables, deposits and prepayments Amount due from subsidiaries Tax recoverable Fixed deposits with licensed banks Cash and bank balances
8 9 10 11
11,658,472 13,473,825 31,397,238 33,499,644 3,307,582 3,631,408 -
9,829,683 25,227,818 3,764,383 127,546 1,727,628 3,395,221 44,072,279 82,091,343
66,453 18,316,074 485,829 18,868,356 41,751,937
9,618 17,684 17,472,474 14,067,548 49,939 730,825 18,220,983 14,127,105 41,583,789 40,430,098
12 13
82,977 261,073 4,651,276 2,384,843 5,131,929 4,014,656 56,407,570 57,087,353 95,659,101 94,767,595
TOTAL ASSETS EQUITY AND LIABILITIES Equity attributable to owners of the parent Share capital Share premium Other reserves Accumulated losses Non-controlling interests Total equity Non-current liabilities Borrowings Deferred tax liabilities
14 15 16
45,011,000 4,443,101 679,721 (667,154) 49,466,668 2,483,403 51,950,071
44,877,000 44,817,000 4,368,086 4,391,143 794,102 731,679 (2,784,495) (4,773,466) 47,215,327 45,205,722 326,634 1,976,117 49,191,444 45,532,356
45,011,000 4,443,101 679,721 (9,106,078) 41,027,744 41,027,744
44,877,000 4,391,143 731,679 (9,131,140) 40,868,682 40,868,682
44,817,000 4,368,086 754,736 (9,917,247) 40,022,575 40,022,575
17 18
3,273,744 492,000 3,765,744
3,913,037 521,000 4,434,037
3,795,121 486,300 4,281,421
Current liabilities Trade payables Other payables and accruals Amount due to subsidiaries Borrowings Provision for taxation Total liabilities
19 20 11 17
10,022,354 8,275,557 21,642,375 3,000 39,943,286 43,709,030
12,662,248 7,258,720 21,198,958 22,188 41,142,114 45,576,151
10,431,504 7,135,058 14,711,004 32,277,566 36,558,987 82,091,343
557,697 166,496 724,193 724,193 41,751,937
510,992 204,115 715,107 715,107
355,510 52,013 407,523 407,523
TOTAL EQUITY AND LIABILITIES
95,659,101 94,767,595
41,583,789 40,430,098
The notes set out on pages 44 to 100 form an integral part of these financial statements.
Statements Of Comprehensive Income

For The Financial Year Ended 31 December 2012
35
GROUP NOTE Revenue Cost of sales Gross profit Other income Administrative expenses Loss on partial disposal of equity interest in existing subsidiaries Loss on disposal of investment in a subsidiary Distribution expenses Operating profit Finance costs Share of results of associates Profit before taxation Taxation Profit for the year Other comprehensive loss, net of tax : Realisation of foreign translation reserve upon disposal of a foreign subsidiary Total comprehensive income for the year Profit for the year attributable to: Owners of the parent Non-controlling interests 24 25 23 22 21 2012 RM 124,893,445 (103,207,676) 21,685,769 1,772,657 (11,099,657) 2011 RM 128,866,924 (106,338,006) 22,528,918 2,164,765 (12,184,817) 2012 RM
COMPANY 2011 RM 3,994,274 3,994,274 133,714 (2,261,836)
3,382,000 3,382,000 7,205 (2,539,788)
(1,071,697)
(6,828,398) 5,530,371 (1,214,435) 4,315,936 (1,016,954) 3,298,982
(1,103,115) (7,289,815) 4,115,936 (1,292,236) 194,328 3,018,028 (1,011,277) 2,006,751
849,417 849,417 (150,000) 699,417
794,455 794,455 (8,348) 786,107
(60,032)
3,298,982
1,946,719
699,417
786,107
2,791,696 507,286 3,298,982
2,087,163 (80,412) 2,006,751
699,417 699,417
786,107 786,107
36
Statements Of Comprehensive Income (Contd)

GROUP NOTE Total comprehensive income/(loss) attributable to: Owners of the parent Non-controlling interests 2012 RM 2011 RM 2012 RM
COMPANY 2011 RM
2,791,696 507,286 3,298,982
2,047,797 (101,078) 1,946,719
699,417 699,417
786,107 786,107
Earnings per share attributable to owners of the parent - Basic (sen)
26
6.21
4.65
Consolidated Statement of Changes in Equity

37
Attributable to owners of the parent Non-distributable Share Capital RM Share Other Accumulated Premium Reserves Losses RM RM RM 731,679 Total RM
2012 At 1 January Total comprehensive income Transactions with owners: Issuance of shares pursuant to ESOS Transfer upon exercise of ESOS Dividend Total transactions with owners At 31 December
NOTE
Noncontrolling Interests RM
Total Equity RM
44,877,000 4,391,143
(2,784,495) 47,215,327
1,976,117 49,191,444
2,791,696
2,791,696
507,286
3,298,982
14
134,000
134,000
134,000
15 27
51,958 -
(51,958) -
(674,355)
(674,355)
(674,355)
134,000
51,958
(51,958) 679,721
(674,355)
(540,355)
(540,355)
45,011,000 4,443,101
(667,154) 49,466,668
2,483,403 51,950,071
38
Consolidated Statement of Changes in Equity (Contd)

Attributable to owners of the parent Non-distributable Share Capital RM Accumulated Other Share Losses Premium Reserves RM RM RM 794,102 Total RM
2011 At 1 January Total comprehensive income Transactions with owners: Issuance of shares pursuant to ESOS Transfer upon exercise of ESOS Dilution arising from partial disposal of existing subsidiaries Issuance of shares to non- controlling interest of a subsidiary Dividend to noncontrolling interests Partial disposal of equity interests in existing subsidiaries Acquisition of equity interest of a new subsidiary Total transactions with owners At 31 December
NOTE
Noncontrolling Interests RM
Total Equity RM
44,817,000 4,368,086
(4,773,466) 45,205,722
326,634 45,532,356
(39,366)
2,087,163
2,047,797
(101,078) 1,946,719
14
60,000
60,000
60,000
15
23,057
(23,057)
(98,192)
(98,192)
(98,192)
90,000
90,000
(29,993)
(29,993)
1,940,725
1,940,725
(250,171)
(250,171)
60,000
23,057
(23,057) 731,679
(98,192)
(38,192)
1,750,561
1,712,369
44,877,000 4,391,143
(2,784,495) 47,215,327
1,976,117 49,191,444
Statement of Changes In Equity

39
Non-distributable Share Capital RM Share Premium RM Other Reserves RM Accumulated Losses RM Total Equity RM
NOTE 2012 At 1 January Total comprehensive income for the year Transactions with owners: Issuance of shares pursuant to ESOS Transfer upon exercise of ESOS Dividend Total transactions with owners At 31 December
44,877,000
4,391,143
731,679
(9,131,140)
40,868,682
699,417
699,417
14
134,000
134,000
15 27
134,000 45,011,000
51,958 51,958 4,443,101
(51,958) (51,958) 679,721
(674,355) (674,355) (9,106,078)
(674,355) (540,355) 41,027,744
2011 At 1 January Total comprehensive income for the year Transactions with owners: Issuance of shares pursuant to ESOS Transfer upon exercise of ESOS Total transactions with owners At 31 December 44,817,000 4,368,086 754,736 (9,917,247) 40,022,575
786,107
786,107
14
60,000
60,000
15
60,000 44,877,000
23,057 23,057 4,391,143
(23,057) (23,057) 731,679
(9,131,140)
60,000 40,868,682
40
Statements of Cash Flows
GROUP 2012 RM CASH FLOWS FROM OPERATING ACTIVITIES Profit before taxation Adjustments for : Bad debts Depreciation Dividend income Gain on disposal of investment in an associate Gain on disposal of investment properties (Gain)/Loss on disposal of property, plant and equipment Goodwill written off Impairment loss on investment in subsidiaries Interest expense Interest income Loss on partial disposal of equity interest in subsidiaries Loss on disposal of investment in a subsidiary Property, plant equipment written off Share of results of associates Unrealised loss/(gain) on foreign exchange Operating profit before working capital changes Decrease/(Increase) in inventories Decrease/(Increase) in receivables (Decrease)/Increase in payables Cash from/(used in) operations Income tax paid Income tax refund Interest paid Net cash from/(used in) operating activities/ Balance carried forward 2011 RM 2012 RM
COMPANY 2011 RM
4,315,936 116,625 4,036,961 (3,350) 1,214,435 (112,984) 10,417 1,567 9,579,607 1,815,353 2,308,040 (1,623,057) 12,079,943 (1,257,442) 164,204 (1,214,435)
3,018,028 34,312 3,943,663 (115,923) (2,583) (79,269) 821,734 1,292,236 (70,463) 1,103,115 8,277 (194,328) (121,761) 9,637,038 (4,073,033) (9,858,292) 2,973,499 (1,320,788) (827,686) 76,889 (1,292,236)
849,417 33,697 (1,150,000) 395,528 (7,205) 121,437 (48,769) 46,705 119,373 -
794,455 36,830 (1,762,274) (115,995) 1,958 1,071,697 1 26,672 (8,066) 155,482 174,088 -
9,772,270
(3,363,821)
119,373
174,088
Statements of Cash Flows (Contd)

41
GROUP 2012 RM Balance brought forward CASH FLOWS FROM INVESTING ACTIVITIES (i) Cash flows on acquisition of equity interests in a subsidiary (ii) Cash flows from disposal of investment in a subsidiary Interest received Investment in subsidiaries Net dividend income received from subsidiaries Net dividend income received from an associate Placement of fixed deposits Proceeds from partial disposal of investment in existing subsidiaries Purchase of other investments (iii) Purchase of property, plant and equipment Proceeds from disposal of investment in an associate Proceeds from disposal of investment properties Proceeds from disposal of property, plant and equipment Subscription for additional shares in a subsidiary Net cash (used in)/from investing activities Balance carried forward 9,772,270 2011 RM (3,363,821) 2012 RM
COMPANY 2011 RM 174,088
119,373
29,480 (276,249) (4,690,167) 17,900 (4,919,036) 4,853,234
(90,584) (1,420,997) 25,263 983,944 (600,000) 1,842,533 (477,399) (3,330,182) 1,015,995 806,000 153,061 (1,092,366) (4,456,187)
7,205 (100,000) 1,150,000 1,057,205 1,176,578
(480,830) 769,982 983,944 1,842,533 (336,843) (2,159) 1,015,995 17,000 (110,000) 3,699,622 3,873,710
42

2012 RM Balance brought forward CASH FLOWS FROM FINANCING ACTIVITIES Advance to subsidiaries Dividend paid Dividend paid to non-controlling interests Payment of finance lease Proceeds from issuance of shares pursuant to ESOS Proceeds from issuance of shares to non-controlling interest of a subsidiary (Repayment)/Drawdown of bankers acceptance (Repayment)/Drawdown of trust receipts Repayment of term loan Net cash (used in)/from financing activities NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS Effects of foreign exchange rate changes on cash and cash equivalents CASH AND CASH EQUIVALENTS AT BEGINNING CASH AND CASH EQUIVALENTS AT END Represented by: Fixed deposits with licensed banks Cash and bank balances Bank overdrafts
GROUP 2011 RM (4,456,187) 2012 RM
COMPANY 2011 RM 3,873,710
4,853,234
1,176,578
(674,355) (1,467,816) 134,000 (1,438,000) (73,715) (269,421) (3,789,307)
(29,993) (1,040,651) 60,000 90,000 5,788,000 172,182 (232,193) 4,807,345
(881,219) (674,355) 134,000 (1,421,574)
(3,252,824) 60,000 (3,192,824)
1,063,927
351,158
(244,996)
680,886
83,726
3,881,331 4,945,258
3,446,447 3,881,331
730,825 485,829
49,939 730,825
2,119,770 5,131,929 (2,306,441) 4,945,258
213,090 4,014,656 (346,415) 3,881,331
485,829 485,829
730,825 730,825
(i) Cash flows on acquisition of equity interests in a subsidiary Property, plant and equipment Inventories Receivables Cash and cash equivalents Payables Net tangible liabilities Non-controlling interest Share of net liabilities acquired Goodwill written off Total purchase consideration Less: Cash and cash equivalents Cash flows on acquisition of equity interests in a subsidiary
377,509 82,521 49,496 147,416 (1,490,847) (833,905) 250,171 (583,734) 821,734 238,000 (147,416)
90,584

43
2012 RM (ii) Cash flows from disposal of investment in a subsidiary Property, plant and equipment Inventories Receivables Cash and cash equivalents Payables Share of net assets disposed Less: Realisation of foreign exchange reserve Loss on disposal of investment in a subsidiary Total disposal consideration Transfer to other investment Less: Cash and cash equivalents Cash flows from disposal of investment in a subsidiary
GROUP
2011 RM
COMPANY 2012 RM 2011 RM
346,953 544,615 2,009,892 1,420,997 (2,281,390) 2,041,067 (181,252) (1,103,115) 756,700 (756,700) (1,420,997)
(1,420,997)
(iii) Purchase of property, plant and equipment Total purchase consideration Acquired under finance lease Total cash acquisition
5,783,217 (1,093,050) 4,690,167
5,052,148 (1,721,966) 3,330,182
2,159 2,159
44
Notes to the Financial Statements

31 December 2012
1.
CORPORATE INFORMATION General The Company is a public limited liability company, incorporated and domiciled in Malaysia and is listed on the Main Market of Bursa Malaysia Securities Berhad. The registered office of the Company is located at 35, 1st Floor, Jalan Kelisa Emas 1, Taman Kelisa Emas, 13700 Seberang Jaya, Penang. The principal place of business of the Company is located at Plot 118, Jalan Perusahaan, Bukit Tengah Industrial Park, 14000 Bukit Mertajam, Penang. The financial statements were authorised for issue by the Board of Directors in accordance with a resolution of the directors on 24 April 2013. Principal Activities The principal activities of the Company consist of investment holding and the provision of management services to its subsidiaries. The principal activities of the subsidiaries are set out in Note 5 to the financial statements. There have been no significant changes in the nature of these activities during the financial year.
2.
SIGNIFICANT ACCOUNTING POLICIES The following accounting policies adopted by the Group and by the Company are consistent with those adopted in the previous financial years unless otherwise indicated below. 2.1 Basis of Preparation The financial statements of the Group and of the Company are prepared under the historical cost convention unless otherwise indicated in the accounting policies below and in accordance with applicable Malaysian Financial Reporting Standards (MFRSs), International Financial Reporting Standards (IFRSs) and the Companies Act, 1965 in Malaysia. The financial statements are presented in Ringgit Malaysia (RM), which is also the Companys functional currency. 2.2 First-time Adoption of MFRSs In the previous financial years, the financial statements of the Group and of the Company were prepared in accordance with Financial Reporting Standards (FRSs). These are the Groups and the Companys first financial statements prepared in accordance with MFRSs and MFRS 1, First-time Adoption of Malaysian Financial Reporting Standards has been applied. The following accounting policies have been applied in preparing the financial statements of the Group and of the Company for the financial year ended 31 December 2012, the comparative information presented in these financial statements for the financial year ended 31 December 2011 and in the preparation of the opening MFRS statement of financial position at 1 January 2011 (the Groups date of transition to MFRSs). The transition to MFRSs does not have any financial impact to the statements of financial position of the Group and of the Company as at 1 January 2011 and 31 December 2011, and the statements of comprehensive income, statements of changes in equity and statements of cash flows for the financial year ended 31 December 2011 and related disclosures. Therefore, no restatement to the comparative information is required.
Notes to the Financial Statements (Contd)

31 December 2012
45
2.
SIGNIFICANT ACCOUNTING POLICIES (Contd) 2.3 Standards Issued But Not Yet Effective The Group and the Company have not applied the following new MFRSs, amendments to MFRSs and IC Interpretations (IC Int) that have been issued by the Malaysian Accounting Standards Board (MASB) but are not yet effective for the Group and for the Company: Amendments to MFRSs effective 1 July 2012 MFRS 101 Presentation of Financial Statements - Presentation of Items of Other Comprehensive Income
MFRSs effective 1 January 2013 MFRS 10 MFRS 11 MFRS 12 MFRS 13 MFRS 119 MFRS 127 MFRS 128 IC Int 20 Consolidated Financial Statements Joint Arrangements Disclosure of Interests in Other Entities Fair Value Measurement Employee Benefits (International Accounting Standard (IAS) 19 as amended by International Accounting Standards Board (IASB) in June 2011) Separate Financial Statements (IAS 27 as amended by IASB in May 2011) Investments in Associates and Joint Ventures (IAS 28 as amended by IASB in May 2011) Stripping Costs in the Production of A Surface Mine
Amendments to MFRSs effective 1 January 2013 MFRS 1 MFRS 7 MFRS 10, 11 and 12 First-time Adoption of Malaysian Financial Reporting Standards - Government Loans Financial Instruments: Disclosures - Offsetting Financial Assets and Financial Liabilities Consolidated Financial Statements, Joint Arrangements and Disclosure of Interests in Other Entities: Transition Guidance
Annual Improvements 2009 2011 Cycle issued in July 2012 Amendments to MFRSs effective 1 January 2014 MFRS 10, 12 and 127 MFRS 132 Consolidated Financial Statements, Disclosure of Interests in Other Entities and Separate Financial Statements: Investment Entities Financial Instruments: Presentation - Offsetting Financial Assets and Financial Liabilities
MFRSs effective 1 January 2015 MFRS 7 MFRS 9 MFRS 9 Financial Instruments: Disclosures Mandatory Date of MFRS 9 and Transition Disclosures Financial Instruments (IFRS 9 issued by IASB in November 2009) Financial Instruments (IFRS 9 issued by IASB in October 2010)
The initial application of the above standards is not expected to have any financial impacts to the financial statements upon the first adoption, except for:
46

