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CONTENT

Notice of Annual General Meeting

02

Corporate Information

04

Group Structure

05

Certification and Accreditation

06

The Groups Business

07

Profile of Directors

08

Audit Committee Report

10

Statement on Corporate Governance

12

Statement of Directors Responsibilities

17

Statement on Corporate Social Responsibility

18

Additional Compliance Information

19

Statement on Risk Management and Internal Control

20

Chairmans Statement

22

Financial Statements

23

Properties of the Group

97

Analysis of Shareholdings

98

Form of Proxy

ANNUAL REPORT 2015 | 1

NOTICE OF ANNUAL GENERAL MEETING


NOTICE IS HEREBY GIVEN that the Twentieth Annual General Meeting of CN Asia Corporation Bhd will be held at Meeting
Room Livia 1, UG Level, ibis Styles Kuala Lumpur Cheras, C180 Hotel Sdn Bhd, Jalan C180/1, Dataran C180, 43200 Cheras,
Selangor Darul Ehsan on Wednesday, 15 June, 2016 at 10.00 a.m. for the following purposes:-

AGENDA
1.

To receive the Audited Financial Statements for the financial year ended 31 December 2015 together
with the Reports of the Directors and the Auditors thereon.

(Resolution 1)

2.

To approve the payment of Directors fees in respect of the financial year ended 31 December 2015.

(Resolution 2)

3.

To re-elect Mr. Lee Lam who is retiring in accordance with Article 84 of the Companys Articles of
Association and being eligible has offered himself for re-election.

(Resolution 3)

4.

To consider and, if thought fit, to pass the following resolution:THAT pursuant to Section 129(6) of the Companies Act, 1965, Dato Hilmi bin Mohd Noor, who is
over the age of seventy (70) years, be and is hereby re-appointed as Director to hold office until the
conclusion of the next Annual General Meeting of the Company.

(Resolution 4)

5.

To re-elect Mr. Roy Ho Yew Kee who is retiring in accordance with Article 91 of the Companys
Articles of Association and being eligible has offered himself for re-election.

(Resolution 5)

6.

To re-appoint Messrs Kreston John & Gan as Auditors of the Company for the ensuing year and to
authorise the Board of Directors to fix their remuneration.

(Resolution 6)

As Special Business
To consider, and if thought fit, to pass the following resolution:7.

ORDINARY RESOLUTION

(Resolution 7)

Continuation in office as Independent Non-Executive Director pursuant to Recommendation 3.3 of


the Malaysian Code on Corporate Governance 2012
THAT approval be and is hereby given to Mr. Chong Ying Choy 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.
8.

ORDINARY RESOLUTION
Authority to allot and issue shares pursuant to Section 132D of the Companies Act, 1965
THAT pursuant to Section 132D of the Companies Act, 1965 and subject to the approval of the
relevant governmental and/or regulatory authorities, the Directors be and are hereby empowered to
allot and issue shares in the Company at any time and upon such terms and conditions and for such
purposes as the Directors may, in their absolute discretion deem fit provided that the aggregate
number of shares issued pursuant to this resolution does not exceed ten percentum (10%) of the
issued share capital of the Company for the time being and the Directors be and are hereby 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 in force until the
conclusion of the next Annual General Meeting of the Company.

9.

To transact any other business for which due notice shall have been given.

BY ORDER OF THE BOARD


LIM PAIK GOOT (MIA 13304)
KOH MUI TEE (LS 03057)
Company Secretaries
Selangor Darul Ehsan
28 April 2016

2 | CN ASIA CORPORATION BHD (399442-A)

(Resolution 8)

NOTICE OF ANNUAL GENERAL MEETING

(CONTD)

Notes:
1.
2.

3.
4.
5.

Only depositors whose names appear in the Record of Depositors as at 7 June 2016 shall be regarded as Members and
entitled to attend, speak and vote at the meeting.
A Member entitled to attend and vote at the meeting is entitled to appoint one (1) or more proxies to attend and vote
instead of him. A proxy may but need not be a Member of the Company and the provision of Section 149(1)(b) of the
Companies Act, 1965 shall not apply to the Company. A proxy appointed to attend and vote at the meeting shall have the
same rights as the Member to speak at the meeting.
Where a Member appoints more than one (1) proxy, the appointment shall be invalid unless the Member specifies the
proportion of his shareholdings to be represented by each proxy.
The instrument appointing a proxy in the case of an individual shall be under the hand of the appointor or of his attorney
duly authorised or if the appointor is a corporation, either under seal or under the hand of an officer or attorney duly
authorised.
The Proxy Form must be deposited at the Registered Office of the Company at Lot 7907, Batu 11, Jalan Balakong, 43300
Seri Kembangan, Selangor Darul Ehsan, not less than forty eight (48) hours before the time set for holding the meeting
or any adjournment thereof.

Explanatory Notes on Ordinary and Special Business


(i)

Resolution 7 Continuation in office as Independent Non-Executive Directors


The Nomination Committee and the Board have assessed the independence of Mr. Chong Ying Choy who served as
Independent Non-Executive Directors of the Company for a cumulative term of more than nine (9) years, and has
recommended that he continues to act as Independent Non-Executive Director of the Company based on the following
justifications:
a)
b)
c)
d)

(ii)

His vast experience, expertise and independent judgment contributed to the effective discharging of his duties.
He has been with the Company for more than 19 years where he has familiarised himself with the business and
provide element of objectivity to the Board of Directors.
He continues to be independent as there are no circumstances and relationships that create threats to his
independence.
He actively participated in board meetings and possess the appropriate competencies to enable him to apply his
professional judgment.

Resolution 8 - Authority to allot and issue shares pursuant to Section 132D of the Companies Act, 1965
The Resolution 8 proposed under item 8 of the agenda, if passed, will renew the authority given to the Directors of
the Company to issue and allot shares in the Company at any time, to such person or persons, upon such terms and
conditions and for such purposes as the Directors may, in their absolute discretion, deem fit (General Mandate),
provided that aggregate number of shares issued pursuant to this General Mandate does not exceed 10% of the total
issued share capital of the Company at the time of issue. This renewed General Mandate, unless revoked or varied at a
general meeting, will expire at the conclusion of the next Annual General Meeting (AGM) of the Company.
Pursuant to Section 132D of the Companies Act 1965, the Company has not issued any new shares under the general
mandate approved in the Nineteenth AGM held on 24 June 2015 and which will expire at the forthcoming Twentieth AGM
of the Company to be held on 15 June 2016.
The authority will provide flexibility to the Company for any possible fund raising activities, including but not limited to
further placing of shares, for purpose of funding future investment project(s), working capital and/or acquisitions.

ANNUAL REPORT 2015 | 3

CORPORATE INFORMATION

Board of Directors
Dato Hilmi bin Mohd Noor
(Independent Non-Executive Chairman)

Chong Ying Choy


(Independent Non-Executive Director)

Ho Cheng San
(Managing Director)

Yoong Nim Chee


(Independent Non-Executive Director)
(Resigned with effect from 20 April 2016)

Ir. Lee Lam


(Executive Director)

Audit Committee

Chong Ying Choy (Chairman)


Dato Hilmi bin Mohd Noor
Yoong Nim Chee (Resigned with effect from 20 April 2016)

Nomination Committee

Dato Hilmi bin Mohd Noor (Chairman)


Chong Ying Choy
Yoong Nim Chee (Resigned with effect from 20 April 2016)

Remuneration Committee

Chong Ying Choy (Chairman)


Ho Cheng San
Yoong Nim Chee (Resigned with effect from 20 April 2016)

Company Secretaries

Lim Paik Goot (MIA 13304)


Koh Mui Tee (LS 03057)

Roy Ho Yew Kee


(Independent Non-Executive Director)
(appointed with effect from 10 December 2015)

Principal Bankers

Public Bank Berhad


Ambank (M) Berhad
Alliance Bank Malaysia Berhad
HSBC Bank Malaysia Berhad
CIMB Bank Berhad
Seychelles International Mercantile
Banking Corp. Ltd.

Solicitors

Iza Ng Yeoh & Kit


Dennis Nik & Wong

Investor Relations

Kathy Lim Paik Goot


Lot 7907, Batu 11, Jalan Balakong
43300 Seri Kembangan
Selangor Darul Ehsan
Tel : +603-8942 6888
Fax : +603-8942 3365
Email: corporate@cnasia.com

Registered Office

Lot 7907, Batu 11, Jalan Balakong


43300 Seri Kembangan
Selangor Darul Ehsan
Tel : +603-8942 6888
Fax : +603-8942 3365

Auditors

Kreston John & Gan (Firm No.: AF 0113)


Chartered Accountants
160-2-1, Kompleks Maluri Business Centre
Jalan Jejaka
55100 Kuala Lumpur
Tel : +603-9287 1889
Fax : +603-9283 0889

4 | CN ASIA CORPORATION BHD (399442-A)

Registrars

Tricor Investor & Issuing House Services


Sdn Bhd (Co. No: 11324-H)
Unit 32-01, Level 32, Tower A
Vertical Business Suite
Avenue 3, Bangsar South
No 8, Jalan Kerinchi
59200 Kuala Lumpur
Tel : +603-2783 9299
Fax : +603-2783 9222

Stock Exchange Listing

Main Market
Bursa Malaysia Securities Berhad

GROUP STRUCTURE
100%
Chip Ngai Engineering
Works Sdn Bhd
(Incoporated in Malaysia)
Manufacturing and
trading of underground
and skid tanks, dish
ends, pressure vessels,
road tankers, piping for
the petroleum industry
and that of specialised
engineering works and
fabrication works

100%
CN ASIA CORPORATION BHD
(Company No.: 399442-A)
(Incorporated In Malaysia)
Investment Holding &
Providing Management Services

Asia Tank Containers


(Malaysia) Sdn Bhd
(Incoporated in Malaysia)
Manufacturing,
repairing and renting of
transportable containers
for hazardous chemicals

100%
Zhuhai CN Engineering
Works Co., Ltd.
(Incoporated in Peoples
Republic of China)
Manufacturing and trading
of tanks for specialised
industries

49%
PICN Engineering
Sdn Bhd
(Incoporated in Malaysia)
Fabrication and trading
of tanks for specialised
industries

100%
CN Asia Capital
Sdn Bhd
(Incoporated in Malaysia)
Investment Holding

100%
Douwin Sdn Bhd
(Incoporated in Malaysia)
Investment Holding

ANNUAL REPORT 2015 | 5

CERTIFICATION AND ACCREDITATION

ISO 9001:2008

CIDB

Petronas - Special License,


Registration Certificate

UL 58 & UL 1746

NB Stamp

R Stamp

U Stamp

U2 Stamp

S Stamp

6 | CN ASIA CORPORATION BHD (399442-A)

THE GROUPS BUSINESS


CN Asia Corporation Bhd was incorporated in Malaysia on 23 August 1996 as an investment holding company. The main
activities of the Group can be categorized under 6 divisions as follows:
1.

Manufacturing of underground and aboveground storage tanks for the petroleum and general process industries for
the local and global market.

2.

Manufacturing of dish heads and provision of plate rolling services for the food and beverage, petrochemical, energy
and heavy engineering industries worldwide.

3.

Manufacturing of all types of transportation equipment such as:


Co2 Road Tankers
Vacuum Tankers
Combination Units
High Pressure Cleaners and Jetters
LPG and Chemical Tankers

4.

Provision of engineering, procurement and construction (EPC) services for the following industries: Petrochemical
: carbon and cladded steel pressure vessels and heat exchangers
Food and Beverage Plant : stainless steel vessels, sterilizers, and etc
Power Generation
: supply and erection of flue stacks and heat recovery steam generator (HRSG)
pressure vessels
Bulking Terminal
: API 620,650 bulk vertical storage tanks inclusive of
- piling works
- civil foundation
- laying of pipes
- pigging and pump system
- loading station
- office and warehouse
Civil engineering and construction works is carried out in conjunction with the above products.

5.

Provision of heat treatment services to a varied range of vessel design and fabrication codes, be they ASME, PD, AS etc
complete with the necessary heat treatment reports and charts.

6.

IMO Type 1 stainless steel transportable tanks


Manufacturing
Repairs
Leasing to International Maritime Operators

ANNUAL REPORT 2015 | 7

PROFILE OF DIRECTORS

Dato Hilmi bin Mohd Noor


Dato Hilmi bin Mohd Noor, a Malaysian, aged 74, is an Independent Non-Executive Chairman of the Company. He was
appointed to the Board on 1 January 1999 as a Non-Executive Chairman and was redesignated as an Independent NonExecutive Chairman on 28 November 2012. He is the Chairman of the Nomination Committee and a member of the Audit
Committee. He graduated with a Bachelor of Arts (Hons.) degree from the University of Malaya in 1966 and obtained his MBA
from Marshall University, USA. In addition, he is presently a member of the Chartered Institute of Purchasing and Supply
(United Kingdom). Upon graduation, he joined the Ministry of Finance where he held various positions until 1986 when he
was appointed the Deputy Director General of the Economic Planning Unit, Prime Ministers Department. From 1989 to 1994,
he served as Secretary General, Ministry of Energy, Telecommunications and Post, and later as Secretary General, Ministry
of Rural Development until his retirement in May 1997. Between 1970 and 1997, he served as a Board Member of several
companies/organisations such as Lembaga Letrik Negara (Chairman), Tenaga Nasional Berhad (Founder Director), Telekom
Malaysia Berhad, Bank Pertanian Malaysia Berhad, Keretapi Tanah Melayu, Lembaga Pelabuhan Bintulu and Heavy Industries
Corporation of Malaysia Berhad.
Dato Hilmi attended all five (5) Board Meetings and all five (5) Audit Committee Meetings held during the financial year ended
31 December 2015.
Dato Hilmi does not hold any interest, directly or indirectly in the securities of the Company or its subsidiaries nor have
any family relationship with any other Directors and/or major shareholders of the Company. He has not entered into any
transaction, whether directly or indirectly, which has a conflict of interest with the Company. He has not been convicted of any
offences within the past 10 years.

Ho Cheng San
Ho Cheng San, a Malaysian, aged 63, is the Managing Director of the Company and was appointed to the Board on 5 April
1997. He is currently a member of the Remuneration Committee and Chairman of the Option Committee. He obtained his
Diploma in Mechanical Engineering in 1978. He has more than 36 years of experiences in the Engineering, Procurement,
Construction and Commissioning of Palm Oil Mills, Petrochemical, Food and Beverage Plants and Manufacturing of Process
Plant Equipment World wide with Comprehensive after Sales Services and Maintenance of its equipment at its installation.
Mr Ho has been involved in housing and property development and has wide experience in the commercial and industrial
property sectors. He is the Chief Executive Officer and one of the founder of Cantik Realty Sdn Bhd and Tai Seng Housing
Development Co Sdn Bhd. He has more than 36 years of management experience in the field of marketing and property
development.
Mr Ho attended all five (5) Board Meetings held during the financial year ended 31 December 2015.
Mr Ho does not have any family relationship with any other Directors of the Company. He is a substantial shareholder of the
Company and his securities holding is set out in Analysis of Directors Shareholdings on page 99 of the Annual Report. There
is no conflict of interest with the Company except for those disclosed in Note 35 to the Financial Statements of this Annual
Report. He has not been convicted of any offences within the past 10 years.

Ir. Lee Lam


Ir. Lee Lam, a Malaysian, aged 68, is an Executive Director of the Company and was appointed to the Board on 1 August 2009.
He graduated with a Bachelor of Engineering (Hons.) degree in Mechanical Engineering from the University of Malaya in 1973
and obtained his Professional Engineering certification from Lembaga Jurutera Malaysia in 1982. He is also a Fellow of the
Institution of Engineers, Malaysia since 1986. Upon his graduation in 1973, he held the position of Shift Engineer in a large
foreign owned tin mining company and later joined other companies that are involved in management consultancy, project
development and product support. Between 1990 to 1999, he served as the Deputy General Manager of Manufacturing and
Engineering in Wagon Engineering Sdn Bhd. Thereafter, he joined the Companys subsidiary company, Chip Ngai Engineering
Works Sdn Bhd (CNEW) as Production Manager until 2003, as Senior Manager and Head of Engineering between 2003 to
2005 and as an Executive Director of CNEW since 2006.
Mr Lee attended all five (5) Board Meetings held during the financial year ended 31 December 2015.
Mr Lee does not have any family relationship with any other Directors and/or major shareholders of the Company. His
securities holding is set out in Analysis of Directors Shareholdings on page 99 of the Annual Report. He has not entered into
any transaction, whether directly or indirectly, which has a conflict of interest with the Company. He has not been convicted of
any offences in the last 10 years.

8 | CN ASIA CORPORATION BHD (399442-A)

PROFILE OF DIRECTORS (CONTD)

Chong Ying Choy


Chong Ying Choy, a Malaysian, aged 61, is an Independent Non-Executive Director of the Company and was appointed to the
Board on 5 April 1997. He is the Chairman of the Audit Committee as well as the Remuneration Committee and is a member
of the Nomination Committee and the Option Committee. He has been an associate member of the Institute of Chartered
Secretaries And Administrators since 1982, a fellow of the Chartered Association of Certified Accountants since 1987, a
member of the Malaysian Association of Certified Public Accountants since 1988, member of Certified Practicing Accountant,
Australia and associate member of Chartered Tax Institute of Malaysia since 2008. He is also a chartered accountant having
been registered with the Malaysian Institute of Accountants since 1982. He has many years of experience in auditing, taxation
and financial advisory. From 1980 to 1988, he was attached with a firm of public accountants, Hanafiah Raslan & Mohamad.
Thereafter, he set up his own practice under the name of Y C Chong & Co.
Mr Chong attended all five (5) Board Meetings and all five (5) Audit Committee Meetings held during the financial year ended
31 December 2015.
Mr Chong does not hold any interest, directly or indirectly in the securities of the Company or its subsidiaries nor have
any family relationship with any other Directors and/or major shareholders of the Company. He has not entered into any
transaction, whether directly or indirectly, which has a conflict of interest with the Company. He has not been convicted of any
offences within the past 10 years.

Yoong Nim Chee (Resigned with effect from 20 April 2016)


Yoong Nim Chee, a Malaysian, aged 57, is an Independent Non-Executive Director of the Company and was appointed to
the Board on 4 December 2014. He is also appointed as the member of Audit Committee, Remuneration Committee and
Nomination Committee on 4 December 2014. Mr. Yoong graduated with a Bachelor of Economy (Hons.) degree from University
Malaya in 1981.
He has extensive experience in the corporate sector, having worked for various banks in Malaysia and Singapore where he
specialized in raising equity and debt capital as well as corporate restructuring. Prior to this, he had also served in the Boards
of several public listed companies. He served as the Chief Executive Officer of a property development company, Magna Prima
Berhad until 2011. Currently, he is involved in his own projects in the property sector.
Mr Yoong attended all five (5) Board Meeting and all five (5) Audit Committee Meeting held during the financial year ended 31
December 2015.
Mr Yoong does not have any family relationship with any other Directors and/or major shareholders of the Company. His
securities holding is set out in the Analysis of Directors Shareholdings on page 99 of the Annual Report. He has not entered
into any transaction, whether directly or indirectly, which has a conflict of interest with the Company. He has not been convicted
of any offences within the past 10 years.

Roy Ho Yew Kee


Roy Ho Yew Kee, a Malaysian, aged 41, is an Independent Non-Executive Director of the Company and was appointed to the
Board on 10 December 2015. Mr. Roy Ho graduated with a Bachelor of Commerce from Griffith University, Brisbane Australia
in 1998.
He has extensive experience in broking and cross border financing involving sales trading, deal origination and institutional
broking. He is also serving on the Board of a public listed company. Currently, he is responsible for corporate strategy,
corporate advisory and structuring at an executive level for Key Alliance Group Berhad.
Mr Roy Ho had not attended any Meeting held during the financial year ended 31 December 2015 since his date of appointment.
Mr Roy Ho does not have any family relationship with any other Directors and/or major shareholders of the Company. He has
not entered into any transaction, whether directly or indirectly, which has a conflict of interest with the Company. He has not
been convicted of any offences within the past 10 years.

ANNUAL REPORT 2015 | 9

AUDIT COMMITTEE REPORT


MEMBERS OF THE AUDIT COMMITTEE
Chong Ying Choy
Dato Hilmi bin Mohd. Noor
Yoong Nim Chee

(Chairman)
(Member)
(Member)

(Independent Non-Executive Director)


(Independent Non-Executive Chairman)
(Independent Non-Executive Director)

TERMS OF REFERENCE
Composition
The Committee must comprise at least three (3) members and all members must be Non-Executive Directors, with the
majority of whom are independent, including the Chairman. Any vacancy, resulting in there being no majority of independent
Directors or number of members reduced to below three (3), shall be filled within three (3) months. All members of the Audit
Committee must be financially literate and at least one (1) member shall be a professional or qualified accountant.
No alternate director shall be appointed as an Audit Committee member.
Authority
The Committee is authorised by the Board to investigate any activity within its terms of reference. It is authorised to seek
any information it requires from any employees and all employees are directed to co-operate with any request made by the
Committee. The Committee shall also have the authority to consult independent experts where they consider it necessary to
carry out their duties.
Meeting
The Committee shall meet at least four (4) times a year or at such meetings as the Chairman shall decide in order to fulfill its
duties. The Secretary of the Committee shall be responsible, in conjunction with the Chairman, for drawing up the agenda and
circulating to the Committee prior to each meeting.
The Secretary will also be responsible for keeping the minutes of the meetings of the Committee, and circulating them to
committee members and to other members of the Board of Directors.
A quorum shall consist of a majority of Committee members and in order to form a quorum, the majority of members present
must be independent directors.
Functions
The functions of the Committee are as follows:1.

review the following and report the same to the Board of Directors:(a)
(b)
(c)
(d)
(e)
(f)
(g)

(h)
(i)
(j)

with the external auditor, the audit plan;


with the external auditor, his evaluation of the system of internal controls and in particular review the external
auditors management letter and managements response;
with the external auditor, his audit report;
the assistance given by the employees to the external auditors;
the adequacy of the scope, functions and resources of the internal audit functions and that it has the necessary
authority to carry out its work;
the internal audit programme, processes, the results of the internal audit programme, processes or investigation
undertaken and whether or not appropriate action is taken on the recommendations of the internal audit function;
the quarterly results and year end financial statements, prior to the approval by the board of directors, focusing
particularly on:
changes in or implementation of major accounting policy;

significant and unusual events; and

compliance with accounting standards and other legal requirements;
any related party transaction and conflict of interest situation that may arise within the Company or Group
including any transaction, procedure or course of conduct that raises questions of management integrity;
any letter of resignation from the external auditors; and
whether there is reason (supported by grounds) to believe that the external auditor is not suitable for reappointment.

