PFCE BERHAD 3 • PFCE BERHAD annual report 2012 CORPORATE STRuCTuRE 65% PFCE Offshore Worldwide...

PFCE BERH

AD

• AN

NUA

L REPORT 2012 ANNUAL

REPORT

dedicated toexcellence

2012

www.pfcebhd.com

PFce Berhad(504718-U)

Level 32, Maju tower1001 Jalan Sultan ismail50250 Kuala LumpurMalaysia

Tel • +603-2772 8775Fax • +603-2772 8405Email • [email protected]

PFCE BERHAD(504718-U)

TABLE OF CONTENTS

2 CORPORATE INFORMATION

3 CORPORATE STRUCTURE

4 CHAIRMAN’S STATEMENT

6 BOARD OF DIRECTORS

11 CORPORATE GOVERNANCE STATEMENT

18 ADDITIONAL COMPLIANCE STATEMENT

20 AUDIT COMMITTEE REPORT

24 STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL

26 DIRECTORS’ REPORT

30 STATEMENT BY DIRECTORS

30 STATUTORY DECLARATION

31 INDEPENDENT AUDITORS’ REPORT

33 STATEMENTS OF FINANCIAL POSITION

35 STATEMENTS OF COMPREHENSIVE INCOME

37 STATEMENTS OF CHANGES IN EQUITY

40 STATEMENTS OF CASH FLOWS

42 NOTES TO THE FINANCIAL STATEMENTS

90 LIST OF PROPERTIES HELD

92 SHAREHOLDINGS STATISTICS

95 NOTICE OF ANNUAL GENERAL MEETING

PROXY FORM

• PFCE BERHAD annual report 20122

CORPORATE INFORMATION

BOARD OF DIRECTORS

Dato’ Abu Talib Bin Mohamed GROUP EXECUTIVE CHAIRMAN

Datuk Lim Chaing Cheah CHIEF EXECUTIVE OFFICER

Lee Peck Hung EXECUTIVE DIRECTOR

Abdul Malek Bin Haji Omar NON-INDEPENDENT NON-EXECUTIVE DIRECTOR

Muammar Gadaffi Bin Abu Talib NON-INDEPENDENT NON-EXECUTIVE DIRECTOR

Ow Hang Sen NON-INDEPENDENT NON-EXECUTIVE DIRECTOR

Tan Sri Mohd Bakri Bin Haji Omar INDEPENDENT NON-EXECUTIVE DIRECTOR

Haji Abd Talib Bin Baba INDEPENDENT NON-EXECUTIVE DIRECTOR

Ong Teng Kek INDEPENDENT NON-EXECUTIVE DIRECTOR

AUDIT COMMITTEE

CHAIRMAN

Haji Abd Talib Bin Baba

INDEPENDENT NON-EXECUTIVE DIRECTOR

MEMBERS

Tan Sri Mohd Bakri Bin Haji Omar

INDEPENDENT

NON-EXECUTIVE DIRECTOR

Ong Teng Kek


COMPANY SECRETARY

Chan Lai Choon

(MAICSA 0809269)

REGISTERED OFFICE

Level 22 Maju Tower1001 Jalan Sultan Ismail50250 Kuala LumpurTel No: 03-2772 8777Fax No: 03-2772 8983

CORPORATE HEAD OFFICE

Level 32 Maju Tower1001 Jalan Sultan Ismail50250 Kuala LumpurTel No: 03-2772 8775Fax No: 03-2772 8405

REMUNERATION AND NOMINATION COMMITTEE

CHAIRMAN

Tan Sri Mohd Bakri Bin Haji Omar


MEMBERS

Haji Abd Talib Bin Baba


Ong Teng KekINDEPENDENT NON-EXECUTIVE DIRECTOR

REGISTRAR

Mega Corporate Services Sdn BhdLevel 15-2Sheraton Imperial CourtJalan Sultan Ismail50250 Kuala LumpurTel No: 03-2692 4271Fax No: 03-2732 5388/2732 5399

AUDITOR

Crowe HorwathLevel 16 Tower CMegan Avenue II12 Jalan Yap Kwan Seng50450 Kuala LumpurTel No: 03-2788 9999Fax No: 03-2788 9998

RISK MANAGEMENT COMMITTEE CHAIRMAN

Abdul Malek Bin Haji Omar

NON-INDEPENDENT NON-EXECUTIVE DIRECTOR

MEMBERS

Ong Teng Kek


Datuk Lim Chaing CheahCHIEF EXECUTIVE OFFICER

PRINCIPAL BANKERS

UOB Bank BerhadCIMB Bank BerhadRHB Bank BerhadMalayan Banking Berhad

STOCK EXCHANGE

Main Market of Bursa MalaysiaSecurities BerhadStock Code : 7165Stock Name: PFCE


CORPORATE STRuCTuRE

65% PFCE Offshore Worldwide Sdn. Bhd. (944615-K) Fabrication of oil and gas steel structures and platforms.

100% Asian Pottery (Penang) Sdn. Bhd. (41609-V) Trade in, export and marketing of pottery and porcelain products, ceramic ware and ornaments.

100% Oriwina Sdn. Bhd. (384926-P) Trade in and manufacture of ceramic wares.

100% Asian Pottery Home & Garden Sdn. Bhd. (385952-T) Retail, trading and wholesale of pottery, ceramic and porcelain products.

100% Asian Earthernware Sdn. Bhd. (197324-K) Trade in and manufacture of pottery and porcelain products.

100% Asian Pottery Manufacturers Sdn. Bhd. (59421-P) Dormant.

100% Metro Craft Sdn. Bhd. (383925-H) (held by Asian Pottery Manufactures Sdn. Bhd.) Dormant.

100% Asian Porcelain Sdn. Bhd. (145106-T) Dormant.

100% Asiarise Holdings Sdn. Bhd. (385684-D) Retail, trading and wholesale of pottery, ceramic and porcelain products.

100% APPI Sdn Bhd (961274-A) Dormant.

100% Guangxi Asian Pottery Co. Ltd. (桂外資 (2006)字(0190)號) Dormant.


CHAIRMAN’S STATEMENT

ON bEhAlF OF ThE bOARd OF dIRECTORS, I TAkE plEASuRE IN pRESENTINg ThE ANNuAl REpORT ANd AudITEd FINANCIAl STATEMENTS OF pFCE bERhAd (“pFCE” OR “ThE gROup”) FOR ThE FINANCIAl yEAR ENdEd 31 dECEMbER 2012 (“FyE2012”).

ChAIRMAN’S STATEMENT (CONT’d)

FINANCIAL PERFORMANCE For the financial year under review, the Group recorded a strong financial performance with revenue surged to RM135.39 million versus RM23.37 million in the previous year. Correspondingly, PFCE posted a pre-tax profit of RM2.84 million and net profit of RM1.34 million as compared to pre-tax loss of RM2.53 million and net loss of RM2.09 million in year before. Basic earnings per share has improved to 0.03 sen versus -2.55 sen in the previous financial year. The improved financial performance was attributable to the oil and gas business undertaken by our subsidiary, PFCE Offshore Worldwide Sdn Bhd (“POW”), whereby POW was accounted for 91% of PFCE’s revenue for FYE2012.

CORPORATE DEVELOPMENT On 11 March 2013, PFCE has announced the approval received from Securities Commission on the Group’s proposal to further consolidate its involvement in the oil and gas sector. Under this proposal, PFCE will own 100% of all the businesses currently undertaken by PFC Engineering Sdn Bhd which is an integrated engineering and maintenance solution provider in the oil and gas industry.

REVIEW OF OPERATIONS In 2012, PFCE through POW has participated in providing engineering, procurement, construction and commission (“EPCC”) services for the rejuvenation and revamp of PETRONAS Gas Berhad’s Processing Plant 2 and 3. The above project has exposed PFCE to plant rejuvenation and revamp services as well as provided PFCE an opportunity to work alongside with international corporations such as Hyundai Engineering Co. Ltd. and Hyundai Engineering & Construction Co. Ltd.

Meanwhile, the performance of our ceramic manufacturing business has improved due to the increased contribution from both North America and South Africa market. During the year, our ceramic cookware has successfully exported to Hong Kong which marked our penetration into export market.

As for domestic market, we have successfully launched a new retail outlet with “garden centre” concept in November 2012 and it is the first of its kind in Malaysia. Going forward, we expect our oil and gas business to be the major earner upon the completion of the consolidation exercise of PFC Engineering Sdn Bhd. Meanwhile, we will continue to expand our ceramic manufacturing business by provision of landscaping services through our retail outlets.

PROPECTS The Malaysian Oil, Gas and Energy industry would continue to remain robust as it is one of the National Key Economic Areas (“NKEA”) within Malaysia’s Economic Transformation Programme (ETP) which will focus on four major thrusts which are, sustaining oil and gas production, enhancing downstream growth, making Malaysia the number one Asian hub for oil field services and building a sustainable energy platform for growth. The 12 targets set in the NKEA to further strengthen the oil and gas industry encompasses the implementation of Enhanced Oil Recovery (EOR) techniques, engineering, procurement and construction for regasification terminals, new well discoveries and marginal oil fields. One of the major initiatives under the NKEA is the much anticipated RM60 billion Refinery and Petrochemical Integrated Development (RAPID) complex in Pengerang, southern Johor by PETRONAS under the Oil, Gas and Energy NKEA. It will be the largest green field investment in Asia-Pacific and is expected to commence in 2014. Among the Entry Point Projects (EPP) identified under the Oil, Gas and Energy NKEA which PFCE will be interested in are rejuvenating existing fields through Enhanced Oil Recovery (EOR), developing small marginal fields through innovative solutions and developing capabilities and capacity through strategic partnerships and joint ventures. In light of these developments, PFCE will be well positioned to participate in selected project packages through partnerships with international EPCC companies.

CORPORATE GOVERNANCE The Board and Management of PFCE are fully committed to the policies and practices of corporate governance. We ensure sustainable value creation for all our shareholders by maintaining the highest standards of corporate governance and risk management of our organisation. Measures taken and implemented have been outlined further in our Statement on Corporate Governance, Statement on Risk Management and Internal Control and the Audit Committee Report, all of which are disclosed further within this Annual Report.

CORPORATE SOCIAL RESPONSIBILITY As part of our efforts to ensure the Group’s sustainable growth, we are committed to carry out responsible business practices that impact positively on our many stakeholders including our customers, employees, shareholders as well as the communities and environment in which we operate. In the year under review, we continued to undertake various corporate social responsibility initiatives that created value in the areas of the workplace, community, environment and marketplace.

APPRECIATION On behalf of PFCE’s Board of Directors, I wish to extend my heartfelt gratitude to our esteemed customers, bankers, suppliers, business associates, government and relevant authorities, members of the media, investors, shareholders and employees for their support and cooperation throughout the year. My sincere appreciation also goes to my fellow Board of Directors for their guidance and counsel, as well as the management and employees for their dedication and unwavering commitment towards the ongoing development of PFCE. Thank you. DATO’ ABU TALIB BIN MOHAMEDGROUP EXECUTIVE CHAIRMAN



DATO’ ABU TALIB BIN MOHAMED GROUP EXECUTIVE CHAIRMAN (AGE 64, MALAYSIAN)

Dato’ Abu Talib bin Mohamed was appointed to the Board on 20 April 2011.

He is a Fellow Member of the Chartered Institute of Management Accountants of United Kingdom and also a Member of the Malaysian Institute of Accountants. Dato’ Abu Talib has extensive knowledge of the steel industry as he was formerly the Director of Operations for Perwaja Steel Sdn Bhd in Kemaman, prior to joining Maju Holdings Sdn Bhd (“Maju Holdings”) as Group Executive Director in 1992. He has been the Group Managing Director of Maju Holdings since 1993 until his resignation as Group Managing Director and director in November 2009.

Dato’ Abu Talib is the Deputy Chairman of Ipmuda Berhad as well as a director of various other private limited companies in Malaysia. He is a deemed major shareholder of the Company.

Dato’ Abu Talib is the father of Muammar Gadaffi bin Abu Talib, who is also a Director and a deemed major shareholder of the Company.

Save as disclosed above, he does not have any family relationship with any other Director and/or any other major shareholder of the Company and does not have any conflict of interest with the Company. He has not been convicted of any offence within the past 10 years.

DATUK LIM CHAING CHEAH CHIEF EXECUTIVE OFFICER (AGE 63, MALAYSIAN)

Datuk Lim Chaing Cheah was appointed to the Board on 04 April 2011 as Executive Director and subsequently re-designated to Chief Executive Officer. He is a member of the Risk Management Committee.

His professional qualification includes a fellowship (“FCA”) in the Institute of Chartered Accountants in England and Wales (“ICAEW”), member of the British Institute of Management and the Corporate Finance Faculty of the ICAEW. He is also a Chartered Accountant with the Malaysian Institute of Accountants. His career began at A.T. Chenhalls and Company in the United Kingdom where he articled for 4 years before joining B. Fish and Partners in the United Kingdom as an Audit Senior for 2 years. He then joined Standard Telephones and Cables PLC as a Financial Analyst and within 4 year quickly rose to the position of Financial Planning Manager. After garnering over 10 years of working experience in the United Kingdom, he returned to Malaysia where he worked in the automotive industry for 6 years under the employment of industry leaders such as Dunlop Malaysia Industries Berhad, Tan Chong Motor Holdings Berhad and Edaran Otomobil Nasional Berhad. In 1987, he returned to his profession as a Partner in Lew and Company before taking up various directorships in public and private companies. He joined Perwaja Steel Sdn Bhd (“PSSB”) as Director – Corporate from 01 June 1988 to 31 December 1994, joined Kanzen Berhad as Executive Director from 13 February 1995 to 31 July 1996. He subsequently joined Maju Holdings Sdn Bhd (“Maju Holdings”) as Executive Director on 01 August 1996, and on 01 July 2002 he was appointed Chief Operating Officer of Maju Holdings. On 06 September 2006 he was appointed to the Board of PSSB as Director.

He is also a director of Perwaja Holdings Berhad.

He does not have any family relationship with any Director and/or major shareholder of the Company and does not have any conflict of interest with the Company. He has not been convicted of any offence within the past 10 years.

BOARD OF dIRECTORS


LEE PECK HUNG EXECUTIVE DIRECTOR (AGE 55, MALAYSIAN)

Mr. Lee Peck Hung was appointed to the Board on 20 April 2011 as an Executive Director.

He holds a Bachelor of Science (Industrial Engineering) from University of Manitoba, Canada.

Mr. Lee joined Sarawak Shell Berhad in 1985 and served in various capacities in Procurement, Logistics, Project Materials Management in Supply Chain Department.

He left Sarawak Shell Berhad in 1996 and formed his own company Megarina Sdn Bhd, He was appointed as Managing Director who managed Contracting Works in Oil and Gas industries.

Mr. Lee was appointed as Executing Director of PFCE Ocean Engineering Sdn Bhd and PFCE Miri (Sarawak) Sdn Bhd in 2006 which he managed the Underwater Maintenance and Construction Works for Oil & Gas Industries.


ABDUL MALEK BIN HAJI OMARNON-INDEPENDENT NON-EXECUTIVE DIRECTOR (AGE 51, MALAYSIAN)

Encik Abdul Malek Bin Haji Omar was appointed to the Board on 20 April 2011 as a Non-Independent Non-Executive Director. He is the Chairman of the Risk Management Committee.

He holds a BSc. (Hons.) Material Engineering from Queen Mary College, University of London and a Masters of Business Administration from Cardiff Business School, University of Wales.

Abdul Malek commenced his career with Siemens Semiconductor Sdn Bhd as an Engineer in the Quality Department in 1984. He later joined Perwaja Steel Sdn Bhd as a Production Engineer for the Steel Making Plant. In 1992, he moved to Aluminium Company of Malaysia (ALCOM) Bhd as the Production Manager for the Sheet & Foil Division.

In 1996, he re-joined Perwaja Steel Sdn Bhd as the Division Head of the Steel Making Division and later promoted to Operations Director of Perwaja Steel. He assumed his current position of Managing Director of PFC Engineering Sdn Bhd since April 2002. He does not have any family relationship with any Director and/or major shareholder of the Company and does not have any conflict of interest with the Company. He has not been convicted of any offence within the past 10 years.

bOARd OF dIRECTORS (CONT’d)


MUAMMAR GADAFFI BIN ABU TALIB NON-INDEPENDENT NON-EXECUTIVE DIRECTOR (AGE 37, MALAYSIAN)

Encik Muammar Gadaffi was appointed to the Board on 20 April 2011 as a Non-Independent Non-Executive Director.

He graduated with a Bachelor of Science in Operations Management from the University of Colorado in 2002.

He kicked off his career as a Marketing Executive in Structural Steel with Edaran Maju-Muda Sdn Bhd from June 1998 until May 1999. From March 2000 until June 2001, he joined Maju Alat Ganti Sdn Bhd as a Sales Executive for their oil & gas products. From 2003 until December 2004, he was attached to PFC Engineering Sdn Bhd (“PFCE”) as a Marketing Executive responsible for the overall planning and analyzing of day to day marketing activities covering oil & gas industries for local and overseas.

He was appointed to the Board of PFCE on 5 March 2009 and currently holds the position of Group Business Development Director. He is also a director of some of the subsidiaries of PFCE. Encik Muammar Gadaffi is a deemed major shareholder of the Company.

He is the son of Dato’ Abu Talib Bin Mohamed, who is the Group Executive Chairman and a deemed major shareholder of the Company.

Save as disclosed above, he does not have any family relationship with any Director and/or major shareholder of the Company and does not have any conflict of interest with the Company. He has not been convicted of any offence within the past 10 years.

OW HANG SEN NON-INDEPENDENT NON-EXECUTIVE DIRECTOR (AGE 65, MALAYSIAN)

Mr. Ow Hang Sen obtained a Modern Management Program Certificate from the National University of Singapore in 1991.

His career’s path started as an Administrative Officer with Ceratek Pte. Ltd. from 1968 to 1970. He then joined his renowned family business, Aw Pottery Sdn Bhd as General Manager and last served as Managing Director for almost 10 years.

Mr. Ow is a person with vast business acumen in this line of mercantile engagement. He has been involved in all the basics and intricacies of pottery making and manufacturing for many years. He was highly instrumental in establishing a nation-wide network of outlets for the products manufactured by Aw Pottery Sdn Bhd and had since made it to be a household name in the domestic and international markets. He was the original founder of Asian Pottery (Penang) Sdn Bhd (“APPSB”), a leading pottery-trading house in Penang in 1979 and later established several pottery manufacturing factories namely; Asian Earthernware Sdn Bhd, Asian Pottery Manufacturers Sdn Bhd, Oriwina Sdn Bhd and Asian Porcelain Sdn Bhd.

He was appointed to the Board on 28 May 2003. He sits on the Board of all the wholly-owned subsidiary companies of PFCE Berhad save for PFCE Offshore Worldwide Sdn Bhd.




TAN SRI MOHD BAKRI BIN HAJI OMAR INDEPENDENT NON-EXECUTIVE DIRECTOR (AGE 64, MALAYSIAN)

Tan Sri Mohd Bakri bin Haji Omar was appointed to the Board on 20 April 2011 as Independent Non-Executive Director. He is Chairman of the Remuneration and Nomination Committee and a Member of the Audit Committee.

He holds a Bachelor of Arts Degree from the University of Malaya (1970) and Master of Arts in Political Science from the Ohio University, United States of America (1983). He also attended the Royal College of Defence Studies in London, United Kingdom (1995).

Tan Sri Mohd Bakri bin Haji Omar was previously the Inspector-General of Police, Royal Malaysia Police. He joined the Police Force on 1 January 1971 as a Cadet Assistant Superintendent of Police and thereafter served in several departments in the Police Force. He was the Officer In-Charge of several Police Districts including Mersing (Johor), Balik Pulau (Penang) and Petaling Jaya (Selangor). He has also served as the Chief Police Officer of Kedah and Kuala Lumpur and the Commissioner of Police Sabah.

In 1987, he held the post of Officer In-Charge of Criminal Investigation Department in Kuala Lumpur. In 1992, Tan Sri Mohd Bakri bin Haji Omar was seconded to Malaysia Airport Berhad as its General Manager - Security, Safety and Human Resource Management and later in 1998 to the Ministry of Home Affairs as the Director-General of the National Narcotics Agency. Upon his return to the Royal Malaysia Police Headquarters in October 1999, he assumed the post of Director of Management. On 10 March 2003, he was appointed the Deputy Inspector-General of Police of the Royal Malaysia Police and subsequently on 06 November 2003, he was appointed as Inspector-General of Police.

He is also a director of Perwaja Holdings Berhad.


HAJI ABD TALIB BIN BABA INDEPENDENT NON-EXECUTIVE DIRECTOR (AGE 67, MALAYSIAN)

Haji Abd Talib Bin Baba was appointed to the Board on 20 April 2011 as an Independent Non-Executive Director. He is the Chairman of the Audit Committee and a member of the Remuneration and Nomination Committee.

He is a Fellow member of the Chartered Association of Certified Accountants (“ACCA”), United Kingdom and a Registered member of the Malaysian Institute of Accountants (“MIA”).

Upon obtaining his professional qualification, he worked with Petronas Berhad as Internal Auditor for 6 years and subsequently as Finance Manager with Petronas Penapisan (T) Sdn Bhd for 9 years before moving on to Petronas Berhad’s Corporate Head Office as Senior Manager Accounts and Finance Services. He was with Petronas Mitco Sdn Bhd as Senior Manager – Finance and Planning when he retired in October 1999.

He is currently a Non-Executive Director of Mesiniaga Berhad and Emas Kiara Industries Berhad.




ONG TENG KEK INDEPENDENT NON-EXECUTIVE DIRECTOR (AGE 53, MALAYSIAN)

Mr. Ong was appointed to the Board on 20 April 2011 as an Independent Non-Executive Director. He is a member of the Audit Committee, Risk Management Committee and Remuneration and Nomination Committee.

He is a law graduate from the University of Liverpool and Lincoln’s Inn London. He was called to the Bar of the High Court of Malaya in 1985.

He runs a medium sized practice with a bias toward corporate litigation. Personally he has a special interest in liquidation law and has been involved in various water mark breaking cases in the Federal Court of Malaya.

He is also a director of a leading paint manufacturing company in Malaysia called Mr. Paintman Sdn Bhd which is a partner to Kansai Paint, Japan.

He is active in the social front and is the Chairman of the Fraser Towers, Joint Management Committee.

He does not hold any directorship in other public companies. He does not have any family relationship with any Director and/or major shareholder of the Company and does not have any conflict of interest with the Company. He has not been convicted of any offence within the past 10 years.



CORPORATE GOVERNANCE STATEMENT

The Board of Directors recognises the importance of the role of good Corporate Governance throughout the Group as a fundamental part of discharging their fiduciary duties and responsibilities, so as to achieve its corporate mission and in enhancing shareholders’ value.

The Board is committed to ensure Corporate Governance adopted by the Company is in line with the principles set out in the Malaysian Code on Corporate Governance 2012 (“MCCG 2012”). The Board further acknowledges the recommendations set out in MCCG 2012 and continue to evaluate the status of the practices and the adopted alternatives.

The Board is pleased to provide the following statements, which outline the main corporate governance principles that were in place throughout the financial year, unless otherwise stated.

A. BOARD OF DIRECTORS Board Responsibilities

The Board provides stewardship to the Group’s strategic direction and operations, and ultimately the enhancement of long-term shareholders’ value. The Board is primarily responsible for:

• AdoptingandmonitoringprogressoftheCompany’sstrategies,budgets,plansandpolicies;• OverseeingtheconductoftheCompany’sbusinesstoevaluatewhetherthebusinessisbeingproperly

managed;• Consideringmanagement recommendationsonkey issues includingacquisitionsanddivestments,

restructuring,fundingandsignificantcapitalexpenditure;• Successionplanningincludingappointingandreviewingthecompensationofthetopmanagement;• Identifyingprincipalrisksandensuringtheimplementationofappropriatesystemstomanagethese

risks;and• ReviewingtheadequacyandintegrityoftheCompany’s internalcontrolsystemsandmanagement

information systems, including systems for compliance with applicable laws, regulations, rules, directives and guidelines,

whilst management is accountable for the execution of the expressed policies and attainment of the Group’s expressed corporate objectives. The demarcation complements and reinforces the supervisory role of the Board.

