Ekowood AR 2015

A
Stylish
way to live
Annual Report 2015
TABLE OF
CONTENTS
002
Notice of Annual General

Meeting
005
Statement Accompanying
Notice of Annual General
Meeting
040
Directors Report
044
Statement by Directors
045
Independent Auditors
Report
047
Statements of
Comprehensive Income
048
Statements of Financial
Position
006
Chairmans Statement
008
Corporate Structure
009
Corporate Information
010
Profile of Board of Directors
049
Statements of Changes in
Equity
017
Statement on Corporate
Governance
051
Statements of Cash Flows
032
Statement on Corporate
Responsibility
053
Notes to the Financial

Statements
033
Statement on Risk
Management and Internal
Control
106
Analysis of Shareholdings
109
List of Property
035
Audit Committee Report
110
038
Notice of Nomination of
Auditors
Statement of Directors
Responsibilities in respect
of the Audited Financial
Statements
Proxy Form
NOTICE OF
ANNUAL GENERAL MEETING
NOTICE IS HEREBY GIVEN THAT the Twenty-Second Annual General Meeting of the Company will be held at
Ballroom 2, LG Level, Eastin Hotel, 13, Section 16/11, Jalan Damansara, 46350 Petaling Jaya, Selangor Darul
Ehsan on 26 May 2016 at 12.00 noon to transact the following businesses:1. To receive the Audited Financial Statements for the financial year ended 31 December 2015
together with the Reports of the Directors and Auditors thereon.
Please refer to
Explanatory Note 1
2. To approve payment of Directors fees of RM99,871 for the financial year ended 31 December
2015.
Resolution 1
3. To re-elect Dato Haji Abdul Latif bin Abdullah, who is retiring in accordance with Article 95 of the
Companys Articles of Association, and who being eligible, offers himself for re-election.
Resolution 2
4. To re-elect Lim Fook Hin, who is retiring in accordance with Article 95 of the Companys Articles
of Association, and who being eligible, offers himself for re-election.
Resolution 3
5. To re-elect Selina binti Yeop Junior @ Lope, who is retiring in accordance with Article 86 of the
Companys Articles of Association, and who being eligible, offers herself for re-election.
Resolution 4
6. To re-elect Yap Boon Teck, who is retiring in accordance with Article 86 of the Companys
Articles of Association, and who being eligible, offers himself for re-election.
Resolution 5
7. To appoint Auditors and to authorise the Directors to fix their remuneration.
Resolution 6
Notice of Nomination pursuant to Section 172(11) of the Companies Act, 1965, a copy of
which is annexed hereto and marked Annexure A has been received by the Company for
the nomination of Messrs BDO for appointment as Auditors and of the intention to move the
following motion to be passed as an ordinary resolution:
THAT Messrs BDO be and are hereby appointed as Auditors of the Company in place of the
retiring Auditors, Messrs Ernst & Young and to hold office until the conclusion of the next Annual
General Meeting and THAT the Directors be authorized to fix their remuneration.
As Special Business:
To consider and, if thought fit, pass the following ordinary resolutions:-
EKOWOOD INTERNATIONAL BERHAD (301735-D)
8. PROPOSED AUTHORITY TO ISSUE SHARES PURSUANT TO SECTION 132D OF THE

COMPANIES ACT, 1965
002
THAT, subject always to the approvals of the relevant regulatory authorities, the Directors be
and are hereby empowered by the shareholders, pursuant to Section 132D of the Companies
Act, 1965 to issue new ordinary shares in the Company from time to time at such price, upon
such terms and conditions, provided that the aggregate number of the new ordinary shares to
be issued pursuant to this resolution does not exceed 10% of the issued capital of the Company
for the time being AND THAT the Directors be and are empowered to obtain the approval from
the Bursa Malaysia Securities Berhad for listing and quotation for the additional new ordinary
shares to be issued AND THAT such authority shall continue in force until the conclusion of the
next Annual General Meeting of the Company.
Resolution 7
NOTICE OF ANNUAL GENERAL MEETING

continued
9. RETENTION OF INDEPENDENT DIRECTOR

THAT, approval be and is hereby given to Dato Haji Abdul Latif 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 Independent Non-Executive Director of the Company.

10. To transact any other business of which due notice shall have been given.
Resolution 8
By Order of the Board
CHOW YEEN LEE (MAICSA 7047480)

Company Secretary
Kuala Lumpur
29 April 2016
Notes:
1. Only depositors whose names appear in the Record of Depositors as at 20 May 2016 be regarded as members and
entitled to attend, speak and vote at the meeting.
2. A member of the Company entitled to attend and vote at the meeting is entitled to appoint a proxy to attend and vote in
his stead. A proxy may but need not be a member of the Company.
3. The instrument appointing a proxy shall be in writing under the hand of the depositor or his attorney duly authorised in
writing or if such appointor is a corporation, under its common seal and shall be deposited at the Registered Office of the
Company at Level 10, Menara TSH, No. 8 Jalan Semantan, Damansara Heights, 50490 Kuala Lumpur, not less than 48
hours before the time appointed for holding this meeting or adjourned meeting.
4. Where a member appoints two (2) or more proxies to attend the same meeting, the member shall specify the proportion
of his shareholdings to be represented by each proxy. If the Proxy Form is returned without any indication as to how the
proxy shall vote, the proxy will vote or abstain as he thinks fit and if no names are inserted in the space for the name of
proxy, the Chairman of the meeting will act as proxy.
Annual Report 2015
5. Where a member of the Company is an exempt authorised nominee which holds ordinary shares in the Company for
multiple beneficial owners in one securities account (omnibus account), there is no limit to the number of proxies which
the exempt authorised nominee may appoint in respect of each omnibus account it holds.
003

continued
Explanatory Notes:
1. The audited financial statements are meant for discussion only as it does not require shareholders approval under the
provision of Section 169(1) and (3) of the Companies Act, 1965. Hence, it will not be put for voting.
2. Resolution 7, is a renewal of the general mandate empowering the Directors of the Company, pursuant to Section 132D
of the Companies Act, 1965, to issue and allot new shares in the Company from time to time provided that the aggregate
number of shares issued pursuant to the general mandate does not exceed 10% of the issued share capital of the
Company for the time being. This authority, unless revoked or varied by the Company at a general meeting, will expire at
the next Annual General Meeting.

As at the date of this notice, the Company did not issue any new shares pursuant to the general mandate granted to the
Directors at the last Annual General Meeting held on 2 June 2015.

The renewal of the general mandate will provide flexibility to the Company for any possible fund raising activities without
the need to convene separate general meeting to specifically approve such issuance of shares and thereby reducing
administrative time and costs associated with the convening of such meeting. However, at this juncture, there is no
decision to issue new shares. If there should be a decision to issue new shares after the general mandate is obtained, the
Company will make an announcement in respect of the purpose and utilization of proceeds arising from such issue.
3. For Resolution 8, the Nomination Committee has assessed the independence of Dato Haji Abdul Latif 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 act as an Independent Non-Executive Director of the Company based on the
following justifications:(i) He fulfilled the criteria under the definition of an Independent Director as stated in the Bursa Malaysia Securities
Berhad Main Market Listing Requirements, and demonstrates complete independence in character and judgement
both in his designated role and as Board member and thus, he would continue to bring independent view of the
Companys affairs to the Board.
(ii) His in-depth knowledge of the Groups businesses and extensive experience and expertise continue to provide
invaluable contribution to the Board.
004
STATEMENT ACCOMPANYING
1. Details of persons who are standing for

election as Directors
No individual is seeking election as a Director at
the Twenty-Second Annual General Meeting of
the Company.
Please refer to Explanatory Note 2 of the Notice

of Twenty-Second Annual General Meeting
for information relating to general mandate for
issue of securities.
Annual Report 2015
2. Statement relating to general mandate for

issue of securities
005
CHAIRMANS
STATEMENT
Dear Valued
Shareholders,
006
On behalf of the Board, I am pleased to

present the Annual Report and Audited
Financial Statements for Ekowood
International Berhad and its Group of
Companies for the financial year ended
31 December 2015.
Datuk (Dr.) Kelvin Tan Aik Pen

Chairman
CHAIRMANS STATEMENT
continued
PERFORMANCE REVIEW
The Group recorded revenue of RM42.9 million for the
financial year ended 31 December 2015 compared to
RM43.0 million for the preceding year. The Group recorded
a lower pretax loss of RM3.0 million for the financial year
ended 31 December 2015 as compared to pretax loss of
RM7.0 million in the preceding financial year.
CORPORATE & BUSINESS DEVELOPMENT
INDUSTRY TRENDS & DEVELOPMENTS

In addition to the development of colored products to
meet the demands of matured markets, Ekowood has
also managed to broaden its traditional customer base
substantially in supplying projects and retail distributors in
Australia, Europe and USA. At the same time, Ekowood
continues to manufacture its products successfully to
meet ever more stringent green requirements which are
environmentally responsible and resource-efficient.
Demand for Ekowood products and services in the local
market remains strong despite the slow down in the property
market. Our local subsidiary is structured to maintain
sustainable growth in the coming years capitalizing on our
pre-finished products for quick installation and integrated
installation services.
AWARD RECEIVED
Ekowood has been awarded yet another international accolade
at the World Branding Awards 2015 on 24 September 2015
held at Kensington Palace, London.
The award is testament to the hardwork and the continuous
commitment to growth from our employees in the Group.
PROSPECTS
2nd half of 2015 saw sales improvements in all our traditional
markets of Asia Pacific and Europe. We expect to be able
to maintain these volumes with slight improvements in 2016.
We are cautiously optimistic on maintaining our leading
position in Malaysia as the property market gets more
challenging and price pressure continues to mount from
local developers.
We would continue the rationalization exercise to improve

operational efficiencies in our subsidiaries.
The Board remains optimistic of the long term prospects of
the global timber flooring industry and is fully committed to
address the issues confronting its existing core business.
ACKNOWLEDGEMENTS
On behalf of the Board, I am pleased to welcome Ms
Selina binti Yeop Junior @ Lope and Mr Yap Boon Teck
to the Board, who were appointed as Independent NonExecutive Directors on 11 March 2016 and 15 December
2015 respectively.
The Board extends its appreciation and gratitude to YB
Datuk Nur Jazlan bin Mohamed, who has resigned on 29
July 2015 and Dr. Tee Choon Hwa, who will be retiring at the
conclusion of the forthcoming Annual General Meeting for
their dedication and contribution to the Group throughout
their tenures.
I would like to convey my deep gratitude to my colleagues
on the Board for their effective contribution and leadership.
Their wisdom and astute insight have proven invaluable in
the course of the financial year.
I would also like to pay tribute to our management and staff
for their continued dedication and determination exhibited in
the face of continued global economic challenges.
Last but not least, I wish to express my sincere appreciation
to our valued shareholders, customers, business
associates, strategic partners, financiers and suppliers for
their unwavering support and confidence in our Group.
DATUK (DR.) KELVIN TAN AIK PEN

Chairman
Annual Report 2015
Efforts made by the Group in product and market

development coupled with efficiency drives in 2015 have
yielded positive results in improving Group performance.
Simultaneously, the Group continues to improve on the
high quality standards and prestige which are expected of
Ekowood end products.
007
CORPORATE
STRUCTURE
100%
99.96%
TSH PRODUCTS SDN. BHD.

(450556-T)
EKOWOOD IBERICA S.L

(Incorporated in Spain)
EKOWOOD (USA) INC.
(Incorporated in the State of California, USA)
EKOWOOD MALAYSIA SDN. BHD.

(336672-X)
EKOLOC SYSTEM SDN. BHD.
70%
EKOWOOD S.A
(Incorporated in Luxembourg)
(396543-P)
EKOWOOD,
USA
008
EKOWOOD,
SPAIN
EKOWOOD,
LUXEMBOURG
EKOWOOD INTERNATIONAL
BERHAD, MALAYSIA
CORPORATE
INFORMATION
BOARD OF DIRECTORS
NOMINATION COMMITTEE
FACTORY
Dato Haji Abdul Latif bin Abdullah
Chairman, Non-Independent NonExecutive Director
Chairman, Independent Non-Executive

Director
Dr. Tee Choon Hwa
Deputy Chairman, Independent NonExecutive Director
Member, Independent Non-Executive

Director
Lot 1-12, Jalan Industri 2/1

Kawasan Perindustrian Gopeng
KM15 Jalan Gopeng
Mukim Sg. Raya
31600 Gopeng
Perak Darul Ridzuan
Tel
: 05-357 2020
Fax
: 05-357 2000
Dato Tan Aik Sim
Selina binti Yeop Junior @ Lope

Independent Non-Executive Director
Dr. Tee Choon Hwa

Yap Boon Teck

Lim Fook Hin

Non-Independent Non-Executive Director
AUDIT COMMITTEE
Director
Dr. Tee Choon Hwa

Director
Yap Boon Teck

Director (Member of the Malaysian
Institute of Accountants)
REMUNERATION COMMITTEE
Director

Member, Non-Independent Non-Executive
Director
AUDITORS
Ernst & Young
Level 23A, Menara Milenium
Jalan Damanlela
Pusat Bandar Damansara
50490 Kuala Lumpur
Tel
: 03-7495 8000
Fax
: 03-2095 5332
Dr. Tee Choon Hwa

Director

COMPANY SECRETARY
PRINCIPAL BANKERS
HSBC Bank Malaysia Berhad
Malayan Banking Berhad
United Overseas Bank (Malaysia) Berhad
Chow Yeen Lee (MAICSA 7047480)

SHARE REGISTRAR
REGISTERED OFFICE
Level 10, Menara TSH
No. 8 Jalan Semantan
Damansara Heights
50490 Kuala Lumpur
: 03-2084 0888
Tel
: 03-2084 0828
Fax
E-mail : info@ekowood.com
Website : www.ekowood.com.my
Symphony Share Registrars Sdn. Bhd.

Level 6, Symphony House
Block D13, Pusat Dagangan Dana 1
Jalan PJU 1A/46
47301 Petaling Jaya
Selangor Darul Ehsan
: 03-7841 8000/
Tel
03-7849 0777 (Helpdesk)
: 03-7841 8151/8152
Fax
STOCK EXCHANGE LISTING

Main Market of Bursa Malaysia Securities
Berhad
Annual Report 2015
Group Managing Director
009
PROFILE OF
BOARD OF DIRECTORS
Chairman, Non-Independent Non-Executive Director
Datuk (Dr.) Kelvin Tan Aik Pen, aged 58, a Malaysian, is the Non-Executive
Chairman of the Company. He has been a Director of Ekowood since 21 June
1994. He also serves as a member of the Remuneration Committee.
Kelvin is currently the Non-Executive Chairman of TSH Resources Berhad and the
Managing Director of Innoprise Plantations Berhad. These companies are listed
on the Main Market of Bursa Malaysia Securities Berhad. He also sits on the
board of a number of private companies.
010
He has more than twenty nine (29) years experience in resource based industry,
which includes extensive working knowledge in international trade practices.
He was the Chairman of the Malaysian Cocoa Board for 8 consecutive years
from 1997 to 2004 and trustee of the Borneo Conservation Trust Sabah from
2010 to 2013. He serves as Honorary Director of Sabah Chinese High School. As
recognition for the many contributions to environmental conservation and forestry,
Kelvin Tan was conferred an Honorary Doctorate in Philosophy (Agroforestry) by
Universiti Malaysia Sabah on 3 September 2006.
He is the brother of Dato Tan Aik Sim and Tan Ek Huat. He has no conflict of
interest with the Company and has no conviction for offences within the past ten
(10) years.
PROFILE OF BOARD OF DIRECTORS

continued

Deputy Chairman, Independent Non-Executive Director
He started his career in 1975 with the Ministry of Foreign

Affairs as Attachment Officer of West Asian Desk. He then
joined Malaysian International Shipping Corporation Berhad
(MISC) as a Management Trainee and was subsequently
promoted to Assistant Manager, Liner Division. From 1982
to 1992, he was with Perbadanan National Shipping Line
Berhad (PNSL) and was instrumental in the formation
and heading a number of subsidiaries and joint venture
companies within the PNSL Group. He was the General
Manager, Business and Corporate Division before opting
to join Mitsui OSK Lines (M) Sdn Bhd in 1990 as founder
Director and remains as Chairman after his retirement in
2005.
He was previously Non-Executive and Public Interest

Director of Bursa Malaysia Berhad, Executive Chairman
of Realmild (M) Sdn Bhd, Chairman of Labuan Shipyard &
Engineering Sdn Bhd and Radicare (M) Sdn Bhd. He was
Chairman of Penang Port Sdn Bhd from 2004 to 2009,
Chairman of the International Shipowners Association of
Malaysia (ISOA) from 1998 to 2008, Chairman of Amanah
Raya Asian Finance Islamic Marine Fund from 2008 to
2010 and was Vice Chairman of the Malaysian Shipowners
Association (MASA).
Presently Dato Haji Abdul Latif is the Chairman, Senior
Independent Non-Executive Director of Efficient E-Solutions
Berhad and a Non-Independent Non-Executive Chairman
of Ancom Logistics Berhad. He also sits on the Board of
various other private limited companies namely Menlo
Worldwide Forwarding Malaysia Sdn Bhd and MOL
Logistics (M) Sdn Bhd.
He does not have any family relationship with any other
Director and/or other major shareholder of the Company
and has no conflict of interest with the Company. He has no
conviction for offences within the past ten (10) years.
Annual Report 2015
Dato Haji Abdul Latif bin Abdullah, aged 65, a

Malaysian, was appointed to the Board of Directors of the
Company as an Independent Non-Executive Director on
30 January 2004 and subsequently on 26 July 2004 was
appointed Deputy Chairman of Ekowood. He also serves as
the Chairman of the Remuneration Committee, Nomination
Committee and Audit Committee. He holds a Master of
Science (Marine Law & Policy) from the University of Wales
Institute of Science and Technology, UK (1981), Bachelor of
Arts (Hons) in International Relations from the University of
Malaya (1975) and is a member of The Chartered Institute of
Logistics and Transport, UK.
011

continued
Dato Tan Aik Sim

Group Managing Director
Dato Tan Aik Sim, aged 52, a Malaysian, was appointed to

the Board of Directors of Ekowood on 21 June 1994. He was
the Chief Executive Officer of the Company before assuming
the position of Group Managing Director on 25 February 2009.
He is also the Group Managing Director of TSH Resources
Berhad (TSH) effective 1 January 2009 and sits on the
board of its various subsidiaries.
He obtained Bachelor Degrees in both Economics and

Engineering from Monash University, Australia in 1988.
012
He started his career in the cocoa industry in 1989 with

significant involvement in the setting-up of its manufacturing
facilities and its subsequent operation of a number of
companies within the cocoa sector. He also played a leading
role in the listing of TSH in 1994 and Ekowood in 2004.
He was appointed to Ekowood to spearhead the
establishment of the integrated timber complex from a
green field site. Through his active involvement since then,
Ekowood has grown rapidly to now an award-winning
internationally recognised brand within the engineered
hardwood flooring industry.
His initial involvement in TSH includes overseeing the

forest management unit in Sabah before progressing into
the biomass energy sector. In the recent years, he has
been actively involved in palm oil plantation segment and
its related downstream activities. He has played a pivotal
role in the rapid growth of TSHs palm segment especially
in Indonesia. He is also instrumental in developing and
putting in place the necessary business platform for the
next development phases of the palm segment in Indonesia
and Sabah.
He is the brother of Datuk (Dr.) Kelvin Tan Aik Pen and Tan
Ek Huat. He has no conflict of interest with the Company
and has no conviction for offences within the past ten (10)
years.

continued

Ms Selina Yeop Jr is the Chief Executive Officer of Salina &

Associates PR Sdn Bhd, a boutique Public Relations agency
based in Selangor, Malaysia. She holds an MBA from the
Southern Pacific University, Delaware, United States of
America and obtained a Diploma in Public Relations from
Stamford College, Kuala Lumpur, Malaysia.
She started her career at Chase Perdana Bhd in Kuala
Lumpur as Head of Corporate Communications, following
her stint at advertising giant Peter Beaumont & Friends,
Kuala Lumpur. She has received the Pingat Ahli Mahkota
Perak from Sultan Azlan Shah in 2008 for her numerous
contributions to the field of Public Relations in the State.
Currently, Ms Selina Yeop Jr is the Honourary Advisor to

the Malaysian Preventation of Tuberculosis, and has been
appointed to the Advisory Panel of the Womens Institute
of Management, where she has co-authored two books
entitled The IPO Debut and Small & Medium Success
Stories in aid of poverished single mothers. She is also a
Board member of local NGO For Wisdom and Revolutionary
Development that contributes to rural development efforts.
She does not have any family relationship with any other
director and/or other major shareholder of the Company.
She has no conflict of interest with the Company and has no
Annual Report 2015
Selina binti Yeop Junior @ Lope, aged 47, a Malaysian,

was appointed as an Independent Non-Executive Director
of Ekowood on 11 March 2016. She is also an Independent
Non-Executive Director of TSH Resources Berhad.
013

continued
Dr. Tee Choon Hwa
014
Dr. Tee Choon Hwa, aged 61, a Malaysian, was appointed

as an Independent Non-Executive Director on 24 November
2004. He also serves as a member of the Audit Committee,
Remuneration Committee and Nomination Committee.
He is a Professional Engineer with practising certificate
registered with the Board of Engineers Malaysia, a Fellow
of the Institution of Engineers Malaysia and a Fellow of
the Institute of Foresters Malaysia. He holds a Bachelor of
Engineering with honours in Mechanical Engineering from
University of Technology Malaysia (1978), a Certificate in
Timber Harvesting and Transport from Finland National
Board of Vocational Education (1981), a Certificate in
Management of Forests and Wood Industries from Swedish
University of Agricultural Sciences (1987) and Doctor of
Business Administration from Ansted University (2001).
He was a Lecturer of Tunku Abdul Rahman College
(1978 - 1979), a Senior Industrial Engineer in the Forest
Department Peninsular Malaysia (1978 - 1988), served as
an Industry Resource Person of the Asia Pacific Forest
Industries Development Group (1986 - 1990) and was a
Senior Manager of the ASEAN Timber Technology Centre
(1989 - 1993). He was appointed as the Executive Director

of Aokam Industries Sdn Bhd in 1994 after early retirement
from the Public Works Department. He was a Director of
Jilin Junxin Forestry Company Limited, China (1995 - 1996),
Golden Plus Holdings Berhad (1995 - 2001) and TSH
Resources Berhad (2003 - 2005). He was appointed as
the Executive Director in 1997 and subsequently promoted
to be the Managing Director of Java Berhad in 1999 until
his retirement in 2005. He served as a consultant/advisor
to Hangzhou Bay Wetland Centre, China (2010 - 2012) and
Lion Forest Industries Berhad (2011 - 2012). He also holds
directorship in other private limited companies.
Dr. Tee Choon Hwa, who has served the Company for more
than eleven (11) years, has expressed his intention to retire
at the conclusion of the forthcoming AGM.

continued
Yap Boon Teck
He holds a professional accounting qualification from the

Association of Chartered Certified Accountants (ACCA),
United Kingdom. He is also a member of the Malaysian
Institute of Accountants.
He started his career with a small to medium size accounting
and audit firms in the United Kingdom and medium to large
local accounting and audit firms in Kuala Lumpur. While
in public practice, Mr Yap has gained experience in audit
of both private and public companies mainly in finance
and banking, property developments and manufacturing
sectors.
He joined the MBf Group of Companies in November 1983 as
an accountant and subsequently held various positions in the
companies within the Group which involved, amongst others,
property, insurance & financial services and manufacturing.
Prior to leaving MBf Group in August 2003, he was the
President-Corporate of MBf Holdings Berhad and MBf
Capital Berhad.
In August 2003, he was appointed as Executive Director

of Metroplex Berhad before he left in March 2006 to join
Malaysian Land Properties Sdn. Bhd. where he served as
the Group General Manager, overseeing management of the
completed projects such as building management, shopping
centre and hotels. He was also involved in the negotiation to
purchase a major property and responsible for the various
departments within the company, namely personnel, legal,
finance and accounting and general administration.
In March 2011, he joined KIP Group of Companies as Chief
Executive Officer, a position he is still holding presently.
He is also currently an Independent Non-Executive Director
of TSH Resources Berhad.
Annual Report 2015
Yap Boon Teck, aged 61, a Malaysian, was appointed as

an Independent Non-Executive Director of the Company
on 15 December 2015. He also serves as a member of the
Audit Committee.
015

continued
Lim Fook Hin
Non-Independent Non-Executive Director
Lim Fook Hin, aged 66, a Malaysian, was appointed

as an Alternate Director to Datuk (Dr.) Kelvin Tan Aik
Pen on 2 July 1997 and subsequently on 1 June 2002
was appointed as an Executive Director of Ekowood.
On 1 February 2016, he was re-designated as NonIndependent Non-Executive Director.
He is a member of the Malaysian Institute of Certified Public