31 December 2012
2.
SIGNIFICANT ACCOUNTING POLICIES (Contd) 2.3 Standards Issued But Not Yet Effective (Contd) MFRS 9 Financial Instruments MFRS 9 addresses the classification, measurement and recognition of financial assets and financial liabilities. It replaces the guidance in MFRS 139 Financial Instruments: Recognition and Measurement. MFRS 9 requires financial assets to be classified into two measurement categories: fair value and amortised cost, determined at initial recognition. The classification depends on the entitys business model for managing its financial instruments and the contractual cash flow characteristics of the instrument. Most of the requirements for financial liabilities are retained, except for cases where the fair value option is taken, the part of a fair value change due to an entitys own risk is recorded in other comprehensive income rather than profit or loss, unless this creates an accounting mismatch. The adoption of MFRS 9 will result in a change in accounting policy. The Group is currently examining the financial impact of adopting MFRS 9. MFRS 10 Consolidated Financial Statements MFRS 10 introduces a new single control model to determining which investees should be consolidated. MFRS 10 supersedes MFRS 127 Consolidated and Separate Financial Statements and IC Interpretation 112 Consolidation - Special Purpose Entities. There are three elements to the definition of control in MFRS 10: (i) power by investor over an investee, (ii) exposure, or rights, to variable returns from investors involvement with the investee, and (iii) investors ability to affect those returns through its power over the investee. MFRS 13 Fair Value Measurement MFRS 13 does not affect which items are required to be fair-valued, but clarifies the definition of fair value and provides related guidance and enhance disclosures about fair value measurements. It replaces the existing fair value guidance in different MFRSs. The adoption of MFRS 13 will result in a change in accounting policy for the items measured at fair value in the financial statements. The Group is currently examining the financial impact of adopting MFRS 13. 2.4 Significant Accounting Estimates and Judgements The preparation of financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and in any future periods affected. 2.4.1 Judgements made in applying accounting policies There are no significant areas of critical judgement in applying accounting policies that have any significant effect on the amount recognised in the financial statements.

31 December 2012
47
2.
SIGNIFICANT ACCOUNTING POLICIES (Contd) 2.4 Significant Accounting Estimates and Judgements (Contd) 2.4.2 Key sources of estimation uncertainty The key assumptions concerning the future and other key sources of estimation uncertainty at the end of the reporting period that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below: (i) Useful lives of depreciable assets Plant and equipment are depreciated on a straight line basis over their estimated useful lives. Management estimates the useful lives of the plant and equipment to be 5 to 10 years. Changes in the expected level of usage and technological developments could impact the economic useful lives and residual values of the plant and equipment. Therefore, future depreciation charges could be revised. (ii) Impairment of plant and equipment The Group performs an impairment review as and when there are impairment indicators to ensure that the carrying value of the plant and equipment does not exceed its recoverable amount. The recoverable amount represents the present value of the estimated future cash flows expected to arise from operations. Therefore, in arriving at the recoverable amount, management exercise judgement in estimating the future cash flows, growth rate and discount rate. (iii) Inventories The management reviews for damage, slow-moving and obsolete inventories. This review requires judgements and estimates. Possible changes in these estimates could result in revision to the valuation of inventories. (iv) Impairment of loans and receivables The Group assesses at the end of each reporting period whether there is any objective evidence that a financial asset is impaired. To determine whether there is objective evidence of impairment, the Group considers factors such as the probability of insolvency or significant financial difficulties of the debtor and default or significant delay in payments. Where there is objective evidence of impairment, the amount and timing of future cash flows are estimated based on historical loss experience of assets with similar credit risk characteristics. (v) Deferred tax assets Deferred tax assets are recognised for unused tax losses and other deductible temporary differences to the extent that it is probable that taxable profit will be available against which the tax losses and other deductible temporary differences can be utilised. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and level of future taxable profits together with tax planning strategies.
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31 December 2012
2.
SIGNIFICANT ACCOUNTING POLICIES (Contd) 2.5 Basis of Consolidation (i) Subsidiaries Subsidiaries are entities, including unincorporated entities, controlled by the Company. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases. Control exists when the Company has the ability to exercise its power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting rights that presently are exercisable are taken into account. Investment in subsidiaries is measured in the Companys statement of financial position at cost less any impairment losses, unless the investment is classified as held for sale or distribution. The cost of investments includes transaction costs. (ii) Business combination Business combinations are accounted for using the acquisition method from the acquisition date, which is the date on which control is transferred to the Group. Acquisition on or after 1 January 2011 For acquisitions on or after 1 January 2011, the Group measures the cost of goodwill at the acquisition date as: the fair value of the consideration transferred, plus the recognised amount of any non-controlling interest in the acquiree, plus if the business combination is achieved in stages, the fair value of the existing equity interest in the acquiree, less the net recognised amount at fair value of the identifiable assets acquired and liabilities assumed When the excess is negative, a bargain purchase gain is recognised in profit or loss. For each business combination, the Group elects whether to recognise non-controlling interest in the acquiree at fair value, or at the proportionate share of the acquirees identifiable net assets at the acquisition date. Transaction costs, other than those associated with the issue of debt or equity securities, that the Group incurs in connection with a business combination are expensed as incurred. Acquisitions before 1 January 2011 As part of its transition to MFRSs, the Group elected not to restate those business combinations that occurred before the date of transition to MFRSs, i.e. 1 January 2011. (iii) Acquisitions of non-controlling interests The Group treats all changes in its ownership interest in a subsidiary that do not result in a loss of control as equity transactions between the Group and its non-controlling interest holders. Any difference between the Groups share of net assets before and after the change, and any consideration received or paid, is adjusted to or against Group reserve.

31 December 2012
49
2.
SIGNIFICANT ACCOUNTING POLICIES (Contd) 2.5 Basis of Consolidation (Contd) (iv) Loss of control Upon the loss of control of a subsidiary, the Group derecognises the assets and liabilities of the subsidiary, any non-controlling interests and the other components of equity related to the subsidiary. Any surplus or deficit arising on the loss of control is recognised in profit or loss. If the Group retains any interest in the previous subsidiary, then such interest is measured at fair value at the date that control is lost. Subsequently it is accounted for as an equity accounted investee or as an available-for sale financial asset depending on the level of influence retained. (v) Non-controlling interests Non-controlling interests at the end of the reporting period, being the equity in a subsidiary not attributable directly or indirectly to the equity holders of the Company, are presented in the consolidated statement of financial position and statement of changes in equity within equity, separately from equity attributable to the owners of the Company. Non-controlling interests in the results of the Group is presented in the consolidated statement of comprehensive income as an allocation of the profit or loss and the comprehensive income for the year between non-controlling interests and owners of the Company. Losses applicable to the non-controlling interests in a subsidiary are allocated to the non-controlling interests even if doing so causes the non-controlling interests to have a deficit balance. (vi) Transactions eliminated on consolidation Intra-group balances and transactions, and any unrealised income and expenses arising from intra group transactions, are eliminated in preparing the consolidated financial statements. 2.6 Investments in Associates Associates are entities, including unincorporated entities, in which the Group has significant influence, but not control, over the financial and operating policies. Investments in associates are accounted for in the consolidated financial statements using the equity method less any impairment losses, unless it is classified as held for sale or distribution. The consolidated financial statements include the Groups share of the profit or loss and other comprehensive income of the associates, after adjustments if any, to align the accounting policies with those of the Group, from the date that significant influence commences until the date that significant influence ceases. When the Groups share of losses exceeds its interest in an associate, the carrying amount of that interest including any long-term investments is reduced to zero, and the recognition of further losses is discontinued except to the extent that the Group has an obligation or has made payments on behalf of the associate. When the Group ceases to have significant influence over an associate, it is accounted for as a disposal of the entire interest in that associate, with a resulting gain or loss being recognised in profit or loss. Any retained interest in the former associate at the date when significant influence is lost is re-measured at fair value and this amount is regarded as the initial carrying amount of a financial asset. When the Groups interest in an associate decreases but does not result in a loss of significant influence, any retained interest is not re-measured. Any gain or loss arising from the decrease in interest is recognised in profit or loss. Any gains or losses previously recognised in other comprehensive income are also reclassified proportionately to profit or loss.
50

31 December 2012
2.
SIGNIFICANT ACCOUNTING POLICIES (Contd) 2.6 Investments in Associates (Contd) Unrealised gains arising from transactions with associates are eliminated against the investment to the extent of the Groups interest in the associates. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment. Investment in associates is measured in the Companys statement of financial position at cost less any impairment losses, unless the investment is classified as held for sale or distribution. The cost of investment includes transaction costs. 2.7 Property, Plant and Equipment Property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses. Property, plant and equipment are depreciated on the straight line method to write off the cost of each asset to its residual value over its estimated useful life at the following annual rates: Short leasehold land Factory buildings Factory extension Plant, machinery and equipment Furniture, fittings and office equipment Renovation Electrical installation Motor vehicles Amortised over lease period 1.89% 2% - 10% 10% - 20% 10% - 50% 1.89% - 10% 10% - 20% 10% - 20%
Short leasehold land refers to land with an unexpired lease period of less than fifty years determined at the end of reporting period. Depreciation on capital expenditure in progress commences when the assets are ready for their intended use. The residual value, useful life and depreciation method are reviewed at the end of each reporting period to ensure that the amount, method and period of depreciation are consistent with previous estimates and the expected pattern of consumption of the future economic benefits embodied in the items of property, plant and equipment. Upon the disposal of an item of property, plant and equipment, the difference between the net disposal proceeds and its carrying amount is recognised in profit or loss. 2.8 Investment Properties Investment properties are properties which are held either to earn rental income or for capital appreciation or for both. Such properties are measured initially at cost, including transaction costs. Subsequent to initial recognition, investment properties are stated at fair value. Fair value is arrived at by reference to market evidence of transaction prices for similar properties and is derived based on directors valuation by reference to the existing market condition. Gains or losses arising from changes in the fair values of investment properties are recognised in profit or loss in the year in which they arise. A property interest under an operating lease is classified and accounted for as an investment property on a property-by-property basis when the Group holds it to earn rentals or for capital appreciation or both. Any such property interest under an operating lease classified as an investment property is carried at fair value.

31 December 2012
51
2.
SIGNIFICANT ACCOUNTING POLICIES (Contd) 2.8 Investment Properties (Contd) Investment properties are derecognised when either they have been disposed of or when the investment property is permanently withdrawn from use and no future economic benefit is expected from its disposal. Any gains or losses on the retirement or disposal of an investment property are recognised in profit or loss in the year in which they arise. 2.9 Leases The determination of whether an arrangement is, or contains, a lease is based on the substance of the arrangement at the inception date, whether fulfilment of the arrangement is dependent on the use of a specific asset or asset or the arrangement conveys a right to use the asset, even if that right is not explicitly specific in an arrangement. For arrangements entered into prior to 1 January 2011, the date of inception is deemed to be 1 January 2011 in accordance with the MFRS 1. Finance lease A finance lease which includes hire purchase arrangement, is a lease that transfers substantially all the risks and rewards incidental to ownership of an asset to the lessee. Title may or may not eventually be transferred. Minimum lease payments made under finance leases are apportioned between finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are recognised in finance costs in the profit or loss. Contingent lease payments are accounted for by revising the minimum lease payments over the remaining term of the lease when the lease adjustment is confirmed. A leased asset is depreciated over the useful life of the asset. However, if there is no reasonable certainty that the Group will obtain ownership by the end of the lease term, the asset is depreciated over the shorter of the estimated useful life of the asset and the lease term. Leasehold land which in substance is a finance lease is classified as property, plant and equipment. Operating leases Leases, where the Group does not assume substantially all the risks and rewards of ownership are classified as operating leases and, except for property interest held under operating lease, the leased assets are not recognised on the statement of financial position. Property interest held under an operating lease, which is held to earn rental income or for capital appreciation or both, is classified as investment property and is measured using fair value model. Payments made under operating leases are recognised in profit or loss on a straight-line basis over the term of the lease. Lease incentives received are recognised in profit or loss as an integral part of the total lease expense, over the term of the lease. Contingent rentals are charged to profit or loss in the reporting period in which they are incurred. Leasehold land which in substance is an operating lease is classified as prepaid lease payments.
52

31 December 2012
2.
SIGNIFICANT ACCOUNTING POLICIES (Contd) 2.10 Impairment of Non-Financial Assets The Group and the Company assess at the end of each reporting period whether there is an indication that an asset may be impaired. For the purpose of impairment testing, recoverable amount (i.e. the higher of the fair value less cost to sell and value-in-use) is determined on an individual asset basis unless the asset does not generate cash flows that are largely independent of those from other assets. If this is the case, the recoverable amount is determined for the cash-generating units (CGU) to which the asset belongs. If the recoverable amount of the asset (or CGU) is estimated to be less than its carrying amount, the carrying amount of the asset (or CGU) is reduced to its recoverable amount. The difference between the carrying amount and recoverable amount is recognised as an impairment loss in the profit or loss. An impairment loss for an asset is reversed if, and only if, there has been a change in the estimates used to determine the assets recoverable amount since the last impairment loss was recognised. The carrying amount of this asset is increased to its revised recoverable amount, provided that this amount does not exceed the carrying amount that would have been determined (net of any accumulated amortisation or depreciation) had no impairment loss been recognised for the asset in prior years. A reversal of impairment loss for an asset is recognised in profit or loss. 2.11 Financial Instruments 2.11.1 Initial recognition and measurement A financial asset or a financial liability is recognised in the statements of financial position when, and only when, the Group and the Company become a party to the contractual provisions of the instrument. A financial instrument is recognised initially, at its fair value plus, in the case of a financial instrument not at fair value through profit or loss, transactions costs that are directly attributable to the acquisition or issuance of the financial instrument. An embedded derivative is recognised separately from the host contract and accounted for as a derivative if, and only if, it is not closely related to the economic characteristics and risks of the host contract and the host contract is not categorised at fair value through profit or loss. The host contract, in the event an embedded derivative is recognised separately, is accounted for in accordance with policy applicable to the nature of the host contract. 2.11.2 Financial instrument categories and subsequent measurement The Group and the Company categorise financial instruments as follows: Financial assets (a) Loans and receivables Loans and receivables category comprises debt instruments that are not quoted in an active market. Financial assets categorised as loans and receivables are subsequently measured at amortised cost using the effective interest method. Loans and receivables are classified as current assets, except for those having maturity dates later than 12 months after the end of the reporting period which are classified as non-current.

