A N N U A L

R E P O R T

2 0 1 3

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ANNUAL REPORT 2013

CONTENTS

Notice of Annual General Meeting Statement Accompanying the Notice of Annual General Meeting Corporate Information Financial Highlights Directors' Profile Managing Director's Statement Statement on Corporate Social Responsibility Statement on Corporate Governance Statement of Risk Management and Internal Control Audit Committee Report Statement of Directors' Responsibility

2-8 9 10 11 12 - 14 15 - 16 17 - 18 19 - 26 27 28 - 31 32

Other Information Required by the Main Market Listing Requirements of Bursa Malaysia Securities Berhad 33 - 34 Directors' Report Statement by Directors Statutory Declaration Independent Auditors' Report Statements of Comprehensive Income Statements of Financial Position Statements of Changes in Equity Statements of Cash Flows Notes to the Financial Statements Supplementary Information List of Properties owned by the Group Analysis of Shareholdings Proxy Form

35 - 38 39 39 40 - 41 42 43 - 44 45 - 46 47 - 48 49 - 108 109 110 111 - 112 Enclosed

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ANNUAL REPORT 2013

NOTICE OF ANNUAL GENERAL MEETING

NOTICE IS HEREBY GIVEN THAT the Twentieth (20th) Annual General Meeting of Suiwah Corporation Bhd (or the Company) will be held at Sunshine Banquet Hall, Level 4, Sunshine Square Complex, 1, Jalan Mayang Pasir, 11950 Bayan Baru, Penang on Thursday, 28 November 2013 at 11.00 a.m. for the following purposes: AS ORDINARY BUSINESS:1. To receive the Audited Financial Statements for the year ended 31 May 2013 together with the Reports of the Directors and Auditors thereon. To approve the declaration of a first and final dividend of 8% less 25% Malaysian Income Tax for the financial year ended 31 May 2013. To re-elect the following Directors who are retiring in accordance with Article 87 of the Companys Articles of Association and are offering themselves for re-election: (a) Dato Hwang Thean Long (b) Datuk Haji Radzali Bin Hassan To pass the following resolution pursuant to Section 129 of the Companies Act, 1965 as ordinary resolution: THAT Dato Ahmad Hassan Bin Osman who is over the age of seventy years and retiring in accordance with Section 129 of the Companies Act, 1965, be hereby re-appointed as Director of the Company and to hold office until the conclusion of the next Annual General Meeting. 5. To approve the payment of directors fees of Ringgit Malaysia Two Hundred Thirty Nine Thousand and Six Hundred (RM239,600) only for the year ended 31 May 2013. To re-appoint Messrs Ernst & Young as Auditors of the Company until the conclusion of the next Annual General Meeting and to authorise the Directors to fix their remuneration. Resolution 5 Resolution 1 Resolution 2

2.

3.

Resolution 3 Resolution 4

4.

Resolution 6 Resolution 7

6.

AS SPECIAL BUSINESS:7. To consider and if thought fit, to pass the following resolutions with or without modification: 7.1 ORDINARY RESOLUTION: AUTHORITY TO ISSUE AND ALLOT SHARES PURSUANT TO SECTION 132D OF THE COMPANIES ACT, 1965 THAT subject to Section 132D of the Companies Act, 1965, the Articles of Association of the Company and approvals of the relevant governmental and/or regulatory authorities, the Directors be and are hereby empowered to issue and allot shares in the Company, at any time to such person or persons 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 per centum (10%) of the issued and paid-up share capital of the Company (excluding treasury shares) for the time being and the Directors be and are also empowered to obtain the approval for the listing of and quotation for the additional shares so issued on Bursa Malaysia Securities Berhad; AND THAT such authority shall commence immediately upon the passing of this resolution and continue to be in force until the conclusion of the next Annual General Meeting of the Company. 7.2 ORDINARY RESOLUTION: PROPOSED RENEWAL AND NEW SHAREHOLDERS MANDATE FOR RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING NATURE INVOLVING DATO HWANG THEAN LONG, DATIN CHEAH GAIK HUANG, HWANG POH CHOO, HWANG SIEW PENG, SUIWAH HOLDINGS SDN BHD AND SUIWAH SUPERMARKET SENDIRIAN BERHAD Resolution 8

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ANNUAL REPORT 2013

NOTICE OF ANNUAL GENERAL MEETING (CONTD.)

THAT approval be and is hereby given to the Companys subsidiaries to enter into and give effect to the recurrent related party transactions of a revenue or trading nature involving Dato Hwang Thean Long, Datin Cheah Gaik Huang, Hwang Poh Choo, Hwang Siew Peng, Suiwah Holdings Sdn Bhd and Suiwah Supermarket Sendirian Berhad (hereinafter referred to as Related Parties) as specified in Section 2.3 under Part A of the Circular dated 6 November 2013, and falling within the ambit of Part E, Paragraph 10.09 of Chapter 10 of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, which are necessary for the dayto-day operations and undertaken in the ordinary course of business of the Company, on terms not more favourable to Related Parties than those generally available to the public and not detrimental to minority shareholders of the Company; THAT such approval unless revoked or varied by the Company in general meeting shall continue to be in full force and effect until: (i) the conclusion of the next Annual General Meeting (AGM) of the Company following the general meeting at which this mandate was passed, at which time it will lapse, unless by a resolution passed at the general meeting whereby the authority is renewed; or the expiration of the period within which the next AGM of the Company after the date it is required to be held pursuant to Section 143(1) of the Companies Act, 1965 (the Act) (but shall not extend to such extension as may be allowed pursuant to Section 143(2) of the Act); or revoked or varied by resolution passed by the shareholders of the Company in a general meeting; Resolution 9

(ii)

(iii)

whichever is the earlier; THAT the above mandate is subject to annual renewal and disclosure will be made in the annual report of the aggregate value of transactions conducted by the Group. AND THAT the Directors of the Company be authorised to complete and do all such acts and things (including executing all such documents as may be required) as they may consider expedient or necessary to give effect to the above mandate. 7.3 ORDINARY RESOLUTION: PROPOSED RENEWAL OF SHAREHOLDERS MANDATE FOR RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING NATURE INVOLVING DATUK HAJI RADZALI BIN HASSAN AND HOZONE SDN BHD THAT approval be and is hereby given to the Companys subsidiaries to enter into and give effect to the recurrent related party transactions of a revenue or trading nature involving Datuk Haji Radzali Bin Hassan and person connected to him, namely Hozone Sdn Bhd (hereinafter referred to as Interested Persons) as specified in Section 2.3 under Part A of the Circular dated 6 November 2013, and falling within the ambit of Part E, Paragraph 10.09 of Chapter 10 of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad which are necessary for the day-to-day operations and undertaken in the ordinary course of business of the Company, on terms not more favourable to Interested Persons than those generally available to the public and not detrimental to minority shareholders of the Company; THAT such approval unless revoked or varied by the Company in general meeting shall continue to be in full force and effect until: (i)the conclusion of the next Annual General Meeting (AGM) of the Company following the general meeting at which this mandate was passed, at which time it will lapse, unless by a resolution passed at the general meeting whereby the authority is renewed; or (ii) the expiration of the period within which the next AGM of the Company after the date it is required to be held pursuant to Section 143(1) of the Companies Act, 1965 (the Act) (but must not extend to such extension as may be allowed pursuant to Section 143(2) of the Act); or revoked or varied by resolution passed by the shareholders of the Company in a general meeting; Resolution 10

(iii)

whichever is the earlier; THAT the above mandate is subject to annual renewal and disclosure will be made in the annual report of the aggregate value of transactions conducted by the Group. AND THAT the Directors of the Company be authorised to complete and do all such acts and things (including executing all such documents as may be required) as they may consider expedient or necessary to give effect to the above mandate.

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ANNUAL REPORT 2013

NOTICE OF ANNUAL GENERAL MEETING (CONTD.)

7.4 ORDINARY RESOLUTION: PROPOSED RENEWAL OF SHAREHOLDERS MANDATE FOR RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING NATURE INVOLVING A DIRECTOR OF THE COMPANYS SUBSIDIARY, NAMELY LOOI TIK MIOW THAT approval be and is hereby given to the Companys subsidiaries to enter into and give effect to the recurrent related party transactions of a revenue or trading nature involving a Director of the Companys subsidiary, namely Looi Tik Miow (hereinafter referred to as Interested Director) as specified in Section 2.3 under Part A of the Circular dated 6 November 2013, and falling within the ambit of Part E, Paragraph 10.09 of Chapter 10 of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, which are necessary for the dayto-day operations and undertaken in the ordinary course of business of the Company, on terms not more favourable to Interested Director than those generally available to the public and not detrimental to minority shareholders of the Company; THAT such approval unless revoked or varied by the Company in general meeting shall continue to be in full force and effect until: (i) the conclusion of the next Annual General Meeting (AGM) of the Company following the general meeting at which this mandate was passed, at which time it will lapse, unless by a resolution passed at the general meeting whereby the authority is renewed; or the expiration of the period within which the next AGM of the Company after the date it is required to be held pursuant to Section 143(1) of the Companies Act, 1965 (the Act) (but must not extend to such extension as may be allowed pursuant to Section 143(2) of the Act); or Resolution 11

(ii)

(iii) revoked or varied by resolution passed by the shareholders of the Company in a general meeting; whichever is the earlier; THAT the above mandate is subject to annual renewal and disclosure will be made in the annual report of the aggregate value of transactions conducted by the Group. AND THAT the Directors of the Company be authorised to complete and do all such acts and things (including executing all such documents as may be required) as they may consider expedient or necessary to give effect to the above mandate. 7.5 ORDINARY RESOLUTION: PROPOSED RENEWAL OF SHAREHOLDERS MANDATE FOR RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING NATURE INVOLVING A DIRECTOR OF THE COMPANYS SUBSIDIARY, NAMELY LEONG KONG MENG THAT approval be and is hereby given to the Companys subsidiaries to enter into and give effect to the recurrent related party transactions of a revenue or trading nature involving a Director of the Companys subsidiary, namely Leong Kong Meng (hereinafter referred to as Interested Director) as specified in Section 2.3 under Part A of the Circular dated 6 November 2013, and falling within the ambit of Part E, Paragraph 10.09 of Chapter 10 of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, which are necessary for the dayto-day operations and undertaken in the ordinary course of business of the Company, on terms not more favourable to Interested Director than those generally available to the public and not detrimental to minority shareholders of the Company; THAT such approval unless revoked or varied by the Company in general meeting shall continue to be in full force and effect until: (i) the conclusion of the next Annual General Meeting (AGM) of the Company following the general meeting at which this mandate was passed, at which time it will lapse, unless by a resolution passed at the general meeting whereby the authority is renewed; or the expiration of the period within which the next AGM of the Company after the date it is required to be held pursuant to Section 143(1) of the Companies Act, 1965 (the Act) (but must not extend to such extension as may be allowed pursuant to Section 143(2) of the Act); or Resolution 12

(ii)

(iii) revoked or varied by resolution passed by the shareholders of the Company in a general meeting; whichever is the earlier; THAT the above mandate is subject to annual renewal and disclosure will be made in the annual report of the aggregate value of transactions conducted by the Group. AND THAT the Directors of the Company be authorised to complete and do all such acts and things (including executing all such documents as may be required) as they may consider expedient or necessary to give effect to the above mandate.

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ANNUAL REPORT 2013

NOTICE OF ANNUAL GENERAL MEETING (CONTD.)

7.6 ORDINARY RESOLUTION: PROPOSED RENEWAL OF AUTHORITY FOR THE COMPANY TO PURCHASE ITS OWN SHARES OF UP TO 10% OF ITS ISSUED AND PAID-UP ORDINARY SHARE CAPITAL (PROPOSED RENEWAL OF SHARE BUY-BACK MANDATE) THAT subject to the Companies Act, 1965 (the Act), the provisions of the Companys Memorandum and Articles of Association, Main Market Listing Requirements of Bursa Malaysia Securities Berhad (Bursa Securities) and all other applicable laws, guidelines, rules and regulations, the Directors of the Company be and is hereby authorised, to the fullest extend permitted by law, to purchase such amount of ordinary shares of RM1.00 each in the Company (SCB Shares) from time to time through Bursa Securities upon such terms and conditions as the Directors may deem fit and expedient in the interest of the Company provided that:(i) the aggregate number of SCB Shares which may be purchased or held by the Company shall not exceed ten per centum (10%) of the total issued and paid-up ordinary share capital for the time being of the Company, subject to a restriction that the Company continues to maintain a shareholding spread that is in compliance with the Main Market Listing Requirements of Bursa Securities after the share purchase; the maximum fund to be allocated by the Company for the purpose of purchasing the SCB Shares under the Proposed Renewal of Share Buy-Back Mandate shall not exceed the retained profits and/or the share premium account of the Company for the time being; Resolution 13

(ii)

(iii) the authority hereby given shall commence immediately upon passing of this ordinary resolution and shall continue to be in force until:(a) the conclusion of the next Annual General Meeting (AGM) of the Company following the forthcoming AGM, at which time the authority will lapse unless renewed by ordinary resolution passed at the general meeting, the authority is renewed, either unconditionally or subject to conditions; or (b) the expiration of the period within which the next AGM of the Company after the date it is required by law to be held; or (c) revoked or varied by ordinary resolution passed by the shareholders of the Company in a general meeting, whichever occurs first; but not so as to prejudice the completion of purchase(s) by the Company of the SCB Shares before the aforesaid expiry date and, made in any event, in accordance with the provisions of the guidelines issued by Bursa Securities and any prevailing laws, rules, regulations, orders, guidelines and requirements issued by any relevant authorities; and (iv) upon completion of the purchase(s) of the SCB Shares by the Company, authority be and is hereby given to the Directors of the Company to decide at their absolute discretion to either to cancel the SCB Shares so purchased and/or to retain the SCB Shares so purchased as treasury shares which maybe distributed as shares dividends to shareholders and if retained as treasury shares, may resell the treasury shares on Bursa Securities and/or subsequently cancelled, or to retain part of the SCB Shares so purchased as treasury shares and cancel the remainder in the manner as prescribed by the Act, rules, regulations and orders made pursuant to the Act and the requirements of the Bursa Securities and any other relevant authority for the time being in force; AND THAT authority be and is hereby unconditionally and generally given to the Directors of the Company to take all such steps as are necessary or expedient to implement, finalise, complete or to effect the Proposed Renewal of Share Buy-Back Mandate with full powers to assent to any conditions, modifications, resolutions, variations and/or amendments (if any) as may be imposed by the relevant authorities and to do all such acts and things as the said Directors may deem fit and expedient in the best interest of the Company to give effect to and to complete the purchase of the SCB Shares. 7.7 ORDINARY RESOLUTION: MANDATE FOR DATO HAJI SUHAIMI BIN ABDULLAH 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 THAT approval be and is hereby given to Dato Haji Suhaimi Bin Abdullah, 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 in compliance with the recommendation of Malaysian Code on Corporate Governance 2012. Resolution 14

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ANNUAL REPORT 2013

NOTICE OF ANNUAL GENERAL MEETING (CONTD.)

7.8 ORDINARY RESOLUTION: MANDATE FOR DATO AHMAD HASSAN BIN OSMAN 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 THAT approval be and is hereby given to Dato Ahmad Hassan Bin Osman, 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 in compliance with the recommendation of Malaysian Code on Corporate Governance 2012. 7.9 ORDINARY RESOLUTION: MANDATE FOR MR. JEN SHEK VOON WHO HAS SERVED AS AN INDEPENDENT NONEXECUTIVE 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 THAT approval be and is hereby given to Mr. Jen Shek Voon, 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 in compliance with the recommendation of Malaysian Code on Corporate Governance 2012. 7.10 ORDINARY RESOLUTION: MANDATE FOR MR. WONG THAI SUN WHO HAS SERVED AS AN INDEPENDENT NONEXECUTIVE 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 THAT approval be and is hereby given to Mr. Wong Thai Sun, 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 in compliance with the recommendation of Malaysian Code on Corporate Governance 2012. 7.11 SPECIAL RESOLUTION: PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION OF THE COMPANY THAT the proposed deletions, alterations, modifications, variations and additions to the existing Articles of Association of the Company in the manner as set out in the Circular to Shareholders dated 6 November 2013 (Proposed Amendments) be and are hereby approved. AND THAT the Directors and/or Secretary of the Company be hereby authorised to sign and execute all relevant documents, acts and things as may be required for and in connection with and to give effect to the Proposed Amendments with the full power to assent to any conditions, deletion, alteration, modifications, variations and/or amendments as may be required by the relevant authorities. Resolution 18 Resolution 17 Resolution 16 Resolution 15

NOTICE OF DIVIDEND ENTITLEMENT

NOTICE IS ALSO HEREBY GIVEN THAT a first and final dividend of 8% less 25% Malaysian Income Tax in respect of the financial year ended 31 May 2013, if approved by members of the Company, will be paid on 18 December 2013. The entitlement date for the dividend payment is 5 December 2013. A Depositor shall qualify for entitlement only in respect of:(a) (b) Shares transferred to the Depositors Securities Account before 4.00 p.m. on 5 December 2013 in respect of ordinary transfers; and Shares bought on the Bursa Malaysia Securities Berhad on a cum entitlement basis according to the Rules of the Bursa Malaysia Securities Berhad.

By Order of the Board, THUM SOOK FUN (MIA 24701) Company Secretary Dated: 6 November 2013 Penang

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ANNUAL REPORT 2013

NOTICE OF ANNUAL GENERAL MEETING (CONTD.)

Explanatory Note to Special Business: (i) Resolution No. 8 - Authority to issue and allot shares pursuant to Section 132D of the Companies Act, 1965 The Resolution No. 8, if passed, will give powers to the Directors of the Company to issue and allot ordinary shares in the capital of the Company up to an aggregate amount of not exceeding 10% of the issued share capital of the Company (excluding treasury shares) for the time being, at anytime in their absolute discretion without convening a general meeting (hereinafter referred to as the General Mandate). The Company has been granted a general mandate by its shareholders at the last Annual General Meeting (AGM) held on 22 November 2012 (hereinafter referred to as the Previous Mandate) and it will lapse at the conclusion of the 20th AGM. As at the date this Notice, the Previous Mandate granted by the shareholders had not been utilised and hence, no proceed was raised therefrom. The purpose to seek for the General Mandate is to enable the Directors to issue and allot shares at any time to such persons in their absolute discretion without convening a general meeting as it would be both time-consuming and costly to organise a general meeting. This General Mandate, unless revoked or varied by the Company in a general meeting, will expire at the conclusion of next AGM of the Company. (ii) Resolution Nos. 9 to 12 - Proposed Renewal and New Shareholders Mandate for the recurrent related party transactions of a revenue or trading nature (Proposed RRPT Mandate) The proposed adoption of Resolution Nos. 9 to 12, if passed, will enable the Company and/or its subsidiaries to carry out the recurrent related party transactions of a revenue or trading nature. For further information on the Proposed RRPT Mandate is set out in Part A of the Circular/Statement to Shareholders dated 6 November 2013, which is dispatched together with the Companys Annual Report 2013. (iii) Resolution No. 13 - Proposed Renewal of Share Buy-Back Mandate The proposed adoption of Resolution No. 13, if passed, will empower the Directors to buy-back and/or hold up to a maximum of 10% of the Companys issued and paid-up ordinary share capital at any point of time, by utilising the funds allocated which shall not exceed the total retained profits and/or share premium account of the Company. This authority, unless revoked or varied by the Company in a general meeting, will expire at the conclusion of the next Annual General Meeting of the Company, or the expiration of period within which the next Annual General Meeting is required by law to be held, whichever is earlier. For further information on the Proposed Renewal of Share Buy-Back Mandate is set out in the Part C of the Circular/ Statement to Shareholders dated 6 November 2013, which is dispatched together with the Companys Annual Report 2013. (iv) Resolution No. 14 - Mandate for Dato Haji Suhaimi Bin Abdullah 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 NonExecutive Director of the Company Both the Nomination Committee and the Board have assessed the independence of Dato Haji Suhaimi Bin Abdullah, who has served as an Independent Non-Executive Director of the Company for a cumulative term of more than nine (9) years, and recommended him to continue to serve as an Independent Non-Executive Director of the Company based on the following justifications:(a) He continues to fulfill the definition of independence as set out in Malaysian Code on Corporate Governance 2012 and Main Market Listing Requirements of Bursa Securities. (b) His existing tenure in office (despite of more than 9 years) does not impair his independence. (c) He remains objective and independent in expressing his view and in participating in deliberation and decision making of the Board and Board Committee(s). (d) He continues to demonstrate conduct and behaviour that are essential indicators of independence. (v) Resolution No. 15 - Mandate for Dato Ahmad Hassan Bin Osman 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 NonExecutive Director of the Company Both the Nomination Committee and the Board have assessed the independence of Dato Ahmad Hassan Bin Osman, who has served as an Independent Non-Executive Director of the Company for a cumulative term of more than nine (9) years, and recommended him to continue to serve as an Independent Non-Executive Director of the Company based on the following justifications:(a) He continues to fulfill the definition of independence as set out in Malaysian Code on Corporate Governance 2012 and Main Market Listing Requirements of Bursa Securities. (b) His existing tenure in office (despite of more than 9 years) does not impair his independence. (c) He remains objective and independent in expressing his view and in participating in deliberation and decision making of the Board and Board Committee(s). (d) He continues to demonstrate conduct and behaviour that are essential indicators of independence.

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ANNUAL REPORT 2013

NOTICE OF ANNUAL GENERAL MEETING (CONTD.)

(vi) Resolution No. 16 - Mandate for Mr. Jen Shek Voon 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 Both the Nomination Committee and the Board have assessed the independence of Mr. Jen Shek Voon, who has served as an Independent Non-Executive Director of the Company for a cumulative term of more than nine (9) years, and recommended him to continue to serve as an Independent Non-Executive Director of the Company based on the following justifications:(a) He continues to fulfill the definition of independence as set out in Malaysian Code on Corporate Governance 2012 and Main Market Listing Requirements of Bursa Securities. (b) His existing tenure in office (despite of more than 9 years) does not impair his independence. (c) He remains objective and independent in expressing his view and in participating in deliberation and decision making of the Board and Board Committee(s). (d) He continues to demonstrate conduct and behaviour that are essential indicators of independence. (vii) Resolution No. 17 - Mandate for Mr. Wong Thai Sun 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 Both the Nomination Committee and the Board have assessed the independence of Mr. Wong Thai Sun, who has served as an Independent Non-Executive Director of the Company for a cumulative term of more than nine (9) years, and recommended him to continue to serve as an Independent Non-Executive Director of the Company based on the following justifications:(a) He continues to fulfill the definition of independence as set out in Malaysian Code on Corporate Governance 2012 and Main Market Listing Requirements of Bursa Securities. (b) His existing tenure in office (despite of more than 9 years) does not impair his independence. (c) He remains objective and independent in expressing his view and in participating in deliberation and decision making of the Board and Board Committee(s). (d) He continues to demonstrate conduct and behaviour that are essential indicators of independence. (viii) Resolution No. 18 Proposed Amendments to the Articles of Association of the Company The Special Resolution proposed under item 7.11 is primarily to seek for shareholders approval to amend the Articles of Association of the Company so as to be aligned with the Main Market Listing Requirements of Bursa Securities. Details of the Proposed Amendments to the Articles of Association of the Company are set out in the Part B of the Circular/Statement to Shareholders dated 6 November 2013 , which is dispatched together with the Companys Annual Report 2013. Notes: 1. In respect of deposited securities, only members whose names appear in the Record of Depositors on 21 November 2013 (General Meeting Record of Depositors) shall be eligible to attend, speak and vote at the Meeting. 2. A member entitled to attend and vote at the Meeting is entitled to appoint two (2) or more proxies to attend and vote in his or her stead. Where a member appoints two (2) proxies, the appointments shall be invalid unless he or she specifies the proportions of his or her shareholdings to be represented by each proxy. 3. A proxy may but does not need to 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. Notwithstanding this, a member entitled to attend and vote at the Meeting is entitled to appoint any person as his proxy to attend and vote instead of the member at the Meeting. There shall be no restriction as to the qualification of the proxy. A proxy appointed to attend and vote at the Meeting shall have the same rights as the member to speak at the Meeting. 4. The instrument appointing a proxy shall be in writing under the hand of the appointor or his attorney duly authorised in writing or, if the appointor is a corporation, either under its seal or under the hand of an officer or attorney duly authorised. 5. Where a member of the Company is an exempt authorised nominee as defined under Securities Industry (Central Depositories) Act 1991 which holds ordinary shares in the Company for multiple beneficial owners in one securities account (omnibus account), there is no limit to the number of proxies which the exempt authorised nominee may appoint in respect of each omnibus account it holds. 6. The instrument appointing a proxy and the power of attorney or other authority if any, under which it is signed or a notarially certified copy of the power or authority shall be deposited at the registered office of the Company at No. 1-201 SUNTECH @ Penang Cybercity, Lintang Mayang Pasir 3, 11950 Bayan Baru, Penang not less than forty-eight (48) hours before the time for holding the meeting or any adjournment thereof.

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ANNUAL REPORT 2013

STATEMENT ACCOMPANYING THE NOTICE OF ANNUAL GENERAL MEETING

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

As at date of this notice, there are no individuals who are standing for election as Directors (excluding the above Directors who are standing for re-election or re-appointment) at this forthcoming 20th Annual General Meeting.

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ANNUAL REPORT 2013

CORPORATE INFORMATION
BOARD OF DIRECTORS DATO HWANG THEAN LONG - Managing Director DATIN CHEAH GAIK HUANG - Executive Director MS. HWANG SIEW PENG - Executive Director DATUK HAJI RADZALI BIN HASSAN - Non-Independent Non-Executive Director DATO HAJI MOHD SUHAIMI BIN ABDULLAH - Independent Non-Executive Director DATO AHMAD HASSAN BIN OSMAN - Independent Non-Executive Director MR. WONG THAI SUN - Independent Non-Executive Director MR. JEN SHEK VOON - Independent Non-Executive Director AUDIT COMMITTEE DATO HAJI MOHD SUHAIMI BIN ABDULLAH - Chairman DATO AHMAD HASSAN BIN OSMAN - Member MR. WONG THAI SUN - Member MR. JEN SHEK VOON - Member NOMINATION COMMITTEE DATO AHMAD HASSAN BIN OSMAN - Chairman DATO HAJI MOHD SUHAIMI BIN ABDULLAH - Member MR. WONG THAI SUN - Member REMUNERATION COMMITTEE DATO AHMAD HASSAN BIN OSMAN - Chairman DATO HAJI MOHD SUHAIMI BIN ABDULLAH - Member MR. WONG THAI SUN - Member COMPANY SECRETARY THUM SOOK FUN (MIA 24701) REGISTERED OFFICE No. 1-20-1 SUNTECH @ Penang Cybercity, Lintang Mayang Pasir 3, 11950 Bayan Baru, Penang, Malaysia. Tel. No. : +604-6437387 Fax No. : +604-6437389 Web Page: http://www.suiwah.com.my SHARE REGISTRAR SECURITIES SERVICES (HOLDINGS) SDN BHD Suite 18.05, MWE Plaza, No. 8, Lebuh Farquhar, 10200 Penang, Malaysia. Tel. No. : +604-2631966 Fax No. : +604-2628544 AUDITORS ERNST & YOUNG (AF0039) Chartered Accountants 21st Floor, MWE Plaza, No. 8, Lebuh Farquhar, 10200 Penang, Malaysia. ADVOCATES & SOLICITORS GHAZI & LIM NG SEE KEE & LEONG WONG-CHOOI & MOHD. NOR ROWENA YAM, KHOO & ASSOCIATES PRINCIPAL BANKERS OCBC BANK (MALAYSIA) BERHAD MALAYAN BANKING BERHAD STOCK EXCHANGE LISTING Main Market of Bursa Malaysia Securities Berhad Stock Code : 9865 Stock Name : SUIWAH

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ANNUAL REPORT 2013

FINANCIAL HIGHLIGHTS
2011 RM000 Revenue Profit Before Tax Paid up Capital Reserves (Restated) 422,263 18,973 61,000 118,234 2012 RM000 381,010 12,622 61,000 119,917 2013 RM000 372,335 19,187 61,000 129,922

Revenue
RM'000 430,000 420,000 410,000 400,000 422,263 390,000 380,000 370,000 360,000 350,000 340,000 2011 2012 Year 2013 15,000 10,000 381,010 372,335 5,000 0 20,000 RM'000 25,000

Profit Before Tax

18,973

2011

2012 Year

12,622

2013

Paid-up Capital
RM'000 70,000 60,000 50,000 40,000 61,000 61,000 30,000 20,000 10,000 0 2011 2012 Year 2013 61,000 RM'000 132,000 130,000 128,000 126,000 124,000 122,000 120,000 116,000 114,000 112,000 2011 118,234 118,000

Reserves

2012 Year

119,917

2013

129,922

19,187

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ANNUAL REPORT 2013

DIRECTORS PROFILE
DATO HWANG THEAN LONG - Managing Director Aged 64, Malaysian Dato Hwang Thean Long was appointed to the Board on 10 December 1992. He is presently the Managing Director of the Company and also acting as director of the subsidiary companies namely Crimson Omega Sdn Bhd, PT Sunshine Amanjaya Indonesi, Qdos Holdings Bhd, Qdos Marketing Sdn Bhd, Sunshine (Labuan) Private Limited, Sunshine Supermarket & Departmental Store Sdn Bhd and Sunshine Wholesale Mart Sdn Bhd. He has more than 42 years of experience in business industry especially supermarket retailing. He started his career with a mini market when he joined his father, the late Mr. Hwang Siong Wah, the founder of the well-known Swee Wah general merchant at Ayer Itam, Penang in 1970. After taking over the Swee Wah general merchant, he has expanded the business by opening additional outlets, which comprise of Sunshine Square, Sunshine Farlim Shopping Mall, Suiwah Ayer Itam and Sunshine Lip Sin. His current directorship in other public company includes Penang Commercial and Industrial Development Berhad. He is also a major shareholder of the Company by virtue of his interests held through Suiwah Holdings Sdn Bhd and Suiwah Supermarket Sendirian Berhad in the Company. He is the spouse of Datin Cheah Gaik Huang, an Executive Director of the Company and the father of Ms. Hwang Siew Peng who is also an Executive Director of the Company. Dato Hwang Thean Long attended all the five (5) Board Meetings held during the financial year ended 31 May 2013.

DATIN CHEAH GAIK HUANG - Executive Director Aged 60, Malaysian Datin Cheah Gaik Huang was appointed to the Board on 14 March 1997. She has more than 32 years of working experience in the supermarket retailing business and also acting as director of the subsidiary companies namely Aljano Sdn Bhd, Magirex Sdn Bhd, Sunshine Electrical Superstore Sdn. Bhd, Sunshine Supermarket & Departmental Store Sdn Bhd and Sunshine Wholesale Mart Sdn Bhd. She does not hold any directorship in other public companies. She is the spouse of Dato Hwang Thean Long, the Managing Director and a major shareholder of the Company. Therefore, she is deemed to have an interest in shares of the Company through Suiwah Holdings Sdn Bhd (SHSB) and Suiwah Supermarket Sendirian Berhad (SSSB) by virtue of her husbands shareholdings held through SHSB and SSSB. She is also the mother of Ms. Hwang Siew Peng, who is an Executive Director of the Company. Datin Cheah Gaik Huang attended all the five (5) Board Meetings held during the financial year ended 31 May 2013.

MS. HWANG SIEW PENG - Executive Director Aged 39, Malaysian Ms. Hwang Siew Peng was appointed to the Board on 26 December 2001. She also sits on the Board of Directors of several subsidiary companies of the Company and other private companies. She holds a Bachelor of Commerce Degree (Marketing and Management) from Curtin University of Technology, Western Australia. She worked as store operational assistant before joining Suiwah group of companies as Business Development Executive in the year 2000. She does not hold any directorship in other public companies. She is the daughter to Dato Hwang Thean Long and Datin Cheah Gaik Huang, who are the Executive Directors and major shareholders of the Company. Therefore, she is deemed to have interest in shares of the Company by virtue of the shareholdings of her parents. Ms. Hwang Siew Peng attended all the five (5) Board Meetings held during the financial year ended 31 May 2013.

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ANNUAL REPORT 2013

DIRECTORS PROFILE (CONTD.)

DATO HAJI MOHD SUHAIMI BIN ABDULLAH - Independent Non-Executive Director Aged 55, Malaysian Dato Haji Mohd Suhaimi Bin Abdullah was appointed to the Board on 10 December 1992. He is presently the Chairman of the Audit Committee and a member of the Nomination and Remuneration Committee of the Company. He is also a director of the subsidiary companies namely Crimson Omega Sdn Bhd and Qdos Holdings Bhd. He graduated from Havering Technical College, London in 1981 with Diploma in Business Studies. Subsequently, he obtained a professional qualification in the Chartered Institute of Transport from School of Transport, University of London in 1985 and is a member of the Chartered Institute of Transport since 1989. From 1982 to 1984, while he was completing his studies, he was engaged as a secretary with the Majlis Pelajar-Pelajar Malaysia in London, UK. There, he managed the administrative and communicative matters between Ministries of Malaysia, which have contact with the Malaysian Students Societies Council in the UK and Ireland. From 1984 to 1985, he was employed as a Marketing Executive in Mafeta Travel Agency Limited, London, UK where he managed the sales and marketing of air tickets for Malaysia and Far East countries. From 1985 to 1987, the Foundation of Mara Education engaged him as an Assistant Secretary II, where he handled the administrative matters of the foundation. Also in 1986, he joined Angkatan Seniman Abad Xx Sdn Bhd as an Executive Director. He was in charged of all administrative and financial matters for the company, which produced feature films and sitcoms for local media. Then in 1987, he joined YPM Realities Sdn Bhd as a General Manager and subsequently joined Yayasan Bumiputera Pulau Pinang Berhad also as a General Manager in 1991. He was in charge of the overall management and day-to-day operations of the companies. He currently is the Managing Director and Chief Executive Officer of Silver Ridge Holdings Bhd. Dato Haji Mohd Suhaimi Bin Abdullah attended four (4) of the five (5) Board Meetings held during the financial year ended 31 May 2013.