10 | CN ASIA CORPORATION BHD (399442-A)

AUDIT COMMITTEE REPORT (CONTD)


2.

recommend the nomination of a person or persons as external auditors.

3.

recommend for approval of the Board the external audit fee.

MEETINGS
There were five (5) Audit Committee meetings held during the financial year ended 31 December 2015. Details of the members
attendances are as follows:Audit Committee Member

Number of Meetings Attended

Chong Ying Choy


Yoong Nim Chee
Dato Hilmi bin Mohd Noor

5/5
5/5
5/5

Upon invitation by the Committee, the Group Financial Controller attended all these meetings and the outsourced internal
auditors, Messrs. Lefis Consulting Sdn Bhd, attended all except the first and second Audit Committee Meetings. The previous
external auditors, Messrs. SJ Grant Thornton were invited to attend the first and second Audit Committee Meetings during
the financial year.

SUMMARY OF ACTIVITIES
A summary of the main activities carried out by the audit committee during the financial year included the following:






Reviewed the quarterly unaudited financial results of the Group and ensure compliance with approved accounting
standards, other legal and regulatory requirements prior to recommending to the Board for approval.
Reviewed the management letters and the audit reports of the external auditors.
Reviewed the annual audited financial statements of the Group and recommended to the Board for approval.
Reviewed deliberated internal audit reports and monitored / followed up on remedial actions as recommended by the
Internal Auditors.
Reviewed internal audit plan and considered the proposed audit fees of the Internal Auditors and the re-appointment of
the Internal Auditors for recommendation to the Board for their approval.
Discussed and considered the audit fees with the External Auditors for the financial year ended 31 December 2015.
Reviewed the risk management report on key risk profiles and risk management activities.
Reviewed the Audit Committee Report and Statement on Risk Management and Internal Control and recommended to
the Board for approval prior to the inclusion in the companys annual report.

INTERNAL AUDIT FUNCTIONS


The Groups internal audit function is outsourced to an independent professional consulting firm, Messrs. Lefis Consulting
Sdn Bhd who reports administratively to the Managing Director and functionally to the Audit Committee. The professional
fees paid to the outsourced Internal Auditors during the financial year ended 31 December 2015 was amounted to RM18,500
(2014:RM19,500). The scope of internal audit covers the examination and evaluation of the adequacy and effectiveness of
the Groups system of internal control, the efficiency of operations and the quality of performance in carrying out assigned
responsibilities. The Internal Auditors primary function is to submit audit reports that highlight risk and control weaknesses
and provide suitable recommendations for improvement to reassure senior management and the Audit Committee on the
state of internal control of the Group. The activities of the internal audit function during the financial year are summarised as
follows:



Prepared the annual internal audit plan for approval by the Audit Committee.
Performed internal audit reviews to evaluate the adequacy of the internal control system on the overall control
environment within the Group.
Performed risk based audits on the purchase, control, record, maintenance and storage of tools of the Group based on
the annual internal audit plan.
Undertook investigation and special reviews on issues arising from the audits and / or requested by the management
and / or Audit Committee and issued reports accordingly to the management and / or Audit Committee.
Reviewed current system and key risk areas covering business process and reported the significant risk management
control to the Audit Committee on a quarterly basis to ensure proper internal controls are embedded in these process.

Further details on the internal audit functions are set out in the Statement on Risk Management and Internal Control of this
Annual Report.
ANNUAL REPORT 2015 | 11

STATEMENT ON CORPORATE GOVERNANCE


The Board of Directors of CN Asia Corporation Bhd (the Board) is pleased to report on the manner in which the Group has
applied the principles and extent of compliance with the best practices of corporate governance as set out in the Malaysian
Code On Corporate Governance 2012 (the Code) and pursuant to paragraph 15.25 of the Main Market Listing Requirement
(MMLR) of Bursa Malaysia Securities Berhad. (Bursa Securities).
The Board recognizes that the practice of high standards of corporate governance throughout the Group as a fundamental part
of discharging its responsibilities to safeguard the interests of the shareholders and to enhance shareholders value.
The Board is of the view that it has complied with the Code, except for the recommendations on the tenure of its independent
directors that should not exceed a cumulative term of nine years. However, the definitions of independent directors under the
MMLR has been complied with.

DIRECTORS
i.

The Board
The Board has the overall responsibility for corporate governance, strategic direction and overseeing and evaluating
the business operation of the Group. It is also entrusted with the responsibility of exercising reasonable care of the
Company and Groups resources in the best interests of its shareholders.

ii.

Composition of the Board


Currently, the Board has six (6) members, comprising an Independent Non-Executive Chairman, a Managing Director,
an Executive Director, and three (3) Non-Executive Independent Directors. Dato Hilmi, the Chairman of the Board, an
Independent Director, is able to provide strong leadership leading the Boards priority more objectively. Together, the
Directors with their different backgrounds and specialisation, collectively bring with them a wide range of business,
management, financial and technical experiences. The profile of each Director is set out on pages 8 to 9 of this Annual
Report.
There is a clear division of responsibilities between the Chairman and the Managing Director to ensure that there is a
balance of power and authority. The Chairman is responsible for running the Board and lead the discussion at the Board
level whilst the Managing Director is responsible for managing the Company and the Group and the implementation of
the Boards policies and decisions to achieve the short term and long term objectives and day-to-day management of the
Company and the Group.The Non-Executive Independent Directors bring to bear objective and independent judgment to
the decision making of the Board in order to provide an efficient check and balance for the Executive Directors.

iii.

Board Meetings
Board meetings are held at quarterly intervals with additional meetings convened when necessary.
There were five (5) Board Meetings held during the financial year ended 31 December 2015 with details of the attendance
of each member of the Board at the Board Meetings as follows:-

Name of Directors
Dato Hilmi bin Mohd Noor
Ho Cheng San
Ir. Lee Lam
Chong Ying Choy
Yoong Nim Chee
Roy Ho Yew Kee *

Status of Directorship
Non-Executive Chairman
Managing Director
Executive Director
Non Executive Director
Non Executive Director
Non Executive Director

Independent
Yes
No
No
Yes
Yes
Yes

Attendance of
Meeting
5/5
5/5
5/5
5/5
5/5
-

Percentage
(%)
100
100
100
100
100
NA

* Appointed on 10 December 2015


The agenda and Board papers for consideration are circulated to all Directors prior to the Board Meetings to enable the
Directors to obtain and access further information and clarification in order to be well informed of the matters before
the Meetings. The Company Secretary was available at all times to provide the Directors with the appropriate advice and
services and also to ensure that the relevant proceedings are complied with in accordance with the rules and regulations
of the relevant authorities. All decisions and conclusions of the Board are duly recorded in the Board minutes. Besides
Board meetings, the Board exercises control on matters that require Boards approval through circulation of Directors
Resolution.
12 | CN ASIA CORPORATION BHD (399442-A)

STATEMENT ON CORPORATE GOVERNANCE (CONTD)


iv.

Board Charter
The Board is guided by its Term of Reference (Charter) which set out the roles and responsibilities of the Board. The
Charter has been adopted and will be reviewed periodically by the Board to ensure it is kept up-to-date with changes in
regulations and best practice and ensure its effectiveness and relevance to the Boards objective. The Board Charter is
available in the Companys website at www.cnasia.com.

v.

Code of Ethics and Conduct


The Directors observe the Code of Ethics and Conduct (COE) in discharging their responsibilities. The COE of the
Company governs the conduct of all employees in the Group including the Board. This COE has been adopted and will
be reviewed periodically by the Board and is available in the Companys website at www.cnasia.com.

vi.

Appointment & Re-election To The Board


New candidate will be considered and evaluated by the Nomination Committee. Suitable candidate will then be
nominated for appointment to the Board.
In accordance with the Companys Articles of Association, newly appointed Directors shall hold office until the next
following annual general meeting and shall then be eligible for re-election by shareholders in the next Annual General
Meeting subsequent to their appointment. The Articles also provide that one third of the Board are required to retire
at every annual general meeting and be subject to re-election by shareholders and all directors shall retire from office
once at least in each three (3) years, but shall be eligible for re-election. Directors over seventy (70) years of age are
required to submit themselves for re-appointment annually in accordance with Section 129 (6) of the Companies Act,
1965.

vii.

Access To Information And Advice


All members of the Board have full and unlimited access to the advice and services of the Company Secretary, and
where necessary, independent professional advisers may be engaged by the Directors at the Companys expense to
enable the Board to discharge their duties.

viii.

Board Independence
The Code recommends that the tenure of an Independent Director should not exceed a cumulative term of nine (9)
years. However, an Independent Director may continue to serve the Board upon reaching the nine (9) years limit subject
to the Independent Director re-designated as Non-Independent Director. In the event the Board intends to retain the
Director as Independent after the Independent Director has served a cumulative term of nine (9) years, the Board must
justify the decision and seek for shareholders approval at the Annual General Meeting.
The Board recognizes the importance of independence and objective in its decision making process. Nevertheless,
the Board is of the view that the Independent Director of the Company, Mr. Chong Ying Choy, who has served as
Independent Director for a cumulative tenure exceeding nine (9) years, has over the time developed increased insight
into the Company of which his experience and exposure to the Company over the years has provided an increasing
contribution to the effectiveness of the Board. Thus, the Board has elected to retain Mr. Chong as Independent Director
after due consideration of his experience and contribution to the Board. The Board will continuously review and evaluate
independent director annually, through its Nomination Committee, as recommended by the Code.

ix.

Directors Remuneration
The Remuneration Committee is responsible to recommend the remuneration at levels which are sufficient to attract
and retain the Directors needed to run the Company successfully taking into consideration all relevant factors including
the functions, workload and responsibilities involved. The remuneration of Director is in line with the Groups overall
policy on compensation and benefits with due consideration to compensation levels which is comparable among other
similar Malaysian Public Listed Companies. The Board as a whole determines the remuneration of Non-Executive
Directors.

ANNUAL REPORT 2015 | 13

STATEMENT ON CORPORATE GOVERNANCE (CONTD)


The aggregate Directors remuneration paid or payable to all directors of the Company by the Group and categorised
into appropriate components for the financial year ended 31 December 2015 are as follows:-

Type of Remuneration
Fees
Salaries
Benefit-in-kind
Other Emoluments
Total

Executive
Directors
RM
24,000
558,600
182,516
92,747
857,863

Non-Executive
Directors
RM
85,420
85,420

Total
RM
109,420
558,600
182,516
92,747
943,283

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

Range of Remuneration
RM100,000 and below
RM100,001-RM200,000
RM200,001-RM300,000
RM300,001-RM400,000
RM400,001-RM500,000
RM500,001 and above
x.

Number of Directors
Executive
Non-Executive
4
1
1
-

Directors Training
All Directors have successfully completed the Mandatory Accreditation Programme (MAP) as prescribed by Bursa
Securities. The Board has undertaken an assessment of the training needs of each director and the Directors will
continue to undergo relevant training programmes, seminars, workshops, talks and conferences to keep abreast with
new regulatory developments and relevant changes in business environment on a continuous basis in compliance with
paragraph 15.08 of the MMLR of Bursa Securities.
During the financial year ended 31 December 2015, the Directors have attended seminars and trainings as follows:Training/ Seminars title
Half-Day Seminar On Transfer Pricing Documentation Practical Issues In Implementing
The Requirements Of The Transfer Pricing Guideline
LHDNM-CTIM Tax Forum 2015
National Tax Conference 2015
MPERS: Planning And Performing For Your Transition
2016 Budget Seminar
Driving Corporate Performance in 2016

Date
9 February 2015
10 March 2015
25 & 26 August 2015
2 November 2015
5 November 2015
28 December 2015

BOARD COMMITTEES
The Board has established the following Board Committees to assist the Board in discharging its duties with specific terms
of reference:
Audit Committee

Nomination Committee

Remuneration Committee.
i.

Audit Committee
The Company has an Audit Committee whose composition meets the MMLR, where the majority member comprises of
Independent Directors. The terms of reference and further information of the Audit Committee are set out on pages 10
to 11 of this Annual Report in the Audit Committee Report.

14 | CN ASIA CORPORATION BHD (399442-A)

STATEMENT ON CORPORATE GOVERNANCE (CONTD)


ii.

Nomination Committee
The Nomination Committee comprises entirely of independent Non-Executive Directors. The Nomination Committee is
responsible for proposing new nominees for the Board appointments and assessing directors on an annual basis, the
contribution of each individual director and the overall effectiveness of the Board. In making these recommendations,
the Nomination Committee will consider the required mix of skills and experience of each member. The final decision
as to who shall be nominated should be the responsibility of the full Board after considering the recommendations of
the Committee.
The members of the Nomination Committee are:(1)
(2)
(3)

Dato Hilmi bin Mohd Noor


Chong Ying Choy
Yoong Nim Chee

- Independent Non-Executive - Chairman


- Independent Non-Executive - Member
- Independent Non-Executive Member

The term of reference of the Nomination Committee are as follows:





To identify, assess and recommend to the Board suitably qualified candidates for directorship on the Board as
well as members of the Board Committees.
To review and assess annually the overall composition of the Board in terms of appropriate balance of skills,
expertise, attributes and core competencies among executives, non executives and independent directors.
To review and assess annually the independence of directors.
To perform the formal assessment of the effectiveness of individual Directors and the annual appraisal of the
Executive Directors performance based on the selected performance criterias.
To ensure new Directors go through proper induction program.

The Committee should meet as and when deemed necessary and at least once a year. There was one (1) Nomination
Committee Meetings held during the financial year ended 31 December 2015 with full attendance registered by all
members. The Board, through the recent review and assessment of the Nomination Committee, confidently believe that
the size of the Board is appropriate and that there is appropriate mix of experience and expertise in the composition of
the Board.
iii.

Remuneration Committee
The Remuneration Committee comprises a majority of Non-Executive Directors, is responsible for making
recommendations to the Board on remuneration packages and benefits extended to the Managing Director and
Executive Director and to review their remuneration packages on an annual basis. Remuneration package of NonExecutive Directors will be a matter to be decided by the Board as a whole with the Directors concerned abstaining
from deliberations and voting on decisions in respect of his individual remuneration. Fees payable to Non-Executive
Directors is determined by the Board with the approval from shareholders at the Annual General Meeting.
In establishing the remuneration packages and benefits for the Managing Director and Executive Director, the
Remuneration Committee has regarded the packages offered by comparable companies, and may obtain independent
advice, where necessary. The remuneration of the Managing Director and the Executive Director comprises a fixed
salary and allowance approved by the Board, which is in line with the Groups performance.
The term of reference of the Remuneration Committee are as follows:

To establish a formal and transparent remuneration policy


To review annually and make recommendation to the Board the remuneration packages and benefits for all
Executive Directors to ensure that the reward commensurate with their contributions to the Groups profitability.
To review annually the performance of the Managing Director and Executive Director and recommend to the
Board specific adjustments in remuneration and reward structures; if any, to reflect their contributions and link
to their level of responsibilities undertaken to the effective functioning of the Board.

The members of the Remuneration Committee are:(1)


(2)
(3)

Chong Ying Choy


Ho Cheng San
Yoong Nim Chee

- Independent Non-Executive - Chairman


- Managing Director - Member
- Independent Non-Executive Member

ANNUAL REPORT 2015 | 15

STATEMENT ON CORPORATE GOVERNANCE (CONTD)


The Remuneration Committee shall meet at least once a year or at such other times as the Chairman of the committee
deemed necessary.
During the financial year, there was one (1) Remuneration Committee Meeting held to review the performance and
remuneration package for Executive and Non-Executive Directors which was attended by all committee members.
The remuneration package of the Managing Director and Executive Director were approved by the Board with
recommendation of the Remuneration Committee.

INVESTOR RELATIONS AND SHAREHOLDERS COMMUNICATION


The Board acknowledges the need for shareholders to be informed of the developments and performance of the Company
and the Group. The distribution of annual report, announcements and release of financial results on a quarterly basis provide
the shareholders and the investing public with an overview of the Groups performance and operations. The principal forum
for dialogue with shareholders remains at the Annual General Meeting. Shareholders are encouraged to ask questions and
seek clarification at Annual General Meeting of the Company on both the resolutions being proposed and the Groups business
and performance. Alternatively, shareholders can seek additional information and divert queries to the Company through the
Groups website: www.cnasia.com which was enhanced during the year to include corporate financial as well as non-financial
information. The Share Registrar is available to attend to matters relating to shareholders interest.

ACCOUNTABILITY AND AUDIT


i.

Financial Reporting
The Board aims to provide and present a balanced, clear and meaningful assessment of the Groups financial
performance and prospects at the end of the financial year, primarily through the annual financial statements, quarterly
announcement of results to shareholders as well as the Chairman Statement in the annual report. The Board is assisted
by the Audit Committee to ensure accuracy and adequacy of all information for disclosure.
A statement by the Directors of their responsibilities in respect of the audited financial statements is set out on page 17
of this Annual Report.

ii.

Internal Control
The Statement On Risk Management and Internal Control set out on pages 20 to 21 of this Annual Report provides an
overview of the Groups state of internal control.

iii.

Relationship With Auditors


The Company maintains a transparent relationship with the auditors in seeking their professional advice and towards
ensuring compliance with the accounting standards.
The key features underlying the relationship between the Audit Committee and the external auditors are included in the
Audit Committees terms of reference as detailed on pages 10 to 11 of this Annual Report.

This Statement on Corporate Governance was made in accordance with a resolution of the Board of Directors at a meeting
held on 31 March 2016.
16 | CN ASIA CORPORATION BHD (399442-A)

STATEMENT OF DIRECTORS RESPONSIBILITIES


FOR PREPARING THE FINANCIAL STATEMENTS

The Directors are responsible for the preparation of the financial statements of the Group that give a true and fair view of the
state of affairs of the Group and of the Company as at 31 December 2015 and of the results and cash flows of the Group and
of the Company for the financial year then ended in accordance with Malaysia Financial Reporting Standards, International
Financial Reporting Standards, the Companies Act, 1965 in Malaysia and the Main Market Listing Requirements of Bursa
Malaysia Securities Berhad.
In preparing the financial statements, the Directors have:

adopted appropriate accounting policies and applied these accounting policies consistently;
made judgements and estimates that are prudent and reasonable; and
prepared the financial statements on a going concern basis, unless they consider that to be inappropriate.

The Directors have the responsibility for ensuring that the Company and the Group 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
the financial statements comply with the provisions of the Companies Act, 1965.
The Directors have overall responsibility for taking such steps that are reasonably open to them to safeguard the assets of the
Group and of the Company to prevent and detect fraud and other irregularities.

This Statement of Directors Responsibilities was made in accordance with a resolution of the Board of Directors at a meeting
held on 31 March 2016.
ANNUAL REPORT 2015 | 17

STATEMENT ON CORPORATE
SOCIAL RESPONSIBILITY
The Board of Directors acknowledges that Corporate Social Responsibility (CSR) is the basis for building positive relationship
towards the community, environment, its employees, customers, suppliers, shareholders and other stakeholders. Therefore,
the continuance practice of CSR activities is strongly encouraged to ensure that people within and outside the Group benefited
from the existence of the organization.
At present, the Group continues to focus on improving the health and safety as well as welfare of the employees and workers
within the organization. The Groups Health, Safety, Security and Environment (HSSE) committee has been actively promoting
health & safety activities in order to provide a safe and healthy work environment for its employees.
Various CSR activities carried out during the financial year ended 31 December 2015 are as follows:a)

Community

b)

Employees welfare



c)

Offer practical or industrial training to undergraduates from local colleges, universities and institution.
Contribution in the form of books to libraries of local universities.

Regular training, seminar, in-home trainings in various relevant fields were being conducted to enhance the
employees technical competency, productivity, leadership and management qualities.
The Company recognizes loyalty of its staff and award its long service staff a special gift at its annual gathering
dinner held at the beginning of the year.
Regular gathering events are being organized by the event committee to celebrate festive seasons of each race
and promote harmonize work environment in the Company.
Organize occasions for regular meet-ups between management and staff to foster better working relationships.

Health, Safety, Security and Environment (HSSE)


The HSSE committee is chaired by the Managing Director and it regularly reviews the Groups HSSE policies to ensure
a safe and healthy work environment for its employees.
HSSE matters are also being scrutinized through internal audits review and recommendations were duly endorsed and
implemented by the Management. The HSSE Committee is committed to ensure the continuous compliance of all safety
measures at all time.
The HSSE committee has carried out the following activities to ensure its objectives are being fulfilled:



Regularly equip and replenish appropriate Personal Protection Equipment (PPE) for workers.
First Aid Drill and regular briefing for workers on health and safety procedures.
Organize fire safety talk to create awareness and prevention among employees.
Gotong-Royong within the factory compound was carried out to ensure clean and healthy work environment for
its employees.
Continuous training and supervision were provided to all levels of employees to promote a safe and healthy workenvironment in compliance with legislative requirements.

This Statement on Corporate Social Responsibility was made in accordance with a resolution of the Board of Directors at a
meeting held on 31 March 2016.
18 | CN ASIA CORPORATION BHD (399442-A)

ADDITIONAL COMPLIANCE INFORMATION


UTILISATION OF PROCEEDS
No proceeds were raised by the Company from any corporate proposal during the financial year.

SHARE BUYBACKS
There were no share buyback programme in place during the financial year.

OPTIONS, WARRANTS OR CONVERTIBLE SECURITIES


The Company did not issue any options, warrants or convertible securities during the financial year.

AMERICAN DEPOSITORY RECEIPT (ADR) OR GLOBAL DEPOSITORY RECEIPT (GDR) PROGRAMME


The Company has not sponsored any ADR or GDR programme during the financial year.

IMPOSITION OF SANCTIONS/PENALTIES
There were no material sanction and/or penalty imposed on the Company and its subsidiaries, Directors or management by
any relevant regulatory bodies during the financial year.

NON-AUDIT FEES
The non-audit fees paid to the previous external auditors, Messrs SJ Grant Thornton during the financial year ended 31
December 2015 was amounted to RM3,180 /- (2014:RM3,180 /-).

PROFIT ESTIMATE, FORECAST OR PROJECTION


The Company did not release any profit estimates, forecasts or projections for the financial year. There were no variances of
10 percent or more between the audited results for the financial year and the unaudited results previously announced.

PROFIT GUARANTEE
The Company did not give any profit guarantee to any parties during the financial year.

MATERIAL CONTRACTS OR LOANS INVOLVING DIRECTORS OR MAJOR SHAREHOLDERS


There were no material contracts of the Company and subsidiaries involving Directors and major shareholders interests
during the financial year. There were no contracts relating to loans entered into by the Company and its subsidiaries which
involve the Directors and major shareholders interest during the financial year.

RECURRENT RELATED PARTY TRANSACTIONS STATEMENT


The Company did not incur any significant recurrent related party transactions of a revenue / trading nature during the
financial year ended 31 December 2015. The details of related party transactions are disclosed in Note 35 to the accompanying
Financial Statements.