31 December 2012
53
2.
SIGNIFICANT ACCOUNTING POLICIES (Contd) 2.11 Financial Instruments (Contd) 2.11.2 Financial instrument categories and subsequent measurement (Contd) Financial assets (Contd) (b) Available-for-sale financial assets Available-for-sale category comprises investment in equity and debt securities instruments that are not held for trading. Investments in equity instruments that do not have a quoted market price in an active market and whose fair value cannot be reliably measured are measured at cost. Other financial assets categorised as available-for-sale are subsequently measured at their fair values with the gain or loss recognised in other comprehensive income, except for impairment losses, foreign exchange gains and losses arising from monetary items and gains and losses of hedged items attributable to hedge risks of fair value hedges which are recognised in profit or loss. On derecognition, the cumulative gain or loss recognised in other comprehensive income is reclassified from equity into profit or loss. Interest calculated for a debt instrument using the effective interest method is recognised in profit or loss. All financial assets, except for those measured at fair value through profit or loss, are subject to review for impairment. Financial liabilities All financial liabilities are subsequently measured at amortised cost other than those categorised as fair value through profit or loss. Fair value through profit or loss category comprises financial liabilities that are derivatives (except for a derivative that is a financial guarantee contract or a designated and effective hedging instrument) or financial liabilities that are specifically designated into this category upon initial recognition. Derivatives that are linked to and must be settled by delivery of unquoted equity instruments whose fair values cannot be reliably measured are measured at cost. Other financial liabilities categorised as fair value through profit or loss are subsequently measured at their fair value with the gain or loss recognised in profit or loss. 2.11.3 Financial guarantee contracts A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due in accordance with the original or modified terms of a debt instrument. Financial guarantee contracts are classified as deferred income and are amortised to profit or loss using a straight-line method over the contractual period or, when there is no specified contractual period, recognised in profit or loss upon discharge of the guarantee. When settlement of a financial guarantee contract becomes probable, an estimate of the obligation is made. If the carrying value of the financial guarantee contract is lower than the obligation, the carrying value is adjusted to the obligation amount and accounted for as a provision.
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31 December 2012
2.
SIGNIFICANT ACCOUNTING POLICIES (Contd) 2.11 Financial Instruments (Contd) 2.11.4 Derecognition A financial asset or part of it is derecognised, when and only when the contractual rights to the cash flows from the financial asset expire or the financial asset is transferred to another party without retaining control or substantially all risks and rewards of the asset. On derecognition of a financial asset, the difference between the carrying amount and the sum of the consideration received (including any new asset obtained less any new liability assumed) and any cumulative gain or loss that had been recognised in equity is recognised in the profit or loss. A financial liability or a part of it is derecognised when, and only when, the obligation specified in the contract is discharged or cancelled or expired. On derecognition of a financial liability, the difference between the carrying amount of the financial liability extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss. 2.12 Impairment of Financial Assets All financial assets (except for financial assets categorised as fair value through profit or loss, investment in subsidiaries and investment in associates) are assessed at the end of each reporting period whether there is any objective evidence of impairment as a result of one or more events having an impact on the estimated future cash flows of the asset. Losses expected as a result of future events, no matter how likely, are not recognised. For an investment in an equity instrument, a significant or prolonged decline in the fair value below its cost is an objective evidence of impairment. An impairment loss in respect of loans and receivables and held-to-maturity investments is recognised in profit or loss and is measured as the difference between the assets carrying amount and the present value of estimated future cash flows discounted at the assets original effective interest rate. The carrying amount of the asset is reduced through the use of an allowance account. An impairment loss in respect of available-for-sale financial assets is recognised in profit or loss and is measured as the difference between the assets acquisition cost (net of any principal repayment and amortisation) and the assets current fair value, less any impairment loss previously recognised. Where a decline in the fair value of an available-for-sale financial asset has been recognised in other comprehensive income, the cumulative loss in other comprehensive income is reclassified from equity to profit or loss. An impairment loss in respect of unquoted equity instrument that is carried at cost is recognised in profit or loss and is measured as the difference between the financial assets carrying amount and the present value of estimated future cash flows discounted at the current market rate of return for a similar financial asset. Impairment losses recognised in profit or loss for an investment in an equity instrument classified as availablefor-sale is not reversed through profit or loss. If, in a subsequent period, the fair value of a debt instrument increases and the increase can be objectively related to an event occurring after the impairment loss was recognised in profit or loss, the impairment loss is reversed, to the extent that the assets carrying amount does not exceed what the carrying amount would have been had the impairment not been recognised at the date the impairment is reversed. The amount of the reversal is recognised in profit or loss.

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55
2.
SIGNIFICANT ACCOUNTING POLICIES (Contd) 2.13 Cash and Cash Equivalents Cash comprises cash in hand, cash at bank and demand deposits. Cash equivalents are short term and highly liquid investments that are readily convertible to known amount of cash and which are subject to an insignificant risk of changes in value, against which bank overdraft balances, if any, are deducted. 2.14 Inventories Inventories are stated at the lower of cost and net realisable value. Cost of raw materials and packing materials is determined on a weighted average basis and comprises the original cost of purchases plus the cost of bringing the inventories to their present location and condition. The cost of finished goods and work-in-progress includes raw materials, direct labour and a proportion of manufacturing overheads and is determined on the weighted average basis. Net realisable value represents the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale. 2.15 Provisions Provisions are recognised when the Group has a present obligation as a result of a past event and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate of the amount can be made. Provisions are reviewed at the end of each reporting period and adjusted to reflect the current best estimate. Where the effect of the time value of money is material, the amount of a provision is the present value of the expenditure expected to be required to settle the obligation. 2.16 Borrowing Costs Borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset are capitalised during the period of time that is necessary to complete and prepare the asset for its intended use or sale. Capitalisation of borrowing costs commences when the activities to prepare the asset for its intended use or sale are in progress and the expenditures and borrowing costs are incurred. Borrowing costs are capitalised until the assets are substantially completed for their intended use or sale. Other borrowing costs are recognised as expenses in the period in which they are incurred. Borrowing costs consist of interest and other costs that the Group incurred in connection with the borrowing of funds. 2.17 Income Recognition Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and to the Company and when the revenue can be reliably measured on the following bases: (i) Sale of goods Revenue from the sale of goods is recognised when the significant risks and ownership have been transferred to the customers. (ii) Provision of services Revenue from rendering of services is recognised on the dates the services are rendered and completed. (iii) Dividend income Dividend income is recognised when the Groups right to receive payment is established.
56

31 December 2012
2.
SIGNIFICANT ACCOUNTING POLICIES (Contd) 2.17 Income Recognition (Contd) (iv) Management fee Management fee is recognised on an accrual basis when services are rendered. (v) Interest income Interest income is recognised on a time proportion basis using the applicable effective interest rate. (vi) Rental income Rental income is recognised on a time proportion basis over the lease term. (vii) Commissions When the Group acts in the capacity of an agent rather than as the principal in a transaction, the revenue recognised is the net amount of commission made by the Group. 2.18 Employee Benefits Short term benefits Wages, salaries, bonuses and social security contributions are recognised as an expense in the year in which the associated services are rendered by employees of the Group. Short term accumulating compensated absences such as paid annual leave are recognised when services are rendered by employees that increase their entitlement to future compensated absences, and short term non-accumulating compensated absences such as sick leave are recognised when the absences occur. Defined contribution plans As required by law, companies in Malaysia make contributions to the national pension scheme, the Employees Provident Fund (EPF). Such contributions are recognised as expenses as incurred. Share-based compensation The Companys Employee Share Options Scheme (ESOS), an equity-settled, share-based compensation plan, allows the Groups employees to acquire ordinary shares of the Company. The total fair value of share options granted to employees is recognised as an employee cost with a corresponding increase in the share option reserve within equity over the vesting period and taking into account the probability that the options will vest. The fair value of share options is measured at grant date, taking into account, if any, the market vesting conditions upon which the options were granted but excluding the impact of any non-market vesting conditions. Nonmarket vesting conditions are included in assumptions about the number of options that are expected to become exercisable on vesting date. At the end of each reporting period, the Group revises its estimates of the number of options that are expected to become exercisable on vesting date. It recognises the impact of the revision of original estimates, if any, in the profit or loss, and a corresponding adjustment to equity over the remaining vesting period. The equity amount is recognised in the share option reserve until the option is exercised, upon which it will be transferred to share premium, or until the option expires, upon which it will be transferred directly to retained profits. The proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value) and share premium when the options are exercised.

31 December 2012
57
2.
SIGNIFICANT ACCOUNTING POLICIES (Contd) 2.19 Income Tax Income tax on the profit or loss for the year comprises current and deferred tax. Current tax is the expected amount of income taxes payable in respect of the taxable profit for the year and is measured using the tax rates that have been enacted or substantively enacted by the end of the reporting period. Deferred tax is provided for, using the liability method, on temporary differences at the end of the reporting period between the tax bases of assets and liabilities and their carrying amounts in the financial statements. In principle, deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised for all deductible temporary differences, unused tax losses and unused tax credits to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, unused tax losses and unused tax credits can be utilised. Deferred tax is measured at the tax rates that are expected to apply in the period when the asset is realised or the liability is settled, based on tax rates that have been enacted or substantively enacted by the end of the reporting period. Deferred tax is recognised in the profit or loss, except when it arises from a transaction which is recognised directly in equity, in which case the deferred tax is also recognised directly in equity, or when it arises from a business combination that is an acquisition, in which case the deferred tax is included in the resulting goodwill or the amount of any excess of the acquirers interest in the net fair value of the acquirees identifiable assets, liabilities and contingent liabilities over the cost of the combination. 2.20 Foreign Currency Translations The individual financial statements of each entity in the Group are measured using the currency of the primary economic environment in which the entity operates (the functional currency). The consolidated financial statements are presented in Ringgit Malaysia (RM), which is also the Companys functional currency. In preparing the financial statements of the individual entities, transactions in currencies other than the entitys functional currency (foreign currencies) are recorded in the functional currencies using the exchange rates prevailing at the dates of the transactions. At the end of each reporting period, foreign currency monetary items are translated into functional currency at the exchange rates ruling at that date. All exchange gains or losses are recognised in profit or loss. The financial statements of the foreign subsidiary are translated into RM at the approximate rate of exchange ruling at the end of the reporting period for assets and liabilities and at the approximate average rate of exchange ruling on transaction dates for income and expenses. Exchange differences due to such currency translations are taken directly to exchange translation reserve. Upon disposal of a foreign operation which resulted in a loss of control, the cumulative translation differences recognised in equity (the exchange translation reserve) are reclassified to profit or loss and recognised as part of the gain or loss on disposal. On partial disposal of a foreign operation, the proportionate share of the cumulative translation differences recognised in equity shall be re-attributed to the non-controlling interests in that foreign operation.
58

31 December 2012
2.
SIGNIFICANT ACCOUNTING POLICIES (Contd) 2.21 Segment Reporting An operating segment is a component of the Group that engages in business activities from which it may earn revenue and incur expenses, including revenues and expenses that relate to transactions with any of the Groups other components. An operating segments operating results are reviewed regularly by the chief operating decision maker, who in this case are the Executive Directors of the Group, to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available. 2.22 Contingencies Where it is not probable that an inflow or an outflow of economic benefits will be required, or the amount cannot be estimated reliably, the asset or the obligation is not recognised in the statements of financial position and is disclosed as a contingent asset or contingent liability, unless the probability of inflow or outflow of economic benefits is remote. Possible obligations, whose existence will only be confirmed by the occurrence or nonoccurrence of one or more future events, are also disclosed as contingent assets or contingent liabilities unless the probability of inflow or outflow of economic benefits is remote. 2.23 Share Capital and Share Issuance Expenses An equity instrument is any contract that evidences a residual interest in the assets of the Group and of the Company after deducting all of its liabilities. Ordinary shares are equity instruments. Share capital represents the nominal value of shares that have been issued. Dividends on ordinary shares are accounted for in shareholders equity as an appropriation of retained profits and recognised as a liability in the period in which they are declared. Share premium includes any premiums received upon issuance of share capital. Any transaction costs associated with the issuing of shares are deducted from share premium, net of any related income tax benefits.
3.
PROPERTY, PLANT AND EQUIPMENT
GROUP Capital expenditure in progress RM Total RM Short leasehold land RM Factory buildings RM Plant, Furniture, machinery fittings and and office Electrical Motor Factory extension equipment equipment Renovation installation vehicles RM RM RM RM RM RM
At cost 4,836,405 6,241,416 195,712 704,853 315,684 25,305,871 441,072 2,913,292 (750,075) 817,439 (598,572) 36,661 5,227,472 211,142 785,117 3,176,658 181,174 564,525 (48,744) 15,000 - (211,479) 13,015 5,830,907 9,998 372,099 (124,881) 11,800 (68,228) 4,199 545,719 298,520 (844,239) 52,654,418 451,070 5,052,148 (798,819) (124,881) (878,279) 53,875
At 1 January 2011 Acquistion of a subsidiary Additions Disposals Written off Reclassification Disposal of a subsidiary Foreign currency translation
31 December 2012
At 31 December 2011/ 1 January 2012 Additions Disposals Written off 4,836,405 6,437,128 42,220 1,020,537 5,438,614 6,479,348 1,020,537 31,761,441 6,278,863 4,836,405 28,165,688 3,697,638 (72,830) (29,055) 5,438,614 6,035,894 255,881 (12,310) (602)
966,291 3,508,975 864,240 298,590 1,830,531 3,807,565
624,648 624,648
56,409,532 5,783,217 (85,140) (29,657) 62,077,952
At 31 December 2012
59
60
3.
PROPERTY, PLANT AND EQUIPMENT(Contd)
GROUP (Contd) Capital expenditure in progress RM Total RM Short leasehold Factory land buildings RM RM Furniture, Plant, fittings machinery Electrical Motor and office and Factory extension equipment equipment Renovation installation vehicles RM RM RM RM RM RM
Accumulated depreciation 638,771 91,253 1,081,995 244,821 147,217 33,475 14,928,158 3,801,829 2,204 71,357 496,422 2,482,135 (711,387) (116,604) (52,508) (357,598) 3,139 21,321 997,074 118,639 556,159 1,477,204 420,936 55,982 (13,640) - (121,220) 7,203 23,628,407 73,561 3,943,663 (725,027) (116,604) (531,326) 31,663
At 1 January 2011 Acquistion of a subsidiary Current charge Disposals Written off Disposal of a subsidiary Foreign currency translation
31 December 2012
At 31 December 2011/ 1 January 2012 Current charge Disposals Written off 730,024 91,253 1,326,816 262,054 180,692 53,962 234,654 18,891,193 4,608,569 1,251,760 1,588,870 16,433,986 4,134,482 485,007 2,536,117 (10,663) (59,927) (257) (18,983) 1,115,713 136,047 821,277
612,141 1,770,483 391,435 81,086 693,227 2,161,918
26,304,337 4,036,961 (70,590) (19,240) 30,251,468
At 31 December 2012
Carrying amount 4,197,634 5,159,421 557,636 839,845 11,731,702 5,110,312 4,890,478 10,377,713 4,106,381 4,015,128 2,029,078 1,901,412 4,230,398 4,322,901 4,186,854 228,958 1,699,454 354,150 1,738,492 1,137,304 1,645,647 545,719 624,648 29,026,011 30,105,195 31,826,484
At 1 January 2011
At 31 December 2011
At 31 December 2012
785,883 12,870,248 1,670,294

31 December 2012
61
3.
PROPERTY, PLANT AND EQUIPMENT (Contd) COMPANY Furniture, fittings and office equipment RM At cost At 1 January 2011 Additions Disposal Written off At 31 December 2011/ 1 January 2012/ At 31 December 2012 Accumulated depreciation At 1 January 2011 Current charge Disposal Written off At 31 December 2011/ 1 January 2012 Current charge At 31 December 2012 Carrying amount At 1 January 2011 At 31 December 2011 At 31 December 2012 GROUP The short leasehold land and building with carrying amount of RM7,942,002 (31.12.2011: RM8,122,502; 1.1.2011: RM8,303,002) are pledged to a licensed bank as security for banking facilities granted to certain subsidiaries. Included in the carrying amount are the following plant and equipment being acquired under finance lease: 31.12.2012 RM Plant, machinery and equipment Electrical installation Motor vehicles 3,768,422 408,500 1,085,620 5,262,542 The leased assets are pledged as security for the related finance lease liabilities (Note 17). 31.12.2011 RM 3,300,009 1,122,612 4,422,621 1.1.2011 RM 2,582,746 1,009,048 3,591,794 8,144 7,085 4,920 123,667 71,096 39,564 131,811 78,181 44,484 36,061 3,217 (1,139) 219,400 33,613 (8,786) 255,461 36,830 (8,786) (1,139) 44,205 2,159 (1,140) 343,067 (27,744) 387,272 2,159 (27,744) (1,140)
Motor vehicles RM
Total RM
45,224
315,323
360,547
38,139 2,165 40,304
244,227 31,532 275,759
282,366 33,697 316,063
62

31 December 2012
4.
INVESTMENT PROPERTIES GROUP 31.12.2011 RM 5,061,024
31.12.2012 RM Investment properties, at fair value * * The breakdown is as follows: Freehold factory building RM 500,654 (500,654) Long leasehold land RM 1,300,058 5,061,024
1.1.2011 RM 5,864,441
Freehold land RM At 1 January 2011 Disposals At 31 December 2011/ 1 January 2012/ 31 December 2012 The amounts recognised in profit or loss are as follows: 302,763 (302,763)
Leasehold factory building RM 3,760,966 -
Total RM 5,864,441 (803,417)
1,300,058
3,760,966
5,061,024
2012 RM Rental income from rental generating properties Direct operating expenses arising from rental generating properties 633,600
2011 RM 650,300
45,562
49,028
Long leasehold land refers to land with remaining lease period of fifty years or more as at the end of the reporting period.
5.
INVESTMENT IN SUBSIDIARIES COMPANY 31.12.2011 RM 26,749,384 4,459,002 (4,459,002) 22,290,382
31.12.2012 RM Unquoted shares, at cost Less : Impairment losses Balance at beginning Current year Disposal of investment in a subsidiary Balance at end 26,849,384 4,459,002 395,528 (4,854,530) 21,994,854
1.1.2011 RM 29,072,784 8,993,700 3,165,302 (7,700,000) (4,459,002) 24,613,782