DATO AHMAD HASSAN BIN OSMAN - Independent Non-Executive Director Aged 75, Malaysian Dato Ahmad Hassan Bin Osman was appointed to the Board on 18 December 1995 and on 16 September 2004, his position has been redesignated from Non-Independent Non-Executive Director to Independent Non-Executive Director. He is presently the Chairman of the Nomination Committee and Remuneration Committee and also a member of Audit Committee in the Company. He is also a director of the subsidiary company, namely Crimson Omega Sdn Bhd. He graduated from the University of Malaya, Kuala Lumpur in 1962 and subsequently obtained a Masters Degree in Economics from the University of Wisconsin, Madison in 1978. He has vast experience in the public service, spanning a period of over 30 years. His last post with the Government was as the Secretary-General of the Ministry of Housing and Local Government, Malaysia. Upon retirement, he was appointed as an Executive Director of the Islamic Development Bank based in Jeddah, Saudi Arabia from 1994 to 1997. His current directorship in other public company includes Kimble Corporation Bhd. Dato Ahmad Hassan Bin Osman attended all the five (5) Board Meetings held during the financial year ended 31 May 2013.

MR. WONG THAI SUN - Independent Non-Executive Director Aged 58, Malaysian Mr. Wong Thai Sun was appointed to the Board on 26 December 2001. He is a member of the Audit Committee, Nomination Committee and Remuneration Committee of the Company. He also sits as a member in the Employees Share Option Scheme Committee of the Company. He holds a Bachelor of Economics and Accountancy from Australian National University. He is a member of the Malaysian Institute of Accountants and the Certified Public Accountants, Australia. He has public practice experience in accountancy for over 20 years in Malaysia and in overseas and currently has his own public practice firm, which is Wong Thai Sun & Associates. He is the Independent Non-Executive Director of Dnonce Technology Bhd and Emico Holdings Bhd. Mr. Wong Thai Sun attended all the five (5) Board Meetings held during the financial year ended 31 May 2013.

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ANNUAL REPORT 2013

DIRECTORS PROFILE (CONTD.)

MR. JEN SHEK VOON - Independent Non-Executive Director Aged 66, Singaporean Mr. Jen Shek Voon was appointed to the Board on 1 July 2004. He is also a member of the Audit Committee of the Company. He sits on the Board of Directors of a number of publicly listed companies on the stock exchanges of Singapore, Malaysia and Hong Kong SAR. He does not hold any directorship in other public companies in Malaysia. He is a fellow member of the Singapore Institute of Directors. He holds Master of Bachelor of Accounting (Hons) from University of Singapore and obtained a post-graduate Commerce Hons degree from the University of New South Wales. He is a fellow of the Institute of Chartered Accountants in Australia, Association of Chartered Certified Accountants in United Kingdom and the Taxation Institute of Australia. He also is a practicing member of the Institute of Certified Public Accountants, Singapore (ICPAS) and a member of Information System Audit and Control Association, British Computer Society, Institute of Internal Auditors and the Malaysian Institute of Accountants. He currently manages his own public accounting practice, Jen Shek Voon PAS, as a sole proprietor. Mr. Jen is a Public Accountant Singapore, licensed by the Singapore Accounting and Corporate Regulatory Authority (ACRA). Mr. Jen Shek Voon attended all the five (5) Board Meetings held during the financial year ended 31 May 2013.

DATUK HAJI RADZALI BIN HASSAN - Non-Independent Non-Executive Director Aged 56, Malaysian Datuk Haji Radzali Bin Hassan is a Pioneering Environmental Entrepreneur, was appointed to the Board on 16 September 2004. Born in 1957 in Perak, Datuk Radzali completed his Masters in Business Administration and holds an Advance Diploma in International Business Studies. Datuk Radzali was conferred the Kestaria Setia DiRaja Award by DYMM Paduka Baginda Yang DiPertuan Agong in 1997 and Darjah Mulia Seri Melaka by TYT Yang Di Pertua Negeri Melaka. Datuk Radzali is currently the Chairman/Group Managing Director of Harta Maintenance Sdn Bhd and Harta Group of Companies since April 1980, is also an acting director of the subsidiary companies namely Qdos Holdings Bhd and Qdos Flexcircuits Sdn Bhd. Datuk Radzali does not hold any directorship in other public companies. Datuk Radzali is a major shareholder of the Company by virtue of his interests held through Hozone Sdn Bhd. Datuk is also a Director and shareholder of Hozone Sdn Bhd. Datuk Radzali Bin Hassan attended all the five (5) Board Meetings held during the financial year ended 31 May 2013. Save for the family relationship as disclosed above, none of the above Directors have any family relationship with other Directors and/or major shareholders of the Company. None of the above Directors have any conflict of interest with the Company or any conviction for any offences other than traffic offences within the past ten (10) years.

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ANNUAL REPORT 2013

MANAGING DIRECTORS STATEMENT

On behalf of the Board of Directors, I have the pleasure to present to you the Annual Report of Suiwah Corporation Bhd. (the Company) and its group of companies (the Group) for the financial year ended 31 May 2013. FINANCIAL OVERVIEW During the financial year ended 31 May 2013, the Groups revenue stood at RM372.33 million which constitutes a 2.28% decrease over last years revenue of RM381.01 million. The marginal decrease was mainly due to the cessation of its merchandise trading activities during the financial year. However, the Groups profit before tax increased by 52.06% from RM12.62 million recorded in previous financial year to RM19.19 million for this financial year ended 31 May 2013. The satisfactory achievement in overall profit improvement was contributed by overall improved operational efficiency, continuous material cost down exercise and overheads cost savings during the financial year. After providing for taxation, the Groups earnings per share improved from 13.17 sen in previous financial year to 24.23 sen for financial year ended 31 May 2013. The Companys shareholders funds have improved from RM96.93 million as at 31 May 2012 to RM99.49 million as at 31 May 2013. The total Groups bank short term borrowings stood at RM13.41 million as at 31 May 2013 compared with RM2.51 million as at 31 May 2012. The increases in bank short term borrowings were mainly due to finance the current development for the construction of Sunshine Bertam. Notwithstanding that, our financial position and capital structure are strong, enabling us to withstand the volatility in the market place and at the same time, provide us with enough flexibility to take advantage of opportunities in this current business environment. DIVIDEND The Company had declared and paid a first and final dividend of 8% less 25% taxation amounting to RM3.44 million for the financial year ended 31 May 2012. In line with the preceding years dividend payout, the Board of Directors is pleased to recommend a first and final dividend of 8% less 25% taxation for the financial year ended 31 May 2013. The proposed final dividend will be tabled for the shareholders approval at the forthcoming Twentieth Annual General Meeting to be held on 28 November 2013. OPERATIONS REVIEW Retail Segment Retail sales activity continues to be driven by domestic demand, particularly household spending. Value growth in retail is expected to increase during financial year ending 31 May 2014, driven by the soon to open new retail outlet in Bertam, Penang. The Group will also be embarking on innovative advertising campaigns in order to boost the brand appeal, ultimately increasing consumer purchasing behavior. The Groups retail business segment remained satisfactory for the financial year ended 31 May 2013, despite the closing down of a retail outlet in the fourth quarter of the financial year 2013. Retail segment is currently focusing to add value to its businesses through improved operation efficiency, such as customer care service, fair price policy, new store opening and strong brand image that emotionally connects the Group with consumers. Despite facing challenging factors in its retail industry, it is envisaged that our retail segment will continue achieving satisfactory performance for the coming financial year. Manufacturing Segment Manufacturing outlook remains positive. Qdos Group has seen significant enhancement in operation efficiency, engineering strength and supply chain management. This would not be possible without the newly implemented ERP system Microsoft Dynamics AX; partnership with USM on various lean manufacturing project, engineering innovations and meritocratic management philosophy. Qdos is optimistic that the manufacturing segments financial performance will be further improved, assuming that the demand from global electronics players remains positive for flexible printed circuit boards. The manufacturing segment continues to upgrade its technological capabilities and to improve its operational efficiencies through lean manufacturing projects. During the financial year, a subsidiary company; Qdos Interconnect Sdn Bhd (QISB) has been incorporated in Malaysia to undertake advanced manufacturing in semiconductor substrates. QISB has entered into the business agreements with Advanpack Solutions Pte Ltd (ASP).

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ANNUAL REPORT 2013

MANAGING DIRECTORS STATEMENT (CONTD.)

OPERATIONS REVIEW (CONTD.) Property Investment and Development Segment The Groups property investment and development segment recorded higher revenue for the financial year 2013 as compared to previous financial year. The company will soon add another milestone to its prestigious achievements, i.e. Sunshine Bertam, which is set to commence for business before the end of 2013. This consumer centered retail store will focus on meeting the changing needs of northern region shoppers by providing a vast selection of fresh, quality and reasonably priced products. The Group is also in the process of developing the Sunshine Tower project on a 9-acres land in Farlim, Penang. This mega project will consist of a shopping mall, a hotel, service apartments and business suites. Sunshine Tower is set to be the next happening leisure and entertainment venue in the Northern Region. FUTURE PROSPECTS The ongoing global economy continues to exhibit significant volatility and uncertainty. However, the Group believes that its business will continue to grow despite the economic volatility and the impact on Asian economic growth. We remain cautious about the strength of global economic growth in the year ahead. Nevertheless, the Group will continue to formulate plans and measures to respond to all challenges and changing consumer demands. We will continue to place high priority on the Groups operational efficiency improvement through innovations. We shall also continue to invest resources and nurture corporate culture that focuses strongly on executing and delivering the Groups business strategies. The Board is confident that the Group is well positioned to meet its overall objectives to continue achieving satisfactory performance for the coming financial year. CORPORATE RESPONSIBILITY Within our business strategies, corporate responsibility remains an integral part of our efforts, despite the economic challenges we have faced. As we work to strengthen our business, we are committed to doing it right for our employees, shareholders, consumers, customers and the environment. We support programs that improve our local communities. We believe that our customers, consumers and suppliers value our efforts to operate in an ethical, environmentally sustainable, and socially responsible manner. The Groups commitment to these aspects can be located in Statement on Corporate Social Responsibility in this Annual Report. CORPORATE GOVERNANCE The Groups commitment to corporate governance is outlined in the Statement of Corporate Governance and other related reports found in the relevant sections of this Annual Report. The Board of Directors of the Company has also ensured that the decision making process is impartial. Independence is assured in key appointments as well as maintaining proper standards of conduct at all times. APPRECIATION On behalf of the Group and the Board of Directors, I would like to thank all our shareholders, customers, bankers, suppliers, business associates and regulatory authorities for their invaluable and continuing support to the Group. We would also like to extend our gratitude and appreciation to the management team and all the employees of the Group for their diligent services, commitment, loyalty to the Group and innovations which have enabled the Group to achieve another successful year. I would also like to extend my personal thanks to my fellow Directors for their constant dedication as the Group attributed its success to the leadership of its Board of Directors and it also owes much to the dedication of its employees and the support of its loyal customers and trust given by all our shareholders. 50 years of serving Penangites. Sunshine delivers. In line with the slogan of our Sunshine delivery service, we take pride in having served the community for 50 years, particularly the Penangites. Moving forward, we are even more committed to serving and giving back to the community. Thank you.

DATO HWANG THEAN LONG Managing Director Date : 22 October 2013

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ANNUAL REPORT 2013

STATEMENT ON CORPORATE SOCIAL RESPONSIBILITY

The Board of Directors (the Board) fully acknowledges the importance of Corporate Social Responsibility (CSR) and the Group continues to support and participate in CSR activities in its operations. In line with this, the Group had carried out several activities during the financial year ended 31 May 2013 that will provide benefits to our stakeholders, and focused on areas of employee welfare and development, community and environment which include the following: FMM Heritage Explorer Trail 2012 Qdos has sponsored 5 teams to participant in the FMM Heritage Explorer Trail 2012 on 15 July 2012 at the Esplanade (City Hall). The fund collected by organizer will be donated to St. Nicholas Home Penang, Women Centre for Change, Pure Lotus Cancer Foundation and Sunshine Cottage Welfare Society. Education Turning Vision into Reality, for Qdos it is as much about crystallizing individual dreams, hopes and aspiration as much as it is about generating profits. Since October 2011, Qdos has collaborated with Universiti Sains Malaysia (USM) to take in over 17 undergraduate students in the field of manufacturing engineering to study the flex circuits manufacturing process as part of the students final year research projects. Department Heads from Production, Quality Assurance and Process Engineering have provided coaching and supervision to those students during their learning period in Qdos. One of the students, have successfully completed with Yellow Belt certification in performing her internship and continued with her 4th year Industrial Training with Qdos from January to May 2013. Hari Raya Puasa Visit to Orphanage Homes Sunshine Aman Jayas Director, Dato Hj. Abdul Rafique and Sunshines Management team had on 14 August 2012 visited Rumah Kebajikan Anak Lelaki Pulau Pinang, Rumah Kebajikan Anak-Anak Yatim Islam Perempuan & Pusat Pemulihan Dalam Komuniti, Permatang Damar Laut to give away pocket money and hampers to the unfortunate children as a Corporate Social Responsibility service. Charity Walk With The Disabled Qdos management and staffs give moral support and motivation to the disabled with their participation to the Charity Walk Together With The Disabled organized by Persatuan Orang Kurang Upaya Penang on 2 September 2012 at Padang Polo, Penang. Blood Donation Campaign Caring is sharing. On 21 November 2012, Qdos worked together with the General Hospital of Penang in organizing a Blood Donation Campaign at Qdos premise. A total of 30 packs of blood are being collected and donated to save lives. Sunshine Gives Back Charity Drive for Orphans/Children of Single Parent Sunshine sponsored 30 orphans/children of single parent family through Women Crisis Centre Penang for shopping spree at the Back to School promotion held at Sunshine Square Bayan Baru on 5 December 2012. Each of the kids is entitled to RM100 voucher for schooling products inclusive uniforms, stationeries and school shoes. Sunshine Gives Back Charity Drive for The Elderly Another charity drive by Sunshine in giving away hampers of essential items to the aged citizens with low income from the area of Ayer Itam during the launching of Chinese New Year Promotions at Sunshine Farlim Mall on 12 January 2013. Caring and Celebrates With The Senior Citizens In conjunction with the Chinese New Year celebration, Qdos makes its effort to care for the elderly on 15 February 2013 at Silver Jubilee Home in Sungai Dua, Penang. Qdos complimented their visit with donations of daily use items, necessities and not forgetting, red packets. Effort in Higher Awareness For Blood Donation Sunshine has sponsored RM6,800 to the Penang State Government and Health Ministry for an event Majlis Penghargaan Penderma Darah Negeri Pulau Pinang on 30 March 2013 as part of its effort in encouraging higher blood donation. Green School Award 2013 In line with the objective of Penang State Government to have a cleaner and greener environment and quality life, this The Green School Award was aimed to create awareness and educate the public especially the young generation on the importance of utilizing resources in a sustainable way and environment friendly. The Company has sponsored RM6,000 as prizes for the top 3 primary schools Green School Award 2013 held from April to October 2013. Colgate OHM Free Dental Check-up The retail arm & Colgate Palmolive jointly organized a consecutive oral health mouth campaign which was held at Sunshine Square Bayan Baru from 4 April to 6 April 2012. A total of 2,332 free dental check-ups were done during the campaign. Penang International Science Fair 2013 Qdos give its support in nurturing children with science and technology education by contributing 5000 bottles of mineral water to the Penang International Science Fair 2013 held on 13-14 April 2013 at the Straits Quay Court and Convention Center.

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ANNUAL REPORT 2013

STATEMENT ON CORPORATE SOCIAL RESPONSIBILITY (CONTD.)

A Walk For Life To survive, one needs support; be it emotionally or physically. Qdos management and staff showed their support by participating in this walk - A Walk For Life organized by University Science of Malaysia in Nibong Tebal on 11 May 2013. Half of the registration fees from this event are donated to National Cancer Society Malaysia (NCSM). Wen Yu 2013 Art Performance Sunshine is the Bronze Sponsor to the Wen Yu 2013 Art Performance held on 11 May 2013 organized by the Chinese Tionghua Club of University Science of Malaysia. The sponsorships are to boost the spirit of art and performance amongst the younger generations. Land Transportation Symposium The Group contributed RM2,500 to the Persatuan Kejuruteraan Universiti Malaya in its initiatives to cultivate interest and share the importance of public transport to the public. Charity Drive Collaboration Sunshine and Reckitt Benckiser (M) Sdn Bhd jointly organized a charity drive. For every sale of Dettol product at Sunshine Square Bayan Baru and Sunshine Farlim Mall, RM0.50 will be donated to Home Dynamics Berhad and Pusat Pemulihan Dalam Komuniti, Permatang Damar Laut. A total of RM5,000 were collected and donated equally to both non-profit centres on 2 June 2013.

The Group is also committed to its social responsibilities at the workplace and continues to provide employment opportunities to new job seekers in the labour market and to hire graduates to create job opportunities to help the government to reduce unemployment. In addition as part of the employees benefit, the manufacturing sector provides regular health checks such as audiometric test were made available for those employees who are constantly exposed to an environment of high level of noise. The Group will continue training either in-house or through outsourcing throughout the year for all its employees and further enhanced their skills at all level to create a career advancement path.

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ANNUAL REPORT 2013

STATEMENT ON CORPORATE GOVERNANCE

Introduction The Board of Directors (Board) of Suiwah Corporation Bhd (SCB or Company) recognizes the importance of adopting good corporate governance throughout the Group as a fundamental part of the Boards responsibility to protect and enhance long-term shareholders value and the financial performance of the Company, whilst taking into account of the interests of other stakeholders. The Statement below sets out how the Group has applied the principles and recommendations of Malaysian Code on Corporate Governance 2012 (MCCG 2012 or Code) together with the provisions contained in the Main Market Listing Requirements of Bursa Malaysia Securities Berhad (Listing Requirements). This statement outlines the Groups main corporate governance practices and policies in alignment with the recommended principles of MCCG 2012 as below: Establish clear roles and responsibilities Strengthen composition Reinforce independence Foster commitment Uphold integrity in financial reporting Recognise and manage risks Ensure timely and high quality disclosure Strengthen relationship between company and shareholders

The following paragraphs describe how the Group has applied the Principles of the Code and how the Board has complied with the recommendations set out in the Code for the financial year ended 31 May 2013. Principle 1 - Establish Clear Roles and Responsibilities 1.1 Board should establish clear functions reserved for Board and those to delegated to Management The Board has been entrusted with the overall responsibility for the overall governance, strategic direction and overseeing the investments of the Group. The Board retains full and effective control of the Group and assumes responsibility for determining the Groups strategies and direction, shareholders and investors relationship, approval of annual and quarterly financial results, acquisition and disposal, major capital expenditure as well as reviewing the adequacy and integrity of the Groups system of internal controls. 1.2 Board should establish clear roles and responsibilities in discharging its fiduciary and leadership functions Currently, the position of the Chairman of the Company is vacant subsequent to the demise of the late Tun Dato Seri Utama Dr. Lim Chong Eu. In this respect, the Board will elect among themselves to chair its meeting. The Chairman of the Board Meeting is primarily responsible for orderly conduct of a Board Meeting whilst the Managing Director is responsible for the day-to-day business operations and implementation of Board policies and decisions. Hence, there is a clear division of responsibility between the Chairman and Managing Director to ensure there is a balance of power and authority. None of the members of the Board has unfettered powers of decision. The Board comprises of the Managing Director, two (2) Executive Directors, one (1) Non-Independent Non-Executive Director and four (4) Independent and Non-Executive Directors, all of whom bring to the Group a broad and valuable range of experience. There was a strong independent element on the Board as 50% of its Board members comprises of Independent and Non-Executive Directors. The presence of Independent and Non-Executive Directors in the Board provides objectivity and they are of the caliber necessary to carry sufficient weight in Board decisions. The role of the Independent and Non-Executive Directors is particularly important in ensuring that the strategies proposed by the management are fully discussed and examined, and takes into account the long-term interests, not only of the shareholders, but also of employees, customers, suppliers, and the many communities in which the Group conducts business. The Board meets regularly at least four (4) times a year. At the end of every quarter, the Groups financial statements and results are tabled and deliberated by the Board. During the Board Meeting, the Board reviews the operation and performance of the Group and any other strategic issues that may affect the Groups business.

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ANNUAL REPORT 2013

STATEMENT ON CORPORATE GOVERNANCE (CONTD.)

1.3 Formalise ethical standards through a code of conduct and ensure its compliance The Board conducted themselves in an ethical manner while executing their duties and functions, and complied with the Companys Code of Ethics recommended by the Companies Commission of Malaysia. In addition to the Company Directors Code of Ethics established by Companies Commission of Malaysia, both Directors and employees are required to uphold the highest integrity in discharging their duties and in dealings with various stakeholders such as shareholders, customers, fellow employees and regulators. The Company shall formalize and apply to ethical values through the code of conduct and in compliance with the Companys policies. 1.4 Ensure the Companys strategy promote sustainability The Company focuses on key areas of environment conservation and social contribution with the aim to promote sustainable development. A report on sustainability activities, demonstrating the Companys commitment to the global environmental, social, governance and sustainability agenda, appears in the Corporate Responsibility Statement of this Annual Report. 1.5 Procedures to allow the Directors access to information and advice All Directors have full and timely access to information through the Board papers distributed in a timely manner prior to the Board meetings. The Board papers provide, among others, periodic financial information, annual budget, operational and corporate issues, investment proposals and management proposals that require Boards approval. Senior management staff may be invited to attend Board meetings to provide the Board detailed explanations and clarifications on certain matters that are tabled by them to the Board. The Directors may also interact directly with the Management, or request further explanation, information or updates on any aspect of the Companys operations or business concerns from them. In this way the Board has full access to all information on the Companys affairs to enable the proper discharge of duties. The Board may seek independent professional advice at the Companys expense on specific issues to enable it to discharge its duties in relation to the matters being deliberated. Individual Director may also obtain independent professional or other advice in furtherance of their duties, subject to the approval of the Board, depending on the quantum of the fees involved. 1.6 Ensure Board is supported by suitably qualified and competent Company Secretary The Board is satisfied with the performance and support rendered by the Company Secretary to the Board in the discharge of its functions. The Company Secretary plays an advisory role to the Board in relation to the Companys constitution, Boards policies and procedures and compliance with the relevant regulatory requirements, codes or guidance and legislations. The Board is supported by suitably qualified and competent company secretary who is member of a professional body. The Board has ready and unrestricted access to the advice and services of the Company Secretary, who are considered capable of carrying out the duties to which the post entails. 1.7 Formalise, periodically review and make public the Board Charter The Board understands the importance of the roles and responsibilities between the Board and the Management. As part of the good corporate governance process, the Board will document these roles and responsibilities in the Board Charter to ensure accountability of both parties and also to provide reference for directors in relation to the Boards roles, powers, duties and functions. The Board will also review the Board Charter to ensure it remains consistent with the Boards objectives and responsibilities, and all the relevant standards of corporate governance from time to time.

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ANNUAL REPORT 2013

STATEMENT ON CORPORATE GOVERNANCE (CONTD.)

Principle 2 - Strengthen Composition 2.1 Establish a Nominating Committee (NC) which should comprise exclusively Non-Executive Directors, a majority of whom must be independent The NC of the Company was established on 29 April 2002. The NC comprises three Non-Executive Directors, majority of who are Independent Non-Executive Directors as follows: Chairman Dato Ahmad Hassan Bin Osman (Independent Non-Executive Director) Members Dato Haji Mohd Suhaimi Bin Abdullah (Independent Non-Executive Director) Mr. Wong Thai Sun (Independent Non-Executive Director) 2.2 NC should develop, maintain and review criteria for recruitment process and annual assessment of Directors The NC is empowered to bring to the Board, recommendations as to the appointment of any new Director or to fill board vacancies as and when they arise in making its recommendation, the NC will consider the required mix of skills, knowledge, expertise, experience and other qualities, including core competencies which should bring to the Board. The duties and functions of the NC are as follows: (i) (ii) (iii) (iv) To review the structure, size and composition (including skills, knowledge and experience) required of the Board compared to its current position and make recommendations to the Board with regard to any changes. To give full consideration to succession planning for directors in the course of its works, taking into account the challenges and opportunities facing the company, and what skills and expertise are therefore needed on the Board in the future. To review and recommend to the Board, candidates to fill board vacancies as and when they arise. To prepare a description of the role and capabilities required for a particular appointment with thorough evaluation and considerations of the following criteria: skills, knowledge, expertise and experience; competencies, commitment, contribution and performance; professionalism; integrity; and the case of candidates for the position of Independent Non-Executive Directors, the Committee shall also evaluate the candidates ability to discharge such responsibilities/function as are expected from Independent Non-Executive Directors. To review and recommend the re-appointment of any Non-Executive Director at the conclusion of their term office having given due regard to their performance and ability to continue to contribute to the Board in the light of the knowledge, skills and experience required. To ensure the board composition meets the needs of the Company. To develop, maintain and review the criteria to be used in the recruitment process and annual assessment of Directors. To review and recommend to the Board, candidates to fill the seats on Board committees. To assist the Board to annually review its required mix of skills and experience and other qualities including core competencies, which Non-Executive Directors should bring to the Board. To assess the effectiveness of the Board as a whole and Committees of the Board and assess the contribution of each individual Director, including the Independent Non-Executive Directors, as well as the Chief Executive Officer. To review and recommend the re-appointment and re-election of Directors of the Company for shareholders approval. To facilitate Board induction and training programmes.

(v)

(vi) (vii) (viii) (ix) (x)

(xi) (xii)

The Board was of the view that the performance appraisal and assessment on the Board is not applicable to the Group as all the Board are already subject to the retirement by rotation at least once in every three (3) years but eligible for re-election by the shareholders at the AGM of the Company. The assessment of Boards performance shall be dependent on the shareholders review before they decide to vote for or against the re-election of the retiring Directors at the AGM. While the Board recognizes the initiatives by the government to enlarge the womens representation at boardroom, the Board composition comprise of two (2) female Directors out of the eight (8) Directors.

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ANNUAL REPORT 2013

STATEMENT ON CORPORATE GOVERNANCE (CONTD.)

2.3 Board should establish formal and transparent remuneration policies and procedures to attract and retain Directors In the case of Executive Directors, the remuneration comprises salary, allowances and bonus. The fees payable to Non-Executive Directors are approved by shareholders at each AGM. All Directors are also paid allowance for each meeting they attend. The details of the Directors remuneration for the financial year ended 31 May 2013 are as follows: Company Category of Remuneration Executive Directors (RM) 174,600 18,000 192,600 Group Executive Directors (RM) 177,600 436,744 18,000 632,344

NonExecutive Directors (RM) 65,000 50,000 115,000

NonExecutive Directors (RM) 74,000 50,000 124,000

Directors Fees Salaries, Bonus and Other Emoluments Meeting Allowance Total

The number of Directors whose remuneration falls into each successive band of RM50,000 is as follows: Range of Remuneration Below RM50,000 RM50,001- RM100,000 RM100,001- RM150,000 RM300,001- RM350,000 Above RM350,000 Total Number of Directors Executive Directors 2 1 3 Non-Executive Directors 5 5

Principle 3 - Reinforce Independence 3.1 Board should undertake an assessment of its Independent Directors annually The Board through the NC assessed the independence of Independent Directors on an annual basis, with a view to ensure the Independent Directors bring independent and objective judgement to the Board and this mitigates arising from conflict of interest or undue influence from interested parties. Where there is a likely conflict of interest position, the Board would take appropriate action to rectify the situation. Should any Director has an interest in any matter under deliberation, he is required to disclose his interest and abstain from participating in the discussions and voting on the matter. The Board also received confirmation in writing from the Independent Directors of their independence. The Board is satisfied with the assessment of the Independent Directors. 3.2 Tenure of Independent Director should not exceed cumulative term of nine (9) years. Upon completion of tenure, Independent Director can continue serving but as Non-Executive Director One of the recommendation of the Code states that the tenure of an Independent Director should be capped at nine (9) years, either be a consecutive service of nine (9) years or a cumulative service of nine (9) years with intervals. Upon completion of the nine (9) years tenure in office, an Independent Director may continue to serve on the company subject to the re-designation as a Non-Independent Director. Currently, the following Independent Directors, who have served the Company as Independent Non-Executive Directors for a cumulative term more than nine (9) years are: (i) (ii) (iii) (iv) Dato Haji Mohd Suhaimi Bin Abdullah Dato Ahmad Hassan Bin Osman Mr. Wong Thai Sun Mr. Jen Shek Voon

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ANNUAL REPORT 2013

STATEMENT ON CORPORATE GOVERNANCE (CONTD.)

3.2 Tenure of Independent Director should not exceed cumulative term of nine (9) years. Upon completion of tenure, Independent Director can continue serving but as Non-Executive Director (contd.) However, the Nomination Committee and the Board have assessed the independence of Dato Haji Mohd Suhaimi Bin Abdullah, Dato Ahmad Hassan Bin Osman, Mr. Wong Thai Sun and Mr. Jen Shek Voon are satisfied with the skills, contribution and independent judgment that the said Independent Directors bring to the Board and was of the view that both of the said Independent Directors remain objective and independent in expressing their views and in participating in deliberations and decision making of the Board and Board Committees. The length of his service on the Board does not in any way interfere with their exercise of independent judgment and ability to act in the best interests of the Company. As all the members of NC have acted as Independent Directors for the tenure in office for more than a cumulative term of nine (9) years and in line with Recommendation 3.2 of MCCG 2012, the Board (save for Dato Haji Mohd Suhaimi Bin Abdullah, Dato Ahmad Hassan Bin Osman, Mr. Wong Thai Sun and Mr. Jen Shek Voon who have abstained themselves from deliberation and forming the opinion on the subject matter) recommends and supports them to continue to act as an Independent Non-Executive Directors of the Company. The relevant motion on the subject matter will be presented to the shareholders for consideration at the forthcoming AGM. 3.3 Must justify and seek shareholders approval in retaining Independent Directors (serving more than 9 years) This was explained in the foregoing section. 3.4 Positions of Chairman and Managing Director to be held by different individuals This was explained in the Paragraph 1.2 above. 3.5 The Board must comprise majority Independent Directors if the Chairman is not an Independent Director It is recommended that the Board must comprise a majority of Independent Directors where the position of the Chairman is not an Independent Director. The Board currently comprises all Non-Executive Directors, of whom four (4) out of eight (8) directors are Independent Non-Executive Directors. The Board therefore has a strong independence element in its composition as there is a balance of membership in the Board thus ensuring that no individual dominates the decision making process and the results thereof. Principle 4 - Foster Commitment 4.1 Board should set expectations on time commitment for its members and protocols for accepting new directorships The Board is satisfied with the level of time commitment given by the Directors towards fulfilling their roles and responsibilities as Directors of the Company. The Board would have at least four (4) regular scheduled meetings annually, with additional meetings convened as and when necessary. A total of five (5) Board meetings were held in financial year ended 31 May 2013. The following is the record of attendance by the Board members during the financial year:Name of Directors Executive Directors Dato Hwang Thean Long Datin Cheah Gaik Huang Ms. Hwang Siew Peng Independent and Non-Executive Directors Dato Haji Mohd Suhaimi Bin Abdullah Dato Ahmad Hassan Bin Osman Mr. Wong Thai Sun Mr. Jen Shek Voon Non-Independent and Non-Executive Director Datuk Haji Radzali Bin Hassan 5 100 4 5 5 5 80 100 100 100 5 5 5 100 100 100 Total Meetings Attended % of Attendance

In the intervals between Board meetings, for exceptional matters requiring urgent Board decisions, the Board decisions are obtained via circular resolutions to which sufficient information required is attached to facilitate the Board in making informed decisions.

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ANNUAL REPORT 2013

STATEMENT ON CORPORATE GOVERNANCE (CONTD.)

4.2 Board should ensure members have access to appropriate continuing education programme All Directors have attended the Mandatory Accreditation Programme (MAP) as required by Bursa Malaysia Securities Berhad (Bursa Securities) on all directors of listed companies. The Directors are also encouraged to attend the relevant training courses deemed necessary so as to keep abreast with the changes on guidelines issued by the relevant authorities as well as the latest developments in the market place, which can complement their services to the Group. The Directors are also updated by the Company Secretary on any changes to legal and governance requirements of the Group. The Directors will continue to undergo other relevant training programmes from time to time to enhance their skills and knowledge where relevant. The training programmes attended by the individual Directors during the financial year ended 31 May 2013 are as follows: Title of the seminars, workshops or courses attended Dato Hwang Thean Long Green Card Safety and Health Induction Course Ms. Hwang Siew Peng Green Card Safety and Health Induction Course Mr. Wong Thai Sun Real Property Gains Tax Latest Development & Practical Issues Transfer Pricing Development in Malaysia Making The Most of Double Taxation Agreement Post Budget 2013 Tax Planning Seminar Percukaian Kebangsaan 2012 Datuk Haji Radzali Bin Hassan MFA Franchise Course Basic Lean Management Whats Next After 5S World Day for Safety and Health at Work 2013: The Prevention of Occupational Diseases Goods and Services Tax (GST) Awareness Mr. Jen Shek Voon FRS Update for the 2012 Reporting Season Public Accountants Conference: Enhancing Productivity and Quality in the Accounting Profession Seminar On Observations By Financial Statements Review Committee for the Preparers of Financial Statements, Auditors and Company Directors FRS 7 Cash Flow Statements FRS 39 Financial Instruments: Recognition and Measurements (Excluding Hedges and Derivatives) Is Effective Financial Regulation based on Written Accounting Standards Possible in a World of Financial Engineering? Mode of Training Course Course Seminar Seminar Seminar Seminar Seminar Course Class-Room Seminar Seminar Class-Room Conference Seminar Class-Room Class-Room Seminar No. of hours / days spent 8 hours 8 hours 8 hours 8 hours 8 hours 8 hours 8 hours 2 days 1 day 1 day 1 day 7 hours 7 hours 6 hours 7 hours 7 hours 3 hours

Save as disclosed above, the other Directors have not attended any trainings during the financial year under review, due to their respective tight traveling schedules and busy/heavy work commitments. Nevertheless, they are kept abreast with new statutory or regulatory development and various operational issues facing the changing business environment within the Group. Principle 5 - Uphold Integrity in Financial Reporting 5.1 Audit Committee should ensure financial statements comply with applicable financial reporting standards The Board acknowledges their responsibility to ensure that the financial statements of the Company and the Group are prepared in accordance with the provisions of the Companies Act, 1965 and approved accounting standards in Malaysia so as to give a true and fair view of the state of affairs and the result of the Company and of the Group. 5.2 Audit Committee should have policies and procedures to assess suitability and independence of External Auditors A transparent and appropriate relationship with the External Auditors to enable them to independently report to shareholders in accordance with statutory and professional requirement is established through the Audit Committee. The role of the Audit Committee members and their relationship with the External Auditors may be found in the Audit Committee Report in the Annual Report. The Audit Committee also met with the External Auditors twice during the financial year ended 2013 without the presence of Management and Executive Directors in compliance with the best practices of the Code.