Accountants. After qualifying as a member of the ICAEW,
he joined Coopers & Lybrand as an audit senior in 1976
and was transferred to Coopers management consultancy
services in 1977. He joined the Commonwealth Development
Corporation in 1978 and was seconded to Sarawak Oil Palm
Sdn. Bhd. as the Company Secretary.
016
He joined BAL Plantation Sdn. Bhd. in 1981 as the

Financial Controller until 1993. His main responsibilities
include financial management, merger and acquisition and
commodity marketing. He was the Chief Executive of United
Palm Oil Industries PLC, a company listed on the Stock
Exchange of Thailand before joining TSH Resources Berhad
(TSH) in 1997.
He is currently a Non-Independent Non-Executive Director

of TSH and the Executive Director of Innoprise Plantations
Berhad. He also sits on the Board of some subsidiaries
within the TSH Group and holds directorships in other
private limited companies.
STATEMENT ON
CORPORATE GOVERNANCE
The Board of Directors of Ekowood (Board) recognizes that exercise of good corporate governance in conducting the
business and affairs of the Company with integrity, transparency and professionalism are key components for the Companys
continued progress and success. These will not only safeguard and enhance shareholders investment and value but will at
the same time ensure that the interests of other stakeholders are protected.
The Board is therefore committed to high standards of corporate governance and business practices. Accordingly, the
Board has adopted Ekowood Corporate Governance Guidelines to assist the Board in the exercise of its responsibilities.
These guidelines, along with the terms of reference of the Board and Board Committees provide the framework for corporate
governance at Ekowood.
This Corporate Governance Statement provides information about Ekowoods corporate governance practices for
2015, including the manner in which the Company has applied the Principles and the extent of compliance with the
Recommendations as set out in the Malaysian Code of Corporate Governance 2012 (Code).
PRINCIPLE 1: ESTABLISH CLEAR ROLES AND RESPONSIBILITIES
There is a clear distinction between the roles and responsibilities of the Board, Chairman and Group Managing Director
which are set out in the Ekowood Corporate Governance Guidelines.
The Board retains full and effective control of the Company. Matters specifically referred to the Board for approval
include, inter-alia reviewing and approving corporate proposals, plans and annual budgets, acquisitions and disposals
of undertakings and properties of a substantial value, major investments and financial decisions and changes to the
management and control structure within the Group, including key policies and procedures and delegated authority
limits.
The Board delegates some of its function to the Committees of the Board which operate within clearly defined terms of
reference with a view to assist in the fulfillment of its responsibilities. Chairman of the various Committees report to the
Board with a recommendation on all matters considered at its meeting. In addition, minutes of each Board Committee
meeting is circulated to all Board members in order to keep the Board abreast of the actions and decisions taken by each
Board Committee.
The responsibilities delegated by the Board to the senior management through the Group Managing Director include:
Managing day-to-day operations in accordance with the standards for social and ethical practices which have been
set out in the TSH Group Employee Handbook.
Managing the financial affairs of the Company in accordance with the delegations of authority and budgets approved
by the Board.
Developing and implementing corporate strategies and making recommendations on significant corporate strategic
initiatives.
Each member of the senior management is subject to an annual performance review which is conducted by the Group
Managing Director. The Group Managing Director is accountable to the Board for the achievement of the Groups
corporate objectives which include performance against targets and long-term goals of the business, organizational
effectiveness as well as implementation of Board policies and decisions.
Annual Report 2015
1.1 Clear Functions of the Board and Management
017
STATEMENT ON CORPORATE GOVERNANCE

continued
The balance of responsibilities between the Board and Group Managing Director will be reviewed on a regular basis so
as to ensure that the division of functions remains appropriate to the needs of the Company.
During 2015, the Board reviewed, amongst others, the Groups operation in particular comparison of actual results with
budget and comparison of current quarter performance with preceding corresponding quarter and preceding quarter
as well as comparison of current year to date with preceding year to date. Where deemed necessary, explanations
for variances were sought from management. Proposals submitted by management were extensively reviewed and
debated. The Board also approved the Groups budget as well as strategic and operational plan for 2015.
1.2 Clear Roles and Responsibilities

The Board takes full responsibility for the overall performance of the Company and the Group. The main responsibilities
of the Board comprise the following:a. Reviewing and adopting the Groups strategic plan

The Board plays an active role in the development of the Groups strategic plan with a view to maximizing shareholder
value and promoting sustainability. This includes review, comment and provide final approval of the Groups strategic
plan prepared by management. In conjunction with this, the Board also reviews and approves the annual budget
for the ensuing year and monitors managements implementation of and performance with respect to that agreed
strategic plan.
b. Overseeing the conduct of the Groups business

The Board carries out periodic review of the achievements by the various operating divisions against their respective
business targets.
c. Identifying principal risks and ensuring the implementation of appropriate internal controls and mitigation
measures
018
The Board maintains a sound system of internal control to safeguard shareholders investment and the Companys
assets. The Board through the Audit Committee reviews the effectiveness of the Enterprise Risk Management
system within the Group and assures that material risks are identified and appropriate risk management processes
are in place, including the formulation and subsequent updating of appropriate Group policies.
Audit Committee ensures that policy to identify and evaluate the Companys and Groups risks is implemented and
that controls in place are adequate and functioning properly to address the risks. In that relation, the Chief Financial
Officer (CFO) is required to complete questionnaires so as to provide the Audit Committee with information on the
risk and control environment.
The Groups Enterprise Risk Management system in place is set out in the Statement on Risk Management and
Internal Control of this Annual Report.
d. Succession planning

The Board has entrusted the Nomination Committee with the responsibility for reviewing the Boards succession
plans, proposing new nominees to the Board and recommending Directors to fill the seats on the Board Committees.
The Board continues with its role to review and monitor the appointment and dismissal of senior management of the
Company while the Group Managing Director is responsible for the senior management succession plan. The senior
management succession plan involves building a talent-rich organization by attracting and developing talented and
skilled people who fit in the Companys culture and business strategy as well as identifying successors for senior
management positions.

continued
e. Overseeing the development and implementation of a shareholder communications policy

Ekowood values the dialogue with shareholders and appreciates the keen interest of shareholders on the Groups
performance. In this regard, Frederick Tan Aik Yong has been appointed as the person responsible for communication
with shareholders and other stakeholders of the Company.
The Company has a Corporate Disclosure Policy and Procedures that outlines the policies and processes for
communications with shareholders, analysts and investors to ensure that the communications are effective and
comply with the applicable laws, rules and regulations.
f.
Reviewing the adequacy and the integrity of the management information and internal controls system
The Board is responsible for the adequacy and integrity of the Companys internal control systems and management
information systems, including systems for compliance with applicable laws, regulations, rules, directives and
guidelines. Details pertaining to the Companys internal control system and the review of its effectiveness are set out
in the Statement on Risk Management and Internal Control of this Annual Report.
1.3 Formalise Ethical Standards through a Code of Conduct

Code of Conduct and Ethics

The Company has adopted a code of conduct and ethics which applies to Directors, officers and employees of the
Group and is available on the Companys website.
The Board of Directors of Ekowood continues to adhere to the Code of Ethics for Company Directors issued by the
Companies Commission of Malaysia (Code of Ethics).
The Board is ultimately responsible for the implementation of this Code of Ethics. The Board has delegated to the
Nomination Committee the responsibility to administer this Code of Ethics. Directors who learn of or suspect that a
violation of the Code of Ethics has occurred or is likely to occur must immediately report the violation to the Chairman
of the Nomination Committee, or to any other member of the Nomination Committee. In the case of issues regarding
the Companys financial statements, financial reporting, accounting, auditing matters or internal accounting controls, it
will be reported to the Chairman of the Audit Committee. If a Director is unsure whether a violation should be reported
to the Nomination or the Audit Committee, he or she is encouraged to report to both Committees. Directors who report
violations or suspected violations in good faith will not be subject to retaliation of any kind. Reported violations will be
treated confidentially to the extent possible.
Alleged violations of the Code of Ethics shall be investigated by the Nomination Committee and may result in discipline
and other action at the discretion of the Board upon recommendation of the Nomination Committee, including, where
appropriate, removal from the Board. The Board is ultimately responsible for the investigation and resolution of all issues
that may arise under this Code of Ethics.
As part of best practices in good corporate governance, a Whistle-Blowing Policy has been established by the Board
since February 2010 that outlines the principles underpinning the policy and grievance procedures. This policy provides
an avenue for employees to report genuine concerns about malpractices, unethical behavior or misconduct within the
Group without fear of reprisal. Identity of the employee will not be disclosed without prior consent. Any concerns raised
will be investigated and outcome of such investigation will be reported to the Board and appropriate action will be taken
to resolve the issue.
Annual Report 2015
Whistle-Blowing Policy
Details of whistle-blowing channel are available on the Companys website at www.ekowood.com.my.
019

continued
1.4 Strategies Promoting Sustainability

The Board places great importance on corporate responsibility and business sustainability. The Companys activities on
environment, social and governance for the year under review are disclosed in the ensuing pages of this Annual Report.
1.5 Supply and Access to Information and Advice

The Directors have access to all information within the Company, whether as a full board or in their individual capacity,
to the extent that the information required is pertinent to the discharge of their duties as Directors.
All Directors are provided with an agenda and a set of Board papers containing information relevant to the business of
the meeting, including information on financial, operational and corporate matters prior to Board meetings. The Board
papers are issued in sufficient time to enable the Directors to obtain further explanations, where necessary, in order to
be properly briefed before the meetings. Time is allocated for Directors to raise other matters not covered by the formal
agenda.
The Board has also put into place a procedure for Directors, whether as a full Board or in their individual capacity, to
take independent professional advice at the Companys expense, if necessary. Details of procedures are disclosed in
the Ekowood Corporate Governance Guidelines.
Management will make all information readily available to the professional advisers and must make themselves available
to such advisers in order to facilitate the effective solution of the Directors concerns. The findings of the advisers will
need to be put before the Board for determination of any action that may be required by the Company.
1.6 Company Secretaries
020
The Board is supported by two (2) qualified Company Secretaries who undertake the role jointly. Both Company
Secretaries are members of professional bodies.
All Directors have direct access to the Company Secretaries and the appointment and removal of Company Secretaries
will be subject to Board approval.
The Company Secretaries are responsible for amongst others, the co-ordination of all Board and Board Committee
meetings including agendas, board papers, minutes and communication with the stock exchange and other regulatory
agencies as well as statutory filings.
The Company Secretaries also play significant role in the following:
assisting with induction and professional development of Directors;
regularly updating the Board on new changes to the statutory and regulatory requirements and the resultant
implications to the Company and the Board in discharging their duties and responsibilities;
notifying Directors and principal officers on the closed periods for dealing in the Companys securities; and
advising and supporting the Chairman and the Board and its Board Committees to manage the day to day
governance framework of the Company.
On 1 February 2016, the Board approved the resignation of Lim Fook Hin as Ekowoods Company Secretary following
his re-designation as Non-Independent Non-Executive Director.

continued
1.7 Board Charter

The Board has adopted a Board Charter which serves as a source of reference and primary induction literature, providing
insights to prospective Board members and senior management. The Board Charter will be periodically reviewed and
updated in accordance with the needs of the Company and any new regulations that may have an impact on the
discharge of the Boards responsibilities.
The Board Charter was recently reviewed and updated in February 2016 and details of the Board Charter are available
for reference on Ekowoods website.
PRINCIPLE 2: STRENGTHEN COMPOSITION

Presently, the Board comprises seven (7) members of which four (4) are Independent Non-Executive Directors, two (2) NonExecutive Directors, one of whom is the Chairman and a Group Managing Director.
The composition of the Board was refreshed in early 2016 with the re-designation of Lim Fook Hin from Executive Director to
Non-Independent Non-Executive Director and appointment of Selina binti Yeop Junior @ Lope, a lady Director to the Board.
The new Board composition complements the remaining Directors with new experience, knowledge and expertise in the
areas of business and public relations. The appointment of Selina binti Yeop Junior @ Lope reflects that the Board recognizes
the value of a woman member of the Board and was an initial step taken by the Board towards achieving a more gender
diversified Board.
The profile of each Board member is set out in this Annual Report.
The Board is of the view that the current Board size is appropriate for the complexity and scale of operations of the Company.
The composition of the Board continues to provide the Group with a wealth of knowledge and experience to draw from a
comprehensive mix of skills which includes financial, technical, public relations and business expertise that is important for
the continued successful direction of the Group.
2.1 Nomination Committee

The Board has established a Nomination Committee on 27 November 2004 and currently comprises entirely Independent
Non-Executive Directors as follows:

Dato Haji Abdul Latif bin Abdullah (Chairman)

Dr. Tee Choon Hwa
The Nomination Committee is responsible for reviewing the Boards succession plans, training for Directors and
assessing the effectiveness of the Board and Board Committees. Details of its terms of reference are available on
Ekowoods website.
2.2 Develop, Maintain and Review Criteria for Recruitment and Annual Assessment of Directors
The Nomination Committee is responsible for proposing and assessing new nominee(s) to the Board and Board
Committee membership and thereupon submitting their recommendation to the Board for decision. Decision is made
by the Board based on an annual review conducted by the Nomination Committee on the Boards required mix of skills
and experiences, taking into account the current and future needs of the Company. This review should be matched
against the current composition of Directors to identify any gaps.
Annual Report 2015
Appointment of Directors
021

continued
In making its recommendations, the Nomination Committee will not be guided solely by gender and ethnicity but rather
the candidates skills, knowledge, expertise and experience, professionalism, integrity and in the case of candidates for
the position of Independent Non-Executive Directors, the Nomination Committee will also evaluate the candidates ability
to discharge such responsibilities/functions as expected from Independent Non-Executive Directors.
As part of the appointment process, the potential candidate must disclose his existing directorships as well as any
other commitments so as to determine whether he has adequate time to perform his duties. The Company Secretaries
shall ensure that all appointments are properly made and all necessary information is obtained, both for the Companys
own records and for the purposes of meeting statutory obligations, as well as obligations arising from the regulatory
requirements.
As far as boardroom diversity is concerned, the Board does not have a specific policy on setting targets for women
candidates and ethnicity as the Board believes that it is of utmost importance that the Company has an effective
composition of the Board to discharge their duties effectively in the best interest of the Company and shareholders.
Nevertheless, the Nomination Committee will evaluate and match the criteria of future potential nominees to the Board
as well as considering the boardroom diversity.
The Board also believes in having a healthy mix of age and experience and therefore does not prescribe a minimum or
maximum age limit for its Board members apart from what is prescribed under Section 129 of the Companies Act, 1965.
In early 2016, the Board approved the recommendation of the Nomination Committee that Lim Fook Hin be re-designated
from Executive Director to Non-Independent Non-Executive Director and Selina binti Yeop Junior @ Lope be appointed
as an Independent Non-Executive Director of the Company.
Annual Assessment
022
The performance of those Directors who are subject to re-appointment and re-election at the next Annual General
Meeting (AGM) are assessed by the Nomination Committee whereupon recommendations are submitted to the Board
for decision on the tabling of the proposed re-appointment and re-election of the Directors concerned for shareholders
approval. In accordance with the Companys Articles of Association, all Directors shall retire from office once at least in
each three (3) years, but shall be eligible for re-election. Directors over seventy (70) years of age are required to submit
themselves for re-appointment annually in accordance with Section 129(6) of the Companies Act, 1965.
The Directors who are due for retirement and re-election pursuant to Article 95 of the Companys Articles of Association
are Dato Haji Abdul Latif bin Abdullah and Lim Fook Hin whilst Yap Boon Teck and Selina binti Yeop Junior @ Lope are
due for retirement and re-election pursuant to Article 86 of the Companys Articles of Association.
The Board has adopted a formal process to be carried out by the Nomination Committee for reviewing its own effectiveness
and that of its individual Directors and Board Committees and assessing the independence of its Independent Directors.
The process will also take into account the fulfillment of the respective terms of reference of the Board and Board
Committees.
Each member of the Nomination Committee receives the Board performance evaluation questionnaires and separate
Committee performance evaluation forms. The assessment of the Nomination Committees performance shall be
carried out by individual members of the Nomination Committee. All Board members are required to assess their own
performance by completing the Directors performance evaluation form. The Company Secretaries shall compile the
results for submission to the Nomination Committee for review and assessment. The Chairman of the Nomination
Committee shall then report the findings and/or recommendations to the Board. All assessments and evaluations carried
out by the Nomination Committee in the discharge of all its functions are properly documented and kept confidential.

continued
During the year, the Nomination Committee reviewed the required mix of skills and experience and other qualities,
including core competencies which Non-Executive Directors should bring to the Board and was of the view that all NonExecutive Directors have extensive experience in managing substantial business entities covering the core business of
the Group as well as knowledge and experience in finance and investment decision analysis with independent judgement.
The Nomination Committee also evaluated the effectiveness of the Board as a whole, the various Committees and
assessing the contribution of each individual Director. Good and effective communications were established among
Board members and Board Committee members on official and unofficial basis and major policies and corporate
proposals are vigorously debated and scrutinised before putting to a vote. All members of the Board and the Committees
have been diligent and exercised due reasonable care in discharging their duties and responsibilities. All Directors are
firmly committed to ensure that the corporate governance standards are adhered to. An assessment of independence
of the Independent Directors was conducted whereby the Nomination Committee reviewed and was satisfied that the
Independent Directors continued to exercise independent and objective judgement and acted in the interest of the
Company and its stakeholders.
In February 2016, the Nomination Committee reviewed and made recommendations to the Board for the retention of
Dato Haji Abdul Latif bin Abdullah as an Independent Non-Executive Director and re-election of those retiring Directors
at the forthcoming AGM for shareholders approval.
2.3 Remuneration Committee

The Board has established a Remuneration Committee on 27 November 2004 and currently comprises two (2)
Independent Non-Executive Directors and one (1) Non-Independent Non-Executive Director as follows:

Dato Haji Abdul Latif bin Abdullah (Chairman)

Dr. Tee Choon Hwa
The Remuneration Committees primary responsibility is to recommend to the Board the remuneration of the Executive
Directors and senior management staff at director level in all its forms, drawing from outside advice as necessary.
The Remuneration Committee assists the Board in developing a policy on remuneration of Directors to attract and
retain Directors and ensure that rewards and remuneration packages are commensurate with each of their expected
responsibilities and contribution to growth and profitability of the Company.
The remuneration of the Executive Directors is structured on the basis of linking rewards to corporate and individual
performance. The Executive Directors play no part in deciding their own remuneration and the Directors concerned shall
abstain from all discussion pertaining to their remuneration.
The level of remuneration for Non-Executive Directors reflects the experience and level of responsibilities. The Board
as a whole determines the remuneration package of Non-Executive Directors. The annual Directors fees payable to
certain Non-Executive Directors are subject to shareholders approval at the AGM based on the recommendation of the
Board. Additional allowances are paid to certain Non-Executive Directors in respect of their membership in each Board
Committee.
Annual Report 2015
023

continued
Details of the remuneration of the Directors of the Company for the financial year under review are as follows:1. Aggregate remuneration of the Directors categorised into appropriate components:Total per annum for the financial year ended
31 December 2015
Remuneration Packages
Executive Directors
RM
Non-Executive Directors
RM
Directors Fees
99,871
Salaries
60,000
Bonuses
10,000
Allowance
45,016
Other emoluments
9,100
Benefits-in-kind
119,242
TOTAL
198,342

2. The number of Directors whose total remuneration fall within the following bands:-
144,887
Number of Directors
Range of Remuneration (RM)
Executive
Non-Executive
Below 50,000
50,001 - 100,000
150,001 - 200,000

PRINCIPLE 3: REINFORCE INDEPENDENCE
3.1 Annual Assessment of Independent Directors
024
In line with the Code, the Board has incorporated additional responsibility into the Nomination Committees terms of
reference, namely to undertake annual assessment of independence of the Independent Directors.
All Independent Directors are required to assess their level of independence annually by completing the form of annual
assessment of independence of independent directors for submission to the Nomination Committee for review and
assessment. The Chairman of the Nomination Committee shall then report the findings and/or recommendations to the
Board.
For the financial year ended 31 December 2015, each of the three (3) Independent Non-Executive Directors had provided
an annual confirmation of his independence to the Board based on its policy on criteria of assessing independence in line
with the definition of independence directors prescribed by the Bursa Malaysia Securities Berhad (Bursa Securities)
Main Market Listing Requirements (MMLR). The Nomination Committee and the Board had assessed the three (3)
Independent Non-Executive Directors of the Company, namely Dato Haji Abdul Latif bin Abdullah, Dr. Tee Choon Hwa
and Yap Boon Teck and were satisfied with the level of independence demonstrated by all the Independent Directors
and their ability to act in the best interest of the Company.

continued
3.2 Tenure of Independent Director

Considering the recommendation of the Code on the tenure of an independent director should not exceed a cumulative
term of nine (9) years, the Board holds the view that the ability of an independent director to exercise independent
judgement is not affected by the length of his service as an independent director. The suitability and ability of independent
director to carry out his roles and responsibilities effectively are very much a function of his caliber, experience and
personal qualities. Restriction on tenure may cause loss of experience and expertise that are important contributors to
the efficient working of the Board.
The Board is fully satisfied that Dato Haji Abdul Latif bin Abdullah and Dr. Tee Choon Hwa, who have served as
Independent Non-Executive Directors for more than nine (9) years, are still independent and continue to bring valuable
business expertise, knowledge and professionalism to the Board for its efficient and effective functioning. They have
actively participated in Board deliberations and provided objectivity in decision making.
3.3 Shareholders Approval for Re-Appointment as Independent Non-Executive Director after a tenure of nine
(9) years

At the preceding AGM held on 2 June 2015, the shareholders had approved the retention of Dato Haji Abdul Latif bin
Abdullah and Dr. Tee Choon Hwa as Independent Non-Executive Directors.
As Dr. Tee Choon Hwa has expressed his intention to retire at the conclusion of the forthcoming AGM, the Company
will only table the proposal to retain Dato Haji Abdul Latif bin Abdullah as an Independent Non-Executive Director at the
forthcoming AGM for shareholders approval.
3.4 Separation of Positions of the Chairman and Group Managing Director

The positions of Chairman, who is a Non-Executive Director and Group Managing Director are individually held by two
(2) persons to ensure a balance of power and authority.
The role of Chairman include, amongst others, overseeing the orderly conduct and effectiveness of the Board by
ensuring a cohesive working relationship between members of the Board. He is also responsible to ensure that quality
information to facilitate decision-making is delivered to Board members on a timely basis and encourage all Directors to
play an active role in Board activities. He maintains a close professional relationship with the Group Managing Director
and acts as mentor as required.