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63
5.
INVESTMENT IN SUBSIDIARIES (Contd) The details of the subsidiaries, all of which are incorporated in Malaysia, except where indicated are as follows: Name of Subsidiaries Direct subsidiaries Ire-Tex (Malaysia) Sdn. Bhd. Effective Equity Interest 31.12.2012 31.12.2011 1.1.2011 100% 100% 100% Principal Activities Design and manufacture of protective packing materials and other related products and investment holding. Contract manufacturing services. Design and manufacture of packaging materials and other related products. Provide services of calibration and testing of equipment and general products. Manufacture of paper pulp, polymer protective packaging materials and other related products. Manufacture of corrugated packaging materials and other related products. Investment holding and sales commission agent. Generation of biomass energy. Sales and marketing of agricultural waste related products. Manufacture of wooden crates, pallets and other related wood products. Dormant. Manufacture of corrugated packaging materials and other related products.
Ire-Tex Electronics Sdn. Bhd. Ire-Tex (Johor) Sdn. Bhd. Cal-Test Laboratory Sdn. Bhd. Eppor-Pack Sdn. Bhd.
100% 70% 100% 51%
100% 70% 100% 51%
100% 70% 100% 100%
GH Packaging Sdn. Bhd. Styrotex (Asia Pacific) Sdn. Bhd. Powertude Sdn. Bhd. TFH Corporate Sdn. Bhd. Jumbo Universe Sdn. Bhd. * Ire-Tex (Vietnam) Co. Ltd. (Incorporated in Vietnam) Ire-Tex Paper Packaging Sdn. Bhd.
100% 50.01% 51% 55% 70% 100% 100%
100% 50.01% 51% 55% 70% 100% -
100% 50.01% 100% 55% -
Indirect - held through Ire-Tex (Malaysia) Sdn. Bhd. Ire-Tex (KL) Sdn. Bhd. 70% 70% 70% Design and manufacture of protective packaging materials and other related products.
Indirect - held through Ire-Tex Electronics Sdn. Bhd. Ire-Tex Distribution Sdn. Bhd. 100% 100% 100% Sourcing, distributing and trading of raw materials, components and finished products.
Indirect - held through Styrotex (Asia Pacific) Sdn. Bhd. * Suzhou Styrotex Plastic Co., Ltd. (Incorporated in The Peoples Republic of China) * Not audited by Grant Thornton. 100% Manufacture of vacuum foaming products.
64

31 December 2012
5.
INVESTMENT IN SUBSIDIARIES (Contd) 31.12.2012 On 16 August 2012, the Company acquired 2 ordinary shares of RM1 each, which represent 100% equity interest in Ire-Tex Paper Packaging Sdn. Bhd. (ITPP) for a total cash consideration of RM2. Subsequently, the Company has also subscribed for 99,998 new ordinary shares of RM1 each in ITPP for a total cash consideration of RM99,998. The additional subscription did not create any change in the effective equity interest of the Company. 31.12.2011 (i) On 11 April 2011, the Company acquired 98,000 ordinary shares of RM1 each in Jumbo Universe Sdn. Bhd. (JUSB) for a total cash consideration of RM98,000. On the same date, the Company has also subscribed for 140,000 new ordinary shares of RM1 each in JUSB for a total cash consideration of RM140,000. Consequently, the Company holds 70% of the total paid up capital in JUSB, making it a subsidiary of the Company. The Company has written off the goodwill arising from consolidation at the point of acquisition amounted to RM821,734 as the management is of the view that its recoverable amount is less than its carrying amount. (ii) On 16 April 2011, the Company has disposed of 49% each of its equity interest in both Eppor-Pack Sdn. Bhd. and Powertude Sdn. Bhd. for a total cash consideration of RM1,842,533. On 27 April 2011, the Company has incorporated a wholly-owned subsidiary in Vietnam, namely Ire-Tex (Vietnam) Co. Ltd. for a subscription of USD80,000 or equivalent to RM242,830. On 23 November 2011, the Group has through Styrotex (Asia Pacific) Sdn. Bhd. (SAPSB) restructured its investment in Suzhou Styrotex Plastic Co., Ltd. (SZST), a wholly-owned subsidiary and Shanghai Kingpak Enviro-Tech Plastic Products Co., Ltd (SHKP), a 50% associate (Note 6) by way of the followings: (a) Disposed of its entire equity interest in SZST to Styropak Singapore Pte. Ltd. (SSPL) at a consideration of SGD306,816, and (b) Disposed of its entire 50% equity interest in SHKP to SSPL at a consideration of SGD236,193. The total disposal consideration of SGD543,009 was satisfied by the issuance of 543,009 new ordinary shares of SGD1.00 each in the paid up capital of SSPL to SAPSB. On the even date, SAPSB has also subscribed for 56,991 new ordinary shares of SGD1.00 each in SSPL. Consequent to the above restructuring, SAPSB now holds 600,000 shares in SSPL, which represents 50% of the total paid up capital of SSPL. However, the Group is unable to exercise significant influence over the financial and operating policies of SSPL and therefore treated the investment as available-for-sale financial assets. (v) On 14 December 2011, the Company subscribed for an additional 110,000 new ordinary shares of RM1 each at par for cash in TFH Corporate Sdn. Bhd. for a total cash consideration of RM110,000. The share subscriptions did not create any change in the effective equity interest of the Group and of the Company in the subsidiary.
(iii)
(iv)
6.
INVESTMENT IN ASSOCIATES GROUP 31.12.2011 RM -
31.12.2012 RM Unquoted shares, at cost Share of post-acquisition reserves -
1.1.2011 RM 1,629,000 643,212 2,272,212

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65
6.
INVESTMENT IN ASSOCIATES (Contd) COMPANY 31.12.2011 RM -
31.12.2012 RM Unquoted shares, at cost -
1.1.2011 RM 900,000
The details of the associates, all of which are incorporated in The Peoples Republic of China, are as follows: Effective Equity Interest 31.12.2012 31.12.2011 1.1.2011 30%
Name of Subsidiaries Direct * Ire-Tex (Xiamen) Plastic Co., Ltd.
Principal Activities Manufacture, design and sales of packaging materials.
Indirect - held through Styrotex (Asia Pacific) Sdn. Bhd. * Shanghai Kingpak Enviro-Tech Plastic Products Co., Ltd. * Not audited by Grant Thornton. The summarised financial information of the associates was as follows: 31.12.2012 RM Assets and liabilities Current assets Non-current assets Total assets Total liabilities (i) 31.12.2011 RM 1.1.2011 RM 50% Manufacture, marketing and sales of plastics vacuum foaming products.
7,536,404 1,577,678 9,114,082 (1,056,656)
On 14 April 2011, the Company disposed of its 30% equity interest in its associate, namely Ire-Tex (Xiamen) Plastics Co., Ltd for a total net cash consideration of RM1,015,995. Details on the disposal of Shanghai Kingpak Enviro-Tech Plastic Products Co., Ltd. is disclosed in Note 5(iv).
(ii)
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31 December 2012
7.
OTHER INVESTMENTS GROUP 31.12.2011 RM
31.12.2012 RM Available-for-sale financial assets Unquoted shares, at cost Less : Impairment loss
1.1.2011 RM
2,324,023 2,324,023
2,324,023 2,324,023
697,400 (190,000) 507,400
Golf club corporate membership, at cost Less : Impairment loss
46,000 (46,000) 2,324,023
46,000 (46,000) 2,324,023 COMPANY 31.12.2011 RM
46,000 (46,000) 507,400
31.12.2012 RM Available-for-sale financial assets Unquoted shares, at cost
1.1.2011 RM
844,243
844,243
507,400
8.
INVENTORIES GROUP 31.12.2011 RM
31.12.2012 RM Raw materials Work-in-progress Finished goods Packing materials
1.1.2011 RM
7,017,222 930,199 3,661,340 49,711 11,658,472
8,242,866 818,831 4,293,366 118,762 13,473,825
5,317,398 806,641 3,653,091 52,553 9,829,683
During the financial year, the inventories recognised in profit or loss as cost of sales is RM100,270,980 (2011: RM97,075,045).

31 December 2012
67
9.
TRADE RECEIVABLES The currency profile of trade receivables is as follows : GROUP 31.12.2011 RM 27,697,620 4,893,253 908,771 33,499,644
31.12.2012 RM Ringgit Malaysia US Dollar Chinese Renminbi Singapore Dollar 24,978,271 5,616,423 802,544 31,397,238 Included herein are the followings : (i) (ii)
1.1.2011 RM 18,945,972 2,832,076 2,406,014 1,043,756 25,227,818
An amount of RM17,426 (31.12.2011: RM16,152; 1.1.2011: RM11,126) due from a company in which c e r t a i n directors of the Company have substantial financial interests, and An amount of RM73,464 (31.12.2011: RM551,178; 1.1.2011: RM Nil) due from a company in which the Company has interest, and
(iii) An amount of RM265,728 (31.12.2011: RM Nil; 1.1.2011: RM Nil) due from a company in which a subsidiary of the Company has interest. Trade receivables are non-interest bearing and are generally on 30 to 90 days (31.12.2011: 30 to 90 days; 1.1.2011: 30 to 90 days) credit terms. They are recognised at their original invoice amounts which represent their fair values on initial recognition.
10. OTHER RECEIVABLES, DEPOSITS AND PREPAYMENTS GROUP 31.12.2011 RM 611,009 1,090,463 541,669 1,388,267 3,631,408 COMPANY 31.12.2011 RM 12,836 4,848 17,684
31.12.2012 RM Other receivables Refundable deposits Deposits for purchase of: - plant and machinery - leasehold land and buildings Prepayments 517,583 694,529 236,581 655,000 1,203,889 3,307,582
1.1.2011 RM 2,191,150 718,472 854,761 3,764,383
31.12.2012 RM Other receivables Refundable deposits Prepayments 8,605 4,848 53,000 66,453
1.1.2011 RM 1,390 4,848 3,380 9,618
As at the end of reporting period, there was no indication that the other receivables and deposits of the Group and of the Company are not recoverable.
68

31 December 2012
10. OTHER RECEIVABLES, DEPOSITS AND PREPAYMENTS (Contd) The currency profile of other receivables, deposits and prepayments is as follows: GROUP 31.12.2011 RM 3,230,142 397,969 3,297 3,631,408 COMPANY 31.12.2011 RM 17,684 17,684
31.12.2012 RM Ringgit Malaysia US Dollar Chinese Renminbi 3,141,002 166,580 3,307,582
1.1.2011 RM 3,118,430 584,574 61,379 3,764,383
31.12.2012 RM Ringgit Malaysia US Dollar 66,453 66,453
1.1.2011 RM 8,742 876 9,618
11. AMOUNT DUE FROM/TO SUBSIDIARIES The currency profile of amount due from subsidiaries is as follows : COMPANY 31.12.2011 RM 17,472,474 17,472,474
31.12.2012 RM Ringgit Malaysia US Dollar 18,316,074 18,316,074 The entire amount due to subsidiaries is denominated in Ringgit Malaysia.
1.1.2011 RM 14,066,548 1,000 14,067,548
The amount due from/to subsidiaries is non-trade related, unsecured, non-interest bearing and is repayable on demand. 12. FIXED DEPOSITS WITH LICENSED BANKS GROUP 31.12.2011 RM 213,090 2,171,753 2,384,843
31.12.2012 RM Unencumbered Encumbered 2,119,770 2,531,506 4,651,276
1.1.2011 RM 201,075 1,526,553 1,727,628
The encumbered fixed deposits are pledged to licensed banks as security for banking facilities granted to certain subsidiaries and hence are not available for general use.

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69
12. FIXED DEPOSITS WITH LICENSED BANKS (Contd) The effective interest rates per annum and maturities as at the end of the reporting period are as follows: 31.12.2012 Interest rates (%) Maturities (Months) 13. CASH AND BANK BALANCES GROUP 31.12.2011 RM 2.75 to 3.25 1 to 12 31.12.2011 2.75 to 3.20 1 to 12 1.1.2011 2.70 to 2.75 1 to 12
31.12.2012 RM Short-term funds with licensed financial institutions Cash and bank balances
1.1.2011 RM
285,650 4,846,279 5,131,929 31.12.2012 RM
285,650 3,729,006 4,014,656 COMPANY 31.12.2011 RM
335,650 3,059,571 3,395,221 1.1.2011 RM
Short-term funds with licensed financial institutions Cash and bank balances
82,647 403,182 485,829
82,647 648,178 730,825
32,647 17,292 49,939
The currency profile of cash and bank balances is as follows: GROUP 31.12.2011 RM 2,535,855 1,214,534 222,711 41,556 4,014,656 COMPANY 31.12.2011 RM 366,145 364,680 730,825
31.12.2012 RM Ringgit Malaysia US Dollar Singapore Dollar Chinese Renminbi 3,477,931 1,312,781 341,028 189 5,131,929
1.1.2011 RM 2,166,206 21,654 358,601 848,760 3,395,221
31.12.2012 RM Ringgit Malaysia US Dollar 436,834 48,995 485,829
1.1.2011 RM 49,939 49,939
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31 December 2012
13. CASH AND BANK BALANCES (Contd) The effective interest rates per annum and maturities of the short term funds as at the end of the reporting period are as follows: GROUP 31.12.2011 2.95 to 3.08 1 to 30 COMPANY 31.12.2011 2.95 to 3.08 1
31.12.2012 Interest rates (%) Maturities (Days) 1.00 to 1.20 1 to 30 31.12.2012 Interest rates (%) Maturities (Days) 14. SHARE CAPITAL Number of Ordinary Shares of RM1 each 2012 Authorised At 1 January/ At 31 December Issued and fully paid : At 1 January Issuance of shares pursuant to ESOS At 31 December 31.12.2012 2011 1.00 to 1.20 1
1.1.2011 2.80 1 to 30 1.1.2011 2.80 1
Amount 2012 RM 2011 RM
50,000,000
50,000,000
50,000,000
50,000,000
44,877,000 134,000 45,011,000
44,817,000 60,000 44,877,000
44,877,000 134,000 45,011,000
44,817,000 60,000 44,877,000
During the financial year, the Company increased its issued and paid-up share capital from RM44,877,000 to RM45,011,000 by way of allotments of 134,000 ordinary shares of RM1 each at an exercise price of RM1 per share for cash pursuant to the ESOS. 31.12.2011 During the financial year, the Company increased its issued and paid-up share capital from RM44,817,000 to RM44,877,000 by way of allotments of 60,000 ordinary shares of RM1 each at an exercise price of RM1 per share for cash pursuant to the ESOS.