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ANNUAL REPORT 2013

STATEMENT ON CORPORATE GOVERNANCE (CONTD.)

Principle 6 - Recognise and Manage Risks 6.1 Board should establish a sound framework to manage risks The Audit Committee oversees the risk oversight and risk management of the Company through the adoption of risk management policy. The Group is in the process to develop and formalize an appropriate risk management framework and structure and details of the risk management are set out in the Risk Management and Internal Controls Statement in this Annual Report. 6.2 Board should establish an internal audit function which reports directly to Audit Committee It is responsibility of the Board to maintain sound system of internal controls to safeguard shareholders investment. The Internal Audit function of the Group has been outsourced to a professional firm who is assisting the Audit Committee in discharging its duties and responsibilities. The role of the Internal Audit function is to provide the Audit Committee with independent assessment for adequate, efficient and effective internal control system to ensure compliance with policies and procedures. The Internal Audit function is also involved in risk management, risk evaluation and recommendation of control activities to manage such identified risk. The attainment of such objectives involves the following activities being carried out by the Internal Auditors: (i) Reviewing and appraising the soundness, adequacy and application of accounting, financial and other controls and promoting effective control in the Company and the Group at reasonable cost. (ii) Ascertaining the extent to whom the Groups and the Companys assets are accounted for and safeguarded from losses of all kinds. (iii) Attending stock counts of merchandise. (iv) Appraising the reliability and usefulness of information developed within the Group and the Company for management reporting purposes. (v) Carrying out audit work and to liaise with the External Auditors to maximise the use of resources and for effective coverage of audit risks. (vi) Recommending improvement to the existing systems of controls. (vii) Carrying out investigations and special reviews requested by Management and/or the Audit Committee of the Company. (viii) Continuously identifying opportunity for improvement in the operations of business processes of the Company and the Group. (ix) Discuss with Management action taken to improve the system of internal control. The Head of the Internal Audit attended the meetings and reported directly to the Audit Committee on the annual Internal Audit plan and Internal Audit reports on the audit conducted in accordance with the annual audit plan. During the financial year, the Internal Auditors has issued Internal Audit report to the Audit Committee and Management in regards to any major audit findings on the weaknesses in the system and controls of the operation. Areas of improvement were highlighted and implementation of recommendations was monitored. The total costs of the Internal Audit function in respect of the financial year ended 31 May 2013 was RM120,352. Principle 7 - Ensure Timely and High Quality Disclosure 7.1 Ensure company has appropriate corporate disclosure policies and procedures The Board recognizes the importance of disclosing of all material information in an accurate, clear and complete manner in accordance to the disclosure requirements as set out in the Listing Requirements. The Board has delegated the authority to the Executive Directors to approve all announcements for release to Bursa Securities. The Group Managing Director and/or Executive Director work closely with the Board, the Senior Management and the Company Secretary who are privy to the information to maintain strict confidentiality of the information.

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ANNUAL REPORT 2013

STATEMENT ON CORPORATE GOVERNANCE (CONTD.)

7.2 Encourage company to leverage on information technology for effective dissemination of information The Company continues to recognise the importance of transparency and accountability to its shareholders and investors. The Board always ensures that the shareholders are informed of the financial performance and major corporate activities of the Company. Such information is communicated to shareholders and investors through various disclosures and announcements to Bursa Securities, including the quarterly financial results, annual reports and where appropriate, circulars and press releases. Apart from the mandatory announcements through the Bursa Securities, the Company also maintains a website www.suiwah.com.my to which shareholders and investors can have access to information on the operations and business activities of the Group. Investor relations activities such as meetings with fund managers and analysts and interviews by the press are held at appropriate time to explain the Groups strategy, performance and major developments. Principle 8 - Strengthen Relationship between Company and Shareholders 8.1 Take reasonable steps to encourage shareholder participation at general meetings The AGM is the principal forum for communicating with shareholders. Shareholders who are unable to attend are allowed to appoint proxy, who need not be the shareholders, to attend and vote on their behalf. Board members are present to answer questions raised by shareholders. Shareholders are given the opportunity to ask questions during the questions and answers session prior to each resolution being proposed to consideration by shareholders. The Company provides information to the shareholders with regard to, amongst others, details of the Annual General Meeting, their entitlement to attend the Annual General Meeting, the right to appoint a proxy and also the qualifications of a proxy. 8.2 Board should encourage poll voting The Chairman of the meeting would remind the shareholders, proxies and corporate representatives on their rights to demand for a poll in accordance with the provisions of the Articles of Association of the Company for any resolutions. The voting process at the annual general meeting shall be by way of show of hands unless a poll is demanded. The Chairman may demand for a poll for any substantive resolutions put forward for voting at the shareholders meetings, if so required. The Companys share registrars system is well equipped for any poll voting should the circumstances arise. 8.3 Board should promote effective communication and proactive engagements with shareholders In maintaining the commitment to effective communication with shareholders, the Group adopts the practice of comprehensive, timely and continuing disclosures of information to its shareholders as well as to the general investing public. The practice of disclosure of information is not just established to comply with the requirements of the Listing Requirements. It also adopts the recommendations of the Code with regard to strengthening engagement and communication with shareholders. Where possible and applicable, the Group also provides additional disclosure of information on a voluntary basis. The Group believes that consistently maintaining a high level of disclosure and extensive communication with its shareholders is vital to shareholders and investors to make informed investment decisions. The Annual Report is the main channel of communication between the Company and its stakeholders. The Annual Report communicates comprehensive information of the financial results and activities undertaken by the Group. As a listed issuer, the contents and disclosure requirements of the annual report are also governed by the Listing Requirements. Another key avenue of communication with its shareholders is the Companys AGM, which provides a useful forum for shareholders to engage directly with the Companys Directors. At each AGM, the Directors of the Company would be present at the meetings to answer any questions that the shareholders may ask. The Chairman of the meeting provided time for the shareholders to ask questions for each agenda in the notice of the AGM. The External Auditors were also present at the AGM to answer any questions that the shareholders may ask. The shareholders were also able to meet with the Directors after the meeting while they mingled with the shareholders, proxies and corporate representatives. Compliance Statement The Board is satisfied that in financial year 2013, save for the above relevant explanations, the Company is in compliance with principles and recommendations of the Code. This statement is made in accordance with the resolution of the Board dated 23 September 2013.

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ANNUAL REPORT 2013

STATEMENT OF RISK MANAGEMENT AND INTERNAL CONTROL

Introduction The Malaysian Code on Corporate Governance requires listed companies to maintain a sound system of internal controls to safeguard shareholders investment and the Groups assets. Pursuant to Paragraph 15.26(b) of the Bursa Securities Listing Requirements, the Board of Directors of Suiwah Corporation Bhd is pleased to provide the following statement on the state of internal control of the Group, which has been prepared in accordance with the Statement of Guidance for Directors of Public Listed Companies (Statement on Internal Control) issued by the Institute of Internal Auditors Malaysia and adopted by Bursa Malaysia. Responsibility The Board affirms its overall responsibility for maintaining the Groups system of internal control and for viewing the adequacy and integrity of those systems. Because of the limitations that are inherent in any systems of internal control, those systems are designed to manage rather than eliminate the risk of failure to achieve business objective, and can only provide reasonable and not absolute assurance against material misstatement or loss. Risk Management The Board and management believe that risk management is critical for the Groups continued profitability and the enhancement of shareholders value. This, it is crucial to achieve a critical balance between risk incurred and potential returns. The potential risk are usually discuss among Directors to assess the performance of the Group, identifying new challenges resulting from changes in business development, industry and overall business environment and formulate appropriate action plans. Thus the Board has reviewed the effectiveness of the system of internal control and confirms that an ongoing process of identifying, evaluating and managing the Groups risk has operated throughout year covered in this Annual report. Internal Audit The Board acknowledges the importance of internal audit function and has outsourced its internal audit function to an independent professional accounting and consulting firm, as part of its efforts to provide adequate and effective internal control systems. The Internal Audit adopts a risk-based approach in developing its audit plan which addresses all the core auditable areas of the Group based on their risk profile. The audit focuses on high risk area to ensure that adequate action plan has in place to improve the controls in place. The audit ascertains that the risks are effectively mitigated by the controls. The highlighted areas will be followed up closely to determine the extent of their recommendations that have been implemented by the Management. Internal Control Apart from risk management and internal audit, the Group has put in place the following key elements of internal control: (i) (ii) (iii) (iv) (v) (vi) (vii) (viii) (ix) (x) An organisation strucure with well-defined scopes of responsibility, clear line of accountability, and appropriate levels of delegated authority; A process of hierarchical reporting which provides a documented and auditable trail of accountability; There is annual budgeting and target setting process including forecast for each area of business with details reviews at all levels of operations; Operational Management Meetings are held on a monthly basis to review the business performance and to compare the results against the financial budgets and to take appropriate actions and also to chart new directions/strategies if necessary; Regular and comprehensive information provided to Management, covering financial and operational performance and key business indicators, for effective monitoring and decision making; In-house training and development programmes corresponding to the needs of employees; Regular visits to business operating units by the Senior Management and Executives Directors; Staff handbook which provides consistency and uniformity in the administrative of the Groups manpower resources is available for reference; All documents made are communicated promptly to staff of all levels within the Group and vice versa where feedbacks and suggestions on improvements could be communicated to the Management and the Board; and Adherence to health, safety, environmental and quality standard of the Group as enforced by the regulatory authorities.

Conclusion The Board has received assurance from top management and Group Managing Director that the Groups risk management and internal control systems have been operating adequately and effectively, in all material aspects, during the financial year under review and up to date of this statement. Taking this assurance into consideration, the Board is of the view that there were no significant weaknesses in the current system of internal control of the Group that may have material impact on the operations of the Group for the financial year ended 31 May 2013. The Board and the Management will continue to take necessary measures and ongoing commitment to strengthen and improve its internal control environment and risk management. The statement is issued in accordance with a resolution of the Directors date 23 September 2013.

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ANNUAL REPORT 2013

AUDIT COMMITTEE REPORT

Members Dato Haji Mohd Suhaimi Bin Abdullah Dato Ahmad Hassan Bin Osman Mr. Wong Thai Sun Mr. Jen Shek Voon Summary of Terms of Reference Constitution (i) (ii) The Audit Committee was established by the Board of Directors (the Board) of the Company on 21 June 1995. The Board shall ensure that the composition and functions of the Audit Committee comply as far as possible with the Bursa Malaysia Securities Berhads (Bursa Securities) Main Market Listing Requirements (Listing Requirements) as well as other regulatory requirements. - Chairman (Independent Non-Executive Director) - Member (Independent Non-Executive Director) - Member (Independent Non-Executive Director) - Member (Independent Non-Executive Director)

Objectives The principal objectives of the Audit Committee are to assist the Board in discharging its statutory duties and responsibilities relating to accounting and financial reporting practices of the Company and its subsidiaries. In addition, the Audit Committee shall: (i) (ii) (iii) (iv) evaluate the quality of the audits performed by the Internal and External Auditors; provide assurance that the financial information presented by Management is relevant, reliable and timely; oversee compliance with laws and regulations and observance of a proper code of conduct; and determine the quality, adequacy and effectiveness of the Groups control environments and quality of the audits.

Membership The Audit Committee shall be appointed by the Board from amongst its Directors which fulfill the following requirements: (i) (ii) The Audit Committee must be composed of no fewer than three (3) members; All the Audit Committee members must be Non-Executive Directors, with a majority of members must be independent. No alternate Director is to be appointed as a member of the Audit Committee. At least one (1) member of the Audit Committee: (a) must be a member of the Malaysian Institute of Accountants (MIA); or (b) if he is not a member of the MIA, he must have at least three (3) years working experience; and a. he must have passed the examinations specified in Part I of the 1st Schedule of the Accountants Act, 1967; or b. he must be a member of one of the associations of accountants specified in Part II of the 1st Schedule of the Accountants Act, 1967; or (c) fulfills such other requirements as prescribed or approved by Bursa Securities. The definition of Independent Directors shall have the meaning given in Chapter 1.01 of the Listing Requirements. The Chairman of the Audit Committee shall be appointed among the members of the Audit Committee who shall be an Independent Director. In the absence of the Audit Committee Chairman and/or an appointed deputy, the remaining Audit Committee members present shall elect one of themselves to chair the Audit Committee meeting. Mr. Wong Thai Sun is a member of the MIA and the Certified Public Accountants, Australia. Mr. Jen Shek Voon is a practicing member of the Institute of Certified Public Accountants, Singapore and a member of Information System Audit and Control Association, British Computer Society, a member of Institute of Internal Auditors and MIA.

(iii)

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ANNUAL REPORT 2013

AUDIT COMMITTEE REPORT (CONTD.)

Meetings (i) The Audit Committee shall meet at least four (4) times a year, with due notice of issues to be discussed, and shall record its conclusions in discharging its duties and responsibilities and at such times as and when necessary. A quorum for the Audit Committee meeting shall consist of a majority of Independent Non-Executive Directors and shall not be less than two (2). For the purpose of this provision, any Audit Committee members who is able (directly or by telephone communication) to speak and shall be entitled to vote or be counted in quorum accordingly. Upon the request of the External Auditors, the Chairman of the Audit Committee shall convene a meeting of the Audit Committee to consider any matter the External Auditors believe should be brought to the attention of the Directors or Shareholders. Notice of Audit Committee meetings shall be given to all the Audit Committee members unless the Audit Committee waives such requirement. The Finance Manager, the Head of Internal Audit and representatives of the External Auditors shall normally attend meetings. Other Board members and employees may attend meetings upon the invitation of the Audit Committee. However, the Audit Committee shall meet with the External Auditors, the Internal Auditors or both, without other Board members and Management present whenever deemed necessary. Questions arising at any meeting of the Audit Committee shall be decided by a majority of votes of the members present, and in the case of equality of votes, the Chairman of the Audit Committee shall have a second or casting vote. The Company Secretary shall be the Secretary of the Audit Committee.

(ii)

(iii)

(iv)

(v)

(vi)

(vii)

During the financial year ended 31 May 2013, five (5) Audit Committee meetings were held. Details of attendance of each Audit Committee member were as follows:Name of Directors Dato Haji Mohd. Suhaimi Bin Abdullah Dato Ahmad Hassan Bin Osman Mr. Wong Thai Sun Mr. Jen Shek Voon Authority The Audit Committee shall, in accordance with a procedure to be determined by the Board and at the expense of the Company, (i) have explicit authority to investigate any matter within its terms of reference, the resources to do so, and full access to information. All employees shall be directed to co-operate as requested by members of the Audit Committee. have full and unlimited/unrestricted access to all information and documents/resources which are required to perform its duties as well as to the Internal and External Auditors and Senior Management of the Company and Group. obtain independent professional or other advice and to invite outsiders with relevant experience to attend, if necessary. have direct communication channels with the External Auditors and person(s) carrying out the internal audit function or activity. No. of the Audit Committee Meetings Attended 4 5 5 5 % of Attendance 80 100 100 100

(ii)

(iii) (iv)

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

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ANNUAL REPORT 2013

AUDIT COMMITTEE REPORT (CONTD.)

Duties and Responsibilities The duties and responsibilities of the Audit Committee are as follows:(i) (ii) to nominate a person or persons as Auditor; to discuss with the External Auditors before the audit commences the nature and scope of the audit, ensure coordination where more than one audit firm is involved; to review with the External Auditors their evaluation of the system of internal controls and their audit report; to review the Companys quarterly/financial report and annual financial statements before submission to the Board, focusing particularly on: the consistency of and any changes to the accounting policies and practices; major judgemental areas; significant adjustments resulting from the audit; the going concern assumption; and compliance with accounting standards and other legal and regulatory bodies requirements. to review any related party transactions and conflict of interest situation that may arise within the Company or the Group, including any transaction, procedure or course of conduct that raises questions of management integrity; to discuss problems and reservations arising from the interim and final audits, and any matter the Auditor may wish to discuss (in the absence of management, where necessary); to review the External Auditors management letter and Managements response; to do the following, in relation to the internal audit function: (a) review the adequacy of the scope, functions, competency and resources of the internal audit function, and that it has the necessary authority to carry out its work; (b) review the internal audit programme and results of the internal audit process and, where necessary, ensure that appropriate actions are taken on the recommendations of the internal audit function; (c) review any appraisal or assessment of the performance of members of the internal audit function; (d) approve any appointment or termination of senior staff members of the internal audit function; and (e) take cognizance of resignations of internal audit staff members and provide the resigning staff member an opportunity to submit his reasons for resigning. to verify the allocation of options pursuant to the Employees Share Option Scheme (ESOS) in compliance with the criteria as stipulated in the by-law of ESOS of the Company, if any; to review the cost effectiveness, independence and objectivity of the External Auditors and recommend for the appointment/re-appointment of the External Auditors, the audit fee and any questions of resignation or dismissal of the External Auditors to the Board, to be put to Shareholders for approval at the general meeting in relation to appointment, re-appointment and dismissal of the Companys External Auditors; To establish policies governing the circumstances under which the contract in relation to the provision of non-audit services can be entered into by the Group with its External Auditors and procedures that need to be adhered; To review the adequacy and effectiveness of risk management and internal control systems instituted within the Group; to report its findings on the financial and management performance, and other material matters to the Board; to consider the major findings of internal investigations and Managements response; and to consider other functions as may be agreed to by the Audit Committee and the Board.

(iii) (iv)

(v) (vi)

(vii) (viii)

(ix)

(x)

(xi)

(xii) (xiii) (xiv) (xv)

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ANNUAL REPORT 2013

AUDIT COMMITTEE REPORT (CONTD.)

Reporting Procedures Minutes of each meeting shall be distributed to each member of the Audit Committee. The Audit Committee Chairman shall report on each meeting to the Board. The minutes of the Audit Committee meeting shall be signed by the Chairman of the meeting at which the proceedings were held or by the Chairman of the next succeeding meeting. Summary of Activities During the financial year ended 31 May 2013, the Audit Committee carried out its duties and responsibilities in accordance with its terms of reference. The main activities undertaken by the Audit Committee were as follows: (i) (ii) (iii) (iv) (v) (vi) (vii) Review of the quarterly unaudited consolidated financial statements before recommending them for the Boards approval; Review of the annual consolidated financial statements of the Group and to discuss issues with the External Auditors before submission to the Board for approval; Review the accounting issues arising from the updates of the new developments on accounting standards issued by Malaysian Accounting Standard Board; Review of the related party transactions of the Company and its subsidiaries; Review the internal audit reports, which highlighted the audit issues, recommendation and managements response; Review of the External Auditors management letter and Managements response; and Review the External Auditors scope of work and plans for the year.

Internal Audit Function The Internal Audit function of the Group is assumed by the Internal Auditor appointed externally to assist the Audit Committee in discharging its duties and responsibilities. The role of the Internal Audit is to provide the Audit Committee with independent assessment for adequate, efficient and effective Internal Control System to ensure compliance with policies and procedures. The Internal Audit function is also involved in risk management, risk evaluation and recommendation of control activities to manage such identified risk. The attainment of such objectives involves the following activities being carried out by the Department: (i) (ii) (iii) (iv) (v) (vi) (vii) (viii) (ix) Reviewing and appraising the soundness, adequacy and application of accounting, financial and other controls and promoting effective control in the Company and the Group at reasonable cost. Ascertaining the extent to whom the Groups and the Companys assets are accounted for and safeguarded from losses of all kinds. Attending stock counts of merchandise. Appraising the reliability and usefulness of information developed within the Group and the Company for management reporting purposes. Carrying out audit work and to liaise with the External Auditors to maximise the use of resources and for effective coverage of audit risks. Recommending improvement to the existing systems of controls. Carrying out investigations and special reviews requested by Management and/or the Audit Committee of the Company. Continuously identifying opportunity for improvement in the operations of business processes of the Company and the Group. Discuss with management action taken to improve the system of internal control.

This statement is made in accordance with the resolution of the Board dated 23 September 2013.

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ANNUAL REPORT 2013

STATEMENT OF DIRECTORS RESPONSIBILITY

IN RELATION TO THE FINANCIAL STATEMENTS

The Board is required to prepare audited financial statements which give a true and fair view of the state of affairs of the Group and the Company at the end of each financial year and of their results and their cash flows for that year then ended. In preparing the financial statements for the year ended 31 May 2013, the Board considers that: (i) (ii) (iii) (iv) all applicable approved accounting standards in Malaysia have been followed; the Group and the Company have used appropriate accounting policies and have consistently applied them; reasonable and prudent judgments and estimates were made; and the financial statements were prepared on the going concern basis as the Board has a reasonable expectation, having made enquiries, that the Group and the Company have adequate resources to continue in operational existence for the foreseeable future.

The Board is responsible for ensuring that the Group and the Company maintain accounting records which disclose with reasonable accuracy the financial position of the Group and the Company, and which enable them to ensure that the financial statements comply with the Companies Act, 1965. The Board has general responsibilities for taking such steps that are reasonably available to them to safeguard the assets of the Group, and to prevent and detect fraud and other irregularities. This statement is made in accordance with the resolution of the Board dated 23 September 2013.

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ANNUAL REPORT 2013

REQUIRED BY THE MAIN MARKET LISTING REQUIREMENTS OF BURSA MALAYSIA SECURITIES BERHAD

OTHER INFORMATION

Utilisation of Proceeds No proceeds were raised by the Company from any corporate exercise during the financial year and no new shares being issued by the Company during the financial year based on the general mandate granted by the shareholders pursuant to Section 132D of the Companies Act, 1965 at the last Annual General Meeting of the Company. Share Buy-back During the financial year ended 31 May 2013, the details of its ordinary shares of RM1.00 each (SCB Shares) bought back by the Company are as follows: Buy Back Price Per SCB Share (RM) Monthly Breakdown August 2012 February 2013 Total: Note: * exclude transaction charges. A total of 20,000 SCB shares purchased by the Company were retained as treasury shares and no shares were resold or cancelled during the financial year. As at 31 May 2013, a total of 3,666,100 SCB Shares were held as treasury shares in accordance with Section 67A of the Companies Act, 1965. Options, Warrants or Convertible Securities There was no issue or exercise of options, warrants or convertible securities during the financial year. Depository Receipt Programme The Company did not sponsor any Depository Receipt programme during the financial year. Sanctions and Penalties There were no sanctions or penalties imposed on the Company and its subsidiaries, Directors or Management by the relevant regulatory bodies during the financial year. Non-Audit Fees The amount of non-audit fees paid to the External Auditors by the Group and by the Company for the financial year 2013 amounted to RM22,000.00 and RM3,000.00 respectively. Variation in Results There were no material variations between the audited results and the unaudited results for the year ended 31 May 2013 of the Group as previously announced. Profit Guarantee The Company did not provide any profit guarantee to any parties during the financial year. Material Contracts Other than those related party transactions disclosed in Note 40 to the financial statements, there were no material contracts outside the ordinary course of business, including contract relating to loan entered into by the Company and its subsidiaries involving Directors and major shareholders interests that are still subsisting at the end of financial year or which were entered into since the end of the previous financial year. Lowest 1.50 1.47 Highest 1.50 1.50

Average Cost Per SCB Share* (RM) 1.50 1.48

No. of SCB Shares Bought Back & retained as Treasury Shares 1,000 19,000 20,000

Total Cost* (RM) 1,500.00 28,150.40 29,650.40

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ANNUAL REPORT 2013

OTHER INFORMATION

REQUIRED BY THE MAIN MARKET LISTING REQUIREMENTS OF BURSA MALAYSIA SECURITIES BERHAD (CONTD.)

Recurrent Related Party Transactions of a Revenue or a Trading Nature The summary of the Recurrent Related Party Transactions which have been entered by the Group based on the mandate as obtained at the Nineteenth Annual General Meeting held on 22 November 2012 are as follows:No. 1 Nature of Transaction Rental of premises which is located at Sunshine Square (Level 2, 3 & 4), 1, Jalan Mahsuri measuring approximately 9,635 square metres by Suiwah Holdings Sdn Bhd (SHSB) to Sunshine Wholesale Mart Sdn Bhd (SWMSB) for a monthly rental and service charges of RM161,943 Purchase of direct materials such as polyester and pressure sensitive adhesive by Qdos Flexcircuits Sdn Bhd (QFSB) from Zephyr (Penang) Sdn Bhd (ZSB) Purchase of label sticker by SWMSB from ZSB Rental of premises which is located at 608 M&N, Jalan Paya Terubong, Ayer Itam, Penang measuring approximately 4,500 square feet by Dato Hwang Thean Long to Sunshine Supermarket & Departmental Store Sdn Bhd (SSDS) for a monthly rental of RM4,000 Rental of premises which is located at 88 Lintang Mayang Pasir 1, Mk 12, 11950 Bayan Baru, Penang measuring approximately 139.79 square metres by Meridian Chance Sdn Bhd (MCSB) to SWMSB for a monthly rental of RM2,000 Provide laundry services for cleaning clean room clothing to QFSB by Mylaco Sdn Bhd (MSB) Sales of merchandise from SWMSB to MSB Interested Related Parties SHSB Suiwah Supermarket Sendirian Berhad (SSSB) Dato Hwang Thean Long Datin Cheah Gaik Huang Ms. Hwang Siew Peng Mr. Looi Tik Miow Transaction Value (RM) 1,943,316

155,947

3 4

Mr. Looi Tik Miow SHSB SSSB Dato Hwang Thean Long Datin Cheah Gaik Huang Ms. Hwang Siew Peng

48,000

SHSB SSSB Dato Hwang Thean Long Datin Cheah Gaik Huang Ms. Hwang Siew Peng Mr. Leong Kong Meng Ms. Hwang Siew Peng Mr. Leong Kong Meng Ms. Hwang Siew Peng Mr. Leong Kong Meng Ms. Hwang Siew Peng Hozone Sdn Bhd (HSB) Datuk Haji Radzali Bin Hassan SHSB SSSB Dato Hwang Thean Long Datin Cheah Gaik Huang Ms. Hwang Siew Peng Mr. Leong Kong Meng SHSB SSSB Dato Hwang Thean Long Datin Cheah Gaik Huang Ms. Hwang Siew Peng Mr. Leong Kong Meng SHSB SSSB Dato Hwang Thean Long Datin Cheah Gaik Huang Ms. Hwang Siew Peng

24,000

Sales of merchandise from Crimson Omega Sdn Bhd to MSB Purchase of Dycem Cleanzone for floor coverings and mat solutions by QFSB from Sinar Bekal Sdn Bhd (SBSB) Provide Surface Mounted Technology and other subcontract services related to flexible printed circuits boards to QFSB by Nanometric Electronics Sdn Bhd (NESB)

10

1,266,275

11

Sales of merchandise from SWMSB to NESB

2,207

12

Rental of 80 car park bays located at Level 3 Sunshine Square Complex, Lintang Mayang Pasir 1, Mk 12, 11950 Bayan Baru, Penang by SHSB to SWMSB for a monthly rental of RM4,000.

31,338

35
ANNUAL REPORT 2013

DIRECTORS REPORT
The Directors have pleasure in presenting their report together with the audited financial statements of the Group and of the Company for the financial year ended 31 May 2013. Principal Activities The principal activities of the Company are investment holding, provision of management services and letting of property. The principal activities of the subsidiaries, jointly controlled entity and associate are described in Notes 18, 19 and 20 to the financial statements. There have been no significant changes in the nature of the principal activities during the financial year. Results Group RM 13,696,760 Company RM 6,036,107

Profit for the year Attributable to: Equity holders of the Company Non-controlling interests

13,890,365 (193,605) 13,696,760

6,036,107 6,036,107

There were no material transfers to or from reserves or provisions during the financial year other than as disclosed in the financial statements. In the opinion of the Directors, the results of the operations of the Group and of the Company during the financial year were not substantially affected by any item, transaction or event of a material and unusual nature. Dividend The amount of dividend paid by the Company since 31 May 2012 was as follows: In respect of the financial year ended 31 May 2012 as reported in the directors' report of that year: First and final dividend of 8% less 25% taxation, approved on 22 November 2012 and paid on 14 December 2012 RM

3,441,189

At the forthcoming Annual General Meeting, a first and final dividend in respect of the current financial year ended 31 May 2013, of 8% less 25% taxation on 57,322,148 ordinary shares (the number of outstanding ordinary shares in issue of the Company as at 31 May 2013 after the set off with 12,000 ordinary shares bought back by the Company and held as treasury shares subsequent to year end) amounting to RM3,439,329 (6 sen net per share) will be proposed for shareholders' approval. The financial statements for the current financial year do not reflect this proposed dividend. Such dividends when approved by the shareholders will be accounted for in equity as an appropriation of retained earnings in the financial year ending 31 May 2014. Directors The names of the Directors of the Company in office since the date of the last report and at the date of this report are: Dato' Hwang Thean Long Dato' Haji Mohd Suhaimi bin Abdullah * Dato' Ahmad Hassan bin Osman * Datin Cheah Gaik Huang Hwang Siew Peng Wong Thai Sun * Jen Shek Voon ^ Datuk Haji Radzali bin Hassan * ^ Being members of Audit, Remuneration and Nomination Committees Being member of Audit Committee

36
ANNUAL REPORT 2013

DIRECTORS REPORT (CONTD.)

Directors' Benefits Neither at the end of the financial year, nor at any time during that year, did there subsist any arrangement to which the Company was a party, whereby the Directors might acquire benefits by means of acquisition of shares in or debentures of the Company or any other body corporate. Since the end of the previous financial year, no Director has received or become entitled to receive a benefit (other than benefits included in the aggregate amount of emoluments received or due and receivable by the Directors or the fixed salaries of Directors who are full-time employees of the Company or its subsidiaries as shown in Note 7 to the financial statements) by reason of a contract made by the Company or a related corporation with any 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 as disclosed in Note 40 to the financial statements. Directors' Interests According to the register of Directors' shareholdings, the interests of Directors in office at the end of the financial year in shares and options over shares in the Company during the financial year were as follows: 1 June 2012 Number of ordinary shares of RM1 each Acquired Sold 31 May 2013

The Company Direct interest Dato' Hwang Thean Long Dato' Haji Mohd Suhaimi bin Abdullah Datin Cheah Gaik Huang Indirect interest Dato' Hwang Thean Long * Hwang Siew Peng ** Datuk Haji Radzali bin Hassan *** Indirect interest Interest of Spouse/Children of the Directors ^ Dato Hwang Thean Long Datin Cheah Gaik Huang

4,445,381 417,125 26,400

4,445,381 417,125 26,400

10,959,105 15,430,886 12,117,948

10,959,105 15,430,886 12,117,948

26,400 15,404,486

26,400 15,404,486

By virtue of his interests in shares of Suiwah Holdings Sdn. Bhd. and Suiwah Supermarket Sendirian Berhad, both companies incorporated in Malaysia, Dato' Hwang Thean Long is deemed to have an interest in the shares of the Company and all its subsidiaries to the extent both these companies have interests. By virtue of the interests of her parents, Dato' Hwang Thean Long and Datin Cheah Gaik Huang, Hwang Siew Peng is deemed to have an interest in the shares of the Company and all its subsidiaries to the extent her parents have interests. By virtue of his interest in shares of Hozone Sdn. Bhd. ("Hozone"), a company incorporated in Malaysia, Datuk Haji Radzali bin Hassan is deemed to have an interest in the shares of the Company, and all its subsidiaries to the extent Hozone has an interest. Disclosure pursuant to Section 134 (12) (c) of the Companies Act 1965

**

***

None of the other Directors in office at the end of the financial year had any interest in shares in the Company or its related corporations and share options of the Company during the financial year.

37
ANNUAL REPORT 2013

DIRECTORS REPORT (CONTD.)

Treasury Shares During the financial year, the Company bought back 20,000 of its issued ordinary shares from the open market at an average price of RM1.49 per share. The total consideration paid for the share buy back including transaction costs was RM29,820. The shares bought back are being held as treasury shares in accordance with Section 67A of the Companies Act 1965. As at 31 May 2013, the Company held as treasury shares a total of 3,666,100 of its 61,000,248 issued ordinary shares. Such treasury shares are held at a carrying amount of RM5,346,718 including transaction costs and further relevant details are disclosed in Note 29(a) to the financial statements. Subsequent to year end, the Company bought back 12,000 of its issued ordinary shares from the open market at an average price of RM1.82 per share. The total consideration paid for the share buy back was RM21,840, consisting of consideration paid amounting to RM21,720 and transaction costs of RM120. The share buy back transactions were financed by internally generated funds. Other Statutory Information (a) Before the statements of comprehensive income and statements of financial position of the Group and of the Company were made out, the Directors took reasonable steps: (i) to ascertain that proper action had been taken in relation to the writing off of bad debts and the making of provision for doubtful debts and satisfied themselves that all known bad debts had been written off and that no provision for doubtful debts was necessary in the financial statements of the Group. The Directors were also satisfied that there were no known bad debts and that adequate provision for doubtful debts has been made in the financial statements of the Company; and to ensure that any current assets which were unlikely to realise their values as shown in the accounting records in the ordinary course of business had been written down to an amount which they might be expected so to realise.