ANNUAL REPORT 2015 | 19

STATEMENT ON RISK MANAGEMENT


AND INTERNAL CONTROL
The Board of Directors of CN Asia Corporation Bhd (the Board) is pleased to present the Statement on Risk Management and
Internal Control pursuant to Paragraph 15.26 (b) of the MMLR of Bursa Securities.

BOARD RESPONSIBILITY
The Board acknowledges its responsibilities for maintaining a sound system of internal control and an effective risk
management and in order to safeguard shareholders investments and the Groups assets and for reviewing its adequacy and
integrity. Due to the limitations that are inherent in any systems of risk management and internal control, the system adopted
by the Group is designed to manage rather than eliminate the risk of failure to achieve business objectives. Thus it can only
provide reasonable and not absolute assurance against material misstatement, fraud or loss.

RISK MANAGEMENT
Risk management is a firmly embedded process for identifying, evaluating, prioritizing and reporting the major business risks
within the Group with the objective of maintaining a sound system of internal control. Regular reviews, evaluation and update
of the risk profile and the corresponding action plans have been reported to the Board. The Board through its Audit Committee
will continue its effort to further enhance its risk management practices to ensure that the Groups assets and shareholders
interest are well protected and shareholders value is enhanced.
The Groups risk management framework is maintained and monitored by its Risk Management Committee, which is
administrated by an independent consulting firm, to achieve its risk management objectives. In order to attain this objective,
the Group has:

adopted a structured and systematic risk assessment, monitoring and reporting framework; and

enhanced the culture of risk awareness in the business processes through risk owners accountability and sign-off for
action plans and continuous monitoring by the various departments within the Group.

Hence, the Group has in place the necessary implementation, reviewing and reporting processes of its risk profile to cultivate
the appropriate discipline and control to continuously improvising its risk management capabilities among the respective risk
owner.

INTERNAL CONTROL PROCESS


The Groups system of internal control comprises the following key elements:








Organization structure with clear lines of roles and responsibilities including delegation of duties are well-defined to
ensure enhancement of the Groups performance.
Delegations of authority including authorization limits at appropriate levels of management are clearly defined to
ensure accountabilities and responsibilities.
Documented standard operating procedures and policies are regularly reviewed and revised to meet operational needs
and made available and accessible by all employees.
Systematic and regular audits are carried out to ensure compliance of the ISO 9001:2008 Quality Management Systems
of its subsidiary company, Chip Ngai Engineering Works Sdn Bhd.
Centralised human resource function that sets out the policies for recruitment, training and appraisal of the employees
within the Group.
The outsourced internal auditor assists the Audit Committee in discharging its duties in maintaining and monitoring the
internal control systems within the Group.
Regular Board and Audit Committee Meetings are carried out to review and assess the overall performance and internal
controls of the Group.
Adequate reports are generated on a consistent basis for review on the operational and financial performance of the
Group.
Scheduled and ad-hoc operation and management meetings were held and attended by the Managing Director,
Executive Director and head of departments to discuss and resolve business and operational issues.
Training and development programs are conducted to ensure the staff are competent in carrying out their duties and
responsibilities to achieve the Groups objectives.

20 | CN ASIA CORPORATION BHD (399442-A)

STATEMENT ON RISK MANAGEMENT


AND INTERNAL CONTROL (CONTD)
INTERNAL AUDIT FUNCTION
The Groups internal audit functions have been outsourced to an independent consulting firm to review and evaluate the
adequacy and effectiveness of the Groups systems of internal control and risk management processes. Periodic reviews
of the Groups business processes and visits to the Groups active business operations based on the Internal Audit Plan
as approved by the Audit Committee. The audit findings and recommendations were reported to the Audit Committee and
communicated to the management for remedial actions.
The outsourced internal audit function provides the Audit Committee with periodic internal audit reports identifying risks
and internal control gaps of existing state of internal control, highlighting observations and providing recommendations with
management action plans to improve the system of internal control. Regular follow-up audits were carried out to ensure
that the remedial actions in respect of internal control deficiencies, as highlighted in the internal audit reports, have been
adequately addressed by the management.
During the financial year under review, the outsourced Internal Auditors conducted a review and assessment on the adequacy
of the internal controls in the inventory management within the Group. In addition, follow up reviews were conducted to
ensure on the implementation of recommendations and issues arising from the previous audit reviews in particular on the
procurement of major raw materials.

CONCLUSION
The Board has received assurance from the Managing Director and the Financial Controller that the Companys risk
management and internal control system are operating adequately and effectively, in all material aspects, based on the risk
management and internal control system of the Company.
The Board believes that the above frameworks are considered appropriate for the Groups business operations to provide
reasonable assurance of their integrity of the Groups risk management and systems of internal control and that the risks
are at the acceptable level throughout the Groups business operations. There were no material losses incurred during the
financial year under review as a result of weaknesses in the Groups risk management and system of internal control.
The Board together with the management will continue to take preventive measures and appropriate actions in order to
strengthen the Groups control environment.

This Statement on Risk Management and Internal Control has been duly reviewed by the External Auditors pursuant to
Paragraph 15.23 of the MMLR of Bursa Securities.
ANNUAL REPORT 2015 | 21

CHAIRMAN STATEMENT
Dear Valued Shareholders,
On behalf of the Board of Directors, I am pleased to present the Annual Report
and Audited Financial Statements of CN Asia Corporation Bhd (CNASIA) for
the financial year ended 31 December 2015.
PERFORMANCE REVIEW

CORPORATE DEVELOPMENTS

During the financial year ended 31 December 2015, CNASIAs


revenue reduced to RM13.1 million as compared to a
revenue of RM15.6 million in the preceding financial year.
Consequently, the Group recorded a loss before taxation of
RM6.3 million as compared to a loss before taxation of RM4.2
million for the year 2014. This was mainly due to increase in
material cost arising from the weakening of Ringgit Malaysia
against other major foreign currencies coupled with the loss
incurred on disposal of certain property, plant and equipment
and written off of certain assets during the financial year
ended 31 December 2015. The Groups net assets fall to
RM0.38 per ordinary share as compared to RM0.52 per
ordinary share in the preceding financial year.

On 6 April 2015, the Proposed Private Placement as approved


by Bursa Malaysia Securities Berhad (Bursa Securities)
vide its letter lapsed. The Company was not able to secure
any placee for the Proposed Private Placement due to
unforeseen and unfavourable market conditions prior to
the expiry of Bursa Malaysia Securities Berhads approval.
As such, the Company has decided not to proceed with the
Proposed Private Placement.

The Groups reduction in revenue during the financial year


under review was mainly due to a 10% and 51% reduction
in pressure vessels and dish end supply respectively as
compared to the financial year 2014. This reduction was
mainly caused by the delay in securing certain projects
during the financial year. Nevertheless, the supply of these
two major products were closely related to the slowdown
in oil and gas business following further weakening in the
global crude oil prices.
Besides, the contribution from the storage tank and
road tanker divisions during the financial year 2015 were
consistent with the performance of the preceding year.

DIVIDEND
The Board does not propose any payment of dividend for the
financial year ended 31 December 2015.

INDUSTRY TREND AND PROSPECTS


The outlook on the oil and gas industry for the year 2016 is
still uncertain. The continuous decline in the crude oil prices
has had a massive impact to oil majors. The upstream oil and
gas activities had been cut down significantly and a number of
exploration and production projects were being put on hold.
Nevertheless, investment is still continuing in the midstream
and downstream activities. In view of the uncertain outlook,
oil majors are cautious and taking a wait-and see approach
before commiting to any major capital investment. It was
expected that the major investors decisions may only take
place after year 2019.
In the past one year, the Group has been taking active role
in cutting down its expenses by streamlining its work force
and production activities in order to turnaround the Groups
performance. The Group is actively pursuing overseas
projects in relation to the pressure vessels and road tanker
business to enhance its business performance.

22 | CN ASIA CORPORATION BHD (399442-A)

On 29 May 2015, the Company announced that it is an


Affected Listed Issuer pursuant to Paragraph 2.1(e) of the
Practice Note 17 of the Main Market Listing Requirements
(PN 17) of Bursa Malaysia Securities Berhad. The Company
has a remaining of approximately one (1) month to formulate
and submit a Regularisation plan to regularize its financial
condition to the relevant authorities. Prior to becoming a
PN 17 affected listed issuer, the Company has been actively
inititating corporate exercise to revive its business at the
same time changing its business model and diversifying its
business into property development as a plan to counter
the continued decline in oil and gas industry. Thereafter,
the entire corporate exercise was deferred in light of the
Company being classified as a PN 17 Affected Listed Issuer.
The Company will make the necessary announcement on the
Regularisation Plan in due course.

BOARD CHANGES
On behalf of the Board, I would like to take this opportunity
to welcome Mr. Roy Ho Yew Kee, who joined the Board as an
Independent Non-Executive Director on 10 December 2015.

ACKNOWLEDGEMENT
On behalf of the Board of Directors, I would like to express my
sincere appreciation to our valued shareholders, customers,
suppliers, bankers, advisors, business associates,
management, staff at all levels, the relevant authorities
and government agencies for their continued support,
commitment, contribution and confidence in the Group.
Last but not least, I would like to place on record my
appreciation and thanks of the valued counsel, guidance
and continued support I have received from my fellow Board
members for the past year.

DATO HILMI BIN MOHD NOOR


CHAIRMAN
19 April 2016

FINANCIAL STATEMENTS
Directors Report

24

Statement by Directors

28

Statutory Declaration

28

Independent Auditors Report

29

Consolidated Statement of Financial Position

31

Consolidated Statement of Profit or Loss


and Other Comprehensive Income

32

Consolidated Statement of Changes in Equity

33

Consolidated Statement of Cash Flows

34

Statement of Financial Position

36

Statement of Profit or Loss and Other


Comprehensive Income

37

Statement of Changes in Equity

38

Statement of Cash Flows

39

Notes to the Financial Statements

40

DIRECTORS REPORT
The directors have pleasure in submitting their report and the audited financial statements of the Group and of the Company
for the financial year ended 31st December 2015.

PRINCIPAL ACTIVITIES
The Company is principally engaged in investment holding and providing management services, whilst the principal activities
of the subsidiary companies are set out in Note 5 to the financial statements. There have been no significant changes in the
nature of these activities of the Company and its subsidiaries during the financial year.

RESULTS

Loss after taxation attributable to : Equity holders of the Company

Group

Company

RM6,284,455

RM228,567

DIVIDENDS
No dividend has been paid, declared or proposed since the end of the previous financial year. The directors do not recommend
any dividend payment in respect of the current financial year.

RESERVES AND PROVISIONS


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

BAD AND DOUBTFUL DEBTS


Before the financial statements of the Group and of the Company were made out, the directors took reasonable steps to
ascertain that action had been taken in relation to the writing off of bad debts and the making of allowance for doubtful debts
and satisfied themselves that all known bad debts had been written off and adequate allowance had been made for doubtful
debts.
At the date of this report, the directors of the Group and of the Company are not aware of any circumstances which would
render the amount written off for bad debts, or the amount of the allowance for doubtful debts, in the Group or in the Company
inadequate to any substantial extent.

CURRENT ASSETS
Before the financial statements of the Group and of the Company were made out, the directors took reasonable steps to
ascertain whether any current assets, other than debts, were unlikely to realise in the ordinary course of business their value
as shown in the accounting records of the Group and of the Company and to the extent so ascertained were written down to an
amount that they might be expected to realise.
At the date of this report, the directors are not aware of any circumstances that would render the values attributed to the
current assets in the financial statements of the Group and of the Company misleading.

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

24 | CN ASIA CORPORATION BHD (399442-A)

DIRECTORS REPORT (CONTD)


CONTINGENT AND OTHER LIABILITIES
At the date of this report, there does not exist : i)

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

ii)

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

No contingent liability or other liability of the Group or 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 or of the Company to meet its obligations as and when they fall due.

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

ITEMS OF AN UNUSUAL NATURE


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

SHARE OPTIONS
No options have been granted by the Company to any parties during the financial year to take up unissued shares of the
Company.
No shares have been issued during the financial year by virtue of the exercise of any option to take up unissued shares of the
Company. At the end of the financial year, there were no unissued shares of the Company under options.

DIRECTORS OF THE COMPANY


The directors who served since the date of the last report are : Dato Hilmi Bin Mohd. Noor
Ho Cheng San
Lee Lam
Chong Ying Choy
Yoong Nim Chee
Roy Ho Yew Kee appointed on 10/12/2015
In accordance with S129(6) of the Companies Act 1965, Dato Hilmi Bin Mohd. Noor retires at forthcoming Annual General
Meeting and being eligible offers himself for re-election.
In accordance with Article 84 of the Companys Articles of Association, Lee Lam retires at the forthcoming Annual General
Meeting and being eligible offers himself for re-election.
In accordance with Article 91 of the Companys Articles of Association, Roy Ho Yew Kee retires at the forthcoming Annual
General Meeting and being eligible offers himself for re-election.

ANNUAL REPORT 2015 | 25

DIRECTORS REPORT (CONTD)


DIRECTORS INTERESTS
The interests and deemed interest in the ordinary shares of the Company and of its related corporations of those who are
Directors at year end (including the interests of the spouses or children of the Directors) as recorded in the Register of
Directors Shareholdings are as follows : Number of ordinary shares of RM1 each
As at
As at
1/1/2015
Bought
Sold
31/12/2015
Direct interests
Ho Cheng San
Lee Lam
Yoong Nim Chee

16,093,535
11,750
155,000

16,093,535
11,750
155,000

Indirect interests
Ho Cheng San *

2,619,759

2,619,759

* Deemed interest by virtue of his substantial shareholdings in CN Asia Engineering Sdn. Bhd.
By virtue of their interests in the shares of the Company, Ho Cheng San is deemed to have an interest in the shares of the
subsidiary companies during the financial year to the extent that CN Asia Corporation Bhd has an interest under Section 6A
of the Companies Act, 1965.
Save and except as disclosed above, none of the other directors holding office at the end of the financial year hold any shares
in the Company or in any related corporations during the financial year ended 31st December 2015.

DIRECTORS BENEFITS
Since the end of the previous financial year, none of the directors of the Company have received or become entitled to receive a
benefit (other than a benefit included in the aggregate amount of emoluments received or due and receivable by the directors
as shown in the financial statements) by reason of a contract made by the Company or a related corporation with the director
or with a firm of which the director is a member, or with a company in which the director has a substantial financial interest
except for any benefits which may be deemed to have arisen by virtue of the significant related party transactions as disclosed
in Note 35 to the financial statements.
There were no arrangements during and at the end of the financial year, to which the Company or its subsidiary companies is a
party, which had the object of enabling the 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.

DISCLOSURE OF PN17
On 29th May 2015, the Company announced that it became an Affected Listed Issuer pursuant to Paragraph 2.1(e) of Practice
Note No.17 of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad. As a result, the Company is
required to submit a Regularisation Plan to the relevant authorities and to implement the Regularisation Plan within the
stipulated timeframe.

26 | CN ASIA CORPORATION BHD (399442-A)

DIRECTORS REPORT (CONTD)


AUDITORS
The auditors, Kreston John & Gan, Chartered Accountants, have expressed their willingness to continue in office.
Signed on behalf of the Board in accordance with a resolution of the Directors

Ho Cheng San

Lee Lam

Kuala Lumpur,
Date : 15 April 2016

ANNUAL REPORT 2015 | 27

STATEMENT BY DIRECTORS

Pursuant to Section 169(15) of the Companies Act, 1965


We, Ho Cheng San and Lee Lam, being two of the directors of CN Asia Corporation Berhad, do hereby state that, in the opinion
of the directors, the financial statements set out on pages 31 to 95 are drawn up in accordance with Malaysian Financial
Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act 1965 so as to
give a true and fair view of the state of affairs of the Group and of the Company at 31st December 2015 and of the results and
the cash flows of the Group and of the Company for the financial year ended on that date.
The information set out in Note 37 to the financial statements have been prepared in accordance with the Guidance on Special
Matter No.1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa
Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants.
Signed on behalf of the Board in accordance with a resolution of the Directors

Ho Cheng San

Lee Lam
Kuala Lumpur
Date: 15 April 2016

STATUTORY DECLARATION

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


I, Ho Cheng San, being the director primarily responsible for the financial management of CN Asia Corporation Berhad, do
solemnly and sincerely declare that the financial statements set out on pages 31 to 95, to the best of my knowledge and belief,
are correct.
And, I make this solemn declaration conscientiously believing the same to be true, and by virtue of the provisions of the
Statutory Declarations Act, 1960.
Subscribed and solemnly declared at Kuala Lumpur on 15 April 2016.

Ho Cheng San
Before me
D. SELVARAJ (W320)
Commissioner for Oaths
Kuala Lumpur

28 | CN ASIA CORPORATION BHD (399442-A)

INDEPENDENT AUDITORS REPORT (CONTD)

to members of CN Asia Corporation Bhd (Company No. 399442 - A)


REPORT ON THE FINANCIAL STATEMENTS
We have audited the financial statements of CN Asia Corporation Bhd, which comprise statements of financial position as
at 31st December 2015 of the Group and of the Company, and statements of profit or loss and other comprehensive income,
statements of changes in equity and statements of cash flows of the Group and of the Company for the year then ended, and a
summary of significant accounting policies and other explanatory information, as set out on notes 1 to 36.

Directors Responsibility for the Financial Statements


The directors of the Company are responsible for the preparation of financial statements so as to give a true and fair view in
accordance with applicable 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 judgment, 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
Companys 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 Companys
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 modified audit
opinion.

Basis for Qualified of Opinion


As mentioned in Note 2(e) to the financial statements which discloses the premise upon which the Group has prepared its
financial statements by applying the going concern assumption, notwithstanding that the Group incurred accumulated losses
of RM31,795,852 as at 31st December 2015, and as of that date, the Groups current liabilities exceeded its current assets by
RM8,516,916, thereby indicating the existence of a material uncertainty which may cast significant doubt about the Groups
ability to continue as a going concern.
On 29th May 2015, the Company announced that it became an Affected Listed Issuer pursuant to Paragraph 2.1(e) of Practice
Note No.17 of Main Market Listing Requirements of Bursa Malaysia Securities Berhad. As a result, the Company is required
to submit a Regularisation Plan to the relevant authorities and to implement the Regularisation Plan within the stipulated
timeframe.
As at the date of this report, the Company is currently in the midst of formalising a regularization plan. In the event that
this is not forthcoming, the Group and the Company may be unable to realise their assets and discharge their liabilities in
the normal course of business. Accordingly, the financial statements may require adjustments relating to the recoverability
and classification of recorded assets and liabilities that may be necessary should the Group and the Company be unable to
continue as going concerns.

Qualified of Opinion
In our opinion, except for the effects on the financial statements of the matters as mentioned in the Basis for Qualified Opinions
paragraphs, the financial statements give a true and fair view of the financial position of the Group as of 31st December
2015 and of their financial performance and cash flows for the year then ended in accordance with applicable Malaysian
Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 1965
in Malaysia.

ANNUAL REPORT 2015 | 29

INDEPENDENT AUDITORS REPORT (CONTD)

to members of CN Asia Corporation Bhd (Company No. 399442 - A)


REPORT ON OTHER LEGAL AND REGULATORY REqUIREMENTS
In accordance with the requirements of the Companies Act, 1965 in Malaysia, we also report the following : a)

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

b)

We have considered the financial statements and the auditors reports of the subsidiary of which we have not acted as
auditors, which are indicated in Note 5 to the financial statements.

c)

We are satisfied that the financial statements 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.

d)

The audit reports on the financial statements of the subsidiaries were subject to qualification as disclosed in Note 5 to
the Financial Statements but did not include any comment made under Section 174(3) of the Act.

OTHER REPORTING RESPONSIBILITIES


The supplementary information set out in Note 37 to the financial statements is disclosed to meet the requirements 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
The financial statements of the Group and the Company for the financial year 31st December 2014 were audited by another
firm of auditors who expressed an unmodified opinion but with Emphasis of Matter on those statements on 15th April 2015. The
Emphasis of Matter relates to the Groups abilities to continue as going concerns. As a result of the expression of emphasis of
matter, the Company became an affected listed issuer pursuant to Paragraph 2.1(e) of the Practice Note 17 of the Main Market
Requirements of Bursa Malaysia Securities Berhad.
This report is made solely to the members of the Company, as a body, in accordance with Section 174 of the Companies Act,
1965 in Malaysia and for no other purpose. We do not assume responsibility to any other person for the contents of this report.