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14. SHARE CAPITAL (Contd) Employee Share Option Scheme (ESOS) The details of ESOS and movements during the financial year are as below: Number of Share Options Exercised Lapsed/ Forfeited
Grant date 2012 17.2.04 24.8.07 2011 17.2.04 24.8.07
Expiry date
Exercise price RM 1.40 1.00
Balance at beginning
Balance at end
16.1.14 16.1.14
750,800 1,887,000
(134,000)
(33,000)
750,800 1,720,000
16.1.14 16.1.14
1.40 1.00
750,800 1,964,000
(60,000)
(17,000)
750,800 1,887,000
The outstanding ESOS as at the end of the reporting period is exercisable at any point of time and the weighted average share price during the financial year is RM1.23 (2011: RM1.13) The salient features of the ESOS are as follows: (i) The total number of new ordinary shares which are available to be issued under the ESOS shall not exceed ten percent (10%) of the total issued and fully paid-up share capital of the Company at any time. (ii) The ESOS shall be capable of being exercised from 1 August 2004 to 16 January 2009. On 26 November 2008, the Company has given its approval to extend the existing ESOS expiring on 16 January 2009 for a further period of five years to 16 January 2014 pursuant to By-laws 19.1 of the Scheme. Options not exercised during the said period shall become null and void. (iii) The new ordinary shares to be issued and allotted upon any exercise of the option will upon allotment and issuance rank pari passu in all respect with the then existing issued and fully paid-up ordinary shares of the Company except that the new ordinary shares will not be entitled for any dividends, rights, allotments or other distribution declared, made or paid to shareholders unless the new ordinary shares so allotted have been credited into the relevant securities accounts of the shareholders maintained by Bursa Malaysia Depository Sdn. Bhd. before the entitlement date and will be subject to all provisions of the Articles of Association of the Company relating to transfer, transmission and otherwise. The fair value of equity-settled share options granted in the previous year was estimated using binomial model, taking into account the terms and conditions upon which the options were granted. The following table lists the inputs to the model used: Fair value of share options granted on 24 August 2007: Weighted average share price (RM) Weighted average exercise price (RM) Expected volatility (%) Expected life (years) Risk free rate (%) 0.88 1.00 21.82 6.40 4.04
The expected life of the option was based on historical data and is not necessarily indicative of exercise patterns that may occur. The expected volatility reflects the assumption that the historical volatility is indicative of future trends, which may also not necessarily be the actual outcome. No other features of the options granted were incorporated into the measurement of fair value.
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15. SHARE PREMIUM GROUP AND COMPANY 2012 2011 RM RM At 1 January Transfer from share option reserve upon exercise of ESOS At 31 December 4,391,143 51,958 4,443,101 4,368,086 23,057 4,391,143
16. OTHER RESERVES GROUP 2012 RM Share option reserve Share-based compensation pursuant to ESOS granted At 1 January Transfer to share premium At 31 December Foreign currency translation reserve At 1 January Realisation upon disposal of a subsidiary At 31 December 2011 RM COMPANY 2012 RM
2011 RM
731,679 (51,958) 679,721
754,736 (23,057) 731,679
731,679 (51,958) 679,721
754,736 (23,057) 731,679
679,721
39,366 (39,366) 731,679
679,721
731,679
17. BORROWINGS GROUP 31.12.2011 RM
31.12.2012 RM Non-current liabilities Secured: Finance lease liabilities Minimum payments: Within 1 year Later than 1 year but not later than 2 years Later than 2 years but not later than 5 years More than 5 years Future finance charges Amount due within 1 year under current liabilities Balance carried forward
1.1.2011 RM
1,403,850 1,160,512 522,803 119,613 3,206,778 (250,144) 2,956,634 (1,254,482) 1,702,152
1,493,374 1,106,968 1,041,296 4,997 3,646,635 (315,235) 3,331,400 (1,316,621) 2,014,779
1,138,778 933,791 828,329 15,125 2,916,023 (265,938) 2,650,085 (996,629) 1,653,456

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73
17. BORROWINGS (Contd) GROUP 31.12.2011 RM 2,014,779 2,145,998 (247,740) 1,898,258 3,913,037
31.12.2012 RM Balance brought forward Term loan Total amount repayable Amount due within 1 year under current liabilities 1,702,152 1,876,577 (304,985) 1,571,592 3,273,744 Current liabilities Secured: Bank overdrafts Bankers acceptance Finance lease liabilities Term loan Trust receipts 2,306,441 17,678,000 1,254,482 304,985 98,467 21,642,375 The entire borrowings are denominated in Ringgit Malaysia. The borrowings (except for finance lease liabilities) are secured by way of: (i) (ii) (iii) (iv) (v) (vi) First and third party legal charge over a subsidiarys leasehold land and building, Facilities Agreements as principal instrument, Letter of undertaking cum indemnity with respective to the bankers acceptance, Overdraft undertaking, Pledge of fixed deposits of certain subsidiaries, and Corporate guarantee of the Company and of a subsidiary.
1.1.2011 RM 1,653,456 2,378,191 (236,526) 2,141,665 3,795,121
346,415 19,116,000 1,316,621 247,740 172,182 21,198,958
149,849 13,328,000 996,629 236,526 14,711,004
The finance lease liabilities are secured over the leased assets (Note 3) and corporate guarantee of the Company. A summary of the average effective interest rates and the maturities of the borrowings are as follows: Average effective interest rate per annum (%) GROUP 31.12.2012 Bank overdrafts Bankers acceptance Finance lease liabilities Term loan Trust receipts 7.10 to 7.60 3.44 to 4.75 2.77 to 4.60 5.60 7.60 2,306,441 17,678,000 2,956,634 1,876,577 98,467 2,306,441 17,678,000 1,254,482 304,985 98,467 1,086,752 322,509 497,692 1,083,036 117,708 166,047 More than one year and less than 2 years RM More than two years and less than 5 years RM
Total RM
Within 1 year RM
More than 5 years RM
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31 December 2012
17. BORROWINGS (Contd) A summary of the average effective interest rates and the maturities of the borrowings are as follows: (Contd) Average effective interest rate per annum (%) GROUP 31.12.2011 Bank overdrafts Bankers acceptance Finance lease liabilities Term loan Trust receipts 1.1.2011 Bank overdrafts Bankers acceptance Finance lease liabilities Term loan 7.30 to 7.55 3.00 to 4.60 2.37 to 4.60 7.30 149,849 13,328,000 2,650,085 2,378,191 149,849 13,328,000 996,629 236,526 839,256 254,382 799,680 884,277 14,520 1,003,006 7.30 to 7.60 3.00 to 4.67 2.37 to 4.60 7.30 3.25 to 7.85 346,415 19,116,000 3,331,400 2,145,998 172,182 346,415 19,116,000 1,316,621 247,740 172,182 1,013,074 267,238 996,782 934,661 4,923 696,359 More than one year and less than 2 years RM More than two years and less than 5 years RM
Total RM
Within 1 year RM
18. DEFERRED TAX GROUP 2012 RM Deferred tax assets : At 1 January Over provision in prior year At 31 December Deferred tax liabilities: At 1 January Transfer from profit or loss 2011 RM 2012 RM COMPANY 2011 RM
190,000 (150,000) 40,000
349,000 (159,000) 190,000
150,000 (150,000) -
150,000 150,000
521,000 2,000 523,000
486,300 24,300 510,600 10,400 521,000
(Over)/Under provision in prior year At 31 December
(31,000) 492,000

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75
18. DEFERRED TAX (Contd) The deferred tax assets/(liabilities) are represented by temporary differences arising from: GROUP 31.12.2011 RM
31.12.2012 RM Deferred tax assets Property, plant and equipment Unabsorbed tax losses Unabsorbed capital allowances Unabsorbed reinvestment allowance Deferred tax assets not recognised
1.1.2011 RM
(118,186) 1,271,542 451,070 394,572 (1,958,998) 40,000
(175,509) 2,378,127 490,022 394,572 (2,897,212) 190,000
(212,290) 2,353,107 494,540 394,572 (2,680,929) 349,000
Deferred tax liabilities Property, plant and equipment Unabsorbed capital allowances
(492,000) (492,000)
(521,000) (521,000) COMPANY 31.12.2011 RM
(713,200) 226,900 (486,300)
31.12.2012 RM Deferred tax assets Property, plant and equipment Unabsorbed tax losses Unabsorbed capital allowances Deferred tax assets not recognised
1.1.2011 RM
(3,849) 1,094,028 (940,179) 150,000
(14,722) 1,085,819 37,312 (958,409) 150,000
19. TRADE PAYABLES The currency profile of trade payables are as follows : GROUP 31.12.2011 RM 8,981,838 3,557,127 123,283 12,662,248
31.12.2012 RM Ringgit Malaysia US Dollar Thai Baht Chinese Renminbi Singapore Dollar 8,434,209 1,588,145 10,022,354
1.1.2011 RM 6,682,619 2,168,332 183,730 1,396,233 590 10,431,504
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31 December 2012
19. TRADE PAYABLES (Contd) Included herein are the followings: (i) An amount of RM1,008,380 (31.12.2011: RM962,491; 1.1.2011: RM1,074,817) due to companies in which certain directors of the Company have substantial financial interests, and An amount of RM265,728 (31.12.2011: RM175,536; 1.1.2011: RM Nil) due to a company in which a subsidiary of the Company has interest.
(ii)
Trade payables are non-interest bearing and are normally settled within 30 to 90 days (31.12.2011: 30 to 90 days; 1.1.2011: 30 to 90 days) credit terms.
20. OTHER PAYABLES AND ACCRUALS GROUP 31.12.2011 RM 3,896,894 3,361,826 7,258,720 45,141 465,851 510,992
31.12.2012 RM Other payables Advance from customers Accruals 4,366,109 1,012,290 2,897,158 8,275,557 Other payables Accruals 45,101 512,596 557,697 The currency profile of the Groups other payables and accruals is as follows:
1.1.2011 RM 3,685,433 3,449,625 7,135,058 874 354,636 355,510
31.12.2012 RM Ringgit Malaysia US Dollar Singapore Dollar Australian Dollar Chinese Renminbi 7,697,799 431,708 140,556 5,494 8,275,557
GROUP 31.12.2011 RM 6,850,664 402,562 5,494 7,258,720
1.1.2011 RM 5,701,087 144,488 5,494 1,283,989 7,135,058
The entire other payables and accruals of the Company is denominated in Ringgit Malaysia. Included in the Groups other payables is an amount of RM325,376 (31.12.2011: RM Nil; 1.1.2011: RM Nil) due to companies in which certain directors of the Company have substantial financial interests. It is unsecured, non-interest bearing and is repayable on demand.

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21. REVENUE GROUP 2012 RM Gross dividend income from unquoted subsidiaries Gross dividend income from an associate Management fee from subsidiaries Sale of goods Commission income 2011 RM 2012 RM COMPANY 2011 RM
124,597,686 295,759 124,893,445
128,649,301 217,623 128,866,924
1,150,000 2,232,000 3,382,000
778,330 983,944 2,232,000 3,994,274
22. OTHER INCOME GROUP 2012 RM Bad debts recovered Commission Gain on disposal of investment in associates Gain on disposal of investment properties Gain on disposal of property, plant and equipment Interest income Realised gain on foreign exchange Rental income Royalty income Scrap sales Miscellaneous income Unrealised gain on foreign exchange 49,593 3,350 112,984 691,581 118,301 736,253 60,595 1,772,657 2011 RM 2,755 115,923 2,583 84,014 70,463 272,044 740,983 87,049 583,614 83,576 121,761 2,164,765 2012 RM 7,205 7,205 COMPANY 2011 RM 115,995 17,719 133,714
23. FINANCE COSTS GROUP 2012 RM Bank overdrafts Bankers acceptance Finance lease liabilities Term loans Others 54,227 785,735 214,784 132,902 26,787 1,214,435 2011 RM 98,942 740,580 254,862 170,131 27,721 1,292,236 2012 RM COMPANY 2011 RM -
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31 December 2012
24. PROFIT BEFORE TAXATION This is arrived at : GROUP 2012 RM After charging : Audit fee - Companys auditors - current year - under/(over) provision in prior year - Other auditors Bad debts Depreciation Directors fee for non-executive directors Goodwill written off Impairment loss on investment in subsidiaries Loss on disposal of property plant and equipment Property, plant and equipment written off Realised loss on foreign exchange Rental of office equipment Rental of machinery Rental of motor vehicles Rental of premises * Staff costs Unrealised loss on foreign exchange 2011 RM 2012 RM COMPANY 2011 RM
68,800 500 116,625 4,036,961 96,000 10,417 271,530 16,133 195,789 18,650 3,367,091 17,020,129 1,567
62,800 (1,000) 7,540 34,312 3,943,663 96,000 821,734 4,745 8,277 189,674 10,690 221,190 20,376 3,442,491 17,021,078 -
15,000 33,697 96,000 395,528 6,364 32,400 1,720,693 -
14,000 36,830 96,000 1,958 1 32,400 1,744,232 -
* Staff costs - Salaries, allowances and bonus - EPF - SOCSO - Fee
15,840,310 1,041,865 113,954 24,000 17,020,129
15,918,905 963,573 114,600 24,000 17,021,078
1,512,841 177,316 6,536 24,000 1,720,693
1,553,179 160,526 6,527 24,000 1,744,232

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24. PROFIT BEFORE TAXATION (Contd) Directors remuneration Included in the staff costs of the Group and of the Company is the aggregate amount of emoluments received and receivable by directors of the Company and its subsidiaries as shown below: GROUP 2012 RM Executive Directors of the Company : - Salaries, allowance and Bonus - EPF Directors fee 2011 RM 2012 RM COMPANY 2011 RM
784,684 105,923 24,000 914,067
778,432 84,480 24,000 886,912
784,684 105,923 24,000 914,607
778,432 84,480 24,000 886,912
Executive Directors of subsidiaries : - Salaries, allowance and bonus - EPF
1,198,250 86,293 1,284,543 2,199,150
1,154,942 86,493 1,241,435 2,128,347
914,607
886,912
Benefits-in-kind Directors of the Company Directors of subsidiaries
14,700 6,500 21,200 2,220,350
24,600 6,500 31,100 2,159,447
14,700 14,700 929,307
24,600 24,600 911,512
25. TAXATION GROUP Current tax : Based on results for the year - Malaysian income tax - Foreign tax Deferred tax relating to the origination and reversal of temporary differences: - Malaysia 2012 RM (757,000) (757,000) 2011 RM (800,000) (7,475) (807,475) 2012 RM COMPANY 2011 RM (8,348) (8,348)
(2,000) (759,000)
(24,300) (831,775) (10,102) (169,400) (179,502) (1,011,277)
(150,000) (150,000) (150,000)
(8,348) (8,348)
Under provision in prior year - Current tax - Deferred tax
(138,954) (119,000) (257,954) (1,016,954)
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31 December 2012
25. TAXATION (Contd) The reconciliation of tax expense of the Group and of the Company is as follows: GROUP 2012 RM Profit before taxation Less: Share of results of associates 4,315,936 4,315,936 Income tax at Malaysian statutory tax rate of 25% Effects of: - Different tax rate in other countries - Income not subject to tax - Expenses not deductible for tax purposes - Utilisation of unabsorbed tax losses and capital allowances - Current year reinvestment all owance claimed - Net deferred tax movements not recognised Under provision in prior year 2011 RM 3,018,028 (194,328) 2,823,700 2012 RM 849,417 849,417 COMPANY 2011 RM 794,455 794,455
(1,078,984) (485,739) 792,083 31,137 (17,497) (257,954) (1,016,954)
(705,925) 35,181 202,675 (857,779) 705,227 362,710 (573,864) (179,502) (1,011,277)
(212,354) 287,500 (220,733) 146,763 (1,176) (150,000) (150,000)
(198,614) 461,220 (289,183) 29,103 (10,874) (8,348)
The following (deductible)/taxable temporary differences have not been recognised in the financial statements: GROUP 2012 RM Property, plant and equipment Unabsorbed tax losses Unabsorbed capital allowances Unabsorbed reinvestment allowance Unabsorbed investment tax allowances 4,144,000 (12,725,000) (6,740,000) (7,252,000) (1,578,000) (24,151,000) 2011 RM 3,447,000 (14,004,000) (6,940,000) (8,176,000) (1,578,000) (27,251,000) 2012 RM 10,000 (3,710,000) (3,700,000) COMPANY 2011 RM 14,000 (4,297,000) (4,283,000)
Deferred tax assets have not been recognised on the above temporary differences as the management is unable to determine whether the Group and the Company will have chargeable income in the next financial year to the extent that the above deductible temporary differences can be utilised in view of the uncertain business environment. These unabsorbed tax losses, capital allowances, reinvestment allowance and investment tax allowance are available to be carried forward for set off against future assessable income of the Company and its subsidiaries.

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81
26. EARNINGS PER SHARE GROUP Basic earnings per share of the Group is calculated by dividing the profit attributable to owners of the parent by the weighted average number of ordinary shares in issue during the financial year as follows: 2012 Profit attributable to owners of the parent (RM) Weighted average number of ordinary shares of RM1 each Basic earnings per share (sen) 2,791,696 44,944,464 6.21 2011 2,087,163 44,865,767 4.65
Diluted earnings per share has not been computed as the effect of the share options under ESOS is anti-dilutive in nature. 27. DIVIDEND GROUP AND COMPANY 2011 2012 RM RM In respect of financial year ended 31 December 2011 - A first and final tax exempt dividend of 1.5 sen per share
674,355
At the forthcoming Annual General Meeting, a first and final tax exempt dividend of 1.5 sen per share amounting to RM675,165 in respect of the financial year ended 31 December 2012 will be proposed for shareholders approval. The financial statements for the current financial year do not reflect this proposed dividend. Such dividend, if approved by the shareholders will be accounted for in equity as an appropriation of retained profits in the financial year ending 31 December 2013. 28. COMMITMENTS GROUP 31.12.2011 RM
31.12.2012 RM (a) Capital commitment Authorised and contracted but not provided for: - Property, plant and equipment (b) Cancellable operating lease commitments (i) Future minimum rentals receivable: Not later than 1 year Later than 1 year and not later than 5 years
1.1.2011 RM
4,245,310
1,379,530
875,713
52,800 52,800
94,800 94,800
136,000 63,000 199,000
Operating lease commitments represent rentals receivable for use of building. Leases are negotiated for terms ranging from one to three years.
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31 December 2012
28. COMMITMENTS (Contd) GROUP 31.12.2011 RM
31.12.2012 RM (b) Cancellable operating lease commitments (Cont'd) (ii) Future minimum rentals payables: Not later than 1 year Later than 1 year and not later than 5 years
1.1.2011 RM
1,474,230 711,290 2,185,520
2,363,033 306,597 2,669,630
2,373,976 949,900 3,323,876
Operating lease commitments represent rentals payables for use of building and equipment. Leases are negotiated for terms ranging from one to five years.
29. CONTINGENT LIABILITIES (UNSECURED) COMPANY 31.12.2011 RM
(i) Corporate guarantee extended to banks and financial institutions for credit facilities granted to subsidiaries - Limit (ii) Corporate guarantee extended to supplier of subsidiaries - Limit
31.12.2012 RM
1.1.2011 RM
62,431,886
56,110,496
33,464,684
1,000,000
1,000,000
1,000,000
The corporate guarantees do not have a determinable effect on the terms of the credit facilities due to the banks, financial institutions and a creditors requirement of the parent guarantee as a pre-condition for approving the credit facilities granted to the subsidiaries. The actual terms of the credit facilities are likely to be the best indicator of at market terms and hence the fair value of the credit facilities are equal to the credit facilities amount received by the subsidiaries. As such, there is no value on the corporate guarantee to be recognised in the financial statements.