(ii)

(b)

At the date of this report, the Directors are not aware of any circumstances which would render: (i) the amount written off for bad debts inadequate to any substantial extent or it necessary to make any provision for doubtful debts in the financial statements of the Group nor they are aware of any circumstances which would render it necessary to write off any bad debts or the amount of the provision for doubtful debts in the financial statements of the Company inadequate to any substantial extent; and the values attributed to the current assets in the financial statements of the Group and of the Company misleading.

(ii)

(c)

At the date of this report, the Directors are not aware of any circumstances which have arisen which would render adherence to the existing method of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate. At the date of this report, the Directors are not aware of any circumstances not otherwise dealt with in this report or financial statements of the Group and of the Company which would render any amount stated in the financial statements misleading. At the date of this report, there does not exist: (i) any charge on the assets of the Group and of the Company which have arisen since the end of the financial year which secures the liabilities of any other person; or any contingent liability of the Group and of the Company which have arisen since the end of the financial year.

(d)

(e)

(ii) (f)

In the opinion of the Directors: (i) no contingent or other liability has become enforceable or is likely to become enforceable within the period of twelve months after the end of the financial year which will or may affect the ability of the Group or of the Company to meet their obligations when they fall due; and no item, transaction or event of a material and unusual nature has arisen in the interval between the end of the financial year and the date of this report which is likely to affect substantially the results of the operations of the Group or of the Company for the financial year in which this report is made.

(ii)

38
ANNUAL REPORT 2013

DIRECTORS REPORT (CONTD.)

Significant Events Details of the significant events during the financial year are disclosed in Note 44 to the financial statements. Subsequent Events Details of the subsequent events are disclosed in Note 46 to the financial statements. Auditors The auditors, Ernst & Young, have expressed their willingness to continue in office. Signed on behalf of the Board in accordance with a resolution of the directors dated 26 September 2013.

Dato' Hwang Thean Long

Wong Thai Sun

39
ANNUAL REPORT 2013

PURSUANT TO SECTION 169(15) OF THE COMPANIES ACT, 1965

STATEMENT BY DIRECTORS

We, Dato' Hwang Thean Long and Wong Thai Sun, being two of the directors of Suiwah Corporation Bhd., do hereby state that, in the opinion of the directors, the accompanying financial statements set out on pages 42 to 108 are drawn up in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act 1965 in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company as at 31 May 2013 and of their financial performance and cash flows for the year then ended. The information set out in Note 48 to the financial statements on page 109 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 dated 26 September 2013.

Dato' Hwang Thean Long

Wong Thai Sun

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

STATUTORY DECLARATION

I, Dato' Hwang Thean Long, being the director primarily responsible for the financial management of Suiwah Corporation Bhd., do solemnly and sincerely declare that the accompanying financial statements set out on pages 42 to 109 are in my opinion correct, and I make this solemn declaration conscientiously believing the same to be true and by virtue of the provisions of the Statutory Declarations Act 1960. Subscribed and solemnly declared by the abovenamed Dato' Hwang Thean Long at Georgetown in the state of Penang on 26 September 2013

Dato' Hwang Thean Long

Before me,

MOK CHENG YOON PJK No. P 140 Commissioner for Oaths

40
ANNUAL REPORT 2013

INDEPENDENT AUDITORS REPORT

TO THE MEMBERS OF SUIWAH CORPORATION BHD.

We have audited the financial statements of Suiwah Corporation Bhd., which comprise the statements of financial position as at 31 May 2013 of the Group and of the Company, and the statements of comprehensive income, statements of changes in equity and statements of cash flows of the Group and of the Company for the year then ended, and a summary of significant accounting policies and other explanatory information, as set out on pages 42 to 108. Directors responsibility for the financial statements The Directors of the Company are responsible for the preparation of financial statements so as to give a true and fair view in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act 1965 in Malaysia. The directors are also responsible for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We have conducted our audit in accordance with approved standards on auditing in Malaysia. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgement, including the assessment of risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entitys preparation of financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entitys internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements give a true and fair view of the financial position of the Group and of the Company as at 31 May 2013 and of their financial performance and cash flows for the year then ended in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act 1965 in Malaysia. Report on Other Legal And Regulatory Requirements In accordance with the requirements of the Companies Act 1965 in Malaysia, we also report the following: (a) In our opinion, the accounting and other records and the registers required by the Act to be kept by the Company and its subsidiaries of which we have acted as auditors have been properly kept in accordance with the provisions of the Act. (b) We have considered the financial statements and the auditors reports of all the subsidiaries of which we have not acted as auditors, which are indicated in Note18 to the financial statements, being financial statements that have been included in the consolidated financial statements. (c) We are satisfied that the financial statements of the subsidiaries that have been consolidated with the financial statements of the Company are in form and content appropriate and proper for the purposes of the preparation of the consolidated financial statements and we have received satisfactory information and explanations required by us for those purposes.

(d) The auditors reports on the financial statements of the subsidiaries were not subject to any qualification and did not include any comment required to be made under Section 174(3) of the Act. Other Reporting Responsibilities The supplementary information set out in Note 48 on page 109 is disclosed to meet the requirement of Bursa Malaysia Securities Berhad. 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.

41
ANNUAL REPORT 2013

TO THE MEMBERS OF SUIWAH CORPORATION BHD. (CONTD.)

INDEPENDENT AUDITORS REPORT

Other Matters 1. As stated in Note 2.2 to the financial statements, the Group and the Company adopted Malaysian Financial Reporting Standards on 1 June 2012 with a transition date of 1 June 2011. These standards were applied retrospectively by the directors to the comparative information in these financial statements, including the statements of financial position as at 31 May and 2012 and 1 June 2011, and the statements of comprehensive income, statement of changes in equity and statements of cash flows for the year ended 31 May 2012 and related disclosures. We were not engaged to report on the comparative information and it is unaudited. Our responsibilities as part of our audit of the financial statements of the Group and of the Company for the year ended 31 May 2013 have, in these circumstances, included obtaining sufficient appropriate audit evidence that the opening balances as at 1 June 2012 do not contain misstatements that materially affect the financial position as at 31 May 2013 and financial performance and cash flows for the year then ended. This report is made solely to the members of the Company, as a body, in accordance with Section 174 of the Companies Act 1965 in Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of this report.

2.

Ernst & Young Lim Foo Chew AF: 0039 No. 1748/01/14(J) Chartered Accountants Chartered Accountant Penang, Malaysia Date: 26 September 2013

42
ANNUAL REPORT 2013

STATEMENTS OF COMPREHENSIVE INCOME

FOR THE FINANCIAL YEAR ENDED 31 MAY 2013

Note Revenue Other operating income Changes in inventories of merchandise, finished goods and work-in-progress Raw materials and consumable goods used Inventories purchased Employee benefits expense Inventories written down/off Amortisation of land use rights Commission Depreciation of: - property, plant and equipment - investment property Impairment loss on investment in a subsidiary Promotional expenses Property, plant and equipment written off Operating leases - minimum lease payment for: - land and buildings - equipment and machinery Subcontract charges Upkeep and maintenance Utilities Other operating expenses Operating profit Finance costs Share of loss in a jointly controlled entity Profit before tax Income tax expense Profit net of tax Other comprehensive income Foreign currency translation Total comprehensive income for the year Profit for the year attributable to: Equity holders of the Company Non-controlling interests 4 5

Group 2013 RM 372,334,550 1,866,301 6,151,223 (30,099,756) (263,009,754) (22,968,308) (553,092) (215,266) (1,380,393) (9,851,927) (4,489,626) (185,753) (2,326,378) (102,000) (5,882,726) (4,451,348) (8,474,771) (6,997,400) 19,363,576 (172,005) (4,627) 19,186,944 (5,490,184) 13,696,760

2012 RM

Company 2013 RM 13,735,220 331,351 (192,600) (1,106) (473,171) (28,334) (1,547) (5,673,635) 7,696,178 7,696,178 (1,660,071) 6,036,107

2012 RM

381,010,045 2,172,255 (7,472) (38,573,549) (260,980,686) (23,439,274) (207,470) (215,266) (1,326,120) (10,413,424) (4,352,545) (74,473) (4,342,809) (115,750) (7,002,164) (5,006,645) (9,633,589) (4,586,241) 12,904,823 (241,571) (40,797) 12,622,455 (5,076,098) 7,546,357

6,696,684 67,290 (192,600) (1,183) (473,171) (1,123) (3,389,074) 2,706,823 2,706,823 (1,559,894) 1,146,929

6 16

13 14

8 9

10

(443,660) 13,253,100

(2,431,366) 5,114,991

6,036,107

1,146,929

13,890,365 (193,605) 13,696,760

7,555,342 (8,985) 7,546,357

6,036,107 6,036,107

1,146,929 1,146,929

Total comprehensive income attributable to: Equity holders of the Company Non-controlling interests

13,446,705 (193,605) 13,253,100

5,123,976 (8,985) 5,114,991

6,036,107 6,036,107

1,146,929 1,146,929

Earnings per share attributable to equity holders of the Company (sen) Basic, for profit for the year Diluted, for profit for the year

11(a) 11(b)

24.23 24.23

13.17 13.17

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

43
ANNUAL REPORT 2013

STATEMENTS OF FINANCIAL POSITION

AS AT 31 MAY 2013

Note Assets Non-current assets Property, plant and equipment Investment property Inventory property Land use rights Intangible asset Investments in subsidiaries Investment in a jointly controlled entity Investment in an associate Investments securities Goodwill on consolidation

2013 RM

Group 2012 RM

1.6.2011 RM

2013 RM

Company 2012 RM

1.6.2011 RM

13 14 15 16 17 18 19 20 21 22

115,731,758 9,700,421 256,409 6,905,900 12,068,577 3,114 4,665,045 149,331,224

96,926,092 9,700,421 471,675 12,456,899 3,123 4,665,045 124,223,255

74,959,388 28,690,500 9,700,421 686,941 8,663,566 3,176 4,665,045 127,369,037

4,107 23,973,462 59,256,344 83,233,913

5,213 24,446,633 59,284,678 83,736,524

6,396 24,919,804 59,284,678 84,210,878

Current assets Inventory property Inventories Trade and other receivables Other current assets Tax recoverable Loan receivables Short term investments Cash and bank balances Total assets Equity and Liabilities

15 23 24 25 26 27 28

16,466,059 33,511,211 24,205,914 398,315 675,660 28,730 13,698,835 32,199,611 121,184,335 270,515,559

16,267,936 34,062,297 28,458,463 4,771,053 711,885 16,516 3,841,946 31,143,760 119,273,856 243,497,111

34,411,732 39,512,719 6,993,827 541,015 127,424 460,524 34,116,283 116,163,524 243,532,561

36,273,636 14,932 4,008,160 40,296,728 123,530,641

11,531,114 14,932 4,872,516 16,418,562 100,155,086

15,337,684 14,932 8,245,100 23,597,716 107,808,594

Equity attributable to equity holders of the Company Share capital Treasury shares Share premium Other reserves Retained earnings Non-controlling interests Total equity 29 29 29 30 31 61,000,248 61,000,248 61,000,248 (5,346,718) (5,316,898) (4,854,244) 13,934,711 13,934,711 13,934,711 (2,875,026) (2,431,366) 863,790 118,862,638 108,413,462 103,435,741 185,575,853 175,600,157 174,380,246 807,232 1,000,837 380,630 186,383,085 176,600,994 174,760,876 61,000,248 (5,346,718) 13,934,711 29,901,976 99,490,217 99,490,217 61,000,248 (5,316,898) 13,934,711 27,307,058 96,925,119 96,925,119 61,000,248 (4,854,244) 13,934,711 863,790 28,737,750 99,682,255 99,682,255

44
ANNUAL REPORT 2013

STATEMENTS OF FINANCIAL POSITION (CONTD.)

AS AT 31 MAY 2013

Note Non-current liabilities Government grant Borrowings Deferred tax

2013 RM

Group 2012 RM

1.6.2011 RM

2013 RM

Company 2012 RM

1.6.2011 RM

32 33 34

164,583 1,480,354 2,621,026 4,265,963

214,583 2,409,893 3,793,082 6,417,558

264,583 3,326,084 3,242,966 6,833,633

Current liabilities Provision for liabilities Government grant Borrowings Trade and other payables Deferred revenue Tax payable Total liabilities Total equity and liabilities

35 32 33 36 37

256,517 50,000 13,411,210 62,532,923 1,316,804 2,299,057 79,866,511 84,132,474 270,515,559

270,285 50,000 2,512,730 55,899,102 1,277,852 468,590 60,478,559 66,896,117 243,497,111

284,453 50,000 2,210,331 56,541,909 1,153,089 1,698,270 61,938,052 68,771,685 243,532,561

23,837,928 202,496 24,040,424 24,040,424 123,530,641

3,137,967 92,000 3,229,967 3,229,967 100,155,086

8,018,837 107,502 8,126,339 8,126,339 107,808,594

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

Attributable to equity holders of the Company Non-distributable Share capital RM RM RM RM RM RM shares premium reserves earnings Total interests RM Treasury Share Other Retained controlling Distributable NonTotal equity RM

Group 61,000,248 61,000,248 61,000,248 61,000,248 (5,346,718) (29,820) 13,934,711 (5,316,898) 13,934,711 (2,431,366) (443,660) (2,875,026) (5,316,898) 13,934,711 (2,431,366) (863,790) (462,654) 863,790 108,413,462 108,413,462 13,890,365 (3,441,189) 118,862,638 (3,441,411) (2,431,366) 7,555,342 (4,854,244) 13,934,711 863,790 103,435,741 174,380,246 5,123,976 (3,441,411) (462,654) 175,600,157 175,600,157 13,446,705 (3,441,189) (29,820) 185,575,853 380,630 (8,985) 629,192 1,000,837 1,000,837 (193,605) 807,232 174,760,876 5,114,991 (3,441,411) 629,192 (462,654) 176,600,994 176,600,994 13,253,100 (3,441,189) (29,820) 186,383,085

At 1 June 2011

Total comprehensive income for the year

Dividend (Note 12)

Additional shares issued by a subsidiary to

non-controlling interests

Purchase of treasury shares

Transfer in/(out) upon expiration of ESOS

At 31 May 2012

At 1 June 2012

Total comprehensive income for the year

Dividend (Note 12)

Purchase of treasury shares

STATEMENTS OF CHANGES IN EQUITY

FOR THE FINANCIAL YEAR ENDED 31 MAY 2013

At 31 May 2013

ANNUAL REPORT 2013

45

46
ANNUAL REPORT 2013

STATEMENTS OF CHANGES IN EQUITY (CONTD.)

FOR THE FINANCIAL YEAR ENDED 31 MAY 2013

Non-distributable Share capital RM Company At 1 June 2011 Total comprehensive income for the year Dividend (Note 12) Purchase of treasury shares Transfer in/(out) upon expiration of ESOS At 31 May 2012 At 1 June 2012 Total comprehensive income for the year Dividend (Note 12) Purchase of treasury shares At 31 May 2013 61,000,248 61,000,248 61,000,248 61,000,248 (4,854,244) (462,654) (5,316,898) (5,316,898) (29,820) (5,346,718) 13,934,711 13,934,711 13,934,711 13,934,711 863,790 (863,790) Treasury shares RM Share premium RM Other reserves RM

Distributable Retained earnings RM Total equity RM

28,737,750 1,146,929 (3,441,411) 863,790 27,307,058 27,307,058 6,036,107 (3,441,189) 29,901,976

99,682,255 1,146,929 (3,441,411) (462,654) 96,925,119 96,925,119 6,036,107 (3,441,189) (29,820) 99,490,217

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

47
ANNUAL REPORT 2013

FOR THE FINANCIAL YEAR ENDED 31 MAY 2013

STATEMENTS OF CASH FLOWS

Company 2012 RM 2013 RM 2012 RM

Group 2013 Note Operating activities Profit before tax Adjustments for: - Amortisation of: - government grant - land use rights Bad debts written off Depreciation of: - property, plant and equipment - investment property Gross dividends from subsidiaries Interest expense Interest income Inventories written down/off Impairment loss on investment in a subsidiary Gain on disposal of property plant and equipment Property, plant and equipment written off Reversal for provision for liquidated damages Allowance for impairment of doubtful debts Reversal of impairment loss Unrealised foreign exchange losses/(gains) Share of loss in a jointly controlled entity Operating cash flows before changes in working capital Increase in inventory property Decrease in receivables Decrease in other current assets (Increase)/Decrease in inventories Increase/(Decrease) in payables Increase in deferred revenue Cash generated from operations Interest paid Interest received Tax paid Net cash from operating activities 8 8 5 8 5 13 14 4 9 5 9,851,927 172,005 (570,272) 553,092 185,753 213,646 4,627 30,229,253 (198,123) 3,305,298 4,372,738 (2,006) 6,620,053 38,952 44,366,165 (172,005) 570,272 (4,795,548) 39,968,884 10,413,424 241,571 (877,373) 207,470 (13,600) 74,473 (1,168) 157,729 (1,179,320) 40,797 21,906,191 (2,913,949) 10,041,690 2,222,774 141,965 (731,531) 124,764 30,791,904 (241,571) 877,373 (5,926,533) 25,501,173 5 16 8 (50,000) 215,266 466,265 (50,000) 215,266 54,467 19,186,944 12,622,455 RM

7,696,178

2,706,823

1,106 473,171 (11,838,536) (71,191) 28,334 5,183,179 (260,160) 1,212,081 (29,611) 1,182,470 71,191 (282,441) 971,220

1,183 473,171 (4,800,000) (66,790) 2,910,160 1,224,547 44,611 1,269,158 66,790 (375,396) 960,552

48
ANNUAL REPORT 2013

STATEMENTS OF CASH FLOWS (CONTD.)

FOR THE FINANCIAL YEAR ENDED 31 MAY 2013

Group 2013 Note Investing activities (Increase)/Decrease in deposits pledged to banks Decrease/(Increase) in deposits placed with licensed banks (more than 3 months) Increase in short term investments Proceeds from disposal of property, plant and equipment Net dividends received Investment in a jointly controlled entity Additional shares issued by a subsidiary to non-controlling interests Acquisition of patent licence Purchase of property, plant and equipment Net cash (used in)/from investing activities Financing activities Repayment of term loan Dividend paid Purchase of treasury shares (Increase)/Decrease in amounts due from subsidiaries Increase/(Decrease) in amounts due to subsidiaries Net changes in bankers' acceptances Net cash used in financing activities Net decrease in cash and cash equivalents Effects of exchange rate changes Cash and cash equivalents as at 1 June 2012 / 2011 Cash and cash equivalents as at 31 May 2013 / 2012 28 12 29 (915,546) (3,441,189) (29,820) 1,742,398 (2,644,157) (8,077,313) 195,072 30,107,763 22,225,522 (874,902) (3,441,411) (462,654) 261,110 (4,517,857) (3,067,117) 139,127 33,035,753 30,107,763 17 13 19,000 (6,905,900) (28,862,248) (45,402,040) 13,600 (6,399,807) 629,192 (14,956,529) (24,050,433) RM 2012 RM

Company 2013 RM 2012 RM

(39,230) 243,227 (9,856,889)

166,665 (122,132) (3,381,422)

10,571,402 10,571,402

3,600,000 3,600,000

(3,441,189) (29,820) (29,665,541) 20,729,572 (12,406,978) (864,356) 4,872,516 4,008,160

(3,441,411) (462,654) 896,410 (4,925,481) (7,933,136) (3,372,584) 8,245,100 4,872,516

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

49
ANNUAL REPORT 2013

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 31 MAY 2013

1.

Corporate Information The Company is a public limited liability company, incorporated and domiciled in Malaysia and listed on the Main Market of Bursa Malaysia Securities Berhad ("Bursa Malaysia"). The registered office of the Company is located at No. 1-20-1 SUNTECH @ Penang Cybercity, Lintang Mayang Pasir 3, 11950 Bayan Baru, Penang. The principal activities of the Company are investment holding, provision of management services and letting of property. The principal activities of the subsidiaries, jointly controlled entity and associate are described in Notes 18, 19 and 20. There have been no significant changes in the nature of the principal activities during the financial year.

2. 2.1

Summary of Significant Accounting Policies Basis of preparation The financial statements of the Group and of the Company have been prepared in accordance with Malaysian Financial Reporting Standards ("MFRS"), International Financial Reporting Standards ("IFRS") and the requirements of the Companies Act, 1965 in Malaysia. For all periods up to and including the year ended 31 May 2012, the Group and the Company prepared their financial statements in accordance with Financial Reporting Standards ("FRS") in Malaysia. These financial statements for the year ended 31 May 2013 are the first financial statements of the Group and the Company prepared in accordance with MFRS and MFRS 1: First-Time Adoption of Malaysian Financial Reporting Standards ("MFRS 1") has been applied. The financial statements have been prepared on a historical cost basis except those disclosed below in the accounting policies. The financial statements are presented in Ringgit Malaysia ("RM").

2.2

First-time adoption of Malaysian Financial Reporting Standards ("MFRS") In preparing their opening MFRS Statements of Financial Position as at 1 June 2011 (which is also the date of transition), the Group adjusted the amounts previously reported in financial statements prepared in accordance with FRS. An explanation of how the transition from FRS to MFRS has affected the Group's financial position is set out below. These notes include reconciliations of equity at the date of transition reported under FRS to those reported at the date of transition under MFRS. Exemptions Applied MFRS 1 allows first-time adopters certain exemptions from the retrospective application of certain MFRS. The Group has applied the following exemptions: (a) Business combinations MFRS 1 provides the option to apply MFRS 3 Business Combinations prospectively from the date of transition or from a specific date prior to the date of transition. This provides relief from full retrospective application of MFRS 3 which would require restatement of all business combinations prior to the date of transition. The Group has elected to apply MFRS 3 prospectively from the date of transition. In respect of acquisitions prior to the date of transition: Acquisition before date of transition The Group has elected to apply MFRS 3 prospectively from the date of transition. In respect of acquisitions prior to the date of transition, (i) (ii) The classification of former business combinations under FRS is maintained; There is no re-measurement of original fair values determined at the time of business combination (date of acquisition); and The carrying amount of goodwill recognised under FRSs is not adjusted.

(iii)

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ANNUAL REPORT 2013

NOTES TO THE FINANCIAL STATEMENTS (CONTD.)

FOR THE FINANCIAL YEAR ENDED 31 MAY 2013

2. 2.2

Summary of Significant Accounting Policies (contd.) First-time adoption of Malaysian Financial Reporting Standards ("MFRS") (contd.) Exemptions Applied (contd.) (b) Property, plant and equipment The short term leasehold land and building of a subsidiary were revalued in March 2000 by a firm of professional valuers using the comparison cost method. The surplus arising from the revaluation had been credited to revaluation reserve in the prior year. The Group has continued to carry the short term leasehold land and building based on its revalued amount in March 2000 since the surplus based on the latest revaluation in July 2010 was immaterial. Upon transition to MFRS, the Group has elected to measure all its property, plant and equipment using the cost model under MFRS 116, Property, Plant and Equipment. At the date of transition to MFRS, the Group elected to regard the revalued amounts of leasehold land and buildings as at March 2000 as deemed cost at the date of revaluation as these amounts were broadly comparable to fair value at that date. The revaluation surplus of RM1,471,912 was transferred to retained earnings at the date of transition to MFRS. (c) Foreign currency translation reserve Under FRS, the Group recognised translation differences on foreign operations in a separate component of equity. Cumulative foreign currency translation differences for all foreign operations are deemed to be zero at the date of transition to MFRS. Accordingly, at the date of transition to MFRS, the cumulative foreign currency translation differences of RM1,519,551 were adjusted to retained earnings. (d) Estimates The estimates at 1 June 2011 and 31 May 2012 are consistent with those made for the same dates in accordance with FRS. The estimates used by the Group to present these amounts in accordance with MFRS reflect conditions at 1 June 2011, the date of transition to MFRS and as at 31 May 2012. The reconciliation of statements of financial position for comparative year and of statements of financial position at the date of transition reported under FRS, as restated to reflect the effect of prior year adjustments to those reported for those periods and at the date of transition under MFRS are provided below: FRS (as previously stated) RM Effect of adopting MFRS 1 RM

Group 1 June 2011 Statements of financial position Inventory property Investment in a jointly controlled entity Investment in an associate Asset revaluation reserve Foreign currency translation reserve Retained earnings

*Prior year adjustments RM

FRS (as restated) RM

MFRS RM

7,665,612 8,663,566 1,471,912 (1,519,551) 101,448,571

2,034,809

(i)

9,700,421 8,663,566 103,483,380

(1,471,912) 1,519,551 (47,639)

9,700,421 8,663,566 103,435,741

8,663,566 (ii) (8,663,566) (ii) 2,034,809

(i)

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ANNUAL REPORT 2013

NOTES TO THE FINANCIAL STATEMENTS (CONTD.)

2. 2.2 Summary of Significant Accounting Policies (contd.) First-time adoption of Malaysian Financial Reporting Standards ("MFRS") (contd.) FRS (as previously stated) RM Effect of adopting MFRS 1 RM

FOR THE FINANCIAL YEAR ENDED 31 MAY 2013

Group 31 May 2012 Statements of financial position Inventory property Investment in a jointly controlled entity Investment in an associate Asset revaluation reserve Foreign currency translation reserve Retained earnings * Prior year adjustments (i)

*Prior year adjustments RM

FRS (as restated) RM

MFRS RM

23,933,548 12,456,899 1,433,347 (3,950,917) 106,464,857

2,034,809

(i)

25,968,357 12,456,899 108,499,666

(1,433,347) 1,519,551 (86,204)

25,968,357 12,456,899 (2,431,366) 108,413,462

12,456,899 (ii) (12,456,899) (ii) 2,034,809

(i)

Inventory property (Note 15) The Group had previously recognised an impairment loss of RM2,034,809 on its land held for property development in the profit and loss of the Group to write down the cost of the land held for development of a subsidiary to its recoverable amount. During the financial year ended 31 May 2013, the management has engaged an external property valuer to review the estimated market value of the land held for property development. An error was noted in the estimates used to determine the asset's recoverable amount in prior year which had resulted in the impairment loss having been incorrectly recognised in prior year. Hence, a reversal of impairment loss is recognised through a prior year adjustment. The carrying amount is increased to its revised recoverable amount, not exceeding the original cost of the land held for property development. The comparative figures for the financial year ended 31 May 2011 and 31 May 2012 have been restated to correct this error.

(ii)

Investment in a jointly controlled entity (Note 19) The Group had previously classified its investment in unquoted shares outside Malaysia, at cost in an entity incorporated in India, Exora Technologies Private Limited as investment in an associate. The management has reassessed and concluded that this investment is to be accounted for in the consolidated financial statements as investment in a jointly controlled entity as the Group has joint control over the activities of the entity, where the entity's strategic financial and operating decisions require unanimous consent as set out in the contractual agreement. Hence, a reclassification is made through a prior year adjustment.

52
ANNUAL REPORT 2013

NOTES TO THE FINANCIAL STATEMENTS (CONTD.)

FOR THE FINANCIAL YEAR ENDED 31 MAY 2013

2. 2.2

Summary of Significant Accounting Policies (contd.) First-time adoption of Malaysian Financial Reporting Standards ("MFRS") (contd.) First-time adoption of MFRS 107: Statement of Cash Flows In accordance with MFRS 107, cash and cash equivalents are held for the purpose of meeting short-term cash commitments (such as cash in hand, at banks and deposits with a maturity of three months or less) rather than investment. In the previous financial year, the Group designated its cash in hand and bank balances and all its deposits as cash and cash equivalents. The Group and the Company have applied this standard retrospectively. Consequently, certain comparative figures have been restated. The following are the reclassification effects to the notes to the statements of cash flows for the year ended 31 May 2013 arising from the change in accounting policy stated above: Effect of adopting MFRS 107 RM

Group 1 June 2011 Statements of cash flows Cash and cash equivalents as at 1 June 2011 31 May 2012 Statements of cash flows Increase in deposit placed with licensed banks (more than 3 months) Increase in short term investments Cash and cash equivalents as at 31 May 2012

FRS RM

MFRS RM

34,029,302

(993,549)

33,035,753

34,604,866

(122,132) (3,381,422) (4,497,103)

(122,132) (3,381,422) 30,107,763

2.3

Changes in accounting policies The standards and interpretations that are issued but not yet effective up to the date of issuance of the Group's and the Companys financial statements are disclosed below. The Group and the Company intend to adopt these standards, if applicable, when they become effective. Effective for annual periods beginning on or after

Description MFRS 101: Presentation of Items of Other Comprehensive Income (Amendments to MFRS 101) Amendments to MFRS 101: Presentation of Financial Statements (Annual Improvements 2009-2011 Cycle) MFRS 3: Business Combinations (IFRS 3: Business Combinations issued by IASB in March 2004) MFRS 10: Consolidated Financial Statements MFRS 11: Joint Arrangements MFRS 12: Disclosure of Interests in Other Entities MFRS 13: Fair Value Measurement MFRS 119: Employee Benefits MFRS 127: Separate Financial Statements

1 July 2012 1 January 2013 1 January 2013 1 January 2013 1 January 2013 1 January 2013 1 January 2013 1 January 2013 1 January 2013

53
ANNUAL REPORT 2013

NOTES TO THE FINANCIAL STATEMENTS (CONTD.)

2. 2.3 Summary of Significant Accounting Policies (contd.) Changes in accounting policies (contd.)

FOR THE FINANCIAL YEAR ENDED 31 MAY 2013

Description MFRS 127: Consolidated and Separate Financial Statements (IAS 27 as revised by IASB in December 2003) MFRS 128: Investment in Associates and Joint Ventures Amendments to IC Interpretation 2: Members Shares in Co-operative Entities and Similar Instruments (Annual Improvements 2009-2011 Cycle) IC Interpretation 20: Stripping Costs in the Production Phase of a Surface Mine Amendments to MFRS 7: Disclosures Offsetting Financial Assets and Financial Liabilities Amendments to MFRS 1: First-time Adoption of Malaysian Financial Reporting Standards Government Loans Amendments to MFRS 1: First-time Adoption of Malaysian Financial Reporting Standards Annual Improvements 2009-2011 Cycle) Amendments to MFRS 116: Property, Plant and Equipment (Annual Improvements 2009-2011 Cycle) Amendments to MFRS 132: Financial Instruments: Presentation (Annual Improvements 2009-2011 Cycle) Amendments to MFRS134: Interim Financial Reporting (Annual Improvements 2009-2011 Cycle) Amendments to MFRS 10: Consolidated Financial Statements: Transition Guidance Amendments to MFRS 11: Joint Arrangements: Transition Guidance Amendments to MFRS 12: Disclosure of Interests in Other Entities: Transition Guidance Amendments to MFRS 10, MFRS 12 and MFRS 127: Investment Entities Amendments to MFRS 132: Offsetting Financial Assets and Financial Liabilities Amendments to MFRS 136: Recoverable Amount Disclosures for Non-Financial Assets Amendments to MFRS 139: Novation of Derivatives and Continuation of Hedge Accounting IC Interpretation 21: Levies MFRS 9: Financial Instruments

Effective for annual periods beginning on or after

1 January 2013 1 January 2013 1 January 2013 1 January 2013 1 January 2013 1 January 2013 1 January 2013 1 January 2013 1 January 2013 1 January 2013 1 January 2013 1 January 2013 1 January 2013 1 January 2014 1 January 2014 1 January 2014 1 January 2014 1 January 2014 1 January 2015

The directors expect that the adoption of the above standards and interpretations will have no material impact on the financial statements in the period of initial application, except as discussed below: MFRS 3 Business Combinations (IFRS 3 Business Combinations issued by IASB in March 2004) and MFRS 127 Consolidated and Separate Financial Statements (IAS 27 as revised by IASB in December 2003) An entity shall apply these earlier versions of MFRS 3 and MFRS 127 only if the entity elected to do so as allowed in MFRS 10 Consolidated Financial Statements. The adoptions of these standards are not expected to have any significant impact to the Group and the Company. MFRS 9 Financial Instruments: Classification and Measurement MFRS 9 reflects the first phase of the work on the replacement of MFRS 139 Financial Instruments: Recognition and Measurement and applies to classification and measurement of financial assets and financial liabilities as defined in MFRS 139 Financial Instruments: Recognition and Measurement. The adoption of the first phase of MFRS 9 will have an effect on the classification and measurement of the Group and the Companys financial assets. The Group and the Company will quantify the effect in conjunction with the other phases, when the final standard including all phases is issued.

54
ANNUAL REPORT 2013

NOTES TO THE FINANCIAL STATEMENTS (CONTD.)

FOR THE FINANCIAL YEAR ENDED 31 MAY 2013

2. 2.3

Summary of Significant Accounting Policies (contd.) Changes in accounting policies (contd.) MFRS 10 Consolidated Financial Statements MFRS 10 replaces part of MFRS 127 Consolidated and Separate Financial Statements that deals with consolidated financial statements and IC Interpretation 112 Consolidation - Special Purpose Entities. Under MFRS 10, an investor controls an investee when: (i) (ii) (iii) the investor has power over an investee, the investor has exposure, or rights, to variable returns from its involvement with the investee, and the investor has ability to use its power over the investee to affect the amount of the investor's returns.