The Group Managing Director manages the business and operations of the Group and implements the Boards policies
and decisions.
3.5 Board must comprise a majority of Independent Directors where the Chairman is not an Independent
Director
Even though the numbers of Independent Directors of the Company do not meet the Code recommendation, the Board
formed the view that it is still able to exercise objective judgment on business and corporate affairs, independent from
management because of active participation and engagement of the Independent Directors during the Board and Board
Committee meetings.
The Board wishes to emphasise that in 2015, the Board comprised 50% Independent Directors and the Chairman,
Datuk (Dr.) Kelvin Tan Aik Pen is a Non-Executive Director as well as one (1) Non-Executive Director, Lim Fook Hin who
does not have any family relationship with any other Director. In addition, any decisions arrived at the Board are made on
consensus. The Board remains focused on its priorities of delivering value for all stakeholders.
Annual Report 2015
025

continued
PRINCIPLE 4: FOSTER COMMITMENT

4.1 Time Commitment

In line with the Code, the Board has adopted a policy whereby all its Board members are required to notify the Chairman of
the Board before accepting any new directorship and to indicate the time expected to be spent on the new appointment.
A schedule of Board and Board Committee meetings set for a whole financial year is prepared in advance and tabled
to the Board for approval before the commencement of a new financial year to enable the Directors to plan ahead and
allocate time in their respective schedules.
The Board meets regularly at least four (4) times a year with due notice of issues to be discussed and records its
deliberations and conclusions in discharging its duties and responsibilities. Additional meetings will be convened as
and when required. In the intervals between Board meetings, for exceptional matters requiring urgent Board decision,
Board approvals are sought via circular resolutions, which are supported with sufficient information required to make an
informed decision.
During the financial year, the Board met four (4) times, whereat it deliberated and considered various matters including
the Groups financial results, major investment and strategic decisions, business plan and direction of the Group. Details
of attendance of each Board member are as follows:
Name
24/02/15
18/11/15
Total
4/4
3/4
Dato Tan Aik Sim
4/4
Dr. Tee Choon Hwa
4/4
Yap Boon Teck (2)
4/4
2/2
1/1
(1)
Lim Fook Hin

YB Datuk Nur Jazlan bin Mohamed
Ooi Sek Min
(1)
(4)
(3)
Appointed on 11 March 2016
Appointed on 15 December 2015
Resigned on 29 July 2015
Appointed on 14 August 2015 and resigned on 6 October 2015
(2)
(3)
(4)
25/08/15

026
20/05/15
4.2 Directors Training

All Directors receive full and appropriate briefing on first appointment, with subsequent updating as necessary. They
were also provided with a Directors manual containing amongst others, the background information on Ekowood Group,
Ekowood Corporate Governance Guidelines and other relevant policies for their reference.
All members of the Board had attended the Mandatory Accreditation Programme (MAP) training as required by the
MMLR. Selina binti Yeop Junior @ Lope, being a new Director appointed on 11 March 2016 has attended the MAP in
October 2015 when she was appointed as director of TSH Resources Berhad whereas Yap Boon Teck had completed
the MAP in 2003 when he was first appointed as director of a listed issuer. In view of long lapses of time since the last
directorship held by Yap Boon Teck in a listed issuer, he attended the MAP again in February 2016 in order to keep
abreast with the latest development in corporate governance standards and regulatory requirements.

continued
The Board, through the Nomination Committee had undertaken an assessment of the training needs of each Director for
the financial year under review and concluded that all Board members have vast experience and extensive knowledge
in managing the core business of the Group. Nonetheless, the Directors are encouraged to attend various training
programmes to ensure they keep abreast on various issues facing the changing business environment within which the
Group operates to effectively discharge their duties as Directors.
For the year under review, save and except Dato Haji Abdul Latif bin Abdullah, all the other Directors had attended
various seminars, conferences, briefings, meeting, forums and/or workshops (training) either collectively or individually,
details of which are set out below:
Title of training
Type of
training
No. of
days spent
Tax briefing on 2015 Malaysian Budget
Briefing
day
Tax briefing on 2016 Malaysian Budget
Briefing
day
Malaysia Entrepreneurship Forum
Seminar
1 day
Future of Forestry in Malaysia
Seminar
1 day
Building Effective Finance Function: From Reporting to Analytics to Strategic

Input
Seminar
day
Forestry Profession Act
Meeting
1 day
UOB Global Markets & Investment Managements Corporate Seminar 2015
Seminar
1 day
Financial Performance & Market Acceptance of ESOS
Seminar
day
Asia-Pacific Parliamentary Forum
Forum
6 days
IDEAS 5 Anniversary
Conference
(as panelist)
day
ACCA Corporate Governance Forum
Forum
1 day
MIA-IIAM Audit Committee Conference
Conference
1 day
5 CPA Westminster Workshop Effective, Independent & Transparent Public

Accounts Committees for Robust Public Financial Oversight
Workshop
4 days
MAP
Seminar
2 days
th
th
Dato Haji Abdul Latif bin Abdullah was unable to attend any training during the year under review due to timing conflict
of the appropriate seminars with his work/travelling schedules.
PRINCIPLE 5: UPHOLD INTEGRITY IN FINANCIAL REPORTING
The Companys financial statements are prepared in accordance with the provisions of the Companies Act, 1965 and
applicable financial reporting standards in Malaysia. The Board is responsible to ensure that the financial statements
give a true and fair view and balanced and understandable assessment of the state of affairs of the Company and of
the Group. The Statement of Directors Responsibilities in respect of the preparation of the annual audited financial
statements is set out in the ensuing pages of this Annual Report.
The Audit Committee assists the Board to review the adequacy and integrity of the Groups financial administration and
reporting, internal control and risk management systems.
Annual Report 2015
5.1 Compliance with Applicable Financial Reporting Standards
027

continued
The Audit Committee currently comprises three (3) members, all of whom are Independent Non-Executive Directors.
The terms of reference of the Audit Committee is made available on the Companys website at www.ekowood.com.my
and its report is set out in the ensuing pages of this Annual Report. The Audit Committee is authorised by the Board
to investigate any matter within its terms of reference and to have the resources in order to perform its duties and
responsibilities as set out in its terms of reference.
During the year under review, the Audit Committee reviewed the Companys quarterly results and annual financial
statements prior to recommending them for the Boards approval and release to public through Bursa LINK.
The CFO formally presented the Companys quarter-to-quarter and year-to-date financial performance against budget as
well as performance of each geographical segment. He also provided assurance to the Audit Committee that adequate
processes and controls were in place for an effective and efficient financial statement close process, that appropriate
accounting policies had been adopted and applied consistently and that the relevant financial statements gave a true
and fair view of the state of affairs of the Group.
In addition, the Head of Internal Audit also undertook independent assessment of the system of internal control and
assured the Audit Committee that no material issue or major deficiency had been noted which posed a high risk to the
overall system of internal control under review.
5.2 Assessment of Suitability and Independence of External Auditors

The Board through the Audit Committee maintains a formal and transparent relationship with the Companys external
auditors. The external auditors are invited to attend the Audit Committee meetings and AGMs and are available to
answer shareholders questions on the conduct of the statutory audit and the preparation and content of their audit
report.
The Audit Committee is responsible to review the performance of the external auditors on an annual basis based on the
following four (4) key areas after completion of the year-end audit:
i)
quality of service;
ii) sufficiency of resources;

iii) communication with management; and
iv) independence, objectivity and professionalism
028
The Audit Committee may request the Group Managing Director and/or CFO to join the assessment.
The Audit Committee is also responsible to review all the non-audit services provided by the external auditors and
the aggregate amount of fees paid to them based on the policy and procedures on provision of non-audit services
established by the Board. This policy is regularly reviewed and states that the Company will only use the appointed
external auditors for non-audit services in cases where these services do not conflict with the auditors independence.
The Audit Committee accepts that certain work of a non-audit nature is best undertaken by the external auditors and
appointments are made taking into consideration of their expertise and cost.
Two (2) written confirmations of independence have been provided by the external auditors to the Audit Committee
before the commencement of and after the completion of the year-end audit for 2015 that they are and have been
independent throughout the conduct of the audit engagement in accordance with the terms of all relevant professional
and regulatory requirements.
In respect of the financial year 2015, a new audit engagement partner was appointed by the Company and the Audit
Committee together with the Group Managing Director and CFO assessed the suitability and independence of the
external auditors as well as their performance based on the above four (4) key areas.

continued
The Audit Committee is satisfied that the provision of the non-audit services was not in conflict with the role of the
external auditors or their independence. Details of the amounts paid to the external auditors for non-audit services
performed during the year are set out in the Additional Compliance Information of this Annual Report.
PRINCIPLE 6: RECOGNISE AND MANAGE RISKS

6.1 Sound Framework to Manage Risks

The Board is responsible for maintaining a sound system of internal control to safeguard shareholders investment
and the Companys assets. The Company has effected several systems of internal control covering financial controls,
operational and compliance controls and risk management. Some of the systems have been in place over the years
and will continue to be reviewed, added on or updated in line with the changes in the operating environment. The
Board seeks regular assurance on the continuity and effectiveness of the internal control system through independent
appraisals by the internal and external auditors. Information on the Groups internal control and risk management are
presented in the Statement on Risk Management and Internal Control.
6.2 Internal Audit Function

The Company has established an internal audit function which reports directly to the Audit Committee. The internal audit
department communicates regularly with the members of the Audit Committee and the Head of Internal Audit is invited
to attend meetings of the Audit Committee. Internal audit activities, all of which are risk-based, are performed by a team
of appropriate, qualified and experienced employees. Further information on internal audit function is set out in the Audit
Committee Report.
PRINCIPLE 7: ENSURE TIMELY AND HIGH QUALITY DISCLOSURE

7.1 Corporate Disclosure Policy

The Companys Corporate Disclosure Policy is designed to ensure the timely release of material price-sensitive
information to the market. This policy establishes procedures to ensure that Directors and employees are aware of
the Companys disclosure obligations and procedures, and have accountability for the Companys compliance with
those obligations.
The Company has also put in place the precautions to be observed in order to keep the information completely
confidential. The Board is mindful that information which is expected to be material must be announced immediately.
Ekowood website provides all relevant information on the Company, including media releases, quarterly and annual
financial statements, announcements as well as annual reports and is accessible by the public. The Board has also
established a dedicated section for corporate governance on the Companys website where information on the Board
Charter, shareholders rights, code of ethics and conducts and whistle blowing may be accessed.
The announcement of the quarterly reports is made via Bursa LINK immediately on the same day after the Boards
approval.
In order to ensure effective dissemination of information, the Company has established a direct link to Bursa Securities
website so that all announcements made by the Company to Bursa Securities can be retrieved concurrently from both
websites.
Annual Report 2015
7.2 Leverage on Information Technology
029

continued
PRINCIPLE 8: STRENGTHEN RELATIONSHIP BETWEEN COMPANY AND SHAREHOLDERS

8.1 Encourage Shareholder Participation at General Meetings

Ekowood recognises the importance of establishing a direct line of communication with shareholders and investors
through timely dissemination of information on the Groups performance and major development via appropriate
channels of communication.
Dissemination of information includes distribution of Annual Report and relevant circulars, issuance of press releases,
quarterly financial performance of the Company and Ekowood Group to Bursa Securities, Securities Commission and
the public.
The Board has appointed Dr. Tee Choon Hwa as the Independent Non-Executive Director to whom concerns may be
conveyed. At all times, shareholders may contact the Company Secretary for information on the Company.
In addition, the Company maintains a website at www.ekowood.com.my for shareholders and the public to access
information on amongst others, the Companys background, business activities and products, annual reports,
shareholders rights, updates on its various news and events and financial performance.
The Chairman and the Board encourage shareholders to attend and participate in the AGM and any general meetings
of the shareholders. Notice of meeting and a copy of the Companys annual report are sent out to shareholders at least
twenty one (21) days before the AGM. The shareholders are given the opportunity to seek clarification on the Companys
accounts and other items for adoption at the meeting before putting a resolution to vote. Members of the Board as well
as the external auditors and representatives from the share registrars of the Company are present to answer questions
raised at the meeting. Resolutions tabled and passed at the meeting are released to Bursa Securities on the same day
to enable the public to know the outcome.
A press conference is usually held immediately after the AGM or general meeting where questions on the Groups
activities and performance from the press are answered by the Board. Board members are also available before and
after these meetings for informal discussions.
8.2 Encourage Poll Voting
030
The Board takes note of the Recommendation 8.2 of the Code on the adoption of electronic means for poll voting to
facilitate greater shareholder participation. However, the Board is of the view that with the current level of shareholders
attendance at AGM, voting by way of a show of hands continues to be efficient. Nonetheless, the Company has always
made the necessary preparation for poll voting for all resolutions tabled at the AGM and the Chairman will inform
shareholders of their right to demand a poll vote at the commencement of the AGM or general meeting.
ADDITIONAL COMPLIANCE INFORMATION

1. Utilisation of proceeds

There were no proceeds raised from any corporate proposals during the financial year under review.

continued
2. Share Buy-Back

During the financial year under review, the Company did not seek any shareholders approval to buy-back its own
shares.
3. Options, Warrants or Convertible Securities

The Company did not issue any options, warrants or convertible securities during the financial year.
4. American Depository Receipt (ADR) or Global Depository Receipt (GDR) Programme

The Company did not sponsor any ADR or GDR programme during the financial year.
5. Imposition of Sanctions and/or Penalties

There were no sanctions and/or penalties imposed on the Company, its subsidiaries, Directors and management by the
relevant regulatory bodies which have material impact on the operations or financial position of the Group during the
financial year ended 31 December 2015.
6. Non-Audit Fees

Non-audit fees amounting to RM289,767 (Group) and RM211,847 (Company) were incurred for services rendered by
external auditors for the financial year ended 31 December 2015.
7. Variation in Results

There were no material variations between the audited results for the financial year ended 31 December 2015 and the
unaudited results previously announced by the Company.
8. Profit Estimate, Forecast or Guarantee

Not applicable.
9. Material Contracts

There were no material contracts entered into by the Company and/or its subsidiaries involving Directors and major
shareholders interests which were still subsisting at the end of the financial year or if not then subsisting, entered into
since the end of the previous financial year.
10. Recurrent Related Party Transactions of a Revenue or Trading Nature

During the financial year under review, the Company had not entered into any recurrent related party transactions which
are of a revenue or trading nature which requires shareholders mandate.
Annual Report 2015
This statement has been reviewed and approved by the Board of Directors on 25 February 2016.
031
STATEMENT ON
CORPORATE RESPONSIBILITY
Ekowood International Berhad and its subsidiaries (the Group) recognize the importance of
fulfilling its Corporate Responsibility (CR) by being committed to the communities which we
operate in. Thus, the Group continues to focus and is committed to contribute in meaningful ways to
our communities through various CR programmes.
COMMUNITY
The Group steps forward and serves the community in which it operates and strives to make a positive contribution to the
community particularly in helping the underprivileged and the less fortunate.
The Board of Directors strongly believes that, in playing their role as a socially responsible corporate citizen, the Group
creates business sustainability and enhances value for its shareholders and other stakeholders in the Group.
HUMAN RESOURCE
The Group recognizes that diversity in workforce provide opportunities for creative solutions and allows the Group to become
more responsive in todays global and dynamic business environment. A healthy mix of employees regardless of gender,
ethnicity or age group promotes productivity that has enabled the Group to sustain a healthy growth in the industries that it
operates in. As part of its commitment, the Group has undertaken to provide fair and equitable employment terms and equal
opportunities for career advancement based on merit.
The Group has always valued its employees and provided them with a conducive working environment that is challenging
while also encouraging learning and career development to realise their potential through in-house and external professional
training programmes. It supports its employees with extensive employee benefits that cover their health and welfare needs.
Employees needs of work-life balance are also taken care of through its numerous activities that welcome the participation
of all levels of employees.
The Group maintains its management culture of Management by Objectives and Focus on Execution as advocated by
One Approach programme which acts as the driver within the Group to prepare all managers to confront challenges ahead
in their working environment and to manage efficiently and productively to achieve the Groups objectives.
OCCUPATIONAL SAFETY AND HEALTH
032
Ekowood is committed to maintaining high safety and health standards at the workplace. To achieve this objective, a safety
and health awareness campaign themed TOWARDS SAFE & HEALTHY WORK ENVIRONMENT and ZERO ACCIDENT
TARGET was in place to create better safety awareness and understanding at the workplace. A series of in-house training
programmes on safety and health have been conducted with the assistance of external experts and committee members.
This statement has been reviewed and approved by the Board of Directors on 25 February 2016.
STATEMENT ON
RISK MANAGEMENT AND INTERNAL CONTROL
The Board of Directors of Ekowood (Board) is pleased to provide the following Statement on Risk Management and
Internal Control (Statement) pursuant to Paragraph 15.26(b) of the Bursa Malaysia Securities Berhad Main Market Listing
Requirements.
Set out below is the Boards Statement on Risk Management and Internal Control which outlines the nature and state of
internal control of the Group during the year under review, and up to the date of this Annual Report.
Board Responsibility
The Board affirms its overall responsibility for the establishment of the Groups system of internal control as well as
periodically reviewing its adequacy and integrity to safeguard shareholders investments, customers interests and Group
assets. However, such a system can only reduce but not eliminate the possibility of poor judgment in decision making,
human error, occurrences of unforeseeable events and circumvention of controls by employees. Accordingly, such a system
can be expected to provide only reasonable but not absolute assurance against material misstatement, operational failures
and fraudulent activities. The concept of reasonable assurance also recognises that the cost of control procedures should
not exceed the expected benefits.
Risk Management
Risk management is regarded by the Board as an important aspect of the Groups operations with the objective of maintaining
a sound system of internal control to ensure that the Groups assets are well protected and shareholders value are enhanced.
The Board confirms that there is a process for identifying, evaluating and managing significant risks faced by the Group,
and the same has been in place for the financial year under review and up to the date of this Annual Report and financial
statements.
Consequently, the Group has also undertaken the following to enhance its risk management practices:

Formalisation of the Groups risk management policy and procedures and adopted a structured approach towards
identifying, measuring and managing significant risks faced by the Group.
Management of the Group operates a risk management process that identifies key risks of each operating unit, assessing
the likelihood and impact of material exposures and puts in place adequate controls to mitigate the risks identified.
Standard operating procedures that cover key aspects of the Groups various processes are formalised. These
procedures are subjected to review on periodic basis to cater for process changes and changing risks.
Internal Control
The key processes that the Directors have established with regards to the system of internal control are as follows:
Organisational structure with defined reporting line.
Clearly documented standard operating procedures covering key processes are adopted. These procedures established
define the level of authorities and lines of responsibilities from operating units up to the Group corporate level to ensure
accountabilities for risk management and control activities.
Corporate policy on zero tolerance pertaining to fraud and criminal breach of trust.
Annual Report 2015
The process is periodically reviewed by the Board through the Audit Committee and is guided by the publication Statement
on Risk Management and Internal Control: Guidelines for Directors of Listed Issuers issued by the Taskforce on Internal
Control.
033
STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL

continued
Comprehensive budgeting and forecasting system is established. Each operating unit submits a budget annually for
approval by the Board. The actual results are reported, analysed and monitored against the budget.
Comprehensive management and financial information are provided to the Board to facilitate decision making.
Regular Board and management meetings to assess performance of key management staff.
Regular Board and management meetings to assess the Groups performance and continually monitor the adequacy
and integrity of the internal control framework.
Group Internal Audit function is established to assist in providing assurance on the effectiveness of the internal control
system within the Group. Internal auditors conduct regular visits to review the effectiveness of the control procedures in
place and to ensure accurate and timely financial management reporting.
The Groups internal audit department reports directly to the Audit Committee. Upon conducting reviews on the system
of internal control and effectiveness of processes that are in place, internal audit reports are prepared and presented to
the Audit Committee on a quarterly basis or earlier, as appropriate.
The internal audit function adopts a risk-based approach and prepares its audit plan based on the risk profiles of the key
business units of the Group after taking into consideration input of senior management and the Audit Committee.
Internal audit department also conducts subsequent follow-up review to ensure management has dealt with audit
recommendations and taken appropriate actions satisfactorily.
Review of the Statement by External Auditors

The external auditors have performed limited assurance procedure on the Statement pursuant to the scope set out in
Recommended Practice Guide (RPG) 5 (Revised), Guidance for Auditors on Engagements to report on the Statement
included in the Annual Report issued by the Malaysia Institute of Accountants (MIA) for inclusion in the Annual Report of
the Group for the year ended 31 December 2015, and reported to the Board that nothing has come to their attention that
causes them to believe the Statement intended to be included in the Annual Report is not prepared, in all material aspects,
in accordance with the disclosures required by paragraphs 41 and 42 of the Guidelines, nor is the Statement factually
inaccurate.
RPG 5 does not require the external auditors to consider whether the Directors Statement on Risk Management and
Internal Control covers all risks and controls, or to form an opinion on the adequacy and effectiveness of the Groups risk
management and internal control system including the assessment and opinion by the Directors and management thereon.
The report from the external auditors was made solely for, and directed solely to the Board of Directors in connection with
their compliance with the Listing Requirements of Bursa Malaysia Securities Berhad and for no other purposes or parties.
The external auditors do not assume responsibility to any person other than the Board of Directors in respect of any aspect
of this report.
The Board has reviewed the adequacy and effectiveness of the risk management and internal control system through the
above activities and is not aware of any significant weaknesses or deficiencies in the Groups risk management and internal
control practices for the year under review and to the date of this report. The Board has also obtained assurance from the
Group Managing Director and the Chief Financial Officer that the risk management and internal control system is in place
and operating effectively.
034
This statement has been reviewed and approved by the Board of Directors on 11 April 2016.
Conclusion
AUDIT COMMITTEE
REPORT
The Board is pleased to present the following report on the Audit Committee and its activities for the financial year
ended 31 December 2015.
Audit Committee Composition and Meetings
As at the date of this report, the Audit Committee comprises three (3) members, all of whom are Independent NonExecutive Directors and one of them, Yap Boon Teck is a member of the Malaysian Institute of Accountants who
satisfies the requirement of Paragraph 15.09(1)(c)(i) of the Bursa Malaysia Securities Berhad Main Market Listing
Requirements (MMLR).
The Audit Committee met five (5) times during the year to discharge its duties and responsibilities. Attendance of
members of the Audit Committee during 2015 is shown in the table below.
Name
24/02/15
17/04/15
20/05/15
25/08/15
18/11/15
Total

(Chairman)
4/5
Dr. Tee Choon Hwa
5/5
3/3
1/1
Yap Boon Teck
(1)

Ooi Sek Min
(2)
(3)
Appointed on 15 December 2015

Resigned on 29 July 2015
(1)
(2)
(3)
Appointed on 14 August 2015 and resigned on 6 October 2015
At the invitation of the Audit Committee, the Chief Financial Officer (CFO) and Head of Internal Audit attended all
the Audit Committee meetings and presented their reports on financial results, audit findings and managements
responses thereto and other matters for consideration and approval. The Audit Committee Chairman will report to the
Board matters of significant concern as and when raised by the internal and external auditors and present the Audit
Committees recommendations to the Board for approval.
Terms of Reference
The Audit Committee is responsible amongst others, to review and monitor the system of internal control and audit
process and to ensure that the Companys financial statements comply with applicable financial reporting standards as
this is integral to the reliability of financial statements. The terms of reference of the Audit Committee will be periodically
reviewed and updated and is made available on the Companys website at www.ekowood.com.my.
During the year, all members of the Audit Committee attended the following briefing, forum, summit, conference and
seminar either individually or collectively:

Malaysia Entrepreneurship Forum

Future of Forestry in Malaysia
Building Effective Finance Function: From Reporting to Analytics to Strategic Input
Forestry Profession Act
Mandatory Accreditation Programme
Annual Report 2015
Training
035
AUDIT COMMITTEE REPORT

continued
Financial Performance & Market Acceptance of ESOS

Asia-Pacific Parliamentary Forum
IDEAS 5th Anniversary
ACCA Corporate Governance Forum
MIA-IIAM Audit Committee Conference
5th CPA Westminster Workshop - Effective, Independent & Transparent Public Accounts Committees for Robust Public
Financial Oversight
Summary of Activities
During the financial year, the Audit Committee discharged its functions and carried out its duties as set out in its terms
of reference. Summary of key activities undertaken by the Audit Committee during the financial year encompassed
the following:
1. Financial Reporting and Compliance

The Audit Committee reviewed the unaudited quarterly financial statements and annual audited consolidated financial
statements to ensure compliance with the Malaysian Financial Reporting Standards, International Financial Reporting
Standards, the requirements of the Companies Act, 1965 and Paragraph 9.22, including Appendix 9B of the MMLR,
focusing particularly on changes in or implementation of major accounting policy changes, significant and unusual
events and significant adjustments resulting from the audit.
The Audit Committees recommendations were presented at the respective Board meetings held subsequently for
approval.
The Audit Committee was satisfied with the assurance given by the CFO that adequate processes and controls were
in place for an effective and efficient financial statement close process, that appropriate accounting policies had been
adopted and applied consistently and that the relevant financial statements gave a true and fair view of the state of affairs
of the Group.
2. External Audit
036
The external auditors were present at two (2) Audit Committee meetings held during the financial year where matters
relating to the audit of the statutory accounts were discussed.
The Audit Committee also met with the external auditors on three (3) occasions in 2015 without the presence of the
Executive Directors, management or internal auditors to discuss the audit findings and any other observations they may
have during the audit process.
During the year, the Audit Committee reviewed with the external auditors, their evaluation of the Statement on Risk
Management and Internal Control and audit report as well as managements response thereto. In addition, the Audit
Committee reviewed the external auditors 2015 Annual Planning Memorandum outlining their scope of work, approach
and proposed fees for the statutory audit and review of the Statement on Risk Management and Internal Control.
The Audit Committee also reviewed the non-audit services provided by the external auditors and the aggregate amount
of fees paid to them taking into consideration of the process and requirements including fee threshold established under
the policy and was satisfied that they were not likely to create any conflicts of interest nor impair the independence and
objectivity of the external auditors.
The external auditors had provided two (2) written confirmations of their independence to the Audit Committee that they
are and have been independent throughout the conduct of the audit engagement in accordance with the terms of all
relevant professional and regulatory requirements.
AUDIT COMMITTEE REPORT

continued
3. Internal Audit

The internal audit team conducted the audit activities as set out in the 2015 Audit Plan. During the year, the Internal
Audit attended the Audit Committee meetings and presented on inter-alia, summaries of the audit reports issued, audit
recommendations provided by the internal auditors and managements response thereto and corrective actions taken
by management on audit issues raised by the internal auditors.
The Audit Committee reviewed the annual audit plan for financial year 2016 to ensure adequate coverage of the activities
of the Group and approved the key position appointment in audit.
The Audit Committee also reviewed the performance appraisal of the internal audit members and was generally satisfied
with the performance of the internal audit function.
4. Other Matters