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83
30. SEGMENT REPORTING Segmental information is presented in respect of the Groups business and geographical segments. The primary format and business segments are based on the Groups management and internal reporting structure. Inter-segment pricing is determined based on negotiated terms. Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Business Segments The operations of the Group are organised into the following main business segments: (i) Manufacturing Contract manufacturing, conversion of corrugated paper boxes and manufacturing of polymer-based packaging materials and other related products. Trading of raw materials, computers, finished goods, wooden crates and pallets, provision of testing and calibration services and sale and marketing of agricultural waste related products. Generation of biomass energy.
(ii) Trading
(iii) Energy supply (iv) Investment holding
84

31 December 2012
30. SEGMENT REPORTING (Contd)

By business segments Manufacturing RM Trading RM Energy supply RM Investment holding RM Elimination RM Note Total RM
2012 Revenue from External customers Inter-segment Total revenue
110,486,944 26,263,265 136,750,209
14,331,501 825 14,332,326
75,000 2,160,000 2,235,000
3,382,000 3,382,000
(31,806,090)
124,893,445 124,893,445
Results Segment results Interest income Interest expense Profit/(Loss) before taxation Taxation Profit/(Loss) for the year
4,949,377 507,772 (1,245,654)
211,612 938 (371,712)
163,902 -
842,212 7,205 -
(749,716) (402,931) 402,931
5,417,387 112,984 (1,214,435)
4,211,495 (866,954) 3,344,541
(159,162) (159,162)
163,902 163,902
849,417 (150,000) 699,417
4,315,936 (1,016,954) 3,298,982
Assets Segment assets Other investments Deferred tax assets Tax recoverable Fixed deposits with licensed banks Cash and bank balances Total assets
96,637,786 1,479,780 40,000 261,073 4,651,276 2,984,865 106,054,780
4,427,894 1,655,856 6,083,750
2,603,864 5,379 2,609,243
40,421,865 844,243 485,829 41,751,937
(60,840,609) -
83,250,800 2,324,023 40,000 261,073 4,651,276 5,131,929 95,659,101
Liabilities Segment liabilities Borrowings Provision for taxation Deferred tax liabilities Total liabilities Other information Capital expenditure Depreciation Non-cash expenses other than depreciation
47,041,490 24,325,572 3,000 492,000 71,862,062
7,605,521 590,547 8,196,068
1,601,961 1,601,961
724,193 724,193
(38,675,254) -
18,297,911 24,916,119 3,000 492,000 43,709,030
5,613,877 3,394,652 14,622
197,268 255,488 110,637
54,000 353,124 -
33,697 359,528
(81,928) (359,528)
5,783,217 4,036,961 125,259

31 December 2012
85

By business segments Manufacturing RM Trading RM Energy supply RM Investment holding RM Elimination RM Note Total RM
2011 Revenue from External customers Inter-segment Total revenue
121,217,770 23,121,647 144,339,417
7,529,154 1,073,001 8,602,155
120,000 1,705,000 1,825,000
3,994,274 3,994,274
(29,893,922)
128,866,924 128,866,924
Results Segment results Interest income Interest expense Share of result of associates Profit/(Loss) before taxation Taxation Profit/(Loss) for the year
6,211,071 287,453 (1,223,867) 5,274,657 (1,035,577) 4,239,080
(803,490) 33 (284,982) (1,088,439) (1,088,439)
(231,734) (410) (232,144) 24,300 (207,844)
627,145 194,328 821,473 (8,348) 813,125
(1,757,519) (217,023) 217,023 8,348
4,045,473 70,463 (1,292,236) 194,328 3,018,028 (1,011,277) 2,006,751
Assets Segment assets Other investments Deferred tax assets Tax recoverable Fixed deposits with licensed banks Cash and bank balances Total assets
98,297,553 1,479,780 40,000 82,977 2,384,843 2,361,642 104,646,795
5,658,756 919,196 6,577,952
2,202,144 2,993 2,205,137
39,858,721 844,243 150,000 730,825 41,583,789
(60,246,078) -
85,771,096 2,324,023 190,000 82,977 2,384,843 4,014,656 94,767,595
Liabilities Segment liabilities Borrowings Provision for taxation Deferred tax liabilities Total liabilities Other information Capital expenditure Depreciation Non-cash expenses/(income) other than depreciation
46,501,595 24,363,921 22,188 521,000 71,408,704
9,122,948 748,074 9,871,022
1,361,757 1,361,757
715,107 715,107
(37,780,439) -
19,920,968 25,111,995 22,188 521,000 45,576,151
3,970,042 3,247,227 539,692
903,223 318,304 (46,761)
176,724 341,302 30,000
2,159 36,830 930,643
5,052,148 3,943,663 1,453,574
86

31 December 2012

Notes to segment information: A B C Inter-segment revenue are eliminated on consolidation. Additions to non-current assets consists of property, plant and equipment. Other non-cash expenses/(income) consist of the following items:
2012 RM Bad debts Gain on disposal of investment in associates Gain on disposal of investment properties Gain on disposal of property, plant and equipment Goodwill written off Loss on disposal of investment in an indirect subsidiary Property, plant and equipment written off Share of result of associates Unrealised loss/(gain) on foreign exchange 116,625 (3,350) 10,417 1,567 125,259 Information about major customers
2011 RM 34,312 (115,923) (2,583) (79,269) 821,734 1,103,115 8,277 (194,328) (121,761) 1,453,574
Total revenue from major customers which individually contributed more than 10% of the Group revenue amounted to RM51,106,335 (2011 : RM57,531,491). Geographical Segments The Group operates principally in Malaysia while in the previous financial year, it operated in Malaysia and The Peoples Republic of China. 2012 Non-current Revenue assets RM RM Malaysia 124,893,445 36,887,508
2011 Non-current Revenue assets RM RM Malaysia The Peoples Republic of China 121,282,879 7,584,045 128,866,924 35,166,219 35,166,219

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30. SEGMENT REPORTING (Contd) Geographical Segments (Contd) Non-current assets information presented above which excludes financial assets, consist of the following items as presented in the Groups statement of financial position. 2012 RM Property, plant and equipment Investment properties 31,826,484 5,061,024 36,887,508 2011 RM 30,105,195 5,061,024 35,166,219
31. RELATED PARTY DISCLOSURES (i) Related party transactions GROUP 2012 RM Management fee income from subsidiaries - Ire-Tex (Malaysia) Sdn. Bhd. - Ire-Tex (Johor) Sdn. Bhd. - Eppor-Pack Sdn. Bhd. - GH Packaging Sdn. Bhd. - Ire-Tex Distribution Sdn. Bhd. - Cal-Test Laboratory Sdn. Bhd. - TFH Corporate Sdn. Bhd. - Styrotex (Asia Pacific) Sdn. Bhd. - Ire-Tex Electronics Sdn. Bhd. - Ire-Tex (KL) Sdn. Bhd. Interest income from a subsidiary - Ire-Tex (KL) Sdn. Bhd. 2011 RM COMPANY 2012 RM 2011 RM
1,440,000 60,000 180,000 420,000 12,000 12,000 36,000 36,000 12,000 24,000
1,440,000 60,000 180,000 420,000 12,000 12,000 36,000 36,000 12,000 24,000
7,205
88

31 December 2012
31. RELATED PARTY DISCLOSURES (Contd) (i) Related party transactions (Contd) GROUP 2012 RM Gross dividend income from subsidiaries - Ire-Tex (Malaysia) Sdn. Bhd. - Ire-Tex (Johor) Sdn. Bhd. - GH Packaging Sdn. Bhd. Gross dividend income received from an associate - Ire-Tex (Xiamen) Plastics Co., Ltd. Rental charged by a subsidiary - Ire-Tex (Malaysia) Sdn. Bhd. Sales to a related party in which the Company has financial interests - Ire-Tex Corporation Sales to a related party in which certain directors of the Company, Dato Dr. Yap Tatt Keat and Mr. Lim Poay Guan, have substantial financial interests - Phoenix Base Sdn. Bhd. Sales to a related party in which a director of the Company, Dr. Lee Yu Huat @ Lee Yew Huat has substantial financial interest - Sin Guan Hup Oil Rice Mill Sdn. Bhd. Purchases from a related party in which certain directors of the Company, Dato Dr. Yap Tatt Keat and Mr. Lim Poay Guan, have substantial financial interests - Phoenix Base Sdn. Bhd. Purchases from a related party in which a subsidiary has interest - Suzhou Styrotex Plastic Co., Ltd Purchases from a related party in which a director of the Company, Dr. Lee Yu Huat @ Lee Yew Huat has substantial financial interest - Sin Guan Hup Oil Rice Mill Sdn. Bhd. Rental of premises paid to a director of the Company - Dr. Lee Yu Huat @ Lee Yew Huat 2011 RM 2012 RM 1,150,000 COMPANY 2011 RM 700,000 78,330 -
983,944 -
32,400
983,944 32,400
446,104
615,690
971
19,294
75,000
120,000
4,521,500
4,578,653
971,457
171,532
81,940
59,556
66,000
66,000

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31. RELATED PARTY DISCLOSURES (Contd) (i) Related party transactions (Contd) GROUP 2012 RM Rental of premises paid to a director of a subsidiary - Mr. Lee Chee Cheang Rental of premises paid to a related party in which a director of the Company, Dr. Lee Yu Huat @ Lee Yew Huat, has substantial financial interest - Sin Guan Hup Oil Rice Mill Sdn. Bhd. Rental of premises paid to persons connected to Dr. Lee Yu Huat @ Lee Yew Huat Rental of premises paid to a person connected to a director of a subsidiary, Mr. Lee Chee Cheang Royalty paid to a company in which the directors of certain subsidiaries, Mr. Zane Masao Ernest Yoshida, Mr. Rene Roger Lloyd Doel and Mr. Lee Chee Cheang, have substantial financial interests - Aeropal Technology Sdn. Bhd. Sales commission paid to a director of a subsidiary - Mr. Zane Masao Ernest Yoshida (ii) Compensation of key management personnel The Group and the Company have no other members of key management personnel apart from the Board of Directors of the Company and of the subsidiaries, which their compensation has been shown in Note 24. Key management personnel are those persons including directors having authority and responsibility for planning, directing and controlling the activities of the Group and the Company, directly or indirectly. 2011 RM 2012 RM COMPANY 2011 RM
120,000
120,000
30,000
30,000
391,680
391,680
120,000
120,000
76,808
85,995
105,740
90

31 December 2012
32. CATEGORIES OF FINANCIAL INSTRUMENTS The table below provides an analysis of financial instruments categorised as available-for-sale financial assets (AFS), loans and receivables (L&R) and financial liabilities measured at amortised cost (FL). Carrying amount RM GROUP 31.12.2012 Financial assets Other investments (Note 7) Trade receivables (Note 9) Other receivables and refundable deposits (Note 10) Fixed deposits with licensed banks (Note 12) Cash and bank balances (Note 13) 2,324,023 31,397,238 1,212,112 4,651,276 5,131,929 44,716,578 Financial liabilities Trade payables (Note 19) Other payables and accruals (Note 20) Borrowings (Note 17) 10,022,354 7,263,267 24,916,119 42,201,740 31.12.2011 Financial assets Other investments (Note 7) Trade receivables (Note 9) Other receivables and deposits (Note 10) Fixed deposits with licensed banks (Note 12) Cash and bank balances (Note 13) 2,324,023 33,499,644 1,701,472 2,384,843 4,014,656 43,924,638 Financial liabilities Trade payables (Note 19) Other payables and accruals (Note 20) Borrowings (Note 17) 12,662,248 7,258,720 25,111,995 45,032,963 2,324,023 2,324,023 33,499,644 1,701,472 2,384,843 4,014,656 41,600,615 12,662,248 7,258,720 25,111,995 45,032,963 2,324,023 2,324,023 31,397,238 1,212,112 4,651,276 5,131,929 42,392,555 10,022,354 7,263,267 24,916,119 42,201,740
AFS RM
L&R RM
FL RM

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31. CATEGORIES OF FINANCIAL INSTRUMENTS (Contd) Carrying amount RM GROUP 1.1.2011 Financial assets Other investments (Note 7) Trade receivables (Note 9) Other receivables and deposits (Note 10) Fixed deposits with licensed banks (Note 12) Cash and bank balances (Note 13) 507,400 25,227,818 2,909,622 1,727,628 3,395,221 33,767,689 Financial liabilities Trade payables (Note 19) Other payables and accruals (Note 20) Borrowings (Note 17) 10,431,504 7,135,058 18,506,125 36,072,687 COMPANY 31.12.2012 Financial assets Other investments (Note 7) Other receivables (Note 10) Amount due from subsidiaries (Note 11) Cash and bank balances (Note 13) 844,243 13,453 18,316,074 485,829 19,659,599 Financial liabilities Other payables and accruals (Note 20) Amount due to subsidiaries (Note 11) 844,243 844,243 13,453 18,316,074 485,829 18,815,356 507,400 507,400 25,227,818 2,909,622 1,727,628 3,395,221 33,260,289 10,431,504 7,135,058 18,506,125 36,072,687
AFS RM
L&R RM
FL RM
557,697 166,496 724,193
557,697 166,496 724,193
92

31 December 2012
31. CATEGORIES OF FINANCIAL INSTRUMENTS (Contd) Carrying amount RM COMPANY 31.12.2011 Financial assets Other investments (Note 7) Other receivables (Note 10) Amount due from subsidiaries (Note 11) Cash and bank balances (Note 13) 844,243 17,684 17,472,474 730,825 19,065,226 Financial liabilities Other payables and accruals (Note 20) Amount due to subsidiaries (Note 11) 844,243 844,243 17,684 17,472,474 730,825 18,220,983 -
AFS RM
L&R RM
FL RM
510,992 204,115 715,107
510,992 204,115 715,107
1.1.2011 Financial assets Other investments (Note 7) Other receivables (Note 10) Amount due from subsidiaries (Note 11) Cash and bank balances (Note 13) 507,400 6,238 14,067,548 49,939 14,631,125 Financial liabilities Other payables and accruals (Note 20) Amount due to subsidiaries (Note 11) 507,400 507,400 6,238 14,067,548 49,939 14,123,725 -
355,510 52,013 407,523
355,510 52,013 407,523

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33. FINANCIAL RISK MANAGEMENT The Group and the Company are exposed to a variety of financial risks arising from their operations and the use of financial instruments. The key financial risks include credit risk, liquidity risk, interest rate risk and foreign currency risk. The Group operates within clearly defined guidelines that are approved by the Board and the Groups policy is not to engage in speculative activities. 33.1 Credit risk Credit risk refers to the risk that the counterparty will default on its contractual obligations resulting in financial loss to the Group and the Company. The Groups exposure to credit risk arises principally from its trade receivables. The Companys exposure to credit risk arises principally from advances to its subsidiaries and financial guarantees given. 33.1.1 Trade receivables The Group extends credit terms to customers that range between 30 to 90 days. In deciding whether credit shall be extended, the Group will take into consideration factors such as the relationship with the customer, its payment history and credit worthiness. The Group subjects new customers to credit verification procedures. In addition, debt monitoring procedures are performed on an on-going basis with the result that the Groups exposure to bad debts is not significant. GROUP The ageing of trade receivables of the Group is as follows : 31.12.2012 RM Not past due Past due 0 - 30 days Past due 31 - 60 days Past due more than 60 days 22,398,894 6,489,622 1,206,798 1,301,924 8,998,344 31,397,238 31.12.2011 RM 23,192,582 7,498,220 1,713,242 1,095,600 10,307,062 33,499,644 1.1.2011 RM 21,319,882 2,655,622 368,631 883,683 3,907,936 25,227,818
Trade receivables that are neither past due nor impaired are creditworthy customers with good payment record with the Group. None of the Groups trade receivables that are neither pass due nor impaired has been renegotiated during the financial year. The Group has trade receivables of RM8,998,344 (31.12.2011: RM10,307,062; 1.1.2011: RM3,907,936) that were past due but not impaired as these customers have no recent history of default and the management is of the view that these debts will be recovered in due course. The Group has significant concentration of credit risk in the form of outstanding balance due from 1 customer (31.12.2011: 1 customer; 1.1.2011: 2 customers) representing 42% (31.12.2011: 43%; 1.1.2011: 42%) of the total trade receivables.
94