Kreston John & Gan


Chartered Accountants
( AF 0113 )

Lim Chiam Kay


Approval No. 1285/03/17(J)
Chartered Accountant
Kuala Lumpur,
Date : 15 April 2016

30 | CN ASIA CORPORATION BHD (399442-A)

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

31st December 2015

Note

2015
RM

2014
RM

4
5
7

26,162,703
16,062
26,178,765

27,493,947
29,842
76,609
27,600,398

8
9
10
11

3,914,573
2,036,502
707,831
278,065
5,658
421,374
7,364,003
33,542,768

3,962,593
3,530,728
1,938,322
806,634
5,658
231,289
388,960
10,864,184
38,464,582

ASSETS
Non-current Assets
Property, plant and equipment
Investment in associated company
Goodwill on consolidation

Current Assets
Inventories
Trade receivables
Amount due from contract customers
Other receivables, deposits and prepayments
Current tax asset
Deposit with a licensed bank
Cash and bank balances

13

Total Assets
EqUITY AND LIABILITIES
Equity attributable to owners
Share capital
Share premium
Translation reserve
Accumulated losses

14
15
15
15

45,382,500
3,491,965
187,492
(31,795,852)
17,266,105

45,382,500
3,491,965
102,129
(25,511,397)
23,465,197

Non-current Liabilities
Borrowings

16

395,744
395,744

488,501
488,501

Current Liabilities
Trade payables
Other payables and accruals
Amount due to associated company
Borrowings

19
20
21
16

2,027,887
1,940,399
34,000
11,878,633
15,880,919
16,276,663
33,542,768

1,886,708
595,332
55,800
11,973,044
14,510,884
14,999,385
38,464,582

Total Liabilities
Total Equity and Liabilities

The accompanying accounting policies and explanatory notes form an integral part of the financial statements.
ANNUAL REPORT 2015 | 31

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND


OTHER COMPREHENSIVE INCOME

for the year ended 31st December 2015

Note

Revenue
Cost of sales

22

Gross loss
Other income
Selling and distribution costs
Administrative expenses
Other expenses

23

Finance costs
Loss from operations
Share of results of associated company

2015
RM

2014
RM

13,113,741
(14,437,518)

15,592,700
(15,845,911)

(1,323,777)

(253,211)

85,506
(77,875)
(3,641,408)
(578,086)

324,262
(125,996)
(3,377,115)
(95,585)

(5,535,640)

(3,527,645)

(735,035)

(710,446)

(6,270,675)

(4,238,091)

(13,780)

156

Loss before taxation

24

(6,284,455)

(4,237,935)

Income tax expense

27

(6,284,455)

(4,237,935)

85,363

87,946

(6,199,092)

(4,149,989)

(6,284,455)

(4,237,935)

(6,199,092)

(4,149,989)

(13.85)

(9.34)

Loss for the year


Other comprehensive income, net of tax
Item that is or may be reclassified subsequently to profit or loss
Exchange translation differences
Total comprehensive loss for the year
Loss for the year attributable to :Equity holders of the Company
Total comprehensive loss for the year attributable to :Equity holders of the Company
Loss per share (sen)

28

The accompanying accounting policies and explanatory notes form an integral part of the financial statements.
32 | CN ASIA CORPORATION BHD (399442-A)

CONSOLIDATED STATEMENT OF CHANGES IN EQUITy

for the year ended 31st December 2015

<----------- Attributable to equity holders of the company ----------->


<----- Non-Distributable -----> <-Distributable->
Foreign
currency
Share
Share
translation
Accumulated
capital
premium
reserve
losses
RM
RM
RM
RM
Balance at 1st January 2014

Total
RM

45,382,500

3,491,965

14,183

(21,273,462)

27,615,186

Comprehensive income:Loss for the year

(4,237,935)

(4,237,935)

Other comprehensive
income:Exchange translation
differences

87,946

87,946

Total comprehensive loss for


the year

87,946

(4,237,935)

(4,149,989)

45,382,500

3,491,965

102,129

(25,511,397)

23,465,197

Comprehensive income:Loss for the year

(6,284,455)

(6,284,455)

Other comprehensive
income:Exchange translation
differences

85,363

85,363

Total comprehensive loss for


the year

85,363

(6,284,455)

(6,199,092)

45,382,500

3,491,965

187,492

(31,795,852)

17,266,105

Balance at 31st December


2014

Balance at 31st December


2015

The accompanying accounting policies and explanatory notes form an integral part of the financial statements.
ANNUAL REPORT 2015 | 33

CONSOLIDATED STATEMENT OF CASH FLOWS

for the year ended 31st December 2015

Note

2015
RM

2014
RM

(6,284,455)

(4,237,935)

83,280
993,309
158,637
173,430
76,609
4,991
735,035
(1,265)
83,815
(1,800)
13,780
(26,256)
25,057

83,280
1,131,509
(36,892)
(92,789)
18,000
84,432
710,446
(7,164)
(156)
(85,452)
-

Operating loss before working capital changes

(3,956,833)

(2,432,721)

Changes in working capital : Inventories


Trade receivables
Amount due from contract customers
Other receivables, deposits and prepayments
Trade payables
Other payables and accruals

74,185
1,511,849
1,230,491
366,734
116,588
1,332,848

908,736
(166,478)
1,500,945
(113,704)
355,772
(61,879)

Cash generated from /(used in) operations

666,862

(9,329)

Interest paid
Tax refunded

(735,035)
-

(710,446)
36,273

(68,173)

(683,502)

Cash flows from operating activities


Loss before taxation
Adjustments for : Amortisation of long term leasehold assets
Depreciation
Development cost written off
(Gain) /Loss on disposal of property, plant and equipment
Gain on disposal of asset held for sale
Goodwil written off
Impairment loss on trade receivables
Inventories written off
Interest expense
Interest income
Plant and equipment written off
Reversal of impairment loss on trade receivables
Share of results of associated company
Unrealised gain on foreign exchange
Unrealised loss on foreign exchange

Net cash flows used in operating activities carried forward

34 | CN ASIA CORPORATION BHD (399442-A)

CONSOLIDATED STATEMENT OF CASH FLOWS (CONTD)

for the year ended 31st December 2015

Note

2015
RM

2014
RM

(68,173)

(683,502)

1,265
231,289
(56,864)
68,800
-

7,164
(6,954)
(795,992)
63,700
472,789

244,490

(259,293)

Drawdown /(Repayment to) bankers acceptance


Repayment to an associated company
Payments of finance lease liabilities

(664,000)
(21,800)
(97,607)

1,169,000
(4,502)
(95,989)

Net cash from /(used in) financing activities

(783,407)

1,068,509

Net increase /(decrease) in cash and cash equivalents

(607,090)

125,714

65,065

29,364

(4,213,477)

(4,368,555)

(4,755,502)

(4,213,477)

Net cash flows used in operating activities brought forward


Cash flows from investing activities
Interest received
Withdrawn /(Placement) of fixed deposit with licensed bank
Purchase of property, plant and equipment
Proceeds from disposal of property, plant and equipment
Net proceeds from disposal of asset held for sale

29

Net cash from /(used in) investing activities


Cash flows from financing activities

Effect of change on foreign exchange differences


Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year

30

The accompanying accounting policies and explanatory notes form an integral part of the financial statements.

ANNUAL REPORT 2015 | 35

STATEMENT OF FINANCIAL POSITION

31st December 2015

Note

2015
RM

2014
RM

14,416,461

14,416,461

14,416,461

14,416,461

1,000
14,942,446
5,658
5,187

70,533
15,140,831
5,658
6,319

14,954,291

15,223,341

29,370,752

29,639,802

45,382,500
3,491,965
(19,563,979)

45,382,500
3,491,965
(19,335,412)

29,310,486

29,539,053

60,266

100,749

60,266

100,749

60,266

100,749

29,370,752

29,639,802

ASSETS
Non-current Assets
Investment in subsidiary companies

Current Assets
Deposits and prepayment
Amount due from subsidiary companies
Current tax asset
Bank balance

11
12

Total Assets
EqUITY AND LIABILITIES
Equity attributable to owners
Share capital
Share premium
Accumulated losses

Current Liabilities
Other payables and accruals

Total Liabilities
Total Equity and Liabilities

14
15
15

20

The accompanying accounting policies and explanatory notes form an integral part of the financial statements.
36 | CN ASIA CORPORATION BHD (399442-A)

STATEMENT OF PROFIT OR LOSS AND OTHER


COMPREHENSIVE INCOME

for the year ended 31st December 2015


Note

2015
RM

2014
RM

Revenue
Administrative expenses
Other expenses

22

60,000
(288,567)
-

60,000
(168,423)
(3,149,794)

Loss before taxation

24

(228,567)

(3,258,217)

Income tax expense

27

(228,567)

(3,258,217)

Loss for the year, represents total comprehensive loss for the year

The accompanying accounting policies and explanatory notes form an integral part of the financial statements.
ANNUAL REPORT 2015 | 37

STATEMENT OF CHANGES IN EQUITy

for the year ended 31st December 2015

<--------------------------- Reserves ---------------------------->


NonDistributable
Distributable
Share
Share
Accumulated
capital
premium
losses
Total
RM
RM
RM
RM
Balance at 1st January 2014
Total comprehensive loss for the year

Balance at 31st December 2014


Total comprehensive loss for the year
Balance at 31st December 2015

45,382,500

3,491,965

(16,077,195)

32,797,270

(3,258,217)

(3,258,217)

45,382,500

3,491,965

(19,335,412)

29,539,053

(228,567)

(228,567)

45,382,500

3,491,965

(19,563,979)

29,310,486

The accompanying accounting policies and explanatory notes form an integral part of the financial statements.
38 | CN ASIA CORPORATION BHD (399442-A)

STATEMENT OF CASH FLOWS

for the year ended 31st December 2015

Note

2015
RM

2014
RM

(228,567)

(3,258,217)

3,149,794

(228,567)

(108,423)

69,533
(40,483)

4,467
72,935

(199,517)

(31,021)

198,385

Net decrease in cash and cash equivalents

(1,132)

(31,021)

Cash and cash equivalents at the beginning of the year

6,319

37,340

5,187

6,319

Cash flows from operating activities


Loss before taxation
Adjustment for : Impairment loss on amount due from subsidiary companies
Operating loss before working capital changes
Changes in working capital : Deposits and prepayment
Other payables and accruals
Net cash used in operating activities
Cash flows from investing activity
Advance from subsidiary companies

Cash and cash equivalents at the end of the year

30

The accompanying accounting policies and explanatory notes form an integral part of the financial statements.
ANNUAL REPORT 2015 | 39

NOTES TO THE FINANCIAL STATEMENTS

31st December 2015


1.

GENERAL INFORMATION
CN Asia Corporation Berhad is a public limited liability company, incorporated and domiciled in Malaysia and is listed
on the Main Market of Bursa Malaysia Securities Berhad. The address of the principal place of business and registered
office of the Company is as follows:Registered office and
Principal place of business

Lot 7907, Batu 11, Jalan Balakong


43300 Seri Kembangan
Selangor Darul Ehsan

The consolidated financial statements of the Company as at and for the financial year ended 31st December 2015
comprise the Company and its subsidiaries (together referred to as the Group and individually referred to as Group
entities) and the Groups interest in associates.
The Company is principally engaged in investment holding and providing management services, whilst the principal
activities of the subsidiary companies are set out in Note 5 to the financial statements.
These financial statements were authorised for issue by the Board of Directors on 15 April 2016.

2.

BASIS OF PREPARATION OF FINANCIAL STATEMENTS


a)

Statement of compliance
The financial statements of the Group and the Company have been prepared in accordance with Malaysian
Financial Reporting Standards (MFRSs), International Financial Reporting Standards and the requirements of
the Companies Act, 1965 in Malaysia.
The following are accounting standards, amendments and interpretations of the MFRS framework that have been
issued by the Malaysian Accounting Standards Board (MASB) but have not been adopted by the Group and the
Company.
MFRSs, Interpretations and Amendments effective for annual periods beginning on or after 1 January 2016










Amendments to MFRS 5, Non-current Assets Held for Sale and Discontinued Operations (Annual
Improvements 2012-2014 Cycle)
Amendments to MFRS 7, Financial Instruments: Disclosures (Annual Improvements 2012-2014 Cycle)
Amendments to MFRS 10, Consolidated Financial Statements, MFRS 12, Disclosure of Interests in Other
Entities and MFRS 128, Investments in Associates and Joint Ventures Investment Entities: Applying the
Consolidation Exception
Amendments to MFRS 11, Joint Arrangements Accounting for Acquisitions of Interests in Joint Operations
MFRS 14, Regulatory Deferral Accounts
Amendments to MFRS 101, Presentation of Financial Statements Disclosure Initiative
Amendments to MFRS 116, Property, Plant and Equipment and MFRS 138, Intangible Assets Clarification
of Acceptable Methods of Depreciation and Amortisation
Amendments to MFRS 116, Property, Plant and Equipment and MFRS 114, Agriculture Agriculture:
Bearer Plants
Amendments to MFRS 119, Employee Benefits (Annual Improvements 2012-2014 Cycle)
Amendments to MFRS 127, Separate Financial Statements Equity Method in Separate Financial
Statements
Amendments to MFRS 134, Interim Financial Reporting (Annual Improvements 2012-2014 Cycle)

MFRSs, Interpretations and Amendments effective for annual periods beginning on or after 1 January 2018

MFRS 9, Financial Instruments (2014)


MFRS 15, Revenue from Contracts with Customers

40 | CN ASIA CORPORATION BHD (399442-A)

Notes to the FiNaNcial statemeNts (coNtd)

31st december 2015

2.

BASIS OF PREPARATION OF FINANCIAL STATEMENTS (CONTD)


a)

Statement of compliance (contd)


MFRSs, Interpretation and Amendments effective for a date yet to be confirmed

Amendments to MFRS 10, Consolidated Financial Statements and MFRS 128, Investments in Associates
and Joint Ventures Sale or Contribution of Assets between an Investor and its Associate or Joint Venture

The Group and the Company plan to apply the abovementioned accounting standards, amendments and
interpretations:

from the annual period beginning on 1st January 2016 for those accounting standards, amendments or
interpretations that are applicable to the Group and the Company and effective for annual periods beginning
on or after 1st January 2016;

from the annual period beginning on 1st January 2018 for those accounting standards, amendments or
interpretations that are applicable to the Group and the Company and effective for annual periods beginning
on or after 1st January 2018.

The initial application of the accounting standards, amendments or interpretations are not expected to have
any material financial impacts to the current period and prior period financial statements of the Group and the
Company except as mentioned below :
MFRS 9, Financial Instruments
MFRS 9 replaces the guidance in MFRS 139, Financial Instruments: Recognition and Measurements on the
classification and measurement of financial assets and financial liabilities, and on hedge accounting.
MFRS 15, Revenue from Contracts with Customers
MFRS 15 replaces the guidance in MFRS 111, Construction Contracts, MFRS 118, Revenue, IC Interpretation
13, Customer Loyalty Programmes, IC Interpretation 15, Arrangements for Construction of Real Estate, IC
Interpretation 18, Transfers of Assets from Customers and IC Interpretation 131, Revenue Barter Transactions
Involving Advertising Services.
Amendments to MFRS 10, Consolidated Financial Statements, MFRS 12, Disclosure of Interest in Other Entities
and MFRS 128, Investments in Associates and Joint Ventures Investment Entities: Applying the Consolidation
Exception
The amendments to MFRS 10, MFRS 12 and MFRS 128 require an investment entity parent to fair value a
subsidiary providing investment-related services that is itself an investment entity, an intermediate parent
owned by an investment entity group can be exempted from preparing consolidated financial statements and a
non-investment entity investor can retain the fair value accounting applied by its investment entity associate or
joint venture.
The Group is currently assessing the financial impact that may arise from the adoption of MFRS 9, MFRS 15 and
amendments to MFRS 10, MFRS 12 and MFRS 128.
b)

Basis of measurement
The financial statements have been prepared on the historical cost basis other than as disclosed in Note 3.

c)

Functional and presentation currency


These financial statements are presented in Ringgit Malaysia (RM), which is the Groups and Companys
functional currency.

d)

Use of estimates and judgments


The preparation of the financial statements in conformity with MFRSs requires management to make judgments,
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.

ANNUAL REPORT 2015 | 41

NOTES TO THE FINANCIAL STATEMENTS (CONTD)

31st December 2015


2.

BASIS OF PREPARATION OF FINANCIAL STATEMENTS (CONTD)


d)

Use of estimates and judgments (contd.)


Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are
recognised in the period in which the estimates are revised and in any future periods affected.
There are no significant areas of estimation uncertainty and critical judgments in applying accounting policies
that have significant effect on the amounts recognised in the financial statements other than those disclosed in
the following notes:i)

Depreciation of property, plant and equipment


Property, plant and equipment are depreciated in a straight-line basis over their estimated useful life.
Management estimated the useful life of these assets to be 2 to 80 years. Changes in the expected level of
usage and technological developments could impact economic useful life and the residual values of these
assets, therefore future depreciation charges could be revised.

ii)

Impairment losses for receivables


The Group and the Company make impairment losses based on an assessment of the recoverability of
receivables. Impairment loss is applied to receivables where events or changes in circumstances indicate
that the carrying amounts may not be recoverable. Management specifically analyses historical default
rate, and changes in customer payment terms when making a judgments to evaluate the adequacy of
the impairment losses of receivables. Where the expectation is different from the original estimate, such
difference will impact the carrying value of receivables.
At the end of the reporting period, included in the allowance account for trade receivables of the Group is
individually assessed impairment losses for trade receivables amounting to RM111,409 (2014 RM113,209).
The estimates of individually assessed impairment for trade receivables are based on the historical default
rate. Hence, should the actual default rate becomes higher than the estimated default rate, the Group may
be required to charge additional impairment losses to the profit or loss within the next financial year.

iii)

Deferred tax assets


Deferred tax assets are recognised for all unabsorbed tax losses and unabsorbed capital allowances to the
extent that it is probable that taxable profit will be available against which the unabsorbed tax losses and
unabsorbed capital allowances can be utilised. Significant management judgment 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 future tax planning strategies.

iv)

Impairment of investments in subsidiaries and amounts due from subsidiaries


The Company reviews the investments in subsidiaries for impairment when there is an indication of
impairment and assess the impairment of receivables on the amounts due from subsidiaries when the
receivables are long outstanding.
The recoverable amounts of the investments in subsidiaries and amounts due from subsidiaries are
assessed by reference to the value in use of the respective subsidiaries.
The value in use is the net present value of the projected future cash flows derived from the business
operations of the respective subsidiaries discounted at an appropriate discount rate. For such discounted
cash flow method, it involves the use of estimated future results and a set assumptions to reflect their
income and cash flows. Judgment had also been used to determine the discount rate for the cash flows
and the future growth of the businesses of the businesses of the subsidiaries.

v)

Inventories
Inventories are measured at the lower of cost and net realisable value. In estimating net realisable values,
management takes into account the most reliable evidence available at the times the estimates are made.

42 | CN ASIA CORPORATION BHD (399442-A)

Notes to the FiNaNcial statemeNts (coNtd)

31st december 2015

2.

BASIS OF PREPARATION OF FINANCIAL STATEMENTS (CONTD)


d)

Use of estimates and judgments (contd.)


v)

Inventories (contd)
The Groups core business is subject to economical and technology changes which may cause selling price
to change rapidly, and the Groups loss to change.
The carrying amount of the Groups inventories at the end of the reporting period is disclosed in Note 8 to
the financial statements.

e)

Financial Position of the Group


The Group has prepared its financial statements by applying the going concern assumption as it is the intention of
the Group to carry on with the existing business activities, notwithstanding that the Group incurred accumulated
losses of RM31,795,852 as at 31st December 2015, and as of that date, the Groups current liabilities exceeded
its current assets by RM8,516,916, thereby indicating the existence of a material uncertainty which may cast
significant doubt about the Groups ability to continue as going concern.

f)

Disclosure of PN17
On 29th May 2015, the Company announced that it became an Affected Listed Issuer pursuant to Paragraph
2.1(e) of Practice Note No.17 of the Main Market Listed Requirements of Bursa Malaysia Securities Berhad. As a
result, the Company is required to submit a Regularisation Plan to the relevant authorities and to implement the
Regularisation Plan within the stipulated timeframe.
As at the date of this report, the Company is currently in the midst of formalising a regularisation plan. In the
event that this is not forthcoming, the Group and the Company may be unable to realise their assets and discharge
their liabilities in the normal course of business. Accordingly, the financial statements may require adjustments
relating to the recoverability and reclassification of recorded assets and liabilities that may be necessary should
the Group and the Company be unable to continue as going concerns.

3.

SIGNIFICANT ACCOUNTING POLICIES


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

Basis of consolidation
i)

Subsidiaries
Subsidiaries are entities, including structured entities, controlled by the Company. The financial statements
of subsidiaries are included in the consolidated financial statements from the date that control commences
until the date that control ceases.
The Group controls an entity when it is exposed, or has rights, to variable returns from its involvement with
the entity and has the ability to affect those returns through its power over the entity. Potential voting rights
are considered when assessing control only when such rights are substantive. The Group considers it has
de facto power over an investee when, despite not having the majority of voting rights, it has the current
ability to direct the activities of the investee that significantly affect the investees return.
Investments in subsidiaries are 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 combinations
Business combinations are accounted for using the acquisition method from the acquisition date, which is
the date on which control is transferred to the Group.

ANNUAL REPORT 2015 | 43

NOTES TO THE FINANCIAL STATEMENTS (CONTD)

31st December 2015


3.

SIGNIFICANT ACCOUNTING POLICIES (CONTD)


a)

Basis of consolidation (contd)


ii)

Business combinations (contd)


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



the fair value of the consideration transferred; plus


the recognised amount of any non-controlling interests in the acquiree; plus
if the business combination is achieved in stages, the fair value of the existing equity interest in the
acquiree; less
the net recognised amount (generally fair value) of the identifiable assets acquired and liabilities
assumed.

When the excess is negative, a bargain purchase gain is recognised immediately in profit or loss.
For each business combination, the Group elects whether it measures the non-controlling interests in the
acquiree either at fair value or at the proportionate share of the 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.
iii)

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 cost of the
investment includes transaction costs. 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, any retained interest in the former
associate at the date when significant influence is lost is measured at fair value and this amount is regarded
as the initial carrying amount of a financial asset. The difference between the fair value of any retained
interest plus proceeds from the interest disposed of and the carrying amount of the investment at the date
when equity method is discontinued is recognised in the profit or loss.
When the Groups interest in an associate decreases but does not result in a loss of significant influence,
any retained interest is not remeasured. 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 the profit or loss if that gain or loss would be required to be reclassified to
profit or loss on the disposal of the related assets or liabilities.
Investments in associates are 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.

iv)

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.

44 | CN ASIA CORPORATION BHD (399442-A)

Notes to the FiNaNcial statemeNts (coNtd)

31st december 2015

3.

SIGNIFICANT ACCOUNTING POLICIES (CONTD)


a)

Basis of consolidation (contd)


iv)

Transactions eliminated on consolidation (contd)


Unrealised gains arising from transactions with equity-accounted associates and joint ventures are
eliminated against the investment to the extent of the Groups interest in the investees. Unrealised losses
are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of
impairment.

b)

Foreign currency
i)

Foreign currency transactions


Transactions in foreign currencies are translated to the respective functional currencies of Group entities
at exchange rates at the dates of the transactions.
Monetary assets and liabilities denominated in foreign currencies at the end of the reporting period are
retranslated to the functional currency at the exchange rate at that date.
Non-monetary assets and liabilities denominated in foreign currencies are not retranslated at the end
of the reporting date, except for those that are measured at fair value are retranslated to the functional
currency at the exchange rate at the date that the fair value was determined.
Foreign currency differences arising on retranslation are recognised in profit or loss, except for differences
arising on the retranslation of available-for-sale equity instruments or a financial instrument designated
as a hedge of currency risk, which are recognised in other comprehensive income.
In the consolidated financial statements, when settlement of a monetary item receivable from or payable
to a foreign operation is neither planned nor likely to occur in the foreseeable future, foreign exchange
gains and losses arising from such a monetary item are considered to form part of a net investment in a
foreign operation and are recognized in other comprehensive income, and are presented in the foreign
currency translation reserve (FCTR) in equity.

ii)

Operations denominated in functional currencies other than Ringgit Malaysia


The assets and liabilities of operations denominated in functional currencies other than RM, including
goodwill and fair value adjustments arising on acquisition, are translated to RM at exchange rates at the end
of the reporting period, except for goodwill and fair value adjustments arising from business combinations
before 1st January 2012 (the date when the Group first adopted MFRS) which are treated as assets and
liabilities of the Company. The income and expenses of foreign operations, excluding foreign operations in
hyperinflationary economies, are translated to RM at exchange rates at the dates of the transactions.
The income and expenses of foreign operations in hyperinflationary economies are translated to RM at the
exchange rate at the end of the reporting period. Prior to translating the financial statements of foreign
operations in hyperinflationary economies, their financial statements for the current period are restated
to account for changes in the general purchasing power of the local currency. The restatement is based on
relevant price indices at the end of the reporting period.
Foreign currency differences are recognised in other comprehensive income and accumulated in the
foreign currency translation reserve (FCTR) in equity. However, if the operation is a non-wholly-owned
subsidiary, then the relevant proportionate share of the translation difference is allocated to the noncontrolling interests. When a foreign operation is disposed of such that control, significant influence or
joint control is lost, the cumulative amount in the FCTR related to that foreign operation is reclassified to
profit or loss as part of the profit or loss on disposal.
When the Group disposes of only part of its interest in a subsidiary that includes a foreign operation, the
relevant proportion of the cumulative amount is reattributed to non-controlling interests. When the Group
disposes of only part of its investment in an associate or joint venture that includes a foreign operation
while retaining significant influence or joint control, the relevant proportion of the cumulative amount is
reclassified to profit or loss.