Under MFRS 127 Consolidated and Separate Financial Statements, control was defined as the power to govern the financial and operating policies of an entity so as to obtain benefits from its activites. MFRS 10 includes detailed guidance to explain when an investor has control over the investee. MFRS 10 requires the investor to take into account all relevant facts and circumstaces. The Group is still assessing the impact of this standard. MFRS 11 Joint Arrangements MFRS 11 establishes the principles for classification and accounting for joint arrangements and supersedes MFRS 131, Interest in Joint Ventures. Under MFRS 11, a joint arrangement may be classified as joint venture or joint operation. Interest in joint venture will be accounted for using equity method whilst interest in joint operation will be accounted for using the applicable MFRSs relating to the underlying assets, liabilities, income and expense items arising from the joint operations. The Group is still assessing the impact of adoption of MFRS 11. MFRS 12 Disclosures of Interests in Other Entities MFRS 12 includes all disclosure requirements for interests in subsidiaries, joint arrangements, associates and structured entities. A number of new disclosures are required. This standard affects disclosures only and has no impact on the Groups financial position or performance. MFRS 13 Fair Value Measurement MFRS 13 establishes a single source of guidance under MFRSs for all fair value measurements. MFRS 13 does not change when an entity is required to use fair value, but rather provides guidance on how to measure fair value under MFRS when fair value is required or permitted. The Group is still assessing the impact of this standard. MFRS 127 Separate Financial Statements As a consequence of the new MFRS 10 and MFRS 12, MFRS 127 is limited to accounting for subsidiaries, jointly controlled entities and associates in separate financial statements. MFRS 128 Investments in Associates and Joint Ventures As a consequence of the new MFRS 11 and MFRS 12, MFRS 128 is renamed as MFRS 128 Investments in Associates and Joint Ventures. This new standard describes the application of the equity method to investments in joint ventures in addition to associates.

55
ANNUAL REPORT 2013

NOTES TO THE FINANCIAL STATEMENTS (CONTD.)

2. 2.3 Summary of Significant Accounting Policies(contd.) Changes in accounting policies (contd.) Amendments to MFRS101: Presentation of Financial Statements (Annual Improvements 2009-2011 Cycle) The amendments to MFRS 101 change the grouping of items presented in other comprehensive income. Items that could be reclassified (or recycled) to profit or loss at a future point in time (for example, net loss or gain on availablefor-sale financial assets) would be presented separately from items which will never be reclassified (for example, actuarial gains and losses on defined benefit plans and revaluation of land and buildings). The amendment affects presentation only and has no impact on the Group's and the Companys financial position and performance. 2.4 Basis of consolidation The consolidated financial statements comprise the financial statements of the Company and its subsidiaries as at the reporting date. The financial statements of the subsidiaries used in the preparation of the consolidated financial statements are prepared for the same reporting date as the Company. Consistent accounting policies are applied to like transactions and events in similar circumstances. All intra-group balances, income and expenses and unrealised gains and losses resulting from intra-group transactions are eliminated in full. Acquisitions of subsidiaries are accounted for by applying the purchase method. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. Adjustments to those fair values relating to previously held interests are treated as a revaluation and recognised in other comprehensive income. The cost of a business combination is measured as the aggregate of the fair values, at the date of exchange, of the assets given, liabilities incurred or assumed, and equity instruments issued, plus any costs directly attributable to the business combination. Any excess of the cost of business combination over the Groups share in the net fair value of the acquired subsidiarys identifiable assets, liabilities and contingent liabilities is recorded as goodwill on the statements of financial position. The accounting policy for goodwill is set out in Note 2.9. Any excess of the Groups share in the net fair value of the acquired subsidiarys identifiable assets, liabilities and contingent liabilities over the cost of business combination is recognised as income in profit or loss on the date of acquisition. When the Group acquires a business, embedded derivatives separated from the host contract by the acquiree are reassessed on acquisition unless the business combination results in a change in the terms of the contract that significantly modifies the cash flows that would otherwise be required under the contract. Subsidiaries are consolidated from the date of acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases. 2.5 Transactions with non-controlling interests Non-controlling interests represent the portion of profit or loss and net assets in subsidiaries not held directly or indirectly by the Group. Non-controlling interests are presented separately in the statements of comprehensive income of the Group and within equity in the statements of financial position of the Group, separately from parent shareholders equity. All total comprehensive income is proportionately allocated to non-controlling interests, even this results in the noncontrolling interests having a deficit balance. A change in the ownership interest of a subsidiary (without loss of control), is accounted for as transaction with owners in their capacity as owners. 2.6 Subsidiaries Subsidiaries are entities over which the Group has the power to govern the financial and operating policies so as to obtain benefits from its activities. In the Companys separate financial statements, investments in subsidiaries are accounted for at cost less any accumulated impairment losses. On disposal of such investments, the difference between net disposal proceeds and their carrying amounts is included in profit or loss.

FOR THE FINANCIAL YEAR ENDED 31 MAY 2013

56
ANNUAL REPORT 2013

NOTES TO THE FINANCIAL STATEMENTS (CONTD.)

FOR THE FINANCIAL YEAR ENDED 31 MAY 2013

2. 2.7

Summary of Significant Accounting Policies (contd.) Associates Associates are entities, not being a subsidiary or a joint venture, in which the Group has significant influence. An associate is equity accounted for from the date the Group obtains significant influence until the date the Group ceases to have significant influence over the associate. The Groups investments in associates are accounted for using the equity method. Under the equity method, the investment in associates is measured in the statements of financial position at cost plus post-acquisition changes in the Groups share of net assets of the associates. Goodwill relating to associates is included in the carrying amount of the investment. Any excess of the Groups share of the net fair value of the associates identifiable assets, liabilities and contingent liabilities over the cost of the investment is excluded from the carrying amount of the investment and is instead included as income in the determination of the Groups share of the associates profit or loss for the period in which the investment is acquired. When the Groups share of losses in an associate equals or exceeds its interest in the associate, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associate. After application of the equity method, the Group determines whether it is necessary to recognise an additional impairment loss on the Groups investment in its associates. The Group determines at each reporting date whether there is any objective evidence that the investment in the associate is impaired. If this is the case, the Group calculates the amount of impairment as the difference between the recoverable amount of the associate and its carrying value and recognises the amount in profit or loss. The financial statements of the associates are prepared as of the same reporting date as the Company. Where necessary, adjustments are made to bring the accounting policies in line with those of the Group. In the Companys separate financial statements, investments in associates are stated at cost less any accumulated impairment losses. On disposal of such investments, the difference between net disposal proceeds and their carrying amounts is included in profit or loss.

2.8

Joint venture Jointly-controlled entity Jointly-controlled entities are those entities over whose activities the Group has joint control, established by contractual agreement and requiring unanimous consent for strategic financial and operating decisions. Joint ventures are accounted for in the consolidated financial statements using the equity method unless it is classified as held for sale (or included in a disposal group that is classified as held for sale). The consolidated financial statements include the Groups share of the profit or loss of the equity accounted joint ventures, after adjustments to align the accounting policies with those of the Group, from the date that joint control commences until the date that joint control ceases. When the Groups share of losses exceeds its interest in an equity accounted joint venture, the carrying amount of that interest (including any long-term investments) is reduced to nil 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 joint venture. In the Company's separate financial statements, investments in jointly controlled entities are stated at cost less any accumulated impairment losses, unless the investment is classified as held for sale. On disposal of such investment, the difference between net disposal proceeds and the carrying amount is included in profit or loss.

57
ANNUAL REPORT 2013

NOTES TO THE FINANCIAL STATEMENTS (CONTD.)

2. 2.9 Summary of Significant Accounting Policies (contd.) Intangible assets (a) Goodwill Goodwill is initially measured at cost. Following initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of impairment testing, goodwill acquired is allocated, from the acquisition date, to each of the Groups cash-generating units that are expected to benefit from the synergies of the combination. The cash-generating unit to which goodwill has been allocated is tested for impairment annually and whenever there is an indication that the cash-generating unit may be impaired, by comparing the carrying amount of the cash-generating unit, including the allocated goodwill, with the recoverable amount of the cash-generating unit. Where the recoverable amount of the cash-generating unit is less than the carrying amount, an impairment loss is recognised in the profit or loss. Impairment losses recognised for goodwill are not reversed in subsequent periods. Where goodwill forms part of a cash-generating unit and part of the operation within that cash-generating unit is disposed of, the goodwill associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal of the operation. Goodwill disposed of in this circumstance is measured based on the relative fair values of the operations disposed of and the portion of the cash-generating unit retained. Goodwill and fair value adjustments arising on the acquisition of foreign operation on or after 1 January 2006 are treated as assets and liabilities of the foreign operations and are recorded in the functional currency of the foreign operations and translated in accordance with the accounting policy set out in Note 2.25. Goodwill and fair value adjustments which arose on acquisitions of foreign operation before 1 January 2006 are deemed to be assets and liabilities of the Company and are recorded in RM at the rates prevailing at the date of acquisition. (b) Other intangible assets Intangible assets acquired separately are measured initially at cost. Following initial acquisition, intangible assets are measured at cost less any accumulated amortisation and any accumulated impairment losses. Intangible assets with finite useful lives are amortised over the estimated useful lives and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method are reviewed at least at each financial year-end. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset is accounted for by changing the amortisation period or method, as appropriate, and are treated as changes in accounting estimates. The amortisation expense on intangible assets with finite lives is recognised in profit or loss. Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in profit or loss when the asset is derecognised. 2.10 Property, plant and equipment and depreciation All items of property, plant and equipment are initially recorded at cost. The cost of an item of property, plant and equipment is recognised as an asset if, and only if, it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably.

FOR THE FINANCIAL YEAR ENDED 31 MAY 2013

58
ANNUAL REPORT 2013

NOTES TO THE FINANCIAL STATEMENTS (CONTD.)

FOR THE FINANCIAL YEAR ENDED 31 MAY 2013

2. 2.10

Summary of Significant Accounting Policies(contd.) Property, plant and equipment and depreciation (contd.) Subsequent to recognition, property, plant and equipment are measured at cost less accumulated depreciation and any accumulated impairment losses. When significant parts of property, plant and equipment are required to be replaced in intervals, the Group recognises such parts as individual assets with specific useful lives and depreciation, respectively. Likewise, when a major inspection is performed, its cost is recognised in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are recognised in profit or loss as incurred. Short-term leasehold land Long-term leasehold apartment Buildings Plant and machinery Office equipment, renovation, furniture and fittings Computers Motor vehicles 5% - 6% 1.27% 2% - 18% 10% - 20% 10% - 20% 20% - 33.3% 10% - 20%

Capital work-in-progress are not depreciated as these assets are not yet available for use. The carrying values of property, plant and equipment are reviewed for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable. The residual value, useful life and depreciation method are reviewed at each financial year-end, and adjusted prospectively, if appropriate. An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss on derecognition of the asset is included in profit or loss in the year the asset is derecognised. 2.11 Investment properties Investment properties are measured at cost model which is to measure investment properties at cost less accumulated depreciation and any accumulated impairment losses. Depreciation is computed on a straight-line basis over the estimated useful lives of the assets as follows: Buildings 1% - 2%

A property interest under an operating lease is classified and accounted for as an investment property on a propertyby-property basis when the Group holds it to earn rentals or for capital appreciation or both. Any such property interest under an operating lease classified as an investment property is carried at fair value. Investment properties are derecognised when either they have been disposed of or when the investment property is permanently withdrawn from use and no future economic benefit is expected from its disposal. Any gain or loss on the retirement or disposal of an investment property is recognised in profit or loss in the year of retirement or disposal. Transfers are made to or from investment property only when there is a change in use. During the financial year ended 31 May 2012, the investment property of the Group has been transferred to property, plant and equipment and property development cost as set out in Note 13, 14 & 15(b) and is accounted for in accordance with the accounting policy set out in Note 2.10 and 2.12 respectively.

59
ANNUAL REPORT 2013

NOTES TO THE FINANCIAL STATEMENTS (CONTD.)

2. 2.12 Summary of Significant Accounting Policies (contd.) Inventory property Property acquired or being constructed for sale in the ordinary course of business, rather than to be held for rental or capital appreciation, is held as inventory property and is measured at the lower of cost and net realisable value. Net realisable value is the estimated selling price in the ordinary course of the business, based on market prices at the reporting date and discounted for the time value of money if material, less costs to completion and the estimated costs of sale. The cost of inventory property recognised in profit or loss on disposal is determined with reference to the specific costs incurred on the property sold and an allocation of any non-specific costs based on the relative size of the property sold. One of its subsidiaries commenced its development activities in the financial year ended 31 May 2012. As a result, a portion of its investment property recognised prior to financial year ended 31 May 2012 was transferred to property development cost. The summary of the comparative figures are presented in Note 14 and 15(b). 2.13 Impairment of non-financial assets The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, or when an annual impairment assessment for an asset is required, the Group makes an estimate of the assets recoverable amount. An assets recoverable amount is the higher of an assets fair value less costs to sell and its value in use. For the purpose of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units (CGU)). In assessing value in use, the estimated future cash flows expected to be generated by the asset 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. Where the carrying amount of an asset exceeds its recoverable amount, the asset is written down to its recoverable amount. Impairment losses recognised in respect of a CGU or groups of CGUs are allocated first to reduce the carrying amount of any goodwill allocated to those units or groups of units and then, to reduce the carrying amount of the other assets in the unit or groups of units on a pro-rata basis. Impairment losses are recognised in profit or loss except for assets that are previously revalued where the revaluation was taken to other comprehensive income. In this case the impairment is also recognised in other comprehensive income up to the amount of any previous revaluation. An assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the assets recoverable amount since the last impairment loss was recognised. If that is the case, the carrying amount of the asset is increased to its recoverable amount. That increase cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised previously. Such reversal is recognised in profit or loss unless the asset is measured at revalued amount, in which case the reversal is treated as a revaluation increase. Impairment loss on goodwill is not reversed in a subsequent period. 2.14 Financial assets Financial assets are recognised in the statements of financial position when, and only when, the Group and the Company become a party to the contractual provisions of the financial instrument. When financial assets are recognised initially, they are measured at fair value, plus, in the case of financial assets not at fair value through profit or loss, directly attributable transaction costs.

FOR THE FINANCIAL YEAR ENDED 31 MAY 2013

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ANNUAL REPORT 2013

NOTES TO THE FINANCIAL STATEMENTS (CONTD.)

FOR THE FINANCIAL YEAR ENDED 31 MAY 2013

2. 2.14

Summary of Significant Accounting Policies (contd.) Financial assets (contd.) The Group and the Company determine the classification of their financial assets at initial recognition, and the categories include financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments and available-for-sale financial assets. (a) Financial assets at fair value through profit or loss Financial assets are classified as financial assets at fair value through profit or loss if they are held for trading or are designated as such upon initial recognition. Financial assets held for trading are derivatives (including separated embedded derivatives) or financial assets acquired principally for the purpose of selling in the near term. Subsequent to initial recognition, financial assets at fair value through profit or loss are measured at fair value. Any gains or losses arising from changes in fair value are recognised in profit or loss. Net gains or net losses on financial assets at fair value through profit or loss do not include exchange differences, interest and dividend income. Exchange differences, interest and dividend income on financial assets at fair value through profit or loss are recognised separately in profit or loss as part of other losses or other income. Financial assets at fair value through profit or loss could be presented as current or non-current. Financial assets that is held primarily for trading purposes are presented as current whereas financial assets that is not held primarily for trading purposes are presented as current or non-current based on the settlement date. (b) Loans and receivables Financial assets with fixed or determinable payments that are not quoted in an active market are classified as loans and receivables. Subsequent to initial recognition, loans and receivables are measured at amortised cost using the effective interest method. Gains and losses are recognised in profit or loss when the loans and receivables are derecognised or impaired, and through the amortisation process. Loans and receivables are classified as current assets, except for those having maturity dates later than 12 months after the reporting date which are classified as non-current. (c) Held-to-maturity investments Financial assets with fixed or determinable payments and fixed maturity are classified as held-to-maturity when the Group has the positive intention and ability to hold the investment to maturity. Subsequent to initial recognition, held-to-maturity investments are measured at amortised cost using the effective interest method. Gains and losses are recognised in profit or loss when the held-to-maturity investments are derecognised or impaired, and through the amortisation process. Held-to-maturity investments are classified as non-current assets, except for those having maturity within 12 months after the reporting date which are classified as current. (d) Available-for-sale financial assets Available-for-sale financial assets are financial assets that are designated as available for sale or are not classified in any of the three preceding categories. After initial recognition, available-for-sale financial assets are measured at fair value. Any gains or losses from changes in fair value of the financial assets are recognised in other comprehensive income, except that impairment losses, foreign exchange gains and losses on monetary instruments and interest calculated using the effective interest method are recognised in profit or loss. The cumulative gain or loss previously recognised in other comprehensive income is reclassified from equity to profit or loss as a reclassification adjustment when the financial asset is derecognised. Interest income calculated using the effective interest method is recognised in profit or loss.

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ANNUAL REPORT 2013

NOTES TO THE FINANCIAL STATEMENTS (CONTD.)

2. 2.14 Summary of Significant Accounting Policies (contd.) Financial assets (contd.) (d) Available-for-sale financial assets (contd.) Dividends on an available-for-sale equity instrument are recognised in profit or loss when the Groups and the Company's right to receive payment is established. Investments in equity instruments whose fair value cannot be reliably measured are measured at cost less impairment loss. Available-for-sale financial assets are classified as non-current assets unless they are expected to be realised within 12 months after the reporting date. A financial asset is derecognised when the contractual right to receive cash flows from the asset has expired. On derecognition of a financial asset in its entirety, the difference between the carrying amount and the sum of the consideration received and any cumulative gain or loss that had been recognised in other comprehensive income is recognised in profit or loss. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the period generally established by regulation or convention in the marketplace concerned. All regular way purchases and sales of financial assets are recognised or derecognised on the trade date i.e., the date that the Group and the Company commit to purchase or sell the asset. 2.15 Impairment of financial assets The Group and the Company assess at each reporting date whether there is any objective evidence that a financial asset is impaired. (a) Trade and other receivables and other financial assets carried at amortised cost To determine whether there is objective evidence that an impairment loss on financial assets has been incurred, the Group and the Company consider factors such as the probability of insolvency or significant financial difficulties of the debtor and default or significant delay in payments. For certain categories of financial assets, such as trade receivables, assets that are assessed not to be impaired individually are subsequently assessed for impairment on a collective basis based on similar risk characteristics. Objective evidence of impairment for a portfolio of receivables could include the Groups and the Company's past experience of collecting payments, an increase in the number of delayed payments in the portfolio past the average credit period and observable changes in national or local economic conditions that correlate with default on receivables. If any such evidence exists, the amount of impairment loss is measured as the difference between the assets carrying amount and the present value of estimated future cash flows discounted at the financial assets original effective interest rate. The impairment loss is recognised in profit or loss. The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables, where the carrying amount is reduced through the use of an allowance account. When a trade receivable becomes uncollectible, it is written off against the allowance account. If in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed to the extent that the carrying amount of the asset does not exceed its amortised cost at the reversal date. The amount of reversal is recognised in profit or loss.

FOR THE FINANCIAL YEAR ENDED 31 MAY 2013

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ANNUAL REPORT 2013

NOTES TO THE FINANCIAL STATEMENTS (CONTD.)

FOR THE FINANCIAL YEAR ENDED 31 MAY 2013

2. 2.15

Summary of Significant Accounting Policies (contd.) Impairment of financial assets (contd.) (b) Available-for-sale financial assets Significant or prolonged decline in fair value below cost, significant financial difficulties of the issuer or obligor, and the disappearance of an active trading market are considerations to determine whether there is objective evidence that investment securities classified as available-for-sale financial assets are impaired. If an available-for-sale financial asset is impaired, an amount comprising the difference between its cost (net of any principal payment and amortisation) and its current fair value, less any impairment loss previously recognised in profit or loss, is transferred from equity to profit or loss. Impairment losses on available-for-sale equity investments are not reversed in profit or loss in the subsequent periods. Increase in fair value, if any, subsequent to impairment loss is recognised in other comprehensive income. For available-for-sale debt investments, impairment losses are subsequently reversed in profit or loss if an increase in the fair value of the investment can be objectively related to an event occurring after the recognition of the impairment loss in profit or loss.

2.16

Financial liabilities Financial liabilities are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability. Financial liabilities, within the scope of MFRS 139, are recognised in the statements of financial position when, and only when, the Group and the Company become a party to the contractual provisions of the financial instrument. Financial liabilities are classified as either financial liabilities at fair value through profit or loss or other financial liabilities. (a) Financial liabilities at fair value through profit or loss Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss. Financial liabilities held for trading include derivatives entered into by the Group and the Company that do not meet the hedge accounting criteria. Derivative liabilities are initially measured at fair value and subsequently stated at fair value, with any resultant gains or losses recognised in profit or loss. Net gains or losses on derivatives include exchange differences. The Group and the Company have not designated any financial liabilities as at fair value through profit or loss. (b) Other financial liabilities The Groups and the Company's other financial liabilities include trade payables, other payables and loans and borrowings. Trade and other payables are recognised initially at fair value plus directly attributable transaction costs and subsequently measured at amortised cost using the effective interest method. Loans and borrowings are recognised initially at fair value, net of transaction costs incurred, and subsequently measured at amortised cost using the effective interest method. Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the reporting date. For other financial liabilities, gains and losses are recognised in profit or loss when the liabilities are derecognised, and through the amortisation process.

63
ANNUAL REPORT 2013

NOTES TO THE FINANCIAL STATEMENTS (CONTD.)

2. 2.16 Summary of Significant Accounting Policies (contd.) Financial liabilities (contd.) A financial liability is derecognised when the obligation under the liability is extinguished. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in profit or loss. 2.17 Income taxes (i) Current tax Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the reporting date. Current taxes are recognised in profit or loss except to the extent that the tax relates to items recognised outside profit or loss, either in other comprehensive income or directly in equity. (ii) Deferred tax Deferred tax is provided using the liability method on temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred tax liabilities are recognised for all temporary differences, except: where the deferred tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and in respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

FOR THE FINANCIAL YEAR ENDED 31 MAY 2013

Deferred tax assets are recognised for all deductible temporary differences, carry forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised except: where the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and in respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, deferred tax assets are recognised only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised.

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are reassessed at each reporting date and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax assets to be utilised. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted at the reporting date. Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss. Deferred tax items are recognised in correlation to the underlying transaction either in other comprehensive income or directly in equity and deferred tax arising from a business combination is adjusted against goodwill on acquisition. Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.

64
ANNUAL REPORT 2013

NOTES TO THE FINANCIAL STATEMENTS (CONTD.)

FOR THE FINANCIAL YEAR ENDED 31 MAY 2013

2. 2.18

Summary of Significant Accounting Policies (contd.) Share capital and share issuance expenses An equity instrument is any contract that evidences a residual interest in the assets of the Group and the Company after deducting all of its liabilities. Ordinary shares are equity instruments. Ordinary shares are recorded at the proceeds received, net of directly attributable incremental transaction costs. Ordinary shares are classified as equity. Dividends on ordinary shares are recognised in equity in the period in which they are declared.

2.19

Cash and cash equivalents Cash and cash equivalents comprise cash at bank and on hand, demand deposits, and short-term, highly liquid investments with maturity of 3 months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. These also include bank overdrafts that form an integral part of the Groups and the Company's cash management.

2.20

Inventories Inventories are stated at the lower of cost and net realisable value. Cost of inventories of merchandise held for resale is determined using the weighted average method. Cost of manufactured goods is determined using the first in, first out method. The cost of raw materials comprises costs of purchase. The cost of finished goods and work-in-progress comprise costs of raw materials, direct labour, other direct costs and appropriate proportions of manufacturing overheads based on normal operating capacity. The cost of properties held for sale comprises cost associated with the acquisition of land, direct costs and appropriate proportions of common costs. Cost is determined on a specific identification basis. Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs necessary to make the sale.

2.21

Leases (i) As lessee Finance leases, which transfer to the Group substantially all the risks and rewards incidental to ownership of the leased item, are capitalised at the inception of the lease at the fair value of the leased asset or, if lower, at the present value of the minimum lease payments. Any initial direct costs are also added to the amount capitalised. Lease payments are apportioned between the finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged to profit or loss. Contingent rents, if any, are charged as expenses in the periods in which they are incurred. Leased assets are depreciated over the estimated useful life of the asset. However, if there is no reasonable certainty that the Group will obtain ownership by the end of the lease term, the asset is depreciated over the shorter of the estimated useful life and the lease term. Operating lease payments are recognised as an expense in profit or loss on a straight-line basis over the lease term. The aggregate benefit of incentives provided by the lessor is recognised as a reduction of rental expense over the lease term on a straight-line basis. (ii) As lessor Leases where the Group and the Company retain substantially all the risks and rewards of ownership of the asset are classified as operating leases. Initial direct costs incurred in negotiating an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same bases as rental income. The accounting policy for rental income is set out in Note 2.26 (v).

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ANNUAL REPORT 2013

NOTES TO THE FINANCIAL STATEMENTS (CONTD.)

2. 2.22 Summary of Significant Accounting Policies (contd.) Borrowings costs Borrowing costs are capitalised as part of the cost of a qualifying asset if they are directly attributable to the acquisition, construction or production of that asset. Capitalisation of borrowing costs commences when the activities to prepare the asset for its intended use or sale are in progress and the expenditures and borrowing costs are incurred. Borrowing costs are capitalised until the assets are substantially completed for their intended use or sale. All other borrowing costs are recognised in profit or loss in the period they are incurred. Borrowing costs consist of interest and other costs that the Group and the Company incurred in connection with the borrowing of funds. 2.23 Provisions Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of economic resources will be required to settle the obligation and the amount of the obligation can be estimated reliably. Provisions are reviewed at each reporting date and adjusted to reflect the current best estimate. If it is no longer probable that an outflow of economic resources will be required to settle the obligation, the provision is reversed. If the effect of the time value of money is material, provisions are discounted using a current pre tax rate that reflects, where appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost. 2.24 Employee benefits (i) Short term benefits Wages, salaries, bonuses and social security contributions are recognised as an expense in the year in which the associated services are rendered by employees. Short term accumulating compensated absences such as paid annual leave are recognised when services are rendered by employees that increase their entitlement to future compensated absences. Short term non-accumulating compensated absences such as sick leave are recognised when the absences occur. (ii) Defined contribution plans Defined contribution plans are post-employment benefit plans under which the Group pays fixed contributions into separate entities or funds and will have no legal or constructive obligation to pay further contributions if any of the funds do not hold sufficient assets to pay all employee benefits relating to employee services in the current and preceding financial years. Such contributions are recognised as an expense in profit or loss as incurred. As required by law, companies in Malaysia make such contributions to the Employees Provident Fund ("EPF"). The Group's foreign subsidiary also make contributions to its respective country's statutory pension scheme. (iii) Share-based compensation The Company's Employee Share Options Scheme ("ESOS"), an equity-settled, share-based compensation plan, allows the Group's employees to acquire ordinary shares of the Company. The total fair value of share options granted to employees is recognised as an employee cost with a corresponding increase in the share option reserve within equity over the vesting period and taking into account the probability that the options will vest. The fair value of share options is measured at grant date, taking into account, if any, the market vesting conditions upon which the options were granted but excluding the impact of any non-market vesting conditions. Non-market vesting conditions are included in assumptions about the number of options that are expected to become exercisable on vesting date. At each reporting date, the Group revises its estimates of the number of options that are expected to become exercisable on vesting date. It recognises the impact of the revision of original estimates, if any, in profit or loss, and a corresponding adjustment to equity over the remaining vesting period. The equity amount is recognised in the share option reserve until the option is exercised, upon which it will be transferred to share premium, or until the option expires, upon which it will be transferred directly to retained earnings. The proceeds received net of any directly attributable transaction costs are credited to equity when the options are exercised.

FOR THE FINANCIAL YEAR ENDED 31 MAY 2013

66
ANNUAL REPORT 2013

NOTES TO THE FINANCIAL STATEMENTS (CONTD.)

FOR THE FINANCIAL YEAR ENDED 31 MAY 2013

2. 2.25

Summary of Significant Accounting Policies (contd.) Foreign currencies (i) Functional and presentation currency The individual financial statements of each entity in the Group are measured using the currency of the primary economic environment in which the entity operates ("the functional currency"). The financial statements of the Group and of the Company are presented in Ringgit Malaysia ("RM"), which is also the Company's functional currency. (ii) Foreign currency transactions In preparing the financial statements of the individual entities, transactions in currencies other than the entity's functional currency (foreign currencies) are recorded in the functional currency using the exchange rates prevailing at the dates of the transactions. At each reporting date, monetary items denominated in foreign currencies are translated at the rates prevailing on the reporting date. Non-monetary items carried at fair value that are denominated in foreign currencies are translated at the rates prevailing on the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not translated. Exchange differences arising on the settlement of monetary items, and on the translation of monetary items, are included in profit or loss for the period except for exchange differences arising on monetary items that form part of the Group's net investment in foreign operation. These are initially taken directly to the foreign currency reserve within equity until the disposal of the foreign operations, at which time they are recognised in profit or loss. Exchange differences arising from on monetary items that form part of the Groups net investment in foreign operation, where that monetary item is denominated in a currency other than the functional currency of either the reporting entity or the foreign operation are recognised in profit or loss in the Companys separate financial statements or the individual financial statements of the foreign operation, as appropriate. Exchange differences arising on the translation of non-monetary items carried at fair value are included in profit or loss for the period except for the differences arising on the translation of non-monetary items in respect of which gains and losses are recognised directly in equity. Exchange differences arising from such non-monetary items are also recognised directly in equity. (iii) Foreign operations The results and financial position of foreign operations that have a functional currency different from the presentation currency of the consolidated financial statements are translated into RM as follows: Assets and liabilities for each statement of financial position presented are translated at the closing rate prevailing at the reporting date; Income and expenses for each statement of comprehensive income are translated at average exchange rates for the year, which approximate the exchange rates at the dates of the transactions; and All resulting exchange differences are taken to the foreign currency translation reserve within equity.

Goodwill and fair value adjustments arising on the acquisition of foreign operations on or after 1 January 2006 are treated as assets and liabilities of the foreign operations and are recorded in the functional currency of the foreign operations and translated at the closing rate at the reporting date. Goodwill and fair value adjustments which arose on the acquisition of foreign subsidiaries before 1 January 2006 are deemed to be assets and liabilities of the parent company and are recorded in RM at the rates prevailing at the date of acquisition.

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ANNUAL REPORT 2013

NOTES TO THE FINANCIAL STATEMENTS (CONTD.)

2. 2.26 Summary of Significant Accounting Policies (contd.) Revenue recognition Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. The following specific recognition criteria must also be met before revenue is recognised: (i) Sale of goods Revenue is recognised net of sales taxes and upon transfer of significant risks and rewards of ownership to the buyer. Revenue is not recognised to the extent where there are significant uncertainties regarding recovery of the consideration due, associated costs or the possible return of goods. (ii) Sale of completed property A property is regarded as sold when the significant risks and returns have been transferred to the buyer, which is normally on unconditional exchange of contracts. For conditional exchanges, sales are recognised only when all the significant conditions are satisfied. (iii) Dividend income Dividend income is recognised when the Group's right to receive payment is established. (iv) Management fees Management fees are recognised when services are rendered. (v) Rental income Rental income is recognised on a straight-line basis over the term of the lease. The aggregate cost of incentives provided to lessees is recognised as a reduction of rental income over the lease term on a straightline basis. (vi) Interest income Interest income is recognised on an accrual basis using the effective interest method. (vii) Revenue on award credits Revenue on award credits is recognised based on the number of award credits that have been redeemed in exchange for free or discounted goods, relative to the total number of award credits expected to be redeemed. 2.27 Government grant Government grant is recognised at its fair value where there is reasonable assurance that the grant will be received and all conditions attached will be met. Where the grant relates to an asset, the fair value is recognised as deferred capital grant in the statements of financial position and is amortised to the statements of comprehensive income over the expected useful life of the relevant asset by equal annual instalments. Grant contributed towards the acquisition of plant and equipment is deducted from the cost of those assets. 2.28 Land use rights Land use rights are initially measured at cost. Following initial recognition, land use rights are measured at cost less accumulated amortisation and accumulated impairment losses. The land use rights are amortised over the lease term of 6 years.

FOR THE FINANCIAL YEAR ENDED 31 MAY 2013

68
ANNUAL REPORT 2013

NOTES TO THE FINANCIAL STATEMENTS (CONTD.)

FOR THE FINANCIAL YEAR ENDED 31 MAY 2013

Significant Accounting Judgements and Estimates The preparation of the financial statements of the Group and of the Company requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities at the reporting date. However, uncertainty about these assumptions and estimates could result in outcomes that could require a material adjustment to the carrying amount of the asset or liability affected in the future.

3.1

Judgements made in applying accounting policies In the process of applying the Groups accounting policies, management has made the following judgements, apart from those involving estimations, which have the most significant effect on the amounts recognised in the financial statements: (i) Classification of property The Group has developed certain criteria based on MFRS 140: Investment Property in making judgement whether a property qualifies as an investment property. Investment property is a property held to earn rentals or for capital appreciation or both. The Company has leased out its building to a subsidiary as a supermarket and departmental store and accordingly the building is classified as investment property in the Company's financial statements. The building is classified as property, plant and equipment in the Group's financial statements as it is held for use in the supply of goods and services. Property that is held for sale in the ordinary course of business is classified as inventory property. (ii) Operating lease commitments the Company as a lessor The Company has entered into property leases with a subsidiary on its investment properties. The Company has determined that it retains all the significant risks and rewards of ownership of these properties which are leased out as operating leases.