The Statement on Risk Management and Internal Control and the Audit Committee Report for inclusion in this Annual
Report were reviewed by the Audit Committee prior to Board approval.
The Audit Committee reviewed and evaluated the questionnaires completed by the CFO on information relating to risk
and control environment of the Group and was satisfied that controls in place are adequate and functioning properly to
address the risks. The Audit Committee was also satisfied with the assurance provided by the Head of Internal Audit that
no material issue or major deficiency had been noted which posed a high risk to the overall system of internal control
under review.
Internal Audit Function

The Company established an Internal Audit Department which reports directly to the Audit Committee on a quarterly basis.
The Internal Audit Department assists the Audit Committee in the discharge of its duties and responsibilities. Its key role is
to provide independent and objective assurance designed to add value and assist the Group in accomplishing its objectives
by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control and
governance processes.
The internal audit activities, all of which are risk-based were established after taken into consideration of the key business
units of the Group and input from senior management and the Audit Committee members.
Every quarter, the Internal Audit Department submits a report on their audit findings and recommendations to the Audit
Committee for its review and deliberation. The Head of Internal Audit attends these meetings to present the internal audit
findings and makes appropriate recommendations on areas of concern within the Company and the Group.
For the year under review, the activities undertaken by internal audit are as follows:
1. Developed an annual audit plan using a risk-based approach, taking into consideration of the key business units of the
Group and input from senior management and the Audit Committee members.
3. Provided independent and objective reviews of the adequacy and relevance of internal controls enforced to mitigate the
risk exposures.
4. Ascertained the level of compliance with established policies and procedures of the Company.
5. Recommended improvements and enhancements to the existing system of internal controls and work procedures/
processes.
6. Preparation of Statement on Risk Management and Internal Control for the Companys 2015 Annual Report.
The total cost incurred in managing the Internal Audit Department in 2015 was RM89,265.
Annual Report 2015
2. Provided independent assessment and objective assurance over the adequacy and effectiveness of risk management
and internal control processes via structured reviews of units and operations identified in the annual audit plan.
037
STATEMENT OF DIRECTORS RESPONSIBILITIES
IN RESPECT OF THE AUDITED FINANCIAL STATEMENTS

The Board of Directors is required under Paragraph 15.26(a) of the Bursa Malaysia Securities Berhad Main Market Listing
Requirements (MMLR) to issue a statement on its responsibility in the preparation of the annual audited financial statements.
The Directors are required by the Companies Act, 1965 (the Act) to prepare financial statements for the financial year which
give a true and fair view of the financial positions of the Group and of the Company as at 31 December 2015 and of their
financial performance and the cash flows for the year then ended.
In preparing the financial statements, the Directors have:

applied the appropriate and relevant accounting policies on a consistent basis;
made judgements and estimates that are reasonable and prudent; and
prepared the annual financial statement in accordance with applicable Financial Reporting Standards in Malaysia, the
provision of the Act and the MMLR.
The Directors are responsible for ensuring that the Company and its subsidiaries keep accounting records which disclose
with reasonable accuracy at any time the financial position of each company and which enable them to ensure that the
financial statements comply with the provisions of the Act.
The Directors are also responsible for taking reasonable steps to safeguard the assets of the Group and the Company to
prevent and detect fraud and other irregularities.
038
Directors
Report and Audited
Financial
Statements
Financial Year Ended 31 December 2015
DIRECTORS
REPORT
Directors report
The directors hereby present their report together with the audited financial statements of the Group and of the Company for
the financial year ended 31 December 2015.
Principal activities
The principal activities of the Company are the manufacturing and sale of downstream wood products. The principal activities
of the subsidiaries are stated in Note 15 to the financial statements.
There have been no significant changes in the nature of these principal activities during the financial year.
Results
The results of the operations of the Group and of the Company for the financial year are as follows:

Group Company
RM RM
Loss net of tax
(3,300,575)
(833,722)
Loss attributable to:

Owners of the parent
Non-controlling interest
(3,251,872)
(48,703)
(833,722)
-
(3,300,575)
(833,722)
There were no material transfers to or from reserves or provisions during the financial year.
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 other than as disclosed in the
financial statements.

Dividends

No dividend was paid or declared by the Company since the end of the previous financial year.
The directors do not recommend any payment of final dividend in respect of the current financial year.
040
Directors
The directors of the Company in office since the date of the last report and at the date of this report are:
Dato Tan Aik Sim
Dr. Tee Choon Hwa
Yap Boon Teck
Lim Fook Hin
Tan Ek Huat (Alternate to Dato Tan Aik Sim)
(Appointed on 11 March 2016)

(Appointed on 15 December 2015)
(Resigned on 29 July 2015)
Directors
Report
continued
Tan Aik Hwa (Alternate to Datuk (Dr.) Kelvin Tan Aik Pen)
(Resigned on 17 September 2015)
Tan Aik Yong (Alternate to Lim Fook Hin)
(Resigned on 17 September 2015)
Ooi Sek Min
(Appointed on 14 August 2015 and resigned on 6 October 2015)
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 the 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 the
benefits included in the aggregate amount of emoluments received or due and receivable by the directors or the fixed salary
of a full-time employee of the Company as shown in Note 10 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 he is a member, or with a company in which he
has substantial financial interest, except as disclosed in Note 27 to the financial statements.
Directors interest

According to the register of directors shareholdings, the interests of directors in office at the end of the financial year in
shares in the Company and its holding company during the financial year were as follows:

Number of ordinary shares of RM0.50 each

Bonus

Acquired
Issue
Sold 31.12.2015
1.1.2015
Holding company
- TSH Resources Berhad

Direct interest:
163,394,239
4,000,000
-
- 167,394,239
Dato Tan Aik Sim
53,105,976
-
-
-
53,105,976
Lim Fook Hin
1,602,000
-
-
-
1,602,000
Tan Ek Huat
39,368,376
-
-
- 39,368,376
Tan Aik Hwa
38,473,848
-
-
- 38,473,848
Tan Aik Yong
53,654,712
-
-
-
53,654,712

Indirect interest:
Lim Fook Hin
#
4,500,000
-
-
-
4,500,000

# Interest in shares held by spouse

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 during the financial year.
Annual Report 2015
The Company

Direct interest:
6,274,939
-
-
-
6,274,939
Dato Tan Aik Sim
838,506
-
-
-
838,506
Dr. Tee Choon Hwa
50,000
-
-
-
50,000
Tan Ek Huat
318,445
-
-
-
318,445
Tan Aik Hwa
40,000
-
-
-
40,000
Tan Aik Yong
840,506
-
-
-
840,506
041
Directors
Report
continued
Holding company
The directors regard TSH Resources Berhad, a company incorporated and domiciled in Malaysia and listed on the Main
Market of Bursa Malaysia Securities Berhad as the holding company.
Other statutory information
(a) Before the statements of financial position and statements of comprehensive income 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 adequate
provision had been made for doubtful debts; and

(ii) 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.

(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 or the amount of the provision for doubtful debts in the financial statements of
the Group and of the Company inadequate to any substantial extent; and

(ii) the values attributed to the current assets in the financial statements of the Group and of the Company
misleading.

(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.

(d) 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.

(e) As at the date of this report, there does not exist:

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

(ii) any contingent liability of the Group or of the Company which has arisen since the end of the financial year.
042
Directors
Report
continued
(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

(ii) 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.

Signed on behalf of the Board in accordance with a resolution of the directors dated 18 April 2016.
Annual Report 2015

Dato Tan Aik Sim Lim Fook Hin
043
Statement by
directors Pursuant to Section 169(15) of the Companies Act, 1965
We, Dato Tan Aik Sim and Lim Fook Hin, being two of the directors of Ekowood International Berhad, do hereby state
that, in the opinion of the directors, the accompanying financial statements set out on pages 47 to 104 give a true and fair
view of the financial position of the Group and of the Company as at 31 December 2015 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.
The information set out in Note 33 to the financial statements have been prepared in accordance with the Guidance on
Special Matter No.1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to
Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants.
Signed on behalf of the Board in accordance with a resolution of the directors dated 18 April 2016.

Dato Tan Aik Sim Lim Fook Hin
Statutory
declaration Pursuant to Section 169(16) of the Companies Act, 1965
I, Chew Siew Yeng, being the officer primarily responsible for the financial management of Ekowood International
Berhad, do solemnly and sincerely declare that the accompanying financial statements set out on pages 47 to 105 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.
044
Subscribed and solemnly declared

by the abovenamed Chew Siew Yeng
at Kuala Lumpur in the Federal
Territory on 18 April 2016.
Chew Siew Yeng

Before me,
Independent auditors report

to the members of Ekowood International Berhad (Incorporated in Malaysia)
Report on the financial statements

We have audited the financial statements of Ekowood International Berhad, which comprise the statements of financial
position as at 31 December 2015 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 notes, as set out on pages 47 to 104.
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 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 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 the accounting policies used and the
reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial
statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the financial statements give a true and fair view of the financial position of the Group and of the Company as at
31 December 2015 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
(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 Note15 to the financial statements, being financial statements that have been
included in the consolidated financial statements.
Annual Report 2015
In accordance with the requirements of the Companies Act, 1965 in Malaysia, we also report the following:
045
Independent auditors report to the members of

Ekowood International Berhad (Incorporated in Malaysia)
continued
(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 material to the
consolidated financial statements 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 33 to the financial statements on page 105 is disclosed to meet the
requirement of Bursa Malaysia Securities Berhad and is not part of the financial statements. The directors are responsible
for the preparation of the supplementary information in accordance with Guidance on Special Matter No. 1, Determination of
Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing
Requirements, as issued by the Malaysian Institute of Accountants (MIA Guidance) and the directive of Bursa Malaysia
Securities Berhad. In our opinion, the supplementary information is prepared, in all material respects, in accordance with the
MIA Guidance and the directive of Bursa Malaysia Securities Berhad.
Other matters
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.
Ernst & Young Low Khung Leong

No. 2697/01/17(J)
AF: 0039
Chartered Accountants
Chartered Accountant

Kuala Lumpur, Malaysia
18 April 2016

046
Statements of
comprehensive income
For the year ended 31 December 2015

Group Company
Note
2015 2014 2015 2014
RM RM RM RM
Revenue
Cost of sales
4
5
42,920,348 43,027,647 35,425,257 34,539,521

(36,693,092)
(37,641,271) (28,884,881) (31,714,492)
Gross profit
Other income
6
Other items of expense:
Administrative expenses
Selling and marketing expenses
Other expenses
6,227,256
2,237,321
5,386,376
1,218,800
6,540,376
3,282,470
2,825,029
1,339,317
(7,075,442)
(1,932,782)
(1,538,927)
(5,358,653)
(1,804,869)
(5,568,226)
(3,931,372)
(927,057)
(4,960,790)
(3,164,797)
(764,409)
(13,709,766)
(Loss)/profit from operation

Finance costs
7
(2,082,574)
(954,520)
(6,126,572)
(867,266)
3,627
(837,349)
(13,474,626)
(740,016)
Loss before tax

Income tax (expense) / benefit
(3,037,094)
(263,481)
(6,993,838)
194,994
(833,722)
-
(14,214,642)
4,794
Loss net of tax
(3,300,575)
(6,798,844)
(833,722)
(14,209,848)
Other comprehensive income

Foreign currency translation
1,137,425
(510,338)
8
11
Total comprehensive loss for the year
(2,163,150) (7,309,182)
(833,722) (14,209,848)
Loss attributable to:

(3,251,872)
(48,703)
(6,424,259)
(374,585)
(833,722)
-
(3,300,575)
(6,798,844)
(833,722) (14,209,848)
Total comprehensive loss

attributable to:
(1,470,108)
(693,042)
(7,292,364)
(16,818)
(833,722)
-
(2,163,150)
(7,309,182)
(833,722) (14,209,848)
12
(1.94)
(14,209,848)
-
(3.82)
Annual Report 2015
Basic loss per share attributable to

owners of the parent (sen per share)
(14,209,848)
-
The accompanying accounting policies and explanatory notes form an integral part of the financial statements.
047
Statements of
financial position
as at 31 December 2015

Group Company
Note
2015
2014
2015
2014
RM RM RM RM
Assets
Non-current assets
Property, plant and equipment
Intangible assets
Investment in subsidiaries
Deferred tax assets
048
13
14
15
17
37,632,948
401,783
-
480,204
41,125,030
401,783
-
740,631
37,289,943
-
28,083,584
-
40,627,632
24,886,658
-
38,514,935
42,267,444
65,373,527
65,514,290
Current assets
Inventories
18
16
Trade and other receivables
Prepaid operating expenses
Tax recoverable
Cash and bank balances
20
61,062,067
18,792,418
408,009
327,135
2,791,727
60,347,499
16,691,258
279,205
342,802
2,308,503
51,464,648
17,561,614
219,191
317,000
1,161,370
48,647,623
23,823,854
72,702
329,367
112,156
83,381,356
79,969,267
70,723,823
72,985,702
Total assets
121,896,291
122,236,711
Equity and liabilities

Share capital
24
Share premium
Retained earnings
25
Foreign currency reserves
26
84,000,000
3,854,541
7,156,140
2,861,134
84,000,000
3,854,541
10,408,012
1,079,370
84,000,000
3,854,541
20,220,978
-
Equity attributable to owners of

the parent
97,871,815
(2,866,275)
99,341,923
(2,173,233)
108,075,519 108,909,241
-
-
Total equity
95,005,540
97,168,690
108,075,519 108,909,241
Current liabilities
Bank borrowings
Derivatives
Trade and other payables
18,301,370
-
8,589,381
19,303,286
8,332
5,756,403
21
22
23

Total equity and liabilities
26,890,751
121,896,291
Net current assets
56,490,605
54,901,246
Net assets
95,005,540
97,168,690
136,097,350 138,499,992
84,000,000
3,854,541
21,054,700
-
15,536,370
-
12,485,461
19,303,286
8,332
10,279,133
25,068,021
28,021,831
29,590,751
122,236,711 136,097,350 138,499,992
42,701,992
43,394,951
108,075,519 108,909,241
Attributable to owners of the parent

Non-distributable
Distributable
95,005,540
At 31 December 2015
97,871,815 84,000,000
99,341,923 84,000,000
(1,470,108)
-
3,854,541
3,854,541
-
2,861,134
1,079,370
1,781,764
97,168,690
99,341,923 84,000,000
104,477,872 106,634,287 84,000,000

(7,309,182)
(7,292,364)
-
3,854,541
3,854,541
-
Annual Report 2015
At 31 December 2014
At 1 January 2014
1,079,370
10,408,012
1,947,475 16,832,271
(868,105) (6,424,259)
7,156,140
10,408,012
(3,251,872)
2014
Group
97,168,690
(2,163,150)
At 1 January 2015
2015
Group
(2,173,233)
(2,156,415)
(16,818)
(2,866,275)
(2,173,233)
(693,042)

Equity
attributable
Foreign

to owners
currency
Non
Equity,
of the
Share
Share translation
Retained controlling

total parent, total
capital
premium
reserve
earnings
interest

RM
RM
RM
RM
RM
RM
RM
Statements of
changes in equity
049
Statements of changes in equity

continued
Non-distributable
Distributable
Share
premium
RM
Retained
earnings
RM
Company

At 1 January 2015
108,909,241
(833,722)
84,000,000
-
3,854,541
-
21,054,700
(833,722)
At 31 December 2015
108,075,519
84,000,000
3,854,541
20,220,978
At 1 January 2014
123,119,089
(14,209,848)
84,000,000
-
3,854,541
-
35,264,548
(14,209,848)
At 31 December 2014
108,909,241
84,000,000
3,854,541
21,054,700

Share

Note
Equity, total
capital
RM
RM

050
Statements of
cash flows
2015
RM
Group Company
2014
2015
2014
RM
RM
RM
Operating activities
Loss before tax
(3,037,094)
(6,993,838)
(833,722)
(14,214,642)
3,358,721
3,294,877
3,121,292
3,194,122
171
954,520
(65)
742,535
66,577
(8,332)
210,644
(246,300)
867,266
(3,294)
813,791
2,159,266
(60,180)
26,073
-
837,349
-
7,632
13,695
(8,332)
208,832
(246,300)
740,016
342,157
2,110,813
(60,180)
24,589
(731,492)
(361,516)
(2,397)
59,786
-
(303,426)
2,392,078
-
(22,054)
483,388
4,103,074
(190,866)
1,128,756
10,018,116
(630,396)
4,349,639
8,860,007
8,573,667
16,621,693
Adjustments for:
Depreciation of property, plant and equipment
(Note 13)
Loss/(gain) on disposal of property, plant and
equipment
Finance costs (Note 7)
Interest income (Note 6)
Bad debts written off (Note 8)
Inventories written off (Note 8)
Net fair value gain on derivatives (Note 6)
Property, plant and equipment written off

Reversal of allowance for impairment of trade
receivables (Note 16(a))
Impairment loss on financial assets:
- Trade receivables (Note 16(a))
- Investment in a subsidiary
Unrealised gain on foreign exchange (Note 6)

Total adjustments
Operating cash flows before working
capital changes
Changes in working capital:
Inventories
Trade and other receivables
Prepaid operating expenses
Trade and other payables
1,312,545
1,866,169
7,739,945
2,407,051
(781,145)
(1,884,530)
(128,804)
2,958,379
(1,133,710)
(896,165)
(71,336)
(564,345)
(2,830,720)
(1,613,635)
(146,489)
2,593,880
(2,407,517)
(1,165,537)
(38,392)
86,042
Total changes in working capital
163,900
(2,665,556)
(1,996,964)
(3,525,404)
Cash flows from/(used in) operations
1,476,445
(799,387)
5,742,981
(1,118,353)
Interest received (Note 6)

Interest paid (Note 7)
Income tax paid
Income tax refunded
65
(954,520)
-
12,614
3,294
(867,266)
(11,570)
-
-
(837,349)
-
12,367
(740,016)
(14,000)
-
Net cash flows from/(used in) operating activities
534,604
(1,674,929)
4,917,999
(1,872,369)
Withdrawal of pledged deposits

Purchase of property, plant and equipment (Note 13)
Proceeds from disposal of property, plant and equipment
65,949
(195,308)
100
3,859
(309,438)
722,200
-
(117,835)
-
(88,807)
722,200
Net cash flows (used in)/from investing activities
(129,259)
416,621
(117,835)
633,393
Annual Report 2015
Investing activities
051
Statements of cash flows

continued
2015
RM
Group Company
2014
2015
2014
RM
RM
RM
Financing activities

Net (repayment)/drawdown of bankers acceptances
(862,000)
6,989,000
(3,627,000)
6,989,000
(136,849)
(5,031,520)
(136,849)
(5,065,966)
Net repayment of foreign currency trade credit

200,000
(300,000)
200,000
(300,000)
Net drawdown/(repayment) of revolving credit

Net cash flows (used in)/from financing activities
Net (decrease)/increase in cash and
cash equivalents
Effect of exchange rate changes
Effect of exchange rate changes on cash and
cash equivalents
Cash and cash equivalents at 1 January
1,657,480
(3,563,849)
1,623,034
(393,504)
1,233,394
399,172
(541,892)
1,236,315
-
384,058
-
(103,616)
705,076
34,577
813,219
-
(1,425,322)
(1,809,380)
1,441,350
705,076
(189,007)
(1,425,322)
Cash and cash equivalents at 31 December

(Note 20)
(798,849)
052
Notes
to the financial statements
31 December 2015
1. Corporate information

Ekowood International Berhad (the Company) is a public limited liability company, incorporated and domiciled in
Malaysia, and is listed on the Main Market of Bursa Malaysia Securities Berhad. The registered office of the Company
is situated at Level 10, Menara TSH, No. 8, Jalan Semantan, Damansara Heights, 50490 Kuala Lumpur. The principal
place of business of the Company is situated at Lot 1-12, Jalan Industri 2/1, Kawasan Perindustrian Gopeng, KM 15 Jalan
Gopeng, 31600 Gopeng, Perak Darul Ridzuan.
The holding company of the Company is TSH Resources Berhad, a public limited liability company incorporated and
domiciled in Malaysia and listed on the Main Market of Bursa Malaysia Securities Berhad.
The principal activities of the Company are the manufacture and sale of downstream wood products. The principal
activities of the subsidiaries are stated in Note 15 to the financial statements. There have been no significant changes in
the nature of these activities during the financial year.
The financial statements for the year ended 31 December 2015 were authorised for issue in accordance with a resolution
of the directors on 18 April 2016.
2. Summary of significant accounting policies

2.1 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 and the requirements of the
Companies Act 1965 in Malaysia.
The financial statements have been prepared on the historical cost basis except as disclosed in the accounting
policies below.
The financial statements are presented in Ringgit Malaysia (RM).
2.2 Changes in accounting policies

The accounting policies adopted are consistent with those of the previous financial year except as follows:
On 1 January 2015, the Group and the Company adopted the following applicable new and amended MFRSs and
IC interpretation mandatory for annual financial periods beginning on or after 1 January 2015:
Effective for
annual periods
beginning
on or after
Amendments to MFRS 119: Defined Benefit Plans: Employee Contributions

Annual Improvements to MFRSs 2010 2012 Cycle
1 July 2014
1 July 2014
1 July 2014
Although these new standards and amendments are applied for the first time in 2015, they did not have a material
impact on the financial statements.
Annual Report 2015

Description
053
Notes to the financial statements

31 December 2015
continued
2. Summary of significant accounting policies (CONTD)

2.3 Standards issued but not yet effective

The standards and interpretations that are issued but not yet effective up to the date of issuance of the Groups
and the Companys financial statements are disclosed below. The Group and the Company intend to adopt these
standards, if applicable, when they become effective.

Description


Amendments to MFRS 116 and MFRS 138: Clarification of Acceptable Methods of
Depreciation and Amortisation

Amendments to MFRS 116 and MFRS 141: Agriculture: Bearer Plants

Amendments to MFRS 10 and MFRS 128: Sale or Contribution of Assets between an
Investor and its Associate or Joint Venture

Amendments to MFRS 11: Accounting for Acquisitions of Interests in Joint Operations

Amendments to MFRS 127: Equity Method in Separate Financial Statements

Amendments to MFRS 101: Disclosure Initiatives

Amendments to MFRS 10, MFRS 12 and MFRS 128: Investment Entities: Applying the
Consolidation Exception

MFRS 14 Regulatory Deferral Accounts

MFRS 15 Revenue from Contracts with Customers

MFRS 9 Financial Instruments
054
Effective for
annual periods
beginning
on or after
1 January 2016
1 January 2016
1 January 2016
Deferred
1 January 2016
1 January 2016
1 January 2016
1 January 2016
1 January 2016
1 January 2018
1 January 2018
Other than discussed below, these new standards and amendments are not expected to have any material impact
on the Group or the Company:
MFRS 15 Revenue from Contracts with Customers
MFRS 15 establishes a new five-step models that will apply to revenue arising from contracts with customers.
MFRS 15 will supersede the current revenue recognition guidance including MFRS 118 Revenue, MFRS 111
Construction Contracts and the related interpretations when it becomes effective.
The core principle of MFRS 15 is that an entity should recognise revenue which depicts the transfer of promised
goods or services to customers in an amount that reflects the consideration to which the entity expects to be
entitled in exchange for those goods or services.
Under MFRS 15, an entity recognises revenue when (or as) a performance obligation is satisfied, such as when
control of the goods or services underlying the particular performance obligation is transferred to the customer.
Either a full or modified retrospective application is required for annual periods beginning on or after 1 January
2018 with early adoption permitted. The Directors anticipate that the application of MFRS 15 will have a material
impact on the amounts reported and disclosures made in the Groups and the Companys financial statements.
The Group is currently assessing the impact of MFRS 15 and plans to adopt the new standard on the required
effective date.