ANNUAL REPORT 2015 | 45

NOTES TO THE FINANCIAL STATEMENTS (CONTD)

31st December 2015


3.

SIGNIFICANT ACCOUNTING POLICIES (CONTD)


c)

Financial instruments
i)

Initial recognition and measurement


A financial asset or a financial liability is recognised in the statement of financial position when, and only
when, the Group or the Company becomes a party to the contractual provisions of the instrument.
A financial instrument is recognised initially, at its fair value plus, in the case of a financial instrument not
at fair value through profit or loss, transaction costs that are directly attributable to the acquisition or issue
of the financial instrument.
An embedded derivative is recognised separately from the host contract and accounted for as a derivative
if, and only if, it is not closely related to the economic characteristics and risks of the host contract and
the host contract is not categorised as 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.

ii)

Financial instrument categorise and subsequent measurement


The Group and the Company categorise financial instruments as follows:Financial assets
a)

Financial assets at fair value through profit or loss


Fair value through profit or loss category comprises financial assets that are held for trading,
including derivatives (except for a derivative that is a financial guarantee contract or a designated
and effective hedging instrument) contingent consideration in a business combination or financial
assets that are specifically designated into this category upon initial recognition.
Derivatives that are linked to and must be settled by delivery of unquoted equity instruments whose
fair values cannot be reliably measured are measured at cost.
Other financial assets categorised as fair value through profit or loss are subsequently measured at
their fair values with the gain or loss recognised in profit or loss.

b)

Held-to-maturity investments
Held-to-maturity investments category comprises debt instruments that are quoted in an active
market and the Group or the Company has the positive intention and ability to hold them to maturity.
Financial assets categorised as held-to-maturity investments are subsequently measured at
amortised cost using the effective interest method.

c)

Loans and receivables


Loans and receivables category comprises debt instruments that are not quoted in an active market.
Financial assets categorised as loans and receivables are subsequently measured at amortised cost
using the effective interest method.

46 | CN ASIA CORPORATION BHD (399442-A)

Notes to the FiNaNcial statemeNts (coNtd)

31st december 2015

3.

SIGNIFICANT ACCOUNTING POLICIES (CONTD)


c)

Financial instruments (contd)


ii)

Financial instrument categorise and subsequent measurement (contd)


The Group and the Company categorise financial instruments as follows:- (contd)
Financial assets (contd)
d)

Available-for-sale financial assets


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

All financial assets, except for those measured at fair value through profit or loss, are subject to review for
impairment (see Note 3(j)(i)).
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),
contingent consideration in a business combination 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 equity instruments that do not have a
quoted price in an active market for identical instruments whose fair values otherwise cannot be reliably
measured are measured at cost.
Other financial liabilities categorised as fair value through profit or loss are subsequently measured at
their fair values with the gain or loss recognised in profit or loss.
iii)

Financial guarantee contracts


A financial guarantee contract is a contract that requires the issuer to make specified payments to
reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due in
accordance with the original or modified terms of a debt instrument.
Fair value arising from financial guarantee contracts are classified as deferred income and is amortised
to profit or loss using a straight-line method over the contractual period or, when there is no specified
contractual period, recognised in profit or loss upon discharge of the guarantee. When settlement of a
financial guarantee contract becomes probable, an estimate of the obligation is made. If the carrying
value of the financial guarantee contract is lower than the obligation, the carrying value is adjusted to the
obligation amount and accounted for as a provision.

iv)

Regular way purchase or sale of financial assets


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

ANNUAL REPORT 2015 | 47

NOTES TO THE FINANCIAL STATEMENTS (CONTD)

31st December 2015


3.

SIGNIFICANT ACCOUNTING POLICIES (CONTD)


c)

Financial instruments (contd)


iv)

Regular way purchase or sale of financial assets (contd)


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

v)

the recognition of an asset to be received and the liability to pay for it on the trade date, and
derecognition of an asset that is sold, recognition of any gain or loss on disposal and the recognition
of a receivable from the buyer for payment on the trade date.

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 control of the asset is not retained or substantially all of the risks
and rewards of ownership of the financial asset are transferred to another party. 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 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, cancelled or expires. On derecognition of a financial liability, the difference
between the carrying amount of the financial liability extinguished or transferred to another party and
the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in
profit or loss.

d)

Property, plant and equipment


i)

Recognition and measurement


Items of property, plant and equipment are measured at cost less any accumulated depreciation and any
accumulated impairment losses.
Cost includes expenditures that are directly attributable to the acquisition of the asset and any other
costs directly attributable to bringing the asset to working condition for its intended use, and the costs
of dismantling and removing the items and restoring the site on which they are located. The cost of selfconstructed assets also includes the cost of materials and direct labour. For qualifying assets, borrowing
costs are capitalised in accordance with the accounting policy on borrowing costs. Cost also may include
transfers from equity of any gain or loss on qualifying cash flow hedges of foreign currency purchases of
property, plant and equipment.
Purchased software that is integral to the functionality of the related equipment is capitalised as part of
that equipment.
When significant parts of an item of property, plant and equipment have different useful lives, they are
accounted for as separate items (major components) of property, plant and equipment.
The gain or loss on disposal of an item of property, plant and equipment is determined by comparing the
proceeds from disposal with the carrying amount of property, plant and equipment and is recognised net
within other income and other expenses respectively in profit or loss.

ii)

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

48 | CN ASIA CORPORATION BHD (399442-A)

Notes to the FiNaNcial statemeNts (coNtd)

31st december 2015

3.

SIGNIFICANT ACCOUNTING POLICIES (CONTD)


d)

Property, plant and equipment (contd)


iii)

Depreciation
Depreciation is based on the cost of an asset less its residual value. Significant components of individual
assets are assessed, and if a component has a useful life that is different from the remainder of that asset,
then that component are depreciated separately.
Depreciation is recognised in profit or loss on a reducing balance method over the estimated useful lives
of each component of an item of property, plant and equipment from the date that they are available for
use. Leased assets are depreciated over the shorter of the lease term and their useful lives unless it is
reasonably certain that the Group will obtain ownership by the end of the lease term. Freehold land is
not depreciated. Property, plant and equipment under construction are not depreciated until the assets
are ready for their intended use. The principal annual rates of depreciation for the property, plant and
equipment are as follows :Rate %
Long-term leasehold land
Building
Motor vehicles
Plant and machinery
Furniture and fittings

86 - 99 years
84 - 92.5 years
5 - 10
5 - 10
20

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

Leased assets
i)

Finance lease
Leases in terms of which the Group or the Company assumes substantially all the risks and rewards of
ownership are classified as finance leases. Upon initial recognition, the leased asset is measured at an
amount equal to the lower of its fair value and present value of the minimum lease payments. Subsequent
to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that
asset.
Minimum lease payments made under finance leases are apportioned between the finance expense and the
reduction of the outstanding liability. The finance expense is allocated to each period during the lease term
so as to produce a constant periodic rate of interest on the remaining balance of the liability. Contingent
lease payments are accounted for by revising the minimum lease payments over the remaining term of the
lease when the lease adjustment is confirmed.
Leasehold land which in substance is a finance lease is classified as property, plant and equipment, or as
investment property if held to earn rental income or for capital appreciation or for both.

ii)

Operating lease
Leases, where the Group or the Company does not assume substantially all the risks and rewards of
ownership are classified as operating leases and, 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 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.
ANNUAL REPORT 2015 | 49

NOTES TO THE FINANCIAL STATEMENTS (CONTD)

31st December 2015


3.

SIGNIFICANT ACCOUNTING POLICIES (CONTD)


f)

Intangible assets
i)

Goodwill
Goodwill arises on business combinations is measured at cost less any accumulated impairment losses.
In respect of equity-accounted associates and joint venture, the carrying amount of goodwill is included in
the carrying amount of the investment and an impairment loss on such an investment is not allocated to
any asset, including goodwill, that forms part of the carrying amount of the equity accounted associates
and joint venture.

ii)

Other intangible assets


Other intangible assets, other than goodwill, that are acquired by the Group, which have finite useful lives,
are measured at cost less accumulated amortisation and any accumulated impairment losses.

iii)

Subsequent expenditure
Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in
the specific asset to which it relates. All other expenditure, including expenditure on internally generated
goodwill and brands, is recognised in profit or loss as incurred.

g)

Investment property
i)

Investment property carried at fair value


Investment properties are properties which are owned or held under a leasehold interest to earn rental
income or for capital appreciation or for both, but not for sale in the ordinary course of business, use in the
production or supply of goods or services or for administrative purposes.
Investment properties are measured initially at cost and subsequently at fair value with any changes
therein recognized in profit or loss for the period in which they arise. Where the fair value of the investment
property under construction is not reliably determinable, the investment property under construction is
measured at cost until either its fair value becomes reliably determinable or construction is complete,
whichever is earlier.
Cost includes expenditure that is directly attributable to the acquisition of the investment property. The
cost of self-constructed investment property includes the cost of materials and direct labour, any other
costs directly attributable to bringing the investment property to a working condition for their intended use
and capitalised borrowing costs.
An investment property is derecognised on its disposal, or when it is permanently withdrawn from use
and no future economic benefits are expected from its disposal. The difference between the net disposal
proceeds and the carrying amount is recognised in profit or loss in the period in which the item is
derecognised.

ii)

Reclassification to /from investment property


When an item of property, plant and equipment is transferred to investment property following a change in
its use, any difference arising at the date of transfer between the carrying amount of the item immediately
prior to transfer and its fair value is recognised directly in equity as a revaluation of property, plant and
equipment. However, if a fair value gain reverses a previous impairment loss, the gain is recognised
in profit or loss. Upon disposal of an investment property, any surplus previously recorded in equity is
transferred to retained earnings; the transfer is not made through profit or loss.
When the use of a property changes such that it is reclassified as property, plant and equipment or
inventories, its fair value at the date of reclassification becomes its cost for subsequent accounting.

50 | CN ASIA CORPORATION BHD (399442-A)

Notes to the FiNaNcial statemeNts (coNtd)

31st december 2015

3.

SIGNIFICANT ACCOUNTING POLICIES (CONTD)


h)

Inventories
Inventories are measured at the lower of cost and net realisable value.
The cost of inventories is calculated using the weighted average cost formula, and includes expenditure incurred
in acquiring the inventories, production or conversion costs and other costs incurred in bringing them to their
existing location and condition. In the case of work-in-progress and finished goods, cost includes an appropriate
share of production overheads based on normal operating capacity.
Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of
completion and the estimated costs necessary to make the sale.

i)

Cash and cash equivalents


Cash and cash equivalents consists of cash on hand, balances and deposits with banks and highly liquid
investments which have an insignificant risk of changes in fair value with original maturities of three months
or less, and are used by the Group and the Company in the management of their short term commitments. For
the purpose of the statement of cash flows, cash and cash equivalents are presented net of bank overdrafts and
pledged deposits.

j)

Impairment
i)

Financial assets
All financial assets (except for financial assets categorised as fair value through profit or loss, investment
in subsidiaries and investment in associates and joint venture) are assessed at each reporting date whether
there is any objective evidence of impairment as a result of one or more events having an impact on the
estimated future cash flows of the asset. Losses expected as a result of future events, no matter how
likely, are not recognised. For an investment in an equity instrument, a significant or prolonged decline in
the fair value below its cost is an objective evidence of impairment. If any such objective evidence exists,
then the impairment loss of the financial asset is estimated.
An impairment loss in respect of loans and receivables and held-to-maturity investments is recognised
in profit or loss and is measured as the difference between the 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 payment 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
available for sale is not reversed through profit or loss.
If, in a subsequent period, the fair value of a debt instrument increases and the increase can be objectively
related to an event occurring after the impairment loss was recognised in profit or loss, the impairment
loss is reversed, to the extent that the 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.

ANNUAL REPORT 2015 | 51

NOTES TO THE FINANCIAL STATEMENTS (CONTD)

31st December 2015


3.

SIGNIFICANT ACCOUNTING POLICIES (CONTD)


j)

Impairment (contd)
ii)

Other assets
The carrying amounts of other assets (except for inventories, amount due from contract customers,
deferred tax asset, assets arising from employee benefits, investment property measured at fair value
and non-current assets (or disposal groups) classified as held for sale) are reviewed at the end of each
reporting period to determine whether there is any indication of impairment. If any such indication exists,
then the assets recoverable amount is estimated. For goodwill and intangible assets that have indefinite
useful lives or that are not yet available for use, the recoverable amount is estimated each period at the
same time.
For the purpose of impairment testing, assets are grouped together into the smallest group of assets
that generates cash inflows from continuing use that are largely independent of the cash inflows of other
assets or cash-generating units. Subject to an operating segment ceiling test, for the purpose of goodwill
impairment testing, cash-generating units to which goodwill has been allocated are aggregated so that
the level at which impairment testing is performed reflects the lowest level at which goodwill is monitored
for internal reporting purposes. The goodwill acquired in a business combination, for the purpose of
impairment testing, is allocated to a cash-generating unit or a group of cash-generating units that are
expected to benefit from the synergies of the combination.
The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair
value less costs of disposal. In assessing value in use, the estimated future cash flows are discounted to
their present value using a pre-tax discount rate that reflects current market assessments of the time
value of money and the risks specific to the asset or cash-generating unit.
An impairment loss is recognised if the carrying amount of an asset or its related cash-generating unit
exceeds its estimated recoverable amount.
Impairment losses are recognised in profit or loss. Impairment losses recognised in respect of cashgenerating units are allocated first to reduce the carrying amount of any goodwill allocated to the cashgenerating unit (group of cash-generating units) and then to reduce the carrying amounts of the other
assets in the cash-generating unit (groups of cash-generating units) on a pro rata basis.
An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses
recognised in prior periods are assessed at the end of each reporting period for any indications that the
loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in
the estimates used to determine the recoverable amount since the last impairment loss was recognised.
An impairment loss is reversed only to the extent that the assets carrying amount does not exceed the
carrying amount that would have been determined, net of depreciation or amortisation, if no impairment
loss had been recognised. Reversals of impairment losses are credited to profit or loss in the financial year
in which the reversals are recognised.

k)

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

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

ii)

Ordinary shares
Ordinary shares are classified as equity.

l)

Employee benefits
i)

Short-term employee benefits


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

52 | CN ASIA CORPORATION BHD (399442-A)

Notes to the FiNaNcial statemeNts (coNtd)

31st december 2015

3.

SIGNIFICANT ACCOUNTING POLICIES (CONTD)


l)

Employee benefits (contd)


ii)

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

iii)

Defined contribution plans


As required by law, companies in Malaysia make contributions to state pension scheme, the Employees
Provident Fund (EPF). Such contributions are recognized as an expense in the income statement as
incurred.

iv)

Termination benefits
Termination benefits are expensed at the earlier of when the Group can no longer withdraw the offer of
those benefits and when the Group recognises costs for a restructuring. If benefits are not expected to be
settled wholly within 12 months of the end of the reporting period, then they are discounted.

m)

Provisions
A provision is recognised if, as a result of a past event, the Group has a present legal or constructive obligation
that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the
obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects
current market assessments of the time value of money and the risks specific to the liability. The unwinding of
the discount is recognised as finance cost.

n)

Revenue and other income


i)

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

ii)

Construction revenue
Revenue from contract work-in-progress is recognised on the percentage of completion method when the
outcome of the contracts can be reliably estimated. The percentage of completion basis is computed based
on proportion of which the contract costs incurred for work performed to-date bear to the estimated total
contract cost for each contract respectively.

iii)

Rental income
Rental income from investment property is recognised in profit or loss on a straight-line basis over the
term of the lease. Lease incentives granted are recognised as an integral part of the total rental income,
over the term of the lease. Rental income from sub-leased property is recognised as other income.

iv)

Interest income
Interest income is recognised as it accrues using the effective interest method in profit or loss except for
interest income arising from temporary investment of borrowings taken specifically for the purpose of
obtaining a qualifying asset which is accounted for in accordance with the accounting policy on borrowing
costs.

ANNUAL REPORT 2015 | 53

NOTES TO THE FINANCIAL STATEMENTS (CONTD)

31st December 2015


3.

SIGNIFICANT ACCOUNTING POLICIES (CONTD)


n)

Revenue and other income (contd)


v)

Management fees
Management fees are recognised when the services are rendered.

o)

Borrowing costs
Borrowing costs that are not directly attributable to the acquisition, construction or production of a qualifying
asset are recognised in profit or loss using the effective interest method.
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are
assets that necessarily take a substantial period of time to get ready for their intended use or sale, are capitalised
as part of the cost of those assets.
The capitalisation of borrowing costs as part of the cost of a qualifying asset commences when expenditure
for the asset is being incurred borrowing costs are being incurred and activities that are necessary to prepare
the asset for its intended use or sale are in progress. Capitalisation of borrowing costs is suspended or ceases
when substantially all the activities necessary to prepare the qualifying asset for its intended use or sale are
interrupted or completed.
Investment income earned on the temporary investment of specific borrowings pending their expenditure on
qualifying assets is deducted from the borrowing costs eligible for capitalisation.

p)

Income tax
Income tax expense comprises current and deferred tax. Current tax and deferred tax are recognised in profit or
loss except to the extent that it relates to a business combination or items recognised directly in equity or other
comprehensive income.
Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates
enacted or substantively enacted by the end of the reporting period, and any adjustment to tax payable in respect
of previous financial years.
Deferred tax is recognised using the liability method, providing for temporary differences between the carrying
amounts of assets and liabilities in the statement of financial position and their tax bases. Deferred tax is not
recognised for the following temporary differences: the initial recognition of goodwill, the initial recognition of
assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor
taxable profit or loss. Deferred tax is measured at the tax rates that are expected to be applied to the temporary
differences when they reserve, based on the laws that have been enacted or substantively enacted by the end of
the reporting period.
Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities
and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on
different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets
and liabilities will be realised simultaneously.
A deferred tax asset is recognised to the extent that is probable that future taxable profits will be available
against which the temporary difference can be utilised. Deferred tax assets are reviewed at the end of each
reporting period and are reduced to the extent that it is no longer probable that the related tax benefit will be
realised.
Unutilised reinvestment allowance and investment tax allowance, being tax incentives that is not a tax base of
an asset, is recognised as a deferred tax asset to the extent that it is probable that future taxable profits will be
available against which the unutilised tax incentive can be utilised.

54 | CN ASIA CORPORATION BHD (399442-A)

Notes to the FiNaNcial statemeNts (coNtd)

31st december 2015

3.

SIGNIFICANT ACCOUNTING POLICIES (CONTD)


q)

Discontinued operations
A discontinued operation is a component of the Groups business that represents a separate major line of
business or geographical area of operations that has been disposed of or is held for sale or distribution, or is
a subsidiary acquired exclusively with a view to resale. Classification as a discontinued operation occurs upon
disposal or when the operation meets the criteria to be classified as held for sale, if earlier. When an operation
is classified as a discontinued operation, the comparative statement of profit or loss and other comprehensive
income is re-presented as if the operation had been discontinued from the start of the comparative period.

r)

Earnings per ordinary share


The Group presents basic and diluted earnings per share data for its ordinary shares (EPS).
Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the
weighted average number of ordinary shares outstanding during the period, adjusted for own shares held.
Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted
average number of ordinary shares outstanding , adjusted for own shares held, for the effects of all dilutive
potential ordinary shares, which comprise convertible notes and share options granted to employees.

s)

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

t)

Contingencies
i)

Contingent liabilities
Where it is not probable that an outflow of economic benefits will be required, or the amount cannot be
estimated reliably, the obligation is not recognised in the statements of financial position and is disclosed as
a contingent liability, unless the probability of outflow of economic benefits is remote. Possible obligations,
whose existence will only be confirmed by the occurrence or non-occurrence of one or more future events,
are also disclosed as contingent liabilities unless the probability of outflow of economic benefits is remote.

ii)

Contingent assets
When an inflow of economic benefit of an asset is probable where it arises from past events and where
existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future
events not wholly within the control of the entity, the asset is not recognized in the statements of financial
position but is being disclosed as a contingent asset. When the inflow of economic benefit is virtually
certain, then the related asset is recognised.

u)

Fair value measurements


Fair value of an asset or a liability, except for share-based payment and lease transactions, is determined as
the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between
market participants at the measurement date. The measurement assumes that the transaction to sell the asset
or transfer the liability takes place either in the principal market or in the absence of a principal market, in the
most advantageous market.
For non-financial asset, the fair value measurement takes into account a market participants ability to generate
economic benefits by using the asset in its highest and best use or by selling it to another market participant that
would use the asset in its highest and best use.

ANNUAL REPORT 2015 | 55

NOTES TO THE FINANCIAL STATEMENTS (CONTD)

31st December 2015


3.

SIGNIFICANT ACCOUNTING POLICIES (CONTD)


u)

Fair value measurements (contd)


When measuring the fair value of an asset or a liability, the Group uses observable market data as far as possible.
Fair value are categorised into different levels in a fair value hierarchy based on the input used in the valuation
technique as follows : Level 1 :

quoted prices (unadjusted) in active markets for identical assets or liabilities that the Group can access
at the measurement date.

Level 2 :

inputs other than quoted prices included within Level 1 that are observable for the asset or liability,
either directly or indirectly.

Level 3 :

unobservable inputs for the asset or liability.

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

4.