Board Charter

The Board Charter serves as a referencing point for Board’s activities to enable Directors carry out their stewardshiproleanddischargetheirfiduciarydutiestowardstheCompany.Italsoseekstoincludeaformalschedule of matters reserved to the Board for deliberation and decision so that the control and direction of theCompanyareinitshands.Subsequenttothefinancialyear,theBoardhasapprovedtheBoardCharterwhich sets out a list of specific functions that are reserved for the Board. The Board Charter addresses the following matters:

i. Board Membership, which includes composition, appointments and re-election and independence of Directors;

ii. RoleoftheBoard,whichincludesdutiesandresponsibilitiesandmattersreservedfortheBoard;iii. RoleofChairmanandChiefExecutiveOfficer;iv. BoardCommitteesandBoardMeetings;v. FinancialReporting;vi. Directors’Remuneration;vii. Directors’TrainingandContinuingEducation;viii. CompanySecretary;ix. InvestorRelationsandShareholders’Communication;x. AccesstoInformationandIndependentAdvice;andxi. Directors’CodeofConductandEthics.

TheapprovalandadoptionoftheBoardCharterinwhichtheCodeofConductandEthicsforDirectorsisembedded in the Board Charter formalizes the standard of ethical values and behavior that is expected of its Directors at all times.


CORPORATE GOVERNANCE STATEMENT (CONT’d)

The Board Charter will be reviewed periodically to ensure its relevance and compliance.

The Board Charter had yet to be made publicly available. Nonetheless, steps will be taken to upload the salient featuresoftheBoardCharterontheCompany’sWebsiteatwww.pfcebhd.cominlinewithRecommendation1.7 of the MCCG 2012.

The Board recognizes the environment sustainability role as a corporate citizen in its business approach and always endeavors in adopting most environmental friendly, ecological and cost effective production process.

The Board also endeavors in developing Group objectives and strategies having regard to the Group’s responsibilities to its shareholders, employees, customers and other stakeholders and ensuring the long term stability of the business, succession planning and sustainability of the environment.

Board Composition, Balance and Independence

TheBoardcurrentlyhasnine(9)members,comprisingthree(3)ExecutiveDirectorsandsix(6)Non-ExecutiveDirectorswiththree(3)oftheDirectorsbeingIndependentNon-ExecutiveDirectors.

The nine (9) members of the Board has a good mix of business, financial, administration and technical expertise andexperiencetoleadandcontroltheGroup.TheprofilesofeachDirectorarepresentedonpages6to10oftheAnnualReport.

InlinewiththeMCCG2012,therolesoftheExecutiveChairmanandChiefExecutiveOfficeroftheCompanyare separate with clear division of responsibilities between them to ensure balance of power and authority.

TheExecutiveChairman is primarily responsible for ensuringBoard effectiveness andconduct and theGroup’s strategic business direction. He encourages a healthy debate on issues raised at meetings, and gives opportunity to Directors who wish to speak on motions, either for or against them.

TheChiefExecutiveOfficer(CEO)hastheoverallresponsibilityforthemanagementoftheGroup’soperations,organizational effectiveness and implementation of Board policies, decisions and strategies set by the Board.

TheCEOtogetherwiththeotherExecutiveDirectorensuresthatstrategies,policiesandmattersapprovedbytheBoardareeffectivelyimplementedwhilsttheNon-ExecutiveDirectorssupporttheskillsandexperienceoftheCEOandtheotherExecutiveDirector,contributingtotheformulationofpolicyanddecisionmakingthrough their knowledge and experience of other businesses sectors.

The independentNon-ExecutiveDirectors are independentofmanagement and free fromanybusinessrelationship which could materially interfere with the exercise of their independent judgment. Together, they play an independent role in ensuring that the strategies proposed by the management are fully deliberated and examined, taking into account the long term interest of the shareholders, employees, customers, suppliers and the many communities in which the Group conducts its business.

AllDirectorsareequallyandcollectivelyaccountablefortheproperstewardshipoftheGroup’sbusinessactivities and affairs.

The composition and size of the Board are reviewed from time to time to ensure appropriateness. The RemunerationandNominationCommitteeexaminesthesizeandcompositionoftheBoardwithaviewofdetermining the impact of the number upon effectiveness and makes recommendations to the Board on what it considers an appropriate size and composition for the Board.

ThecurrentIndependentDirectorscontinuetofulfiltherequirementsofthedefinitionofindependenceasstipulatedintheMainMarketListingRequirementsofBursaMalaysiaSecuritiesBerhad.NoneofthemhaveservedtheCompanyformorethannine(9)yearsasperRecommendation3.2oftheMCCG2012.

GiventhecurrentcompositionoftheBoard,theBoarddoesnotconsideritnecessarytoidentifyaSeniorIndependentNon-ExecutiveDirectortowhomanymattersofconcernmayberaisedtotheBoard.

Recommendation3.5oftheMCCG2012statesthattheBoardmustcompriseamajorityofindependentdirectorswhere theChairman is not an independent director. Even though the number of IndependentDirectors of the Company do not meet the MCCG 2012 recommendation, the Board is still able to exercise objective judgment on business and corporate affairs, independent from management because of active participationandengagementoftheIndependentDirectorsduringtheBoardmeetingsandmeetingsoftheBoard Committees.



Meetings

TheBoardordinarilymeetsatleastfive(5)timesayearwithadditionalmeetingsconvenedwhenurgentandimportant decisions need to be made in between the scheduled meetings. During the financial year ended 31December2012,theBoardmetonsix(6)occasions;whereitdeliberateduponandconsideredvariousmatters.

TheBoardalsoreceivesdocumentsonmattersrequiringitsconsiderationpriortoandinadvanceofeachmeetingandvidecircularresolutions.AllproceedingsfromtheBoardmeetingsareminuteandsignedbytheChairman of the meeting.

Details of each existing Director’s meeting attendance during the financial year are as follows:

Meetings Attended (Out of 6)

Dato’AbuTalibbinMohamed GroupExecutiveChairman 6/6DatukLimChaingCheah ChiefExecutiveOfficer 6/6LeePeckHung ExecutiveDirector 5/6AbdulMalekbinHajiOmar Non-IndependentNon-ExecutiveDirector 5/6MuammarGadaffibinAbuTalib Non-IndependentNon-ExecutiveDirector 6/6OwHangSen Non-IndependentNon-ExecutiveDirector 5/6TanSriMohdBakribinHajiOmar IndependentNon-ExecutiveDirector 6/6HajiAbdTalibbinBaba IndependentNon-ExecutiveDirector 6/6OngTengKek IndependentNon-ExecutiveDirector 5/6

Appointments to the Board

TheappointmentofnewDirectors isunderthepurviewoftheRemunerationandNominationCommitteewhich is responsible for making recommendations to the Board on the suitable candidates for appointment.

Recommendation2.2of theMCCG2012states that theBoard shouldestablishapolicy formalizing itsapproach to boardroom diversity. The Board is mindful of the aforesaid gender diversity recommendation. The Board has no immediate plans to implement a gender diversity policy or targets as it is of the view that Boardmembershipisdependentoneachcandidate’sskills,experience,corecompetenciesandotherqualitiesregardless of gender. However, the Board will take note of the gender diversity guideline when considering future changes to the Board composition

Time commitment of accepting new directorships

DirectorsareexpectedtohavesuchexpertisesoastoqualifythemtomakeapositivecontributiontotheBoard’sperformanceofitsdutiesandtogivesufficienttimeandattentiontotheaffairsoftheGroup.AnyDirector shall notify the Chairman before accepting any new directorship and the notification shall include the indication of time that will be spent on the new appointment.

Supply of Information

TheBoardrecognisesthatthedecisionmakingprocessishighlycontingentonthequalityofinformationfurnished.Assuch,allDirectorshaveunrestrictedaccesstoanyinformationpertainingtotheCompanyandthe Group.

The Chairman ensures that all Directors have full and timely access to information with Board papers distributed in advance of meetings. This ensures that Directors have sufficient time to appreciate issues to be deliberated at the Board meeting and expedites the decision making process.

AllDirectorsalsohaveaccesstotheadviceandservicesoftheCompanySecretary.

TheAuditCommittee,RemunerationandNominationCommitteeplayapivotalroleinchannellingpertinentoperational and assurance related issues to the Board. The Committees partly function as a filter to ensure that only pertinent matters are tabled at the Board level. There is also a formal procedure sanctioned by the Board of Directors, whether as a full board or in their individual capacity, for Directors to obtain independent professional advice at the Company’s expense.


Board Committees

The Board has delegated specific responsibilities to the following Board Committees:

a. Audit Committee

TheAuditCommitteemeetsregularlywithseniormanagement,andtheexternalauditorstoreviewthe Company’s and the Group’s financial reporting, the nature and scope of audit reviews, and the effectiveness of the systems of internal control and compliance.

The termsof referencesandactivities of theAuditCommitteeduring the financial year ended31December2012aresetoutinthereportoftheAuditCommitteeonpages20to23oftheAnnualReport.

b. Remuneration and Nomination Committee

The roles of theRemunerationCommittee andNominationCommittee have been combined forexpediency and effectiveness.

TheRemunerationandNominationCommittee(RNC)ismadeupofthree(3)IndependentNon-executiveDirectors.

Committee Members TanSriMohdBakribinHajiOmar(Chairman) HajiAbdTalibbinBaba(Member) OngTengKek(Member)

ThedutiesandresponsibilitiesoftheRNCareasfollow:-

• torecommendtotheBoardofDirectors,candidatesfordirectorshipstobefilledbytheShareholdersor the Board of Directors. The final decision for any appointment remains the responsibility of the Board afterconsideringtheCommittee’srecommendations;

• toconsider,inmakingitsrecommendations,candidatesfordirectorshipsproposedbytheExecutiveChairman and within the bounds of practicability, by any other senior executive or any Director or Shareholder;

• torecommendtotheBoard,DirectorstofilltheseatsontheBoardcommittees;• toassist theBoardtoannually review its requiredmixofskillsandexperienceandotherqualities,

includingcorecompetencies,whichNon-ExecutiveDirectorsshouldbringtotheBoard;• toassesstheeffectivenessoftheBoardofDirectorsasawholeandeachindividualDirector/Committee

oftheBoard;• toconductannualreviewofthestructure,sizeandcompositionoftheBoard(includingskills,knowledge,

experience and gender diversity) and the overall effectiveness of the Board on an on-going basis and thoseDirectorswhoaredueforre-electionattheCompany’sAnnualGeneralMeeting;

• toreviewandassesstheindependenceoftheIndependentDirectorsannually,termofofficeandtosubmittheirrelevantrecommendationtotheBoardfortheultimatedecisionandendorsement.Amongthe criteria considered for independency includes ability to exercise independent comments, judgment, andcontributionconstructivelyatalltimesforaneffectiveBoard;

• toreviewandassesstheremunerationpackagesoftheExecutiveDirectorsinallforms,withorwithoutotherindependentprofessionaladviceorotheroutsideadvice;

• toensurethelevelsofremunerationbesufficientlyattractiveandbeabletoretainDirectorsneededtoruntheCompanysuccessfully;

• tostructurethecomponentpartsofremunerationsoastolinkrewardstocorporateandindividualperformanceandtoassesstheneedsoftheCompanyfortalentatBoardlevelataparticulartime;and

• toconsiderandexaminesuchothermattersastheRNCconsidersappropriate.

The remuneration of the non-executive directors is determined in accordance with their experience and level of responsibilities assumed. Non-executive directors are remunerated in the form of directors’ fees as approved by the shareholders.

TheRNChas assessed and recommended to theBoard that theDirectors retiring under theArticlesof Association at the forthcomingAnnualGeneralMeetingbe nominated for re-election having regardto the individual’s experience, contributions andperformance and theBoard has endorsed theRNC’srecommendations.

TheRNCmetonceduringtheyear.




Directors’ Training

The Directors are regularly briefed on the business of the Group, its operation, financial and corporate governancetofacilitatetheirunderstandingontheGroup’slatestdevelopment.AllDirectorshavecompletedtheMandatoryAccreditationProgrammesconductedbyBursaMalaysiaSecuritiesBerhad.

Intheyear2012,theDirectorscontinuedtoundergorelevanttrainingprogrammestoenhancetheirknowledge.Additionally,theBoardalsoencouragescontinuouslearningforallmemberstokeepabreastwithdevelopmentsin the market place to gain competitive knowledge.

Details of training courses attended by the members of the Board during the financial year under review are as follows:

Directors Training Courses

Dato’AbuTalibbinMohamed FailedBusiness:DerivingSoundStrategicInsightsDatukLimChaingCheah FailedBusiness:DerivingSoundStrategicInsightsLeePeckHung FailedBusiness:DerivingSoundStrategicInsightsAbdulMalekbinHajiOmar FailedBusiness:DerivingSoundStrategicInsightsMuammarGadaffibinAbuTalib FailedBusiness:DerivingSoundStrategicInsightsTanSriMohdBakribinHajiOmar FailedBusiness:DerivingSoundStrategicInsightsOwHangSen FailedBusiness:DerivingSoundStrategicInsightsHajiAbdTalibbinBaba FailedBusiness:DerivingSoundStrategicInsightsOngTengKek FailedBusiness:DerivingSoundStrategicInsights

B. DIRECTORS’ REMUNERATION

ThecurrentremunerationpolicyfortheNon-ExecutiveDirectorscomprisesthefollowing:-

Directors’ Fees

Nodirectors’feewasgiventoanyNon-ExecutiveDirectorforthefinancialyearended31December2012.

Meeting Allowance

TheNon-ExecutiveDirectorsarepaidanattendanceallowanceofRM500permeetingforthemeetingstheyhave attended.

The aggregate Directors’ remuneration paid or payable or otherwise made available to all Directors of the Group during the financial year as follows:-

Salaries & other Category emoluments Meeting allowances

ExecutiveDirectors 180,375 –Non-ExecutiveDirectors – 26,500

The number of Directors of the Company whose income from the Company falling within the following bands are:-

Category RM150,000 and above Below RM150,000

ExecutiveDirectors 1 2Non-ExecutiveDirectors 0 6


C. SHAREHOLDERS

The Group recognizes the importance of keeping shareholders and investing community informed of its business and corporate developments. This is done by way of disseminating information via the annual reports,circulartoshareholders,quarterlyfinancialresultsandthevariousannouncementsmadefromtimeto time.

Inlinewithourpolicyonenhancingclosercommunicationwiththeinvestingcommunity,wealwaysencourageourshareholderstoattendourAnnualGeneralMeeting(AGM).

AttheAGM,shareholdersareencouragedtoaskquestionsbothabouttheresolutionsbeingproposedorabout the Group’s operations in general. Where it is not possible to provide immediate answers, the Chairman willundertaketofurnishtheshareholderwithawrittenansweraftertheAGM.TheChairmanoftheBoardalso addresses the shareholders on the review of the Group’s operations for the financial year and outlines theprospectsoftheGroupforthesubsequentfinancialyear.

The shareholders are informed of their rights to demand for poll prior to the commencement of each general meeting.

Recommendation8.2of theMCCG2012 recommends that theBoard should encouragepoll voting forsubstantive resolutions. The Board is of the view that the current level of shareholders’ attendance at the AGMs,votingbywayofshowofhandscontinuestobeefficient.TheBoardwillevaluatethefeasibilityofcarrying out electronic polling at its general meetings in future.

D. ACCOUNTABILITY AND AUDIT

Financial Reporting

The Board aims to provide and present a balanced and meaningful assessment of the Group’s financial performanceandprospectsattheendofthefinancialyear,primarilythroughtheannualandquarterlyfinancialstatementstoBursaSecuritiesaswellastheChairman’sStatementintheAnnualReport.

TheBoardisassistedbytheAuditCommitteetooverseetheGroup’sfinancialreportingprocessesandthequalityofitsfinancialreporting.

Directors’ Responsibility Statement in Respect of the Audited Financial Statements

The Board is responsible for ensuring that the financial statements give a true and fair view of the state of affairs of the Group and of the Company as at the end of the financial period and of the operations results and cash flows for the financial period then ended.

Inpreparingthefinancialstatements,theDirectorshavetoensurethattheapplicableMalaysianFinancialReportingStandardsandtherequirementsoftheCompaniesAct,1965havebeencompliedwith.

Inpreparingthefinancialstatements,theDirectorshaveselectedandappliedconsistentlysuitableaccountingpolicies and made reasonable and prudent judgement and estimates. The Directors also have a general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Group and to prevent and detect fraud and other irregularities.

Risk Management and Internal Control

The Board has overall responsibility for the Group’s system of internal controls that provides reasonable assurance for effective and efficient operations, compliance with laws and regulations as well as adherence with internal policies and procedures.

The Group has established internal controls to ensure its operations are effective and efficient as well as safeguarding of the Group’s assets and shareholders’ interest.

TheoutsourceInternalAuditfunctionconductsauditsandmonitorscompliancewithpoliciesandproceduresand the effectiveness of the Group’s internal control system.

TheStatementonRiskManagementandInternalControlassetoutinthisAnnualReportprovidesanoverviewon the state of internal controls in the Group.




Relationship with External Auditors

The external auditors of the Company fulfil an essential role in giving assurance to the Company’s shareholders on the reliability of the Group’s financial statements.

TheexternalauditorshaveanobligationtobringtotheattentionoftheBoardofDirectors,theAuditCommitteeand Company’s management any significant weaknesses in the Company’s system of reporting, internal control andcompliancewiththeapplicableapprovedFinancialReportingStandardsforentitiesotherthanprivateentitiesissuedbytheMalaysianAccountingStandardsBoardandregulatoryrequirements.

TheexternalauditorsoftheCompanyareinvitedtoattendAuditCommittee’smeetings.TheAuditCommitteealsomeets with the Group’s external auditors at least twice a year without the presence of management to review the scopeandadequacyoftheauditprocess,theannualfinancialstatementsandtheirauditfindings.

ThekeyfeaturesunderlyingtherelationshipoftheAuditCommitteewiththeexternalauditorsareassetoutintheAuditCommittee’stermsofreferenceintheAuditCommitteeReportofthisAnnualReport. AsummaryoftheactivitiesoftheAuditCommitteeduringthefinancialyearisalsosetoutintheAuditCommitteeReportonpage20to23oftheAnnualReport.

CORPORATE DISCLOSURE POLICY

The Board places importance in ensuring disclosure made to shareholders and investors is comprehensive, accurate and on a timely and even basis as it is critical towards building and maintaining corporate creditability and investors confidence.ACorporateDisclosurePolicyfortheGrouptosetoutthepoliciesandproceduresfordisclosureofmaterialinformationwillbeaddressedinduecourse,followingtheemphasisbyBursaMalaysiaSecuritiesBerhadas outlined in its Corporate Disclosure Guide.

This statement is made in accordance with a resolution of the Board of Directors dated 30 May 2013.


Utilization of proceeds

Duringthecurrentfinancialyear,theCompanyincreaseditsissuedandpaidupordinarysharesfromRM44,000,000toRM47,500,000bytheallotmentof7,000,000newordinarysharesofRM0.50eachatanissuepriceofRM0.60pershareforthepurposeofworkingcapital.AtotalcashofRM4,200,000wasreceivedfromthisprivateplacementproceed and has been used for the Group’s operational expenses.

Share Buy-backs

During the financial year under review, there were no share buy-backs by the Company.

Options, Warrants or Convertible Securities

During the financial year under review, there were no options, warrants or convertible securities exercised.

American Depository Receipt (“ADR”) or Global Depository Receipt (“GDR”)

Duringthefinancialyearunderreview,therewerenoADRorGDRsponsoredbytheCompany.

Sanctions and/or Penalties

During the financial year under review, there were no sanctions and or penalties imposed on the Company and its subsidiaries, Directors or management by any relevant regulatory bodies.

Non-audit fees

During the financial year under review, there were no non-audit fees paid by the Group to the external auditors.

Variation in results

There was no material difference between the Group’s audited results and unaudited results for the financial year ended 31 December 2012.

Profit Guarantee

During the financial year under review, there were no profit guarantee given in respect of the Company and Group.

Material Contracts Involving Directors

Saveasdisclosedbelow,therearenootheragreementwhicharematerialwhichhaveenteredintobyPFCEoritssubsidiaries, either still subsisting at the end of the financial year ended 31 December 2012 or entered into since the end of previous financial year:-

Type Date Parties Consideration and mode of satisfaction

Relationship

ShareSaleAgreement

12 March 2012 PFCEBerhadandDATGroupSdnBhd

Proposed acquis i t ion of10,000,000 sharesofRM1.00each inPFCEngineeringSdnBhdatRM300,000,000only.

The purchase consideration shal l be sat isf ied by the issuance of PFCE Berhad’snew ordinary shares at an issue priceofRM0.60pershare.

Dato’ Abu Tal ib b inMohamed and Muammar GadaffibinAbuTalibaretheshareholdersofDATGroupSdnBhd

ADDITIONAL COMPLIANCE STATEMENT


AddiTiONAl COMPliANCE STATEMENT (CONT’d)

Recurrent related party transactions (“RRPT”) of Revenue or Trading nature

The recurrent related party transactions of revenue or trading nature pursuant to shareholders’ mandate during the financial year ended 31 December 2012 are as follow:

Transacting Party Related Party Nature of Transaction Actual TransactionRM’000

PFCEOffshoreWorldwideSdnBhd

PFCEngineeringSdnBhd Construction of mechanical works for plant refurbishment and rejuvenation

123,553


AUDIT COMMITTEE REPORT

TheAuditCommitteewasestablishedbytheBoardofDirectors(the“Committee”).TheAuditCommitteecomprisesthree(3)memberswherebyallmembersoftheCommitteeareIndependentNon-ExecutiveDirectors.Themembersof the Committee and their respective designation are as follows:-

Audit Committee

ChairmanHajiAbdTalibbinBaba(IndependentNon-ExecutiveDirector)

MemberTanSriMohdBakribinHajiOmar(IndependentNon-ExecutiveDirector)

MemberOngTengKek(IndependentNon-ExecutiveDirector)

Asatthereportingdate,thequalifyingcriteriaforthecompositionofmembersweremet.TheCommitteeheldatotaloffive(5)meetingsduringthefinancialyearended31December2012.Detailsoftheattendanceareasfollows:-

Audit Committee Meeting Attendance

ChairmanHajiAbdTalibbinBaba(IndependentNon-ExecutiveDirector) 5/5

MemberTanSriMohdBakribinHajiOmar(IndependentNon-ExecutiveDirector) 4/5

MemberOngTengKek(IndependentNon-ExecutiveDirector) 5/5

TERMS OF REFERENCE

1. Appointment of Audit Committee

ThemembersoftheAuditCommitteemustbeappointedfromamongstthenon-executivedirectors.Suchappointments must be made by the Board.

2. Composition of Audit Committee

TheAuditCommitteeshallcompriseatleastthree(3)non-executivedirectorsandamajorityofwhommustbe independent directors.

AllmembersoftheAuditCommitteeshallbefinanciallyliterateandhavetheability:• Toreadandunderstandfinancialstatements,includingacompany’sStatementofFinancialPosition,

StatementofComprehensiveIncomeandCashFlowStatement;• Toanalyzefinancialstatementsandaskpertinentquestionsaboutthecompany’soperationsagainst

internalcontrolsandriskfactors;and• Tounderstandandinterprettheapplicationofapprovedaccountingstandards.