31 December 2015
continued

2.3 Standards issued but not yet effective (Contd)

MFRS 9 Financial Instruments
In November 2014, MASB issued the final version of MFRS 9 Financial Instruments which reflects all phases of the
financial instruments project and replaces MFRS 139 Financial Instruments: Recognition and Measurement and
all previous versions of MFRS 9. The standard introduces new requirements for classification and measurement,
impairment and hedge accounting. MFRS 9 is effective for annual periods beginning on or after 1 January 2018, with
early application permitted. Retrospective application is required, but comparative information is not compulsory.
The adoption of MFRS 9 will have an effect on the classification and measurement of the Groups financial assets,
but no impact on the classification and measurement of the Groups financial liabilities.
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
for like transactions and events in similar circumstances.
The Company controls an investee if and only if the Company has all the following:

(i) Power over the investee (such as existing rights that give it the current ability to direct the relevant activities of
the investee);
(ii) Exposure, or rights, to variable returns from its involvement with the investee; and
(iii) The ability to use its power over the investee to affect its returns.

When the Company has less than a majority of the voting rights of an investee, the Company considers the
following in assessing whether or not the Companys voting rights in an investee are sufficient to give it power over
the investee:

(i) The size of the Companys holding of voting rights relative to the size and dispersion of holdings of the other
vote holders;
(ii) Potential voting rights held by the Company, other vote holders or other parties;
(iii) Rights arising from other contractual arrangements; and
Losses within a subsidiary are attributed to the non-controlling interests even if that results in a deficit balance.
Annual Report 2015
(iv) Any additional facts and circumstances that indicate that the Company has, or does not have, the current
ability to direct the relevant activities at the time that decisions need to be made, including voting patterns of
previous shareholders meetings.

Subsidiaries are consolidated when the Company obtains control over the subsidiary and ceases when the
Company loses control of the subsidiary. All intra-group balances, income and expenses and unrealised gains and
losses resulting from intra-group transactions are eliminated in full.
055

31 December 2015
continued

2.4 Basis of consolidation (Contd)

Changes in the Groups ownership interests in subsidiaries that do not result in the Group losing control over the
subsidiaries are accounted for as equity transactions. The carrying amounts of the Groups interests and the noncontrolling interests are adjusted to reflect the changes in their relative interests in the subsidiaries. The resulting
difference is recognised directly in equity and attributed to owners of the Company.
Business combinations
056
When the Group loses control of a subsidiary, a gain or loss calculated as the difference between (i) the aggregate
of the fair value of the consideration received and the fair value of any retained interest and (ii) the previous carrying
amount of the assets and liabilities of the subsidiary and any non-controlling interest, is recognised in profit or
loss. The subsidiarys cumulative gain or loss which has been recognised in other comprehensive income and
accumulated in equity are reclassified to profit or loss or where applicable, transferred directly to retained earnings.
The fair value of any investment retained in the former subsidiary at the date control is lost is regarded as the cost
on initial recognition of the investment.
Acquisitions of subsidiaries are accounted for using the acquisition method. The cost of an acquisition is
measured as the aggregate of the consideration transferred, measured at acquisition date fair value and the
amount of any non-controlling interests in the acquiree. The Group elects on a transaction-by-transaction basis
whether to measure the non-controlling interests in the acquiree either at fair value or at the proportionate
share of the acquirees identifiable net assets. Transaction costs incurred are expensed and included in
administrative expenses.
Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition date.
Subsequent changes to the fair value of the contingent consideration which is deemed to be an asset or liability
will be recognised in accordance with MFRS 139 either in the profit or loss or as a change to other comprehensive
income. If the contingent consideration is classified as equity, it will not be remeasured. Subsequent settlement
is accounted for within equity. In instances where the contingent consideration does not fall within the scope of
MFRS 139, it is measured in accordance with the appropriate MFRS.
When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate
classification and designation in accordance with the contractual terms, economic circumstances and pertinent
conditions as at the acquisition date. This includes the separation of embedded derivatives in host contracts by
the acquiree.
If the business combination is achieved in stages, the acquisition date fair value of the acquirers previously held
equity interest in the acquiree is remeasured to fair value at the acquisition date through profit or loss.
Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred and the
amount recognised for non-controlling interests over the net identifiable assets acquired and liabilities assumed. If
this consideration is lower than fair value of the net assets of the subsidiary acquired, the difference is recognised
in profit or loss.
2.5 Transactions with non-controlling interests

Non-controlling interests represents the equity in subsidiaries not attributable, directly or indirectly, to owners of the
Company, and is presented separately in the consolidated statement of comprehensive income and within equity
in the consolidated statement of financial position, separately from equity attributable to owners of the Company.

31 December 2015
continued

2.5 Transactions with non-controlling interests (Contd)

Changes in the Company owners ownership interest in a subsidiary that do not result in a loss of control are
accounted for as equity transactions. In such circumstances, the carrying amounts of the controlling and noncontrolling interests are adjusted to reflect the changes in their relative interests in the subsidiary. Any difference
between the amount by which the non-controlling interest is adjusted and the fair value of the consideration paid
or received is recognised directly in equity and attributed to owners of the parent.
2.6 Foreign currency

(a) 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 consolidated financial
statements are presented in Ringgit Malaysia (RM), which is also the Companys functional currency.
(b) Foreign currency transactions

Transactions in foreign currencies are measured in the respective functional currencies of the Company
and its subsidiaries and are recorded on initial recognition in the functional currencies at exchange rates
approximating those ruling at the transaction dates.
Monetary assets and liabilities denominated in foreign currencies are translated at the rate of exchange ruling
at the reporting date. Non-monetary items denominated in foreign currencies that are measured at historical
cost are translated using the exchange rates as at the dates of the initial transactions. Non-monetary items
denominated in foreign currencies measured at fair value are translated using the exchange rates at the date
when the fair value was determined.
Exchange differences arising on the settlement of monetary items or on translating monetary items at the
reporting date are recognised in profit or loss except for exchange differences arising on monetary items that form
part of the Groups net investment in foreign operations, which are recognised initially in other comprehensive
income and accumulated under foreign currency translation reserve in equity. The foreign currency translation
reserve is reclassified from equity to profit or loss of the Group on disposal of the foreign operation.
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.
The assets and liabilities of foreign operations are translated into RM at the rate of exchange ruling at the
reporting date and income and expenses are translated at exchange rates at the dates of the transactions. The
exchange differences arising on the translation are taken directly to other comprehensive income. On disposal
of a foreign operation, the cumulative amount recognised in other comprehensive income and accumulated
in equity under foreign currency translation reserve relating to that particular foreign operation is recognised in
the profit or loss.
Goodwill and fair value adjustments arising on the acquisition of foreign operations 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.
Annual Report 2015
(c) Foreign operations
057

31 December 2015
continued

2.7 Property, plant and equipment

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.
Subsequent to recognition, property, plant and equipment and furniture and fixtures are measured at cost less
accumulated depreciation and 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.
Depreciation is computed on a straight-line basis over the estimated useful lives of the assets as follows:
Building and electrical installation

Plant, machinery and equipment
Motor vehicles
Furniture, fittings and office equipment
Capital work-in-progress are stated at cost and not depreciated as the assets are not yet available for use. Capital
work-in-progress comprises contractors payments, finance costs and directly attributable costs incurred in
preparing these assets for their intended use.
Depreciation on assets under construction commences when the assets are ready for their intended 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 values, 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 the profit or loss in
the year the asset is derecognised.
2%
7% - 20%
20%
10% - 50%
2.8 Intangible assets
058
Goodwill

Goodwill is initially measured at cost. Following initial recognition, goodwill is measured at cost less 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 (CGU) that are expected to benefit from the synergies of the combination.
The CGU to which goodwill has been allocated is tested for impairment annually and whenever there is an indication
that the CGU may be impaired, by comparing the carrying amount of the CGU, including the allocated goodwill,
with the recoverable amount of the CGU.

31 December 2015
continued

2.8 Intangible assets (Contd)
Goodwill (Contd)

Where the recoverable amount of the CGU 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 CGU and part of the operation within that CGU 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 CGU 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 Groups accounting policy.
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.
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.
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.
Annual Report 2015
2.9 Impairment of non-financial assets
059

31 December 2015
continued

2.10 Subsidiaries
A subsidiary is an entity over which the Group has all the following:

(i) Power over the investee (such as existing rights that give it the current ability to direct the relevant activities of
the investee);
(ii) Exposure, or rights, to variable returns from its involvement with the investee; and
(iii) The ability to use its power over the investee to affect its returns.

In the Companys separate financial statements, investments in subsidiaries are accounted for at cost less
impairment losses. On the disposal of such investments, the difference between net disposal proceeds and their
carrying amounts is included in profit or loss.
2.11 Current versus non-current classification

The Group presents assets and liabilities in statement of financial position based on current/non-current
classification. An asset as current when it is:
- expected to be realised or intended to sold or consumed in normal operating cycle;
- held primarily for the purpose of trading;
- expected to be realised within twelve months after the reporting period; or
- cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve
months after the reporting period.

All other assets are classified as non-current. A liability is current when:

- it is expected to be settled in normal operating cycle;
-
it is held primarily for the purpose of trading;
it is due to be settled within twelve months after the reporting period; or
there is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting
period.

The Company classifies all other liabilities as non-current.
060
Deferred tax liabilities are classified as non-current assets and liabilities.

2.12 Fair value measurement

The Group measures financial instruments such as derivatives, and non-financial assets such as investment
properties, at fair value at each balance sheet date. Fair-value related disclosures for financial instruments and
non-financial assets that are measured at fair value or where fair values are disclosed.

31 December 2015
continued

2.12 Fair value measurement (Contd)

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date. The fair value measurement is based on the presumption
that the transaction to sell the asset or transfer the liability takes place either:
-
in the principal market for the asset or liability; or
in the absence of a principal market, in the most advantageous market for the asset or liability.

The principal or the most advantageous market must be accessible to by the Group and by the Company.

The fair value of an asset or a liability is measured using the assumptions that a market participants would use
when pricing the asset or liability, assuming that the market participants act in their economic best interest.
A fair value measurement of a non-financial asset takes into account a market participants ability to generate
economic benefits by using the asset in its highest and best use or by selling it to another market participant that
would use the asset in its highest and best use.
The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data
are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of
unobservable inputs.
All assets and liabilities for which fair value is measured and disclosed in the financial statements are categorised
within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair
value measurement as a whole:
Level 1: quoted (unadjusted) market prices in active markets for identical assets or liabilities;
Level 2: valuation techniques for which the lowest level input that is significant to the fair value measurement is
directly or indirectly observable; and
Level 3: valuation techniques for which the lowest level input that is significant to the fair value measurement is
unobservable.
For assets and liabilities that are recognised in the financial statements on a recurring basis, the Group and the
Company determine whether transfers have occurred between levels in the hierarchy by re-assessing categorisation
(based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each
reporting period.
2.13 Derivative financial instruments and hedge accounting
The Group uses derivative financial instruments, such as forward currency contracts to hedge its foreign currency
risks. Such derivative financial instruments are initially recognised at fair value on the date on which a derivative
contract is entered into and are subsequently remeasured at fair value. Derivatives are carried as financial assets
when the fair value is positive and as financial liabilities when the fair value is negative.
Annual Report 2015
Initial recognition and subsequent measurement
061

31 December 2015
continued

2.13 Derivative financial instruments and hedge accounting (Contd)
Initial recognition and subsequent measurement (Contd)

The purchase contracts that meet the definition of a derivative under MFRS 139 are recognised in the statement of
profit or loss as cost of sales.
Any gains or losses arising from changes in the fair value of derivatives are taken directly to profit or loss, except for
the effective portion of cash flow hedges, which is recognised in Other Comprehensive Income (OCI) and later
reclassified to profit or loss when the hedge item affects profit or loss.
For the purpose of hedge accounting, hedges are classified as cash flow hedges when hedging the exposure to
variability in cash flows that is either attributable to a particular risk associated with a recognised asset or liability
or a highly probable forecast transaction or the foreign currency risk in an unrecognised firm commitment.
Cash flow hedges
The effective portion of the gain or loss on the hedging instrument is recognised in OCI in the cash flow hedge
reserve, while any ineffective portion is recognised immediately in the statement of profit or loss.
The Group uses forward currency contracts as hedges of its exposure to foreign currency risk in forecast
transactions and firm commitments, as well as forward commodity contracts for its exposure to volatility in the
commodity prices. The ineffective portion relating to foreign currency contracts is recognised in finance costs and
the ineffective portion relating to commodity contracts is recognised in other operating income or expenses.
Amounts recognised as OCI are transferred to profit or loss when the hedged transaction affects profit or loss,
such as when the hedged financial income or financial expense is recognised or when a forecast sale occurs.
When the hedged item is the cost of a non-financial asset or non-financial liability, the amounts recognised as OCI
are transferred to the initial carrying amount of the non-financial asset or liability.
If the hedging instrument expires or is sold, terminated or exercised without replacement or rollover (as part of the
hedging strategy), or if its designation as a hedge is revoked, or when the hedge no longer meets the criteria for
hedge accounting, any cumulative gain or loss previously recognised in OCI remains separately in equity until the
forecast transaction occurs or the foreign currency firm commitment is met.
2.14 Financial instruments initial recognition and subsequent measurement
062
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity
instrument of another entity.
(a) Financial assets
Initial recognition and measurement

Financial assets are classified, at initial recognition, as financial assets at fair value through profit or loss, loans
and receivables, held-to-maturity investments, available-for-sale financial assets, or as derivatives designated
as hedging instruments in an effective hedge, as appropriate. All financial assets are recognised initially at fair
value plus, in the case of financial assets not recorded at fair value through profit or loss, transaction costs that
are attributable to the acquisition of the financial asset.
Purchases or sales of financial assets that require delivery of assets within a time frame established by
regulation or convention in the market place (regular way trades) are recognised on the trade date, i.e., the
date that the Company commits to purchase or sell the asset.

31 December 2015
continued

2.14 Financial instruments initial recognition and subsequent measurement (Contd)
(a) Financial assets (Contd)
Subsequent measurement

For purposes of subsequent measurement financial assets are classified in four categories:
Financial assets at fair value through profit or loss

-
Loans and receivables
-
Held-to-maturity investments

Available-for-sale financial investments
Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss include financial assets held for trading and financial assets
designated upon initial recognition at fair value through profit or loss. Financial assets are classified as held for
trading if they are acquired for the purpose of selling or repurchasing in the near term. Derivatives, including
separated embedded derivatives are also classified as held for trading unless they are designated as effective
hedging instruments as defined by MFRS 139. The Group has not designated any financial assets at fair value
through profit or loss. Financial assets at fair value through profit or loss are carried in the statement of financial
position at fair value with net changes in fair value presented as finance costs (negative net changes in fair
value) or finance income (positive net changes in fair value) in the statement of profit or loss.
Derivatives embedded in host contracts are accounted for as separate derivatives and recorded at fair value
if their economic characteristics and risks are not closely related to those of the host contracts and the host
contracts are not held for trading or designated at fair value though profit or loss. These embedded derivatives
are measured at fair value with changes in fair value recognised in profit or loss. Re-assessment only occurs
if there is either a change in the terms of the contract that significantly modifies the cash flows that would
otherwise be required or a reclassification of a financial asset out of the fair value through profit or loss.
Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not
quoted in an active market. After initial measurement, such financial assets are subsequently measured at
amortised cost using the effective interest rate (EIR) method, less impairment. Amortised cost is calculated
by taking into account any discount or premium on acquisition and fees or costs that are an integral part of
the EIR. The EIR amortisation is included in finance income in the statement of profit or loss. The losses arising
from impairment are recognised in the statement of profit or loss in finance costs for loans and in cost of sales
or other operating expenses for receivables.
This category generally applies to trade receivables.
Non-derivative financial assets with fixed or determinable payments and fixed maturities are classified as held-tomaturity when the Group has the positive intention and ability to hold them to maturity. After initial measurement,
held-to-maturity investments are measured at amortised cost using the EIR, less impairment. Amortised cost is
calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral
part of the EIR. The EIR amortisation is included as finance income in the statement of profit or loss. The losses
arising from impairment are recognised in the statement of profit or loss as finance costs. The Group did not have
any held-to-maturity investments during the years ended 31 December 2015 and 2014.
Annual Report 2015
Held-to-maturity investments
063

31 December 2015
continued

(a) Financial assets (Contd)
Available-for-sale (AFS) financial investments

AFS financial investments include equity investments and debt securities. Equity investments classified as AFS
are those that are neither classified as held for trading nor designated at fair value through profit or loss. Debt
securities in this category are those that are intended to be held for an indefinite period of time and that may
be sold in response to needs for liquidity or in response to changes in the market conditions.
After initial measurement, AFS financial investments are subsequently measured at fair value with unrealised
gains or losses recognised in other comprehensive income and credited in the AFS reserve until the investment
is derecognised, at which time the cumulative gain or loss is recognised in other operating income, or the
investment is determined to be impaired, when the cumulative loss is reclassified from the AFS reserve to the
statement of profit or loss in finance costs. Interest earned whilst holding AFS financial investments is reported
as interest income using the EIR method.
The Group evaluates whether the ability and intention to sell its AFS financial assets in the near term is still
appropriate. When, in rare circumstances, the Group is unable to trade these financial assets due to inactive
markets, the Group may elect to reclassify these financial assets if the management has the ability and intention
to hold the assets for foreseeable future or until maturity.
For a financial asset reclassified from the AFS category, the fair value carrying amount at the date of
reclassification becomes its new amortised cost and any previous gain or loss on the asset that has been
recognised in equity is amortised to profit or loss over the remaining life of the investment using the EIR. Any
difference between the new amortised cost and the maturity amount is also amortised over the remaining life
of the asset using the EIR. If the asset is subsequently determined to be impaired, then the amount recorded
in equity is reclassified to the statement of profit or loss.
Derecognition
064
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets)
is primarily derecognised (i.e. removed from the groups consolidated statement of financial position) when:
-
the rights to receive cash flows from the asset have expired, or
the Group has transferred its rights to receive cash flows from the asset or has assumed an obligation
to pay the received cash flows in full without material delay to a third party under a pass-through
arrangement; and either (a) the Group has transferred substantially all the risks and rewards of the asset,
or (b) the Group has neither transferred nor retained substantially all the risks and rewards of the asset,
but has transferred control of the asset.
When the Group has transferred its rights to receive cash flows from an asset or has entered into a pass-through
arrangement, it evaluates if and to what extent it has retained the risks and rewards of ownership. When it has
neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control
of the asset, the Group continues to recognise the transferred asset to the extent of the Groups continuing
involvement. In that case, the Group also recognises an associated liability. The transferred asset and the
associated liability are measured on a basis that reflects the rights and obligations that the Group has retained.
Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower
of the original carrying amount of the asset and the maximum amount of consideration that the Group could
be required to repay.

31 December 2015
continued

(b) Impairment of financial assets

The Group assesses, at each reporting date, whether there is objective evidence that a financial asset or a
group of financial assets is impaired. An impairment exists if one or more events that has occurred since the
initial recognition of the asset (an incurred loss event), has an impact on the estimated future cash flows of
the financial asset or the group of financial assets that can be reliably estimated. Evidence of impairment may
include indications that the debtors or a group of debtors is experiencing significant financial difficulty, default
or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial
reorganisation and observable data indicating that there is a measurable decrease in the estimated future
cash flows, such as changes in arrears or economic conditions that correlate with defaults.
Financial assets carried at amortised cost

For financial assets carried at amortised cost, the Group first assesses whether impairment exists individually
for financial assets that are individually significant, or collectively for financial assets that are not individually
significant. If the Group determines that no objective evidence of impairment exists for an individually assessed
financial asset, whether significant or not, it includes the asset in a group of financial assets with similar credit
risk characteristics and collectively assesses them for impairment. Assets that are individually assessed for
impairment and for which an impairment loss is, or continues to be, recognised are not included in a collective
assessment of impairment.
The amount of any impairment loss identified is measured as the difference between the assets carrying
amount and the present value of estimated future cash flows (excluding future expected credit losses that
have not yet been incurred). The present value of the estimated future cash flows is discounted at the financial
assets original effective interest rate.
The carrying amount of the asset is reduced through the use of an allowance account and the loss is recognised
in statement of profit or loss. Interest income (recorded as finance income in the statement of profit or loss)
continues to be accrued on the reduced carrying amount and is accrued using the rate of interest used to
discount the future cash flows for the purpose of measuring the impairment loss. Loans together with the
associated allowance are written off when there is no realistic prospect of future recovery and all collateral
has been realised or has been transferred to the Group. If, in a subsequent year, the amount of the estimated
impairment loss increases or decreases because of an event occurring after the impairment was recognised,
the previously recognised impairment loss is increased or reduced by adjusting the allowance account. If a
write-off is later recovered, the recovery is credited to finance costs in the statement of profit or loss.
For AFS financial investments, the Group assesses at each reporting date whether there is objective evidence
that an investment or a group of investments is impaired.
In the case of equity investments classified as AFS, objective evidence would include a significant or prolonged
decline in the fair value of the investment below its cost. Significant is evaluated against the original cost of the
investment and prolonged against the period in which the fair value has been below its original cost. When
there is evidence of impairment, the cumulative loss measured as the difference between the acquisition
cost and the current fair value, less any impairment loss on that investment previously recognised in the
statement of profit or loss is removed from other comprehensive income and recognised in the statement
of profit or loss. Impairment losses on equity investments are not reversed through profit or loss; increases in
their fair value after impairment are recognised in other comprehensive income.
Annual Report 2015
Available-for-sale (AFS) financial investments
065

31 December 2015
continued

(b) Impairment of financial assets (Contd)
Available-for-sale (AFS) financial investments (Contd)

In the case of debt instruments classified as AFS, the impairment is assessed based on the same criteria as
financial assets carried at amortised cost. However, the amount recorded for impairment is the cumulative loss
measured as the difference between the amortised cost and the current fair value, less any impairment loss
on that investment previously recognised in the statement of profit or loss.
Future interest income continues to be accrued based on the reduced carrying amount of the asset, using
the rate of interest used to discount the future cash flows for the purpose of measuring the impairment loss.
The interest income is recorded as part of finance income. If, in a subsequent year, the fair value of a debt
instrument increases and the increase can be objectively related to an event occurring after the impairment
loss was recognised in the statement of profit or loss, the impairment loss is reversed through the statement
of profit or loss.
(c) Financial liabilities

Initial recognition and measurement

Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss,
loans and borrowings, payables, or as derivatives designated as hedging instruments in an effective hedge,
as appropriate.
All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables,
net of directly attributable transaction costs.
The Groups financial liabilities include trade and other payables, loans and borrowings including bank
overdrafts, financial guarantee contracts and derivative financial instruments.
Subsequent measurement

The measurement of financial liabilities depends on their classification, as described below.
Financial liabilities at fair value through profit or loss
066
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 are classified as held for trading if they are incurred for the purpose of repurchasing in the
near term. This category also includes derivative financial instruments entered into by the Group that are not
designated as hedging instruments in hedge relationships as defined by MFRS 139. Separated embedded
derivatives are also classified as held for trading unless they are designated as effective hedging instruments.
Gains or losses on liabilities held for trading are recognised in the statement of profit or loss.
Financial liabilities designated upon initial recognition at fair value through profit or loss are designated at the
initial date of recognition, and only if the criteria in MFRS 139 are satisfied. The Group has not designated any
financial liability as at fair value through profit or loss.

31 December 2015
continued

(c) Financial liabilities (Contd)
Loans and borrowings

After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost
using the EIR method. Gains and losses are recognised in profit or loss when the liabilities are derecognised
as well as through the EIR amortisation process.
Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs
that are an integral part of the EIR. The EIR amortisation is included as finance costs in the statement of profit
or loss.
This category generally applies to interest-bearing loans and borrowings.
Financial guarantee contracts

Financial guarantee contracts issued by the Group are those contracts that require a payment to be made
to reimburse the holder for a loss it incurs because the specified debtor fails to make a payment when due
in accordance with the terms of a debt instrument. Financial guarantee contracts are recognised initially
as a liability at fair value, adjusted for transaction costs that are directly attributable to the issuance of the
guarantee. Subsequently, the liability is measured at the higher of the best estimate of the expenditure required
to settle the present obligation at the reporting date and the amount recognised less cumulative amortisation.
As at reporting date, no values are placed on corporate guarantees provided by the Company to secure bank
loans and other banking facilities granted to its subsidiaries where such loans and banking facilities are fully
collateralised by fixed and floating charges over the property, plant and equipment and other assets of the
subsidiaries and where the directors regard the value of the credit enhancement provided by the corporate
guarantees as minimal.
Derecognition

A financial liability is derecognised when the obligation under the liability is discharged or cancelled, or expires.
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
the derecognition of the original liability and the recognition of a new liability. The difference in the respective
carrying amounts is recognised in the statement of profit or loss.
(d) Offsetting of financial instruments

Financial assets and financial liabilities are offset and the net amount is reported in the consolidated statement
of financial position if there is a currently enforceable legal right to offset the recognised amounts and there is
an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.
Cash and cash equivalents comprise cash at bank and on hand, and short-term deposits that are readily convertible
to known amount 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 of the Companys cash management.