PROPERTY, PLANT AND EqUIPMENT

Group
2015

Long term
leasehold
land
RM

Buildings
RM

Motor
vehicles, plant,
machinery,
furniture
and fittings,
and equipment
RM

7,162,083
521,286

7,228,000
120,000

37,657,196
56,864
(1,894,349)
53,652

694,938
(694,938)

52,742,217
56,864
(1,894,349)
-

7,683,369

7,348,000

62,315
35,935,678

62,315
50,967,047

Capital
work-inprogress
RM

Total
RM

At cost
Balance at 1/1/15
Additions
Disposal /Written off
Reclassification
Foreign currency
translation
Balance at 31/12/15
Accumulated Depreciation
Balance at 1/1/15
Charge for the year
Deletion
Foreign currency
translation
Balance at 31/12/15

749,523
83,280
-

602,334
86,047
-

23,244,577
907,262
(917,494)

24,596,434
1,076,589
(917,494)

832,803

688,381

48,815
23,234,345

48,815
24,804,344

Impairment losses
Balance at 1/1/15
Deletion
Balance at 31/12/15
Net Book Value

6,850,566

6,659,619

651,836
(651,836)
12,701,333

651,836
(651,836)
26,162,703

56 | CN ASIA CORPORATION BHD (399442-A)

Notes to the FiNaNcial statemeNts (coNtd)

31st december 2015

4.

PROPERTY, PLANT AND EqUIPMENT (CONTD)

Group
2014

Long term
leasehold
land
RM

Buildings
RM

Motor
vehicles, plant,
machinery,
furniture
and fittings,
and equipment
RM

7,162,083
-

7,228,000
-

37,415,303
459,218
(269,565)

173,164
521,774
-

51,978,550
980,992
(269,565)

7,162,083

7,228,000

52,240
37,657,196

694,938

52,240
52,742,217

Capital
work-inprogress
RM

Total
RM

At cost
Balance at 1/1/14
Additions
Disposal /Written off
Foreign currency
translation
Balance at 31/12/14
Accumulated Depreciation
Balance at 1/1/14
Charge for the year
Deletion
Foreign currency
translation
Balance at 31/12/14

666,243
83,280
-

516,286
86,048
-

22,450,076
1,045,461
(242,757)

23,632,605
1,214,789
(242,757)

749,523

602,334

(8,203)
23,244,577

(8,203)
24,596,434

Impairment losses
Balance at 1/1/14
Charge for the year
Balance at 31/12/14
Net Book Value

6,412,560

6,625,666

651,836
651,836
13,760,783

694,938

651,836
651,836
27,493,947

i)

The long term leasehold land have unexpired lease period of 76 years expiring in year 2091.

ii)

The leasehold land and buildings at carrying amounts of RM13,510,185 (2014 RM13,038,226) have been pledged
to licensed banks as security for credit facilities granted to the Group.

iii)

The carrying amount of property, plant and equipment at the reporting date held under finance lease is as
follows:Group

Motor vehicles
Furniture, fittings and equipment

2015
RM

2014
RM

571,019
571,019

713,774
10,930
724,704

ANNUAL REPORT 2015 | 57

NOTES TO THE FINANCIAL STATEMENTS (CONTD)

31st December 2015


5.

INVESTMENT IN SUBSIDIARY COMPANIES


Company

Unquoted shares, at cost


Less : Impairment losses

2015
RM

2014
RM

28,298,215
(13,881,754)
14,416,461

28,298,215
(13,881,754)
14,416,461

Details of the subsidiary companies are as follows : -

Name of subsidiary

Country of
Incorporation

Principal activities

Effective equity
ownership Interest
2015
2014
%
%

Direct subsidiary
Asia Tank Containers
(Malaysia) Sdn. Bhd.

Malaysia

Manufacturing, repairing
and renting of transportable
containers for hazardous
chemicals

100

100

Chip Ngai Engineering Works


Sdn. Bhd.

Malaysia

Manufacturing of tanks and


related products, specialized
engineering and fabrication works

100

100

CN Asia Capital Sdn. Bhd.

Malaysia

Investment holding

100

100

Douwin Sdn. Bhd.

Malaysia

Investment holding

100

100

Manufacturing and trading of


tanks for specialised industries

100

100

Indirect subsidiary
Zhuhai CN Engineering Works
Co., Ltd. (*)

Peoples Republic
of China

(*) The financial statements of the subsidiary company were audited by a firm other than Kreston John & Gan
i)

The auditors report of subsidiary company that was subject to the following Basis for Qualified of Opinion : Chip Ngai Engineering Works Sdn. Bhd.

The Company has prepared its financial statements by applying the going concern assumption, notwithstanding
that the Company incurred accumulated losses of RM7,433,655 as at 31st December 2015, and as of that date,
the Companys current liabilities exceeded its current assets by RM26,746,898, thereby indicating the existence
of a material uncertainty which many cast significant doubt about the Companys ability to continue as a going
concern. The ability of the Company to continue as a going concern is dependent on the future profitability of the
Company in order to enable it to meet its obligations and liabilities as and when they fall due.

58 | CN ASIA CORPORATION BHD (399442-A)

Notes to the FiNaNcial statemeNts (coNtd)

31st december 2015

5.

INVESTMENT IN SUBSIDIARY COMPANIES (CONTD)


ii)

The auditors report of subsidiary companies that were subject to Emphasis of Matters :Asia Tank Containers (Malaysia) Sdn. Bhd.

The auditors draw attention to the financial statements which discloses the premise upon which the company has
prepared its financial statements by applying the going concern assumption, notwithstanding that the company
incurred accumulated losses of RM6,097,408 as at 31st December 2015, and as of that date, the companys
current liabilities exceeded its current assets by RM1,097,408, thereby indicating the existence of a material
uncertainty which may cast significant doubt about the companys ability to continue as a going concern. The
ability of the company to continue as a going concern is dependent on the continuous financial support from
holding company in order to enable it to meet its obligations and liabilities as and when they fall due.
CN Asia Capital Sdn. Bhd.

The auditors draw attention to the financial statements which discloses the premise upon which the Company has
prepared its financial statements by applying the going concern assumption, notwithstanding that the Company
incurred accumulated losses of RM40,336 as at 31st December 2015, and as of the date, the Companys current
liabilities exceeded its current asset by RM40,334, thereby indicating the existence of a material uncertainty
which may cast significant doubt about the Companys ability to continue as a going concern. The ability of the
Company to continue as a going concern is dependent on the continuous financial support from the holding
company in order to enable it to meet its obligations and liabilities as and when they fall due.

6.

INVESTMENT IN ASSOCIATED COMPANY


Group

Unquoted shares at cost


Groups share of post-acquisition losses

2015
RM

2014
RM

159,301
(143,239)
16,062

159,301
(129,459)
29,842

Details of the associated company are as follows : -

Name of company

PICN Engineering Sdn. Bhd.

Country of
Incorporation

Malaysia

Principal activities

Fabrication and trading of tanks for


specialised industries

Effective equity
ownership interest
2015
2014
%
%
49

49

ANNUAL REPORT 2015 | 59

NOTES TO THE FINANCIAL STATEMENTS (CONTD)

31st December 2015


6.

INVESTMENT IN ASSOCIATED COMPANY (CONTD)


The following table summarises the financial information of the associated company, adjusted for any differences in
accounting policies and reconciles the information to the carrying amount of the Groups interest in the associate : Group
2015
RM

2014
RM

As at 31st December
Non-current assets
Current assets
Current liabilities
Net assets

24
34,757
(2,000)
32,781

30
63,094
(2,221)
60,903

Year ended 31st December


Profit /(Loss) for the year, representing total comprehensive loss for the year

(28,122)

318

156

16,062

29,842

(13,780)

156

Included in total comprehensive loss is :


Revenue
Reconcile of net assets to carrying amount :
As at 31st December
Groups share of net assets
Groups share of results :
Year ended 31st December
Groups share of total comprehensive income /(loss)
Other information :
Dividends received

The associated company does not have any significant restriction on its ability to transfer fund to the Company.

60 | CN ASIA CORPORATION BHD (399442-A)

Notes to the FiNaNcial statemeNts (coNtd)

31st december 2015

7.

INTANGIBLE ASSETS

Group

Goodwill
RM

Development
costs
RM

Total
RM

136,136
(136,136)
-

409,378
409,378

545,514
(136,136)
409,378

59,527
(59,527)
-

409,378
409,378
-

468,905
(59,527)
409,378
-

136,136
136,136

409,378
409,378

545,514
545,514

59,527
59,527
76,609

409,378
409,378
-

468,905
468,905
76,609

2015
Cost
At 1st January 2015
Addition
Written off
At 31st December 2015
Accumulated impairment and amortisation
At 1st January 2015
Amortisation for the year
Deletion
At 31st December 2015
Net Book Value
2014
Cost
At 1st January 2014
Addition
At 31st December 2014
Accumulated impairment and amortisation
At 1st January 2014
Amortisation for the year
At 31st December 2014
Net Book Value
i)

Development costs
The Directors are in the opinion that the future economic benefits of the research and development expenditure
can be determined with reasonable certainty and accordingly have capitalised these expenditure.

ii)

Goodwill on consolidation
Goodwill acquired in the business combination is, from the acquisition date, allocated to each of the Groups
cash-generating units that are expected to benefit from the synergies of the combination.

ANNUAL REPORT 2015 | 61

NOTES TO THE FINANCIAL STATEMENTS (CONTD)

31st December 2015


8.

INVENTORIES
Group

At cost
Raw materials
Work-in-progress
Finished goods
Consumbles

2015
RM

2014
RM

450,834
2,214,440
950,797
298,502
3,914,573

664,162
2,070,971
765,649
461,811
3,962,593

The cost of inventories recognised as an expense during the financial year in the Group amounted to RM5,282,390 (2014
RM5,687,309).
The cost of inventories written off and recognised as expenses during the financial year in the Group amounted to
RM4,991 (2014 RM84,432).

9.

TRADE RECEIVABLES
Group

Trade receivables
Less : Allowance for impairment losses

2015
RM

2014
RM

2,147,911
(111,409)
2,036,502

3,643,937
(113,209)
3,530,728

The reconciliation of the allowance account is as follows : Group

At beginning of the financial year


(Additional)/Reversal of impairment losses
At the end of the financial year

2015
RM

2014
RM

113,209
(1,800)
111,409

95,209
(18,000)
113,209

The normal credit terms of trade receivables range from cash on delivery to 60 days (2014 14 to 60 days). Other terms
are assessed and approved on a case-by-case basis.
The foreign currency exposures of trade receivables of the Group are as follows :-

Brunei Dollar
Singapore Dollar

62 | CN ASIA CORPORATION BHD (399442-A)

2015
RM

2014
RM

109,410
-

650,444
1,328,289

Notes to the FiNaNcial statemeNts (coNtd)

31st december 2015

10.

AMOUNT DUE FROM CONTRACT CUSTOMERS


Group

Aggregate cost incurred to-date


Balance at 1st January
Addition during the financial year
Less: adjustment for completed project
Balance at 31st December
Add: Attributable profit
Balance at 1st January
Recognised during the financial year
Less: Adjustment for completed project
Balance at 31st December
Less: Progress billings
Balance at 1st January
Addition during the financial year
Less: Adjustment for completed project
Balance at 31st December
Presented as: Amount due from contract customers

11.

2015
RM

2014
RM

6,694,419
186,558
6,880,977
(4,273,843)
2,607,134

3,717,773
3,371,222
7,088,995
(394,576)
6,694,419

244,163
(59,917)
184,246
(13,549)
170,697

935,394
(688,007)
247,387
(3,224)
244,163

(5,000,260)
(1,330,035)
(6,330,295)
4,260,295
(2,070,000)
707,831

(1,213,900)
(4,184,160)
(5,398,060)
397,800
(5,000,260)
1,938,322

707,831

1,938,322

OTHER RECEIVABLES, DEPOSITS AND PREPAYMENTS


Group

Other receivables
Deposits
Prepayments

Company

2015
RM

2014
RM

2015
RM

2014
RM

72,845
138,457
66,763
278,065

323,396
152,308
330,930
806,634

1,000
1,000

1,000
69,533
70,533

The foreign currency exposures of other receivables, deposits and prepayments of the Group are as follows :-

EURO
US Dollar

2015
RM

2014
RM

25,501
5,921

8,026
5,826

ANNUAL REPORT 2015 | 63

NOTES TO THE FINANCIAL STATEMENTS (CONTD)

31st December 2015


12.

AMOUNTS DUE FROM SUBSIDIARY COMPANIES


Company

Amount due from subsidiaries


- Asia Tank Containers (Malaysia) Sdn. Bhd.
- Chip Ngai Engineering Works Sdn. Bhd.
- CN Asia Capital Sdn. Bhd.
- Douwin Sdn. Bhd.
Less : Allowance account

2015
RM

2014
RM

4,697,815
14,223,303
38,521
715,401
19,675,040
(4,732,594)
14,942,446

4,697,815
14,446,928
34,779
693,903
19,873,425
(4,732,594)
15,140,831

The reconciliation of the allowance account is as follows : Group

At beginning of the financial year


Impairment losses recognised
At the end of the financial year

2015
RM

2014
RM

(4,732,594)
(4,732,594)

(1,582,800)
(3,149,794)
(4,732,594)

The amounts due from subsidiary companies are in respect of advances and payments made on behalf, which are nontrade in nature, unsecured and repayable on demand.

13.

DEPOSIT WITH A LICENSED BANK


The deposit with a licensed bank has been pledged to a licensed bank for credit facilities granted to a subsidiary
company.
The interest rate of deposit with a licensed bank that was effective during the financial year is Nil (2014 3.30%) per
annum.
The deposit with a licensed bank has maturity period of 1 year (2014 1 year).

14.

SHARE CAPITAL
Group and Company
2015
2014
Authorised :
50,000,000 ordinary shares of RM1 each

RM50,000,000

RM50,000,000

Issued and fully paid :


45,382,500 ordinary shares of RM1 each

RM45,382,500

RM45,382,500

The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one
vote per share at meetings of the Company. All ordinary shares rank equally with regard to the Companys residual
assets.

64 | CN ASIA CORPORATION BHD (399442-A)

Notes to the FiNaNcial statemeNts (coNtd)

31st december 2015

15.

RESERVES
Group

Non-distributable
Share premium
Foreign currency translation reserve

Distributable
Accumulated losses

2015
RM

2014
RM

3,491,965
187,492

3,491,965
102,129

3,679,457

3,594,094

(31,795,852)

(25,511,397)

(28,116,395)

(21,917,303)

Company

Non-distributable
Share premium
Distributable
Accumulated losses

2015
RM

2014
RM

3,491,965

3,491,965

(19,563,979)

(19,335,412)

(16,072,014)

(15,843,447)

Share premium
The share premium is not distributable by way of dividends and may be utilised in the manner set out in Section 60(3) of
the Companies Act 1965.
Translation reserve
The translation reserve comprises all foreign currency differences arising from the translation of the financial
statements of a foreign entity.

ANNUAL REPORT 2015 | 65

NOTES TO THE FINANCIAL STATEMENTS (CONTD)

31st December 2015


16.

BORROWINGS
Group
2015
RM

2014
RM

395,744
395,744

488,501
488,501

5,974,000
4,981,314
92,757
11,048,071

6,953,000
4,409,418
97,607
11,460,025

635,000
195,562
830,562
11,878,633

320,000
193,019
513,019
11,973,044

5,974,000
4,981,314
488,501
11,443,815

6,953,000
4,409,418
586,108
11,948,526

635,000
195,562
830,562
12,274,377

320,000
193,019
513,019
12,461,545

Non-current liabilities
Secured
Finance lease liabilities

Current liabilities
Secured
Bankers acceptance
Bank overdrafts
Finance lease liabilities

Unsecured
Bankers acceptance
Bank overdrafts
Total current liabilities

Total borrowings
Secured
Bankers acceptance (Note 17)
Bank overdrafts (Note 17)
Finance lease liabilities (Note 18)

Unsecured
Bankers acceptance (Note 17)
Bank overdrafts (Note 17)

Effective interest rates per annum on the borrowings of the Group are as follows : Group

Bankers acceptance
Bank overdrafts
Finance lease liabilities

66 | CN ASIA CORPORATION BHD (399442-A)

2015
RM

2014
RM

3.50 - 4.10
8.35 - 9.35
4.55 - 4.70

3.50 - 4.10
8.10 - 9.10
4.55 - 7.78

Notes to the FiNaNcial statemeNts (coNtd)

31st december 2015

17.

BANKERS ACCEPTANCE AND BANK OVERDRAFTS


Group
Secured
The bankers acceptance and bank overdraft are secured by the following : i)

First party legal charge over leasehold land and buildings owned by Chip Ngai Engineering Works Sdn. Bhd.

ii)

Third party charge over leasehold land owned by Douwin Sdn. Bhd.

iii)

Negative pledged over assets owned by Chip Ngai Engineering Works Sdn. Bhd.

iv)

Specific debenture over properties and fixtures and fittings attached to the properties owned by Chip Ngai
Engineering Works Sdn. Bhd.

v)

Corporate guarantee by the Company

Unsecured
The bankers acceptance at amount of RM635,000 (2014 RM320,000) and bank overdraft at amount of RM195,562 (2014
RM193,109) are on clean basis.
The bankers acceptance bears interest rate of ranging 3.50% to 4.10% (2014 3.50% to 4.10%) per annum.
The bank overdraft bears interest at the rate of ranging 8.35% to 9.35% (2014 8.10% to 9.10%) per annum.

18.

FINANCE LEASE LIABILITIES


Group

Minimum lease payments : - not later than one year


- later than one year and not later than two years
- later than two years and not later than five years
- later than five years
Less : Future interest charges
Present value of finance lease liabilities

2015
RM

2014
RM

112,164
112,164
309,349
7,651
541,328
(52,827)
488,501

121,644
112,164
336,492
92,024
662,324
(76,216)
586,108

97,197
290,948
7,599
395,744

92,757
304,907
90,837
488,501

92,757
488,501

97,607
586,108

Repayable as follows : Non-current liabilities


- later than one year and not later than two years
- later than two years and not later than five years
- later than five years

Current liabilities
- not later than one year

ANNUAL REPORT 2015 | 67

NOTES TO THE FINANCIAL STATEMENTS (CONTD)

31st December 2015


18.

FINANCE LEASE LIABILITIES (CONTD)


The Group obtains finance lease facilities to finance its purchase of motor vehicles. The remaining finance lease terms
range from 5 to 6 years as at 31st December 2015. Implicit interest rates of the finance lease are fixed at the inception
of the finance lease arrangements, and the finance lease instalments are fixed throughout the finance lease period. The
Group has the option to purchase the assets at the end of the agreements. There are no significant restriction clauses
imposed on the finance lease arrangements.

19.

TRADE PAYABLES
Group
The normal credit terms of trade payables range from 30 to 90 days. However, the terms may vary upon negotiation with
the trade payables.
The foreign currency exposures of trade payables of the Group are as follows :-

Brunei Dollar
EURO
Singapore Dollar
US. Dollar

20.

2015
RM

2014
RM

75,988
93,796
942
7,084

80,000
400
6,460

OTHER PAYABLES AND ACCRUALS


Group

Other payables
Accruals

Company

2015
RM

2014
RM

2015
RM

2014
RM

1,762,320
178,079
1,940,399

260,571
334,761
595,332

38,006
22,260
60,266

78,489
22,260
100,749

The foreign currency exposures of other payables and accruals of the Group are as follows :-

Brunei Dollar
Chinese Renminbi
Singapore Dollar
US. Dollar

21.

2015
RM

2014
RM

85,869
19,013
222,035
140,397

AMOUNT DUE TO AN ASSOCIATED COMPANY


The amount due to an associated company is non-trade in nature, unsecured, interest free and repayable on demand.

68 | CN ASIA CORPORATION BHD (399442-A)

Notes to the FiNaNcial statemeNts (coNtd)

31st december 2015

22.

REVENUE
Group

Revenue
Sales of goods
Contract revenue
Tank rental revenue
Management fee

23.

Company

2015
RM

2014
RM

2015
RM

2014
RM

13,000,591
99,544
13,606
13,113,741

12,880,696
2,683,215
28,789
15,592,700

60,000
60,000

60,000
60,000

OTHER INCOME
Group

Gain on disposal of plant and equipment


Interest income
Insurance claims
Other income
Reversal of allowance for doubtful debts
Unrealised gain on foreign exchange

2015
RM

2014
RM

1,265
56,185
1,800
26,256
85,506

129,681
7,164
102,890
84,527
324,262

ANNUAL REPORT 2015 | 69

NOTES TO THE FINANCIAL STATEMENTS (CONTD)

31st December 2015


24.

LOSS BEFORE TAxATION


Group

Company

2015
RM

2014
RM

2015
RM

2014
RM

83,280

83,280

56,000
5,631
993,309
158,637

57,000
7,390
1,131,509
-

21,000
-

21,000
-

109,420
833,863
5,166
76,609
3,948

86,000
664,967
4,049
-

109,420
-

86,000
-

18,000

3,149,794
-

365,894
343,800
1,304
24,037
4,991
173,430
83,815
28,724
512,300
25,057

379,654
300,621
2,746
27,425
84,432
65,476
519,200
-

1,265
-

36,892
92,789
7,164
-

60,000

60,000

1,800
26,256

85,452

Loss before tax is arrived at after charging : Amortisation of long-term leasehold land
Auditors remuneration
- statutory audit
- other external auditor
Depreciation
Development cost written off
Directors remuneration
- Directors fee
- Directors emoluments
Empty cylinder rental
Goodwill written off
Hire of plant and machinery
Impairment loss on amount due from
subsidiaries
Impairment loss on trade receivables
Interest
- Bank overdrafts
- Bankers acceptance
- Bank guarantee
- Finance lease
Inventories written off
Loss on disposal of plant and equipment
Plant and equipment written off
Realised loss on foreign exchange
Rental of premises
Unrealised loss on foreign exchange
and after crediting :Gain on disposal of property, plant and
equipment
Gain on disposal of asset held for sale
Interest income
Management fee
Reversal of impairment loss on trade
receivables
Unrealised gain on foreign exchange

70 | CN ASIA CORPORATION BHD (399442-A)

Notes to the FiNaNcial statemeNts (coNtd)

31st december 2015

25.

EMPLOYEE BENEFITS ExPENSE


Group

Salaries, wages and other emoluments


Defined contribution plans
Social security costs
Other staff related expenses

Company

2015
RM

2014
RM

2015
RM

2014
RM

4,044,329
267,886
16,775
21,628
4,350,618

3,690,633
253,122
17,638
37,620
3,999,013

109,420
109,420

86,000
86,000

Included in employee benefits expense of the Group is executive directors remuneration excluding benefits-in-kind,
amounting to RM943,283 (2014 RM750,967) as disclosed in Note 26.

26.