Atleastone(1)memberoftheAuditCommitteemustbe:• amemberoftheMalaysiaInstituteofAccountant(“MIA”);or• ifheisnotamemberof“MIA”,hemusthaveatleastthree(3)yearsofworkingexperience;and

i. HemusthavepassedtheexaminationsspecifiedinPartIoftheFirstScheduleoftheAccountantsAct1967;or

ii. HemustbeamemberofoneoftheassociationsoftheaccountantsspecifiedinPartIIoftheFirstScheduleoftheAccountantsAct1967;or

iii. Fulfill such other requirements as prescribedbyBursaMalaysiaSecuritiesBerhad (“BursaSecurities”)

ThetermofofficeandperformanceoftheAuditCommitteeandeachofitsmembersshallbereviewedbytheBoardatleastonceeverythree(3)yearstodeterminewhethersuchAuditCommitteeandmembershavecarried out their duties in accordance with their terms of reference

MembersoftheAuditCommitteemayrelinquishtheirmembershipintheAuditCommitteewithpriorwrittennoticetotheCompanySecretary.IntheeventofavacancyintheAuditCommitteeresultinginnon-compliancewiththeMainMarketListingRequirementsofBursaSecuritiesonthecompositionofAuditCommittee,theBoardshall,withinthree(3)months,accordinglyappointsuchmemberofnewmembersasmayberequiredto make up the minimum of three (3) members.

3. Quorum

ThequorumforameetingoftheAuditCommitteeshallbetwo(2)members,withthemajorityofmemberspresentbeingIndependentDirectors.IntheabsenceoftheChairman,thememberspresentshallelectaChairman from amongst them to chair the meeting.

Questionsarisingatanymeetingof theAuditCommitteeshallbedeterminedbyamajorityof theAuditCommitteememberspresent,andinthecaseofanequalityofvotes,theChairmanofthemeetingshallhavea second or casting vote.

4. Chairman of Audit Committee

TheBoardofDirectorsshallappointtheChairmanoftheAuditCommitteefromamongsttheIndependentNon-ExecutiveDirectors.

5. Tenure of Memberships

Eachmembershallbesubjectedtotenureofmembershipofnotexceedingthree(3)yearsunlesscircumstancesrequireotherwise.Attheendofthetenure,halfofthecommitteemembersshallretirefromoffice.Iftheirnumber is not two or the multiple of two, then the number nearest to half but not exceeding half shall retire from office. The committee member to retire shall be the Directors who have been longest in office and shall be eligible for re-appointment.

6. Duties of Audit Committee

ThemainfunctionsanddutiesoftheAuditCommitteeshallincludethereviewofthefollowingareasandreport of the same to the Board:-

a. Financial Reporting and Performance Oversight 1. Toreviewfinancialreporting,internalcontrol,internalauditandexternalaudit;2. Todiscussproblemsandreservationsarisingfromthequarterlyandfinalaudit,andanymatters

theauditorsmaywishtohighlightanddiscuss;3. To review thequarterlyandfinalfinancial statementsof theCompanyand theGroupbefore

submission to the Board of Directors, emphasizing and focusing particularly on:-i. Anychangesinaccountingpoliciesandpractices;ii. CompliancewithFinancialReportingStandards(FRS)andotherlegalrequirements;andiii. Major judgment areas and significant adjustment resulting from the audit.

AUdiT COMMiTTEE REPORT (CONT’d)



b. Oversight of Internal Control and Controls Environment1. To ensure that there is no management override of established prudent financial practices and

procedures.2. To provide an impartial channel for complaints concerning the management and direction of the

Company.

c. Dealing with External Auditors1. To recommend the appointment of the external auditors, the setting of audit fees and their

resignationordismissal;2. To discuss with external auditors before the audit commences, the nature and scope of audit,

andensureco-ordinationwheremorethanoneauditfirmisinvolved;and3. To review the external auditors’ management letter and management’s response.

d. Related Party Transaction1. To review and consider any recurrent related party transactions that may arise within the Group.

e. To do the following, in the relation to the Internal Audit Function1. To review the internal audit plan, consider the major findings of internal audits investigations and

Management’sresponses,andensurecoordinationbetweentheinternalandexternalauditors;2. Toreviewtheadequacyofthescope,functions,competencyandresourcesoftheinternalaudit

functionsandthatithasthenecessaryauthoritytocarryoutitswork;3. Toreviewtheauditreports;4. Todirectadwhereappropriatesuperviseanyspecialprojectorinvestigationconsiderednecessary;5. ToprepareperiodicreportstotheBoardsummarizingtheworkperformedinfulfillingtheAudit

Committee’sprimaryresponsibilities;and6. TodeterminetheremitofinternalauditfunctionthatreportsdirectlytotheAuditCommittee.

7. Frequency Of Meetings

a. TheAuditCommitteeshallmeetat least four (4) timesayearandsuchadditionalmeetingsastheChairmanshalldecideinordertofulfillitsduties;

b. TheAuditCommitteeshallmeettheinternalauditors,externalauditorsorbothatleasttwiceayearorwheneverisdeemednecessarywithoutthepresenceofExecutiveDirector(s)andmanagement;

c. TheChairmanmaycallameetingoftheCommitteeifanyAuditCommitteemembersconsidernecessary,makearequestandshouldrecorditsmeetings’minutes;and

d. TheChairmanshallbeentitled,whereappropriate,toinviteanyperson(s)tothemeetingsoftheAuditCommittee.

8. Authority

a. The Committee is authorized by the Board to carry out the roles and duties above and investigate any activity within the Committee’s term of reference. The Management shall give all assistance that is necessary to enable the Committee to discharge their duties as well as having full and unrestricted access to any information pertaining to the Group.

b. The Committee has the resources in order to perform its duties as set out in its terms of reference.c. TheCommitteeshallhaveadirectcommunicationchannelwiththeexternalAuditorsandperson(s)

carryingouttheinternalauditfunctionoractivity;d. The Committee shall, whenever necessary and reasonable for the performance of its duties and in

accordance with a procedure to be determined by the Board and at the Company costs:• be able toobtainoutside legal or other independentprofessional advicewheneverdeemed

necessary;• beabletoconvenemeetingswiththeexternalAuditors,excludingtheattendanceoftheexecutive

membersoftheCommittee,whenevernecessary;• beabletoinvestigateanymatterwithinitstermsofreferenceandreporttotheBoard,andifsuch

matter has not been satisfactorily resolved, thus resulting in a breach of the Main Market Listing RequirementsofBursaSecurities,theCommitteeshallpromptlyreportsuchmattertotheBursaSecurities.

e. The Committee has immediate access to reports on fraud or irregularities and has power to authorize an investigation where there is possible fraud, illegal acts or suspect’s violation of the code of conduct involving senior management or members of the Board.


Summary of Activities of Audit Committee

Duringthefinancialyearunderreview,thefollowingactivitieswerecarriedoutbytheAuditCommittee:

1. Review the unaudited quarterly results before recommending to theBoard of Directors for quarterlyannouncement. The independent external auditors are responsible for expressing an opinion on the conformity of the Company’s audited financial statements with the applicable approved accounting standards in Malaysia andotherprovisionsofCompaniesAct,1965.TheCommitteehadrecommendedtotheBoardofDirectors,andtheBoardhadapprovedtheauditedfinancialstatements for the inclusion in theCompany’sAnnualReport2012fortheyearended31December2012,forfilingwiththeBursaSecurities.

2. ReviewedanddiscussedwithManagement and the independent external auditors theaudited financialstatements. The Committee discussed with the external auditors on audit matters including those pertaining to financial reporting standards in Malaysia. The Committee also considered whether were any non-audit service provided by the external auditors and if they were compatible with the independence of the external auditors.

3. Receivedfromtheindependentinternalauditorstheprogramme,planandquarterlyinternalauditorreportsanddiscussedwiththemtheirindependencefromthecompanyanditsManagement;

4. ReviewedtheInternalAuditor’sprogrammesandplansfortheyearunderreview;

5. ReviewedtheextentoftheGroup’scompliancewiththeprovisionssetoutundertheMalaysianCodeonCorporate Governance for the purpose of the statement of Corporate Governance pursuant to the Listing RequirementsofBursaSecurities;

6. Reviewed theCompany’s compliancewith theMainMarket ListingRequirements ofBursaSecurities,accountingstandardsandotherrelevantlegalandregulatoryrequirements;

7. Reviewedtheremunerationandnon-auditfeesofExternalAuditors;and

8. ReviewedAuditCommittee’sTermsofReference.

Summary of Activities of Internal Auditors

For reasons of cost efficiency and integrity, the management has outsourced the internal audit function to an independentprofessionalfirmduringthefinancialyearended31December2012.Two(2)InternalauditreportswereissuedtotheAuditCommitteeandtabledintheAuditCommitteemeetings.Thereportwasalsoissuedtotherespective operations’ management. The internal audit reports set out audit recommendations and management’s responses with regard to audit findings on weaknesses noted in the systems and controls of the companies in the Group. The recommendations have been followed up and implemented accordingly.

ThisAuditCommitteeReportismadeinaccordancewitharesolutionoftheBoardofDirectorsdated30May2013.



STATEMENT ON RISk MANAGEMENT AND INTERNAL CONTROL

INTRODUCTION

PursuanttoParagraph15.26(b)oftheBursaMalaysiaSecuritiesBerhad(‘‘BursaSecurities’’)ListingRequirements,theBoardofDirectorsofPFCEBerhadispleasedtoprovidethefollowingstatementonthestateofriskmanagementand internal control of the Group during the financial year ended 31 December 2012, which has been prepared, takenintoconsiderationtheStatementonInternalControl:GuidanceforDirectorsofPublicListedCompaniesissuedbytheInstituteofInternalAuditorsMalaysiaandadoptedbyBursaSecurities.

The Board of Directors acknowledges its responsibility for maintaining a sound system of risk management and internalcontroltosafeguardshareholders’investmentandtheGroupassets,andforreviewingitsadequacyandintegrity.

RESPONSIBILITY

The Board of Directors undertakes responsibilities for maintaining a sound system of internal control that supports theachievementofthecorporatepolicies,aimsandobjectivesofthePFCEGroupofcompaniesbycontinuousimprovementoninternalcontrolandriskmanagement.Inviewofthelimitationsunderlyinganysystemoftheinternalcontrols which covers financial, operational, compliance controls and risk management procedures, the system is designated to provide reasonable but not absolute assurance of its effectiveness and is designated to manage ratherthaneliminatetheriskoffailuretoachievethecorporatepolicies,aimsandobjectives.Accordingly,itcanonly provide reasonable but not absolute assurance against material misstatement or loss.

The Board also upholds that there is an ongoing process for identifying, evaluating and managing significant risks facedbytheGroup.TheBoard,throughitsAuditCommittee,regularlyreviewstheresultsofthisprocesswhichhasbeen in place for the year under review and up to the date of issuance of the annual report and financial statements.

RISk MANAGEMENT AND INTERNAL CONTROL

Riskmanagementandinternalcontrolsareregardedasanintegralpartoftheoverallmanagementprocesses.Towardsformalizing the risk management functions within the Group, the Board has engaged an independent professional firmtohandletheinternalauditfunctions,andassisttheBoardandtheAuditCommitteeinprovidingindependentassessmentoftheadequacy,efficiencyandeffectivenessoftheGroup’sinternalcontrolsystem.TheyreportdirectlytotheAuditCommitteewhoreviewsandapprovestheinternalauditplanstoensureadequatecoverage.

AuditsarecarriedoutincognizancewiththeGroup’sobjectivesandpoliciesinthecontextofitsevolvingbusinessandregularityenvironment,takingintoconsiderationinputoftheseniormanagementandtheBoard.OpportunityforimprovementstothesystemofinternalcontrolareidentifiedandpresentedtotheAuditCommitteeviainternalauditreports.Inaddition,theinternalauditfunctionalsofollowedupontheimplementationofrecommendationsfrompreviouscyclesof internalauditandupdatedtheAuditCommitteeon thestatusofmanagementagreedaction plan implementation.

During the financial year under review, two cycles of internal audit was carried out for major subsidiaries, the fees incurredfortheinternalauditfunctionforthefinancialyearended31December2012wasRM28,850.

OTHER RISk AND CONTROL PROCESSES

The Group has set in place well-established standard operating procedures covering major and critical facets of the Group’s business process. Procedures are primarily geared towards the prevention of wastages, handling loss and major functional aspects of business operations. The procedures are subject to review as processes change orwhennewbusinessrequirementsneedtobemet.


CONCLUSION

The Directors believe that the system of the internal control is considered appropriate to the business operations andthattherisktakenisatanacceptablelevelwithinthecontextofthebusinessenvironmentoftheGroup.Itshould be noted that such arrangements do not eliminate the possibility of collusion or deliberate circumvention ofproceduresbyemployees.Humanerrorand/orotherunforeseencircumstancescanresultinpoorjudgment.Intheyearunderreview,ithasnotresultedinanymateriallosses,contingenciesoruncertaintieswhichwouldrequireseparatedisclosureinthisAnnualReport.

PursuanttoParagraph15.23oftheListingRequirementsofBursaSecurities,theexternalauditorhasreviewedthisstatementforinclusionintheAnnualReportoftheGroupfortheyearended31December2012andreportedtotheBoard that nothing has come to their attention that causes them to believe that the statement is inconsistent with thierunderstandingoftheprocessadoptedbytheBoardinreviewingtheadequacyandintergrityofthesystemof internal control.

This statement is made in accordance with a resolution of the Board of Directors dated 30 May 2013.

STATEMENT ON RiSk MANAGEMENT ANd iNTERNAl CONTROl (CONT’d)


DIRECTORS’ REPORT

The directors hereby submit their report and the audited financial statements of the Group and of the Company for the financial year ended 31 December 2012.

PRINCIPAL ACTIVITIES

The Company is principally engaged in the business of investment holding and the provision of management services.TheprincipalactivitiesofthesubsidiariesaresetoutinNote5tothefinancialstatements.Therehavebeen no significant changes in the nature of these activities during the financial year.

RESULTS

THE THE GROUP COMPANY RM RM

Profit/(Loss)aftertaxationforthefinancialyear 1,339,605 (902,408)

Attributableto:-OwnersoftheCompany 27,905 (902,408)Non-controllinginterests 1,311,700 –

1,339,605 (902,408)

DIVIDENDS

No dividend was paid since the end of the previous financial year and the directors do not recommend the payment of any dividend for the current financial year.

RESERVES AND PROVISIONS

Allmaterial transfers to or from reservesor provisionsduring the financial year aredisclosed in the financialstatements.

ISSUES OF SHARES AND DEBENTURES

During the financial year,

(a) therewerenochangesintheauthorisedsharecapitaloftheCompany;

(b) theCompanyincreaseditsissuedandpaid-upsharecapitalfromRM44,000,000toRM47,500,000bytheallotmentof7,000,000newordinarysharesofRM0.50eachatanissuepriceofRM0.60pershareforthepurpose of working capital. The new shares were issued for cash consideration. The new shares issued rank paripassuinallrespectswiththeexistingsharesoftheCompany;and

(c) there were no issues of debentures by the Company.

OPTIONS GRANTED OVER UNISSUED SHARES

During the financial year, no options were granted by the Company to any person to take up any unissued shares in the Company.


BAD AND DOUBTFUL DEBTS

Before the financial statements of the Group and of the Company were made out, the directors took reasonable steps to ascertain that action had been taken in relation to the writing off of bad debts and the making of allowance for impairment losses on receivables, and satisfied themselves that all known bad debts had been written off and thatnoallowanceforimpairmentlossesonreceivablesisrequired.

Atthedateofthisreport,thedirectorsarenotawareofanycircumstancesthatwouldrequirethefurtherwritingoff of bad debts, or the allowance for impairment losses on receivables in the financial statements of the Group and of the Company.

CURRENT ASSETS

Before the financial statements of the Group and of the Company were made out, the directors took reasonable steps to ascertain that any current assets other than debts, which were unlikely to be realised in the ordinary course of business, including their value as shown in the accounting records of the Group and of the Company, have been written down to an amount which they might be expected so to realise.

Atthedateofthisreport,thedirectorsarenotawareofanycircumstanceswhichwouldrenderthevaluesattributedto the current assets in the financial statements misleading.

VALUATION METHODS

At thedateof this report, thedirectors are not awareof any circumstanceswhichhave arisenwhich renderadherence to the existing methods of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate.

CONTINGENT AND OTHER LIABILITIES

ThecontingentliabilitiesaredisclosedinNote37tothefinancialstatements.Atthedateofthisreport,theredoesnot exist:-

(i) any charge on the assets of the Group and of the Company that has arisen since the end of the financial year whichsecurestheliabilitiesofanyotherperson;or

(ii) any contingent liability of the Group and of the Company which has arisen since the end of the financial year.

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

CHANGE OF CIRCUMSTANCES

Atthedateofthisreport,thedirectorsarenotawareofanycircumstancesnototherwisedealtwithinthisreportorthe financial statements of the Group and of the Company which would render any amount stated in the financial statements misleading.

diRECTORS’ REPORT (CONT’d)


ITEMS OF AN UNUSUAL NATURE

The results of the operations of the Group and of the Company during the financial year were not, in the opinion of the directors, substantially affected by any item, transaction or event of a material and unusual nature.

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

DIRECTORS

The directors who served since the date of the last report are as follows:-

DATO’ABUTALIBBINMOHAMEDDATUKLIMCHAINGCHEAHLEEPECKHUNG ABDULMALEKBINHAJIOMARMUAMMARGADAFFIBINABUTALIBTANSRIMOHDBAKRIBINHAJIOMAROWHANGSENHAJIABDTALIBBINBABAONGTENGKEK

DIRECTORS’ INTERESTS

Accordingtotheregisterofdirectors’shareholdings,theinterestsofdirectorsholdingofficeattheendofthefinancialyear in shares in the Company and its related corporations during the financial year are as follows:-

NUMBER OF ORDINARY SHARES OF RM0.50 EACH AT AT 1.1.2012 BOUGHT SOLD 31.12.2012

DIRECT INTERESTOWHANGSEN 3,306,260 – – 3,306,260 INDIRECT INTERESTSDATO’ABUTALIBBINMOHAMED# 35,161,900 – – 35,161,900MUAMMARGADAFFIBINABUTALIB# 35,161,900 – – 35,161,900

# Deemed interested by virtue of his direct substantial shareholding in PFC Engineering Sdn. Bhd.

ByvirtueoftheirshareholdingsintheCompany,Dato’AbuTalibBinMohamedandMuammarGadaffiBinAbuTalibare deemed to have interests in shares in the Company’s subsidiaries during the financial year to the extent of the Company’sinterests,inaccordancewithSection6AoftheCompaniesAct1965.

The other directors holding office at the end of the financial year had no interest in shares in the Company or its related corporations during the financial year.



DIRECTORS’ BENEFITS

Sincetheendofthepreviousfinancialyear,nodirectorhasreceivedorbecomeentitledtoreceiveanybenefit(other than a benefit included in the aggregate amount of emoluments received or due and receivable by directors as shown in the financial statements, or the fixed salary of a full-time employee of the Company) by reason of a contract made by the Company or a related corporation with the director or with a firm of which the director is a member, or with a company in which the director has a substantial financial interest except for any benefits which may be deemed to arise from transactions entered into in the ordinary course of business with companies in which certaindirectorshavesubstantialfinancialinterestsasdisclosedinNote35tothefinancialstatements.

Neither during nor at the end of the financial year was the Group or the Company a party to any arrangements whoseobjectistoenablethedirectorstoacquirebenefitsbymeansoftheacquisitionofsharesinordebenturesof the Company or any other body corporate.

SIGNIFICANT EVENT DURING THE FINANCIAL YEAR

The significant event during the financial year is disclosed in Note 39 to the financial statements.

SIGNIFICANT EVENT OCCURRING AFTER THE REPORTING PERIOD

ThesignificanteventoccurringafterthereportingperiodisdisclosedinNote40tothefinancialstatements.

AUDITORS

The auditors, Messrs. Crowe Horwath, have expressed their willingness to continue in office.

SIGNED IN ACCORDANCE WITH A RESOLUTION OF THE DIRECTORSDATED 26 APRIL 2013

Dato’ Abu Talib Bin Mohamed

Datuk Lim Chaing Cheah



STATEMENT BY DIRECTORS

STATUTORY DECLARATION

We, Dato’ Abu Talib Bin Mohamed and Datuk Lim Chaing Cheah, being two of the directors of PFCE Berhad, state that,intheopinionofthedirectors,thefinancialstatementssetoutonpages33to88aredrawnupinaccordancewithMalaysianFinancialReportingStandards,InternationalFinancialReportingStandardsandtherequirementsoftheCompaniesAct1965inMalaysiasoastogiveatrueandfairviewofthestateofaffairsoftheGroupandofthe Company at 31 December 2012 and of their results and cash flows for the financial year ended on that date.

ThesupplementaryinformationsetoutinNote42,whichisnotpartofthefinancialstatements,ispreparedinallmaterialrespects,inaccordancewithGuidanceonSpecialMatterNo.1,DeterminationofRealisedandUnrealisedProfitsorLossesintheContextofDisclosurePursuanttoBursaMalaysiaSecuritiesBerhadListingRequirements,asissuedbytheMalaysianInstituteofAccountantsandthedirectiveofBursaMalaysiaSecuritiesBerhad.

SIGNED IN ACCORDANCE WITH A RESOLUTION OF THE DIRECTORSDATED 26 APRIL 2013

Dato’ Abu Talib Bin Mohamed Datuk Lim Chaing Cheah

I,Datuk Lim Chaing Cheah,I/CNo.500514-07-5263,beingthedirectorprimarilyresponsibleforthefinancialmanagement of PFCE Berhad, do solemnly and sincerely declare that the financial statements set out on pages 33to88are,tothebestofmyknowledgeandbelief,correct,andImakethissolemndeclarationconscientiouslybelievingthesametobetrueandbyvirtueoftheprovisionsoftheStatutoryDeclarationsAct1960.

SubscribedandsolemnlydeclaredbyDatukLimChaingCheah,I/CNo.500514-07-5263,atKualaLumpurintheFederalTerritoryonthis26April2013

Datuk Lim Chaing Cheah

Before me

Yap Lee ChinNo.W591CommissionerofOath


REPORT ON THE FINANCIAL STATEMENTS

WehaveauditedthefinancialstatementsofPFCEBerhad,whichcomprisethestatementsoffinancialpositionasat31 December 2012 of the Group and of the Company, and the statements of comprehensive income, statements of changesinequityandstatementsofcashflowsoftheGroupandoftheCompanyforthefinancialyearthenended,andasummaryofsignificantaccountingpoliciesandotherexplanatoryinformation,assetoutonpages33to88.

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 fairviewinaccordancewithMalaysianFinancialReportingStandards,InternationalFinancialStandardsandtherequirementsoftheCompaniesAct1965inMalaysia.Thedirectorsarealsoresponsibleforsuchinternalcontrolas 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

Ourresponsibilityistoexpressanopiniononthesefinancialstatementsbasedonouraudit.WeconductedourauditinaccordancewithapprovedstandardsonauditinginMalaysia.Thosestandardsrequirethatwecomplywithethicalrequirementsandplanandperformtheaudittoobtainreasonableassuranceaboutwhetherthefinancialstatements are free from material misstatement.

Anauditinvolvesperformingprocedurestoobtainauditevidenceabouttheamountsanddisclosuresinthefinancialstatements. The procedures selected depend on our judgement, including the assessment of risks of material misstatementofthefinancialstatements,whetherduetofraudorerror. Inmakingthoseriskassessments,weconsider internal control relevant to the entity’s 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 anopinionontheeffectivenessoftheentity’sinternalcontrol.Anauditalsoincludesevaluatingtheappropriatenessof 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

Inouropinion,thefinancialstatementsgiveatrueandfairviewofthefinancialpositionoftheGroupandoftheCompany as of 31 December 2012 and of their financial performance and cash flows for the financial year then endedinaccordancewithMalaysianFinancialReportingStandards,InternationalFinancialReportingStandardsandtherequirementsoftheCompaniesAct1965inMalaysia.

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

InaccordancewiththerequirementsoftheCompaniesAct1965inMalaysia,wealsoreportthefollowing:-

(a) Inouropinion,theaccountingandotherrecordsandtheregistersrequiredbytheActtobekeptbytheCompany and its subsidiaries of which we have acted as auditors have been properly kept in accordance withtheprovisionsoftheAct.

(b) We have considered the financial statements and the auditors’ report of a subsidiary of which we have not actedasauditors,whichisindicatedinNote5tothefinancialstatements.