31 December 2012
33. FINANCIAL RISK MANAGEMENT (Contd) 33.1 Credit risk (Contd) 33.1.2 Intercompany balances The Company provides advances to its subsidiaries and monitors the results of the subsidiaries regularly. As at the end of the reporting period, there was no indication that the advances to its subsidiaries are not recoverable. The Company does not specifically monitor the ageing of the advances to its subsidiaries. 33.1.3 Financial guarantee The Company provides unsecured corporate guarantee to banks, financial institutions and a creditor in respect of credit facilities granted to certain subsidiaries. The maximum exposure to credit risk amounts to RM24,591,848 (31.12.2011: RM24,729,170; 1.1.2011: RM18,878,888), representing the outstanding credit facilities of the said subsidiaries as at the end of the reporting period. The Company monitors on an ongoing basis the results of the subsidiaries and repayments made by the subsidiaries. As at the end of the reporting period, there was no indication that any of the subsidiaries would default on repayment. 33.2 Liquidity risk Liquidity risk is the risk that the Group will not be able to meet its financial obligations as and when they fall due. The Group actively manages its debt maturity profile, operating cash flows and availability of funding so as to ensure that all repayment and funding needs are met. As part of its overall prudent liquidity management, the Group maintains sufficient levels of cash and cash equivalents to meet its working capital requirements. The table below summarises the maturity profile of the Groups financial liabilities as at the end of the reporting period based on the undiscounted contractual payments. More than 1 year and less than 2 years RM More than 2 years and less than 5 years RM
Carrying amount RM GROUP 31.12.2012 Interest bearing borrowings Trade and other payables
Contractual cash flows RM
Within 1 year RM
24,916,119 17,285,621 42,201,740
25,469,697 17,285,621 42,755,318
21,889,083 17,285,621 39,174,704
1,562,836 1,562,836
1,729,775 1,729,775
288,003 288,003
31.12.2011 Interest bearing borrowings Trade and other payables
25,111,995 19,920,968 45,032,963
26,041,858 19,920,968 45,962,826
21,530,296 19,920,968 41,451,264
1,509,292 1,509,292
2,248,267 2,248,267
754,003 754,003

31 December 2012
95
33. FINANCIAL RISK MANAGEMENT (Contd) 33.2 Liquidity risk (Contd) More than 1 year and less than 2 years RM More than 2 years and less than 5 years RM
Carrying amount RM GROUP 1.1.2011 Interest bearing borrowings Trade and other payables
Contractual cash flows RM
Within 1 year RM
18,506,125 17,566,562 36,072,687
19,515,962 17,566,562 37,082,524
15,018,951 17,566,562 32,585,513
1,336,115 1,336,115
2,035,301 2,035,301
1,125,595 1,125,595
COMPANY 31.12.2012 Other payables and accruals Intercompany balances
557,697 166,496 724,193
557,697 166,496 724,193
557,697 166,496 724,193
31.12.2011 Other payables and accruals Intercompany balances
510,992 204,115 715,107
510,992 204,115 715,107
510,992 204,115 715,107
1.1.2011 Other payables and accruals Intercompany balances
355,510 52,013 407,523
355,510 52,013 407,523
355,510 52,013 407,523
33.3 Interest rate risk The Groups fixed rate borrowings are exposed to a risk of change in their fair value due to changes in interest rates. The Groups floating rate borrowings are exposed to a risk of change in cash flows due to changes in interest rates.
96

31 December 2012
33. FINANCIAL RISK MANAGEMENT (Contd) 33.3 Interest rate risk (Contd) The interest rate profile of the Groups and of the Companys interest-bearing financial instruments based on the carrying amounts as at the end of the reporting period is as follows: GROUP 31.12.2011 RM
31.12.2012 RM Fixed rate instruments Financial assets Financial liabilities Floating rate instruments Financial assets Financial liabilities
1.1.2011 RM
4,651,276 2,956,634
2,384,843 3,331,400
1,727,628 2,650,085
285,650 21,959,485
285,650 21,780,595 COMPANY 31.12.2011 RM
335,650 15,856,040
31.12.2012 RM Floating rate instruments Financial assets Sensitivity analysis for fixed rate instruments
1.1.2011 RM
82,647
82,647
32,647
The Group and the Company do not account for any fixed rate financial assets and financial liabilities at fair value through profit or loss, and the Group and the Company do not designate derivatives as hedging instruments under a fair value hedge accounting model. Therefore, a change in interest rates at the end of the reporting period would not affect profit or loss. Sensitivity analysis for floating rate instruments An increase of 25 basis point at the end of the reporting period would have decreased profit before taxation by the amount shown below and a corresponding decrease would have an equal but opposite effect. These changes are considered to be reasonably possible based on observation of current market conditions. This analysis assumes that all other variables, in particular foreign currency rates, remain constant. GROUP 2012 RM Decrease in profit before taxation 55,967 2011 RM 57,469

31 December 2012
97
33. FINANCIAL RISK MANAGEMENT (Contd) 33.4 Foreign currency risk The objectives of the Groups foreign exchange policies are to allow the Group to manage exposures that arise from trading activities effectively within a framework of controls that does not expose the Group to unnecessary foreign exchange risks. The Group is exposed to foreign currency risk on sales and purchases that are denominated in currencies other than the functional currency of the Group. The Group also holds cash and bank balances denominated in foreign currencies for working capital purposes. The currencies giving rise to this risk are primarily US Dollar (USD), Chinese Renminbi (RMB) and Singapore Dollar (SGD). The Groups exposure to foreign currency risk, based on carrying amounts as at the end of the reporting period is as follows: USD RM GROUP 31.12.2012 Trade receivables Other receivables Cash and bank balances Trade payables Other payables Net exposure 31.12.2011 Trade receivables Other receivables Cash and bank balances Trade payables Other payables Net exposure 1.1.2011 Trade receivables Other receivables Cash and bank balances Trade payables Other payables Net exposure 2,832,076 584,574 21,654 (2,168,332) (144,488) 1,125,484 2,406,014 61,379 848,760 (1,396,233) (1,283,989) 635,931 1,043,756 358,601 (590) 1,401,767 (183,730) (5,494) (189,224) 4,893,253 397,969 1,214,534 (3,557,127) (402,562) 2,546,067 3,297 41,556 44,853 908,771 222,711 1,131,482 (123,283) (5,494) (128,777) 5,616,423 166,580 1,312,781 (1,588,145) (431,708) 5,075,931 189 189 802,544 341,028 (140,556) 1,003,016 (5,494) (5,494) RMB RM SGD RM OTHERS RM
98

31 December 2012
33. FINANCIAL RISK MANAGEMENT (Contd) 33.4 Foreign currency risk (Contd) USD RM COMPANY 31.12.2012 Bank balances 31.12.2011 Bank balances 1.1.2011 Other receivables Amount due from subsidiaries Net exposure Sensitivity analysis for foreign currency risk Below demonstrates the sensitivity to a reasonable possible change in the foreign currencies exchange rates against Ringgit Malaysia, with all other variables held constant, of the Groups and of the Companys profit before taxation. A 10% strengthening of the RM against the following currencies at the end of the reporting period would have reduced profit before taxation by the amount shown below and a corresponding decrease would have an equal but opposite effect. This analysis is based on foreign currency exchange rate variances that the Group considered to be reasonably possible at the end of the reporting period. GROUP 2012 RM USD RMB SGD Others Reduce in profit before taxation 33.5 Capital Management The primary objective of the Groups capital management policy is to maintain a strong capital base to support its businesses and maximise shareholders value. The Group manages its capital structure and makes adjustments to it in the light of changes in economic conditions or expansion of the Group. The Group may adjust the capital structure by issuing new shares, returning capital to shareholders or adjusting the amount of dividends to be paid to shareholders or sell assets to reduce debts. (507,593) (19) (100,302) 549 (607,365) 2011 RM (254,607) (4,485) (113,148) 12,878 (359,362) COMPANY 2011 RM (36,468) (36,468) 876 1,000 1,876 364,680 48,995 RMB RM SGD RM OTHERS RM
2012 RM
(4,900) (4,900)

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99
34. FAIR VALUE OF FINANCIAL INSTRUMENTS The carrying amounts of financial assets (other than investment in unquoted shares) and financial liabilities of the Group and of the Company as at the end of the reporting period approximate their fair values, either due to their shortterm nature or that they are floating rate instruments that are re-priced to market interest rates on or near the end of the reporting period. The unquoted shares are carried at cost as it is not practicable to reasonably estimate their fair values due to lack of comparable quoted market prices and available market data for valuation. Therefore, these investments are carried at their original costs less any impairment losses. The carrying amounts of the non-current portion of finance lease liabilities are reasonable approximation of fair values due to the insignificant impact of discounting. 34.1 Fair value hierarchy The following table provides an analysis of financial instruments that are measured subsequent to initial recognition at fair value, grouped into Levels 1 to 3 based on the degree to which the fair value is observable. Level 1 Fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 Fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices). Level 3 Fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs). Level 1 RM GROUP 31.12.2012 Available-for-sale financial assets Unquoted shares, at cost 31.12.2011 Available-for-sale financial assets Unquoted shares, at cost 1.1.2011 Available-for-sale financial assets Unquoted shares, at cost COMPANY 31.12.2012 Available-for-sale financial assets Unquoted shares, at cost 31.12.2011 Available-for-sale financial assets Unquoted shares, at cost 1.1.2011 Available-for-sale financial assets Unquoted shares, at cost Level 2 RM Level 3 RM Total RM
2,324,023
2,324,023
2,324,023
2,324,023
507,400
507,400
844,243
844,243
844,243
844,243
507,400
507,400
100

31 December 2012
35. SIGNIFICANT EVENTS The Company has on 3 October 2012 announced to Bursa Malaysia Securities Berhad that its wholly owned subsidiary, Ire-Tex Paper Packaging Sdn. Bhd., had on 2 October 2012 entered into a sale and purchase agreement with Ampelos International Sdn. Bhd. to acquire two pieces of land known as Lot No. Plot 49, Kawasan Perusahaan Kulim, Bandar Kulim, Daerah Kulim, Kedah held under HSM 7869 and Lot No. Plot 63, Kawasan Perusahaan Kulim, Bandar Kulim, Daerah Kulim, Kedah held under Hakmilik Sementara No. HSM 10484 together with buildings erected thereon bearing postal addresses known as 49 and 63, Lorong Perusahaan 2B, Kulim Industrial Estate, 09000 Kulim, Kedah Darul Aman for a total cash consideration of RM4,500,000. As at the end of the reporting period, the subsidiary has paid a 10% deposit and other related expenses amounted to RM655,000 as disclosed in Note 10 to the financial statements.
Supplementary Information
31 December 2012
101
36. DISCLOSURE OF REALISED AND UNREALISED PROFITS/(LOSSES) With the purpose of improving transparency, Bursa Malaysia Securities Berhad has on 25 March 2010, and subsequently on 20 December 2010, issued directives which require all listed corporations to disclose the breakdown of unappropriated profits or accumulated losses into realised and unrealised on Group and Company basis in the annual audited financial statements. The breakdown of retained profits/(accumulated losses) as at the reporting date has been prepared by the Directors in accordance with the directives from Bursa Malaysia Securities Berhad stated above and the Guidance on Special Matter No. 1 - Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants are as follows: 2012 RM Total retained profits/ (accumulated losses) of the Company and its subsidiaries - Realised - Unrealised GROUP 2011 RM 2012 RM COMPANY 2011 RM
3,386,141 (453,567) 2,932,574
917,470 (209,239) 708,231 (3,492,726) (2,784,495)
(9,106,078) (9,106,078) (9,106,078)
(9,281,140) 150,000 (9,131,140) (9,131,140)
Less : Consolidation adjustments
(3,599,728) (667,154)
102
List of Properties
Registered Owner / Location
Description
Date of Acquisition/ *Valuation
Land/Build Up Area (sq ft)
Tenure (Expiry Date)
Approximate Age of Building (Years) 16
Net Book Value as at 31/12/2012 (RM) 12,574,030
Ire-Tex (Malaysia) Sdn Bhd Plot 118 Jalan Perushaan Bukit Tengah Industrial Park 14000 Bukit Mertajam Penang Ire-Tex (Johor) Sdn Bhd Plo 733 Jalan Keluli 9 Zone 12 Kawasan Perindustrian Pasir Gudang 81700 Pasir Gudang Johor Darul Takzim
1 Storey Factory with 3 Storey Office Building
25/03/2004
322,427/ 242,700
Leasehold 60 years (19/04/2056)
1 Storey Factory with 3 Storey Office Building
14/03/2006
108,900/ 67,598
Leasehold 60 years (13/03/2066)
5,061,024
Analysis of Shareholdings
103
Analysis of Shareholdings As At 7 May 2013 Authorised Capital Issued and Fully Paid Capital Class of Equity Securities Voting Rights Total Shareholders : : : : : RM 50,000,000 RM 45,011,000 Ordinary shares of RM1.00 each 1 vote per share 707
Distribution Schedule of Shareholders As At 7 May 2013 Holdings Less than 100 100 1,000 1,001 10,000 10,001 100,000 100,001 2,250,549** 2,250,550 and above** Total ^ Negligible * Less than 5% of issued shares ** 5% and more of issued shares Substantial Shareholders As At 7 May 2013 Direct Name Teh Eng Huat Ire-Tex Holdings Sdn. Bhd. Dato Dr Yap Tatt Keat K O Limited Partnership Lee Chee Cheang Timothy Ian OHearn
(1) (2)
No. of Holders 3 277 284 102 37 4 707
Total Holdings 152 178,598 1,187,550 3,573,300 17,752,100 22,319,300 45,011,000
% ^ 0.40 2.64 7.94 39.44 49.58 100.00
Indirect % 26.14 12.14 12.12 11.82 0.13 0.04 No. of Shares % 12.14 11.82
No. of Shares 11,765,600 5,462,412 5,455,354 5,319,434 57,000 20,000
5,462,412(1) 5,319,434(2)
Deemed Interested By Virtue Of His Shareholding Of More Than 15% In Ire-Tex Holdings Sdn. Bhd. Deemed Interested By Virtue Of His Shareholding Of More Than 15% In K O Limited Partnership.
Thirty Largest Shareholders According to the Record of Depositors, the 30 largest shareholders of the Company as at 7 May 2013 are as follows : Name 1 2 3 4 5 6 7 8 9 KENANGA NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT FOR TEH ENG HUAT IRE-TEX HOLDINGS SDN. BHD. YAP TATT KEAT K O LIMITED PARTNERSHIP EB NOMINEES (TEMPATAN) SENDIRIAN BERHAD PLEDGED SECURITIES ACCOUNT FOR TEH ENG HUAT LIM LIEW HONG PUBLIC NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT FOR TEH ENG HUAT HDM NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT FOR TEH ENG HUAT UOB KAY HIAN NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT FOR TEH ENG HUAT No. of Shares 6,082,100 5,462,412 5,455,354 5,319,434 1,700,000 1,585,000 1,403,000 1,320,300 1,097,100 % 13.51 12.14 12.12 11.82 3.78 3.52 3.12 2.93 2.44
104
Analysis of Shareholdings (Contd)
Thirty Largest Shareholders (Cont'd) Name 10 EB NOMINEES (TEMPATAN) SENDIRIAN BERHAD PLEDGED SECURITIES ACCOUNT FOR KHOO HUN SNIAH 11 HDM NOMINEES (TEMPATAN) SDN. BHD. PLEDGED SECURITIES ACCOUNT FOR ONG SENG HOOI 12 TAN AH LEE 13 KHOO HUN SNIAH 14 PUBLIC NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT FOR TEOH GUAN SIANG 15 MAH SENG LUM 16 OOI LAY MENG 17 NG KOK YONG 18 MAYBANK NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT FOR YEAP BAN AIK 19 MALACCA EQUITY NOMINEES (TEMPATAN) SDN BHD EXEMPT AN FOR PHILLIP CAPITAL MANAGEMENT SDN BHD 20 CIMSEC NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT FOR CHAN CHEE WAI 21 SYARIKAT PERKAPALAN SOO HUP SENG SDN BHD 22 LIM KIM TEAN 23 CH'NG THEAN KEAT 24 ALLIANCEGROUP NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT FOR TEH ENG HUAT 25 OOI AH ENG @ OOI HOOI CHEAN 26 LEE PING MENG 27 TAN SOH CHENG 28 ANG SIEW KEE 29 TANG BOON LEY 30 RHB CAPITAL NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT FOR GOH KIM DUAN No. of Shares 1,000,000 882,500 735,000 659,900 640,500 511,800 500,000 435,000 415,100 397,800 397,300 373,400 373,000 303,700 297,900 295,800 283,000 219,900 192,000 190,000 170,000 % 2.22 1.96 1.63 1.47 1.42 1.14 1.11 0.97 0.92 0.88 0.88 0.83 0.83 0.67 0.66 0.66 0.63 0.49 0.43 0.42 0.38
Analysis of Shareholdings (Contd)