Annual Report 2015
2.15 Cash and cash equivalents
067

31 December 2015
continued

2.16 Service contracts

The Group provides flooring installation works on a contract basis for timber flooring supplied to customers.
Where the outcome of a service contract can be reliably estimated, contract revenue and contract costs are
recognised as revenue and expenses respectively by using the stage of completion method. The stage of
completion is measured by reference to the proportion of contract costs incurred for work performed to date to
the estimated total contract costs.
Where the outcome of a service contract cannot be estimated reliably, contract revenue is recognised to the extent
of contract costs incurred that are likely to be recoverable. Contract costs are recognised as expenses in the
period in which they are incurred.
When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognised as
an expense immediately.
Contract revenue comprises the initial amount of revenue agreed in the contract and variations in contract work,
claims and incentive payments to the extent that it is probable that they will result in revenue and they are capable
of being reliably measured.
When the total of costs incurred on service contracts plus recognised profits (less recognised losses) exceeds
progress billings, the balance is classified as amounts due from customers on contracts. When progress billings
exceed costs incurred plus, recognised profits (less recognised losses), the balance is classified as amounts due
to customers on contracts.
2.17 Inventories

068
Inventories are stated at the lower of cost and net realisable value. Costs incurred in bringing the inventories to their
present location and conditions are accounted for as follows:
-
Raw materials: purchase costs on a first-in first-out basis.
Finished goods and work-in-progress: costs of direct materials and labour and a proportion of manufacturing
overheads based on normal operating capacity. These costs are assigned on weighted average cost basis.
Net realisable value is the estimated selling price in the ordinary course of business less estimated costs of
completion and the estimated costs necessary to make the sale.
2.18 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.

31 December 2015
continued

2.19 Borrowing 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 incurred in connection with the borrowing of funds.
2.20 Employee benefits

(a) Employee leave entitlement

Employee entitlements to annual leave are recognised as a liability when they accrue to the employees. The
estimated liability for leave is recognised for services rendered by employees up to the reporting date.
(b) Defined contribution plans

The Group participates in the national pension schemes as defined by the laws of the countries in which it has
operations. The Malaysian companies in the Group make contributions to the Employee Provident Fund in
Malaysia, a defined contribution pension scheme. Contributions to defined contribution pension schemes are
recognised as an expense in the period in which the related service is performed.
(c) Employee share option plans

Employees of the Group receive remuneration in the form of share options as consideration for services
rendered. The cost of these equity-settled transactions with employees is measured by reference to the fair
value of the options at the date on which the options are granted. This cost is recognised in profit or loss, with
a corresponding increase in the employee share option reserve over the vesting period.
The cumulative expense recognised at each reporting date until the vesting date reflects the extent to which
the vesting period has expired and the Groups best estimate of the number of options that will ultimately vest.
The charge or credit to profit or loss for a period represents the movement in cumulative expense recognised
at the beginning and end of that period.
No expense is recognised for options that do not ultimately vest, except for options where vesting is
conditional upon a market or non-vesting condition, which are treated as vested irrespective of whether
or not the market or non-vesting condition is satisfied, provided that all other performance and/or service
conditions are satisfied. The employee share option reserve is transferred to retained earnings upon expiry of
the share options. When the options are exercised, the employee share option reserve is transferred to share
capital if new shares are issued.
The determination of whether an arrangement is, or contains a lease is based on the substance of the arrangement
at inception date: whether fulfillment of the arrangement is dependent on the usage of a specific asset or assets of
the arrangement conveys a right to use the asset, even if that right is not explicitly specified in an arrangement.
Annual Report 2015
2.21 Leases
For arrangements entered into prior to 1 January 2012, the date of inception is deemed to be 1 January 2012 in
accordance with MFRS 1 First-time Adoption of Malaysian Financial Reporting Standards.
069

31 December 2015
continued

2.21 Leases (Contd)
(a) As lessee

Finance leases, which transfer to the Group substantially all the risks and rewards incidental to ownership of
the leased item, are capitalised at the inception of the lease at the fair value of the leased asset or, if lower,
at the present value of the minimum lease payments. Any initial direct costs are also added to the amount
capitalised. Lease payments are apportioned between the finance charges and reduction of the lease
liability so as to achieve a constant rate of interest on the remaining balance of the liability. 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.
(b) As lessor

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.
Leases where the Group retains 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.
2.22 Revenue

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. Revenue is measured at the fair value of consideration received or receivable.
The specific recognition criteria below must also be met before revenue is recognised.
(a) Sale of goods

Revenue from sale of goods is recognised upon the transfer of significant risk and rewards of ownership of
the goods to the customer. 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.
(b) Service contracts
070
Revenue from service contracts is accounted for by the stage of completion method.

(c) Interest income

Interest is recognised using the effective interest method.

(d) Rental income

Rental income is accounted for on a straight-line basis over the lease terms.

31 December 2015
continued

2.23 Income taxes
(a) 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.
(b) 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.

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.
Annual Report 2015
071

31 December 2015
continued

2.23 Income taxes (Contd)
(b) Deferred tax (Contd)

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.
(c) Sales tax

Revenues, expenses and assets are recognised net of the amount of sales tax except:
-
Where the sales tax incurred in a purchase of assets or services is not recoverable from the taxation
authority, in which case the sales tax is recognised as part of the cost of acquisition of the asset or as part
of the expense item as applicable; and
Receivables and payables that are stated with the amount of sales tax included.
The net amount of sales tax recoverable from, or payable to, the taxation authority is included as part of
receivables or payables in the statements of financial position.
2.24 Segment reporting

For management purposes, the Group is organised into operating segments based on their products and services
which are independently managed by the respective segment managers responsible for the performance of
the respective segments under their charge. The segment managers report directly to the management of the
Company who regularly review the segment results in order to allocate resources to the segments and to assess
the segment performance. Additional disclosures on each of these segments are shown in Note 32, including the
factors used to identify the reportable segments and the measurement basis of segment information.
2.25 Share capital and share issuance expenses

072
An equity instrument is any contract that evidences a residual interest in the assets of the Group 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.
2.26 Contingencies

A contingent liability or asset is a possible obligation or asset that arises from past events and whose existence will
be confirmed only by the occurrence or non-occurrence of uncertain future events not wholly within the control of
the Group.
Contingent liabilities and assets are not recognised in the statements of financial position of the Group.

31 December 2015
continued
3. Significant accounting judgements and estimates

The preparation of the Groups financial statements requires management to make judgements, estimates and
assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of
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 Judgement made in applying accounting policies

There are no critical judgements made by management in the process of applying the Companys accounting
policies on the amounts recognised in the financial statements.
3.2 Key sources of estimation uncertainty

The key assumptions concerning the future and other keys sources of estimation uncertainty at the reporting
date that have a significant risk of causing a material adjustment to the carrying amounts of assets within the next
financial year are discussed below:
(a) Impairment of property, plant and equipment
-
The Group assesses whether there are any indicators of impairment for all non-financial assets including
property, plant and equipment at each reporting date. Other non-financial assets are tested for impairment
when there are indicators that the carrying amounts may not be recoverable.
The Group carried out the impairment test based on a variety of estimation including the fair value less
costs to sell (FVLCTS) of the CGU. The FVLCTS of CGU is primarily based on valuation performed
by independent valuers. In respect of the property, plant and equipment, results of the impairment test
shows the FVLCTS of the property, plant and equipment exceeds their carrying amounts. Accordingly, no
impairment has been recognised. The carrying amounts of property, plant and equipment of the Group
and of the Company as at the reporting date is disclosed in Note 13.
(b) Impairment of loans and receivables

The Group and 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 Company considers
factors such as the probability of insolvency or significant financial difficulties of the debtor and default or
significant delay in payments.
Where there is objective evidence of impairment, the amount and timing of future cash flows are estimated
based on historical loss experience for assets with similar credit risk characteristics. The carrying amount of
the Groups and Companys loans and receivables at the reporting date are disclosed in Note 16.
(c) Deferred tax assets

Deferred tax assets are recognised for all unused tax losses and unabsorbed capital allowances to the extent
that they are probable that taxable profit will be available against which the losses and allowances can be
utilised. Significant management judgement is required to determine the amount of deferred tax assets that
can be recognised, based on the likely timing and level of future taxable profits together with future tax
planning strategies.
Annual Report 2015
073

31 December 2015
continued
3. Significant accounting judgements and estimates (CONTD)

3.2 Key sources of estimation uncertainty (Contd)
(c) Deferred tax assets (Contd)

Assumptions about generation of future taxable profits depend on managements estimates of future cash
flows. These depend on estimates of future production and sales volume, operating costs, capital expenditure,
dividends and other capital management transactions. Judgement is also required about application of
income tax legislation. These judgements and assumptions are subject to risks and uncertainty, hence
there is a possibility that changes in circumstances will alter expectations, which may impact the amount of
deferred tax assets recognised and capital allowances in the statement of financial position and the amount
of unrecognised tax losses and unrecognised temporary differences. The carrying amount of deferred tax is
disclosed in Note 17.
4. Revenue

2015
RM
Group
2014
RM
2015
RM
Company
2014
RM
Sale of goods
Contract revenue
Installation service rendered
30,144,059
2,185,291
10,590,998
26,622,904
10,992,608
5,412,135
35,425,257
-
-
34,539,521
-
42,920,348
43,027,647
35,425,257
34,539,521
5. Cost of sales

Cost of sales of the Group represent cost of inventories sold and installation service costs which are recognised by the
stage of completion method. Cost of sales of the Company represent cost of inventories sold.
6. Other income

Group Company

2015
2014
2015
2014

RM
RM
RM
RM
074
Gain on disposal of property, plant and equipment

Gain on waiver of amount due to a subsidiary
Interest income
Net gain on foreign exchange:
- realised
- unrealised
Net fair value gain on derivatives
Reversal of allowance for impairment of trade
receivables (Notes 16(a))
Rental income
Sundry income

-
-
65
246,300
-
3,294
-
1,991,401
-
246,300
-
871,207
303,426
8,332
363,892
22,054
60,180
871,207
190,866
8,332
363,892
630,396
60,180
731,492
40,241
282,558
361,516
116,749
44,815
2,397
-
218,267
38,549
2,237,321
1,218,800
3,282,470
1,339,317

31 December 2015
continued
7. Finance costs

Group
Company

2015
2014
2015
2014

RM
RM
RM
RM
Interest expense on:
- bank overdrafts
- bankers acceptances
- revolving credit
- advances from holding company (Note 27)
- others
101,008
448,428
264,773
137,530
2,781
70,849
470,599
240,555
85,263
-
101,008
334,038
264,773
137,530
-
70,849
343,349
240,555
85,263
-
954,520
867,266
837,349
740,016
2015
RM
Group
2014
RM
2015
RM
Company
2014
RM
10,244,432
8,768,535
7,303,497
6,322,576
145,263
134,145
60,000
57,500
(2,780)
289,767
742,535
(21,282)
82,508
813,791
2,500
211,847
7,632
(17,500)
50,800
342,157
3,358,721
66,577
171
144,887
210,644
3,294,877
2,159,266
-
156,000
26,073
3,121,292
13,695
-
144,887
208,832
3,194,122
2,110,813
156,000
24,589
59,786
-
2,392,078
-
483,388
4,103,074
1,128,756
10,018,116
44,711
343,098
-
249,775
-
-
8. Loss before tax

Employee salaries and benefits expense
Auditors remuneration:
- statutory audit
- current
- (over)/under provision in respect of previous year
- other services
Bad debts written off
Depreciation of property, plant and equipment
(Note 13)
Inventories written off
Loss on disposal of property, plant and equipment
Non-executive directors remuneration (Note 10)
Property, plant and equipment written off
Impairment loss on financial assets:
- trade receivables (Note 16)
- investment in subsidiary
Rental expenses:
- holding company (Note 27)
- third parties
Annual Report 2015
The following items have been included in arriving at loss before tax:
075

31 December 2015
continued
9. Employee salaries and benefits expenses

2015
RM
Group Company
2014
2015
2014
RM
RM
RM
Staff costs
Salaries and wages
Contributions to defined contribution plan
Social security costs
Social security contributions

9,343,906
637,726
201,268
61,532
7,952,385
638,047
119,096
59,007
6,753,112
499,399
-
50,986
5,765,634
507,943
48,999
10,244,432
8,768,535
7,303,497
6,322,576
Included in employee salaries and benefits expenses of the Group and of the Company are executive directors
remuneration amounting to RM79,100 (2014: RM79,100) and RM79,100 (2014: RM79,100) respectively as further
disclosed in Note 10.
10. Directors remuneration
076
The details of remuneration receivable by directors of the Company during the year are as follows:

Group Company

2015
2014
2015
2014

RM
RM
RM
RM
Executive (Note 9):
Salaries and other emoluments
Bonus
Defined contribution plan
60,000
10,000
9,100
60,000
10,000
9,100
60,000
10,000
9,100
60,000
10,000
9,100
Total executive directors remuneration (excluding

benefits-in-kind)(Note 9)
Benefits-in-kind
79,100
119,242
79,100
120,295
79,100
119,242
79,100
120,295
Total executive directors remuneration (including

benefits-in-kind)
198,342
199,395
198,342
199,395
Non-executive (Note 8):

Fees
Allowance
99,871
45,016
108,000
48,000
99,871
45,016
108,000
48,000
144,887
156,000
144,887
156,000
Total
343,229
355,395
343,229
355,395

31 December 2015
continued
10. Directors remuneration (CONTD)

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

2015
2014
Executive directors:
RM150,001 - RM200,000

Non-executive directors:
Below RM50,000
RM50,001 - RM100,000
3
2
1
2
11. Income tax expense/(benefit)

Major components of income tax expense/(benefit)

The major components of income tax expense/(benefit) for the years ended 31 December 2015 and 2014 are:

2015
RM
Group
2014
RM
2015
RM
Company
2014
RM
Statements of comprehensive income:

Current income tax:
- Malaysian income tax

- Under/(over) provision in respect of previous years
1,548
1,506
312
(3,793)
-
-
(4,794)
3,054
(3,481)
(4,794)
Deferred income tax (Note 17):

- Origination and reversal of temporary differences
260,427
(191,513)
260,427
(191,513)
Income tax expense/(benefit) recognised in profit

or loss
263,481
(194,994)
(4,794)

Reconciliation between tax expense/(benefit) and accounting profit
The reconciliation of income tax expense/(benefit) and the product of accounting profit multiplied by the applicable
corporate tax rate for the years ended 31 December 2015 and 2014 is as follows:

2015
RM
Group
2014
RM
2015
RM
Company
2014
RM
Loss before tax
(3,037,094)
(6,993,838)
(833,722)
(14,214,642)
(759,274)
60,749
(1,748,460)
20,764
(208,431)
-
(3,553,661)
-
Tax at Malaysian statutory tax rate of 25% (2014: 25%)

Different tax rates in other countries
Annual Report 2015
077

31 December 2015
continued
11. Income tax expense/(benefit) (Contd)

Reconciliation between tax expense/(benefit) and accounting profit (contd)

The reconciliation of income tax expense/(benefit) and the product of accounting profit multiplied by the applicable
corporate tax rate for the years ended 31 December 2015 and 2014 is as follows: (contd)

Tax savings from double deductions
Non-deductible expenses
Utilisation of previously unrecognised deferred
tax assets
Deferred tax assets not recognised
Under/(over) provision of income tax in respect of
previous years
Income tax expense/(benefit) recognised in profit
or loss
2015
RM
Group
2014
RM
2015
RM
Company
2014
RM
(203,058)
1,404,903
(232,201)
1,883,189
(203,058)
1,393,774
(232,200)
3,754,833
(241,345)
-
(114,493)
-
(982,285)
-
31,028
1,506
(3,793)
(4,794)
263,481
(194,994)
(4,794)
Domestic income tax is calculated at the Malaysian statutory tax rate of 25% (2014: 25%) of the estimated assessable
profit for the year. The domestic statutory tax rate will be reduced to 24% from the current years rate of 25% with
effect from the year of assessment 2016. The computation of deferred tax as at 31 December 2015 has reflected these
changes.
Taxation for other jurisdictions is calculated at the rates prevailing in the respective jurisdictions.
The above reconciliation is prepared by aggregating separate reconciliations for each national jurisdiction.
12. Basic loss per share
078
Basic loss per share amounts are calculated by dividing loss for the year, net of tax, attributable to owners of the parent
by the weighted average number of ordinary shares outstanding during the financial year.
The following reflect the loss and share data used in the computation of basic loss per share for the years ended 31
December 2015 and 2014.

Group

2015
2014
Loss net of tax attributable to owners of the parent (RM)
Weighted average number of ordinary shares
Basic loss per share (sen)
(3,251,872)
(6,424,259)
168,000,000 168,000,000
(1.94)
(3.82)
There have been no other transactions involving ordinary shares or potential ordinary shares between the reporting date
and the date of authorisation of these financial statements.
2,752,634
139,276
-
-
-
2,891,910 10,028,428 43,238,367
5,483,864 19,530,770 11,864,440

Accumulated depreciation:
At 1 January 2015
Charge for the year (Note 8)
Disposals
Write offs
Exchange differences
At 31 December 2015
Net carrying amount
Annual Report 2015
8,375,774 29,559,198 55,102,807
At 31 December 2015
9,437,254 41,034,584
591,174
2,194,022
-
-
-
(12)
-
9,773
8,375,774 29,559,198 54,980,924

-
-
113,110
-
-
-
-
-
(1,000)
-
-
-
-
-
9,773
Cost:
At 1 January 2015
Additions
Disposals
Write offs
Transfer to holding company
Group
347,129
1,515,459
1,408,904
106,555
-
-
-
1,862,588
1,805,686
56,902
-
-
-
-
393,506
4,766,456
4,538,614
327,694
(79)
(159,476)
59,703
5,159,962
5,228,682
25,296
(350)
(161,015)
-
67,349

Plant, Furniture,
Building and machinery fittings and

Leasehold electrical
and
Motor
office

land installation equipment
vehicles equipment

RM
RM
RM
RM
RM
13. Property, plant and equipment
Total
RM
59,171,990
3,358,721
(79)
(159,488)
69,476
13,239
37,632,948
- 62,440,620
-
-
-
-
-
13,239 100,073,568
346,756 100,297,020
-
195,308
-
(350)
(208,117)
(370,132)
(125,400)
(125,400)
-
77,122
Capital
work-in-
progress
RM

31 December 2015
continued
079
080
20,121,944 13,946,340
396,782
690,068
346,756
5,623,140
Net carrying amount
4,538,614
1,408,904
2,752,634
At 31 December 2014
9,437,254 41,034,584
-
-
-
-
-
5,228,682

At 1 January 2014
2,614,627
8,917,047 38,819,205 1,494,364 4,374,549
138,007
641,295 2,236,550
66,414
212,611
Disposals
-
(121,088)
-
(151,874)
-
Write offs
-
-
(15,386)
-
(28,388)
-
-
(5,785)
-
(20,158)
1,805,686
41,125,030
59,171,990
56,219,792
3,294,877
(272,962)
(43,774)
(25,943)
346,756 100,297,020
8,375,774 29,559,198 54,980,924
At 31 December 2014
Total
RM
346,756 100,835,256
-
309,438
-
(748,862)
-
(69,847)
-
(28,965)
Capital
work-in-
progress
RM
Cost:
At 1 January 2014
8,375,774 30,118,217 54,967,901 1,967,609 5,058,999
Additions
-
-
58,025
27,920
223,493
Disposals
-
(559,019)
-
(189,843)
-
-
-
(39,218)
-
(30,629)
Write offs
-
-
(5,784)
-
(23,181)
Group

Plant, Furniture,

and
Motor
office

vehicles equipment

RM
RM
RM
RM
RM
13. Property, plant and equipment (CONTd)

31 December 2015
continued
2,752,634
139,276
-
2,891,910 10,028,428 42,891,866
5,483,864 19,530,770

At 1 January 2015
Write offs
At 31 December 2015
Net carrying amount
Annual Report 2015
8,375,774 29,559,198 54,644,987
At 31 December 2015
11,753,121
9,437,254 40,723,254
591,174
2,168,612
-
-
8,375,774 29,559,198 54,539,467

-
-
105,520
-
-
-
-
-
-
Cost:
At 1 January 2015
Additions
Write offs
Transfer to holding company
Company
306,660
939,642
847,328
92,314
-
1,246,302
1,246,302
-
-
-
202,289
3,482,484
3,494,923
129,916
(142,355)
3,684,773
3,815,528
12,315
(143,070)
-

Plant, Furniture,

and
Motor
office

vehicles equipment

RM
RM
RM
RM
RM
57,255,393
3,121,292
(142,355)
97,524,273
97,883,025
117,835
(351,187)
(125,400)
Total
RM
13,239
37,289,943
- 60,234,330
-
-
-
13,239
346,756
-
(208,117)
(125,400)
Capital
work-in-
progress
RM

31 December 2015
continued
081
082
2,614,627
138,007
-
-
2,752,634
5,623,140

At 1 January 2014
Disposals
Write offs
At 31 December 2014
Net carrying amount

20,121,944 13,816,213
9,437,254 40,723,254
8,917,047 38,529,645
641,295 2,208,668
(121,088)
-
-
(15,059)
8,375,774 29,559,198 54,539,467
At 31 December 2014
30,118,217 54,532,893
-
44,500
(559,019)
-
-
(37,926)
8,375,774
-
-
-
Cost:
At 1 January 2014
Additions
Disposals
Write offs
Company
398,974
847,328
937,591
61,611
(151,874)
-
1,246,302
1,412,345
23,800
(189,843)
-
320,605
3,494,923
3,378,350
144,541
-
(27,968)
3,815,528
3,824,711
20,507
-
(29,690)

Plant, Furniture,

and
Motor
office

vehicles equipment

RM
RM
RM
RM
RM
Total
RM
346,756
-
-
-
-
346,756
40,627,632
57,255,393
54,377,260
3,194,122
(272,962)
(43,027)
97,883,025
346,756 98,610,696
-
88,807
-
(748,862)
-
(67,616)
Capital
work-in-
progress
RM

31 December 2015
continued

31 December 2015
continued
14. Intangible assets

Group
Goodwill RM
Cost
As at 1 January 2014 and 31 December 2014 and 2015
401,783
Key assumptions used in value-in-use calculations
Goodwill have been allocated to a subsidiary of the Group which is in the business of installation service in Malaysia.
Goodwill is tested for impairment on an annual basis by comparing the carrying amount with the recoverable amount.
As the Directors are of the opinion that all the CGU are held on a long-term basis, the value-in-use would best reflect its
recoverable amount.
The value-in-use is determined by discounting future cash flows over a five-year period. The future cash flows are based
on managements business plan, which is the best estimate of future performance. The ability to achieve the business
plan targets is a key assumption in determining the recoverable amount for each CGU.
There remains a risk that the ability to achieve managements business plan will be adversely affected due to unforeseen
changes in the respective economies in which the CGUs operate and/or global economic conditions. In computing the
value-in-use for each CGU, the management has applied a pre-tax discount rate as follows:

2015
2014

%
%
Discount rate

12.00
12.00
The following describes each key assumption on which management has based its cash flow projections for the
purposes of the impairment test for goodwill:
(i)
The discount rate used reflected the managements best estimate of return on capital employed.
(ii)
The profit margin applied to the projections are based on the historical profit margin trend for the individual CGU.
(iii)
Growth rate used has been based on historical trend taking into account industry outlook for that CGU.
Sensitivity to changes in assumptions

With regard to the assessment of value in use, the management believes that no reasonably possible change in any of
the above key assumptions would cause the carrying value of the unit to materially exceed its recoverable amount.
Annual Report 2015
083

31 December 2015
continued
15. Investment in subsidiaries

Company

2015
2014

RM
RM
Unquoted shares at cost:
- Ordinary shares
In Malaysia
Outside Malaysia
570,003
17,710,587
570,003
17,710,587

- Convertible Redeemable Preference Shares
In Malaysia
18,280,590
18,280,590
27,300,000
20,000,000

Impairment loss
45,580,590
(19,342,076)
38,280,590
(15,239,002)

Discount on loan to a subsidiary
26,238,514
1,845,070
23,041,588
1,845,070
28,083,584
24,886,658
During the financial year, the Company provided additional impairment losses on a subsidiary to fully write down the
carrying amount of this investment. This impairment was required in view of the continuous losses incurred by the
subsidiary. The recoverable amount was derived based on a value-in-use computation over a period of 5 years.
Details of the subsidiaries are as follows:
Name
084
Country of
incorporation Principal activities
% of ownership
interest held by
the Group*
% of ownership
interest held by
non-controlling
interests*
2015
2014
2015
2014
Ekowood Malaysia
Sdn. Bhd.(i)
Malaysia
Supply and installation of

timber flooring
100
100
Ekoloc System
Sdn. Bhd. (i)
Malaysia
Supply and installation of

timber strips panel flooring
and sub-licensing of strip lock
system for manufacturing of
engineered sold hardwood
flooring that uses mechanical
locking system
100
100
TSH Products
Sdn. Bhd. (i)
Malaysia
Dormant
100
100
Ekowood (USA)
Inc
California,
United States
of America
Trading of wood products
100
100

31 December 2015
continued
15. Investment in subsidiaries (CONTd)
Name
Ekowood Iberica
S. L. (ii)
Country of
incorporation Principal activities
Spain
% of ownership
interest held by
non-controlling
interests*
% of ownership
interest held by
the Group*
2015
2014
2015
2014
99.96
99.96
0.04
0.04
Luxembourg
70
70
30
30
Ekowood
S. A. (ii)

*
Equals to the proportion of voting rights.
(i)

Audited by Ernst & Young, Malaysia.
(ii)

Audited by Ernst & Young, Malaysia for the purpose of consolidation in the financial statements of the Group.