(c) We are satisfied that the financial statements of the subsidiaries that have been consolidated with the Company’s financial statements are in form and content appropriate and proper for the purposes of the preparation of the financial statements of the Group and we have received satisfactory information and explanationsrequiredbyusforthosepurposes.

(d) Theaudit reportson thefinancialstatementsof thesubsidiariesdidnotcontainanyqualificationoranyadversecommentmadeunderSection174(3)oftheAct.

INDEPENDENT AUDITORS’ REPORT TOTHEMEMBERSOFPFCEBERHAD


OTHER REPORTING REQUIREMENTS

ThesupplementaryinformationsetoutinNote42onpage89isdisclosedtomeettherequirementofBursaMalaysiaSecuritiesBerhadandisnotpartofthefinancialstatements.ThedirectorsareresponsibleforthepreparationofthesupplementaryinformationinaccordancewithGuidanceonSpecialMatterNo.1,DeterminationofRealisedandUnrealisedProfitsorLossesintheContextofDisclosurePursuanttoBursaMalaysiaSecuritiesBerhadListingRequirements,asissuedbytheMalaysianInstituteofAccountants(“MIAGuidance”)andthedirectiveofBursaMalaysiaSecuritiesBerhad.Inouropinion,thesupplementaryinformationisprepared,inallmaterialrespects,inaccordancewiththeMIAGuidanceandthedirectiveofBursaMalaysiaSecuritiesBerhad.

OTHER MATTERS

1. AsstatedinNote41tothefinancialstatements,PFCEBerhadadoptedMalaysianFinancialReportingStandardson1January2012withatransitiondateof1January2011.Thesestandardswereappliedretrospectivelybydirectors to the comparative information in these financial statements, including the statements of financial positionasat31December2011and1January2011,andthestatementofcomprehensiveincome,statementofchangesinequityandstatementofcashflowsforthefinancialyearended31December2011andrelateddisclosures.Wewerenotengagedtoreportontherestatedcomparativeinformationanditisunaudited.Ourresponsibilities as part of our audit of the financial statements of the Group and of the Company for the financial year ended 31 December 2012 have, in these circumstances, included obtaining sufficient appropriate audit evidencethattheopeningbalancesasat1January2012donotcontainmisstatementsthatmateriallyaffectthe financial position as of 31 December 2012 and financial performance and cash flows for the financial year then ended.

2. ThisreportismadesolelytothemembersoftheCompany,asabody,inaccordancewithSection174oftheCompaniesAct1965inMalaysiaandfornootherpurpose.Wedonotassumeresponsibilitytoanyotherperson for the content of this report.

Crowe Horwath Onn kien HoeFirmNo:AF1018 ApprovalNo:1772/11/14(J/PH)CharteredAccountants CharteredAccountant

26April2013

KualaLumpur

iNdEPENdENT AUdiTORS’ REPORT (CONT’d)


STATEMENTS OF FINANCIAL POSITION AT31DECEMBER2012

T

HE

GR

OU

P

TH

E C

OM

PAN

Y

31

.12.

2012

31

.12.

2011

1.

1.20

11

31.1

2.20

12

31.1

2.20

11

1.1.

2011

N

OT

E

RM

R

M

RM

R

M

RM

R

M

AS

SE

TS

NON-C

URRENTASSETS

Inve

stmen

tsin

sub

sidiarie

s5

––

–47

,625

,148

47

,594

,318

47

,767

,716

Property,p

lantand

equipmen

t6

31,691

,295

31

,504

,344

33

,103

,391

23

0,29

422

4,79

41,57

3Prepaidla

ndle

asepay

men

ts

717

1,61

717

9,44

217

0,54

8–

––

Goo

dwillaris

ingon

con

solid

ation

82,57

5,00

52,57

5,00

52,57

5,00

5–

––

34,437

,917

34

,258

,791

35

,848

,944

47

,855

,442

47

,819

,112

47

,769

,289

CURRENTASSETS

Inve

ntories

96,88

1,03

87,07

3,70

07,45

8,19

7–

––

Trad

erece

ivab

les

10

1,57

6,29

43,21

3,19

03,99

2,17

3

––

–Otherrec

eiva

bles,dep

osits

an

dprepay

men

ts

11

2,04

9,89

02,08

7,28

289

0,13

731

,150

36

,150

1,00

0Amou

ntowingbysu

bsidiarie

s12

–

––

8,60

5,06

76,21

3,09

16,19

4,67

8Amou

ntowingbyaco

ntractcus

tomer

13

39,323

,094

–

––

––

Amou

ntowingbyarelatedparty

14

5,51

6,57

73,41

3,33

1–

––

–Derivativeas

sets

15

4,00

0–

36,595

–

––

Taxrefund

able

10

,200

6,84

13,48

8–

328

375

Fixe

ddep

ositwith

alice

nsed

ban

k16

56

,383

54

,660

53

,146

–

––

Cas

han

dban

kbalan

ces

3,64

2,82

95,23

7,39

22,04

6,02

111

0,51

827

,073

13

,443

59,060

,305

21

,086

,396

14

,479

,757

8,74

6,73

56,27

6,64

26,20

9,49

6

TOTA

LASSETS

93,498

,222

55

,345

,187

50

,328

,701

56

,602

,177

54

,095

,754

53

,978

,785

The

anne

xed

not

es fo

rm a

n in

tegr

al p

art

of t

hese

fina

ncia

l sta

tem

ents

.


T

HE

GR

OU

P

TH

E C

OM

PAN

Y

31

.12.

2012

31

.12.

2011

1.

1.20

11

31.1

2.20

12

31.1

2.20

11

1.1.

2011

N

OT

E

RM

R

M

RM

R

M

RM

R

M

EQ

UIT

Y A

ND

LIA

BIL

ITIE

SEQUITY

Sha

recap

ital

17

47,500

,000

44

,000

,000

44

,000

,000

47

,500

,000

44

,000

,000

44

,000

,000

Sha

repremium

12

,360

,794

11

,660

,794

11

,660

,794

12

,360

,794

11

,660

,794

11

,660

,794

Foreignex

chan

getrans

latio

nrese

rve

18

83,346

10

4,36

960

,553

–

––

Acc

umulated

losses

(16,38

8,96

2)

(16,41

6,86

7)

(14,17

3,60

8)

(8,241

,403

)(7,338

,995

)(6,559

,778

)

TOTA

LEQUITYATT

RIBUTA

BLE

TO

OWNERSO

FTH

ECOMPA

NY

43

,555

,178

39

,348

,296

41

,547

,739

51

,619

,391

48

,321

,799

49

,101

,016

NON-C

ONTR

OLL

INGIN

TERESTS

1,46

9,27

515

7,57

5–

––

–

TOTA

LEQUITY

45

,024

,453

39

,505

,871

41

,547

,739

51

,619

,391

48

,321

,799

49

,101

,016

NON-C

URRENTLIABILITIES

Borrowings

19

32

7,64

641

9,64

750

9,08

3–

––

Deferredtax

liab

ilitie

s20

2,96

2,27

62,74

3,18

63,31

7,52

2–

–34

5

3,28

9,92

23,16

2,83

33,82

6,60

5–

–34

5

CURRENTLIABILITIES

Trad

epay

ables

22

40,683

,631

4,22

2,87

11,20

8,79

0–

––

Otherpay

ablesan

dacc

ruals

23

1,89

8,85

81,31

3,39

72,12

2,30

818

4,06

948

,146

10

5,07

4

Amou

ntowingtosub

sidiary

12

––

–4,79

8,71

75,21

4,38

04,70

7,35

0Amou

ntowingtoacon

trac

tcu

stom

er

13

–3,08

8,51

5–

––

–Amou

ntowingtoarelated

party

14

–2,83

2,18

3–

–50

9,92

9–

Amou

ntowingtodire

ctors

24

–1,50

070

,858

–

1,50

065

,000

Derivativeliabilitie

s15

–

20,560

–

––

–Provision

fortaxa

tion

1,21

1,75

512

6,00

0–

––

–Borrowings

19

1,38

9,60

31,07

1,45

71,55

2,40

1–

––

45,183

,847

12

,676

,483

4,95

4,35

74,98

2,78

65,77

3,95

54,87

7,42

4

TOTA

LLIABILITIES

48

,473

,769

15

,839

,316

8,78

0,96

24,98

2,78

65,77

3,95

54,87

7,76

9

TOTA

LEQUITYANDLIABILITIES

93

,498

,222

55

,345

,187

50

,328

,701

56

,602

,177

54

,095

,754

53

,978

,785

The

anne

xed

not

es fo

rm a

n in

tegr

al p

art

of t

hese

fina

ncia

l sta

tem

ents

.

STATEMENTS Of fiNANCiAl POSiTiON (CONT’d)


THE GROUP THE COMPANY 2012 2011 2012 2011 NOTE RM RM RM RM

REVENUE 27 135,386,450 23,368,482 1,320,847 244,889

COSTOFSALES 28 (124,952,555) (18,877,988) – –

GROSSPROFIT 10,433,895 4,490,494 1,320,847 244,889

OTHEROPERATINGINCOME 495,985 253,910 – 99

10,929,880 4,744,404 1,320,847 244,988

ADMINISTRATIVEEXPENSES (6,313,962) (5,645,910) (2,223,255) (1,024,183)

SELLINGANDDISTRIBUTION EXPENSES (1,019,052) (1,276,910) – –

OTHEREXPENSES (614,509) (233,839) – –

FINANCECOSTS (145,908) (118,315) – –

PROFIT/(LOSS)BEFORE TAXATION 29 2,836,449 (2,530,570) (902,408) (779,195)

TAXATION 30 (1,496,844) 444,886 – (22)

PROFIT/(LOSS)AFTER TAXATION 1,339,605 (2,085,684) (902,408) (779,217)

OTHERCOMPREHENSIVE (EXPENSES)/INCOME, NETOFTAX-Foreigncurrencytranslation (21,023) 43,816 – –

(21,023) 43,816 – –

TOTALCOMPREHENSIVE INCOME/(EXPENSES) FORTHE FINANCIALYEAR 1,318,582 (2,041,868) (902,408) (779,217)

STATEMENTS OF COMPREHENSIVE INCOME FORTHEFINANCIALYEARENDED31DECEMBER2012

The annexed notes form an integral part of these financial statements.


THE GROUP THE COMPANY 2012 2011 2012 2011 NOTE RM RM RM RM

PROFIT/(LOSS) AFTERTAXATION ATTRIBUTABLETO:- OwnersoftheCompany 27,905 (2,243,259) (902,408) (779,217) Non-controllinginterests 1,311,700 157,575 – –

1,339,605 (2,085,684) (902,408) (779,217)

TOTALCOMPREHENSIVE INCOME/(EXPENSES) ATTRIBUTABLETO:- OwnersoftheCompany 6,882 (2,199,443) (902,408) (779,217) Non-controllinginterests 1,311,700 157,575 – –

1,318,582 (2,041,868) (902,408) (779,217)

EARNINGS/(LOSS) PERSHARE(SEN)-basic 31 0.03 (2.55)

- diluted 31 Not Not applicable applicable

STATEMENTS Of COMPREhENSiVE iNCOME (CONT’d)



STATEMENTS OF CHANGES IN EQUITY FORTHEFINANCIALYEARENDED31DECEMBER2012

N

ON

-DIS

TR

IBU

TAB

LE

D

IST

RIB

UTA

BLE

FO

RE

IGN

AT

TR

IBU

TAB

LE

E

XC

HA

NG

E

T

O O

WN

ER

S

NO

N-

S

HA

RE

S

HA

RE

T

RA

NS

LAT

ION

A

CC

UM

ULA

TE

D

OF

TH

E

CO

NT

RO

LLIN

G

TO

TAL

C

AP

ITA

L P

RE

MIU

M

RE

SE

RV

E

LOS

SE

S

CO

MPA

NY

IN

TE

RE

ST

S

EQ

UIT

Y

RM

R

M

RM

R

M

RM

R

M

RM

TH

E G

RO

UP

Balan

ceat1.1.20

11

44,000

,000

11

,660

,794

60

,553

(14,17

3,60

8)

41,547

,739

–

41,547

,739

Loss

aft

er t

axat

ion

for

thefin

ancialyea

r–

––

(2,243

,259

)(2,243

,259

)15

7,57

5(2

,085

,684

)

Othercom

prehe

nsive

in

com

e fo

r th

e

finan

cial

yea

r,

net

of t

ax:

- fo

reig

n cu

rren

cytran

slation

––

43,816

–

43,816

–

43,816

To

tal c

omp

rehe

nsiv

einco

me/(exp

ense

s)forthefin

ancialyea

r–

–43

,816

(2,243

,259

)(2,199

,443

)15

7,57

5(2,041

,868

)

Balan

cecarrie

dfo

rward

44,000

,000

11

,660

,794

10

4,36

9(16,41

6,86

7)

39,348

,296

15

7,57

539

,505

,871

The

anne

xed

not

es fo

rm a

n in

tegr

al p

art

of t

hese

fina

ncia

l sta

tem

ents

.


N

ON

-DIS

TR

IBU

TAB

LE

D

IST

RIB

UTA

BLE

FO

RE

IGN

AT

TR

IBU

TAB

LE

E

XC

HA

NG

E

T

O O

WN

ER

S

NO

N-

S

HA

RE

S

HA

RE

T

RA

NS

LAT

ION

A

CC

UM

ULA

TE

D

OF

TH

E

CO

NT

RO

LLIN

G

TO

TAL

C

AP

ITA

L P

RE

MIU

M

RE

SE

RV

E

LOS

SE

S

CO

MPA

NY

IN

TE

RE

ST

S

EQ

UIT

Y

RM

R

M

RM

R

M

RM

R

M

RM

Balan

cebroug

htfo

rward

44,000

,000

11

,660

,794

10

4,36

9(16,41

6,86

7)

39,348

,296

15

7,57

539

,505

,871

Pro

fit a

fter

tax

atio

n fo

rthefin

ancialyea

r–

––

27,905

27

,905

1,31

1,70

01,339

,605

Othercom

prehe

nsive

ex

pen

ses

for

the

fin

anci

al y

ear,

ne

t of

tax

:

-

fore

ign

curr

ency

tran

slation

––

(21,02

3)

–(21,02

3)

–(21,02

3)

Tota

l com

pre

hens

ive

(exp

ense

s)/in

comefor

thefin

ancialyea

r–

–(21,02

3)

27,905

6,88

21,31

1,70

01,31

8,58

2

Issu

ance

of

ordinarysh

ares

3,50

0,00

070

0,00

0–

–4,20

0,00

0–

4,20

0,00

0

Balan

ceat31

.12.20

12

47,500

,000

12

,360

,794

83

,346

(16,38

8,96

2)

43,555

,178

1,46

9,27

545

,024

,453

STATEMENTS Of ChANGES iN EqUiTy (CONT’d)

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NON-DISTRIBUTABLE DISTRIBUTABLE SHARE SHARE ACCUMULATED Total CAPITAL PREMIUM LOSSES Equity RM RM RM RM

THE COMPANY

Balanceat1.1.2011 44,000,000 11,660,794 (6,559,778) 49,101,016

Lossaftertaxation/Totalcomprehensive expenses forthefinancialyear – – (779,217) (779,217)

Balanceat31.12.2011/1.1.2012 44,000,000 11,660,794 (7,338,995) 48,321,799

Lossaftertaxation/Total comprehensive expenses forthefinancialyear – – (902,408) (902,408)

Issuanceofordinaryshares 3,500,000 700,000 – 4,200,000

Balanceat31.12.2012 47,500,000 12,360,794 (8,241,403) 51,619,391

STATEMENTS Of ChANGES iN EqUiTy (CONT’d)



STATEMENTS OF CASH FLOWS FORTHEFINANCIALYEARENDED31DECEMBER2012

THE GROUP THE COMPANY 2012 2011 2012 2011 RM RM RM RM

CASHFLOWS(FOR)/FROM OPERATINGACTIVITIESProfit/(Loss)beforetaxation: 2,836,449 (2,530,570) (902,408) (779,195)

Adjustmentsfor:-Amortisationofprepaidleasepayments 3,970 4,014 – –Baddebtswrittenoff 66,645 5,175 – –Depreciation of property, plant andequipment 1,476,463 1,534,289 27,287 25,546Interestexpense 85,773 118,315 – –Impairmentlossoninvestment insubsidiaries – – – 215,000Impairmentlossonproperty, plantandequipment – 24,104 – –Loss on disposal of property, plantandequipment – 79,855 – –Loss on foreign exchange-unrealised 191,455 68,133 716 –Inventorieswrittendown 328,792 638,855 – –Gain on disposal of property, plantandequipment (7,420) – – –Gain on foreign exchange -unrealised (198,205) (157,081) – (99)Interestincome (9,731) (8,448) – –Writeback of impairment losses ontradereceivables (823) – – –

Operatingprofit/(loss)before workingcapitalchanges 4,773,368 (223,359) (874,405) (538,748)Increaseininventories (136,130) (254,358) – –(Increase)/Decreaseintrade andotherreceivables (519,340) (277,234) 5,000 (53,464)Increaseintrade andotherpayables 37,052,971 1,624,022 135,207 896,531Increaseinamountowing by/(to)acontractcustomer (42,411,609) 3,088,515 – –

CASH(FOR)/FROMOPERATIONS (1,240,740) 3,957,586 (734,198) 304,319

Interestpaid (85,773) (118,315) – –Incometaxpaid (195,358) (4,587) – (453)Incometaxrefunded – 133 328 133

NETCASH(FOR)/FROM OPERATINGACTIVITIES/ CARRIEDFORWARD (1,521,871) 3,834,817 (733,870) 303,999



THE GROUP THE COMPANY 2012 2011 2012 2011 Note RM RM RM RM

NETCASH(FOR)/FROM OPERATINGACTIVITIES/ BROUGHTFORWARD (1,521,871) 3,834,817 (733,870) 303,999

CASHFLOWSFROM/(FOR) INVESTINGACTIVITIESInterestincomereceived 9,731 8,448 – –Purchase of property, plant andequipment 32 (1,434,560) (706,832) (32,787) (248,767)Proceeds from disposal of property,plantandequipment 15,195 1,006,249 – –Advancestorelatedparty (2,832,183) – (509,929) –Repaymenttodirector (1,500) (69,358) (1,500) –Subscriptionofshares inasubsidiary – – (30,830) (41,602)Advancetosubsidiaries – – (2,391,976) –

NETCASHFROM/(FOR) INVESTINGACTIVITIES (4,243,317) 238,507 (2,967,022) (290,369)

CASHFLOWSFROM/(FOR) FINANCINGACTIVITIESRepaymentofhirepurchase payables (85,337) (26,707) – –Repaymenttosubsidiaries – – (415,663) –Repaymentoftermloans (299,880) (278,196) – –Netdrawdown/(repayment) ofbankers’acceptances 283,000 (405,000) – –Proceeds from issuance ofshares 4,200,000 – 4,200,000 –

NETCASHFROM/(FOR) FINANCINGACTIVITIES 4,097,783 (709,903) 3,784,337 –

NET(DECREASE)/INCREASE INCASHANDCASH EQUIVALENTS (1,667,405) 3,363,421 83,445 13,630

CASHANDCASHEQUIVALENTS ATBEGINNINGOFTHE FINANCIALYEAR 4,730,345 1,408,183 27,073 13,443

EFFECTOFEXCHANGE RATECHANGES 2,403 (41,259) – –

CASHANDCASHEQUIVALENTS ATENDOFTHE FINANCIALYEAR 33 3,065,343 4,730,345 110,518 27,073

STATEMENTS Of CASh flOwS (CONT’d)



1. GENERAL INFORMATION

TheCompanyisapubliccompanylimitedbysharesandisincorporatedundertheCompaniesAct1965inMalaysia.ThedomicileoftheCompanyisMalaysiaandlistedontheMainMarketofBursaMalaysiaSecuritiesBerhad. The registered office and principal place of business are as follows:-

Registeredoffice : Level22,MajuTower,1001JalanSultanIsmail,50250KualaLumpur. Principalplaceofbusiness : Level32,MajuTower,1001JalanSultanIsmail,50250KualaLumpur.

The financial statements were authorised for issue by the Board of Directors in accordance with a resolution ofthedirectorsdated26April2013.

2. PRINCIPAL ACTIVITIES

The Company is principally engaged in the business of investment holding and the provision of management services.TheprincipalactivitiesofthesubsidiariesaresetoutinNote5tothefinancialstatements.Therehave been no significant changes in the nature of these activities during the financial year.

3. BASIS OF PREPARATION

The financial statements of the Group are prepared under the historical cost convention and modified to include other bases of valuation as disclosed in other sections under significant accounting policies, and incompliancewithMalaysianFinancialReportingStandards(“MFRSs”), InternationalFinancialReportingStandardsandtherequirementsoftheCompaniesAct1965inMalaysia.

(a) ThesearetheGroup’sfirstsetoffinancialstatementspreparedinaccordancewithMFRSs,whicharealsoinlinewithInternationalFinancialReportingStandardsasissuedbytheInternationalAccountingStandardsBoard.

Inthepreviousfinancialyear,thefinancialstatementsoftheGroupwerepreparedinaccordancewithFinancialReportingStandards(“FRSs”).ThefinancialimpactsonthetransitionfromFRSstoMFRSsaredisclosedinNote41tothefinancialstatements.

(b) The Group has not applied in advance the following accounting standards and interpretations (including theconsequentialamendments)thathavebeenissuedbytheMalaysianAccountingStandardsBoard(MASB)butarenotyeteffectiveforthecurrentfinancialyear:-

MFRSs and IC Interpretations (Including The Consequential Amendments) Effective Date

MFRS9FinancialInstruments 1January2015

MFRS10ConsolidatedFinancialStatements 1January2013

MFRS11JointArrangements 1January2013

MFRS12DisclosureofInterestsinOtherEntities 1January2013

MFRS13FairValueMeasurements 1January2013

MFRS119EmployeeBenefits 1January2013

MFRS127SeparateFinancialStatements 1January2013

MFRS128InvestmentsinAssociatesandJointVentures 1January2013

NOTES TO THE FINANCIAL STATEMENTS FORTHEFINANCIALYEARENDED31DECEMBER2012


NOTES TO ThE fiNANCiAl STATEMENTS (CONT’d)

3. BASIS OF PREPARATION (CONT’D)

(b) The Group has not applied in advance the following accounting standards and interpretations (including theconsequentialamendments)thathavebeenissuedbytheMalaysianAccountingStandardsBoard(MASB)butarenotyeteffectiveforthecurrentfinancialyear(Cont’d):-

MFRSs and IC Interpretations (Including The Consequential Amendments) (Cont’d) Effective Date

AmendmentstoMFRS1:GovernmentLoans 1January2013

AmendmentstoMFRS7:Disclosures– OffsettingFinancialAssetsandFinancialLiabilities 1January2013

AmendmentstoMFRS9:MandatoryEffectiveDateofMFRS9and TransitionDisclosures 1January2015

AmendmentstoMFRS10,MFRS11andMFRS12:TransitionGuidance 1January2013

AmendmentstoMFRS10,MFRS12andMFRS127: InvestmentEntities 1January2014

AmendmentstoMFRS101:PresentationofItemsofOtherComprehensiveIncome 1July2012

AmendmentstoMFRS132:OffsettingFinancialAssetsandFinancialLiabilities 1January2014

ICInterpretation20StrippingCostsintheProductionPhaseofaSurfaceMine 1January2013

AnnualImprovementstoMFRSs2009–2011Cycle 1January2013

Theaboveaccountingstandardsandinterpretations(includingtheconsequentialamendments)arenotrelevant to the Group’s operations except as follows:-

(i) MFRS9replacesthepartsofMFRS139thatrelatetotheclassificationandmeasurementoffinancial instruments.MFRS9dividesallfinancialassets into2categories–thosemeasuredat amortised cost and those measured at fair value, based on the entity’s business model for managing its financial assets and the contractual cash flow characteristics of the instruments. For financialliabilities,thestandardretainsmostoftheMFRS139requirement.Anentitychoosingto measure a financial liability at fair value will present the portion of the change in its fair value due to changes in the entity’s own credit risk in other comprehensive income rather than within profit or loss. There is no possible impact on the financial statements of the Group upon its initial application.