105
Interests of Directors As At 7 May 2013 a) Interest in shares of the Company Direct Name YM Raja Said Abidin Bin Raja Shahrome Dato Dr. Yap Tatt Keat See Toh Kean Yaw Timothy Ian OHearn Dr. Lee Yu Huat @ Lee Yew Huat Lim Poay Guan Fazrin Azwar Bin Dato Md. Nor Teh Eng Aun
(1)
Indirect % 0.22 12.12 0.13 0.04 0.04 0.04 0.02 No. of Shares 5,319,434 (1) % 11.82 -
No. of Shares 100,000 5,455,354 58,500 20,000 20,000 20,000 10,100 -
Deemed Interested By Virtue Of His Shareholding Of More Than 15% In K O Limited Partnership.
b) Interest in shares of related corporations None of the Directors have any interest in the shares of related corporations as at 7 May 2013.
c) Share options under the Companys Employee Share Option Scheme (ESOS) Option over number of ordinary shares of RM1.00 each 84,000 275,000 66,500 235,000
Name Dato Dr Yap Tatt Keat See Toh Kean Yaw
Option Price (RM) 1.40 1.00 1.40 1.00
106
Notice of Annual General Meeting
NOTICE IS HEREBY GIVEN THAT the Eleventh Annual General Meeting of Ire-Tex Corporation Berhad will be held at Laurel II, Level 1, Evergreen Laurel Hotel, 53, Persiaran Gurney, 10250 Penang on Thursday, 27 June 2013 at 10.00 a.m. for the following purposes :AS ORDINARY BUSINESSES 1. 2. To receive the Audited Financial Statements for the financial year ended 31 December 2012 together with the Reports of the Directors and Auditors thereon; To re-elect the following Directors who retire in accordance with Article 95 of the Companys Articles of Association and being eligible offer themselves for re-election:i) ii) 3. 4. 5. Dato Dr Yap Tatt Keat Lim Poay Guan Ordinary Resolution 1 Ordinary Resolution 2 Ordinary Resolution 3 Ordinary Resolution 4 Ordinary Resolution 5
To declare a first and final tax exempt dividend of 1.5 sen per share for the financial year ended 31 December 2012; To approve the payment of Directors fees of RM120,000.00 for the financial year ended 31 December 2012; To re-appoint Messrs. Grant Thornton as auditors of the Company for the ensuing year and to authorise the Directors to fix their remuneration.
AS SPECIAL BUSINESSES 6. To consider and, if thought fit, to pass with or without modifications the following resolutions as Ordinary Resolutions :(a) THAT authority be and is hereby given to YM Raja Said Bin Raja Shahrome who has served as an Independent Non-Executive Director of the Company for a cumulative term of more than nine (9) years to continue to act as an Independent Non-Executive Director of the Company. (b) THAT authority be and is hereby given to En. Fazrin Azwar Bin Dato Md Nor who has served as an Independent Non-Executive Director of the Company for a cumulative term of more than nine (9) years to continue to act as an Independent Non-Executive Director of the Company. Authority To Issue Shares Pursuant to Section 132D of the Companies Act, 1965 (c) THAT pursuant to Section 132D of the Companies Act, 1965, and subject to the approvals of the relevant Governmental and/or regulatory authorities, the Directors be and are hereby empowered to issue shares in the Company from time to time upon such terms and conditions and for such purposes and to such person or persons as the Directors may deem fit provided that the aggregate number of shares issued pursuant to this resolution does not exceed 10% of the total issued share capital of the Company for the time being and that the Directors be and are also empowered to obtain the approval from Bursa Malaysia Securities Berhad for the listing of and quotation for the additional shares so issued and that such authority shall continue to be in force until the conclusion of the next Annual General Meeting of the Company or the expiration of the period within which the next Annual General Meeting is required by law to be held or revoked/varied by resolution passed by the shareholders in general meeting whichever is earlier. Proposed Renewal and New Shareholders Mandate for Recurrent Related Party Transactions of a Revenue or Trading Nature (d) THAT subject always to the Listing Requirements of Bursa Malaysia Securities Berhad, approval be and is hereby given to the Companys subsidiaries to enter into all arrangements and/or transactions as detailed in Section 2.2(b) of the Companys Circular to Shareholders dated 5 June 2013 involving the interests of Directors, major shareholders or persons connected with such Directors or major shareholders of the Company (Related Parties) as detailed in Section 2.2(b) of the Companys Circular to Shareholders dated 5 June 2013, provided that such arrangements and/or transactions are:(i) recurrent transactions of a revenue or trading nature; Ordinary Resolution 9 Ordinary Resolution 6
Ordinary Resolution 7
Notice of Annual General Meeting (Contd)

107
Proposed Renewal and New Shareholders Mandate for Recurrent Related Party Transactions of a Revenue or Trading Nature (Cont'd) (ii) necessary for the day-to-day operations; and (iii) carried out in the ordinary course of business and are made on an arms length basis on normal commercial terms which are not more favourable to the Related Parties than those generally available to the public and not to the detriment of the minority shareholders of the Company. (the Proposed Shareholders Mandate) THAT the Proposed Shareholders Mandate is subject to annual renewal and shall continue to be in force until:(a) the conclusion of the next annual general meeting (AGM) of the Company at which such Proposed Shareholders Mandate was passed, at which time it will lapse, unless by a resolution passed at the meeting, the authority is renewed; (b) the expiration of the period within which the next AGM after that date is required to be held pursuant to Section 143(1) of the Companies Act, 1965 (but shall not extend to such extension as may be allowed pursuant to Section 143(2) of the Act); or (c) revoked or varied by resolution passed by the shareholders in general meeting, whichever is the earlier. AND THAT the Directors of the Company be and are hereby authorised to complete and do all such acts and things as they may consider expedient or necessary to give effect to the Proposed Shareholders Mandate. 7. To consider any other business for which due notice shall have been given in accordance with the Companies Act, 1965.
NOTICE OF DIVIDEND ENTITLEMENT NOTICE IS HEREBY GIVEN THAT the first and final tax exempt dividend of 1.5 sen per share for the financial year ended 31 December 2012, if so approved at the Eleventh Annual General Meeting of the Company, will be paid on 23 August 2013 to shareholders registered in the Record of Depositors at the close of business on 5 August 2013. A Depositor shall qualify for entitlement only in respect of:a. b. Shares transferred to the Depositors Securities Account before 4.00 p.m. on 5 August 2013 in respect of ordinary transfers; and Shares bought on the Bursa Malaysia Securities Berhad on a cum entitlement basis according to the Rules of the Bursa Malaysia Securities Berhad.
By order of the Board
Lim Kim Teck Kong Sown Kaey Secretaries Penang Date : 5 June 2013
108
Notice of Annual General Meeting (Contd)

Explanatory Notes on Special Businesses Ordinary Resolutions 6 and 7 Under the Malaysian Code on Corporate Governance 2012 (MCCG 2012), the Board must undertake an assessment of its independent directors annually. In addition, the MCCG 2012 has recommended that the tenure of an independent director should not exceed a cumulative term of nine years. Shareholders approval must be sought in the event that the Company intends to retain the independent directors who have served in that capacity for more than nine years. Ordinary Resolution 8 - Authority To Issue Shares Pursuant to Section 132D of the Companies Act, 1965 The proposed ordinary resolution 8, if passed will empower the Directors of the Company to issue and allot shares up to 10% of the issued and paid-up share capital of the Company from time to time. This authority will, unless revoked or varied by the Company in general meeting, expire at the conclusion of the next Annual General Meeting of the Company or the period within which the next Annual General Meeting of the Company is required by law to be held whichever is the earlier. As at the date of this notice 94,000 shares have been issued pursuant to the mandate granted to the Directors at the last Annual General Meeting held on 28 June 2012 and which will lapse at the conclusion of the Eleventh Annual General Meeting. The Directors seek a renewal of the mandate to provide flexibility to the Company for possible raising of funds, including but not limited to further placing of shares, for purpose of additional working capital, funding of investments and/or acquisitions. Ordinary Resolution 9 - Proposed Renewal and New Shareholders Mandate for Recurrent Related Party Transactions of a Revenue or Trading Nature The proposed ordinary resolution 9 in relation to the Proposed Renewal and New Shareholders Mandate for Recurrent Related Party Transactions of a Revenue or Trading Nature which is to be reviewed annually will eliminate the requirement for the Company to make regular announcements and convene separate general meetings from time to time in respect of the aforesaid Related Party Transactions.
Notes: 1. Only a Depositor whose name appear in the Record of Depositors as at 19 June 2013 shall be regarded as a member entitled to attend, speak and vote or to appoint a proxy or proxies to attend, speak and vote at the Eleventh Annual General Meeting. 2. Subject to Paragraph (4) below, a member entitled to attend and vote is entitled to appoint not more than two (2) proxies to attend and vote instead of him. Where a member appoints more than one (1) proxy, to attend and vote at the same meeting, the appointment shall be invalid unless the member specifies the proportion of his holdings to be represented by each proxy. 3. A proxy may but need not be a member of the Company and a member may appoint any person to be his proxy without restriction as to the qualification of the proxy and the provisions of Section 149(1)(a) and (b) of the Act shall not apply to the Company. 4. Where a member of the Company is an exempt authorised nominee as defined under the Securities Industry (Central Depositories) Act 1991 which holds ordinary shares in the Company for multiple beneficial owners in one securities account (omnibus account), there is no limit to the number of proxies which the exempt authorised nominee may appoint in respect of each omnibus account it holds. 5. The instrument appointing a proxy shall be in writing under the hand of the appointor or of his attorney duly authorised in writing, or if the appointor is a corporation, either under its seal or under the hand of an officer or attorney duly authorised. 6. The instrument appointing a proxy must be deposited at the Registered Office of the Company at 35, 1st Floor, Jalan Kelisa Emas 1, Taman Kelisa Emas, 13700 Seberang Jaya, Penang not less than forty eight (48) hours before the time appointed for holding the meeting or any adjournment thereof.
For the 11th Annual General Meeting

Proxy Form
109
No. of shares held I/We of being a member/members of the abovenamed Company, hereby appoint of or failing him of
(Full Name in Block Letters)
(Address)
(Address)
(Address)
as my/our Proxy to vote for me/us on my/our behalf at the Eleventh Annual General Meeting of the Company to be held at 10.00 a.m. on Thursday, 27 June 2013 at Laurel II, Level 1, Evergreen Laurel Hotel, 53, Persiaran Gurney, 10250 Penang and at any adjournment thereof in the manner indicated below :Resolution To re-elect the following as Directors pursuant to Article 95 of the Companys Articles of Association :(i) Dato Dr Yap Tatt Keat (ii) Lim Poay Guan To declare a first and final tax exempt dividend of 1.5 sen per share for the financial year ended 31 December 2012 To approve the payment of Directors fees of RM120,000.00 for the financial year ended 31 December 2012. To re-appoint Messrs Grant Thornton as auditors of the Company for the ensuing year and to authorise the Directors to fix their remuneration. To authorise the following Directors to continue to act as Independent Non-Executive Directors of the Company :(i) YM Raja Said Bin Raja Shahrome (ii) En. Fazrin Azwar Bin Dato Md Nor To empower the Directors to issue up to 10% of the issued share capital of the Company. To approve the Proposed Renewal and New Shareholders Mandate for Recurrent Related Party Transactions of a Revenue or Trading Nature. For Against
Ordinary Resolution 1 Ordinary Resolution 2 Ordinary Resolution 3 Ordinary Resolution 4 Ordinary Resolution 5
Ordinary Resolution 6 Ordinary Resolution 7 Ordinary Resolution 8 Ordinary Resolution 9
(Please indicate with an X in the appropriate box against each resolution how you wish your proxy to vote. If no instruction is given this form will be taken to authorise the proxy to vote at his/her discretion.) Dated this day of 2013.
Signature of Shareholder(s) or Common Seal

Notes: 1. Only a Depositor whose name appear in the Record of Depositors as at 19 June 2013 shall be regarded as a member entitled to attend, speak and vote or to appoint a proxy or proxies to attend, speak and vote at the Eleventh Annual General Meeting. 2. Subject to Paragraph (4) below, a member entitled to attend and vote is entitled to appoint not more than two (2) proxies to attend and vote instead of him. Where a member appoints more than one (1) proxy, to attend and vote at the same meeting, the appointment shall be invalid unless the member specifies the proportion of his holdings to be represented by each proxy. 3. A proxy may but need not be a member of the Company and a member may appoint any person to be his proxy without restriction as to the qualification of the proxy and the provisions of Section 149(1)(a) and (b) of the Act shall not apply to the Company. 4. Where a member of the Company is an exempt authorised nominee as defined under the Securities Industry (Central Depositories) Act 1991 which holds ordinary shares in the Company for multiple beneficial owners in one securities account (omnibus account), there is no limit to the number of proxies which the exempt authorised nominee may appoint in respect of each omnibus account it holds. 5. The instrument appointing a proxy shall be in writing under the hand of the appointor or of his attorney duly authorised in writing, or if the appointor is a corporation, either under its seal or under the hand of an officer or attorney duly authorised. 6. The instrument appointing a proxy must be deposited at the Registered Office of the Company at 35, 1st Floor, Jalan Kelisa Emas 1, Taman Kelisa Emas, 13700 Seberang Jaya, Penang not less than forty eight (48) hours before the time appointed for holding the meeting or any adjournment thereof.
Fold this flap for sealing
Fold here
Affix Stamp
The Company Secretary
IRE-TEX CORPORATION BERHAD (576121-A)

35, 1st Floor, Jalan Kelisa Emas 1, Taman Kelisa Emas, 13700 Seberang Jaya, Penang, Malaysia.
Fold here
IRE-TEX CORPORATION BERHAD (576121-A) Plot 118, Jalan Perusahaan, Bukit Tengah Industrial Park, 14000 Bukit Mertajam, Penang, Malaysia. Tel : (04)-502 2752 Fax : (04)-502 2751

IRETEX AnnualReport2012

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IRE-TEX CORPORATION BERHAD

GOING FURTHER, DELIVERING MORE

To provide customers with proactive and cost effective solution.

22 - 25 26 - 101 102 103 - 105 106 - 108 109

AUDITORS Grant Thornton Chartered Accountants

Group Corporate Structure

IRE-TEX Corporation Berhad

Cal-Test Laboratory Sdn Bhd (523396-U)

GH Packaging Sdn Bhd (251096-P)

Ire-Tex Paper Packaging Sdn Bhd (1012491-U)

Ire-Tex (Johor) Sdn Bhd (497417-D)

Jumbo Universe Sdn Bhd (859413-M)

TFH Corporate Sdn Bhd (873099-H)

Eppor-Pack Sdn Bhd (352964-M)

Powertude Sdn Bhd (715976-T)

Styrotex (Asia Pacific) Sdn Bhd (617998-X)

Ire-Tex (Vietnam) Co Ltd (412043000350)

Profile of Board of Directors

YM Raja Said Abidin Bin Raja Shahrome, aged 67, Malaysian.

Dato Dr. Yap Tatt Keat, aged 47, Malaysian.

Profile of Board of Directors (Contd)

See Toh Kean Yaw, aged 39, Malaysian.

Timothy Ian OHearn, aged 62, American.

Dr. Lee Yu Huat @ Lee Yew Huat, aged 66, Malaysian.

Profile of Board of Directors (Contd)

Lim Poay Guan, aged 56, Malaysian.

Fazrin Azwar Bin Dato Md. Nor, aged 46, Malaysian.

Teh Eng Aun, aged 61, Malaysian.

Chairmans Statement (Contd)

YM Raja Said Abidin Bin Raja Shahrome Chairman

Corporate Governance Statement

Corporate Governance Statement (Contd)

Corporate Governance Statement (Contd)

Corporate Governance Statement (Contd)

Corporate Governance Statement (Contd)

Corporate Governance Statement (Contd)

Corporate Governance Statement (Contd)

Corporate Governance Statement (Contd)

Corporate Social Responsibility Statement

Statement on Risk Management & Internal Control

Audit Committee Report

Audit Committee Report (Contd)

Audit Committee Report (Contd)

Other Information (Contd)

Other Information (Contd)

ITMSB ITJSB EPSB GHPSB

2,431,795 2,067,510 8,479 13,716

971 34,000 85,995

Other Information (Contd)

For The Year Ended 31 December 2012

2,791,696 507,286 3,298,982

(Contd) For The Year Ended 31 December 2012

Exercise price RM 1.40 1.00

(Contd) For The Year Ended 31 December 2012

100,000 5,455,354 18,500 20,000 20,000 20,000 10,100

100,000 5,455,354 58,500 20,000 20,000 20,000 10,100

(Contd) For The Year Ended 31 December 2012

Dato Dr. Yap Tatt Keat Penang, Date : 24 April 2013

See Toh Kean Yaw

Dato Dr. Yap Tatt Keat Date : 24 April 2013

See Toh Kean Yaw

Independent Auditors Report to the Members of IRE-TEX Corporation Berhad

Independent Auditors Report to the Members (Contd) of IRE-TEX Corporation Berhad