The summarised financial information of these subsidiaries that have material non-controlling interest is provided below.
The information is based on amounts before inter-company eliminations.

Ekowood S. A.
2015
RM
2014
RM
Revenue
Cost of sales
Administrative expenses
Finance costs
Other operating income
Other operating expense
-
-
(182,790)
(2,541)
50,455
(22,200)
(1,996)
(286,524)
116,843
(1,076,186)
Loss before tax
(157,076)
(1,247,863)
Loss for the year from continuing operations
(157,076)
(1,247,863)
(157,076)
(1,247,863)
Attributable to non-controlling interests
(47,123)
(374,359)
2015
RM
2014
RM
Property, plant and equipment and other non-current assets

Inventories and cash and bank balances (current)
Trade and other payables (current)
Trade and other receivables (current)
Other payables (non-current)
-
30,405
(77,499)
4,766,585
(27,651,710)
672
142,779
(271,087)
4,558,186
(25,057,409)
Total equity
(22,932,219)
(20,626,859)
Attributable to non-controlling interests
(6,879,666)
(6,188,058)
Summarised statement of profit or loss:
Annual Report 2015

Summarised statement of financial position:
085

31 December 2015
continued
15. Investment in subsidiaries (CONTd)

Summarised cash flow information:

2015
2014

RM
RM
Operating
Investing
(117,788)
67,415
21,882
(174)
Net (decrease)/increase in cash and cash equivalents
(50,373)
21,708
16. Trade and other receivables

2015
RM
Group Company
2014
2015
2014
RM
RM
RM
Current
086
Trade receivables
Third parties
Amounts due from subsidiaries
Amounts due from customers on contract (Note 19)
Retention sums on contract (Note 19)
21,805,435
-
221,321
1,421,359
19,963,979
-
1,790,941
1,185,069
9,417,243
9,101,150
-
-
5,422,135
17,110,466
-

Less: Allowance for impairment
23,448,115
(7,270,749)
22,939,989
(7,564,196)
18,518,393
(1,951,450)
22,532,601
(1,470,459)
Trade receivables, net
16,177,366
15,375,793
16,566,943
21,062,142
Other receivables
Refundable deposits
Amounts due from subsidiaries
Amounts due from related company
Sundry receivables
332,452
-
9,958
2,272,642
301,029
-
1,100
1,013,336
130,508
11,515
9,958
842,690
124,275
1,913,586
1,100
722,751
2,615,052
1,315,465
994,671
2,761,712
18,792,418
16,691,258
17,561,614
23,823,854
Non-current
Other receivable
Loan to a subsidiary
-
-
-
-
23,790,329
(23,790,329)
23,790,329
(23,790,329)
Total trade and other receivables(Note 30(b))

Add: Cash and bank balances (Note 20)
18,792,418
2,791,727
16,691,258
2,308,503
17,561,614
1,161,370
23,823,854
112,156
Total loan and receivables
21,584,145
18,999,761
18,722,984
23,936,010

31 December 2015
continued
16. Trade and other receivables (CONTd)

(a) Trade receivables

Trade receivables are non-interest bearing and are generally on 30 to 90 day (2014: 30 to 90 day) terms. They are
recognised at their original invoice amounts which represent their fair values on initial recognition.
Ageing analysis of trade receivables
The ageing analysis of trade receivables are as follows:
Neither past due nor impaired
2015
RM

Group Company
2014
2015
2014
RM
RM
RM
8,347,916
9,132,853
6,895,853
4,512,954
1 to 30 days past due not impaired

91 to 120 days past days due not impaired
More than 121 days past due not impaired

Impaired
1,142,652
597,624
139,430
151,286
4,130,007
6,160,999
8,939,200
1,167,366
426,718
885,937
112,254
661,911
3,254,186
10,552,950
172,830
194,086
936
196,515
8,050,698
8,615,065
3,007,475
905,677
1,270,033
1,189,581
910,234
12,273,663
16,549,188
1,470,459
23,448,115
22,939,989
18,518,393
22,532,601
Receivables that are neither past due nor impaired
Trade receivables that are neither past due nor impaired are creditworthy debtors with good payment records with
the Group.
None of the 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 RM6,160,999 (2014: RM3,254,186) that are past due at the reporting
date but not impaired.
At the reporting date, trade receivables that are insured by trade credit insurance underwritten by a reputable
insurer in Malaysia and Europe amounting to RM6,501,879 (2014: RM3,305,204) at the reporting date. The
remaining balances of receivables that are past due but not impaired are unsecured in nature.
Receivables that are impaired
The Groups trade receivables that are impaired at the reporting date and the movement of the allowance accounts
used to record the impairment are as follows:

2015
RM
Group Company
2014
2015
2014
RM
RM
RM
Trade receivables
- nominal amounts
8,939,200
(7,270,749)
10,552,950
(7,564,196)
3,007,475
(1,951,450)
1,470,459
(1,470,459)
1,668,451
2,988,754
1,056,025
Annual Report 2015
087

31 December 2015
continued
16. Trade and other receivables (CONTd)

(a) Trade receivables (Contd)

Receivables that are impaired (contd)
Movement in allowance accounts:

2015
RM
Group Company
2014
2015
2014
RM
RM
RM
At 1 January
Reversal of impairment
losses

Written off
7,564,196
59,786
5,753,235
2,392,078
1,470,459
483,388
341,703
1,128,756
(731,492)
-
378,259
(361,516)
(154,198)
(65,403)
(2,397)
-
-
At 31 December
7,270,749
7,564,196
1,951,450
1,470,459
Trade receivables that are individually impaired determined to be impaired at the reporting date relate to debtors
that are in significant financial difficulties and have defaulted on payments.
(b) Amounts due from holding and subsidiary companies

Amounts due from a subsidiary and related companies are unsecured, non-interest bearing and are receivable
upon demand.
In the previous financial year, the Company had provided an allowance of RM23,790,329 for impairment of the
unsecured loan to a subsidiary company.
17. Deferred tax
088
Deferred income tax as at 31 December relates to the following:

Recognised
Recognised

As at in profit or
As at in profit or
As at

1 January
loss 31 December
loss 31 December

2014
(Note 11)
2014
(Note 11)
2015
RM
RM
RM
RM
RM
Group
Deferred tax liabilities:

Receivables
4,330,744
43,508
(364,813)
(4,761)
3,965,931
38,747
(523,730)
56,103
3,442,201
94,850
4,374,252
(369,574)
4,004,678
(467,627)
3,537,051

31 December 2015
continued
17. Deferred tax (CONTD)

Deferred income tax as at 31 December relates to the following: (contd)

Recognised
Recognised

As at in profit or
As at in profit or
As at

1 January
loss 31 December
loss 31 December

2014
(Note 11)
2014
(Note 11)
2015
RM
RM
RM
RM
RM
Group (contd)
Deferred tax assets:
Payables
Unabsorbed capital allowances
Unutilised tax losses
Others
17,905
3,459,102
1,297,246
149,117
(2,696)
(346,766)
(20,113)
191,514
15,209
3,112,336
1,277,133
340,631
(15,209)
424,715
(877,133)
(260,427)
3,537,051
400,000
80,204
4,923,370
(178,061)
4,745,309
(728,054)
4,017,255
(549,118)
(191,513)
(740,631)
260,427
(480,204)
Deferred tax liabilities:


Receivables
4,275,387
38,833
(309,456)
(86)
3,965,931
38,747
(523,730)
56,103
3,442,201
94,850
4,314,220
(309,542)
4,004,678
(467,627)
3,537,051
Deferred tax assets:


Others
3,459,102
837,213
17,905
(346,766)
39,920
(2,696)
3,112,336
877,133
15,209
424,715
(877,133)
(15,209)
3,537,051
-
4,314,220
(309,542)
4,004,678
(467,627)
3,537,051
Company
Presented after appropriate offsetting as follows:

2015
RM
Group Company
2014
2015
2014
RM
RM
RM
Deferred tax assets

Deferred tax liabilities
(4,017,255)
3,537,051
(4,745,309)
4,004,678
(3,537,051)
3,537,051
(4,004,678)
4,004,678
(480,204)
(740,631)
Annual Report 2015
089

31 December 2015
continued
17. Deferred tax (CONTD)

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

Other deductible temporary difference - provisions

2015
RM
Group
2014
RM
2015
RM
Company
2014
RM
1,705,187
56,539,228
12,521,701
140,187
53,448,501
18,142,807
1,468,022
7,171,189
12,521,701
6,947,246
18,142,807
70,766,116
71,731,495
21,160,912
25,090,053
Unrecognised tax losses
At the reporting date, the Group has tax losses and capital allowances of approximately that are available for offset
against future taxable profits of the companies in which the losses arose, for which no deferred tax assets are recognised
due to uncertainty of their recoverability. The availability of unutilised tax losses and unabsorbed capital allowances for
offsetting against future taxable profits of the respective companies in Malaysia is subject to no substantial changes in
shareholdings of those companies under the Income Tax Act, 1967 and guidelines issued by the tax authority. The use
of tax losses of subsidiaries in other countries is subject to the agreement of the tax authorities and compliance with
certain provisions of the tax legislation of the respective countries in which the subsidiaries operate.
Certain unutilised tax losses of a subsidiary amounting to RM12,978,010 (2014: RM10,568,909) are available for carry
forward in the jurisdiction in which the subsidiary operates for a period of 20 years from the year in which the tax
losses arose.
18. Inventories

2015
RM
Group
2014
RM
2015
RM
Company
2014
RM
Stores and supplies

Raw materials
Work-in-progress
Finished goods
Merchandising stocks
4,244,322
10,164,243
19,050,420
11,851,215
208,402
4,508,030
10,841,251
18,951,895
21,731,140
208,402
4,244,322
7,273,016
15,391,505
12,172,029
208,402
4,508,030
7,289,150
18,918,317
13,616,943
208,402
45,518,602
56,240,718
39,289,274
44,540,842
Work-in-progress
Finished goods

3,984,438
11,559,027
1,347,566
2,759,215
3,984,438
8,190,936
1,347,566
2,759,215
15,543,465
4,106,781
12,175,374
4,106,781
61,062,067
60,347,499
51,464,648
48,647,623
Cost
090
Net realisable value
During the year, the amount of inventories recognised as an expense in cost of sales of the Group and the Company
were RM32,222,931 (2014: RM32,820,606) and RM28,884,881 (2014: RM31,714,492) respectively.

31 December 2015
continued
19. Amounts due from customers on contract

2015
RM
Group
2014
RM
Installation service costs incurred to date

Attributable profits
14,813,433
836,668
6,518,904
636,124

Less: Progress billings
15,650,101
(15,428,780)
7,155,028
(5,364,087)
Amount due from customers on service contract (Note 16)
221,321
1,790,941
Retention sums, included in trade receivables (Note 16)
1,421,359
1,185,069
Advances received, included in other payables (Note 23)
350,391
675,442
20. Cash and bank balances
2015
RM
Group Company
2014
2015
2014
RM
RM
RM
Cash on hand and at banks

Short term deposit with a licensed bank
2,791,727
-
2,242,554
65,949
1,161,370
-
112,156
-
Cash and bank balances (Note 30(b))
2,791,727
2,308,503
1,161,370
112,156
Cash at banks earns interest at floating rates based on daily bank deposit rates. In the previous financial year, the
maturity of the short-term deposit was 1 year and the deposit earned interest at 0.8% per annum.
The short term deposit was pledged as security for rental deposit.
For the purpose of the cash flow statements, cash and cash equivalents comprise the following as at reporting date:

2015
RM
Group
2014
RM
2015
RM
Company
2014
RM
Cash and bank balances

Bank overdrafts (Note 21)
2,791,727
(1,350,377)
2,308,503
(1,537,478)
1,161,370
(1,350,377)
112,156
(1,537,478)

Less: Deposit pledged with a licensed bank
1,441,350
-
771,025
(65,949)
(189,007)
-
(1,425,322)
-
Cash and cash equivalents
1,441,350
705,076
(189,007)
(1,425,322)
Annual Report 2015
091

31 December 2015
continued
21. Borrowings
2015
RM
Group
2014
RM
2015
RM
Company
2014
RM
On demand
2015
2015
2015
1,350,377
11,200,000
250,993
5,500,000
1,537,478
12,062,000
403,808
5,300,000
1,350,377
8,435,000
250,993
5,500,000
1,537,478
12,062,000
403,808
5,300,000
Total borrowings (Note 30(b))
18,301,370
19,303,286
15,536,370
19,303,286

Maturity
Current Unsecured:

Bank overdrafts (Note 20)
Bankers acceptances
Foreign currency trade credit
Revolving credit
092
The Company has provided a negative pledge for its bank borrowings.

Unutilised borrowing facilities as at 31 December 2015 are as follows:

2015
RM
Group
2014
RM
2015
RM
Company
2014
RM
Bank overdraft
Bankers acceptances and guarantees
Trust receipts
Revolving credit
1,149,623
10,045,905
8,000,000
500,000
962,522
9,031,090
8,000,000
700,000
1,149,623
12,764,007
8,000,000
500,000
962,522
8,984,192
8,000,000
700,000
19,695,528
18,693,612
22,413,630
18,646,714
All short term bank borrowings mature within one year from the balance sheet date. The range of the interest rates per
annum at the reporting date were as follows:

2015
%
Group
2014
%
2015
%
Company
2014
%
Floating rate
Bank overdraft
Bankers acceptances
Foreign currency trade credit
Revolving credit
7.35 - 8.10
3.22 - 4.82
1.40 - 3.64
3.36 - 5.26
6.80 - 7.85
3.44 - 4.78
1.18 - 1.74
3.83 - 5.10
7.35 - 8.10
3.22 - 4.82
1.40 - 3.64
3.36 - 5.26
6.80 - 7.85
3.44 - 4.78
1.18 - 1.74
3.83 - 5.10
22. Derivatives

Group and Company
Non-hedging derivatives:
Forward currency contracts
2015
2014
RM
RM
Contract/
Contract/
Notional
Notional
Amount
Liability
Amount
Liability
1,130,202
8,332

31 December 2015
continued
22. Derivatives (CONTd)

The Group uses forward currency contracts to manage some of the transaction exposure. These contracts are not
designated as cash flow or fair value hedges and are entered into for periods consistent with currency transaction
exposure and fair value changes exposure. Such derivatives do not qualify for hedge accounting.
Forward currency contracts were used to hedge the Groups sales denominated in USD and EUR for which firm
commitments existed at the previous financial year reporting date, extended to May 2015.
The method and assumptions applied in determining the fair values of derivative are disclosed in Note 29.
23. Trade and other payables

2015
RM
Group Company
2014
2015
2014
RM
RM
RM
Current
Trade payables
Third parties
Amount due to subsidiaries
2,596,581
-
1,334,790
-
1,781,524
4,761,695
963,245
6,715,694
2,596,581
1,334,790
6,543,219
7,678,939
2015
RM
Group Company
2014
2015
2014
RM
RM
RM
Other payables
Advances from:
- holding company
- subsidiary
Advances from customers
on contracts (Note 19)
Accruals
Sundry payables
3,171,267
-
1,399,942
-
3,125,655
1,190,271
1,399,918
-
350,391
1,199,171
1,271,971
675,442
1,125,809
1,220,420
-
661,281
965,035
803,124
397,152
5,992,800
4,421,613
5,942,242
2,600,194
8,589,381
18,301,370
5,756,403
19,303,286
12,485,461
15,536,370
10,279,133
19,303,286
26,890,751
25,059,689
28,021,831
29,582,419
Total trade and other payables (Note 30(b))

Add: Loans and borrowings (Note 21)
Total financial liabilities carried at amortised cost

(a) Trade and other payables
The trade payables are non-interest bearing and the normal trade credit terms granted to the Group range from 30
to 60 days (2014: 30 to 60 days).
(b) Advances from holding and subsidiary companies

Advances from holding and subsidiary companies are unsecured and repayable on demand.
Annual Report 2015
093
Advances from holding company bears interest at 4.50% (2014: 3.50%) per annum whilst the advances from a
subsidiary company is non-interest bearing.

31 December 2015
continued
24. Share capital

Group and Company
Number of ordinary

shares of RM0.50 each Amount

2015
2014
2015
2014

RM
RM
Authorised:
At 1 January/31 December
400,000,000 400,000,000 200,000,000 200,000,000
Isued and fully paid:

At 1 January/31 December

168,000,000 168,000,000
84,000,000
84,000,000
The holders of ordinary shares (except treasury shares) are entitled to receive dividends as and when declared by
the Company. All ordinary shares carry one vote per share without restrictions and rank equally with regard to the
Companys residual assets.
25. Retained earnings

The Company may distribute dividends out of its entire retained earnings under the single tier system.
26. Other reserves

The foreign currency translation reserve represents exchange differences arising from the translation of the financial
statements of foreign subsidiaries whose functional currencies are different from that of the Groups presentation
currency.

27. Related party disclosures
(a) Sales and purchases of goods and services
094
In addition to the related party information disclosed elsewhere in the financial statements, the following significant
transactions between the Group and related parties took place at terms agreed between the parties during the
financial year:

Group Company

2015
2014
2015
2014

RM
RM
RM
RM
Sale of wood products to:
- subsidiaries
-
-
(9,502,822) (13,334,181)
- goods returned
-
-
-
2,220,100
Rental of premises paid to holding company (Note 8)
44,711
-
-
Interest on advances payable to holding company
(Note 7)
137,530
85,263
137,530
85,263
Sub-license and entrance fees paid to a subsidiary
-
-
561,114
485,706
Sales commission paid to a non-controlling
interest of a subsidiary
-
-
-
19,064
Transfer of property, plant and equipment to
holding company (Note 13)
125,400
-
125,400
-

31 December 2015
continued
27. Related party disclosures (CONTD)

(b) Compensation of key management personnel

The remuneration of the directors, being the key management personnel of the Group, are disclosed in Note 10 to
the financial statements.
28. Commitments
(a) Operating lease commitments - as lessee

Future minimum rentals payable under non-cancellable operating leases of the Group at the reporting date are
as follows:
2015
RM
2014
RM
Not later than 1 year

Later than 1 year but not later than 5 years
220,564
365,126
193,959
77,980
585,690
271,939
(b) Operating lease commitments - as lessor

Future minimum rentals receivable under non-cancellable operating lease of the Group at the reporting date are
as follows:
2015
RM
2014
RM
Not later than 1 year
6,201
(c) Financial guarantees

Unsecured guarantees utilised amounting to RM1,315,975 (2014: RM1,678,363) are provided by the Group to
financial institutions in respect of credit facilities granted.
29. Fair value of financial assets

A. Fair value hierarchy
The Group categories fair value measurement using a fair value hierarchy that is dependent on the valuation inputs
used as follows:
- Level 1 : quoted prices (unadjusted) in active markets for identical assets or liabilities that the Group can
access at the measurement date,

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

- Level 3 : unobservable inputs for the asset or liability.

Fair value measurements that use inputs of different hierarchy levels are categorised in its entirety in the same level
of the fair value hierarchy as the lowest level input that is significant to the entire measurement.
Annual Report 2015
095

31 December 2015
continued
29. Fair value of financial assets (contd)

B. Liabilities measured at fair value

The following table shows an analysis of the class of liability measured at fair value at the reporting date:
Fair value measurements at the reporting

date using

Level 1
Level 2
Level 3
Total

RM
RM
RM
RM
Group and Company
Recurring fair value measurements

Derivatives:
Forward currency contracts: - 2014 (Note 22)
8,332
8,332
C.
Determination of fair value

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:

Current
- Trade and other receivables
- Cash and bank balances
- Bank borrowings
- Trade and other payables
Trade and other receivables/payables and bank borrowings (current)
The carrying amounts of these financial assets and liabilities are reasonable approximation of fair values, either due
to their short-term maturities of these instruments.

16
20
21
23
096
Note
Derivatives
Forward currency contracts are valued using a valuation technique with market observable inputs. The most
frequently applied valuation techniques include forward pricing and swap models, using present value calculations.
The models incorporate various inputs including the credit quality of counterparties, foreign exchange spot and
forward rates and interest rate curves.

30. 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 credit risk, liquidity risk, interest rate risk and foreign currency risk.
The Board of Directors reviews and agrees policies and procedures for the management of these risks which are
executed by the Risk Management Committee. The audit committee provides independent oversight to the effectiveness
of the risk management process.

31 December 2015
continued
30. Financial risk management objectives and policies (CONTD)

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) 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 sales made on deferred
credit terms. For other financial assets (including cash and bank balances and short-term investment), 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 to minimise the Groups exposure to bad debts. For transactions
that do not occur in the country of the relevant operating unit, the Group does not offer credit terms without the
approval of the Head of Credit Control. The Group has adopted a policy to enter into trade credit insurance for
first-time customers who wish to trade on credit terms in order to mitigate heightened credit risks.
Exposure to credit risk
At the reporting date, the Groups and the Companys maximum exposure to credit risk is represented by the
carrying amount of each class of financial assets recognised in the statements of financial position, including
derivatives with positive fair values.
Information regarding credit enhancements for trade receivables is disclosed in Note 16.
Credit risk concentration profile
The Group determines concentrations of credit risk by monitoring the country and industry sector profile of its trade
receivables on an ongoing basis. The credit risk concentration profile of the Groups and the Companys trade
receivables at the reporting date are as follows:

Group
RM
2015
% of total
RM
2014
% of total
By country:
Asia
Europe
Malaysia
South-west Pacific
United States of America
Other countries
51,209
1,842,311
7,611,616
3,231,370
3,356,451
84,409
0%
11%
47%
20%
21%
1%
882,805
1,408,532
10,801,229
1,351,102
871,490
60,635
7%
10%
66%
10%
7%
0%
16,177,366
100%
15,375,793
100%
Annual Report 2015
097

31 December 2015
continued

(a) Credit risk (Contd)

Credit risk concentration profile (contd)
The Group determines concentrations of credit risk by monitoring the country and industry sector profile of its trade
receivables on an ongoing basis. The credit risk concentration profile of the Groups and the Companys trade
receivables at the reporting date are as follows: (contd)

Company
RM
2015
% of total
RM
2014
% of total
By country:
Asia
Europe
Malaysia
South-west Pacific
Other countries
51,209
1,262,162
6,150,208
3,231,370
5,787,584
84,410
0%
8%
36%
20%
35%
1%
882,805
717,487
14,592,460
1,351,102
3,457,652
60,636
4%
3%
69%
7%
17%
0%
16,566,943
100%
21,062,142
100%
At the reporting date, approximately 21% (2014: 18%) of the Groups trade receivables were due from 5 major
customers who are located in Europe, United States of America and South-west Pacific.

Financial assets that are neither past due nor impaired
Information regarding trade receivables that are neither past due nor impaired is disclosed in Note 16(a). Deposits
with banks that are neither past due nor impaired are placed with or entered into with reputable financial institutions
or companies with high credit ratings and no history of default.
Information regarding financial assets that are either past due or impaired is disclosed in Note 16(a).
(b) Liquidity risk
098
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 actively manages its debt maturity profile, operating cash flows and the availability of funding so as
to ensure that all refinancing, repayment and funding needs are met. To meet its working capital requirements it
is critical for the Group to maintain sufficient levels of cash or cash convertible investments and to ensure that
adequate banking facilities are readily available for the next 12 months from the financial year ended. As at 31
December 2015, the Group has unutilised banking facilities of RM19,695,528 (2014: RM18,693,612). The Group
has ensured that it has complied with the covenants of its borrowings.
The table below summarises the maturity profile of the Groups and of the Companys liabilities at the reporting
date based on contractual undiscounted repayment obligations.