(ii) MFRS10replacestheconsolidationguidanceinMFRS127andICInterpretation112.UnderMFRS10,thereisonlyonebasisforconsolidation,whichiscontrol.Extensiveguidancehasbeenprovided in the standard to assist in the determination of control.

(iii) MFRS12isapplicabletoentitiesthathaveinterestsinsubsidiaries,jointarrangements,associatesand/orunconsolidatedstructuredentities.MFRS12isadisclosurestandardandthedisclosurerequirementsinthisstandardaremoreextensivethanthoseinthecurrentstandards.Accordingly,there will be no financial impact on the financial statements of the Group upon its initial application but may impact its future disclosures.

(iv) MFRS13defines fair value, providesguidanceonhow todetermine fair value and requiresdisclosuresaboutfairvaluemeasurements.ThescopeofMFRS13isbroad;itappliestobothfinancialinstrumentitemsandnon-financialinstrumentitemsforwhichotherMFRSsrequireorpermit fair value measurements and disclosures about fair value measurements, except in specified circumstances.Ingeneral,thedisclosurerequirementsinMFRS13aremoreextensivethanthoserequiredinthecurrentstandardsandthereforetherewillbenofinancialimpactonthefinancialstatements of the Group upon its initial application but may impact its future disclosures.



3. BASIS OF PREPARATION (CONT’D)

(b) Theaboveaccountingstandardsandinterpretations(includingtheconsequentialamendments)arenotrelevant to the Group’s operations except as follows (Cont’d):-

(v) TheamendmentstoMFRS7(Disclosures–OffsettingFinancialAssetsandFinancialLiabilities)requiredisclosuresthatwillenableusersofanentity’sfinancialstatementstoevaluatetheeffector potential effect of netting arrangements, including rights of set-off associated with the entity’s recognised financial assets and recognised financial liabilities, on the entity’s financial position. There will be no financial impact on the financial statements of the Group upon its initial application.

(vi) TheamendmentstoMFRS101retaintheoptiontopresentprofitorlossandothercomprehensiveincomeineitherasinglestatementorintwoseparatebutconsecutivestatements.Inaddition,items presented in other comprehensive income section are to be grouped based on whether they arepotentiallyre-classifiabletoprofitorlosssubsequentlyi.e.thosethatmightbereclassifiedandthosethatwillnotbereclassified.Incometaxonitemsofothercomprehensiveincomeisrequiredto be allocated on the same basis. There will be no financial impact on the financial statements of the Group upon its initial application other than the presentation format of the statements of profit or loss and other comprehensive income.

(vii) TheAnnualImprovementstoMFRSs2009–2011CyclecontainamendmentstoMFRS1,MFRS101,MFRS116,MFRS132andMFRS134.Theseamendmentsareexpectedtohavenomaterialimpact on the financial statements of the Group upon their initial application.

4. SIGNIFICANT ACCOUNTING POLICIES

(a) Critical Accounting Estimates and Judgements

Estimatesandjudgementsarecontinuallyevaluatedbythedirectorsandmanagementandarebasedon historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The estimates and judgements that affect the application of the Group’s accounting policies and disclosures, and have a significant risk of causing a material adjustment to the carrying amounts of assets, liabilities, income and expenses are discussed below:-

(i) Depreciation of Property, Plant and Equipment

The estimates for the residual values, useful lives and related depreciation charges for the property, plantandequipmentarebasedoncommercialfactorswhichcouldchangesignificantlyasaresultof technical innovations and competitors’ actions in response to the market conditions.

TheGroup anticipates that the residual values of its property, plant and equipmentwill beinsignificant.Asaresult,residualvaluesarenotbeingtakenintoconsiderationforthecomputationof the depreciable amount.

Changes in the expected level of usage and technological development could impact the economic useful lives and the residual values of these assets, therefore future depreciation charges could be revised.

(ii) Income Taxes

There are certain transactions and computations for which the ultimate tax determination may be different from the initial estimate. The Group recognises tax liabilities based on its understanding of the prevailing tax laws and estimates of whether such taxes will be due in the ordinary course of business. Where the final outcome of these matters is different from the amounts that were initially recognised, such difference will impact the income tax and deferred tax provisions in the year in which such determination is made.



4. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

(a) Critical Accounting Estimates and Judgements (Cont’d)

(iii) Impairment of Non-financial Assets

When the recoverable amount of an asset is determined based on the estimate of the value-in-useofthecash-generatingunittowhichtheassetisallocated,themanagementisrequiredtomake an estimate of the expected future cash flows from the cash-generating unit and also to apply a suitable discount rate in order to determine the present value of those cash flows.

(iv) Write-down of Inventories

Reviews aremade periodically bymanagement on damaged, obsolete and slow-movinginventories.Thesereviewsrequirejudgementandestimates.Possiblechangesintheseestimatescould result in revisions to the valuation of inventories.

(v) Impairment of Trade and Other Receivables

Animpairmentlossisrecognisedwhenthereisobjectiveevidencethatafinancialassetisimpaired.Management specifically reviews its loans and receivables financial assets and analyses historical bad debts, customer concentrations, customer creditworthiness, current economic trends and changesinthecustomerpaymenttermswhenmakingajudgmenttoevaluatetheadequacyofthe allowance for impairment losses. 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 similarcreditriskcharacteristics.Iftheexpectationisdifferentfromtheestimation,suchdifferencewill impact the carrying value of receivables.

(vi) Classification of Leasehold Land

Theclassificationof leasehold landasafinance leaseoranoperating leaserequirestheuseof judgement in determining the extent to which risks and rewards incidental to its ownership lie. Despite the fact that there will be no transfer of ownership by the end of the lease term and that the lease term does not constitute the major part of the indefinite economic life of the land, management considered that the present value of the minimum lease payments approximated tothefairvalueofthelandattheinceptionofthelease.Accordingly,managementjudgedthattheGrouphasacquiredsubstantiallyalltherisksandrewardsincidentaltotheownershipoftheland through a finance lease.

(vii) Impairment of Goodwill

Goodwill is tested for impairment annually and at other times when such indicators exist. This requiresmanagementtoestimatetheexpectedfuturecashflowsofthecash-generatingunittowhich goodwill is allocated and to apply a suitable discount rate in order to determine the present value of those cash flows. The future cash flows are most sensitive to budgeted gross margins, growthratesestimatedanddiscountrateused.Iftheexpectationisdifferentfromtheestimation,such difference will impact the carrying value of goodwill.

(viii) Fair Value Estimates for Certain Financial Assets and Liabilities

TheGroupcarriescertainfinancialassetsandliabilitiesatfairvalue,whichrequiresextensiveuseof accounting estimates and judgement. While significant components of fair value measurement were determined using verifiable objective evidence, the amount of changes in fair value would differ if theGroupusesdifferentvaluationmethodologies.Anychanges in fairvalueof theseassetsandliabilitieswouldaffectprofitand/orequity.




(a) Critical Accounting Estimates and Judgements (Cont’d)

(ix) Construction Contracts

Construction contracts accounting requires reliable estimationof the costs to complete thecontract and reliable estimation of the stage of completion.

• ContractRevenue

Constructioncontractsaccountingrequiresthatvariationclaimsandincentivepaymentsonly be recognised as contract revenue to the extent that it is probable that they will be acceptedbythecustomers.Astheapprovalprocessoftentakessometime,ajudgementisrequiredtobemadeofitsprobabilityandrevenuerecognisedaccordingly.

• ContractCosts

Usingexperiencegainedoneachparticularcontractandtakingintoaccounttheexpectationsofthetimeandmaterialsrequiredtocompletethecontract,managementestimatestheprofitability of the contract on an individual basis at any particular time.

(b) Basis of Consolidation

The consolidated financial statements include the financial statements of the Company and its subsidiaries made up to 31 December 2012.

Asubsidiaryisdefinedasacompanyinwhichtheparentcompanyhasthepower,directlyorindirectly,to exercise control over its financial and operating policies so as to obtain benefits from its activities.

Subsidiariesareconsolidatedfromthedateonwhichcontrol is transferredtotheGroupuptotheeffective date on which control ceases, as appropriate.

Intragroup transactions, balances, incomeand expenses are eliminatedon consolidation.Wherenecessary, adjustments are made to the financial statements of subsidiaries to ensure consistency of accounting policies with those of the Group.

(a) Business Combinations

Acquisitionsofbusinessesareaccountedforusingtheacquisitionmethod.Undertheacquisitionmethod,theconsiderationtransferredforacquisitionofasubsidiaryisthefairvalueoftheassetstransferred, liabilities incurredandtheequity interests issuedbytheGroupat theacquisitiondate. The consideration transferred includes the fair value of any asset or liability resulting from acontingentconsiderationarrangement.Acquisition-relatedcosts,otherthanthecoststoissuedebtorequitysecurities,arerecognisedinprofitorlosswhenincurred.

Inabusinesscombinationachievedinstages,previouslyheldequityinterestsintheacquireeareremeasuredtofairvalueattheacquisitiondateandanycorrespondinggainorlossisrecognisedin profit or loss.

Non-controllinginterestsintheacquireemaybeinitiallymeasuredeitheratfairvalueoratthenon-controllinginterests’proportionateshareofthefairvalueoftheacquiree’sidentifiablenetassetsatthedateofacquisition.Thechoiceofmeasurementbasisismadeonatransaction-by-transaction basis.




(b) Basis of Consolidation (Cont’d)

(b) Non-controlling Interests

Non-controllinginterestsarepresentedwithinequityintheconsolidatedstatementoffinancialposition,separatelyfromtheequityattributabletoownersoftheCompany.Transactionswithnon-controlling interests are accounted for as transactions with owners and are recognised directly inequity.Profitorlossandeachcomponentofothercomprehensiveincomeareattributedtothe owners of the parent and to the non-controlling interests. Total comprehensive income is attributed to non-controlling interests even if this results in the non-controlling interests having a deficit balance.

Attheendofeachreportingperiod,thecarryingamountofnon-controllinginterestsistheamountofthose interestsat initialrecognitionplusthenon-controlling interests’shareofsubsequentchangesinequity.

(c) Acquisitions of Non-controlling Interests

Allchangesintheparent’sownershipinterestinasubsidiarythatdonotresultinalossofcontrolareaccountedforasequitytransactions.Anydifferencebetweentheamountbywhichthenon-controlling interest is adjusted and the fair value of consideration paid or received is recognised directlyinequityandattributedtoownersoftheparent.

(d) Loss of Control

Uponlossofcontrolofasubsidiary,theprofitorlossondisposaliscalculatedasthedifferencebetween:-

(i) the aggregate of the fair value of the consideration received and the fair value of any retained interestintheformersubsidiary;and

(ii) the previous carrying amount of the assets (including goodwill), and liabilities of the former subsidiary and any non-controlling interests.

Amountspreviouslyrecognisedinothercomprehensiveincomeinrelationtotheformersubsidiaryare accounted for (i.e. reclassified to profit or loss or transferred directly to retained profits) in thesamemanneraswouldberequirediftherelevantassetsorliabilitiesweredisposedof.Thefair value of any investments retained in the former subsidiary at the date when control is lost isregardedasthefairvalueoninitialrecognitionforsubsequentaccountingunderMFRS139or, when applicable, the cost on initial recognition of an investment in an associate or a jointly controlled entity.

(c) Goodwill

Goodwill is measured at cost less accumulated impairment losses, if any. The carrying value of goodwill is reviewed for impairment annually. The impairment value of goodwill is recognised immediately in profitorloss.Animpairmentlossrecognisedforgoodwillisnotreversedinasubsequentperiod.

Undertheacquisitionmethod,anyexcessofthesumofthefairvalueoftheconsiderationtransferredinthe business combination, the amount of non-controlling interests recognised and the fair value of the Group’spreviouslyheldequityinterestintheacquiree(ifany),overthenetfairvalueoftheacquiree’sidentifiableassetsandliabilitiesatthedateofacquisitionisrecordedasgoodwill.

Where the latter amount exceeds the former, after reassessment, the excess represents a bargain purchase gain and is recognised as a gain in profit or loss.




(d) Functional and Foreign Currencies

(i) Functional and Presentation Currency

The individual financial statements of each entity in the Group are presented in the currency of the primary economic environment in which the entity operates, which is the functional currency.

Theconsolidatedfinancialstatementsarepresented inRinggitMalaysia (“RM”),which is theCompany’s functional and presentation currency.

(ii) Transactions and Balances

Transactions in foreign currencies are converted into the respective functional currencies on initial recognition, using the exchange rates approximating those ruling at the transaction dates. Monetary assets and liabilities at the end of the reporting period are translated at the rates ruling as of that date. Non-monetary assets and liabilities are translated using exchange rates that existedwhenthevaluesweredetermined.Allexchangedifferencesarerecognisedinprofitorloss.

(iii) Foreign Operations

AssetsandliabilitiesofforeignoperationsaretranslatedtoRMattheratesofexchangerulingattheendofthereportingperiod.Revenuesandexpensesofforeignoperationsaretranslatedatexchangeratesrulingatthedatesofthetransactions.Allexchangedifferencesarisingfromtranslationaretakendirectlytoothercomprehensiveincomeandaccumulatedinequityunderthetranslationreserve.Onthedisposalofaforeignoperation,thecumulativeamountrecognisedin other comprehensive income relating to that particular foreign operation is reclassified from equitytoprofitorloss.

Goodwillandfairvalueadjustmentsarisingfromtheacquisitionofforeignoperationsaretreatedas 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 end of the reporting period.

MFRS121requiresanentity:

(a) to recognise some translation differences in other comprehensive income and accumulate theseinaseparatecomponentofequity;and

(b) on disposal of a foreign operation, to reclassify the cumulative translation difference for that foreign operation (including, if applicable, gains and losses on related hedges) from equitytoprofitorlossaspartofthegainorlossondisposal.

However,afirst-timeadopterneednotcomplywiththeserequirementsforcumulativetranslationdifferencesthatexistedatthedateoftransitiontoMFRSs.Inrelationtothis,theGrouphasnotadopted this exemption.

(e) Financial Instruments

Financial instruments are recognised in the statements of financial position when the Group has become a party to the contractual provisions of the instruments.

Financial instrumentsareclassifiedas liabilitiesorequity inaccordancewith thesubstanceof thecontractualarrangement.Interest,dividends,gainsandlossesrelatingtoafinancialinstrumentclassifiedas a liability, are reported as an expense or income. Distributions to holders of financial instruments classifiedasequityarechargeddirectlytoequity.

Financial instruments are offset when the Group has a legally enforceable right to offset and intends to settle either on a net basis or to realise the asset and settle the liability simultaneously.




(e) Financial Instruments (Cont’d)

Afinancialinstrumentisrecognisedinitially,atitsfairvalueplus,inthecaseofafinancialinstrumentnotatfairvaluethroughprofitorloss,transactioncoststhataredirectlyattributabletotheacquisitionor issue of the financial instrument.

Financial instruments recognised in the statements of financial position are disclosed in the individual policy statement associated with each item.

(i) Financial Assets

Oninitialrecognition,financialassetsareclassifiedaseitherfinancialassetsatfairvaluethroughprofit or loss, held-to-maturity investments, loans and receivables financial assets, or available-for-sale financial assets, as appropriate.

• FinancialAssetsatFairValueThroughProfitorLoss

Financial assets are classified as financial assets at fair value through profit or loss when the financial asset is either held for trading or is designated to eliminate or significantly reduce a measurement or recognition inconsistency that would otherwise arise. Derivatives are also classified as held for trading unless they are designated as hedges.

Financial assets at fair value through profit or loss are stated at fair value, with any gains or losses arising on remeasurement recognised in profit or loss. Dividend income from this category of financial assets is recognised in profit or loss when the Group’s right to receive payment is established.

Asattheendofthereportingperiod,therewerenofinancialassetsclassifiedunderthiscategory.

• Held-to-maturityInvestments

Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturities that the management has the positive intention and ability to hold to maturity. Held-to-maturity investments are measured at amortised cost using the effective interest method less any impairment loss, with revenue recognised on an effective yield basis.


• LoansandReceivablesFinancialAssets

Trade receivables and other receivables that have fixed or determinable payments that arenotquotedinanactivemarketareclassifiedasloansandreceivablesfinancialassets.Loans and receivables financial assets are measured at amortised cost using the effective interestmethod,lessanyimpairmentloss.Interestincomeisrecognisedbyapplyingtheeffective interest rate, except for short-term receivables when the recognition of interest would be immaterial.




(e) Financial Instruments (Cont’d)

(i) Financial Assets (Cont’d)

• Available-for-saleFinancialAssets

Available-for-salefinancialassetsarenon-derivativefinancialassetsthataredesignatedin this category or are not classified in any of the other categories.

Afterinitialrecognition,available-for-salefinancialassetsareremeasuredtotheirfairvaluesat the end of each reporting period. Gains and losses arising from changes in fair value are recognised in other comprehensive income and accumulated in the fair value reserve, with theexceptionofimpairmentlosses.Onderecognition,thecumulativegainorlosspreviouslyaccumulatedinthefairvaluereserveisreclassifiedfromequityintoprofitorloss.Dividendsonavailable-for-saleequityinstrumentsarerecognisedinprofitorlosswhentheGroup’sright to receive payments is established.

Investmentsinequityinstrumentswhosefairvaluecannotbereliablymeasuredaremeasuredat cost less accumulated impairment losses, if any.


(ii) Financial Liabilities

All financial liabilities are initially at fair valueplusdirectly attributable transaction costs andsubsequentlymeasuredatamortisedcostusingtheeffectiveinterestmethodotherthanthosecategorised as fair value through profit or loss.

Fair value through profit or loss category comprises financial liabilities that are either held for trading or are designated to eliminate or significantly reduce a measurement or recognition inconsistency that would otherwise arise. Derivatives are also classified as held for trading unless they are designated as hedges.

(iii) Equity Instruments

Ordinarysharesareclassifiedasequity.Incrementalcostsdirectlyattributabletotheissueofnewsharesoroptionsareshowninequityasadeduction,netoftax,fromproceeds.

Dividends on ordinary shares are recognised as liabilities when approved for appropriation.

(f) Investments in Subsidiaries

InvestmentsinsubsidiariesarestatedatcostinthestatementoffinancialpositionoftheCompany,andare reviewed for impairment at the end of the reporting period if events or changes in circumstances indicate that the carrying values may not be recoverable.

Onthedisposaloftheinvestmentsinsubsidiaries,thedifferencebetweenthenetdisposalproceedsand the carrying amount of the investments is recognised in profit or loss.




(g) Property, Plant and Equipment

Property,plantandequipment,otherthanfreeholdlandandbuildings,arestatedatcostlessaccumulateddepreciation and impairment losses, if any.

Freehold land is not depreciated.

Depreciation is calculated under the straight-line method to write off the depreciable amount of the assets over their estimated useful lives. Depreciation of an asset does not cease when the asset becomes idle or is retired from active use unless the asset is fully depreciated. The principal annual rates used for this purpose are:-

Freehold buildings 2%Leasehold buildings 2%Leasehold land 1-2%Plant and machinery 10%Furniture,fittingsandequipment 10%-33%Motor vehicles 20%

The depreciation method, useful lives and residual values are reviewed, and adjusted if appropriate, at the end of each reporting period to ensure that the amounts, method and periods of depreciation are consistent with previous estimates and the expected pattern of consumption of the future economic benefitsembodiedintheitemsoftheproperty,plantandequipment.

Subsequent costsare included in theasset’s carryingamountor recognisedasa separateasset,as appropriate, only when the cost is incurred and it is probable that the future economic benefits associated with the asset will flow to the Group and the cost of the asset can be measured reliably. The carrying amount of parts that are replaced is derecognised. The costs of the day-to-day servicing ofproperty,plantandequipmentarerecognisedinprofitorlossasincurred.Costalsocomprisestheinitial estimate of dismantling and removing the asset and restoring the site on which it is located for whichtheGroupisobligatedtoincurwhentheassetisacquired,ifapplicable.

Anitemofproperty,plantandequipmentisderecognisedupondisposalorwhennofutureeconomicbenefitsareexpectedfromitsuse.Anygainorlossarisingfromderecognitionoftheassetisrecognisedinprofitorloss.Therevaluationreserveincludedinequityistransferreddirectlytoretainedprofitsonretirementordisposaloftheasset.Inaddition,theGroupalsomakesanannualtransferoftherevaluationreservetoretainedprofitsastheassetisused.Insuchacase,theamountoftherevaluationreservetransferred would be the difference between depreciation based on the revalued carrying amount of the asset and depreciation based on the asset’s original cost.

(h) Impairment

(i) Impairment of Financial Assets

Allfinancialassets(otherthanthosecategorisedatfairvaluethroughprofitorloss),areassessedat the end of each reporting period whether there is any objective evidence of impairment as a result of one or more events having an impact on the estimated future cash flows of the asset.

Animpairmentlossinrespectofheld-to-maturityinvestmentsandloansandreceivablesfinancialassets is recognised in profit or loss and is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the financial asset’s original effective interest rate.

Ifinasubsequentperiod,theamountoftheimpairmentlossdecreasesandthedecreasecanbe related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed through profit or loss to the extent that the carrying amount of the investment at the date the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised.




(h) Impairment (Cont’d)

(ii) Impairment of Non-Financial Assets

Thecarryingvaluesofassets,otherthanthosetowhichMFRS136ImpairmentofAssetsdoesnotapply, are reviewed at the end of each reporting period for impairment when there is an indication thattheassetsmightbeimpaired.Impairmentismeasuredbycomparingthecarryingvaluesofthe assets with their recoverable amounts. The recoverable amount of the assets is the higher of the assets’ fair value less costs to sell and their value in use, which is measured by reference to discounted future cash flow.

Animpairmentlossisrecognisedinprofitorloss.

Whenthereisachangeintheestimatesusedtodeterminetherecoverableamount,asubsequentincrease in the recoverable amount of an asset is treated as a reversal of the previous impairment loss and is recognised to the extent of the carrying amount of the asset that would have been determined (net of amortisation and depreciation) had no impairment loss been recognised. The reversal is recognised in profit or loss immediately.

(i) Assets under Hire Purchase

Assetsacquiredunderhirepurchasearecapitalisedinthefinancialstatementsandaredepreciatedinaccordancewiththepolicysetout inNote4(g)above.Eachhirepurchasepayment isallocatedbetween the liability and finance charges so as to achieve a constant rate on the finance balance outstanding. Finance charges are recognised in profit or loss over the period of the respective hire purchase agreements.

(j) Inventories

Inventoriesarestatedatthelowerofcostandnetrealisablevalue.Costisdeterminedonthefirst-in-first-out basis and comprises the purchase price and incidentals incurred in bringing the inventories to their present location and condition.

Net realisable value represents the estimated selling price less the estimated costs necessary to make the sale.

Where necessary, due allowance is made for all damaged, obsolete and slow-moving items. The Group writes down its obsolete or slow moving inventories based on assessment of the condition and the future demand for the inventories. These inventories are written down when events or changes in circumstances indicate that the carrying amounts may not be recovered.

(k) Income Taxes

Incometaxfortheyearcomprisescurrentanddeferredtax.

Current tax is the expected amount of income taxes payable in respect of the taxable profit for the year and is measured using the tax rates that have been enacted or substantively enacted at the end of the reporting period.

Deferred tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements.

Deferred tax liabilities are recognised for all taxable temporary differences other than those that arise fromgoodwillorexcessoftheacquirer’sinterestinthenetfairvalueoftheacquiree’sidentifiableassets,liabilities and contingent liabilities over the business combination costs or from the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the transaction, affects neither accounting profit nor taxable profit.




(k) Income Taxes (Cont’d)

Deferred tax assets are recognised for all deductible temporary differences, unused tax losses and unused tax credits to the extent that it is probable that future taxable profits will be available against which the deductible temporary differences, unused tax losses and unused tax credits can be utilised. The carrying amounts of deferred tax assets are reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient future taxable profits will be available to allow all or part of the deferred tax assets to be utilised.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period when the asset is realised or the liability is settled, based on the tax rates that have been enacted or substantively enacted at the end of the reporting period.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when the deferred income taxes relate to the same taxation authority.