DIRECTORS REMUNERATION
Group

Company

2015
RM

2014
RM

2015
RM

2014
RM

24,000
833,863

24,000
664,967

24,000
-

24,000
-

85,420
943,283
943,283

62,000
750,967
750,967

85,420
109,420
109,420

62,000
86,000
86,000

Directors of the Company


Executive directors
- Fees
- Other emoluments
Non-executive directors
- Fees
Total excluding benefits-in-kind

The number of directors of the Company and the subsidiary companies whose total remuneration during the year fell
within the following bands is analysed below : Number of directors
Group

Company

2015

2014

2015

2014

Directors of the Company


Executive directors :
- Below RM100,000
- RM100,000 - RM300,000
- RM300,001 - RM600,000
- Above RM600,000

1
1
-

1
1
-

1
-

1
-

Non-Executive directors :
- Below RM50,000
- Above RM50,000

4
-

3
-

4
-

3
-

ANNUAL REPORT 2015 | 71

NOTES TO THE FINANCIAL STATEMENTS (CONTD)

31st December 2015


27.

INCOME TAx ExPENSE


There is no tax provision due to the Group and the Company incurring business losses during the year.
Income tax is calculated at the Malaysian statutory tax rate of 25% of the estimated assessable profit for the year.
The numerical reconciliation between the effective tax rate and the applicable tax rate is as follows:Group

Applicable tax rate


Tax effects of :
- Non-allowable expenses
- Deferred tax assets not recognised
Effective tax rate

Company

2015
%

2014
%

2015
%

2014
%

(25)

(25)

(25)

(25)

3
22
-

7
18
-

25
-

25
-

Unabsorbed tax losses, capital allowances and unutilised reinvestment allowance of the Group which are available to
set-off against future chargeable income for which the tax effects have not been recognised in the financial statements
are shown below : Group

Unabsorbed tax losses


Unabsorbed capital allowances
Unutilised reinvestment allowance

2015
RM

2014
RM

25,033,600
6,901,000
8,907,000

20,660,000
6,386,000
8,907,000

The potential deferred tax benefits that have not been accounted for in the financial statements are as follows : -

Group

Balance at 1st January


2014
Arising /(Utilised) during
the year
Balance at 31st December
2014
Arising /(Utilised) during
the year
Reduction of tax rate
Balance at 31st December
2015

Unabsorbed
tax losses
RM

Unabsorbed
capital
allowances
RM

Unutilised
reinvestment
allowances
RM

Accelerated
capital
allowances
RM

Total
RM

4,434,000

1,471,000

2,226,750

(5,045,250)

3,086,500

731,000

125,500

(81,750)

774,750

5,165,000

1,596,500

2,226,750

(5,127,000)

3,861,250

1,093,400
(250,400)

128,750
(69,050)

(89,050)

458,750
186,850

1,680,900
(221,650)

6,008,000

1,656,200

2,137,700

(4,481,400)

5,320,500

No deferred tax asset has been recognised as the Group is unable to ascertain whether it is probable that taxable profit
of the subsidiary companies will be available against which the deductible temporary differences can be utilised.

72 | CN ASIA CORPORATION BHD (399442-A)

Notes to the FiNaNcial statemeNts (coNtd)

31st december 2015

28.

LOSS PER SHARE


Basic :
Basic loss per share is calculated by dividing the profit /(loss) for the year attributable to equity holders of the Company
by the weighted average number of ordinary shares in issue during the financial year.
Group

Loss for the year attributable to ordinary equity holders of the Company

2015
RM

2014
RM

(6,284,455)

(4,237,935)

Number of shares
Weighted average number of ordinary shares in issue
Basic loss per share (sen)

45,382,500

45,382,500

(13.85)

(9.34)

Diluted :
The basic and diluted earnings per share are equal as the Company has no dilutive potential ordinary shares.

29.

PURCHASE OF PROPERTY, PLANT AND EqUIPMENT


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

Purchase of property, plant and


equipment (Note 4)
Financed by finance lease arrangements
Cash payments on purchase of property,
plant and equipment

30.

Company

2015
RM

2014
RM

2015
RM

2014
RM

56,864
-

980,992
(185,000)

56,864

795,992

CASH AND CASH EqUIVALENTS


Cash and cash equivalents included in the cash flow statements comprise the following statements of financial position
amounts : Group

Deposit with a licensed bank


Cash and bank balances
Bank overdrafts
Less : Deposits pledged to licensed bank

Company

2015
RM

2014
RM

2015
RM

2014
RM

421,374
(5,176,876)
(4,755,502)
(4,755,502)

231,289
388,960
(4,602,437)
(3,982,188)
(231,289)
(4,213,477)

5,187
5,187
5,187

6,319
6,319
6,319

ANNUAL REPORT 2015 | 73

NOTES TO THE FINANCIAL STATEMENTS (CONTD)

31st December 2015


30.

CASH AND CASH EqUIVALENTS (CONTD)


The foreign currency exposures of cash and cash equivalents of the Group are as follows :-

Chinese Renminbi
EURO
Hong Kong Dollar
Seychelles Rupee
Singapore Dollar
South African Rand
Us. Dollar

31.

2015
RM

2014
RM

275,017
839
60,396
52,772

786
43
60,396
576
291
357,211

SEGMENTAL INFORMATION
Segment information is presented in respect of the Groups business and geographical segments. The primary format,
business segments, is based on the Groups management and internal reporting structure.
Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be
allocated on a reasonable basis. Unallocated items mainly comprise interest-earning assets and revenue, interestbearing loans, borrowings and expenses, and corporate assets and expenses.
Segment capital expenditure is the total cost incurred during the year to acquire segment assets that are expected to
be used for more than one year.
Business segments
The Group comprises the following main business segments : Manufacturing

Manufacture tanks and related products, engineering works and fabrication works

Trading

Repairing and renting of transportable containers for hazardous chemicals

Investment

Investment holdings

Management monitors the operating results of its business units separately for the purpose of making decisions about
resource allocation and performance assessment. Segment performance is evaluated based on operating profit or loss
which, in certain respects as explained in the table below, is measured differently from operating profit or loss in the
consolidated financial statements.

74 | CN ASIA CORPORATION BHD (399442-A)

31.

a)

3,602,950
4,700,358

33,717,151

Segment liabilities / Total liabilities

(184,807)
(184,807)
(184,807)

13,606
13,606

Trading
RM

31,563,969

(4,996,628)
1,265
(735,035)
(5,730,398)
(5,730,398)

13,100,135
13,100,135

Manufacturing
RM

Segment assets

Other information

Segment results
Interest income
Finance cost
Share of loss in associated company
Loss before taxation
Income tax expense
Loss for the year

Results

Revenue from external customers


Inter-segment revenue
Total revenue

Revenue

Business Segments

2015

Business Segment

SEGMENTAL INFORMATION (CONTD)

818,188

38,878,320

(253,880)
(253,880)
(253,880)

60,000
60,000

Investment
RM

(22,959,034)

(40,502,471)

(101,590)
(13,780)
(115,370)
(115,370)

(60,000)
(60,000)

Adjustments
and
eliminations
RM

16,276,663

33,542,768

(5,536,905)
1,265
(735,035)
(13,780)
(6,284,455)
(6,284,455)

13,113,741
13,113,741

Total
RM

Notes to the FiNaNcial statemeNts (coNtd)


31st december 2015

ANNUAL REPORT 2015 | 75

31.

a)

76 | CN ASIA CORPORATION BHD (399442-A)


173,430
-

25,057
(26,256)
(1,800)

56,864

Included in the measure of segment assets are : Additions to non-current assets other than financial instruments and
deferred tax assets
-

9,438
4,991
57

Trading
RM

51,562
990,608
158,637
83,758

Manufacturing
RM

Other information
Amortisation of long leasehold land
Depreciation of property, plant and equipment
Development cost written off
Inventories written off
Plant and equipment written off
Non-cash expenses
Loss on disposal of property, plant and equipment
Loss on unrealised foreign exchange
Non-cash income
Gain on unrealised foreign exchange
Reversal of impairment losses on trade receivables

Business Segments

2015

Business Segment (contd)

SEGMENTAL INFORMATION (CONTD)

Investment
RM

31,718
(6,737)
-

Adjustments
and
eliminations
RM

56,864

(26,256)
(1,800)

173,430
25,057

83,280
993,309
158,637
4,991
83,815

Total
RM

31st December 2015

NOTES TO THE FINANCIAL STATEMENTS (CONTD)

31.

a)

(4,006,131)
(4,006,131)

Profit /(Loss) before taxation


Income tax expense
Non-controlling interests
Profit /(Loss) for the year

3,787,877
4,700,478

36,031,708
32,428,907

Segment liabilities / Total liabilities

(79,320)
(79,320)

(79,320)
-

28,789
28,789

Trading
RM

Segment assets

Other information

(3,302,849)
7,164
(710,446)
-

15,563,911
15,563,911

Manufacturing
RM

Segment results
Interest income
Finance cost
Share of profit in associated company

Results

Revenue from external customers


Inter-segment revenue
Total revenue

Revenue

Business Segments

2014

Business Segment (contd)

SEGMENTAL INFORMATION (CONTD)

833,670

39,147,682

(3,277,809)
(3,277,809)

(3,277,809)
-

60,000
60,000

Investment
RM

(22,963,670)

(40,502,685)

3,125,325
3,125,325

3,125,169
156

(60,000)
(60,000)

Adjustments
and
eliminations
RM

14,999,385

38,464,582

(4,237,935)
(4,237,935)

(3,534,809)
7,164
(710,446)
156

15,592,700
15,592,700

Total
RM

Notes to the FiNaNcial statemeNts (coNtd)


31st december 2015

ANNUAL REPORT 2015 | 77

31.

a)

78 | CN ASIA CORPORATION BHD (399442-A)


-

18,000
(85,452)
(36,892)
(92,789)

980,992

Included in the measure of segment assets are : Additions to non-current assets other than financial instruments
and deferred tax assets
-

13,246
84,432

Trading
RM

51,562
1,095,603
-

Manufacturing
RM

Other information
Amortisation of intangible assets
Bad debts written off
Depreciation of property, plant and equipment
Inventories written off
Non-cash expenses
Impairment losses
- Trade receivables
Non-cash income
Gain on unrealised foreign exchange
Gain on disposal of property, plant and equipment
Gain on disposal of asset held for sale

Business Segments

2014

Business Segment (contd)

SEGMENTAL INFORMATION (CONTD)

Investment
RM

(185,000)

31,718
22,660
-

Adjustments
and
eliminations
RM

795,992

(85,452)
(36,892)
(92,789)

18,000

83,280
1,131,509
84,432

Total
RM

31st December 2015

NOTES TO THE FINANCIAL STATEMENTS (CONTD)

Notes to the FiNaNcial statemeNts (coNtd)

31st december 2015

31.

SEGMENTAL INFORMATION (CONTD)


b)

Geographical segment
In presenting information on the basis of geographical segments, segment revenue is based on the geographical
location of customers whereas segment assets are based on the geographical location of assets.

Malaysia
RM

Republic of
China
RM

Elimination
RM

Consolidated
RM

Revenue from external customers


Revenue from internal
Segment revenue

13,113,741
60,000
13,173,741

(60,000)
(60,000)

13,113,741
13,113,741

Results
Operating results
Interest income
Finance cost
Share of loss in associated company
Profit before taxation
Income tax expense
Loss for the year

(5,429,684)
1,265
(735,035)
(6,163,454)
(6,163,454)

(5,631)
(5,631)
(5,631)

(101,590)
(13,780)
(115,370)
(115,370)

(5,536,905)
1,265
(735,035)
(13,780)
(6,284,455)
(6,284,455)

Assets
Segment assets /Total assets

73,343,693

701,546

(40,502,471)

33,542,768

Liabilities
Segment liabilities /Total liabilities

39,216,684

19,013

(22,959,034)

16,276,663

Geographical Segments
2015

ANNUAL REPORT 2015 | 79

NOTES TO THE FINANCIAL STATEMENTS (CONTD)

31st December 2015


31.

SEGMENTAL INFORMATION (CONTD)


b)

Geographical segment (contd)


2015
Geographical Segments
Other information
Amortisation of leasehold land
Depreciation of property, plant and
equipment
Development cost written off
Inventories written off
Plant and equipment written off
Non-cash expenses
Loss on disposal of property, plant
and equipment
Loss on unrealised foreign
exchange
Non-cash income
Gain on unrealised foreign exchange
Reversal of impairment losses on
trade receivables
Included in the measure of segment
assets are : Additions to non-current assets
other than financial instruments
and deferred tax assets

80 | CN ASIA CORPORATION BHD (399442-A)

Malaysia
RM

Republic of
China
RM

Elimination
RM

Consolidated
RM

51,562

31,718

83,280

1,000,046
158,637
4,991
83,815

(6,737)
-

993,309
158,637
4,991
83,815

173,431

173,431

25,057

25,057

(26,256)

(26,256)

(1,800)

(1,800)

56,864

56,864

Notes to the FiNaNcial statemeNts (coNtd)

31st december 2015

31.

SEGMENTAL INFORMATION (CONTD)


b)

Geographical segment (contd)

Geographical Segments

Malaysia
RM

Republic of
China
RM

Elimination
RM

Consolidated
RM

15,592,700
60,000
15,652,700

(60,000)
(60,000)

15,592,700
15,592,700

2014
Revenue from external customers
Revenue from internal
Segment revenue
Results
Operating results
Interest income
Finance cost
Share of profit in associated
company
Profit before taxation
Income tax expense
Loss for the year

(6,618,063)
6,954
(710,446)

(41,915)
210
-

3,125,169
-

(3,534,809)
7,164
(710,446)

(7,321,555)
(7,321,555)

(41,705)
(41,705)

156
3,125,325
3,125,325

156
(4,237,935)
(4,237,935)

Assets
Segment assets /Total assets

78,364,455

602,812

(40,502,685)

38,464,582

Liabilities
Segment liabilities /Total liabilities

37,963,044

11

(22,963,670)

14,999,385

ANNUAL REPORT 2015 | 81

NOTES TO THE FINANCIAL STATEMENTS (CONTD)

31st December 2015


31.

SEGMENTAL INFORMATION (CONTD)


b)

Geographical segment (contd)


2014
Geographical Segments
Other information
Amortisation of leasehold land
Depreciation of property, plant and
equipment
Inventories written off
Non-cash expenses
Impairment losses of trade
receivables
Non-cash income
Gain on unrealised foreign exchange
Gain on disposal of property, plant
and equipment
Gain on disposal of asset held for
sale
Included in the measure of segment
assets are : Additions to non-current assets
other than financial instruments
and deferred tax assets

82 | CN ASIA CORPORATION BHD (399442-A)

Malaysia
RM

Republic of
China
RM

Elimination
RM

Consolidated
RM

51,562

31,718

83,280

1,074,393
84,432

34,456
-

22,660
-

1,131,509
84,432

18,000

18,000

(84,527)

(925)

(85,452)

(36,892)

(36,892)

(92,789)

(92,789)

980,992

(185,000)

795,992

Notes to the FiNaNcial statemeNts (coNtd)

31st december 2015

32.

FINANCIAL INSTRUMENTS
a)

Categories of financial instruments


The table below provides an analysis of financial instruments categorised as follows : (a)
(b)

Loans and receivables (L&R);


Financial liabilities measured at amortised cost (FL).

Group

Carrying
amount
RM

L&R
RM

FL
RM

2,036,502
72,845
421,374
2,530,721

2,036,502
72,845
421,374
2,530,721

(2,027,887)
(1,940,399)
(34,000)
(6,609,000)
(5,176,876)
(488,501)
(16,276,663)

(2,027,887)
(1,940,399)
(34,000)
(6,609,000)
(5,176,876)
(488,501)
(16,276,663)

3,530,728
323,396
231,289
388,960
4,474,373

3,530,728
323,396
231,289
388,960
4,474,373

(1,886,708)
(595,332)
(55,800)
(7,273,000)
(4,602,437)
(586,108)
(14,999,385)

(1,886,708)
(595,332)
(55,800)
(7,273,000)
(4,602,437)
(586,108)
(14,999,385)

2015
Financial assets
Trade receivables
Other receivables
Cash and bank balances

Financial liabilities
Trade payables
Other payables and accruals
Amount due to associated company
Bankers acceptance
Bank overdrafts
Finance lease liabilities

2014
Financial assets
Trade receivables
Other receivables
Deposit with a licensed bank
Cash and bank balances

Financial liabilities
Trade payables
Other payables and accruals
Amount due to associated company
Bankers acceptance
Bank overdrafts
Finance lease liabilities

ANNUAL REPORT 2015 | 83

NOTES TO THE FINANCIAL STATEMENTS (CONTD)

31st December 2015


32.

FINANCIAL INSTRUMENTS (CONTD)


a)

Categories of financial instruments (contd)

Company

Carrying
amount
RM

L&R
RM

FL
RM

14,942,446
5,187
14,947,633

14,942,446
5,187
14,947,633

(60,266)
(60,266)

(60,266)
(60,266)

15,140,831
6,319
15,147,150

15,140,831
6,319
15,147,150

(100,749)

(100,749)

2015
Financial assets
Amount due from subsidiary companies
Cash and bank balances

Financial liabilities
Other payables and accruals

2014
Financial assets
Amount due from subsidiary companies
Cash and bank balances

Financial liabilities
Other payables and accruals
b)

Financial risk management


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


Credit risk
Liquidity and cash flow risk
Market risk
Operational risk

i)

Credit risk
Credit risk is the risk of a financial loss to the Group if a customer or counterparty to a financial instrument
fails to meet its contractual obligations. The Groups exposure to credit risk arises principally from
its receivables from customers. The Companys exposure to credit risk arises principally from loans
and advances to subsidiaries and financial guarantees given to banks for credit facilities granted to
subsidiaries. The Group also has an internal credit review which is conducted if the credit risk is material.
Trade receivables are monitored on an ongoing basis via Group management reporting procedures.
Receivables

Risk management objectives, policies and processes for managing the risk
The credit risk is controlled by the application of credit approvals, limits and monitoring procedures. Credit
risks are minimised and monitored via strictly limiting the Groups associations to business partners
with high credit worthiness. The Group also has an internal credit review which is conducted if the credit
risk is material. Trade receivables are monitored on an ongoing basis via Group management reporting
procedures.

84 | CN ASIA CORPORATION BHD (399442-A)

Notes to the FiNaNcial statemeNts (coNtd)

31st december 2015

32.

FINANCIAL INSTRUMENTS (CONTD)


b)

Financial risk management (contd)


i)

Credit risk (contd)


Receivables (contd)

Exposure to credit risk, credit quality and collateral


As at the end of the reporting period, the maximum exposure to credit risk arising from receivables is
represented by the carrying amounts in the statement of financial position.
The following shows the total amount due from the top five (5) major customers as at the reporting date,
which represents more than 80% (2014 75%) of the total trade receivables.

Trade receivables

2015

2014

RM1,612,526

RM2,647,749

Management has taken reasonable steps to ensure that receivables that are neither past due nor impaired
are measured at their realisable values. A significant portion of these receivables are regular customers
that have been transacting with the Group. The Group uses ageing analysis to monitor the credit quality
of the receivables. Any past due receivables having significant balances, which are deemed to have higher
credit risk, are monitored individually.
The trade receivables are not secured by any collateral or supported by any other credit enhancements.
The Group maintains an ageing analysis in respect of trade receivables only. The ageing analysis of the
trade receivables is as follows : -

Gross
RM

Individual
impairment
RM

Collective
impairment
RM

Net
RM

834,459
379,746
933,706
2,147,911

(111,409)
(111,409)

834,459
379,746
822,297
2,036,502

1,533,668
93,366
2,016,903
3,643,937

(113,209)
(113,209)

1,533,668
93,366
1,903,694
3,530,728

2015
Not past due
Past due 1 - 30 days
Past due Over 30 days

2014
Not past due
Past due 1 - 30 days
Past due Over 30 days

Receivables that are neither past due nor impaired


Trade receivables that are neither past due nor impaired are creditworthy debtors with good payment
records with the Group. None of the Groups trade receivables have been renegotiated during the financial
year.
Receivables that are past due but not impaired
As at 31st December 2015, trade receivables of approximately RM1,202,043 (2014 RM1,997,060) were
past due but not impaired. These relate to a number of independent customers for whom there is no
recent history of default. All trade receivables, whether current or past due, are reviewed for impairment
on a case-by-case basis to identify impairment taking into account the ageing of the debt, the likelihood of
recoverability and other external factors.
ANNUAL REPORT 2015 | 85

NOTES TO THE FINANCIAL STATEMENTS (CONTD)

31st December 2015


32.

FINANCIAL INSTRUMENTS (CONTD)


b)

Financial risk management (contd)


i)

Credit risk (contd)


Receivables (contd)
Receivables that are impaired :
The movement in the allowances for impairment of trade receivables during the financial year were : -

At beginning of the financial year


Impairment losses recognised
Amounts recovered and reversed
At the end of the financial year

2015
RM

2014
RM

113,209
(1,800)
111,409

95,209
18,000
113,209

Inter-company loans and advances

Risk management objectives, policies and processes for managing the risk
The Company provides unsecured loans and advances to subsidiaries. The Company monitors the results
of the subsidiaries regularly.
Exposure to credit risk, credit quality and collateral
As at the end of the reporting period, the maximum exposure to credit risk is represented by their carrying
amounts in the statement of financial position.
Impairment losses
As at the end of the reporting period, there was no indication that the loans and advances to the subsidiaries
are not recoverable. The Company does not specifically monitor the ageing of current advances to the
subsidiaries.
Financial guarantees

Risk management objectives, policies and processes for managing the risk
The Company provides unsecured financial guarantees to banks in respect of banking facilities granted
to certain subsidiaries. The Company monitors on an ongoing basis the results of the subsidiaries and
repayments made by the subsidiaries.
Exposure to credit risk, credit quality and collateral
The maximum exposure to credit risk amounts to RM11,852,976 (2014 RM12,035,725) representing the
outstanding banking facilities of the subsidiaries as at the end of the reporting period.
As at the end of the reporting period, there was no indication that any subsidiary would default on
repayment.
The financial guarantees have not been recognised since the fair value on initial recognition was not
material.
ii)

Liquidity risk and cash flow risk


Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The
Groups exposure to liquidity risk arises principally from its various payables, loans and borrowings.
The Group maintains a level of cash and cash equivalents and bank facilities deemed adequate by the
management to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when
they fall due.
It is not expected that the cash flows included in the maturity analysis could occur significantly earlier or
at significantly different amounts.