3.2

Key sources of estimation uncertainty The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below. (i) Impairment of goodwill The Group determines whether goodwill are impaired at least on an annual basis. This requires an estimation of the value-in-use of the cash-generating units ("CGU") to which goodwill are allocated. Estimating a valuein-use amount requires management to make an estimate of the expected future cash flows from the CGU and also to choose a suitable discount rate in order to calculate the present value of those cash flows. The carrying amount of the goodwill as at 31 May 2013 of the Group was RM4,665,045 (2012: RM4,665,045). Further details are disclosed in Note 22. (ii) Deferred tax assets Deferred tax assets are recognised for all unused tax losses and unabsorbed capital allowances to the extent that it is probable that taxable profit will be available against which the losses and capital allowances can be utilised. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and level of future taxable profits together with future tax planning strategies. The total carrying value of unrecognised tax losses and capital allowances of the Group is disclosed in Note 34. (iii) Depreciation of plant and machinery The cost of plant and machinery for the manufacturing of flexible printed circuit boards of the Group are depreciated on a straight-line basis over the assets' useful lives. Management estimates the useful lives of these plant and machinery to be within 5 to 8 years. These are common life expectancies applied in the precisions industry. Changes in the expected level of usage and technological developments could impact the economic useful lives and the residual values of these assets, therefore future depreciation charges could be revised.

69
ANNUAL REPORT 2013

NOTES TO THE FINANCIAL STATEMENTS (CONTD.)

3. 3.2 Significant Accounting Judgements and Estimates (contd.) Key sources of estimation uncertainty (contd.) (iv) Impairment of financial assets The Group and the Company assess at each reporting date whether there is any objective evidence that a financial asset is impaired. To determine whether there is objective evidence of impairment, the Group and the Company consider factors such as the probability of insolvency or significant financial difficulties of the debtor and default or significant delay in payments. Where there is objective evidence of impairment, the amount and timing of future cash flows are estimated based on historical loss experience for assets with similar credit risk characteristics. The carrying amount of the Groups and the Company's loans and receivables at the reporting date is disclosed in Note 24. (v) Deferred revenue The Group allocates the consideration received from the sale of goods to the goods sold and the points issued under its loyalty programme. The consideration allocated to the points issued is measured at their fair value. The carrying amount of deferred revenue allocated to the award credits at the reporting date was RM1,316,804 (2012: RM1,277,852). (vi) Impairment loss on investments in subsidiaries and associate The Company has recognised impairment loss in respect of investments in subsidiaries and associate. The Company carried out the impairment test based on the estimation of the higher of the value-in-use or the fair value less cost to sell of the cash-generating units ("CGU") to which the investments in subsidiaries and associate belong to. Estimating the recoverable amount requires the Company to make an estimate of the expected future cash flows from the CGU and also to determine a suitable discount rate in order to calculate the present value of those cash flows. The carrying amount at the reporting date for investments in subsidiaries and associate is disclosed in Notes 18 and 20.

FOR THE FINANCIAL YEAR ENDED 31 MAY 2013

4.

Revenue

Group 2013 RM 367,859,428 249,000 5,360 4,220,762 372,334,550

2012 RM

Company 2013 RM 1,656,684 240,000 11,838,536 13,735,220

2012 RM -

Sales of goods Sales of properties Loan interest income Rental income from: - investment property - operating leases, other than those relating to investment property Management fees from subsidiaries Gross dividends from subsidiaries

375,273,075 1,539,000 12,340 4,185,630 381,010,045

1,656,684 240,000 4,800,000 6,696,684

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ANNUAL REPORT 2013

NOTES TO THE FINANCIAL STATEMENTS (CONTD.)

FOR THE FINANCIAL YEAR ENDED 31 MAY 2013

5.

Other Operating Income

Group 2013 RM 310,684 50,000 50,000 7,466 20,839 570,272 857,040 1,866,301

2012 RM 414,082 50,000 13,600 14,640 3,262 877,373 799,298 2,172,255

Company 2013 RM 71,191 260,160 331,351

2012 RM 66,790 500 67,290

Advertising and promotional income Amortisation of government grant (Note 32) Bad debts recovered Gain on disposal of property, plant and equipment Commission income Insurance claim Interest income Miscellaneous Reversal of impairment loss (Note 24)

6.

Employee Benefits Expense

Group 2013 RM 18,609,646 1,341,395 197,498 1,435,162 1,384,607 22,968,308

2012 RM 19,241,780 1,415,803 192,398 1,416,075 1,173,218 23,439,274

Company 2013 RM 192,600 192,600

2012 RM 192,600 192,600

Wages and salaries Executive directors' remuneration (Note 7) Social security contributions Contributions to defined contribution plan Other benefits

7.

Directors' Remuneration

Directors of the Company Executive: Salaries and other emoluments Fees Bonus Contributions to defined contribution plan

Group 2013 RM

2012 RM

Company 2013 RM

2012 RM

379,564 177,600 45,000 30,180 632,344

385,505 175,600 45,000 40,560 646,665

18,000 174,600 192,600

18,000 174,600 192,600

Non-executive: Other emoluments Fees

50,000 74,000 124,000

48,500 68,000 116,500

50,000 65,000 115,000

48,500 65,000 113,500

71
ANNUAL REPORT 2013

NOTES TO THE FINANCIAL STATEMENTS (CONTD.)

7. Directors' Remuneration (contd.)

FOR THE FINANCIAL YEAR ENDED 31 MAY 2013

Directors of subsidiaries Executive: Salaries and other emoluments Fees Bonus Contributions to defined contribution plan Non-executive: Fees Total directors remuneration (Note 40(b)) Estimated money value of benefits-in-kind Total directors remuneration including benefits-in-kind

Group 2013 RM

2012 RM

Company 2013 RM

2012 RM

580,022 9,000 47,952 72,077 709,051 150,000 1,615,395 28,294

642,554 3,000 63,396 60,188 769,138 146,000 1,678,303 33,473

307,600 -

306,100 -

1,643,689

1,711,776

307,600

306,100

Analysis: Total executive directors' remuneration (Note 6) Total non-executive directors' remuneration (Note 8) Total directors' remuneration Estimated money value of benefits-in-kind Total directors remuneration including benefits-in-kind

1,341,395 274,000 1,615,395 28,294 1,643,689

1,415,803 262,500 1,678,303 33,473 1,711,776

192,600 115,000 307,600 307,600

192,600 113,500 306,100 306,100

The executive directors remuneration of the Group amounting to RM1,341,395 (2012: RM1,415,803) are paid to the present directors of the Group. The number of directors of the Company whose total remuneration during the year fell within the following bands is analysed below:

Number of directors 2013 2012 Executive directors: RM50,001 - RM100,000 RM100,001 - RM150,000 RM300,001 - RM350,000 Non-executive directors: Below RM50,000 2 1 2 1

72
ANNUAL REPORT 2013

NOTES TO THE FINANCIAL STATEMENTS (CONTD.)

FOR THE FINANCIAL YEAR ENDED 31 MAY 2013

8.

Other Operating Expenses Included in other operating expenses are: Group 2013 RM Auditors' remuneration: - statutory audit - current year - underprovision in prior years Allowance for impairment of doubtful debts (Note 24) Bad debts written off Foreign exchange (gains)/losses: - realised - unrealised Non-executive directors' remuneration (Note 7) - present directors Reversal for provision for liquidated damages (Note 35) Company 2013 RM

2012 RM

2012 RM

153,170 17,000 466,265 (172,422) 213,646 274,000 -

150,690 38,923 157,729 54,467 (327,960) (1,179,320) 262,500 (1,168)

25,000 5,183,179 115,000 -

25,000 12,000 2,910,160 113,500 -

9.

Finance Costs

Group 2013 RM 131,057 27,071 13,877 172,005

2012 RM 178,490 54,278 8,803 241,571

Interest expense: Term loan Bank overdrafts Bankers' acceptances

10.

Income Tax Expense

Group 2013 RM 6,666,641 (4,401) 6,662,240

2012 RM 4,526,388 (406) 4,525,982

Company 2013 RM 1,669,630 (9,559) 1,660,071

2012 RM

Current year income tax: Malaysian income tax (Over)/Underprovision in prior year Deferred tax (Note 34): Relating to origination and reversal of temporary differences (Over)/Underprovision in prior year Income tax recognised in profit or loss

1,559,500 394 1,559,894

(971,560) (200,496) (1,172,056) 5,490,184

162,515 387,601 550,116 5,076,098

1,660,071

1,559,894

Domestic income tax is calculated at the Malaysian statutory tax rate of 25% (2012: 25%) of the estimated assessable profit for the year. Taxation of other jurisdictions is calculated at the rates prevailing in the respective jurisdiction.

73
ANNUAL REPORT 2013

NOTES TO THE FINANCIAL STATEMENTS (CONTD.)

10. Income Tax Expense (contd.) A reconciliation of income tax expense applicable to profit before tax at the statutory income tax rate to income tax expense at the effective income tax rate of the Group and of the Company is as follows: 2013 RM 2012 RM

FOR THE FINANCIAL YEAR ENDED 31 MAY 2013

Group Profit before tax Taxation at Malaysian statutory tax rate of 25% Different tax rates in other countries Expenses not deductible for tax purposes Income not subject to tax Effect of utilisation of previously unrecognised deferred tax assets Deferred tax assets not recognised during the year Overprovision of income tax expense in prior year (Over)/Underprovision of deferred tax in prior year Income tax expense for the year

19,186,944 4,796,736 (1,996) 1,351,529 (333,476) (406,117) 288,405 (4,401) (200,496) 5,490,184

12,622,455 3,155,615 (2,610) 1,241,896 (123,183) 417,185 (406) 387,601 5,076,098

Company Profit before tax Taxation at Malaysian statutory tax rate of 25% Expenses not deductible for tax purposes Income not subject to tax (Over)/Underprovision of income tax expense in prior year Income tax expense for the year Group (i) A subsidiary, which has on 18 January 2010 obtained approval from Malaysian Industrial Development Authority ("MIDA"), subject to certain conditions being complied with, 100% tax exemption on its statutory income on "Fine Resolution Interconnect Flexible Printed Circuit Boards" (Pitch < 3mm) for a period of 5 years from the "Production Date". The subsidiary has subsequently applied to MIDA to vary one of its conditions and its application has been approved by MIDA. The subsidiary has submitted an application to fix its "Production Date" to the Ministry of International Trade and Industry ("MITI") and its application is still subject to MITI's approval as at 31 May 2013. Consequently, the subsidiarys chargeable income as at 31 May 2013 continues to be calculated on the basis that it is subject to income tax at a rate of 25% (2012: 25%). Subsequent to 31 May 2013, MITI has approved the subsidiary's application and fixed 1 June 2009 as the "Production Date" of the subsidiary where 100% of its statutory income on "Fine Resolution Interconnect Flexible Printed Circuit Boards" (Pitch < 3mm) will be tax exempted for a period of 5 years from 1 June 2009 to 31 May 2014. Further details are disclosed in Note 46. (ii) Another subsidiary has been accorded the Multimedia Super Corridor ("MSC") Status and was granted an extention of pioneer status for a further period of 5 years from 10 February 2008 to 9 February 2013. The chargeable income arising from the pioneer activity is 100% tax exempt during the pioneer status period. The pioneer status has expired on 9 February 2013 and consequently the subsidiarys income tax is calculated at a rate of 25% of the assessable profit generated from 10 February 2013 onwards. 7,696,178 1,924,045 1,503,126 (1,757,541) (9,559) 1,660,071 2,706,823 676,706 882,794 394 1,559,894

74
ANNUAL REPORT 2013

NOTES TO THE FINANCIAL STATEMENTS (CONTD.)

FOR THE FINANCIAL YEAR ENDED 31 MAY 2013

11.

Earnings Per Share (a) Basic Basic earnings per share amounts are calculated by dividing profit for the year attributable to ordinary equity holders of the Company by the weighted average number of ordinary shares in issue during the financial year, excluding treasury shares held by the Company. Group 2013 RM 13,890,365 57,334,148 24.23

Profit for the year attributable to ordinary equity holders of the Company (RM) Weighted average number of ordinary shares in issue Basic earnings per share (sen) (b) Diluted

2012 RM 7,555,342 57,354,148 13.17

For the purpose of calculating diluted earnings per share, the profit for the year attributable to ordinary equity holders of the Company and the weighted average number of ordinary shares in issue during the financial year, excluding treasury shares held by the Company have been adjusted for the dilutive effects of all potential ordinary shares, i.e. Employee Share Options Scheme ("ESOS"). The effect on the basic earnings per share for the financial year arising from the assumed conversion of the existing ESOS was anti-dilutive. The ESOS has lapsed on 23 April 2012 and all the unexercised options shall automatically lapse upon the expiry of the option period. Accordingly, the diluted earnings per share for the current financial year are presented as equal to basic earnings per share.

12.

Dividend Amount 2013 RM Group and Company In respect of financial year ended 31 May 2011: First and final dividend of 8% less 25% taxation, declared on 5 December 2011 and paid on 15 December 2011 In respect of financial year ended 31 May 2012: First and final dividend of 8% less 25% taxation, declared on 22 November 2012 and paid on 14 December 2012 Net dividend per share 2013 2012 Sen Sen

2012 RM

3,441,411

6.00

3,441,189 3,441,189

3,441,411

6.00 6.00

6.00

At the forthcoming Annual General Meeting, a first and final dividend in respect of the current financial year ended 31 May 2013, of 8% less 25% taxation on 57,322,148 ordinary shares (the number of outstanding ordinary shares in issue of the Company as at 31 May 2013 after the set off with 12,000 ordinary shares bought back by the Company and held as treasury shares subsequent to year end) amounting to RM3,439,329 (6 sen net per share) will be proposed for shareholders' approval. The financial statements for the current financial year do not reflect this proposed dividend. Such dividends when approved by the shareholders will be accounted for in equity as an appropriation of retained earnings in the financial year ending 31 May 2014.

13. Office equipment, Long-term leasehold apartment RM RM RM RM RM RM RM Buildings machinery and fittings Computers vehicles progress Total RM Plant and furniture Motor work-inrenovation, Capital

Property, Plant and Equipment

Short-term

leasehold

land

Group

RM

2013

Cost 1,030,570 1,030,570 59,368,975 63,104,649 19,477,253 5,237,725 741 (14,614,895) (1,318,435) (75,350) 633,096 65,000 (130,556) 3,131,457 51,989 495,258 283,954 29,650 313,695 59,316,986 76,591,190 20,445,993 5,283,425 2,948,318 29,297,337 27,687,702 (698,096) (19,000) 56,267,943 198,226,962 28,862,248 (19,000) (16,139,236) 741 210,931,715

At 1 June 2012

3,313,143

Additions

Reclassifications

Disposals

Write off

Exchange differences

At 31 May 2013

3,313,143

Accumulated depreciation 2,181 13,099 15,280 20,153,248 49,613,625 (14,479,498) 3,099,272 4,018,346 2,182,324 (1,303,127) 643 16,270,200 17,053,976 60,074,777 15,390,360 4,713,431 271,413 (40,303) 4,944,541 2,097,423 203,617 (130,555) 2,170,485 1,096,591 1,096,591 101,300,870 9,851,927 (15,953,483) 643 95,199,957

At 1 June 2012

872,131

Depreciation charge for

the year

63,856

Write off

Exchange differences

At 31 May 2013

935,987

Net carrying amount 1,015,290 39,215,727 13,491,024 3,207,053 293,184 960,972 55,171,352 115,731,758

NOTES TO THE FINANCIAL STATEMENTS (CONTD.)

At 31 May 2013

2,377,156

ANNUAL REPORT 2013

FOR THE FINANCIAL YEAR ENDED 31 MAY 2013

75

76

13. Office equipment, Long-term leasehold apartment RM RM RM RM RM RM RM Buildings machinery and fittings Computers vehicles progress Plant and furniture Motor work-inTotal RM renovation, Capital

Property, Plant and Equipment (contd.)

Short-term

ANNUAL REPORT 2013

leasehold

land

Group

RM

2012

Cost 1,030,570 1,030,570 59,316,986 76,591,190 20,445,993 (22,734) (122,650) (70,290) (73,000) 5,283,425 (387,435) 948,515 316,420 33,767 2,307,164 560,958 134,719 189,878 (215,680) 2,948,318 59,670,654 73,458,161 19,661,639 5,221,706 2,974,120 877,500 10,699,473 18,597,864 (877,500) 29,297,337 165,176,923 14,956,529 18,597,864 (215,680) (265,940) (22,734) 198,226,962

FOR THE FINANCIAL YEAR ENDED 31 MAY 2013

At 1 June 2011

3,313,143

Additions

Transfer in

Reclassifications

Disposals

NOTES TO THE FINANCIAL STATEMENTS (CONTD.)

Write off

Exchange differences

At 31 May 2012

3,313,143

Accumulated depreciation 2,181 2,181 17,053,976 (17,349) 3,878 (107,175) 60,074,777 3,126,439 5,105,546 13,944,886 55,072,528 13,823,961 1,634,853 13,471 (62,392) (19,533) 15,390,360 4,451,430 283,901 (21,900) 4,713,431 2,116,457 196,646 (215,680) 2,097,423 1,096,591 1,096,591 90,217,535 10,413,424 1,096,591 (215,680) (191,467) (19,533) 101,300,870

At 1 June 2011

808,273

Depreciation charge for

the year

63,858

Transfer in

Reclassifications

Disposals

Write off

Exchange differences

At 31 May 2012

872,131

Net carrying amount 1,028,389 42,263,010 16,516,413 5,055,633 569,994 850,895 28,200,746 96,926,092

At 31 May 2012

2,441,012

77
ANNUAL REPORT 2013

NOTES TO THE FINANCIAL STATEMENTS (CONTD.)

13. Property, Plant and Equipment (contd.) Office equipment, renovation, furniture and fittings RM

FOR THE FINANCIAL YEAR ENDED 31 MAY 2013

Company 2013 Cost At 1 June 2012/ At 31 May 2013 Accumulated depreciation At 1 June 2012 Depreciation charge for the year At 31 May 2013 Net carrying amount At 31 May 2013 2012 Cost At 1 June 2011/ At 31 May 2012 Accumulated depreciation At 1 June 2011 Depreciation charge for the year At 31 May 2012 Net carrying amount At 31 May 2012 (a)

Plant and machinery RM

Computers RM

Motor vehicles RM

Total RM

1,443,263 1,440,695 476 1,441,171 2,092

18,292 18,291 18,291 1

26,003 23,360 630 23,990 2,013

535,017 535,016 535,016 1

2,022,575 2,017,362 1,106 2,018,468 4,107

1,443,263 1,440,219 476 1,440,695 2,568

18,292 18,291 18,291 1

26,003 22,653 707 23,360 2,643

535,017 535,016 535,016 1

2,022,575 2,016,179 1,183 2,017,362 5,213

The short-term leasehold land and building of a subsidiary in the manufacturing segment was revalued on 23 July 2010 using the comparison cost method by a firm of professional valuers. However, the Group has continued to carry the short-term leasehold land and building based on its earlier revalued amount in March 2000 since the surplus based on the latest revaluation was immaterial. Upon transition to MFRS, the subsidiary has elected to measure all its property, plant and equipment using the cost model under MFRS 116, Property, Plant and Equipment. At the date of transition to MFRS, the subsidiary elected to regard the revalued amounts of leasehold land and buildings as at March 2000 as deemed cost at the date of revaluation as these amounts were broadly comparable to fair value at that date. The revaluation surplus was transferred to retained earnings at the date of transition to MFRS.

(b)

Included in property, plant and equipment are: (i) (ii) a motor vehicle of the Company with net carrying amount of RM1 (2012: RM1) registered under the name of an employee of the subsidiary, in trust for the Company; motor vehicles of a subsidiary with net carrying amount of RM65,309 (2012: RM83,757) registered under the name of a director of the Company, i.e. Dato' Hwang Thean Long in trust for the said subsidiary; capital work-in-progress transferred in from investment property and other receivables with a carrying amount of RM Nil (2012: RM16,273,409) and RM Nil (2012: RM1,227,864) respectively; leasehold land under capital work-in-progress with a net carrying amount of RM16,273,409 (2012: RM16,273,409) pledged to a bank to secure bank borrowings as disclosed in Note 33; and fully depreciated property, plant and equipment which are still in use with the following costs: Group 2013 RM Buildings Plant and machinery Office equipment, renovation, furniture and fittings Computers Motor vehicles 938,648 23,828,544 8,942,112 4,037,880 1,426,417 39,173,601 2012 RM 938,648 37,291,990 9,787,764 3,858,145 1,327,710 53,204,257 Company 2013 RM 1,438,512 18,290 21,803 535,017 2,013,622 2012 RM

(iii) (iv) (v)

1,438,512 18,290 21,303 535,017 2,013,122

78
ANNUAL REPORT 2013

NOTES TO THE FINANCIAL STATEMENTS (CONTD.)

FOR THE FINANCIAL YEAR ENDED 31 MAY 2013

13.

Property, Plant and Equipment (contd.) (c) (d) The short term leasehold land has an unexpired lease of 36 years (2012: 37 years). The long term leasehold land under capital work-in-progress has an unexpired lease of 91 years (2012: 92 years). The long term leasehold apartment has an unexpired lease of 77 years (2012: 78 years). Included in the buildings of the Group are buildings erected on land leased from statutory bodies with a net carrying amount of RM4,208,483 (2012: RM6,479,463).

(e) (f)

14.

Investment Property

Leasehold land and building Cost At 1 June 2012 / 2011 Transfer to property, plant and equipment and development costs (Note 13, 15(b)) At 31 May 2013 / 2012 Accumulated depreciation At 1 June 2012 / 2011 Transfer to property, plant and equipment and development costs (Note 13, 15(b)) Depreciation charge for the year At 31 May 2013 / 2012 Net carrying amount At 31 May 2013 / 2012

Group 2013 RM

2012 RM

Company 2013 RM

2012 RM

30,623,822 (30,623,822) -

29,078,033 29,078,033

29,078,033 29,078,033

1,933,322 (1,933,322) -

4,631,400 473,171 5,104,571

4,158,229 473,171 4,631,400

23,973,462

24,446,633

Group The investment property of the Group has an open market value of approximately RM32,000,000 as at 31 May 2012. During the financial year ended 31 May 2012, the investment property of the Group has been transferred to property, plant and equipment and property development costs amounting to RM16,273,409 and RM12,417,091 respectively as the Group has commenced its development activities and the Group will retain a portion of the project for its own use while the balance will be disposed off to third parties. Company The investment property of the Company has an open market value of approximately RM25,800,000 (2012: RM25,800,000) and is leased to a subsidiary as a supermarket and departmental store. The title deed of the investment property is registered under the name of a corporate shareholder of the Company, i.e. Suiwah Holdings Sdn. Bhd., a company in which a director of the Company, i.e. Dato' Hwang Thean Long has a substantial interest. The strata title of the building is in the process of being transferred to the Company. Direct operating expenses incurred by the Company on the investment property during the financial year amounted to RM652,355 (2012: RM652,357).

79
ANNUAL REPORT 2013

NOTES TO THE FINANCIAL STATEMENTS (CONTD.)

15. Inventory Property

FOR THE FINANCIAL YEAR ENDED 31 MAY 2013

Non-current Land held for property development Current Property development cost

Note (a)

Group 2013 2012 RM RM 9,700,421 9,700,421

(b)

16,466,059 26,166,480

16,267,936 25,968,357

(a)

Land held for property development Group Development cost RM

2013 Cost At 1 June 2012 / 31 May 2013 2012 Cost At 1 June 2011 / 31 May 2012

Freehold land RM

Total RM

7,305,719

2,394,702

9,700,421

7,305,719

2,394,702

9,700,421

Included in freehold land is a Malay reserve freehold land with a carrying value of RM2,834,809 (2012: RM2,834,809). (b) Property development costs Leasehold land RM

2013 Cumulative property development costs At 1 June 2012 Costs incurred during the year At 31 May 2013 Cumulative costs recognised in statements of comprehensive income At 1 June 2012 / 31 May 2013 Property development costs at 31 May 2013

Group Development costs RM

Total RM

12,417,091 12,417,091

3,850,845 198,123 4,048,968

16,267,936 198,123 16,466,059

12,417,091

4,048,968

16,466,059

80
ANNUAL REPORT 2013

NOTES TO THE FINANCIAL STATEMENTS (CONTD.)

FOR THE FINANCIAL YEAR ENDED 31 MAY 2013

15.

Inventory Property (contd.) (b) Property development costs (contd.) Leasehold land RM

2012 Cumulative property development costs At 1 June 2011 Costs incurred during the year Transfer from other receivables Transfer from investment property (Note 14) At 31 May 2012 Cumulative costs recognised in statements of comprehensive income At 1 June 2011 / 31 May 2012 Property development costs at 31 May 2012

Group Development costs RM

Total RM

12,417,091 12,417,091

2,913,949 936,896 3,850,845

2,913,949 936,896 12,417,091 16,267,936

12,417,091

3,850,845

16,267,936

The long term leasehold land is pledged to a bank to secure bank borrowings as disclosed in Note 33 and has an unexpired lease of 91 years (2012: 92 years).

16.

Land Use Rights

Group 2013 RM 471,675 (215,266) 256,409

2012 RM 686,941 (215,266) 471,675

At 1 June 2012 / 2011 Amortisation during the year At 31 May 2013 / 2012

17.

Intangible Asset

Group 2013 RM 6,905,900

2012 RM -

Patent License, at cost

During the financial year ended 31 May 2013, the newly incorporated subsidiary of the Group, Qdos Interconnect Sdn Bhd ("QISB") has entered into a technology license and transfer agreement with a third party for a term of 20 years which grants the subsidiary an exclusive license to manufacture the Licensed Products, and a non-exclusive license to sell the Licensed Products on a world-wide basis and to provide technology transfer to the subsidiary. In consideration of the Patent Licence granted and Know-how transferred, the subsidiary shall pay the aforesaid third party by way of instalments, a Licence Fee by cash in the aggregate sum of USD 3,000,000 in accordance with the payment schedule specified in the technology license and transfer agreement. The intangible asset is measured initially at cost, which is the fair value of consideration to be paid to acquire the asset at the time of its acquisition. The calculation of fair value of consideration to be paid is based on assumption of a 10year repayment term, as set out in the payment schedule and a discount rate of 4.95%. The useful life of the patent license is estimated to be 20 years.

81
ANNUAL REPORT 2013

NOTES TO THE FINANCIAL STATEMENTS (CONTD.)

18. Investments in Subsidiaries

FOR THE FINANCIAL YEAR ENDED 31 MAY 2013

Company 2013 RM

2012 RM

Unquoted shares in Malaysia, at cost: Impairment losses

60,560,774 (1,304,430) 59,256,344

60,560,774 (1,276,096) 59,284,678

Impairment assessment As at 31 May 2013, the Company carried out a review of the recoverable amount of its investments in subsidiaries. An impairment loss of RM28,334 (2012: RM Nil) has been recognised in profit or loss, reducing the net carrying amount of the investment in Sunshine (Labuan) Private Limited to its recoverable amount as at 31 May 2013. The review has also led to the retention of the impairment loss of RM1,276,096 recognised in the prior years profit or loss. Equity interest held (%) 2013 2012 Principal activities

Name of subsidiaries Incorporated in Malaysia Sunshine Wholesale Mart Sdn. Bhd.

100

100

Operator of supermarkets and departmental stores and money lending Operator of supermarkets and departmental stores and trading of cable wires Investment holding Trading in general merchandise, garments and construction materials Property investment Dormant Property development Property development Property development Sub-letting of properties and trading of merchandise goods Dormant Investment holding International trading business

Sunshine Supermarket & Departmental Store Sdn. Bhd. Sunshine Link Sdn. Bhd. Aljano Sdn. Bhd.

100

100

100 100

100 100

Magirex Sdn. Bhd. Sunshine Electrical Superstore Sdn. Bhd. Great Support Sdn. Bhd. Crimson Omega Sdn. Bhd. Silver Resort Sdn. Bhd. Sunshine Amanjaya Sdn. Bhd. (i)

100 100 75 100 100 100

100 100 75 100 100 100

Sunshine (Labuan) Private Limited (i) Qdos Holdings Bhd. Sunshine Amanjaya Pte Ltd (i), (iii) Incorporated in Indonesia PT. Sunshine Amanjaya Indonesia (ii)

100 100 51

100 100 51

100

100

Intended principal activities are to act as a main distributor, importer and exporter of merchandise goods

82
ANNUAL REPORT 2013

NOTES TO THE FINANCIAL STATEMENTS (CONTD.)

FOR THE FINANCIAL YEAR ENDED 31 MAY 2013

18.

Investments in Subsidiaries (contd.) Equity interest held (%) 2013 2012 Principal activities

Name of subsidiaries Held under Qdos Holdings Bhd. Incorporated in Malaysia Qdos Flexcircuits Sdn. Bhd.

100

100

Manufacturing of flexible printed circuit boards Research and development, design and prototyping of flexible printed circuit boards Design services of flexible printed circuit boards and trading in general merchandise Manufacturing and trading in semiconductor

Qdos Technology Sdn. Bhd.

100

100

Qdos Marketing Sdn. Bhd.

100

100

Qdos Interconnect Sdn. Bhd. Held under Qdos Flexcircuits Sdn. Bhd. Incorporated in India Qdos Flexcircuits (India) Private Limited (i)

100

Nil

100

100

Design of flexible printed circuit boards. The Company remained dormant during the year.

(i) (ii)

Audited by firms of auditors other than Ernst & Young The Company has a 99% equity interest in the subsidiary and the remaining 1% equity interest is held by a wholly owned subsidiary, Sunshine Amanjaya Sdn. Bhd. The Company has a 50% equity interest in the subsidiary and the remaining 1% equity interest is held by a wholly owned subsidiary, Sunshine Wholesale Mart Sdn. Bhd.

(iii)

19.

Investment in a Jointly Controlled Entity

Group 2013 RM 15,063,373 (45,424) (2,949,372) 12,068,577

2012 RM 15,063,373 (40,797) (2,565,677) 12,456,899

Unquoted shares outside Malaysia, at cost Share of post acquisition reserve Exchange differences

During the year ended 31 May 2011, the Groups subsidiaries, Qdos Flexicircuits Sdn. Bhd. and Qdos Flexicircuit (India) Private Limited have entered into a Shareholders' Agreement with M.J Shantharam, Valdel Real Estate Pvt. Ltd and Exora Technologies Private Limited (Exora) to subscribe up to 22,500,000 new shares of Rupees 10 each in Exora, representing 49% of the equity interest in Exora, for a total cash consideration of approximately RM15 million. As at 31 May 2013, the Groups subsidiaries have in total subscribed for 22,151,893 shares of Rupees 10 each in Exora, representing 49% of the equity interest in Exora for a total cash consideration of RM15,063,373.

83
ANNUAL REPORT 2013

NOTES TO THE FINANCIAL STATEMENTS (CONTD.)

19. Investment in a Jointly Controlled Entity (contd.) Details of the jointly controlled entity are as follows: Equity interest held (%) 2013 2012 Principal activities

FOR THE FINANCIAL YEAR ENDED 31 MAY 2013

Name of jointly controlled Held under Qdos Flexcircuits Sdn. Bhd. and its subsidiary Incorporated in India Exora Technologies Private Limited

49

49

Venture into the development of commercial/ residential properties in India through a special purpose vehicle

The aggregate amounts of each of the current assets, non-current assets, current liabilities, non-current liabilities, income and expenses related to the Groups interests in the jointly-controlled entity are as follows: 2013 RM Assets and liabilities Current assets Non-current assets Total assets Current liabilities Non-current liabilities Total liabilities Results Revenue Loss for the year 2012 RM

12,676,505 1,339 12,677,844 665,103 665,103

13,084,201 1,382 13,085,583 686,295 686,295

(4,627)

(40,797)

20.

Investment in an Associate Group 2013 RM Unquoted shares outside Malaysia, at cost Accumulated impairment losses Share of post acquisition reserve Exchange difference 1,631,726 1,631,726 (1,513,625) (118,101) Company 2013 RM 1,631,726 (1,631,726) -

2012 RM 1,631,726 1,631,726 (1,513,625) (118,101) -

2012 RM

1,631,726 (1,631,726) -

Impairment assessment The Company has carried out a review of the recoverable amount of its investment in associate due to its net liability position. The review has led to the retention of the impairment loss of RM1,631,726 recognised in profit or loss in the prior year, reducing the net carrying amount of the investment to nil.

84
ANNUAL REPORT 2013

NOTES TO THE FINANCIAL STATEMENTS (CONTD.)

FOR THE FINANCIAL YEAR ENDED 31 MAY 2013

20.

Investment in an Associate (contd.) Details of the associate are as follows: Equity interest held (%) 2013 2012 Principal activities

Name of associate Incorporated in India Valdel Oil and Gas Private Limited ("VOG")

25

25

Carrying on business connected with oil and natural gas. The Company has remained dormant during the year.

The summarised financial information based on the audited financial statements of the associate, not adjusted for the proportion of ownership interest held by the Group, is as follows: 2013 RM 403,301 5,382,920 5,786,221 6,615,544 9,921 6,625,465 2012 RM 415,197 5,693,403 6,108,600 6,628,152 890,510 7,518,662

Assets and liabilities Current assets Non-current assets Total assets Current liabilities Non-current liabilities Total liabilities Results Revenue Profit/(Loss) for the year

428,693 547,716

636,845 137,807

21.

Investments securities

Non-current Available-for-sale financial assets - Equity instruments (quoted in Malaysia) - Equity instruments (quoted outside Malaysia)

Group 2013 RM

2012 RM

2,841 273 3,114 3,888

2,841 282 3,123 3,284

Market value

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ANNUAL REPORT 2013

NOTES TO THE FINANCIAL STATEMENTS (CONTD.)