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 transactions either in other comprehensiveincomeordirectlyinequityanddeferredtaxarisingfromabusinesscombinationisincludedintheresultinggoodwillorexcessoftheacquirer’sinterestinthenetfairvalueoftheacquiree’sidentifiable assets, liabilities and contingent liabilities over the business combination costs.

(l) Cash and Cash Equivalents

Cashandcashequivalentscomprisecashinhand,bankbalances,demanddeposits,depositspledgedwithfinancial institutions,bankoverdraftsandshort-term,highly liquid investmentsthatarereadilyconvertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

(m) Employee Benefits

(i) Short-term Benefits

Wages, salaries, paid annual leave and sick leave, bonuses and non-monetary benefits are recognised in profit or loss in the period in which the associated services are rendered by employees of the Group.

(ii) Defined Contribution Plans

The Group’s contributions to defined contribution plans are recognised in profit or loss in the periodtowhichtheyrelate.Oncethecontributionshavebeenpaid,theGrouphasnofurtherliability in respect of the defined contribution plans.

(n) Borrowing Costs

Borrowingcosts,directlyattributabletotheacquisitionandconstructionofproperty,plantandequipmentare capitalised as part of the cost of those assets, until such time as the assets are ready for their intended use or sale. Capitalisation of borrowing costs is suspended during extended periods in which active development is interrupted

Allotherborrowingcostsarerecognisedinprofitorlossasexpensesintheperiodinwhichtheyincurred.




(o) Related Parties

Apartyisrelatedtoanentity(referredtoasthe“reportingentity”)if:-

(a) Apersonoraclosememberofthatperson’sfamilyisrelatedtoareportingentityifthatperson:-

(i) hascontrolorjointcontroloverthereportingentity;(ii) hassignificantinfluenceoverthereportingentity;or(iii) is a member of the key management personnel of the reporting entity or of a parent of the

reporting entity.

(b) Anentityisrelatedtoareportingentityifanyofthefollowingconditionsapplies:-

(i) The entity and the reporting entity are members of the same group (which means that each parent, subsidiary and fellow subsidiary is related to the others).

(ii) Oneentityisanassociateorjointventureoftheotherentity(oranassociateorjointventureof a member of a group of which the other entity is a member).

(iii) Both entities are joint ventures of the same third party.(iv) Oneentityisajointventureofathirdentityandtheotherentityisanassociateofthethird

entity.(v) The entity is a post-employment benefit plan for the benefit of employees of either the

reportingentityoranentityrelatedtothereportingentity.Ifthereportingentityisitselfsucha plan, the sponsoring employers are also related to the reporting entity.

(vi) The entity is controlled or jointly controlled by a person identified in (a) above.(vii) Apersonidentifiedin(a)(i)abovehassignificantinfluenceovertheentityorisamember

of the key management personnel of the entity (or of a parent of the entity).

Close members of the family of a person are those family members who may be expected to influence, or be influenced by, that person in their dealings with the entity.

(p) Contingent Liabilities

Acontingentliabilityisapossibleobligationthatarisesfrompasteventsandwhoseexistencewillonlybe confirmed by the occurrence of one or more uncertain future events not wholly within the control of theGroup.Itcanalsobeapresentobligationarisingfrompasteventsthatisnotrecognisedbecauseitisnotprobablethatanoutflowofeconomicresourceswillberequiredortheamountofobligationcannot be measured reliably.

Acontingentliabilityisnotrecognisedbutisdisclosedinthenotestothefinancialstatements.Whenachange in the probability of an outflow occurs so that the outflow is probable, it will then be recognised as a provision.

(q) Revenue and Other Income

(i) Sale of Goods

Revenueisrecognisedupondeliveryofgoodsandcustomers’acceptanceandwhereapplicable,net of returns and trade discounts.

(ii) Management Fees

Revenuefrommanagementservicesisrecognisedasandwhentheservicesareperformed.

(iii) Interest Income

Interestincomeisrecognisedonanaccrualbasis.




(q) Revenue and Other Income (Cont’d)

(iv) Rental Income

Rentalincomeisrecognisedonanaccrualbasis.

(v) Construction Contracts

Revenueon contracts is recognisedupon thepercentageof completionmethodunless theoutcome of the contract cannot be reliably determined, in which case revenue on contracts is only recognised to the extent of the contract costs incurred that are recoverable. Foreseeable losses, if any, are provided for in full as and when it can be reasonably ascertained that the contract will result in loss.

The stage of completion is determined based on the proportion that contract costs incurred for work performed to date bear to the estimated total contract costs.

(r) Operating Segments

AnoperatingsegmentisacomponentoftheGroupthatengagesinbusinessactivitiesfromwhichitmay earn revenues and incur expenses, including revenues and expenses that relate to transactions withanyoftheGroup’sothercomponents.Anoperatingsegment’soperatingresultsarereviewedregularly by the chief operating decision maker to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available.

5. INVESTMENTS IN SUBSIDIARIES

THE COMPANY 2012 2011 RM RM

Unquotedshares,atcostAt1January -inMalaysia 50,057,473 50,057,473-outsideMalaysia 3,676,604 3,645,774

53,734,077 53,703,247

Accumulatedimpairmentlosses:- At1January (6,108,929) (5,893,929)Additionduringthefinancialyear – (215,000)

At31December (6,108,929) (6,108,929)

47,625,148 47,594,318



5. INVESTMENTS IN SUBSIDIARIES (CONT’D)

The details of the subsidiaries are as follows:-

Country of EffectiveName of Companies Incorporation Equity Interest Principal Activities

2012 2011 % %

AsianPottery Malaysia 100 100 Dormant. Manufacturers Sdn.Bhd. OriwinaSdn.Bhd. Malaysia 100 100 Tradeinandmanufactureof ceramic wares. AsianPottery(Penang) Malaysia 100 100 Tradein,exportandmarketing Sdn.Bhd. ofpotteryandporcelainproducts, ceramic ware and ornaments.

AsianEarthernware Malaysia 100 100 Tradeinandmanufactureof Sdn.Bhd. potteryandporcelainproducts.

AsianPorcelain Malaysia 100 100 Dormant. Sdn.Bhd.

MetroCraftSdn.Bhd. Malaysia 100 100 Dormant. (heldbyAsianPottery Manufacturers Sdn.Bhd.)

AsianPotteryHome& Malaysia 100 100 Retail,tradingandwholesaleof GardenSdn.Bhd. pottery,ceramicsandporcelain products. AsiariseHoldings Malaysia 100 100 Retail,tradingandwholesaleof Sdn.Bhd. pottery,ceramicsandporcelain products.

APPISdn.Bhd. Malaysia 100 100 Dormant.

PFCEOffshore Malaysia 65 65 Fabricationofoilandgassteel WorldwideSdnBhd structuresandplatforms.

GuangxiAsianPottery ThePeople’s 100 100 Dormant. Co.Ltd.^ RepublicofChina

^ This subsidiary was audited by another firm of chartered accountants.



6. PROPERTY, PLANT AND EQUIPMENT

CURRENCY AT DEPRECIATION TRANSLATION AT 1.1.2012 ADDITIONS DISPOSALS CHARGE DIFFERENCES 31.12.2012 THE GROUP RM RM RM RM RM RM

NET BOOk VALUE

Freehold land andbuildings 18,382,459 – – (367,542) – 18,014,917 Leaseholdbuildings 8,005,009 – – (269,324) (17,770) 7,717,915 Leaseholdland 2,757,931 – – (32,069) – 2,725,862 Plantandmachinery 1,323,598 92,383 (1,076) (402,570) (915) 1,011,420 Renovation – 274,035 – (27,403) – 246,632 Furniture, fittings andequipment 726,415 1,033,518 (6,699) (276,403) – 1,476,831 Motorvehicles 290,020 290,824 – (101,152) (476) 479,216 Capitalwork-in-progress 18,912 – – – (410) 18,502

31,504,344 1,690,760 (7,775) (1,476,463) (19,571) 31,691,295

CURRENCY AT DEPRECIATION TRANSLATION AT 1.1.2011 ADDITIONS DISPOSALS CHARGE DIFFERENCES 31.12.2011 THE GROUP RM RM RM RM RM RM

NET BOOk VALUE Freehold land andbuildings 19,825,124 – (1,075,123) (367,542) – 18,382,459 Leaseholdbuildings 8,210,017 – – (243,646) 38,638 8,005,009 Leaseholdland 2,790,000 – – (32,069) – 2,757,931 Plantandmachinery 1,923,939 119,677 (5,735) (718,007) 3,724 1,323,598 Furniture, fittings andequipment 309,136 558,667 (5,246) (136,142) – 726,415 Motorvehicles 27,593 297,288 – (36,883) 2,022 290,020 Capitalwork-in-progress 17,583 – – – 1,329 18,912

33,103,392 975,632 (1,086,104) (1,534,289) 45,713 31,504,344



6. PROPERTY, PLANT AND EQUIPMENT (CONT’D)

AT ACCUMULATED NET BOOk COST DEPRECIATION VALUE THE GROUP RM RM RM

At31.12.2012

Freeholdlandandbuildings 18,750,000 (735,083) 18,014,917 Leaseholdbuildings 8,489,465 (771,550) 7,717,915 Leaseholdland 2,790,000 (64,138) 2,725,862 Plantandmachinery 9,231,569 (8,220,149) 1,011,420 Renovation 274,035 (27,403) 246,632 Furniture,fittingsandequipment 3,126,798 (1,649,967) 1,476,831 Motorvehicles 1,310,101 (830,885) 479,216 Capitalwork-in-progress 18,502 – 18,502

43,990,470 (12,299,175) 31,691,295

At31.12.2011

Freeholdlandandbuildings 18,750,000 (367,541) 18,382,459 Leaseholdbuildings 8,489,465 (484,456) 8,005,009 Leaseholdland 2,790,000 (32,069) 2,757,931 Plantandmachinery 9,174,819 (7,851,221) 1,323,598 Furniture,fittingsandequipment 2,141,672 (1,415,257) 726,415 Motorvehicles 1,019,279 (729,259) 290,020 Capitalwork-in-progress 18,912 – 18,912

42,384,147 (10,879,803) 31,504,344

AT DEPRECIATION AT 1.1.2012 ADDITION CHARGE 31.12.2012 THE COMPANY RM RM RM RM

NET BOOk VALUE

Furniture,fittingsandequipment 224,794 32,787 (27,287) 230,294

AT DEPRECIATION AT 1.1.2011 ADDITION CHARGE 31.12.2011 THE COMPANY RM RM RM RM

NET BOOk VALUE

Furniture,fittingsandequipment 1,573 248,767 (25,546) 224,794



6. PROPERTY, PLANT AND EQUIPMENT (CONT’D)

AT ACCUMULATED NET BOOk COST DEPRECIATION VALUE THE COMPANY RM RM RM

At31.12.2012

Furniture,fittingsandequipment 288,237 (57,943) 230,294

At31.12.2011

Furniture,fittingsandequipment 255,451 (30,657) 224,794

(a) IncludedintheassetsoftheGroupattheendofthereportingperiodweremotorvehicleswithatotalnetbookvalueofRM450,341(2011–RM265,452),whichwereacquiredunderhirepurchaseterms.

(b) The freehold land and buildings and leasehold land and buildings of the Group which have been pledged to licensed banks as security for banking facilities granted to the Group as disclosed in Notes 19, 21 and25areasfollows:

THE GROUP 2012 2011 RM RM Freeholdlandandbuildings 9,395,129 14,950,868Leaseholdbuildings 5,609,459 5,769,731Leaseholdland 2,256,896 2,283,448

17,261,484 23,004,047

7. PREPAID LAND LEASE PAYMENTS

THE GROUP 2012 2011 RM RM

Long-term leasehold land, at cost:- At1January 200,680 200,680Exchangedifferences (4,360) –

At31December 196,320 200,680

Accumulatedamortisation:- At1January (21,238) (16,012)Amortisationchargeduringtheyear (3,970) (4,014)Exchangedifferences 505 (1,212)

At31December (24,703) (21,238)

Carryingvalueat31December 171,617 179,442

TheGroup’sleaseholdlandinthePeople’sRepublicofChinaisclassifiedasprepaidlandleasepayments.Theprepaidlandleasepaymentsarenottransferableandhavearemainingtenureof44years(2011–45years).



8. GOODWILL


At1January 2,924,706 2,924,706Accumulatedimpairmentlosses (349,701) (349,701)

At31December 2,575,005 2,575,005

(a) The carrying amount of goodwill allocated to each cash-generating unit is as follows:-


Ceramicsegment 2,575,005 2,575,005

(b) The Group has assessed the recoverable amounts of goodwill allocated and determined that no additionalimpairmentisrequired.Therecoverableamountofthecash-generatingunitisdeterminedusing the value-in-use approach, and this is derived from the present value of the future cash flows from the operating segments computed based on the projections of financial budgets approved by management covering a period of 3 years.

(c) The key assumptions used in the determination of the recoverable amount are as follows:-

GROSS MARGIN GROWTH RATE DISCOUNT RATE 2012 2011 2012 2011 2012 2011

Ceramic 33% 33% 5% 5% 10% 9%

(c) The key assumptions used in the determination of the recoverable amount are as follows (Cont’d):-

(i) Budgeted gross margin The basis used to determine the value assigned to the budgeted gross margin is the average gross margin achieved in the 3 years immediately before the budgeted period increased for expected efficiency improvements and cost saving measures.

(ii) Growth rate The growth rates used are based on the expected projection of the

ceramic segments.

(iii) Discount rate The discount rates used are pre-tax and reflect specific risks relating to the relevant operating segments.



9. INVENTORIES


Atcost:- Rawmaterials 374,009 497,258Work-in-progress 145,265 215,655Finishedgoods 3,294,993 2,383,231

3,814,267 3,096,144Atnetrealisablevalue:- Finishedgoods 3,066,771 3,977,556

6,881,038 7,073,700

10. TRADE RECEIVABLES

TheGroup’snormaltradecredittermsrangefrom30to90days.Othercredittermsareassessedandapprovedon a case-by-case basis.

11. OTHER RECEIVABLES, DEPOSITS AND PREPAYMENTS


Otherreceivables 167,036 97,950 30,000 35,000 Deposits 108,579 108,636 1,150 1,150 Prepayments 1,774,275 1,880,696 – –

2,049,890 2,087,282 31,150 36,150

12. AMOUNTS OWING BY/(TO) SUBSIDIARIES

THE COMPANY 2012 2011 RM RM

Amountowingby:-

Current Non-tradebalances 8,605,067 6,213,091

Amountowingto:-

Current Non-tradebalances (4,798,717) (5,214,380)

The balances represent unsecured interest-free advances and payments on behalf. The amounts owing are repayable on demand and are to be settled in cash.



13. AMOUNTS OWING BY/(TO) A CONTRACT CUSTOMER


Costofcontract 116,770,399 8,469,762Attributableprofitrecognisedtodate 6,782,429 745,054

123,552,828 9,214,816Less:Progressbillings (84,229,734) (12,303,331)

39,323,094 (3,088,515)

14. AMOUNTS OWING BY/(TO) A RELATED PARTY


Amountowingby:-

CurrentTradebalances 5,516,577 3,413,331 – –

Amountowingto:-

CurrentNon-tradebalances – (2,832,183) – (509,929)

The trade balance is subjected to the normal trade credit terms ranging from 30 to 90 days. The amount owing is to be settled in cash.

The non-trade balance represents unsecured interest-free advances and payments on behalf. The amount owing is repayable on demand and is to be settled in cash.

15. DERIVATIVE ASSETS/LIABILITIES

CONTRACT/ CONTRACT/ NOTIONAL NOTIONAL

AMOUNT AMOUNT THE GROUP 2012 2011 2012 2011

RM RM RM RM

DerivativeAssetsForwardforeigncurrencycontracts 309,800 1,721,085 4,000 –

Derivative LiabilitiesForwardforeigncurrencycontracts 305,800 1,741,645 – 20,560



15. DERIVATIVE ASSETS/LIABILITIES

The Group does not apply hedge accounting.

(a) ForwardforeigncurrencycontractsareusedtohedgetheGroup’spurchasesdenominatedinUnitedStatesDollar(USD)forwhichfirmcommitmentsexistedattheendofthereportingperiod.Thesettlementdates on forward foreign currency contracts range between 1 to 12 months (2011 - 1 to 12 months) after the end of the reporting period.

(b) TheGrouphasrecognisedaprofitofRM4,000(2011–lossofRM20,560)arisingfromfairvaluechangesof derivatives during the financial year. The fair value changes were attributed to changes in the foreign exchange spot and forward rates. The method and assumptions applied in determining the fair values ofderivativesaredisclosedinNote38(d)(iv)tothefinancialstatements.

16. FIXED DEPOSIT WITH A LICENSED BANk

(a) The fixed deposit with a licensed bank of the Group at the end of the reporting period bore an effective interestrateof3.15%(2011–2.85%)perannum.Thedeposithasamaturityperiodof12months(2011–12months).

(b) IncludedinthefixeddepositwithalicensedbankoftheGroupattheendofthereportingperiodwasanamountofRM56,383(2011–RM54,660)whichhasbeenpledgedtoalicensedbankassecurityforbanking facilities granted to the Group.

17. SHARE CAPITAL

THE COMPANY 2012 2011 2012 2011 NUMBER OF SHARES RM RM

AUTHORISED

OrdinarysharesofRM0.50each 100,000,000 100,000,000 50,000,000 50,000,000

ISSUEDANDFULLYPAID-UP

At1January 88,000,000 88,000,000 44,000,000 44,000,000Issuanceofshares 7,000,000 – 3,500,000 –

At31December 95,000,000 88,000,000 47,500,000 44,000,000

During the current financial year, the Company increased its issued and paid-up ordinary shares from RM44,000,000toRM47,500,000bytheallotmentof7,000,000newordinarysharesofRM0.50eachatanissuepriceofRM0.60pershareforthepurposeofworkingcapital.Thenewshareswereissuedforcashconsideration.

The new ordinary shares issued rank pari passu in all respects with the existing shares of the Company.



18. FOREIGN EXCHANGE TRANSLATION RESERVE

The foreign exchange translation reserve arose from the translation of the financial statements of a foreign subsidiary and is not distributable by way of dividends.

19. BORROWINGS


Current: -Bankoverdrafts(Note25) 633,869 561,707-Bankers’acceptances 442,000 159,000-Hirepurchasepayables(Note26) 104,043 51,488-Termloan(Note21) 209,691 299,262

1,389,603 1,071,457

Non-current: -Hirepurchasepayables(Note26) 327,646 209,338-Termloan(Note21) – 210,309

327,646 419,647

1,717,249 1,491,104

The bankers’ acceptances are secured by:-

(i) alegalchargeovercertainpropertiesoftheCompany;and

(ii) a corporate guarantee of the Company.

20. DEFERRED TAX LIABILITIES


At1January 2,743,186 3,317,522 – 345Recognisedinprofitorloss(Note30) 219,090 (574,336) – (345)

At31December 2,962,276 2,743,186 – –

The deferred tax liabilities are attributable to the following:-


Revaluationoflandandbuilding 3,265,879 3,327,415 – –Acceleratedcapitalallowances 1,011,443 973,266 – –Othertemporarydifferences (1,315,046) (1,557,495) – –

2,962,276 2,743,186 – –



21. TERM LOAN


Current portion: (Note 19) -notlaterthanoneyear 209,691 299,262

Non-current portion: (Note 19)-laterthanoneyearandnotlaterthantwoyears – 210,309

209,691 509,571

The term loan is secured by a first party legal charge over the Group’s leasehold land and buildings and a corporate guarantee provided by the Company.

The repayment terms of the term loan are as follows:-

Termloan1atBLR+1.25%perannum Repayablein84monthlyinstalmentsofRM27,387effectivefrom25July2006.

22. TRADE PAYABLES

The normal trade credit terms granted to the Group and the Company range from 30 to 90 days.

23. OTHER PAYABLES AND ACCRUALS


Otherpayables 964,369 572,117 160,069 36,079Deposits 142,752 – 24,000 12,067Accruals 791,737 741,280 – –

1,898,858 1,313,397 184,069 48,146

24. AMOUNT OWING TO DIRECTORS

In theprevious financial year, the non-tradebalance representedunsecured interest-free advances andpayments made on behalf. The amount owing was settled in cash.

25. BANk OVERDRAFTS

ThebankoverdraftsaresecuredbyafixedchargeovercertainoftheGroup’spropertiesandequipment.



26. HIRE PURCHASE PAYABLES


Minimum hire purchase payments: -notlaterthanoneyear 119,880 60,888-laterthanoneyearandnotlaterthanfiveyears 367,463 233,602

487,343 294,490Less:Futurefinancecharges (55,654) (33,664)

Presentvalueofhirepurchasepayables 431,689 260,826

Current portion: (Note 19) -notlaterthanoneyear 104,043 51,488

Non-current portion: (Note 19) -laterthanoneyearandnotlaterthanfiveyears 327,646 209,338

431,689 260,826

27. REVENUE


Salesofgoods 11,833,623 14,153,666 – –Contractrevenue 123,552,827 9,214,816 – –Managementfees – – 1,320,847 244,889

135,386,450 23,368,482 1,320,847 244,889

28. COST OF SALES


Costofgoodssold 8,182,156 10,408,226Contractcosts 116,770,399 8,469,762

124,952,555 18,877,988



29. PROFIT/(LOSS) BEFORE TAXATION


Profit/(Loss)beforetaxationis arrivedataftercharging/(crediting):-

Amortisationofprepaidlandleasepayments 3,970 4,014 – –Auditfee:-currentfinancialyear 87,500 39,100 24,000 12,000-under/(over)provisioninthe previousfinancialyear 39,900 5,000 12,000 (3,500)Baddebtswrittenoff 66,645 5,175 – –Depreciation of property, plantandequipment 1,476,463 1,534,289 27,287 25,546Directors’non-feeemoluments 206,875 406,737 26,500 20,400Impairmentlosson:-investmentinsubsidiaries – – – 215,000-property,plantandequipment – 24,104 – –Interestexpense:-bankoverdrafts 37,256 38,357 – –-hirepurchase 16,719 4,654 – –-termloan 28,768 50,452 – –-bankers’acceptances 3,030 24,852 – –Loss on disposal of property, plantandequipment – 79,855 – –Inventorieswrittendown 328,792 638,855 – –Loss on foreign exchange:-realised 195,894 127,243 – –-unrealised 191,455 68,133 716 –Rentalofequipment 97,115 252,977 2,580 3,970Rentalofquarters – 21,731 – –Rentalofcar 28,652 236,807 – –Rentalofoffice 849,810 205,502 420,750 –Staffcosts:- salaries, wages, bonuses andallowances 10,156,944 5,741,756 77,160 31,846-definedcontributionplan 1,095,156 565,079 9,012 4,854-otherbenefits 342,667 389,786 17,816 14,277Gain on disposal of property, plantandequipment (7,420) – – –Gain on foreign exchange:-realised (143,535) (7,153) – –-unrealised (198,205) (157,081) – (99)Interestincome (9,731) (8,448) – –Rentalincome (96,000) (79,400) – –Writeback of impairment lossesontradereceivables (823) – – –



30. TAXATION


Incometax:-currentyear 1,251,827 128,350 – –- underprovision in the previousfinancialyear 25,927 1,100 – 367

1,277,754 129,450 – 367

Deferred taxation (Note 20):- relating to origination and reversal of temporary differences 236,090 (546,778) – (345)- overprovision in the previous financialyear (17,000) (27,558) – –

219,090 (574,336) – (345)

1,496,844 (444,886) – 22

Areconciliationofincometaxexpenseapplicabletotheprofit/(loss)beforetaxationatthestatutorytaxrateto income tax expense at the effective tax rate of the Group and the Company is as follows:-


Profit/(Loss)beforetaxation 2,836,449 (2,530,570) (902,408) (779,195)

Taxatthestatutorytaxrateof25% 709,112 (632,642) (225,602) (194,799)

Tax effects of:-Non-deductibleexpenses 703,055 528,069 225,602 204,368Deferred tax assets not recognised duringthefinancialyear 80,895 48,278 – –Utilisationofdeferredtaxassetnot recognisedinpreviousfinancialyear (5,145) (362,133) – (9,914)Underprovisionofincometaxinthe previousfinancialyear 25,927 1,100 – 367Overprovisionofdeferredtaxation inthepreviousfinancialyear (17,000) (27,558) – –

Incometaxexpenseforthe financialyear 1,496,844 (444,886) – 22



30. TAXATION (CONT’D)

Subjecttoagreementwiththetaxauthorities,theGroupandtheCompanyhaveunabsorbedcapitalallowancesand unutilised tax losses available at the end of the reporting period to be carried forward for offset against future taxable business income as follows:-


Unutilisedtaxlosses 10,439,000 10,946,000 507,000 507,000Unabsorbedcapitalallowances 8,970,000 8,766,000 – –

19,409,000 19,712,000 507,000 507,000

31. EARNINGS/(LOSS) PER SHARE

THE GROUP 2012 2011

Profit/(Loss)aftertaxationattributabletoownersoftheCompany(RM) 27,905 (2,243,259)Weightedaveragenumberofordinarysharesinissueat31December 89,750,000 88,000,000

Basicearnings/(loss)pershare(sen) 0.03 (2.55)

Thedilutedearnings/(loss)persharewasnotapplicableastherewerenodilutivepotentialordinarysharesoutstanding at the end of the reporting period.