31 December 2015
continued

(b) Liquidity risk (Contd)

2015
RM
Group Company
2014
2015
2014
RM
RM
RM
On demand or within one year

Financial assets:
Current
- Trade and other receivables (Note 16)
- Cash and bank balances (Note 20)

18,792,418
2,791,727
16,691,258
2,308,503
17,561,614
1,161,370
23,823,854
112,156
Total undiscounted financial assets
21,584,145
18,999,761
18,722,984
23,936,010
Financial liabilities:
Current
- Trade and other payables (Note 23)
- Bank borrowings (Note 21)
8,589,381
18,301,370
5,756,403
19,303,286
12,485,461
15,536,370
10,279,133
19,303,286
Total undiscounted financial liabilities
26,890,751
25,059,689
28,021,831
29,582,419
Total net undiscounted financial liabilities
(5,306,606)
(6,059,928)
(9,298,847)
(5,646,409)
(c) Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of the Groups and of the Companys financial
instruments will fluctuate because of changes in market interest rates.
The Groups and the Companys exposure to interest rate risk arises primarily from their loans and borrowings.
The information on maturity dates and effective interest rates of financial assets and liabilities which are exposed
to interest rate risk are disclosed in their respective notes.
Sensitivity analysis for interest rate risk
At the reporting date, if interest rates had been 5 basis points lower/higher, with all other variables held constant,
the Groups loss net of tax would have been RM5,826 (2014: RM7,239) lower/higher, arising mainly as a result of
lower/higher interest expense on floating rate loans and borrowings, lower/higher interest expense from floating
rate loans from holding company.
The assumed movement in basis points for interest rate sensitivity analysis is based on the currently observable
market environment.
Approximately 67% (2014: 61%) and 45% (2014: 47%) of the Groups sales and cost of sales are denominated
in foreign currencies respectively. The Groups 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 and EUR) amount to RM790,517 (2014:
RM1,133,625) for the Group.
Annual Report 2015
(d) Foreign currency exchange risk
099

31 December 2015
continued

(d) Foreign currency exchange risk (Contd)

The Group requires all of its operating entities to use forward currency contracts to eliminate the currency exposures
on any individual transactions for which payment is anticipated more than one month after the Group has entered
into a firm commitment for a sale or purchase. The forward currency contracts must be in the same currency as
the hedged item. It is the Groups policy not to enter into forward contracts until a firm commitment is in place.
During the financial year, the Group hedged 94% (2014: 87%) of its foreign currency denominated sales and
purchases. The firm commitments did not exist as at the current reporting date. The firm commitments in the
previous financial year had extended to May 2015.
Sensitivity analysis for foreign currency risk
The following table demonstrates the sensitivity of the Groups loss net of tax to a reasonably possible change in
the USD and EUR exchange rates against the respective functional currencies of the Group entities, with all other
variables held constant.

USD/RM
- Strengthened 5%
- Weakened 5%

EUR/RM
- Strengthened 5%
- Weakened 5%
2015
RM
Group
2014
RM
2015
RM
Company
2014
RM
(13,000)
13,000
35,000
(35,000)
85,000
(85,000)
23,000
(23,000)
(108,000)
108,000
28,000
(28,000)
98,000
(98,000)
80,000
(80,000)
Included in the following statements of financial position captions of the Group as at the reporting date are balances
denominated in the following major foreign currencies:

United
States

Dollars Euro Total
RM RM RM
At 31 December 2015
100
Cash, deposit and bank balances

Receivables
Payables
Borrowings
453,957
2,971,194
585,451
118,613
336,560
2,679,271
29,927
42,472
790,517
5,650,465
615,378
161,085
889,251
1,947,640
171,718
211,483
244,375
1,576,524
-
192,325
1,133,626
3,524,164
171,718
403,808

At 31 December 2014
Cash, deposit and bank balances
Receivables
Payables
Borrowings

31 December 2015
continued
31. Capital management

The primary objective of the Groups 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 December 2015 and 31 December 2014.
The Group monitors capital using a debt/equity ratio, which is loans and borrowings less cash and bank balances
divided by shareholder fund. The Group intends to manage its debt/equity at below 1.0 level over the near to medium
term to support its existing credit metrics.

Note

Bank borrowings
Less: Cash and bank balances
2015
RM
Group Company
2014
2015
2014
RM
RM
RM
21
20
18,301,370
(2,791,727)
19,303,286
(2,308,503)
15,536,370
(1,161,370)
19,303,286
(112,156)
15,509,643
16,994,783
14,375,000
19,191,130
Total equity
95,005,540
97,168,690
Debt/equity ratio
0.16
0.17
108,075,519 108,909,241
0.13
0.18
32. Segment information

(a) Geographical segments

The Group operates in three principal geographical areas of the world. In Malaysia, its home country, the Groups
areas of operations are principally wood product manufacturing and sale of downstream wood products.
The Group also operates in Spain, Luxembourg and the United States of America, where it engages in wood
product marketing and selling.

Consolidated
United States
financial

Malaysia
Europe of America Eliminations statements
RM
RM
RM
RM
RM

Revenue
External customers
Inter-segment
38,698,724
2,372,026
2,450,434
-
1,771,190
-
-
(2,372,026)
42,920,348
-
Total revenue
41,070,750
2,450,434
1,771,190
(2,372,026)
42,920,348

Results:
Segment loss
(1,638,626)
(4,113,547)
(1,958,576)
5,628,175
(2,082,574)
(954,520)
Loss before tax

Income tax expense (Note 11)
(3,037,094)
(263,481)
Loss net of tax
(3,300,575)
Annual Report 2015
31 December 2015
101

31 December 2015
continued
32. Segment information (CONTD)

(a) Geographical segments (Contd)

Consolidated

United States
financial

Malaysia
RM
RM
RM
RM
RM
31 December 2015
Assets
Segment assets
Unallocated assets
- Deferred tax assets and
tax recoverable
Total assets
Liabilities
Segment liabilities
145,989,564
6,209,669
3,411,403
(34,521,684)
121,088,952
807,339
121,896,291
31,058,287
27,820,438
2,846,493
(34,834,467)
26,890,751
195,308
3,224,263
-
-
133,699
(65)
-
759
-
-
-
-
195,308
3,358,721
(65)
(303,426)
(303,426)
49,151
66,577
717,871
10,635
-
-
-
-
24,664
-
-
-
59,786
66,577
742,535
210,644
210,644
(623,859)
(107,633)
(731,492)
Revenue
External customers
Inter-segment
39,830,184
624,793
1,776,272
-
1,421,191
-
-
(624,793)
43,027,647
-
Total revenue
40,454,977
1,776,272
1,421,191
(624,793)
43,027,647

Results:
Segment loss
(13,318,277)
(1,620,428)
(456,016)
9,268,149
(6,126,572)
(867,266)
Loss before tax

Income tax expense (Note 11)

(6,993,838)
194,994
Loss net of tax
(6,798,844)
Other segment information

Capital expenditure
Depreciation (Note 8)
Other non-cash (gain)/expenses:
Unrealised foreign exchange
gain (Note 6)
Impairment loss on trade
receivables (Note 8)
written off (Note 8)
Reversal of allowance for
impairment of trade
31 December 2014
102

31 December 2015
continued

(a) Geographical segments (Contd)

Consolidated
United States
financial

Malaysia
RM
RM
RM
RM
RM
31 December 2014
Assets
Segment assets
149,402,471
8,305,922
5,167,704 (41,722,819) 121,153,278
Unallocated assets
- Deferred tax assets and

tax recoverable
1,083,433
Total assets
122,236,711

Liabilities
Segment liabilities
31,311,282
23,048,527
2,842,728
(32,134,516)
25,068,021
151,547
3,283,572
(3,200)
157,891
10,755
(94)
-
550
-
-
-
-
309,438
3,294,877
(3,294)
(22,054)
(22,054)
2,101,562
2,159,266
7,855
166,030
-
805,936
124,486
-
-
-
-
-
2,392,078
2,159,266
813,791
26,073
26,073
(361,516)
(361,516)
2015
RM
2014
RM
Asia
Europe
Malaysia
South-west Pacific
Others
4,723,491
7,734,428
14,203,385
9,512,533
6,368,297
378,214
4,774,292
6,750,987
16,823,347
6,204,168
6,735,377
1,739,476
42,920,348
43,027,647

Other segment information
Capital expenditure
Depreciation (Note 8)
Other non-cash (gain)/expenses:
Unrealised foreign exchange gain
(Note 6)
Impairment loss on trade
written off (Note 8)
Reversal of allowance for
impairment of trade
Annual Report 2015
Revenue by geographical location of customers
103

31 December 2015
continued

(b) Business segments

The Group operates in a single industry and accordingly, the financial information by business segments is
not presented.
(c) Allocation basis and transfer pricing

Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be
allocated on a reasonable basis. Unallocated items comprise mainly corporate assets, liabilities and expenses.
Transfer prices between business segments are set on an arms length basis in a manner similar to transactions
with third parties. Segment revenue, expenses and results include transfers between business segments. These
transfers are eliminated on consolidation.
(d) Revenue from group of customers
104
Revenue from a group of 5 customers totalling RM15,823,054 (2014: RM15,086,449) arise from sales of wood
products in all regions.

31 December 2015
continued
33. Supplementary information breakdown of retained earnings into realised and

unrealised
The breakdown of the retained earnings of the Group and of the Company as at 31 December 2015 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.

2015
RM
Total retained earnings of the Company and

its subsidiaries
- Realised
- Unrealised
(34,579,353)
(4,348,429)
(28,463,185)
(4,304,061)
24,969,408
(4,748,430)
25,758,761
(4,704,061)

Add : Consolidation adjustment
(38,927,782)
46,083,922
(32,767,246)
43,175,258
20,220,978
-
21,054,700
-
7,156,140
10,408,012
20,220,978
21,054,700
Retained earnings as per audited financial statements
Group Company
2014
2015
2014
RM
RM
RM
Annual Report 2015
105
ANALYSIS OF
SHAREHOLDINGS
AS AT 31 MARCH 2016
Authorised Capital
RM200,000,000 divided into 400,000,000 ordinary shares of RM0.50 each
Issued and Fully Paid-Up Capital
RM84,000,000 divided into 168,000,000 ordinary shares of RM0.50 each
Class of Shares
Ordinary shares of RM0.50 each fully paid-up
Voting Rights
One vote per RM0.50 share
1. Analysis By Size Of Shareholdings
No. of
No. of
Size of Shareholdings Shareholders
% Shares held

1 -
99

100 -
1,000

1,001 -
10,000

10,001 -
100,000

100,001 - 8,399,999*

8,400,000 and above**
89
455
662
416
85
1
5.21
26.64
38.76
24.36
4.98
0.06
2,278
241,824
3,163,107
15,325,656
35,942,147
113,324,988
Total
1,708
100.00
168,000,000
*
**

Dato Tan Aik Sim
Dr. Tee Choon Hwa
Yap Boon Teck
Lim Fook Hin
Tan Ek Huat (alternate to Dato Tan Aik Sim)
Negligible
0.14
1.88
9.12
21.39
67.46
100.00
Less than 5% of issued holdings

5% and above of issued holdings
2. DIRECTORS SHAREHOLDINGS

No. of Shares held
Name
Direct
% Indirect
106
6,274,939
3.74
-
-
-
-
838,506
0.50
-
-
-
-
50,000
0.03
-
- - - - - - 318,445
0.19
-
-

3. SUBSTANTIAL SHAREHOLDER
Name No. of Shares held
TSH Resources Berhad
113,324,988
%
67.46
ANALYSIS OF SHAREHOLDINGS
AS AT 31 MARCH 2016
continued
4. THIRTY (30) LARGEST SHAREHOLDERS
1.

2.

3.

4.

5.

6.

7.

8.

9.

10.

11.

12.

13.

14.

15.

16.

17.

18.
TSH Resources Berhad
113,324,988
67.46
RHB Capital Nominees (Tempatan) Sdn Bhd

- Pledged securities account for Tan Aik Pen
5,759,997
3.43
Alliancegroup Nominees (Tempatan) Sdn Bhd

- Pledged securities account for Ngai Chee Ping
2,628,454
1.56
CIMSEC Nominees (Tempatan) Sdn Bhd

- CIMB Bank for Hee Yuen Sang
2,000,000
1.19

- Pledged securities account for Julie Mae Yeong
1,536,126
0.91
Public Nominees (Tempatan) Sdn Bhd

Pledged securities account for Ching Soon Liang
980,000
0.58
907,192
0.54
Wong Chin Hor
862,000
0.51

- Pledged securities account for Tan Aik Yong
840,506
0.50
HSBC Nominees (Tempatan) Sdn Bhd

- Tan Aik Sim
838,506
0.50
Maybank Nominees (Asing) Sdn Bhd

- Eccles Equity Asia Ltd.
781,740
0.47
Amsec Nominees (Tempatan) Sdn Bhd

- Pledged securities account for Julie Mae Yeong
722,360
0.43

- Pledged securities account for Ngai Chee Ping
623,140
0.37
Maybank Securities Nominees (Tempatan) Sdn Bhd

Pledged securities account for Ting Yuet May
528,600
0.31

- Pledged securities account Ambank (M) Berhad for Tan Aik Pen
514,942
0.31
Khor Siew Yan
500,010
0.30
Ong Soi Tat
500,000
0.30
Yeong Tau Lan
500,000
0.30
Tan Aik Kiong
Annual Report 2015
Name of Shareholders No. of Shares held
107
ANALYSIS OF SHAREHOLDINGS
AS AT 31 MARCH 2016
continued
4. THIRTY (30) LARGEST SHAREHOLDERS (CONTD)

Name of Shareholders No. of Shares held
19.

20.

21.

22.

23.

24.

25.

26.

27.

28.

29.

30.

108
Golden Brook Sdn Bhd
475,000
0.28
Maybank Nominees (Asing) Sdn Bhd

- Walton Private Investment Limited
475,000
0.28
Affin Hwang Nominees (Tempatan) Sdn Bhd

- Pledged securities account for Neoh Soon Kean
450,000
0.27
Affin Hwang Nominees (Tempatan) Sdn Bhd

- Pledged securities account for Chan Hong Ee
450,000
0.27
Khor Eng Loon
420,400
0.25
Balaskanda A/L Thamotharam
400,000
0.24
Liew Sin Keat
400,000
0.24
Khor Meow Siang
398,300
0.24
Chee Hian Boon @ Chee Ah Deck
393,600
0.23
Tan Soon Hong
350,761
0.21
Chan Fong Yau
330,000
0.20
Kenanga Nominees (Tempatan) Sdn Bhd

Pledged securities account for Tan Bee Yook
330,000
0.20
LIST OF
PROPERTY
Lot 1-12, Jalan Industri 2/1

Kawasan Perindustrian Gopeng
KM 15 Jalan Gopeng
Mukim Sg. Raya, Gopeng
Title No. PN 214516-214525
PN 214528 & PN 214530
Mukim Sungai Raya & Title No.
PN 214489 & PN 214490
PN 214492-214496 Mukim Teja
District of Kinta, State of Perak
Description
Area
Existing
use
Industrial land
1,752,254
sq. ft
Factory
& office
Tenure
60 years
lease from
29.09.1995
for land under
Mukim Sungai
Raya and
60 years
lease from
27.03.1996
for land under
Mukim Teja
Approximate
age of building
(years)
Net book
value
as at
31.12.2015
(RM)
Date of
Acquisition
20
25,014,634
18.01.1995
Annual Report 2015
Location
HELD BY THE COMPANY AS AT 31 DECEMBER 2015
109
Notice of
Nomination of auditors
110
PROXY
F ORM
(Incorporated in Malaysia)
CDS Account No.
I/We __________________________________________________________ *NRIC/Company No. ____________________________

(FULL NAME IN CAPITAL LETTERS)
of________________________________________________________________________________________________________________

(FULL ADDRESS)
being *a member/members of EKOWOOD INTERNATIONAL BERHAD hereby appoint __________________________________

______________________________________________________________ *NRIC No./Passport No. __________________________
of________________________________________________________________________________________________________________

(FULL ADDRESS)
or failing *him/her _______________________________________________ *NRIC No./Passport No. __________________________

of________________________________________________________________________________________________________________

(FULL ADDRESS)
as *my/our proxy to attend, speak and vote for *me/us on *my/our behalf at the Twenty-Second Annual General Meeting of the
Company to be held at Ballroom 2, LG Level, Eastin Hotel, 13, Section 16/11, Jalan Damansara, 46350 Petaling Jaya, Selangor
Darul Ehsan on 26 May 2016 at 12.00 noon and any adjournment thereof and to vote as indicated below:-
*FOR
Resolution 1
Resolution 2
Resolution 3
Resolution 4
Resolution 5
Resolution 6
Resolution 7
Resolution 8
*AGAINST
To approve payment of Directors fees of RM99,871 for the financial year ended
31 December 2015.
To re-elect Dato Haji Abdul Latif bin Abdullah, who is retiring in accordance with
Article 95 of the Companys Articles of Association.
To re-elect Lim Fook Hin, who is retiring in accordance with Article 95 of the Companys
Articles of Association.
To re-elect Selina binti Yeop Junior @ Lope, who is retiring in accordance with Article
86 of the Companys Articles of Association.
To re-elect Yap Boon Teck, who is retiring in accordance with Article 86 of the
Companys Articles of Association.
To appoint Messrs BDO as the Companys Auditors and to authorise Directors to fix
their remuneration.
Proposed authority to issue shares pursuant to Section 132D of the Companies Act,
1965.
To retain Dato Haji Abdul Latif bin Abdullah as the Independent Director.
* Please indicate with an X in the space provided for each resolution. Unless voting instructions are indicated in the space above,
the proxy will vote as he/she thinks fit.
Percentage of shareholdings to be
Signed this _______ day of ______________________ 2016
represented by the proxies:
No. of shares Percentage
Proxy 1
No. of shares
Proxy 2
held
Total
100%
Signature/Common Seal of Appointor
Notes:
1. Only depositors whose names appear in the Record of Depositors as at 20 May 2016 be regarded as
members and entitled to attend, speak and vote at the meeting.
2. A member of the Company entitled to attend and vote at the meeting is entitled to appoint a proxy to attend
and vote in his stead. A proxy may but need not be a member of the Company.
3. The instrument appointing a proxy shall be in writing under the hand of the depositor or his attorney duly
authorised in writing or if such appointor is a corporation, under its common seal and shall be deposited at
the Registered Office of the Company at Level 10, Menara TSH, No. 8 Jalan Semantan, Damansara Heights,
50490 Kuala Lumpur, not less than 48 hours before the time appointed for holding this meeting or adjourned
meeting.
4. Where a member appoints two (2) or more proxies to attend the same meeting, the member shall specify the
proportion of his shareholdings to be represented by each proxy. If the Proxy Form is returned without any
indication as to how the proxy shall vote, the proxy will vote or abstain as he thinks fit and if no names are
inserted in the space for the name of proxy, the Chairman of the meeting will act as proxy.
5. Where a member of the Company is an exempt authorised nominee which holds ordinary shares in the
Company for multiple beneficial owners in one securities account (omnibus account), there is no limit to the
number of proxies which the exempt authorised nominee may appoint in respect of each omnibus account it
holds.
Explanatory Notes:
1. The audited financial statements are meant for discussion only as it does not require shareholders approval
under the provision of Section 169(1) and (3) of the Companies Act, 1965. Hence, it will not be put for voting.
2. Resolution 7, is a renewal of the general mandate empowering the Directors of the Company, pursuant to
Section 132D of the Companies Act, 1965, to issue and allot new shares in the Company from time to time
provided that the aggregate number of shares issued pursuant to the general mandate does not exceed 10%
of the issued share capital of the Company for the time being. This authority, unless revoked or varied by the
Company at a general meeting, will expire at the next Annual General Meeting.

As at the date of this notice, the Company did not issue any new shares pursuant to the general mandate
granted to the Directors at the last Annual General Meeting held on 2 June 2015.
The renewal of the general mandate will provide flexibility to the Company for any possible fund raising
activities without the need to convene separate general meeting to specifically approve such issuance of
shares and thereby reducing administrative time and costs associated with the convening of such meeting.
However, at this juncture, there is no decision to issue new shares. If there should be a decision to issue new
shares after the general mandate is obtained, the Company will make an announcement in respect of the
purpose and utilization of proceeds arising from such issue.
3. For Resolution 8, the Nomination Committee has assessed the independence of Dato Haji Abdul Latif 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 act as an Independent Non-Executive Director
of the Company based on the following justifications:(i) He fulfilled the criteria under the definition of an Independent Director as stated in the Bursa Malaysia
Securities Berhad Main Market Listing Requirements, and demonstrates complete independence in
character and judgement both in his designated role and as Board member and thus, he would continue
to bring independent view of the Companys affairs to the Board.
(ii) His in-depth knowledge of the Groups businesses and extensive experience and expertise continue to
provide invaluable contribution to the Board.
1st fold here
2nd fold here
AFFIX
STAMP
HERE
The Company Secretary

EKOWOOD INTERNATIONAL BERHAD
(301735-D)
(Incorporated in Malaysia)
Level 10, Menara TSH

No. 8 Jalan Semantan
Damansara Heights
50490 Kuala Lumpur, Malaysia
www.ekowood.com.my
A member of TSH Group
Level 10, Menara TSH, No. 8 Jalan Semantan, Damansara Heights, 50490 Kuala Lumpur, Malaysia
Tel: +(6) 03 2084 0888
Fax: +(6) 03 2084 0828 Email: info@ekowood.com

Ekowood AR 2015

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A

Annual Report 2015

Notice of Annual General

Profile of Board of Directors

Statements of Cash Flows

Notes to the Financial

Audit Committee Report

7. To appoint Auditors and to authorise the Directors to fix their remuneration.

EKOWOOD INTERNATIONAL BERHAD (301735-D)

8. PROPOSED AUTHORITY TO ISSUE SHARES PURSUANT TO SECTION 132D OF THE

NOTICE OF ANNUAL GENERAL MEETING

9. RETENTION OF INDEPENDENT DIRECTOR

By Order of the Board

CHOW YEEN LEE (MAICSA 7047480)

Annual Report 2015

NOTICE OF ANNUAL GENERAL MEETING

EKOWOOD INTERNATIONAL BERHAD (301735-D)

1. Details of persons who are standing for

Please refer to Explanatory Note 2 of the Notice

Annual Report 2015

2. Statement relating to general mandate for

EKOWOOD INTERNATIONAL BERHAD (301735-D)

On behalf of the Board, I am pleased to

Datuk (Dr.) Kelvin Tan Aik Pen

CORPORATE & BUSINESS DEVELOPMENT

INDUSTRY TRENDS & DEVELOPMENTS

We would continue the rationalization exercise to improve

DATUK (DR.) KELVIN TAN AIK PEN

Annual Report 2015

Efforts made by the Group in product and market

TSH PRODUCTS SDN. BHD.

EKOWOOD IBERICA S.L

EKOWOOD (USA) INC.

(Incorporated in the State of California, USA)

EKOWOOD MALAYSIA SDN. BHD.

EKOLOC SYSTEM SDN. BHD.

EKOWOOD INTERNATIONAL BERHAD (301735-D)

Datuk (Dr.) Kelvin Tan Aik Pen

Dato Haji Abdul Latif bin Abdullah

Chairman, Non-Independent NonExecutive Director

Chairman, Independent Non-Executive

Dato Haji Abdul Latif bin Abdullah

Dr. Tee Choon Hwa

Deputy Chairman, Independent NonExecutive Director

Member, Independent Non-Executive

Lot 1-12, Jalan Industri 2/1

Dato Tan Aik Sim

Selina binti Yeop Junior @ Lope

Dr. Tee Choon Hwa

Yap Boon Teck

Lim Fook Hin

Dr. Tee Choon Hwa

Yap Boon Teck

Datuk (Dr.) Kelvin Tan Aik Pen

Dr. Tee Choon Hwa

Chow Yeen Lee (MAICSA 7047480)

Symphony Share Registrars Sdn. Bhd.

STOCK EXCHANGE LISTING

Annual Report 2015

Group Managing Director

Datuk (Dr.) Kelvin Tan Aik Pen

Chairman, Non-Independent Non-Executive Director

EKOWOOD INTERNATIONAL BERHAD (301735-D)