22. Goodwill on Consolidation Group 2013 RM At 31 May 4,665,045

FOR THE FINANCIAL YEAR ENDED 31 MAY 2013

2012 RM 4,665,045

Impairment test on goodwill (a) Allocation of goodwill Goodwill has been allocated to the Group's cash-generating units ("CGU") identified according to the business segment and relates to the manufacturing and designing of flexible printed circuits boards as follows: 2013 RM Manufacturing (b) Key assumptions used in value-in-use ("VIU")calculations The recoverable amount of the CGU is determined based on VIU calculations using cash flow projections based on financial forecasts approved by management covering a 5-year period. The following describes each key assumption on which management has based its cash flow projection for VIU calculations of CGU to undertake impairment testing of goodwill: (i) Budgeted gross margin The basis used to determine the value assigned to the budgeted gross margin is the average gross margin achieved in the year immediately before the budgeted year adjusted for expected efficiency improvement, market and economic conditions and internal resource efficiency, where applicable. (ii) Growth rate The weighted average growth rate used is consistent with the long term average growth rate for the relevant industry. The forecasted growth rate used to extrapolate cash flows beyond the five-year period is 3.9% (2012: 3.6%). (iii) Discount rate The discount rate used is on a basis that reflects specific risks relating to the relevant business segment. The pre-tax discount rate applied to the cash flow projections is 10% (2012: 9%) Sensitivity to changes in assumptions With regard to the assessment of value-in-use of the CGU, management believes that no reasonable change in any of the above key assumptions would cause the carrying value of the CGU to materially exceed its recoverable amount. 4,665,045 2012 RM 4,665,045

86
ANNUAL REPORT 2013

NOTES TO THE FINANCIAL STATEMENTS (CONTD.)

FOR THE FINANCIAL YEAR ENDED 31 MAY 2013

23.

Inventories

Group 2013 RM

2012 RM

At cost: Merchandise held for resale Raw materials Work-in-progress Finished goods Properties held for sale Spare parts Raw materials in transit At net realisable value: Raw materials 791,272 33,511,211 1,042,469 34,062,297 20,619,755 4,518,819 2,206,200 436,670 4,569,693 368,802 32,719,939 18,792,865 4,780,683 2,755,549 1,501,622 4,757,714 213,656 217,739 33,019,828

The cost of inventories recognised as an expense during the year amounted to RM286,958,287 (2012: RM299,561,707).

24.

Trade and Other Receivables Group 2013 RM Company 2013 RM

Trade receivables Third parties Allowance for impairment Trade receivables, net Other receivables Due from subsidiaries: - Magirex Sdn. Bhd. - Sunshine Amanjaya Sdn. Bhd. - PT. Sunshine Amanjaya Indonesia - Sunshine Supermarket & Departmental Store Sdn. Bhd. - Sunshine Wholesale Mart Sdn. Bhd. - Sunshine (Labuan) Private Limited - Sunshine Amanjaya Pte. Ltd. Deposits for: - Rental - Others Rental income receivable Sundry receivables Dividend receivable from Qdos Holdings Bhd. Allowance for impairment Other receivables, net Total trade and other receivables Add: Loan receivables (Note 26) Add: Cash and bank balances (Note 28) Total loans and receivables

2012 RM

2012 RM

22,306,783 22,306,783

25,378,043 (157,729) 25,220,314

1,838,260 8,733,639 586 5,436,370 24,382,812 1,314 32,834

2,278,260 8,714,029 586 3,163,342 260,160 23,897

864,803 594,019 24,750 415,559 1,899,131 1,899,131 24,205,914 28,730 32,199,611 56,434,255

886,352 938,865 32,576 1,380,356 3,238,149 3,238,149 28,458,463 16,516 31,143,760 59,618,739

1,000 3,680,000 44,106,815 (7,833,179) 36,273,636 36,273,636 4,008,160 40,281,796

1,000 14,441,274 (2,910,160) 11,531,114 11,531,114 4,872,516 16,403,630

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ANNUAL REPORT 2013

NOTES TO THE FINANCIAL STATEMENTS (CONTD.)

24. Trade and Other Receivables (contd.) (a) Trade receivables The Group's primary exposure to credit risk arises through its trade receivables of its manufacturing subsidiaries. The Group's trading terms with its customers are mainly on credit, except for new customers, where payment in advance is normally required. The normal credit periods range from 30 to 75 days (2012: 30 to 75 days). Other credit terms are assessed and approved on a case-by-case basis. The Group seeks to maintain strict control over its outstanding receivables and has a credit control department to minimise credit risk. Overdue balances are reviewed regularly by senior management. As at 31 May 2013, the Group has significant exposure to a group of customers, which constitutes approximately 74% (2012: 70%) of the trade receivables as at year end. Ageing analysis of trade receivables The ageing analysis of the Groups trade receivables is as follows : 2013 RM Neither past due nor impaired 1 to 30 days past due not impaired 31 to 60 days past due not impaired 61 to 90 days past due not impaired 91 to 120 days past due not impaired More than 121 days past due not impaired Impaired 9,708,475 5,066,389 3,416,217 2,889,262 39,030 1,187,410 12,598,308 22,306,783 2012 RM 9,093,558 5,240,574 4,873,999 2,969,845 897,081 2,145,257 16,126,756 157,729 25,378,043

FOR THE FINANCIAL YEAR ENDED 31 MAY 2013

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 subsidiaries. None of the Groups trade receivables that are neither past due nor impaired have been renegotiated during the financial year. Receivables that are past due but not impaired The Group has trade receivables amounting to RM12,598,308 (2012: RM16,126,756) that are past due at the reporting date but not impaired. These relate to customers which have no recent history of default and are monitored on an on-going basis. The receivables that are past due but not impaired are unsecured in nature. Receivables that are impaired The Group's trade receivables that are impaired at the reporting date and the movement of the allowance accounts used to record the impairment are as follows: Group 2013 2012 RM RM Trade receivables: - nominal amounts Allowance for impairment

157,729 (157,729) -

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ANNUAL REPORT 2013

NOTES TO THE FINANCIAL STATEMENTS (CONTD.)

FOR THE FINANCIAL YEAR ENDED 31 MAY 2013

24.

Trade and Other Receivables (contd.) (a) Trade receivables (contd.) Movement in allowance accounts: Group 2013 RM At 1 June 2012 / 2011 Charge for the year Written off At 31 May 2013 / 2012 157,729 (157,729) 2012 RM 157,729 157,729

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

(b)

Amounts due from subsidiaries Amounts due from subsidiaries are non-interest bearing and are repayable on demand. These amounts are unsecured and are to be settled in cash. Other receivables that are impaired At the reporting date, the Company has provided an allowance of RM7,833,179 (2012: RM2,910,160) for impairment of the unsecured advances to subsidiaries with nominal amounts of RM8,733,639 (2012: RM8,974,189). These subsidiaries have been suffering financial losses for the current and past two financial years. Company 2013 RM Other receivables: - nominal amounts Allowance for impairment 44,106,815 (7,833,179) 36,273,636

2012 RM

14,441,274 (2,910,160) 11,531,114

Movement in allowance accounts: Company 2013 RM At 1 June 2012 / 2011 Charge for the year Reversal of impairment loss At 31 May 2013 / 2012 2,910,160 5,183,179 (260,160) 7,833,179

2012 RM

2,910,160 2,910,160

Further details on related party transactions are disclosed in Note 40. Other information on financial risks of receivables are disclosed in Note 42.

89
ANNUAL REPORT 2013

NOTES TO THE FINANCIAL STATEMENTS (CONTD.)

25. Other Current Assets

FOR THE FINANCIAL YEAR ENDED 31 MAY 2013

Group 2013 RM 398,315

2012 RM 4,771,053

Company 2013 RM 14,932

2012 RM 14,932

Prepayments

Included in prepayments of the Group are advances of RM Nil (2012: RM4,132,595) given by a subsidiary to a supplier for purchase of mineral.

26.

Loan Receivables

Group 2013 RM 26,000 2,730 28,730

2012 RM 8,516 8,000 16,516

Unsecured advances repayable within twelve months Loan interest receivable

The advances are made by a subsidiary, Sunshine Wholesale Mart Sdn. Bhd. whose principal activities include that of money lending under the Moneylenders Act, 1951. The advances bear interest rates of 12% to 18% (2012: 12% to 18%) per annum.

27.

Short Term Investments Group 2013 RM

Quoted unit trust funds OSK-UOB Money Market Fund Hwang DBS - AIIMAN Cash Fund Hwang DBS - Select Cash Fund Hwang DBS - Select Bond Fund Unquoted investments AmIncome

2012 RM

55,633 101,605 74,999 9,277,425 9,509,662

54,040 1,377,814 442,574 1,874,428

4,189,173 13,698,835

1,967,518 3,841,946

Market value of investments/unit trust funds: Quoted unit trust funds OSK-UOB Money Market Fund Hwang DBS - AIIMAN Cash Fund Hwang DBS - Select Cash Fund Hwang DBS - Select Bond Fund 55,633 101,605 74,999 9,277,425 9,509,662 54,040 1,377,814 442,574 1,874,428

(a)

OSK-UOB Money Market Fund OSK-UOB Money Market Fund is a short term fund which aims to provide investors with a high level of liquidity whilst providing reasonable returns by investing in low risk investments.

90
ANNUAL REPORT 2013

NOTES TO THE FINANCIAL STATEMENTS (CONTD.)

FOR THE FINANCIAL YEAR ENDED 31 MAY 2013

27.

Short Term Investments (contd.) (b) Hwang DBS - AIIMAN Cash Fund Hwang DBS - AIIMAN Cash Fund is a Shariah-compliant wholesale income type fund, which invests in debentures, money market instruments and deposits with different maturity periods. The fund aims to provide investors with a regular income stream and high level of liquidity in order to meet their cash flow requirements while maintaining capital preservation. The redemption monies are to be paid the day following the next business day upon the receiving of the redemption request. (c) Hwang DBS - Select Cash Fund The investment objective of Hwang DBS - Select Cash Fund is to provide investors with a regular income stream and high level of liquidity to meet cash flow requirements while maintaining capital preservation. The Fund will invest between 90% to 100% in short term fixed income instruments with maturity of not more than 365 days. Up to 10% of the Net Asset Value ("NAV") of the Fund is to be invested in debentures, money market instruments and deposits with maturity periods, exceeding 365 days but no longer than 732 days. (d) Hwang DBS - Select Bond Fund The investment objective of Hwang DBS - Select Bond Fund is to provide investors with a steady income stream over the medium to long term period through investment primarily in bonds and other fixed income securities. The investment process will be driven by considering the interest rate outlook over the medium to long-term horizon and seeking potential credit upgrade fixed income securities. 80% of the Fund will be invested in medium to long-term government bond, private debt securities and other fixed income securities. The balance will be held in cash deposits and short-term money market instruments. (e) AmIncome AmIncome is a short to medium-term money market fund that aims to provide investors with a stream of income. The proceeds from withdrawals will be received in the following manner: (i) (ii) the first RM2 million and below not later than the 7th day of receipt of repurchase notice; and any amount above RM2 million withdrawn, not later than the 30th day of receipt of repurchase notice.

The range of interest rates earned per annum during the financial year is from 2.67% to 2.80% (2012: 2.72% to 3.00%). Other information on financial risks of short term investments is disclosed in Note 42.

28.

Cash and Bank Balances Group 2013 RM Cash on hand and at banks Deposits with licensed banks: - short term placements - fixed deposits 31,367,611 832,000 32,199,611 Company 2013 RM 4,008,160 4,008,160

2012 RM 27,307,763 2,800,000 1,035,997 31,143,760

2012 RM

4,872,516 4,872,516

Included in cash at banks of the Group are amounts of RM2,285,371 (2012: RM2,240,247) held pursuant to Section 7A of the Housing Development (Control and Licensing) Act, 1966 and are restricted from use in other operations. Deposits with licensed banks of the Group amounting to RM420,070 (2012: RM380,840) have been pledged to banks as collaterals for bank facilities and bankers' guarantees obtained. Deposits with licensed banks of the Group amounting to RM136,755 (2012: RM134,050) are held in trust by a director.

91
ANNUAL REPORT 2013

NOTES TO THE FINANCIAL STATEMENTS (CONTD.)

28. Cash and Bank Balances (contd.) The range of interest rates earned per annum and the maturities period during the financial year for short term placements and fixed deposits were as follows: 2013 Interest rates Maturities period 2012

FOR THE FINANCIAL YEAR ENDED 31 MAY 2013

2.95% - 9.00% 2.65% - 9.50% 365 days 1 - 365 days

Other information on financial risks of cash and cash equivalents is disclosed in Note 42. For the purposes of the statements of cash flows, cash and cash equivalents comprise the following as at the reporting date: Group 2013 RM Deposits with licensed banks Less: Fixed deposits pledged to banks Fixed deposits (more than 90 days) Deposits with licensed banks Add: Cash on hand and at banks Less: Bank overdraft (Note 33) Cash and cash equivalents 832,000 (420,070) (411,930) 31,367,611 (9,142,089) 22,225,522 Company 2013 RM 4,008,160 4,008,160

2012 RM 3,835,997 (380,840) (655,157) 2,800,000 27,307,763 30,107,763

2012 RM

4,872,516 4,872,516

29.

Share Capital, Share Premium and Treasury Shares Number of ordinary shares of RM1 each Share capital (issued and Treasury fully paid) shares

Share capital (issued and fully paid) RM 61,000,248 61,000,248 61,000,248 61,000,248

Amount

Treasury shares RM (4,854,244) (462,654) (5,316,898) (5,316,898) (29,820) (5,346,718)

Share premium RM 13,934,711 13,934,711 13,934,711 13,934,711

At 1 June 2011 Purchase of treasury shares At 31 May 2012 At 1 June 2012 Purchase of treasury shares At 31 May 2013

61,000,248 61,000,248 61,000,248 61,000,248

(3,328,100) (318,000) (3,646,100) (3,646,100) (20,000) (3,666,100)

Number of ordinary shares of RM1 each 2013 2012 Authorised: At 1 June and 31 May 100,000,000 100,000,000

Amount 2013 RM

2012 RM

100,000,000

100,000,000

There is no movement in issued and fully paid/ authorised share capital during the year. 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 Company's residual assets.

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ANNUAL REPORT 2013

NOTES TO THE FINANCIAL STATEMENTS (CONTD.)

FOR THE FINANCIAL YEAR ENDED 31 MAY 2013

29.

Share Capital, Share Premium and Treasury Shares (contd.) (a) Treasury shares The shareholders of the Company, by an ordinary resolution passed in a general meeting held on 22 November 2012, renewed their approval for the Company's plan to buy back its own ordinary shares. The directors of the Company are committed to enhancing the value of the Company for its shareholders and believe that the share buy back plan can be applied in the best interests of the Company and its shareholders. During the financial year, the Company bought back 20,000 (2012: 318,000) of its issued and fully paid ordinary shares from the open market at an average price of RM1.49 (2012: RM1.45) per share. The total consideration paid for the share buy back was RM29,820 (2012: RM462,654), consisting of consideration paid amounting to RM29,650 (2012: RM461,077) and transaction costs of RM170 (2012: RM1,577). The shares bought back are being held as treasury shares in accordance with Section 67A of the Companies Act, 1965. Of the total 61,000,248 (2012: 61,000,248) issued and fully paid ordinary shares as at 31 May 2013, 3,666,100 (2012: 3,646,100) are held as treasury shares by the Company. As at 31 May 2013, the number of outstanding ordinary shares in issue after the setoff is therefore 57,334,148 (2012: 57,354,148) ordinary shares of RM1 each. Subsequent to year end, the Company bought back 12,000 of its issued ordinary shares from the open market at an average price of RM1.82 per share. The total consideration paid for the share buy back was RM21,840, consisting of consideration paid amounting to RM21,720 and transaction costs of RM120. The share buy back transactions were financed by internally generated funds.

30.

Other Reserves (Non-Distributable) Foreign currency translation reserve RM Share option reserve RM Total RM

Group 2013 At 1 June 2012 Foreign currency translation At 31 May 2013 2012 At 1 June 2011 Transfer to retained earnings Foreign currency translation At 31 May 2012 Group

(2,431,366) (443,660) (2,875,026)

(2,431,366) (443,660) (2,875,026)

(2,431,366) (2,431,366)

863,790 (863,790) -

863,790 (863,790) (2,431,366) (2,431,366)

The nature and purpose of each category of reserve are as follows: (a) Foreign currency translation reserve The foreign currency translation reserve is used to record exchange differences arising from the translation of the financial statements of foreign operations whose functional currencies are different from that of the Group's presentation currency. It is also used to record the exchange differences arising from monetary items which form part of the Group's net investment in foreign operations, where the monetary item is denominated in either the functional currency of the reporting entity or the foreign operation. (b) Share option reserve The share option reserve represents the equity-settled share options granted to employees. This reserve is made up of the cumulative value of services received from employees recorded on grant date of share options. The share option reserve has been transferred to distributable retained earnings during the year ended 31 May 2012 upon expiration of ESOS. Company Other reserve of the Company represents share option reserve. The share option reserve has been transferred to distributable retained earnings during the year ended 31 May 2012 upon expiration of ESOS.

93
ANNUAL REPORT 2013

NOTES TO THE FINANCIAL STATEMENTS (CONTD.)

31. Retained Earnings Prior to the year of assessment 2008, Malaysian companies adopted the full imputation system. In accordance with the Finance Act 2007 which was gazetted on 28 December 2007, companies shall not be entitled to deduct tax on dividend paid, credited or distributed to its shareholders, and such dividends will be exempted from tax in the hands of the shareholders ("single tier system"). However, there is a transitional period of six years, expiring on 31 December 2013, to allow companies to pay franked dividends to their shareholders under limited circumstances. Companies also have an irrevocable option to disregard the revised 108 balance and pay dividends under the single tier system. The change in the tax legislation also provides for the 108 balance to be locked-in as at 31 December 2007 in accordance with Section 39 of the Finance Act 2007. The Company did not elect for the irrevocable option to disregard the revised 108 balance. Accordingly, during the transitional period, the Company may utilise the credit in the revised 108 balance as at 31 May 2013 to distribute cash dividend payments to ordinary shareholders as defined under the Finance Act 2007. As at 31 May 2013, the Company has sufficient tax credit in the revised 108 balance to pay franked dividends amounting to RM20,043,024 (2012: RM23,484,213) out of it retained earnings. If the balance of the retained earnings of RM9,858,952 (2012: RM3,822,845) were to be distributed as dividends, the Company may distribute such dividends under the single tier system. As at 31 May 2013, the Company has tax exempt profits available for distribution of approximately RM226,897 (2012: RM226,897), subject to the agreement of the Inland Revenue Board. 32. Government Grant

FOR THE FINANCIAL YEAR ENDED 31 MAY 2013

Cost: At 1 June 2012 / 2011 Received during the year At 31 May 2013 / 2012 Accumulated amortisation: At 1 June 2012 / 2011 Amortisation during the year At 31 May 2013/ 2012 Net carrying amount: Current Non-current

Group 2013 RM 400,000 400,000 135,417 50,000 185,417 50,000 164,583 214,583

2012 RM 400,000 400,000 85,417 50,000 135,417 50,000 214,583 264,583

Government grant relates to grant received for the acquisition of plant and equipment for development activities undertaken by a subsidiary of the Group to promote technology advancement. There are no unfulfilled conditions or contingencies attached to the grant. 33. Borrowings

Short term borrowings: Secured: Bank overdrafts Bankers' acceptances Term loan Long term borrowings: Secured: Term loan Total borrowings: Bank overdrafts Bankers' acceptances Term loan Maturity of borrowings: On demand or within one year More than 1 year and less than 2 years More than 2 years and less than 5 years

Group 2013 RM 9,142,089 3,337,249 931,872 13,411,210 1,480,354 9,142,089 3,337,249 2,412,226 14,891,564 13,411,210 1,480,354 14,891,564

2012 RM 1,594,851 917,879 2,512,730 2,409,893 1,594,851 3,327,772 4,922,623 2,512,730 931,871 1,478,022 4,922,623

94
ANNUAL REPORT 2013

NOTES TO THE FINANCIAL STATEMENTS (CONTD.)

FOR THE FINANCIAL YEAR ENDED 31 MAY 2013

33.

Borrowings (contd.) The bank borrowings of the Group are secured by way of: (i) (ii) a corporate guarantee by the Company; a first legal charge over the leasehold land of a subsidiary under capital work-in-progress and property development costs with a carrying amount of RM16,273,409 (2012: RM16,273,409) and RM12,417,091 (2012: RM12,417,091) respectively as disclosed in Note 13 and Note 15.

Bank overdrafts are denominated in RM and bear interest rate at 7.50% (2012: 7.5%) per annum. The bankers' acceptances bore interest rates at the reporting date ranging from 3.6% to 3.8% (2012: 3.6% to 3.8%) per annum. The term loan of the Group is repayable over seventy eight (78) equal monthly installments of RM87,217 commencing 1 September 2009. The term loan bore interest rates at the reporting date ranging from 4.5% to 6.3% (2012: 4.5% to 6.3%) per annum. Other information on financial risks of borrowings is disclosed in Note 42.

34.

Deferred Tax Group 2013 RM At 1 June 2012 / 2011 Recognised in profit or loss (Note 10) At 31 May 2013 / 2012 Presented after appropriate offsetting as follows: Deferred tax liabilities Deferred tax assets At 31 May 3,793,082 (1,172,056) 2,621,026

2012 RM 3,242,966 550,116 3,793,082

2,621,026 2,621,026

3,793,082 3,793,082

The components and movements of deferred tax liabilities and assets during the financial year prior to offsetting are as follows: Deferred tax liabilities of the Group Property, plant and equipment RM At 1 June 2012 Recognised in profit or loss At 31 May 2013 At 1 June 2011 Recognised in profit or loss At 31 May 2012 2,925,345 (743,695) 2,181,650 2,640,708 284,637 2,925,345

Revaluation surplus * RM 1,133,021 (42,269) 1,090,752 1,163,514 (30,493) 1,133,021

Others RM 295,852 (192,979) 102,873 295,852 295,852

Total RM 4,354,218 (978,943) 3,375,275 3,804,222 549,996 4,354,218

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ANNUAL REPORT 2013

NOTES TO THE FINANCIAL STATEMENTS (CONTD.)

34. Deferred Tax (contd.) Deferred tax assets of the Group Provisions RM At 1 June 2012 Recognised in profit or loss At 31 May 2013 At 1 June 2011 Recognised in profit or loss At 31 May 2012 (450,679) (38,695) (489,374) (512,237) 61,558 (450,679) Others RM (110,457) (154,418) (264,875) (49,019) (61,438) (110,457) Total RM (561,136) (193,113) (754,249) (561,256) 120 (561,136)

FOR THE FINANCIAL YEAR ENDED 31 MAY 2013

Revaluation surplus relates to revaluation of property, plant and equipment in prior years. Upon transition to MFRS, the Group elected to measure all its property, plant and equipment using cost model. Accordingly, the revaluation surplus was transferred to retained earnings on date of transition to MFRS.

Deferred tax assets have not been recognised in respect of the following items: Group 2013 RM Unused tax losses Unabsorbed capital allowances Other deductible temporary differences 3,393,696 2,742,312 23,954 6,159,962

2012 RM 2,151,719 4,614,461 24,716 6,790,896

The availability of the unused tax losses and unabsorbed capital allowances for offsetting against future taxable profits of the respective subsidiaries are subject to no substantial change in shareholdings under the Income Tax Act, 1967 and guidelines issued by the tax authority. No deferred tax assets are recognised in respect of the above as it is not probable that future taxable profit will be available against which these items can be utilised.

35.

Provision for Liabilities Group 2013 RM At 1 June 2012 / 2011 Reversal during the year Utilisation of provision At 31 May 2013 / 2012 270,285 (13,768) 256,517

2012 RM 284,453 (1,168) (13,000) 270,285

This represents provision for liquidated damages in respect of the development projects undertaken by a subsidiary. The provision is recognised for expected liquidated damages claims based on the terms of the applicable sale and purchase agreements.

96
ANNUAL REPORT 2013

NOTES TO THE FINANCIAL STATEMENTS (CONTD.)

FOR THE FINANCIAL YEAR ENDED 31 MAY 2013

36.

Trade and Other Payables

Trade payables Third parties Related party *

Group 2013 RM 46,465,134 37,399 46,502,533

2012 RM 44,317,069 69,412 44,386,481

Company 2013 RM -

2012 RM -

Other payables Due to subsidiaries: - Crimson Omega Sdn. Bhd. - Aljano Sdn. Bhd. - Sunshine Supermarket and Departmental Store Sdn. Bhd. - Silver Resort Sdn. Bhd. Due to tooling suppliers Deposits received Rental deposits Accruals Other payables

110,912 5,500 998,944 4,523,333 10,391,701 16,030,390 62,532,923 14,891,564 77,424,487

291,197 15,500 873,739 4,998,330 5,333,855 11,512,621 55,899,102 4,922,623 60,821,725

22,840,749 627,407 39,021 269,101 61,650 23,837,928 23,837,928 23,837,928

1,707,008 112,347 895,591 62,659 278,601 81,761 3,137,967 3,137,967 3,137,967

Add: Borrowings (Note 33) Total financial liabilities carried at amortised cost *

The related party is Zephyr (Penang) Sdn. Bhd., a company in which a director of a subsidiary, Qdos Holdings Bhd., i.e. Looi Tik Miow, has an interest. Trade payables Trade payables are non-interest bearing and the normal trade credit terms granted to the Group range from 30 to 90 days (2012: 30 to 90 days).

(a)

(b)

Amounts due to subsidiaries Amounts due to subsidiaries are non-interest bearing and are repayable on demand. These amounts are unsecured and are to be settled in cash.

Further details on related party transactions are disclosed in Note 40. Other information on financial risks of payables are disclosed in Note 42.

37.

Deferred Revenue The Group operates a loyalty programme which allows customers to accumulate points when they purchase products in the Groups stores. The points can be redeemed for free or for discounted goods from the Groups stores. Deferred revenue represents consideration received from the sale of goods that is allocated to the points issued under the loyalty programme that are expected to be redeemed but are still outstanding as at the reporting date.

97
ANNUAL REPORT 2013

NOTES TO THE FINANCIAL STATEMENTS (CONTD.)

38. Employee Benefits Employee share options scheme (ESOS) The following table illustrates the number and exercise price of, and movements in, share options during the year:
Group Exercise Grant date 2013 Option 1 2012 Option 1 24 April 2002 23 April 2012 1,359,400 - (1,359,400) Expiry date price RM Outstanding at 1 June Granted Exercised Forfeited Expired Outstanding Exercisable at 31 May at 31 May

FOR THE FINANCIAL YEAR ENDED 31 MAY 2013

The ESOS has lapsed on 23 April 2012. The Group has no plan to extend the ESOS plan. Hence, all the unexercised options shall automatically lapse upon the expiry of the option period. 39. Commitments (a) Capital commitments Group 2013 RM Capital expenditure: Approved and contracted for: - Buildings Approved but not contracted for - Buildings (b) Operating lease commitments as lessee The Group has entered into non-cancellable operating lease agreements for the use of the leasehold land and buildings. These leases have an average life of between 3 and 15 years with no renewal or purchase option included in the contracts. There were no restrictions placed upon the Group by entering into these leases. The future aggregate minimum lease payments under non-cancellable operating leases contracted for as at the reporting date but not recognised as liabilities, are as follows: Group 2013 RM Not later than 1 year Later than 1 year and not later than 5 years Later than 5 years 3,434,700 1,126,178 802,011 5,362,890

2012 RM

11,656,000

6,800,000

25,000,000

2012 RM 4,082,818 4,885,975 2,575,673 11,544,466

(c)

Operating lease commitments as lessor The Group and the Company have entered into commercial property leases on its investment property and property, plant and equipment. These non-cancellable leases have remaining lease terms of between two and four years. All leases include a clause to enable upward revision of the rental charge on an annual basis based on prevailing market conditions.

98
ANNUAL REPORT 2013

NOTES TO THE FINANCIAL STATEMENTS (CONTD.)

FOR THE FINANCIAL YEAR ENDED 31 MAY 2013

39.

Commitments (contd.) (c) Operating lease commitments as lessor (contd.) Future minimum rentals receivable under non-cancellable operating leases at the reporting date are as follows: Group 2013 RM Not later than 1 year Later than 1 year and not later than 5 years Later than 5 years 1,930,227 129,500 2,059,727 Company 2013 RM 1,656,684 1,656,684

2012 RM 2,421,955 242,438 2,664,393

2012 RM

1,656,684 1,656,684

40.

Related Party Disclosures (a) Related party transactions In addition to the transactions detailed elsewhere in the financial statements, the Group and the Company had the following transactions with related parties during the financial year: 2013 RM 2012 RM

Group Rental paid/payable to: - Suiwah Holdings Sdn. Bhd., a corporate shareholder - Suiwah Supermarket Sdn. Bhd., a company in which a director of the Company, i.e. Dato' Hwang Thean Long has an interest - a director of the Company, i.e. Dato Hwang Thean Long - Meridian Chance Sdn. Bhd., a company connected with a director of the Company, i.e. Dato Hwang Thean Long by virtue of his family relationship Sales of goods to Mylaco Sdn. Bhd., a company in which a director of the Company, i.e. Hwang Siew Peng has an interest Purchases of merchandise from Zephyr (Penang) Sdn. Bhd., a company in which Looi Tik Miow, a director of a subsidiary, Qdos Holdings Bhd., has an interest

2,284,806 11,800 48,000

2,284,806 6,000 48,000

24,000 -

24,000 11,407

155,947 2013 RM

209,726 2012 RM

Company Gross dividends from subsidiaries Management fees from subsidiaries Rental income from a subsidiary Advances (from) /to subsidiaries, net: - Sunshine Supermarket & Departmental Store Sdn. Bhd. - Crimson Omega Sdn. Bhd. - Sunshine Wholesale Mart Sdn. Bhd. - Magirex Sdn. Bhd. - Aljano Sdn. Bhd. - Sunshine (Labuan) Private Limited - Sunshine Amanjaya Sdn. Bhd. - Sunshine Amanjaya Pte Ltd - Silver Resort Sdn. Bhd. - Qdos Flexcircuits Sdn. Bhd.

11,838,536 240,000 1,656,684 6,331,960 (21,133,742) 21,219,470 (440,000) (515,061) (258,846) 19,610 8,937 23,638 -

4,800,000 240,000 1,656,684 239,741 1,683,342 1,870,617 (370,000) 134,897 2,401 (116,046) 23,897 493,632 66,593

99
ANNUAL REPORT 2013

NOTES TO THE FINANCIAL STATEMENTS (CONTD.)

40. Related Party Disclosures (contd.) (a) Related party transactions (contd.) Datin Cheah Gaik Huang and Hwang Siew Peng are also deemed interested in the transactions in which Dato Hwang Thean Long has an interest by virtue of their family relationships. Information regarding outstanding balances arising from related party transactions as at 31 May 2013 are disclosed in Notes 24 and 36. (b) Compensation of key management personnel The remuneration of directors and other members of key management personnel during the year was as follows: Group 2013 RM Short term employee benefits Defined contribution plan 1,590,758 111,497 1,702,255 2012 RM 1,645,935 109,988 1,755,923 Company 2013 RM 307,600 307,600 2012 RM 306,100 306,100

FOR THE FINANCIAL YEAR ENDED 31 MAY 2013

Included in the remuneration of total key management personnel are: Group 2013 RM Directors' remuneration (Note 7) 1,615,395 2012 RM 1,678,303 Company 2013 RM 307,600 2012 RM 306,100

Directors of the Group and the Company and other members of key management have been granted the following number of options under the Employees' Share Option Scheme ("ESOS"). The ESOS has expired on 23 April 2012. The Company has no plan to renew or extend the ESOS. Hence, all the unexercised options shall automatically lapse upon the expiry of the ESOS. The cumulative value of services received from the directors and members of key management recorded on grant date which was included in shares option reserve has been transferred to distributable retained earnings during the year upon expiration of ESOS. Group 2013 RM At 1 June 2012 / 2011 Transfer to retained earnings At 31 May 2013 / 2012 2012 RM 392,500 (392,500) Company 2013 RM 2012 RM 238,400 (238,400) -

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ANNUAL REPORT 2013

NOTES TO THE FINANCIAL STATEMENTS (CONTD.)

FOR THE FINANCIAL YEAR ENDED 31 MAY 2013

41.

Fair Value of Financial Instruments (a) Fair value of financial instruments by classes that are carried at fair value The following table shows an analysis of financial instruments carried at fair value by level of fair value hierarchy : Level 1 RM Level 2 RM Level 3 RM Total RM

2013 Financial assets Investment securities Quoted equity instruments (Note 21) Short term investments - Quoted unit trust funds (Note 27) - Unquoted investments (Note 27) 2012 Financial assets Investment securities Quoted equity instruments (Note 21) Short term investments - Quoted unit trust funds (Note 27) - Unquoted investments (Note 27) Fair value hierarchy

3,114

3,114

9,509,662 -

4,189,173

9,509,662 4,189,173

3,123

3,123

1,874,428 -

1,967,518

1,874,428 1,967,518

The Group and the Company classify fair value measurement using a fair value hierarchy that reflects the significance of the inputs used in making the measurement. The fair value hierarchy has the following levels: Level 1 :Quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 :Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices). Level 3 :Inputs for the assets and liability that are not based on observable market data (unobservable inputs). (b) Financial instruments that are not carried at fair value and whose carrying amounts are reasonable approximation of fair value The following are classes of financial instruments that are not carried at fair value and whose carrying amounts are reasonable approximation of fair value: Note Trade receivables Other receivables Loan receivables Bank borrowings Trade payables Other payables 24 24 26 33 36 36

The carrying amounts of these financial assets and liabilities are reasonable approximation of fair values, either due to their short-term nature or that they are floating rate instruments that are re-priced to market interest rates on or near the reporting date. The carrying amounts of the bank borrowings are reasonable approximations of fair values due to the insignificant impact of discounting. The fair values of bank borrowings are estimated by discounting expected future cash flows at market incremental lending rate for similar types of lending, borrowing or leasing arrangements at the reporting date.

101
ANNUAL REPORT 2013

NOTES TO THE FINANCIAL STATEMENTS (CONTD.)