32. PURCHASE OF PROPERTY, PLANT AND EQUIPMENT


Cost of property, plant and equipmentpurchased 1,690,760 975,632 32,787 248,767Amountfinancedthrough hirepurchase (256,200) (268,800) – –

Cash disbursed for purchase ofproperty,plantandequipment 1,434,560 706,832 32,787 248,767

33. CASH AND CASH EQUIVALENTS

Forthepurposeofthestatementsofcashflows,cashandcashequivalentscomprisethefollowing:-

THE GROUP THE COMPANY 2012 2011 2012 2011 Note RM RM RM RM

Fixed deposit with a licensedbank 16 56,383 54,660 – –Cashandbankbalances 3,642,829 5,237,392 110,518 27,073Bankoverdrafts 25 (633,869) (561,707) – –

3,065,343 4,730,345 110,518 27,073



34. DIRECTORS’ REMUNERATION

(a) The aggregate amounts of emoluments received and receivable by directors of the Group and the Company during the financial year are as follows:-


Executivedirectors:-non-feeemoluments 180,375 392,537 – 6,200

Non-executive directors:-allowance 26,500 14,200 26,500 14,200

206,875 406,737 26,500 20,400

(b) Detailsofdirectors’emolumentsoftheGroupandtheCompanyreceived/receivableforthefinancialyearinbandsofRM50,000areasfollows:-

THE GROUP/ THE COMPANY 2012 2011

Executivedirectors:- RM150,001–RM200,000 1 1BelowRM150,000 2 5

Non-executive directors:- RM150,001–RM200,000 – 1BelowRM50,000 6 3

9 9

35. SIGNIFICANT RELATED PARTY DISCLOSURES

(a) Identitiesofrelatedparties

The Group has related party relationships with its directors, key management personnel and entities within the same group of companies.

(b) Inadditiontotheinformationdetailedelsewhereinthefinancialstatements,theGroupandtheCompanycarried out the following significant transactions with the related parties during the financial year:-


Management fees receivable fromsubsidiaries – – 1,320,847 244,889Salestoarelatedparty 123,552,827 9,214,816 – –Keymanagementpersonnel compensation: -short-termemployeebenefits 1,372,956 1,111,811 77,573 14,416 -definedcontributionplan 161,792 120,256 9,012 2,372



36. OPERATING SEGMENTS

OperatingsegmentsarepreparedinamannerconsistentwiththeinternalreportingprovidedtotheGroupChiefExecutiveOfficerasitchiefoperatingdecisionmakerinordertoallocateresourcestosegmentsandto assess their performance. For management purposes, the Group is organised into business units based on their products and services provided.

The Group is organised into 2 main business segments as follows:-

(i) Ceramicsegment–involvedinthemarketingofpotteryandporcelainproductsandceramicswaresand ornaments.

(ii) Oilandgas–fabricationofoilandgassteelstructuresandplatforms.

TheGroupExecutiveCommitteeassessestheperformanceoftheoperatingsegmentsbasedonoperatingprofit or loss which is measured differently from those disclosed in the consolidated financial statements.

Group financing (including finance costs) and income taxes are managed on a group basis and are not allocated to operating segments.

Assets,liabilitiesandexpenseswhicharecommonandcannotbemeaningfullyallocatedtotheoperatingsegmentsarepresentedunderunallocateditems.Unallocateditemscomprisemainlyinvestmentsandrelatedincome,loansandborrowingsandrelatedexpenses,corporateassets(primarilytheCompany’sheadquarters)and head office expenses.

Transfer prices between operating segments are at arm’s length basis in a manner similar to transactions with third parties.

BUSINESS SEGMENTS

INVESTMENT OIL AND GAS CERAMIC HOLDING GROUP RM RM RM RM2012

Revenue Externalrevenue 123,552,827 11,833,623 – 135,386,450Inter-segmentrevenue – 3,612,604 1,320,847 4,933,451

123,552,827 15,446,227 1,320,847 140,319,901

Adjustmentsandeliminations (4,933,451)

Consolidatedrevenue 135,386,450

Results Segmentresults 14,188,677 3,630,352 (347,087) 17,471,942Interestincome – 9,731 – 9,731Othermaterialitemsofincome – 294,205 – 294,205Depreciation of property, plantandequipment (213,245) (1,235,931) (27,287) (1,476,463)Othermaterialitemsofexpenses (8,849,345) (3,353,503) (527,318) (12,730,166)Othernon-cashexpenses – (586,176) (716) (586,892)

5,126,087 (1,241,322) (902,408) 2,982,357

Financecosts (145,908)Incometaxexpense (1,496,844)

Consolidatedprofitaftertaxation 1,339,605



36. OPERATING SEGMENTS (CONT’D)

BUSINESS SEGMENTS (CONT’D)


AssetsSegmentassets 47,082,453 46,033,607 371,962 93,488,022Tax refundable 10,200

Consolidatedtotalassets 93,498,222

LiabilitiesSegmentliabilities 39,656,300 4,459,369 184,069 44,299,738Deferredtaxation 2,962,276Provisionfortaxation 1,211,755

Consolidatedtotalliabilities 48,473,769

Other segment items Additionstonon-currentassets other than financial instruments:- -property,plantandequipment 1,207,540 450,433 32,787 1,690,760

2011 Revenue Externalrevenue 9,214,816 14,153,666 – 23,368,482Inter-segmentrevenue – 4,241,376 244,889 4,486,265

9,214,816 18,395,042 244,889 27,854,747

Adjustmentsandeliminations (4,486,265)

Consolidatedrevenue 23,368,482

Results Segmentresults 2,659,716 4,759,086 (467,336) 6,951,466Interestincome – 8,448 – 8,448Othermaterialitemsofincome – 236,382 99 236,481Depreciation of property, plantandequipment (4,134) (1,504,609) (25,546) (1,534,289)Othermaterialitemsofexpenses (2,054,051) (5,236,770) (71,377) (7,362,198)Othernon-cashexpenses – (712,163) – (712,163)

601,531 (2,449,626) (564,160) (2,412,255)

Financecosts (118,315)Incometaxexpense 444,886

Consolidatedlossaftertaxation (2,085,684)






Assets Segmentassets 9,069,790 45,980,539 288,017 55,338,346Taxrefundable 6,841

Consolidatedtotalassets 55,345,187

Liabilities Segmentliabilities 8,422,569 3,987,986 559,575 12,970,130Deferredtaxation 2,743,186Provisionfortaxation 126,000

Consolidatedtotalliabilities 15,839,316

Other segment items Additionstonon-currentassetsother than financial instruments:- -property,plantandequipment 313,462 413,403 248,767 975,632

(a) Othermaterialitemsofincomeconsistofthefollowing:-


Unrealisedgainonforeignexchange 198,205 157,081 Rentalincome 96,000 79,400

294,205 236,481

(b) Othermaterialitemsofexpensesconsistofthefollowing:-


Realisedlossonforeignexchangereceivables (195,894) (127,243) Rentalofpremises (849,810) (205,502) Rentalofequipment (97,115) (252,977) Gain/(Loss)ondisposalofPPE 7,420 (79,855) Staffcosts (11,594,767) (6,696,621)

(12,730,166) (7,362,198)





(c) Othernon-cashexpensesconsistofthefollowing:-


Baddebtswrittenoff (66,645) (5,175) Inventorieswrittendown (328,792) (638,855) Unrealisedlossonforeignexchange (191,455) (68,133)

(586,892) (712,163)

37. CONTINGENT LIABILITIES

(a) THE COMPANY 2012 2011 RM RM

Unsecured:- Corporate guarantee given to licensed banks for credit facilities grantedtosubsidiaries 1,543,848 1,230,278

(b) There is a discrepancy on claims made by two sub-contractors of a subsidiary amounted to approximately RM6million.TheGroupdeniedthediscrepancyduetodisputeandhasengagedthesolicitortoresistthoseclaims.Accordingly,theDirectorsareoftheviewthattheGroupwillnotsufferanymaterialliabilityarising from the claims, and no further provision is necessary in respect of the claim.

38. FINANCIAL INSTRUMENTS

The Group’s activities are exposed to a variety of market risk (including foreign currency risk, interest rate riskandequitypricerisk),creditriskandliquidityrisk.TheGroup’soverallfinancialriskmanagementpolicyfocuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group’s financial performance.

(a) Financial Risk Management Policies

The Group’s policies in respect of the major areas of treasury activity are as follows:-

(i) Market Risk

(i) ForeignCurrencyRisk

The Group is exposed to foreign currency risk on transactions and balances that are denominatedincurrenciesotherthanRinggitMalaysia.ThecurrenciesgivingrisetothisriskareprimarilyUnitedStatesDollarandChineseRenminbi.Foreigncurrencyriskismonitoredcloselyonanongoingbasistoensurethatthenetexposureisatanacceptablelevel.Onoccasion, the Group enters into forward foreign currency contracts to hedge against its foreign currency risk.



38. FINANCIAL INSTRUMENTS (CONT’D)

(a) Financial Risk Management Policies (Cont’d)

(i) Market Risk (Cont’d)

(i) ForeignCurrencyRisk(Cont’d)

The Group’s exposure to foreign currency is as follows:-

UNITED STATES CHINESE RINGGIT DOLLAR RENMINBI MALAYSIA TOTALTHE GROUP RM RM RM RM

2012

Financial assetsTradereceivables 1,546,533 – 29,761 1,576,294Otherreceivables anddeposits 23,212 – 252,403 275,615Amountowingby arelatedparty – – 5,516,577 5,516,577Derivativeassets 4,000 – – 4,000Fixed deposit with alicensedbank – – 56,383 56,383Cash and bank balances 2,702,520 3,704 936,605 3,642,829

4,276,265 3,704 6,791,729 11,071,698

Financial liabilities Tradepayables 25,589 425,254 40,232,788 40,683,631Otherpayables andaccruals 408,242 147,577 1,343,039 1,898,858Borrowings – – 1,389,603 1,389,603

433,831 572,831 42,965,430 43,972,092

Net financial assets/(liabilities) 3,842,434 (569,127) (36,173,701) (32,900,394)Less: Forward foreign currency contracts (contracted notional principal) (309,800) – – (309,800)Less: Net financial liabilities denominated in the entity’s functional currency – – 36,173,701 36,173,701

Currency exposure 3,532,634 (569,127) - 2,963,507







The Group’s exposure to foreign currency is as follows:- (Cont’d)

UNITED STATES CHINESE RINGGIT DOLLAR RENMINBI MALAYSIA TOTALTHE GROUP RM RM RM RM

2011

Financial assets Tradereceivables 1,993,610 – 1,219,580 3,213,190Otherreceivables anddeposits – 2,379 204,207 206,586Amountowingby arelatedparty – – 3,413,331 3,413,331Fixed deposit with alicensedbank – – 54,660 54,660Cash and bank balances 1,855,359 10,470 3,371,563 5,237,392

3,848,969 12,849 8,263,341 12,125,159

Financial liabilities Tradepayables 146,016 428,201 3,648,654 4,222,871Otherpayables andaccruals 5,275 123,412 1,184,710 1,313,397Amountowingto arelatedparty – – 2,832,183 2,832,183Amountowingto directors – – 1,500 1,500Borrowings – – 1,491,104 1,491,104Derivativeliability 20,560 – – 20,560

171,851 551,613 9,158,151 9,881,615

Net financial assets/(liabilities) 3,677,118 (538,764) (894,810) 2,243,544Less: Forward foreign currency contracts (contracted notional principal) (1,741,645) – – (1,741,645)Less: Net financial liabilities denominated in the entity’s functional currency – – 894,810 894,810

Currency exposure 1,935,473 (538,764) – 1,396,709







Foreign currency risk sensitivity analysis

The following table details the sensitivity analysis to a reasonably possible change in the foreign currencies as at the end of the reporting period, with all other variables held constant:-

THE GROUP 2012 2011

Increase/ Increase/ (Decrease) (Decrease) RM RM

Effects on profit after taxation/equity

UnitedStatesDollar:- -strengthenedby10% 264,948 145,160-weakenedby10% (264,948) (145,160)

ChineseRenminbi:- -strengthenedby10% 42,685 (40,407)-weakenedby10% (42,685) 40,407

(ii) InterestRateRisk

Interestrateriskistheriskthatthefairvalueorfuturecashflowsofafinancialinstrumentwill fluctuate because of changes in market interest rates. The Group’s exposure to interest rate risk arises mainly from interest-bearing financial assets and liabilities. The Group’s policyistoobtainthemostfavourableinterestratesavailable.AnysurplusfundsoftheGroup will be placed with licensed financial institutions to generate interest income.

InformationrelatingtotheGroup’sexposuretotheinterestrateriskofthefinancialliabilitiesisdisclosedinNote38(a)(iii)tothefinancialstatements.

Interestraterisksensitivityanalysis

The following table details the sensitivity analysis to a reasonably possible change in the interest rates as at the end of the reporting period, with all other variables held constant:-

THE GROUP 2012 2011

Increase/ Increase/ (Decrease) (Decrease) RM RM

Effects on profit after taxation

Increaseof25basispoints(bp) (9,219) (2,693)Decreaseof25bp 9,219 2,693

Effects on equity

Increaseof25bp (9,219) (2,693)Decreaseof25bp 9,219 2,693






(iii) EquityPriceRisk

TheGroupandCompanydoesnothaveanyquotedinvestmentandhenceisnotexposedtoequitypricerisk.

(ii) Credit Risk

The Group’s exposure to credit risk, or the risk of counterparties defaulting, arises mainly from trade, other receivables and amount owing by a related party. The Group manages its exposure to credit risk by the application of credit approvals, credit limits and monitoring procedures on anongoingbasis.Forotherfinancialassets(includingunquotedinvestments,cashandbankbalances and derivatives), the Group minimises credit risk by dealing exclusively with high credit rating counterparties.

The Group establishes an allowance for impairment that represents its estimate of incurred losses in respect of the trade and other receivables as appropriate. The main components of this allowance are a specific loss component that relates to individually significant exposures, and a collective loss component established for groups of similar assets in respect of losses that have beenincurredbutnotyet identified. Impairment isestimatedbymanagementbasedonpriorexperience and the current economic environment.

Credit risk concentration profile

The Group’s major concentration of credit risk relates to the amount owing by a related party whichconstitutedapproximately60%ofitsreceivablesasattheendofthereportingperiod.

Exposuretocreditrisk

AstheGroupdoesnotholdanycollateral,themaximumexposuretocreditriskisrepresentedby the carrying amount of the financial assets as at the end of the reporting period.

The exposure of credit risk for trade receivables (including amount owing by a related party) by geographical region is as follows:-


UnitedStates 1,546,533 1,993,610Malaysia 5,546,338 4,632,911

7,092,871 6,626,521





(ii) Credit Risk (Cont’d)

Ageinganalysis

The ageing analysis of the Group’s trade receivables (including amount owing by a related party) at the end of the reporting period is as follows:-

GROSS INDIVIDUAL COLLECTIVE CARRYING AMOUNT IMPAIRMENT IMPAIRMENT VALUETHE GROUP RM RM RM RM

2012

Notpastdue 7,092,871 – – 7,092,871

2011

Notpastdue 6,623,640 – – 6,623,640

Past due: -lessthan3months 2,881 – – 2,881

6,626,521 – – 6,626,521

At the endof the reportingperiod, therewereno trade receivables thatwere individually orcollectively impaired.

Tradereceivablesthatarepastduebutnotimpaired

The Group believes that no impairment allowance is necessary in respect of these trade receivables. They are substantially companies with good collection track record and no recent history of default.

Tradereceivablesthatareneitherpastduenorimpaired

A significant portion of trade receivables that are neither past due nor impaired are regularcustomers that have been transacting with the Group. The Group uses ageing analysis to monitor thecreditqualityofthetradereceivables.Anyreceivableshavingsignificantbalancespastdueor more than 90 days, which are deemed to have higher credit risk, are monitored individually.





(iii) Liquidity Risk

Liquidityriskarisesmainlyfromgeneral fundingandbusinessactivities.TheGrouppractisesprudent risk management by maintaining sufficient cash balances and the availability of funding through certain committed credit facilities.

The following table sets out the maturity profile of the financial liabilities as at the end of the reporting period based on contractual undiscounted cash flows (including interest payments computed using contractual rates or, if floating, based on the rates at the end of the reporting period):-

WEIGHTED AVERAGE CONTRACTUAL OVER EFFECTIVE CARRYING UNDISCOUNTED WITHIN 1 – 5 5 RATE AMOUNT CASH FLOWS 1 YEAR YEARS YEARSTHE GROUP % RM RM RM RM RM

2012

Termloan 7.85 209,691 215,305 215,305 – –Tradepayables – 40,683,631 40,683,631 40,683,631 – –Otherpayables andaccruals – 1,898,858 1,898,858 1,898,858 – –Bankoverdrafts 7.60-8.35 633,869 633,869 633,869 – –Bankers’ acceptances 4.72-5.19 442,000 442,000 442,000 – –Hire purchase payables 4.90-5.48 431,689 487,343 119,880 367,463 –

44,299,738 44,361,006 43,993,543 367,463 –

2011 Termloan 7.85 509,571 545,136 328,648 216,488 –Tradepayables – 4,222,871 4,222,871 4,222,871 – –Otherpayables andaccruals – 1,313,397 1,313,397 1,313,397 – –Bankoverdrafts 8.18 561,707 561,707 561,707 – –Bankers’ acceptances 5.18 159,000 159,000 159,000 – –Hire purchase payables 5.00 260,826 294,490 60,888 233,602 –Amountowing toadirector – 1,500 1,500 1,500 – –Amountowing torelatedparties – 2,832,183 2,832,183 2,832,183 – –

9,861,055 9,930,284 9,480,194 450,090 –





(iii) Liquidity Risk (Cont’d)

WEIGHTED AVERAGE CONTRACTUAL OVER EFFECTIVE CARRYING UNDISCOUNTED WITHIN 1 – 5 5 RATE AMOUNT CASH FLOWS 1 YEAR YEARS YEARSTHE COMPANY % RM RM RM RM RM

2012

Otherpayables andaccruals – 184,069 184,069 184,069 – –Amountowing tosubsidiary – 4,798,717 4,798,717 4,798,717 – –

4,982,786 4,982,786 4,982,786 – –

2011

Otherpayables andaccruals – 48,146 48,146 48,146 – –Amountowing tosubsidiary – 5,214,380 5,214,380 5,214,380 – –Amountowingtoarelatedparty – 509,929 509,929 509,929 – –Amountowing toadirector – 1,500 1,500 1,500 – –

5,773,955 5,773,955 5,773,955 – –

(b) Capital Risk Management

The Group manages its capital to ensure that entities within the Group will be able to maintain an optimal capital structure so as to support their businesses and maximise shareholders’ value. To achieve this objective, the Group may make adjustments to the capital structure in view of changes in economic conditions, such as adjusting the amount of dividend payment, returning of capital to shareholders or issuing new shares.

The Group manages its capital based on gearing ratio. The Group’s strategies were unchanged from thepreviousfinancialyear.Thegearingratioiscalculatedastotalborrowingsdividedbytotalequity.




(b) Capital Risk Management (Cont’d)

The gearing ratio of the Group as at the end of the reporting period was as follows:-


Bankoverdrafts 633,869 561,707Bankers’acceptances 442,000 159,000Hirepurchaserepayables 431,689 260,826Termloan 209,691 509,571

Totalborrowings 1,717,249 1,491,104

Totalequity 43,555,178 39,348,296

Gearingratio 3.90% 3.80%

UndertherequirementofBursaMalaysiaPracticeNoteNo.17/2005,theCompanyisrequiredtomaintainaconsolidatedshareholders’equity(totalequityattributabletoownersoftheCompany)equaltoornotlessthanthe25%oftheissuedandpaid-upsharecapital(excludingtreasuryshares)andsuchshareholders’equityisnotlessthanRM40million.TheCompanyhascompliedwiththisrequirement.

(c) Classification Of Financial Instruments


Financial assets

Loans and receivables financial assets

Tradereceivables 1,576,294 3,213,190 – –Otherreceivablesanddeposits 275,615 206,586 31,150 36,150Amountowingbysubsidiaries – – 8,605,067 6,213,091Amountowingbyrelatedparty 5,516,577 3,413,331 – –Fixed deposit with a licensedbank 56,383 54,660 – –Cashandbankbalances 3,642,829 5,237,392 110,518 27,073

11,067,698 12,125,159 8,746,735 6,276,314

Fair value through profit and lossDerivativeassets/(liabilities) 4,000 (20,560) – –

11,071,698 12,104,599 8,746,735 6,276,314




(c) Classification Of Financial Instruments (Cont’d)


Financial liabilitiesOtherfinancialliabilitiesBorrowings 1,717,249 1,491,104 – –Tradepayables 40,683,631 4,222,871 – –Otherpayablesandaccruals 1,898,858 1,313,397 184,069 48,146Amountowingtoasubsidiary – – 4,798,717 5,214,380Amountowingtorelatedparty – 2,832,183 – 509,929Amountowingtoadirector – 1,500 – 1,500

44,299,738 9,861,055 4,982,786 5,773,955

(d) Fair Values Of Financial Instruments

The carrying amounts of the financial assets and financial liabilities reported in the financial statements approximated their fair values.

The following summarises the methods used to determine the fair values of the financial instruments:-

(i) The financial assets and financial liabilities maturing within the next 12 months approximated their fair values due to the relatively short-term maturity of the financial instruments.

(ii) The fair value of hire purchase payables is determined by discounting the relevant cash flows using current interest rates for similar instruments as at the end of the reporting period.

(iii) The carrying amounts of the term loans approximated their fair values as these instruments bear interest at variable rates.

(iv) The fair value of forward foreign currency contracts is estimated by discounting the difference between the contractual forward price and the current forward price for the residual maturity of the contract using a risk-free interest rate.

(e) Fair Value Hierarchy

The fair values of the financial assets and liabilities are analysed into level 1 to 3 as follows:-

Level1: Fairvaluemeasurementsderivefromquotedprices(unadjusted)inactivemarketsforidenticalassets or liabilities.

Level2: Fairvaluemeasurementsderivefrominputsotherthanquotedpricesincludedwithinlevel1 that are observable for the asset or liability, either directly or indirectly

Level3: Fairvaluemeasurementsderivefromvaluationtechniquesthatincludeinputsfortheassetor liability that are not based on observable market data (unobservable inputs).

LEVEL 1 LEVEL 2 LEVEL 3 TOTALTHE GROUP RM RM RM RM

2012 Financial assets Derivative assets: - forward foreign currencycontracts – 4,000 – 4,000



39. SIGNIFICANT EVENT DURING THE FINANCIAL YEAR

On13May2011,theCompanyproposedtoundertakeaprivateplacementofupto10%oftheexistingissued and paid-up share capital of the Company. The number of new ordinary shares of the Company that wastobeissuedpursuanttotheProposedPrivatePlacementamountedto8,800,000ordinarysharesofRM0.50each.