86 | CN ASIA CORPORATION BHD (399442-A)

32.

b)

ii)

Non-derivative financial liabilities


Trade payables
Other payables and accruals
Bankers acceptance
Bank overdrafts
Amount due to associated company
Finance lease liabilities

2014

Non-derivative financial liabilities


Trade payables
Other payables and accruals
Bankers acceptance
Bank overdrafts
Amount due to associated company
Finance lease liabilities

2015

Group

1,886,708
595,332
7,273,000
4,602,437
55,800
586,108
14,999,385

2,027,887
1,940,399
6,609,000
5,176,876
34,000
488,501
16,276,663

Carrying
amount
RM

3.50-4.10
8.10-9.10
4.55-4.70

3.50-4.10
8.35-9.35
4.55-4.70

Effective
Interest /
Expense Rate
%

1,886,708
595,332
7,273,000
4,602,437
55,800
662,324
15,075,601

2,027,887
1,940,399
6,609,000
5,176,876
34,000
541,328
16,329,490

Contractual
cash
flows
RM

1,886,708
595,332
7,273,000
4,602,437
55,800
121,644
14,534,921

2,027,887
1,940,399
6,609,000
5,176,876
34,000
112,164
15,900,326

Under
1 year
RM

112,164
112,164

112,164
112,164

1-2
years
RM

336,492
336,492

309,349
309,349

2-5
years
RM

92,024
92,024

7,651
7,651

More than
5 years
RM

The table below summarises the maturity profile of the Groups and the Companys financial liabilities as at the end of the reporting period based on
undiscounted contractual payments : -

Maturity analysis

Liquidity risk and cash flow risk (contd)

Financial risk management (contd)

FINANCIAL INSTRUMENTS (CONTD)

Notes to the FiNaNcial statemeNts (coNtd)


31st december 2015

ANNUAL REPORT 2015 | 87

32.

b)

ii)

88 | CN ASIA CORPORATION BHD (399442-A)

Non-derivative financial liabilities


Other payables and accruals

2014

Non-derivative financial liabilities


Other payables and accruals

2015

Company

Maturity analysis (contd)

Liquidity risk and cash flow risk (contd)

Financial risk management (contd)

FINANCIAL INSTRUMENTS (CONTD)

100,749

60,266

Carrying
amount
RM

Effective
Interest /
Expense Rate
%

100,749

60,266

Contractual
cash
flows
RM

100,749

60,266

Under
1 year
RM

1-2
years
RM

2-5
years
RM

More than
5 years
RM

31st December 2015

NOTES TO THE FINANCIAL STATEMENTS (CONTD)

Notes to the FiNaNcial statemeNts (coNtd)

31st december 2015

32.

FINANCIAL INSTRUMENTS (CONTD)


b)

Financial risk management (contd)


iii)

Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates
that will affect the Groups financial position or cash flows.
Currency risk
The Group is exposed to foreign currency risk on sales that are denominated in a currency other than the
respective functional currency of Group entities. The currency giving rise to this risk was primarily US.
Dollar (USD), Singapore Dollar (SGD), Renminbi (RMB), Hong Kong Dollar (HKD), South African
Rand (ZAR), Seychelles Rupee (SCR), EURO (EURO) and Brunei Dollar (BND).

Exposure to foreign currency risk


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

Group
US. Dollar
- Other receivables, deposits and prepayments (Note 11)
- Trade payables (Note 19)
- Other payables and accruals (Note 20)
- Cash and bank balances (Note 30)
Singapore Dollar
- Trade receivables (Note 9)
- Trade payables (Note 19)
- Other payables and accruals (Note 20)
- Cash and bank balances (Note 30)
Chinese Renminbi
- Other payables and accruals (Note 20)
- Cash and bank balances (Note 30)
Hong Kong Dollar
- Cash and bank balances (Note 30)
South African Rand
- Cash and bank balances (Note 30)
Seychelles Rupee
- Cash and bank balances (Note 30)
EURO
- Other receivables, deposits and prepayments (Note 11)
- Trade payables (Note 19)
- Cash and bank balances (Note 30)
Brunei Dollar
- Trade receivables (Note 9)
- Trade payables (Note 19)
- Other payables and accruals (Note 20)

2015
RM

2014
RM

5,921
(7,084)
(140,397)
52,772

5,826
(6,460)
357,211

(942)
(222,035)
-

1,328,289
(400)
576

(19,013)
275,017

598

43

291

60,396

60,396

25,501
(93,796)
839

8,026
(80,000)
786

109,410
(75,988)
(85,869)

650,444
-

ANNUAL REPORT 2015 | 89

NOTES TO THE FINANCIAL STATEMENTS (CONTD)

31st December 2015


32.

FINANCIAL INSTRUMENTS (CONTD)


b)

Financial risk management (contd)


iii)

Market risk (contd)

Currency risk sensitivity analysis


A 5% strengthening of RM against the following currency at the end of the reporting period would have
increased /(decreased) equity and profit or loss before tax by the amount shown below. This analysis is
based on foreign currency exchange rate variances that the Group considered to be reasonable possible at
the end of the reporting period. The analysis assumes that all other variables, in particular interest rates,
remained constant.
2015

Decrease

2014

Equity
RM

Profit
before
tax
RM

Equity
RM

Loss
before
tax
RM

(5,763)

(5,763)

(116,281)

(116,281)

A 5% of weakened of RM against the above foreign currency at the end of the reporting period would have
had equal but opposite effect on the above currency to the amount shown above, on the basis that all other
variables remained constant.
Interest rate risk
The Groups fixed rate borrowings are exposed to a risk of change in their fair value due to changes in
interest rate. The Groups variable rate borrowings are exposed to a risk of change in cash flows due to
changes interest rates. Short term investment such as deposits with licensed bank are not significantly
exposed to interest rate risk.

Risk management objectives, policies and processes for managing the risk
The Groups policy is to borrow principally on the floating rate basis but to retain a proportion of fixed rate
debt. The objectives for the mix between fixed and floating rate borrowings are set to reduce the impact of
an upward change in interest rates while enabling benefits to be enjoyed if interest rates fall.
Exposure to interest rate risk
The interest rate profile of the Groups and the Companys significant interest-bearing financial instruments,
based on carrying amounts as at the end of the reporting period was : -

Group
Fixed rate instruments
Deposits with licensed banks
Finance lease liabilities
Floating rate instruments
Bank overdraft
Bankers acceptance

2015
RM

Effective
Interest rate
%

2014
RM

Effective
Interest rate
%

(488,501)

4.55-4.70

231,289
(586,108)

3.30
2.38-4.35

(5,176,876)
(6,609,000)

8.35-9.35
3.50-4.10

(4,602,437)
(7,273,000)

8.10-9.10
3.50-4.10

Interest /Expense rate risk sensitivity analysis : Fair value sensitivity analysis for fixed rate instruments
The Company does not account for any fixed rate financial assets and liabilities at fair value through profit
or loss. Therefore, a change on interest rates at the end of the reporting period would not affect profit or
loss.
90 | CN ASIA CORPORATION BHD (399442-A)

Notes to the FiNaNcial statemeNts (coNtd)

31st december 2015

32.

FINANCIAL INSTRUMENTS (CONTD)


b)

Financial risk management (contd)


iii)

Market risk (contd)

Interest /Expense rate risk sensitivity analysis (contd): Cash flow sensitivity analysis for variable rate instruments
At the reporting date, if interest rates had been 100 basis points lower/higher, with all other variables held
constant, the Groups loss net of tax would have been RM144,846 higher/lower, arising mainly as a result
of lower/higher interest expense on floating rate borrowings. The assumed movement in basis points for
interest /expense rate sensitivity analysis is based on the currently observable market environment.
iv)

Operational risk
The operational risk arises from the daily activities of the Group which includes legal, credit reputation and
financing risk and other risks associated to daily running of its business operations.
Such risks are mitigated through proper authority levels of approval limits, clear reporting structure,
segregation of duties, policies and procedures implemented and periodic management meetings.
In dealing with its stewardship, the directors recognise that effective risk management is an integral part
of good business practice.
The directors will pursue an ongoing process of identifying, assessing and managing key business areas,
overall operational and financial risks faced by the business units as well as regularly reviewing and
enhancing risk mitigating strategies with its appointed and key management personnel.

ANNUAL REPORT 2015 | 91

32.

c)

92 | CN ASIA CORPORATION BHD (399442-A)

Financial liabilities
Bank overdraft
Bankers acceptance
Finance lease liabilities

2014

Financial liabilities
Bank overdraft
Bankers acceptance
Finance lease liabilities

2015
Group

Fair value of financial instruments


carried at fair value
Level 1
Level 2
Level 3
Total
RM
RM
RM
RM

Carrying
amount
RM

Total
fair value
RM

- 4,228,238
- 7,006,744
530,665
- 11,765,647

4,228,238
7,006,744
530,665
530,665

4,228,238 4,602,437
7,006,744 7,273,000
530,665
586,108
530,665 12,461,545

- 4,755,972 4,755,972 4,755,972 5,176,876


- 6,367,052 6,367,052 6,367,052 6,609,000
455,657
455,657
455,657
488,501
- 11,578,681 11,578,681 11,578,681 12,274,377

Fair value of financial instruments


not carried at fair value
Level 1
Level 2
Level 3
Total
RM
RM
RM
RM

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

Fair value information

FINANCIAL INSTRUMENTS (CONTD)

31st December 2015

NOTES TO THE FINANCIAL STATEMENTS (CONTD)

Notes to the FiNaNcial statemeNts (coNtd)

31st december 2015

32.

FINANCIAL INSTRUMENTS (CONTD)


c)

Fair value information (contd)


The following shows the valuation techniques used in the determination of fair values within Level 3 for financial
instruments not carried at fair value, as well as the key unobservable inputs used in the valuation models.

33.

Type

Description of valuation technique and inputs used

Bank borrowing

Discounted cash flows using a rate based on the current market rate of borrowing of the
respective Group entities at the reporting date.

CAPITAL MANAGEMENT
The Groups objectives when managing capital is to maintain a strong capital base and safeguard the Groups ability to
continue as going concern, so as to maintain investor, creditor and market confidence and to sustain future development
of the business.
There were no changes in the Groups approach to capital management during the financial year.

34.

CONTINGENT LIABILITIES
Group

Secured
Corporate guarantees issued to bank for
bank facilities granted to a subsidiary
company
Bank guarantee issued in favour of third
parties
Unsecured
Corporate guarantees issued to bank for
bank facilities granted to a subsidiary
company

Company

2015
RM

2014
RM

2015
RM

2014
RM

11,022,414

11,522,706

67,100

151,000

67,100

151,000

830,562
11,852,976

513,019
12,035,725

Group
Secured
The bank guarantee is secured by the leasehold land and buildings of subsidiary companies.
The directors are of the opinion that adequate allowance has been made in the financial statements for any possible
liabilities.

35.

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

ANNUAL REPORT 2015 | 93

NOTES TO THE FINANCIAL STATEMENTS (CONTD)

31st December 2015


35.

RELATED PARTIES (CONTD)


Identity of related parties (contd)
Related parties also include key management personnel defined as those persons having authority and responsibility
for planning, directing and controlling the activities of the Company either directly or indirectly. The key management
personnel include all the Directors of the Company, and certain members of the senior management of the Company.
The Company has related party relationship with its subsidiaries, Directors and key management personnel.
Significant related party transactions
Related party transactions have been entered into the normal course of business under normal trade terms. The
significant related party transactions of the Group and the Company are show below. The related party balances are
shown in Note 12 and 21.
a)

Transactions and balances with related parties / companies


i)

Significant related company transactions in the financial statements are as follows : Group

Rental of premises in which a Director, Ho Cheng San has


substantial interest
- Crystal Bond Sdn. Bhd.
- Marvellous Production Sdn. Bhd.

2015
RM

2014
RM

96,000
336,000

96,000
336,000
Company

Management income received and receivable from


subsidiary company
- Chip Ngai Engineering Works Sdn. Bhd.
b)

2015
RM

2014
RM

60,000

60,000

Compensation of Key Management Personnel


The remuneration paid by the Group and the Company to key management personnel during the year are as
follows : Group

Short-term employee benefits


Post-employment benefits :
- Defined contribution plan
- EPF

Company

2015
RM

2014
RM

2015
RM

2014
RM

850,536

676,472

109,420

86,000

92,747
943,283

74,495
750,967

109,420

86,000

2015
RM

2014
RM

2015
RM

2014
RM

943,283

750,967

109,420

86,000

Included in the total key management personnel are : Group

Directors remuneration (Note 26)


- Directors of the Company
94 | CN ASIA CORPORATION BHD (399442-A)

Company

Notes to the FiNaNcial statemeNts (coNtd)

31st december 2015

36.

COMPARATIVE FIGURES
i)

The following comparative figures have been reclassified to conform with the current years presentation : -

As previously
RM

As reclassified
report
RM

12,693,917

9,224,944
3,468,973
-

Consolidated statement of profit or loss and other comprehensive income: - Distribution costs
- Other expenses
- Cost of sales
ii)

The financial statements for the financial year ended 31st December 2014 were audited by a firm of auditors other
than Kreston John & Gan.

ANNUAL REPORT 2015 | 95

NOTES TO THE FINANCIAL STATEMENTS (CONTD)

31st December 2015


37.

SUPPLEMENTARY INFORMATION ON THE BREAKDOWN OF REALISED AND UNREALISED PROFITS OR


LOSSES
The breakdown of the accumulated losses of the Group and of the Company at 31st December, into realised and
unrealised losses, pursuant to Paragraph 2.06 and 2.23 of Bursa Malaysia Main Market Listing Requirements, are as
follows : Group
Group
Total retained earnings /(accumulated losses) of the Company
and its subsidiaries :
- realised
- unrealised

Total accumulated losses from an associated company :


- realised

Less : Consolidation adjustments

2015
RM

2014
RM

(24,729,315)
1,199

(18,658,264)
85,452

(24,728,116)

(18,572,812)

(143,239)

(129,459)

(24,871,355)

(18,702,271)

(6,924,497)

(6,809,126)

(31,795,852)

(25,511,397)

(19,563,979)
-

(19,335,412)
-

(19,563,979)

(19,335,412)

Company
Total accumulated losses of the Company
- realised
- unrealised

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

96 | CN ASIA CORPORATION BHD (399442-A)

PROPERTIES OF THE GROUP


THE PROPERTIES HELD BY THE GROUP AS AT 31 DECEMBER 2015 ARE AS FOLLOWS:

OWNER
AND
LOCATION
1

DESCRIPTION
AND ExISTING
USE

LAND /
BUILT-UP
AREA
(Sq.FT.)

NET
BOOK
VALUE
(RM)

99 years lease
expiring on
11 October 2091 /
22 years

Industrial land
constructed with
office block
and plant

104,004.05/
72,200

11,099,625

99 years lease
expiring on
11 October 2091/-

Industrial land
used as an open
storage yard

70,596.86/-

2,410,560

CHIP NGAI ENGINEERING


WORKS SDN BHD
PT No. 17040, Mukim
and District of Petaling
State of Selangor

TENURE /
APPROxIMATE
AGE OF
BUILDINGS

DOUWIN SDN BHD


PT No. 17041, Mukim and
District of Petaling
State of Selangor

Notes:
For all properties held as long term leasehold properties, the Group has elected to apply the optional exemption, upon
the transition to MFRS, to use the previous revaluation value of these properties as deemed cost under MFRSs. Thus, no
revaluation was done on these properties.

ANNUAL REPORT 2015 | 97

ANALYSIS OF SHAREHOLDINGS

AS AT 31 MARCH 2016
Authorised Share Capital
Issued and Fully Paid-Up Capital
Class of Shares
Voting Rights

:
:
:
:

RM50,000,000
RM45,382,500
Ordinary Shares of RM1.00 each
One Vote Per RM1.00 Share

DISTURBUTION OF SHAREHOLDINGS
Size of
Shareholdings

No. of
Shareholders

% of
Shareholders

No. of
Shares Held

% of
Issued Capital

1-99
100-1,000
1,001-10,000
10,001-100,000
100,001-less than 5% of issued shares
5% and above of issued shares

416
123
1,232
207
41
3

20.57
6.08
60.93
10.24
2.03
0.15

19,763
74,870
3,393,866
6,809,950
13,641,957
21,442,094

0.04
0.16
7.48
15.01
30.06
47.25

Total

2,022

100.00

45,382,500

100.00

No. of
Shares Held

% of
Issued Capital

16,093,535
2,728,800
2,619,759
1,450,000
1,186,900
1,110,400
747,100

35.46
6.01
5.77
3.20
2.62
2.45
1.65

632,000
614,308

1.39
1.36

562,950
451,100
389,400
350,000

1.24
0.99
0.86
0.77

331,000
310,000
304,000

0.73
0.68
0.67

303,000
280,888
273,800
266,400

0.67
0.62
0.60
0.59

THIRTY LARGEST SHAREHOLDERS


Name

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20

Ho Cheng San
Charles Ross Mckinnon
CN Asia Engineering Sdn Bhd
Charles Ross Mckinnon
Tengku AB Malek Bin Tengku Mohamed
Oon Kim Woon
Public Nominees (Tempatan) Sdn Bhd
Pledged Securities Account For Au Kwan Seng (E-KLC)
Lee Hui Leong
UOB Kay Hian Nominees (Asing) Sdn Bhd
Exempt An For UOB Kay Hian Pte Ltd (A/C Clients)
Angeline Chan Kit Fong
Yew Siew Choo
Chong Mong Yuen
TA Nominees (Tempatan) Sdn Bhd
Pledged Securities Account For Khong Cheng Yee
Goh Chin Chooi
Ang Pek See
HSBC Nominees ( Asing) Sdn Bhd
Exempt An For Credit Suisse ( SG BR-TST-Asing)
Lee Kooi Yin
Hoo Soot Khing
Lee Wan Hooi
M & A Nominee (Tempatan) Sdn Bhd
Pledged Securities Account For Fong Kiah Yeow (M & A)

98 | CN ASIA CORPORATION BHD (399442-A)

ANALYSIS OF SHAREHOLDINGS (CONTD)

AS AT 31 MARCH 2016

THIRTY LARGEST SHAREHOLDERS (CONTD)


Name

21

No. of
Shares Held

% of
Issued Capital

250,000

0.55

241,000
238,400
233,161
228,800
200,000
199,700
191,500
187,700

0.53
0.53
0.51
0.51
0.44
0.44
0.42
0.41

180,000

0.40

33,155,601

73.06

M & A Nominee (Tempatan) Sdn Bhd


Pledged Securities Account For Teo Hock Chuan (M & A)
Gan Geok Khim
Kew Chin Fah
Hoo Shet Wan
Dancomair Engineering Sdn Bhd
Kew Yuen Cheng
Kew Chin Fah
Chan Cheng Choy
Kenanga Nominees (Tempatan) Sdn Bhd
Pledged Securities Account For Lee Wan Hooi (010)
Eng Yen Nee

22
23
24
25
26
27
28
29
30

Total

SUBSTANTIAL SHAREHOLDERS
No. of Shares Held
Direct
Indirect

Name
1
2
3

Ho Cheng San
Charles Ross Mckinnon
CN Asia Engineering Sdn Bhd

16,093,535
4,178,800
2,619,759

2,619,759*
-

% of Issued Capital
Direct
Indirect
35.46
9.21
5.77

5.77
-

Deemed interested by virtue of his substantial shareholdings in CN Asia Engineering Sdn Bhd

DIRECTORS SHAREHOLDINGS

Name
Dato Hilmi bin Mohd Noor
Ho Cheng San
Ir. Lee Lam
Chong Ying Choy
Yoong Nim Chee
Roy Ho Yew Kee

No. of Shares Held


Direct
Indirect
16,093,535
11,750
155,000
-

2,619,759*
-

% of Issued Capital
Direct
Indirect
35.46
0.03
0.34
-

5.77
-

Deemed interested by virtue of his substantial shareholdings in CN Asia Engineering Sdn Bhd

ANNUAL REPORT 2015 | 99

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FORM OF PROxY
CN ASIA CORPORATION BHD (399442-A)
(Incorporated In Malaysia)

I/We

(shareholders name in full)

(NRIC/Company No.)

of

(fulladdress)

being a Member/Members of CN ASIA CORPORATION BHD hereby appoint


(name of proxy in full) (NRIC No:

of

(fulladdress)
(name of proxy in full) (NRIC No:

or failing him/her,

of

(fulladdress)

orthe CHAIRMAN OF THE MEETING as my/our proxy to vote for me/us on my/our behalf at the Twentieth Annual General Meeting
of the Company to be held at Meeting Room Livia 1, UG Level, ibis Styles Kuala Lumpur Cheras, C180 Hotel Sdn Bhd, Jalan C180/1,
Dataran C180, 43200 Cheras, Selangor Darul Ehsan on Wednesday, 15 June 2016 at 10.00 a.m. and at any adjournment thereof,
and to vote as indicated below:Resolution 1

Resolution 2
Resolution 3
Resolution 4
Resolution 5
Resolution 6
Resolution 7
Resolution 8

Resolution
Toreceive the Audited Financial Statements for the financial year ended 31
December 2015 together with the Reports of the Directors and the Auditors
thereon.
Toapprovepaymentof directors fees in respect of the financial year ended
31 December 2015.
To re- elect as Director Mr. Lee Lam (retires under Article 84 of the
Companys Articles of Association).
To re-appoint Dato Hilmi bin Mohd Noor as Director pursuant to Section
129(6) of the Companies Act, 1965.
To re-elect as Director Mr. Roy Ho Yew Kee (retires under Article 91 of the
Companys Article of Association).
To re-appoint Messrs Kreston John & Gan as Auditors and to authorise the
Director to fix their remuneration.
To retain Mr. Chong Ying Choy as an Independent Non-Executive Director.
Authority to allot and issue shares pursuant to Section 132D of the Companies
Act, 1965.

For

Against

(Please indicate with an (X) in the spaces provided whether you wish your votes to be cast for or against the resolution. In the
absence of specific directions, your proxy will vote or abstain from voting at his/her discretion.)

No of Shares
Proxy 1
Proxy 2
Proxy 3
Total
Dated this

Percentage

Total number of ordinary shares held


CDS Account No.

100%
day of

2016
Signature/Common Seal of Shareholder

Contact No.:
Notes:
1. Only depositors whose names appear in the Record of Depositors as at 7 June 2016 shall be regarded as Members and entitled to attend,
speak and vote at the meeting.
2.

A Member entitled to attend and vote at the meeting is entitled to appoint one (1) or more proxies to attend and vote instead of him. A proxy
may but need not be a Member of the Company and the provisions of Section 149(1)(b) of the Companies Act, 1965 shall not apply to the
Company. A proxy appointed to attend and vote at the meeting shall have the same rights as the Member to speak at the meeting.

3.

Where a Member appoints more than one (1) proxy, the appointment shall be invalid unless the Member specifies the proportion of his
shareholdings to be represented by each proxy.

4.

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

5.

The Proxy Form must be deposited at the Registered Office of the Company at Lot 7907, Batu 11, Jalan Balakong, 43300 Seri Kembangan,
Selangor Darul Ehsan, not less than forty eight (48) hours before the time set for holding the meeting or any adjournment thereof.

1st fold here

AFFIX
STAMP
The Company Secretary

CN ASIA CORPORATION BHD


Lot 7909, Batu 11,
Jalan Balakong
43300 Seri Kembangaan
Selangor Darul Ehsan

2nd fold here