42. Financial Risk Management Objectives and Policies The Group and the Company are exposed to financial risks arising from their operations and the use of financial instruments. The key financial risks include interest rate risk, foreign currency risk, liquidity risk, credit risk and market price risk. The Board of Directors reviews and agrees policies and procedures for the management of these risks. The Audit Committee provides independent oversight to the effectiveness of the risk management process. It is, and has been throughout the current and previous financial year, the Groups policy that no derivatives shall be undertaken except for the use as hedging instruments where appropriate and cost-efficient. The Group and the Company do not apply hedge accounting. The following sections provide details regarding the Groups and the Companys exposure to the above-mentioned financial risks and the objectives, policies and processes for the management of these risks. (a) Interest rate risk Interest rate risk is the risk that the fair value or future cash flows of the Groups and the Companys financial instruments will fluctuate because of changes in market interest rates. As the Group has no significant interest-bearing financial assets, the Group's income and operating cash flows are substantially independent of changes in market interest rates. The Group's interest-bearing financial assets are mainly short term in nature and have been mostly placed in deposits in licensed banks. The Group's interest rate risk arises primarily from interest-bearing borrowings. Borrowings at floating rates expose the Group to cash flow interest rate risk. Borrowings obtained at fixed rates expose the Group to fair value interest rate risk. The Group manages its interest rate exposure by maintaining a mix of fixed and floating rate borrowings. Sensitivity analysis for interest rate risk At the reporting date, if interest rates had been 10 basis points lower/higher, with all other variables held constant, the Groups profit net of tax would have been RM14,892 (2012: RM4,923) higher/lower, arising mainly as a result of lower/higher interest expense on floating rate loans and borrowings. The assumed movement in basis points for interest rate sensitivity analysis is based on the currently observable market environment. (b) Foreign currency risk Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. Some of the Groups subsidiaries have transactional currency exposures arising from sales or purchases that are denominated in a currency other than the respective functional currencies of the Groups subsidiaries, primarily RM. The foreign currencies in which these transactions are denominated are mainly US Dollars (USD). Approximately 15% (2012: 33%) of the Groups subsidiaries sales are denominated in foreign currencies. The Groups subsidiaries trade receivable and trade payable balances at the reporting date have similar exposures. The Group also holds cash and cash equivalents denominated in foreign currencies for working capital purposes. At the reporting date, such foreign currency balances (mainly in USD) amounted to RM20,532,718 (2012: RM13,586,310) for the Group.

FOR THE FINANCIAL YEAR ENDED 31 MAY 2013

Sensitivity analysis for foreign currency risk The following table demonstrates the sensitivity of the Groups profit net of tax to a reasonably possible change in the USD exchange rates against the respective functional currencies of the Group entities, with all other variables held constant. Increase/ (decrease) in profit net of tax 2013 2012 RM RM USD/RM - strengthened 5% (2012: 2%) - weakened 5% (2012: 2%) 858,071 (858,071) 420,160 (420,160)

102
ANNUAL REPORT 2013

NOTES TO THE FINANCIAL STATEMENTS (CONTD.)

FOR THE FINANCIAL YEAR ENDED 31 MAY 2013

42.

Financial Risk Management Objectives and Policies (contd.) (c) Liquidity risk Liquidity risk is the risk that the Group or the Company will encounter difficulty in meeting financial obligations due to shortage of funds. The Groups and the Companys exposure to liquidity risk arises primarily from mismatches of the maturities of financial assets and liabilities. The Groups and the Companys objective is to maintain a balance between continuity of funding and flexibility through the use of stand-by credit facilities. The Group and the Company manage their debt maturity profile, operating cash flows and the availability of funding so as to ensure that all refinancing, repayment and funding needs are met. As part of its overall liquidity management, the Group and the Company maintain sufficient levels of cash or cash convertible investments to meet their working capital requirements. In addition, the Group and the Company strive to maintain available banking facilities of a reasonable level to its overall debt position. Furthermore, the Group and the Company are able to raise funds from both capital markets and financial institutions and balance its portfolio with combination of a mixture of short and long term fundings so as to achieve overall cost effectiveness. Analysis of financial instruments by remaining contractual maturities The table below summarises the maturity profile of the Groups and the Companys liabilities at the reporting date based on contractual undiscounted repayment obligations. 2013 Over one year RM

Group Financial liabilities: Trade payables Other payables Borrowings Total undiscounted financial liabilities Company Financial liabilities: Other payables Amounts due to subsidiaries Total undiscounted financial liabilities

On demand or within one year RM

Total RM

46,502,533 16,030,390 13,525,942 76,058,865

1,545,312 1,545,312

46,502,533 16,030,390 15,071,254 77,604,177

330,751 23,507,177 23,837,928 2012

330,751 23,507,177 23,837,928

Group Financial liabilities: Trade payables Other payables Borrowings Total undiscounted financial liabilities Company Financial liabilities: Other payables Amounts due to subsidiaries Total undiscounted financial liabilities

On demand or within one year RM

Over one year RM

Total RM

44,386,481 11,512,621 2,641,455 58,540,557

2,591,916 2,591,916

44,386,481 11,512,621 5,233,371 61,132,473

360,362 2,777,605 3,137,967

360,362 2,777,605 3,137,967

103
ANNUAL REPORT 2013

NOTES TO THE FINANCIAL STATEMENTS (CONTD.)

42. Financial Risk Management Objectives and Policies (contd.) (d) Credit risk Credit risk is the risk of loss that may arise on outstanding financial instruments should a counterparty default on its obligations. The Groups and the Companys exposure to credit risk arises primarily from trade and other receivables. For other financial assets (including investment securities, cash and bank balances and derivatives), the Group and the Company minimise credit risk by dealing exclusively with high credit rating counterparties. The Groups objective is to seek continual revenue growth while minimising losses incurred due to increased credit risk exposure. The Group trades only with recognised and creditworthy third parties. It is the Groups policy that all customers who wish to trade on credit terms are subject to credit verification procedures. In addition, receivable balances are monitored on an ongoing basis with the result that the Groups exposure to bad debts is not significant. For transactions that do not occur in the country of the relevant operating unit, the Group does not offer credit terms without the approval. (i) Exposure to credit risk At the reporting date, the Groups and the Companys maximum exposure to credit risk are represented by: (a) (b) The carrying amount of each class of financial assets recognised in the statements of financial position.

FOR THE FINANCIAL YEAR ENDED 31 MAY 2013

A nominal amount of RM16,426,914 (2012: RM6,717,621) relating to corporate guarantees provided by the Company to financial institutions as securities for credit facilities granted to subsidiaries.

Information regarding credit enhancements for trade and other receivables are disclosed in Note 24. (ii) Credit risk concentration profile The Group determines concentrations of credit risk by monitoring the country sector profile of its trade receivables on an ongoing basis. The credit risk concentration profile of the Groups trade receivables at the reporting date are as follows: 2013 RM 17,052,605 1,277,345 316,150 2,505,158 1,155,525 22,306,783 % 77 6 1 11 5 100 2012 RM 18,659,314 1,754,885 1,451,156 283,870 746,091 2,324,998 25,220,314 % 74 7 6 1 3 9 100

By country: Within Malaysia China Germany Switzerland Singapore Other countries Total (iii)

Financial assets that are neither past due nor impaired Information regarding trade receivables that are neither past due nor impaired is disclosed in Note 24.

(iv)

Financial assets that are either past due or impaired Information regarding trade receivables that are either past due or impaired is disclosed in Note 24.

(e)

Market price risk Market price risk is the risk that the fair value or future cash flows of the Groups financial instruments will fluctuate because of changes in market prices (other than interest or exchange rates). The Group is exposed to equity price risk arising from its investment in quoted equity instruments. The quoted equity instruments in Malaysia are listed on Bursa Malaysia. These instruments are classified as availablefor-sale financial assets. The Group does not have exposure to commodity price risk.

104
ANNUAL REPORT 2013

NOTES TO THE FINANCIAL STATEMENTS (CONTD.)

FOR THE FINANCIAL YEAR ENDED 31 MAY 2013

43.

Capital Management The primary objective of the Group's capital management is to ensure that it maintains a strong credit rating and healthy capital ratios in order to support its business and maximise shareholder value. The Group manages its capital structure and makes adjustments to it, in light of changes in economic conditions. To maintain or adjust the capital structure, the Group may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. No changes were made in the objectives, policies or processes during the years ended 31 May 2013 and 31 May 2012. The Group monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt. The Group includes within net debt, borrowings, trade and other payables, less short term investments and cash and bank balances. Capital includes equity attributable to the owners of the parent. Group 2013 2012 Note RM RM Borrowings Trade and other payables Less: - short term investments - cash and bank balances Net debt Equity attributable to the owners of the parent, representing total capital Capital and net debt Gearing ratio 33 36 27 28 14,891,564 62,532,923 (13,698,835) (32,199,611) 31,526,041 4,922,623 55,899,102 (3,841,946) (31,143,760) 25,836,019

185,575,853 217,101,894 15%

175,600,157 201,436,176 13%

44.

Significant Events The following events took place during the financial year: (i) A subsidiary, Sunshine Supermarket and Departmental Store Sdn. Bhd. has commenced construction activities on a piece of freehold land in Bertam to develop the land into commercial complex for its own use. On 3 April 2013, a subsidiary, Qdos Holdings Bhd. has incorporated a new wholly owned subsidiary, i.e. Qdos Interconnect Sdn. Bhd. ("QISB") in Malaysia with an authorised and issued and paid up capital of RM100 divided into 100 ordinary shares of RM1.00 each at the date of incorporation. QISB has during the financial year increased its authorised share capital to RM1,000,000 of RM1.00 ordinary shares each and Qdos Holdings Bhd. has further subscribed for 999,900 ordinary shares of RM1.00 each at par in QISB. The principal activity of QISB is to undertake trading in semiconductor.

(ii)

45.

Segment Information For management purposes, the Group is organized into business units based on their products and services, and there are four reportable operating segments as follows: (i) (ii) (iii) (iv) Retail - operation of supermarkets and departmental stores and a hypermarket; Manufacturing - manufacturing and designing of flexible printed circuits boards; Property investment and development of residential and commercial properties; and Trading

The Directors are of the opinion that all inter-segment transactions have been entered into the normal course of business and have been established on terms and conditions that are not materially different from those obtained in transaction with unrelated parties. There are minimal inter-segment sales within the Group.

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ANNUAL REPORT 2013

NOTES TO THE FINANCIAL STATEMENTS (CONTD.)

45. Segment Information (contd.) (a) Business segment Property investment and Retail Manufacturing development 2013 Revenue and expenses Revenue Segment revenue Sales to external customers Inter-segment sales Total revenue Results Segment results Interest income Finance costs Share of loss in a jointly controlled entity Profit before tax Income tax expense Profit for the year Assets Segment assets Investment in a jointly controlled entity Unallocated assets Total assets Liabilities Segment liabilities Unallocated liabilities Total liabilities Other segment information Additions to non-current assets Amortisation expense Depreciation Non-cash expenses other than depreciation, amortisation and impairment losses 27,572,833 2,364,382 1,237,426 3,960,419 51,989 215,266 3,484,706 42,420 28,862,248 215,266 9,851,927 47,801,777 13,335,302 1,163,054 2,020,694 64,320,827 19,811,647 84,132,474 107,160,411 96,491,890 12,068,577 51,456,397 2,662,624 257,771,322 12,068,577 675,660 270,515,559 11,679,649 182,207 10,378,994 338,375 (2,297,047) 51,031 (968,292) (1,341) 18,793,304 570,272 (172,005) (4,627) 19,186,944 (5,490,184) 13,696,760 297,210,139 193,742 297,403,881 72,125,986 72,125,986 2,998,425 3,394,588 6,393,013 (3,588,330) (3,588,330) 372,334,550 372,334,550 RM RM RM

FOR THE FINANCIAL YEAR ENDED 31 MAY 2013

Trading RM

Eliminations Consolidated RM RM

241,412

687,639

58,501

381,204

1,368,756

106
ANNUAL REPORT 2013

NOTES TO THE FINANCIAL STATEMENTS (CONTD.)

FOR THE FINANCIAL YEAR ENDED 31 MAY 2013 45. Segment Information (contd.) (a) Business segment (contd.) Property investment and Retail Manufacturing development 2012 Revenue and expenses Revenue Segment revenue Sales to external customers Inter-segment sales Total revenue Results Segment results Interest income Finance costs Share of loss in a jointly controlled entity Profit before tax Income tax expense Profit for the year Assets Segment assets Investment in a jointly controlled entity Unallocated assets Total assets Liabilities Segment liabilities Unallocated liabilities Total liabilities Other segment information Additions to non-current assets Amortisation expense Depreciation Non-cash expenses other than depreciation, amortisation and impairment losses 10,645,036 2,690,434 4,269,263 4,236,417 2,094 215,266 3,483,172 40,136 3,401 14,956,529 215,266 10,413,424 43,060,853 11,154,310 1,428,404 2,068,255 57,711,822 9,184,295 66,896,117 82,374,489 81,295,968 12,456,899 56,336,104 10,321,766 230,328,327 12,456,899 711,885 243,497,111 8,094,204 295,378 6,103,215 519,140 (1,935,376) 63,642 (234,593) 5,855 (6,642) 12,027,450 877,373 (241,571) (40,797) 12,622,455 (5,076,098) 7,546,357 296,038,393 232,296 296,270,689 74,326,060 74,326,060 4,182,483 2,856,684 7,039,167 6,463,109 6,463,109 (3,088,980) (3,088,980) 381,010,045 381,010,045 RM RM RM

Trading RM

Eliminations Consolidated RM RM

232,201

(967,383)

(1,168)

(736,350)

107
ANNUAL REPORT 2013

NOTES TO THE FINANCIAL STATEMENTS (CONTD.)

45. Segment Information (contd.) (b) Geographical segments The Group operates locally except for the manufacturing segment which has a wholly owned subsidiary in India. All of the Group's manufacturing activities are conducted in Malaysia while the overseas subsidiary is principally engaged in the design of flexible printed circuit boards. The following table provides an analysis of the Group's revenue, segment assets and capital expenditure by geographical segment: Singapore, India, Philippines, Sri Lanka, Vietnam and Thailand RM United States of America, Europe and New Zealand RM

FOR THE FINANCIAL YEAR ENDED 31 MAY 2013

2013 Total revenue from external customers Segment assets Capital expenditure

Malaysia RM

Korea, Hong Kong, Taiwan and Japan RM

Consolidated RM

355,255,055 251,177,566 28,862,248

2,615,286 6,593,756 -

1,687,555 -

12,776,654 -

372,334,550 257,771,322 28,862,248

2012 Total revenue from external customers Segment assets Capital expenditure

354,193,423 223,694,543 14,956,529

3,053,971 6,633,784 -

8,285,865 -

15,476,786 -

381,010,045 230,328,327 14,956,529

46.

Subsequent Events There were no material events subsequent to the end of the year except for the following: (i) On 26 June 2013, the board of directors of a subsidiary, Qdos Interconnect Sdn. Bhd. has approved the purchase of 3 units of machines amounting to approximately RM3,840,000. On 4 July 2013, a subsidiary, Qdos Flexcircuits Sdn. Bhd. ("QFSB") has applied to Malayan Banking Berhad ("the said Bank") to allow the following third party utilisation of the letter of credit facility granted by the said Bank to QFSB by another subsidiary, Qdos Interconnect Sdn. Bhd. ("QISB"): (a) (b) Ac-hoc third party letter of credit facility of up to USD1,200,000 to facilitate its purchase of machines. Ad-hoc temporary letter of credit of RM1,800,000 up to 60 days from date of invoice.

(ii)

The facilities are secured by a RM1,800,000 deposit pledged to the said Bank. (iii) On 23 July 2013, a subsidiary, Sunshine Supermarket & Departmental Store Sdn. Bhd. has obtained an advance amounting to RM3,500,000 from a company in which certain directors have interest. The advance is repayable within 12 months and bears interest at a rate of BLR - 1.5% per annum. On 29 July 2013, the Ministry of International Trade and Industry has approved and fixed 1 June 2009 as the "Production Date" of a subsidiary, Qdos Flexcircuits Sdn. Bhd. where the 100% tax exemption on its statutory income on "Fine Resolution Interconnect Flexible Printed Circuit Boards" (Pitch < 3mm) will be for a 5-year period from 1 June 2009 to 31 May 2014. As at the date the financial statements are authorised for issue, the Group is still assessing the impact of the total tax to be discharged by the Inland Revenue Board.

(iv)

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ANNUAL REPORT 2013

NOTES TO THE FINANCIAL STATEMENTS (CONTD.)

FOR THE FINANCIAL YEAR ENDED 31 MAY 2013

46.

Subsequent Events (contd.) (v) On 2 September 2013, a subsidiary, Sunshine Supermarket & Departmental Store Sdn. Bhd. has accepted the following financing facilities from OCBC Al-Amin Bank Berhad: (a) (b) Term financing-I Ijarah Muntahiah bi Al-Tamlik with a limit of RM12,000,000 (Facility I) and; Cash line facility-I Bai Bithaman Ajil with a limit of RM8,000,000 (Facility II).

Facility I bears interest at a rate of BFR - 1.5% or 2.5% whichever is higher per annum and is repayable over 144 months from the date of the first utilisation. Facility II bears interest at a rate of 6% per annum and is repayable over 60 months. Both facilities are secured by: (1) a fixed charge over a piece of freehold land known as Hakmilik Sementara No HS(D) 32854, Lot 21477, Mukim 6, Daerah Seberang Perai Utara, Pulau Pinang. which is included in capital work-inprogress (Note13); and a corporate guarantee from the Company.

(2) (vi)

On 20 September 2013, the Company has increased its investment in a subsidiary, Sunshine Amanjaya Sdn. Bhd. from RM100,000 divided into 100,000 ordinary shares of RM1.00 each fully paid to RM8,800,000 divided into 8,800,000 ordinary shares of RM1.00 in settlement of the debt due by the subsidiary to the Company. The Group has initiated a deal to dispose off the land held for development of its subsidiary, Great Support Sdn. Bhd. for approximately RM3,590,000. As at the date the financial statements are authorised for issue, the said disposal has yet to be finalised.

(vii)

47.

Authorisation of Financial Statements for Issue The financial statements were authorised for issue by the Board of Directors in accordance with a resolution of the directors on 26 September 2013.

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ANNUAL REPORT 2013

SUPPLEMENTARY INFORMATION
48. Supplementary Information Breakdown of Retained Profits Into Realised and Unrealised The breakdown of the retained profits of the Group and of the Company as at 31 May 2013 into realised and unrealised profits is presented in accordance with the directive issued by Bursa Malaysia Securities Berhad dated 25 March 2010 and prepared in accordance with Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants. The retained earnings as at reporting date may be analysed as follows: Group 2013 RM Total retained earnings of the Company and its subsidiaries - Realised - Unrealised Company 2013 RM

2012 RM

2012 RM

134,701,741 (1,239,217) 133,462,524

128,821,723 (993,726) 127,827,997

29,901,976 29,901,976

27,307,058 27,307,058

Total share of accumulated losses from jointly controlled entity - Realised Total share of accumulated losses from associate - Realised - Unrealised Consolidation adjustments Retained earnings as per financial statements

(40,090)

(35,635)

(1,513,625) (118,101) 131,790,708 (12,928,070) 118,862,638

(1,513,625) (118,101) 126,160,636 (17,747,174) 108,413,462

29,901,976 29,901,976

27,307,058 27,307,058

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ANNUAL REPORT 2013

LIST OF PROPERTIES OWNED BY THE GROUP

AS AT 31 MAY 2013

Location No. 1, Jalan Mayang Pasir, 11950 Bayan Baru, Pulau Pinang

Description Basement level & Level 1, Sunshine Square Complex Leasehold land with a warehouse and 3 storey office block Freehold land

Land Area / Built Up Area 33,000 sq ft & 34,584 sq ft

Tenure 99 years leasehold expiring 2090 60 years leasehold expiring 2050 Freehold land

Age of Building 20 years

Net Book Value (RM) 23,973,463

No. 2A, Lebuhraya Kampung Jawa, 11900 Bayan Lepas, Pulau Pinang Plot 1109, Tempat Kelibang, Langkawi Lots Nos. 2704, 2705, 2706 and 453, Mukim 7, Province Wellesley South, Penang Lot 7703, Mukim 13, N.E.D, Bandar Baru Air Itam, Penang

61,237 sq ft & 37,600 sq ft

21 years

4,328,705

32,055 sq ft

Not Applicable

2,834,809

Freehold land

501,376 sq ft

Freehold land

Not Applicable

4,470,910

Leasehold land

392,434 sq ft

99 years leashold expiring 2104 60 years leasehold expiring 2049

Not Applicable

21,579,630

No. 99, Lebuhraya Kampung Jawa, Taman Perindustrian Bayan Lepas, 11900 Penang 3-9-3A, Jalan Bukit Jambul, 11900 Bayan Lepas Penang

Leasehold land with double storey factory building

87,806 sq ft & 87,000 sq ft

13 years

8,802,542

Condominium

2,281 sq ft

99 years leashold expiring 2090 6 years leasehold expiring 2014 16 years leasehold expiring 2023

12 years

1,015,290

No 294, Jalan Thean Teik, Bandar Baru Air Itam, 11500 Penang

Ground floor & Level 1, Sunshine Farlim Mall

67,972 sq ft & 91,035 sq ft

5 years

2,338,234

No 5047, Diatas Sebahagian Lot HS (D) 9813, Plot ('A'), Jalan Bagan Dalam, Dermaga Butterworth Seksyen 4, 12100 Seberang Perai Utara, Pulau Pinang HS(D) 32854, Lot 21477, Mukim 6, Daerah Seberang Perai Utara, Pulau Pinang

Leasehold land with a warehouse

64,400 sq ft

3 year

1,870,250

Freehold land with 1 sub-basement and 2 storey shopping mall, Sunshine Bertam

727,229 sq ft

Freehold land

Construction 30,598,449 in progress **

33032 , Lot No 602 , Seksyen 1, Freehold land with Daerah Timor Laut, Pulau Pinang. 1 basement and 4 storey shopping floor and 16 car park bay ** Relates to building construction in progress

28,083 sq ft

Freehold land

Construction in progress **

2,400,000

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ANNUAL REPORT 2013

ANALYSIS OF SHAREHOLDINGS
AS AT 7 OCTOBER 2013

SHARE CAPITAL Authorised Capital Issued and Fully Paid-Up Capital Class of Shares Voting Rights : RM100,000,000.00 : RM61,000,248.00 consists of 61,000,248 ordinary shares of RM1.00 each : Ordinary Share of RM1.00 each (Shares) : One Vote Per Share

Distribution Schedule of Shareholders No of Holders Holdings 58 Less than 100 228 100 - 1,000 930 1,001 10,000 193 10,001 to 100,000 shares 34 100,001 to less than 5% of issued shares 4 5% and above of issued shares 1,447

No. of Shares 2,414 159,836 3,630,330 5,494,783 18,433,766 29,601,019 57,322,148

% 0.00 0.28 6.33 9.59 32.16 51.64 100.00

# This represents the total issued and paid up capital of RM61,000,248, comprises of 61,000,248 shares after deducting 3,647,100 Shares retained by the Company (or SCB) as treasury shares. 30 Largest Securities Account Holders (without aggregating the securities from different securities accounts belonging to the same person) No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 Name HOZONE SDN.BHD. SUIWAH HOLDINGS SDN. BHD. DAUNPURI SDN. BHD. SUIWAH HOLDINGS SDN. BHD. DATO HWANG THEAN LONG WONG THAN KIM DATO HWANG THEAN LONG TEO KWEE HOCK LENA LEONG OY LIN JF APEX NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT FOR TEO SIEW LAI LEONG KOK TAI LOOI TIK MIOW LIM KENG HONG HO SAM FONG DB (MALAYSIA) NOMINEE (ASING) SDN BHD EXEMPT AN FOR BRITISH AND MALAYAN TRUSTEES LIMITED UNG PENG JOO BARBARA ELIZABETH NG KENANGA NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT FOR DATO HAJI MOHD SUHAIMI BIN ABDULLAH SIVA KUMAR A/L M JEYAPALAN LENA LEONG OY LIN GOH SING YENG CHAN SENG CHEONG TAWAKAR ENTERPRISE SDN. BHD. CIMSEC NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT FOR IRENE YEOH POH IM CH'NG BOON CHONG LEE ENG HOCK & CO. SENDIRIAN BERHAD INTER-PACIFIC EQUITY NOMINEES (TEMPATAN) SDN BHD HO SOO TAK KANG KHOON SENG POH BIN SENG (DATO') YEO KHEE HUAT No. of Shares held 12,117,948 7,591,200 6,595,171 3,296,700 2,296,881 2,207,380 2,148,500 1,551,900 1,426,600 748,900 672,000 668,300 618,400 597,000 500,000 464,400 434,800 417,125 376,600 288,700 287,760 230,820 200,000 193,000 192,700 190,000 183,800 180,000 172,000 168,380 % # 21.14 13.24 11.51 5.75 4.01 3.85 3.75 2.71 2.49 1.31 1.17 1.17 1.08 1.04 0.87 0.81 0.76 0.73 0.66 0.50 0.50 0.40 0.35 0.34 0.34 0.33 0.32 0.31 0.30 0.29

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ANNUAL REPORT 2013

ANALYSIS OF SHAREHOLDINGS
AS AT 7 OCTOBER 2013 (CONTD.)

Substantial Shareholders (Direct & Indirect) (excluding those who are bare trustees pursuant to Section 69 of the Companies Act, 1965) No. of Shares beneficially held by the Substantial Shareholders No. Name of Shareholders Direct Interest % # Indirect Interest % # Note 1 Hozone Sdn Bhd 12,117,948 21.14 2 Suiwah Holdings Sdn Bhd 10,887,900 18.99 3 Daunpuri Sdn Bhd 6,595,171 11.51 4 Dato' Hwang Thean Long 4,445,381 7.76 10,985,505 19.16 (i) 5 Datin Cheah Gaik Huang 26,400 0.05 15,404,486 26.87 (ii) 6 Suiwah Supermarket Sendirian Bhd 71,205 0.12 10,887,900 18.99 (iii) 7 Hwang Siew Peng 15,430,886 26.92 (iv) 8 Datuk Haji Radzali bin Hassan 12,117,948 21.14 (v) 9 Che Wan Bin Mat 6,595,171 11.51 (vi) 10 Yeoh Eng Wan 6,595,171 11.51 (vi) Notes : (i) Deemed interested through his shareholdings in Suiwah Holdings Sdn Bhd (SHSB) and Suiwah Supermarket Sdn Bhd (SSSB) by virtue of Section 6A of the Companies Act, 1965 (the Act) and the shareholdings of his wife, Datin Cheah Gaik Huang in SCB. (ii) Deemed interested through the shareholdings of her husband, Dato' Hwang Thean Long in SCB. (iii) Deemed interested through SHSB in SCB by virtue of Section 6A of the Act. (iv) Deemed interested through the shareholdings of her parents, Dato' Hwang Thean Long and Datin Cheah Gaik Huang in SCB. (v) Deemed interested through his shareholdings in Hozone Sdn Bhd pursuant to Section 6A of the Act. (vi) Deemed interested through their shareholdings in Daunpuri Sdn Bhd pursuant to Section 6A of the Act. Directors Shareholdings (Direct & Indirect) Name of Directors Dato' Hwang Thean Long Datin Cheah Gaik Huang Dato' Haji Mohd Suhaimi bin Abdullah Dato' Ahmad Hassan bin Osman Datuk Haji Radzali bin Hassan Wong Thai Sun Hwang Siew Peng Jen Shek Voon No. of Shares beneficially held by the Directors Direct Interest % # Indirect Interest %# 4,445,381 7.76 10,985,505 19.16 26,400 0.05 15,404,486 26.87 417,125 0.73 12,117,948 21.14 15,430,886 26.92 Note (i) (ii)

(iii) (iv)

Notes : (i) Deemed interested through his shareholdings in SHSB and SSSB by virtue of Section 6A of the Act and the shareholdings of his wife, Datin Cheah Gaik Huang in SCB. (ii) Deemed interested through the shareholdings of her husband, Dato' Hwang Thean Long in SCB. (iii) Deemed interested through his shareholdings in Hozone Sdn Bhd pursuant to Section 6A of the Act. (iv) Deemed interested through the shareholdings of her parents, Dato' Hwang Thean Long and Datin Cheah Gaik Huang in SCB.

Interest In The Related Corporation Dato Hwang Thean Long, Datin Cheah Gaik Huang, Hwang Siew Peng and Datuk Haji Radzali Bin Hassan by virtue of their interest in Shares in the Company, are deemed interested in Shares of all the Companys subsidiaries to the extent the Company has an interest. Save as disclosed above, none of the other Directors in office have any interest in Shares in the Company or its related corporations.

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ANNUAL REPORT 2013

PROXY FORM
No. of Shares held
I/We ___________________________________________________________________________________________________________
(FULL NAME IN CAPITAL LETTERS)

of _____________________________________________________________________________________________________________
(FULL ADDRESS)

member/members of the abovenamed Company, hereby appoint ____________________________________________________________ of ________________________________________________________ or failing him,__________________________________________ of ________________________________________________or the Chairman of the Meeting, as *my/our proxy to vote for *me/us on *my/ our behalf at the Twentieth (20th) Annual General Meeting of the Company to be held at Sunshine Banquet Hall, Level 4, Sunshine Square Complex, 1, Jalan Mayang Pasir, 11950 Bayan Baru, Penang on Thursday, 28 November 2013 at 11.00 a.m. and at any adjournment thereof. *My/Our Proxy is to vote as indicated below: AS ORDINARY BUSINESS: Resolution 1 To receive the Audited Financial Statements for the year ended 31 May 2013 together with the Reports of the Directors and Auditors thereon. Resolution 2 To approve the declaration of a first and final dividend of 8% less 25% Malaysian Income Tax for the financial year ended 31 May 2013. Resolution 3 To re-elect Dato Hwang Thean Long as Director of the Company. Resolution 4 To re-elect Datuk Haji Radzali Bin Hassan as Director of the Company. Resolution 5 To re-appoint Dato Ahmad Hassan Bin Osman as Director of the Company. Resolution 6 To approve the payment of Directors fees. Resolution 7 To re-appoint Messrs Ernst & Young as Auditors of the Company and to authorise Directors to fix their remuneration. AS SPECIAL BUSINESS: Resolution 8 Ordinary Resolution Authority to issue and allot shares pursuant to Section 132D of the Companies Act, 1965. Resolution 9 Ordinary Resolution - Proposed renewal and new shareholders mandate for recurrent related party transactions of a revenue or trading nature (RRPT) involving Dato Hwang Thean Long, Datin Cheah Gaik Huang, Hwang Poh Choo, Hwang Siew Peng, Suiwah Holdings Sdn Bhd and Suiwah Supermarket Sendirian Berhad. Resolution 10 Ordinary Resolution - Proposed renewal of shareholders mandate for RRPT involving Datuk Haji Radzali Bin Hassan and Hozone Sdn Bhd. Resolution 11 Ordinary Resolution - Proposed renewal of shareholders mandate for RRPT involving Looi Tik Miow. Resolution 12 Ordinary Resolution - Proposed renewal of shareholders mandate for RRPT involving Leong Kong Meng. Resolution 13 Ordinary Resolution - Proposed renewal of Shares Buy-Back Mandate. Resolution 14 Ordinary Resolution - Mandate for Dato Haji Suhaimi Bin Abdullah to continue to act as an Independent NonExecutive Director of the Company. Resolution 15 Ordinary Resolution - Mandate for Dato Ahmad Hassan Bin Osman to continue to act as an Independent NonExecutive Director of the Company. Resolution 16 Ordinary Resolution - Mandate for Mr. Jen Shek Voon to continue to act as an Independent Non-Executive Director of the Company. Resolution 17 Ordinary Resolution - Mandate for Mr. Wong Thai Sun to continue to act as an Independent Non-Executive Director of the Company. Resolution 18 Special Resolution - Proposed Amendments to the Articles of Association of the Company. For Against

(Please indicate with an X in the appropriate box against each Resolution how you wish your proxy to vote. If no instruction is given, the proxy will vote or abstain at his/her discretion). * Strike out whichever not applicable. Signed this day of 2013.

Signature of Shareholder/Common Seal

Notes: 1. In respect of deposited securities, only members whose names appear in the Record of Depositors on 21 November 2013 (General Meeting Record of Depositors) shall be eligible to attend, speak and vote at the Meeting. 2. A member entitled to attend and vote at the Meeting is entitled to appoint two (2) or more proxies to attend and vote in his or her stead. Where a member appoints two (2) proxies, the appointments shall be invalid unless he or she specifies the proportions of his or her shareholdings to be represented by each proxy. 3. A proxy may but does not need to 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. Notwithstanding this, a member entitled to attend and vote at the Meeting is entitled to appoint any person as his proxy to attend and vote instead of the member at the Meeting. There shall be no restriction as to the qualification of the proxy. A proxy appointed to attend and vote at the Meeting shall have the same rights as the member to speak at the Meeting. 4. The instrument appointing a proxy shall be in writing under the hand of the appointor or his attorney duly authorised in writing or, if the appointor is a corporation, either under its seal or under the hand of an officer or attorney duly authorised. 5. Where a member of the Company is an exempt authorised nominee as defined under Securities Industry (Central Depositories) Act 1991 which holds ordinary shares in the Company for multiple beneficial owners in one securities account (omnibus account), there is no limit to the number of proxies which the exempt authorised nominee may appoint in respect of each omnibus account it holds. 6. The instrument appointing a proxy and the power of attorney or other authority if any, under which it is signed or a notarially certified copy of the power or authority shall be deposited at the registered office of the Company at No. 1-20-1 SUNTECH @ Penang Cybercity, Lintang Mayang Pasir 3, 11950 Bayan Baru, Penang not less than forty-eight (48) hours before the time for holding the meeting or any adjournment thereof. 7. Any alteration in this form must be initialed.

Please fold across the line and close

stamp

To : The Company Secretary

SUIWAH CORPORATION BHD (253837-H)

No. 1-20-1 SUNTECH @ Penang Cybercity, Lintang Mayang Pasir 3, 11950 Bayan Baru, Penang, Malaysia.

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