On5September2012,7,000,000newordinarysharesweresubscribedforatanissuepriceofRM0.60pershareandtheproceedsfromtheprivateplacementamountedtoRM4,200,000.ThePrivatePlacementwascompleted at the end of the reporting period.

40. SIGNIFICANT EVENT OCCURRING AFTER THE REPORTING PERIOD

On12March2012,theCompanyenteredintoaconditionalSaleandPurchaseAgreement(“SPA”)withDATGroupSdn.Bhd.(“DAT”or“Vendor”),fortheacquisitionoftheentireequityinterestinPFCEngineeringSdn.Bhd.(“PFCEngineering”)fromtheVendorforatotalpurchaseconsiderationofRM300million,tobesatisfiedbytheissuanceof500,000,000newsharesoftheCompany(“ConsiderationShares”)atanissuepriceofRM0.60pershare(“ProposedAcquisition”).

InconjunctionwiththeProposedAcquisition,theBoardhasalsoresolvedtoundertakethefollowing:-

(a) proposedexemptiontoDATandthepartiesactinginconcertfromtheobligationtoextendamandatorygeneral offer for all the remaining shares not already held by them upon completion of the Proposed AcquisitionunderParagraph16.1ofPracticeNote9oftheCode;

(b) proposedplacementofupto90,000,000sharesbyDATandproposedrestrictedofferforsaleorissuebyDATortheCompanyofupto59,838,100sharesatanissueorofferpricetobedeterminedlater;and

(c) proposed increase intheauthorisedsharecapitalof theCompanyfromRM50,000,000comprising100,000,000sharestoRM400,000,000comprising800,000,000shares.

(TheProposedAcquisitionand(a)to(c)abovearecollectivelyreferredtoas“theProposals”).

UponcompletionoftheProposedAcquisition,PFCEngineeringwillbeawholly-ownedsubsidiaryoftheCompany.

TheProposalshavebeenapprovedbySecuritiesCommissionon11March2013.



41. TRANSITION TO THE MFRS FRAMEWORk

AsstatedinNote3(a)tothefinancialstatements,thesearethefirstfinancialstatementsoftheGroupandtheCompanypreparedinaccordancewithMFRSs.TheaccountingpoliciesinNote4tothefinancialstatementshave been applied to all financial information covered under this set of financial statements.

InpreparingtheopeningMFRSstatementsoffinancialpositionat1January2011(dateoftransition),theGroup and the Company have adjusted amounts reported previously in financial statements prepared in accordancewithFRSs.Thefinancialimpactsonthetransitionareasbelow:-

RECONCILIATION OF FINANCIAL POSITION

1.1.2011 31.12.2011 Transition Transition FRSs Effects MFRSs FRSs Effects MFRSsThe Group Note RM RM RM RM RM RM

ASSETSNON-CURRENTASSETSProperty, plant andequipment a 31,001,945 2,101,446 33,103,391 32,102,601 (598,257) 31,504,344Prepaid land lease payments 170,548 – 170,548 179,442 – 179,442Goodwill arising on consolidation 2,575,005 – 2,575,005 2,575,005 – 2,575,005

33,747,4982,101,446 35,848,94434,857,048 (598,257) 34,258,791

CURRENTASSETSInventories 7,458,197 –7,458,1977,073,700 – 7,073,700Tradereceivables 3,992,173 – 3,992,1733,213,190 –3,213,190Otherreceivables, deposits and prepayments 890,137 – 890,1372,087,282 – 2,087,282Amountduefroma contractcustomer – – – – – –Amountowingbya relatedparty – – –3,413,331 – 3,413,331Derivativeassets 36,595 – 36,595 – – –Taxrefundable 3,488 – 3,488 6,841 – 6,841Fixed deposit with a licensedbank 53,146 – 53,146 54,660 – 54,660Cashandbankbalances 2,046,021 –2,046,0215,237,392 – 5,237,392

14,479,757 –14,479,757 21,086,396 – 21,086,396

TOTALASSETS 48,227,255 2,101,446 50,328,701 55,943,444 (598,257) 55,345,187



41. TRANSITION TO THE MFRS FRAMEWORk (CONT’D)

RECONCILIATION OF FINANCIAL POSITION (CONT’D)

1.1.2011 31.12.2011 Transition Transition FRSs Effects MFRSs FRSs Effects MFRSsThe Group Note RM RM RM RM RM RM

EQUITY AND LIABILITIESEQUITY

Sharecapital 44,000,000 – 44,000,000 44,000,000 – 44,000,000Sharepremium 11,660,794 – 11,660,794 11,660,794 – 11,660,794Reserve a 649,270(588,717) 60,553 2,519,887 (2,415,518) 104,369Accumulatedlosses a (16,199,013) 2,025,405 (14,173,608) (18,394,941) 1,978,074 (16,416,867)

TOTALEQUITY ATTRIBUTABLETO OWNERSOFTHE COMPANY 40,111,051 1,436,688 41,547,739 39,785,740 (437,444) 39,348,296

NON-CONTROLLING INTERESTS – – – 157,575 – 157,575

TOTALEQUITY 40,111,051 1,436,688 41,547,739 39,943,315 (437,444) 39,505,871NON-CURRENTLIABILITIES Borrowings 509,083 – 509,083 419,647 – 419,647Deferredtaxliabilities a 2,652,764 664,7583,317,522 2,903,999 (160,813) 2,743,186

3,161,847 664,758 3,826,605 3,323,646 (160,813) 3,162,833

CURRENTLIABILITIESTradepayables 1,208,790 – 1,208,7904,222,871 –4,222,871Otherpayablesandaccruals 2,122,308 – 2,122,3081,313,397 – 1,313,397Amountduetocontract customer – – –3,088,515 – 3,088,515Amountowingtoa relatedparty – – – 2,832,183 –2,832,183Amountowingtodirectors 70,858 – 70,858 1,500 – 1,500Derivativeliabilities – – – 20,560 – 20,560Provisionfortaxation – – – 126,000 – 126,000Borrowings 1,552,401 – 1,552,4011,071,457 – 1,071,457

4,954,357 – 4,954,357 12,676,483 – 12,676,483

TOTALLIABILITIES 8,116,204 664,758 8,780,962 16,000,129 (160,813) 15,839,316

TOTALEQUITYANDLIABILITIES 48,227,255 2,101,446 50,328,701 55,943,444 (598,257) 55,345,187




RECONCILIATION OF COMPREHENSIVE INCOME

The Group 2011 Transition FRSs Effects MFRSs Note RM RM RM

REVENUE 23,368,482 – 23,368,482

COSTOFSALES (18,877,988) – (18,877,988)

GROSSPROFIT 4,490,494 – 4,490,494

OTHERINCOME 253,910 – 253,910

ADMINISTRATIVEEXPENSES a (5,626,499) (19,411) (5,645,910)

SELLINGANDDISTRIBUTIONEXPENSES (1,276,910) – (1,276,910)

OTHEROPERATINGEXPENSES (233,839) – (233,839)

FINANCECOSTS (118,315) – (118,315)

LOSSBEFORETAXATION (2,511,159) – (2,530,570)

INCOMETAXEXPENSE a 472,806 (27,920) 444,886

LOSSAFTERTAXATION (2,038,353) (47,331) (2,085,684)

OTHERCOMPREHENSIVEINCOME-Foreigncurrencytranslation 43,816 – 43,816-Revaluationofproperty a 1,826,801 (1,826,801) –

TOTALCOMPREHENSIVEEXPENSES FORTHEFINANCIALYEAR (167,736) (1,874,132) (2,041,868)




RECONCILIATION OF CASH FLOWS

TherearenomaterialdifferencesbetweenthestatementsofcashflowspresentedunderFRSsandMFRS.

NOTES TO RECONCILIATIONS

(a) Property,plantandequipment–DeemedCostExemption

UnderFRSs,theGroupandtheCompanymeasuredtheirfreeholdlandandbuildings,leaseholdlandandbuildingsatvaluation.UpontransitiontoMFRSs,theGroupelectedtousethepreviousrevaluationasdeemedcostunderMFRSs.

The financial impacts arising from the change are summarised as follows:-

(i) Anincreaseinproperty,plantandequipmentat1January2011ofRM2,101,446andadecreaseinproperty,plantandequipmentat31December2011ofRM598,257;

(ii) Anincreaseindeferredtaxliabilitiesat1January2011ofRM664,758andadecreaseofRM160,813for31December2011thatrelatetothefairvalueadjustmentabove;

(iii) The resulting adjustments on items (i) and (ii) above were adjusted against retained profits at 1 January2011and31December2011;and

(iv) AnincreaseindepreciationchargesandtaxexpenseofRM19,411andRM27,920respectivelyfor the financial year ended 31 December 2011.

The aggregate fair value of the freehold land and buildings, leasehold land and buildings were determined tobeRM30,825,140comparedtothethencarryingamountofRM28,723,694.


42. SUPPLEMENTARY INFORMATION – DISCLOSURE OF REALISED AND UNREALISED PROFITS/LOSSES

The breakdown of the accumulated losses of the Group and of the Company as at the end of the reporting period into realised and unrealised losses are presented in accordance with the directive issued by Bursa MalaysiaSecuritiesBerhadandpreparedinaccordancewithGuidanceonSpecialMatterNo.1,DeterminationofRealisedandUnrealisedProfitsorLossesintheContextofDisclosurePursuanttoBursaMalaysiaSecuritiesBerhadListingRequirements,asissuedbytheMalaysianInstituteofAccountants,asfollows:-


Total accumulated losses: -realised 21,314,099 20,179,741 (8,242,119) (7,338,497) -unrealised (310,353) (673,177) 716 (498)

21,003,746 19,506,564 (8,241,403) (7,338,995) Less:Consolidationadjustments (37,392,708) (35,923,431) – –

At31December (16,388,962) (16,416,867) (8,241,403) (7,338,995)

SUPPLEMENTARY INFORMATION


LIST OF PROPERTIES HELDAS AT dECEMBER 31 2012

Registered Owner / Location

Descriptionand existing

usage

Land Area

(sq. ft.)

Built-UpArea

(sq. ft.) Tenure

ApproximateAge of

Building

Net BookValue as at31-Dec-12

(RM)

Date ofRevaluation/

Acquisition

Asian Pottery (Penang) Sdn. Bhd.

No.547-P,JalanWeeHeinTze,11200 Tanjung Bungah, Penang(LotNo.999,GeranNo.3768,Town of Tanjung Bungah,NorthEastDistrict,Penang)

Office 6,594 3,383 Freehold 33Years 2,470,588 31.01.2012

Lot906,JalanJalong,31100SungaiSiput(U),Perak(GM816/Lot906,MukimSungaiSiput,DaerahKualaKangsar,Perak)

Factory 115,527

112,848

Freehold 16Years 2,300,143 31.01.2012


Factory 128,502 Freehold 10Years 2,956,463 31.01.2012

Lot947,JalanJalong,31100SungaiSiput(U),Perak(GM1342,Lot947,MukimSungaiSiput,DaerahKualaKangsar,Perak)

Warehouse 133,947 48,000 Freehold 14Years 2,910,541 13.04.2011

Lot948,JalanJalong,31100SungaiSiput(U),Perak(EMR105/Lot948,MukimSungaiSiput,DaerahKualaKangsar,Perak)




Metro Craft Sdn. Bhd.(Land Owner)AsianPotteryManufacturersSdn.Bhd.(BuildingOwner)

Plot57,JalanLogam3,KawasanPerindustrianKamuntingRaya,34600Kamunting,Perak(HS(D)LM11471,PTNo.11515,MukimAsamKumbang,Daerah Larut and Matang, Perak)

Factory 43,562–

–24,900

Leasehold (99 years)

expiring on 7.12.2097

14Years 468,9661,343,244

31.01.2012


Registered Owner / Location

Descriptionand existing

usage

Land Area

(sq. ft.)

Built-UpArea

(sq. ft.) Tenure

ApproximateAge of

Building

Net BookValue as at31-Dec-12

(RM)

Date ofRevaluation/

Acquisition

Oriwina Sdn. Bhd.


Factory 43,562 27,900 Leasehold (99 years)


14Years 1,997,981 18.04.2011




14years 1,670,628 31.01.2012




14Years 1,944,641 31.01.2012

Plot53&54,JalanLogam2,KawasanPerindustrianKamuntingRaya,34600Kamunting,Perak(HS(D)LM11467&11468,LOTNo.20786&20787,MukimAsamKumbang,Daerah Larut and Matang, Perak)

Warehouse 87,290 31,200 Leasehold (99 years)


14Years 2,253,107 31.01.2012

Guangxi Asian Pottery Co., Ltd

Wu Tang Gang, Daxin,Pingnan County, Guangxi Province, ThePeopleRepublicofChina

Factory 120,000 37,700 Leasehold (50years)


7Years 765,210 15.02.2006

liST Of PROPERTiES hEld (CONT’d)


SHAREHOLDINGS STATISTICSAS AT 20 MAy 2013

Authorised : RM50,000,000.00IssuedandFullypaid-up : RM47,500,000.00ClassofShare : OrdinarysharesofRM0.50eachfullypaidVotingRights : Onevotingrightforoneordinaryshare

DISTRIBUTION SCHEDULE OF SHAREHOLDINGS AS AT 20 MAY 2013

Size of No. Of No. OfShareholdings Shareholders % Shares %

Lessthan100 16 1.74 628 0.00100-1,000 139 15.11 113,200 0.121,001-10,000 391 42.50 2,210,192 2.3310,001-100,000 278 30.22 10,936,930 11.51100,001tolessthan5%ofissuedshares 95 10.33 46,577,150 49.035%andaboveofissuedshares 1 0.11 35,161,900 37.01

TOTAL 920 100.00 95,000,000 100.00

THIRTY LARGEST SHAREHOLDERS AS AT 20 MAY 2013

% of Issued Name No. of Shares Share Capital

1. MaybankSecuritiesNominees(Tempatan)SdnBhd PledgedSecuritiesAccountForPFCEngineeringSdnBhd 35,161,900 37.01

2. TaipanEquitySdn.Bhd. 2,379,700 2.50

3. OwHangSen 2,306,260 2.43

4. HamidonBinAbdullah 2,000,000 2.11

5. PerniagaanKinKeeSdnBhd 2,000,000 2.11

6. AmsecNominees(Tempatan)SdnBhd PledgedSecuritiesAccount-Ambank(M)Berhad forIntracoHoldingsSdnBhd 2,000,000 2.11

7. AmsecNominees(Tempatan)SdnBhd PledgedSecuritiesAccount-Ambank(M)Berhad forCheahSunChuang 2,000,000 2.11

8. ChuahWanChee@ChuahWanPin 2,000,000 2.11

9. HLIBNominees(Tempatan)SdnBhd PledgedSecuritiesAccountforDanielChoongYewChee(M) 1,839,800 1.94

10. HLIBNominees(Tempatan)SdnBhd HongLeongBankBhdforLimChinMing 1,776,100 1.87

11. MaybankSecuritiesNominees(Tempatan)SdnBhd PledgedSecuritiesAccountforLimCheeSing(R01-MARGIN) 1,196,900 1.26

12. AlliancegroupNominees(Tempatan)SdnBhd PledgedSecuritiesAccountforGohKhoonSoon(8057227) 1,080,000 1.14


THIRTY LARGEST SHAREHOLDERS AS AT 20 MAY 2013 (CONT’D)

% of Issued Name No. of Shares Share Capital

13. OoiToonKit 1,060,000 1.12

14. G-GoldGallerySdnBhd 1,006,900 1.06

15. MaybankNominees(Tempatan)SdnBhd PledgedSecuritiesAccountForMohdNizamBinMohamed 1,000,000 1.05

16. HLIBNominees(Tempatan)SdnBhd PledgedSecuritiesAccountforOwHangSen(M) 1,000,000 1.05

17. MatJusohBinMamat 1,000,000 1.05

18. RamlyBinMatZin 823,000 0.87

19. LeongLin 772,757 0.88

20. FunYoonFah 751,400 0.79

21. HLIBNominees(Tempatan)SdnBhd PledgedSecuritiesAccountforEngYanChun@NgYanChan(CCTS) 711,500 0.75

22. AwYeowBuk 663,500 0.70

23. LimChinMing 588,000 0.62

24. LawCheeKheong 550,000 0.58

25. TanKimLun@TanKimLan 500,000 0.53

26. WongChooiYen 500,000 0.53

27. KooAhKan 500,000 0.53

28. YusoffBinMohamad 495,600 0.52

29. OhSoonGuan&SonsSendirianBerhad 469,955 0.49 30. HLBNominees(Tempatan)SdnBhd PledgedSecuritiesAccountforAbuSahidBinMohamed 463,800 0.49

TOTAL 68,597,072 72.21

ShAREhOldiNGS STATiSTiCS (CONT’d)


ShAREhOldiNGS STATiSTiCS (CONT’d)

SUBSTANTIAL SHAREHOLDERS OF THE COMPANY AS AT 20 MAY 2013

Direct Indirect Name No. of Shares % No. of Shares %

1. PFCEngineeringSdnBhd 35,161,900 37.01 – –

2. Dato’AbuTalibbinMohamed – – 35,161,900(1) 37.01

3. MuammarGadaffiBinAbuTalib – – 35,161,900(2) 37.01

Note: (1) & (2)HeldthroughPFCEngineeringSdnBhd

DIRECTORS’ SHAREHOLDINGS IN THE COMPANY AS AT 20 MAY 2013

Direct IndirectName No. of Shares % No. of Shares %

1.Dato’AbuTalibBinMohamed – – 35,161,900(1) 37.01

2.OwHangSen 3,306,260 3.48 – –

3.DatukLimChaingCheah – – – –

4.LeePeckHung – – – –

5.AbdulMalekBinHajiOmar – – – –

6.MuammarGadaffiBinAbuTalib – – 35,161,900(2) 37.01

7.OngTengKek – – – –

8.HajiAbdTalibBinBaba – – – –

9.TanSriMohdBakriBinHajiOmar – – – –

Note: (1) & (2)HeldthroughPFCEngineeringSdnBhd


NOTICE OF ANNUAL GENERAL MEETING

NOTICE IS HEREBY GIVEN THATthe13thAnnualGeneralMeetingofPFCE Berhad willbeheldatMultaqamHall,Level10,MajuTower,1001JalanSultanIsmail,50250KualaLumpur,MalaysiaonFriday28June2013at11.00 a.m. for the following purposes:

AGENDA

AS ORDINARY BUSINESS:

1. ToreceivetheAuditedFinancialStatementsforthefinancialyearended31December2012togetherwithReportoftheDirectorsandAuditorsthereon.

(Please refer toExplanatory Note A)

2. Tore-electthefollowingDirectorsretiringunderArticle91oftheCompany’sArticlesofAssociation:

(i) MrOwHangSen(ii) Datuk Lim Chaing Cheah(iii) MrOngTengKek

Resolution 1 Resolution 2 Resolution 3

3. ToappointAuditorsandtoauthorisetheDirectorstofixtheirremuneration. Resolution 4

AS SPECIAL BUSINESS:

4. Toconsiderandifthoughtfit,topassthefollowingOrdinaryResolution:

Authority to issue shares pursuant to Section 132D of the Companies Act, 1965

“THAT, subject always to theCompanies Act, 1965, the Articles of

AssociationoftheCompanyandtheapprovalsofrelevantgovernment/regulatory authorities, the Directors be and are hereby empowered, pursuanttoSection132DoftheCompaniesAct,1965,toissueordinaryshares from the unissued capital of the Company at any time at such price, upon such terms and conditions, for such purposes and to such persons whomsoever the Directors may in their absolute discretion deem fit and that the Directors be empowered to obtain the approval for the listing and quotationoftheadditionalsharessoissuedonBursaMalaysiaSecuritiesBerhad provided that the aggregate number of shares issued pursuant to this resolution does not exceed 10% of the issued share capital of the Company for the time being and that such authority shall continue to be inforceuntiltheconclusionofthenextAnnualGeneralMeetingoftheCompany.”

Resolution 5

5. Toconsiderandifthoughtfit,topassthefollowingSpecialResolution:

Proposed Amendments to the Company’s Articles of Association

“THATtheArticlesofAssociationoftheCompanybeamendedasfollows:

(i) ToinsertthefollowingnewdefinitionunderArticle2immediatelyaftertheexistingdefinitionof“AuthorisedNominee”:

Special Resolution 1

WORDS

ExemptAuthorisedNominee

MEANING

AnauthorisednomineedefinedundertheCentralDepositoriesActwhichisexempted from compliance with the provisionsofsubsection25A(1)oftheCentralDepositoriesAct.


NOTiCE Of ANNUAl GENERAl MEETiNG (CONT’d)

(ii) TodeletetheexistingArticle51andreplacewiththefollowingnewArticle51toreadasfollows:

ExistingArticle51

IneverynoticecallingameetingoftheCompany,thereshallappearwith reasonable prominence a statement that a Member entitled to attend and vote is entitled to appoint at least one (1) proxy to attend and vote instead of him. Where a Member appoints two (2) proxies or more, he shall specify the proportion of his shareholding to be represented by each proxy.

NewArticle51

IneverynoticecallingameetingoftheCompany,thereshallappearwith reasonable prominence a statement that a Member entitled to attend and vote at a meeting of the Company, or at a meeting of any class of Members of the Company, is entitled to appoint a proxy or not more than two (2) proxies to attend and vote instead of him and that a proxy may but need not be a Member of the Company and theprovisionofSection149(1)(b)oftheActshallnotapplytotheCompany.Thereshallbenorestrictionastothequalificationoftheproxy. Where a Member appoints two (2) proxies, he shall specify the proportion of his shareholding to be represented by each proxy. AproxyappointedtoattendandvoteatameetingoftheCompanyshall have the same rights as the Member to speak at the meeting.

(iii) TodeletetheexistingArticle70andreplacewiththefollowingnewArticle70toreadasfollows:

ExistingArticle70

AproxymaybutneednotbeaMemberof theCompanyandaMember may appoint any person to be his proxy without limitation andtheprovisionsofSection149(1)(b)oftheActshallnotapplytotheCompany.Aproxyshallbeentitledtovoteonashowofhandsonanyquestionatanygeneralmeeting.

NewArticle70

AproxymaybutneednotbeaMemberof theCompanyandaMember may appoint any person to be his proxy without limitation andtheprovisionofSection149(1)(b)oftheActshallnotapplytotheCompany.Thereshallbenorestrictionastothequalificationoftheproxy.Aproxyappointedtoattendandvoteatameetingofthe Company shall have the same rights as the Member to speak atthemeeting.Aproxyshallbeentitledtovoteonashowofhandsonanyquestionatanygeneralmeeting.

(iv) TodeletetheexistingArticle72andreplacewiththefollowingnewArticle72toreadasfollows:

ExistingArticle72

WhereaMemberoftheCompanyisanAuthorisedNominee,itmayappointatleastone(1)proxyinrespectofeachSecuritiesAccountit holds with ordinary shares of the Company standing to the credit ofthesaidSecuritiesAccount.



NewArticle72

(1) AMemberof theCompanyentitled to attendand vote ata meeting of the Company, or at a meeting of any class of Members of the Company, shall be entitled to appoint any person as his proxy to attend and vote instead of the Member at the meeting. There shall be no restriction as to thequalificationoftheproxy.

(2) AMembermay appoint notmore than two (2) proxies toattend the same meeting. Where a Member appoints two (2) proxies, he shall specify the proportion of his shareholdings to be represented by each proxy.

(3) Where a Member of the Company is an authorised nominee as definedundertheCentralDepositoriesAct,itmayappointatleast one (1) proxy but not more than two (2) proxies in respect ofeachSecuritiesAccountitholdswithordinarysharesoftheCompany standing to the credit of the saidSecuritiesAccount.

(4) WhereaMemberoftheCompanyisanexemptauthorisednominee which holds ordinary shares in the Company for multiple beneficial owners in one securities account (“omnibus account”), there is no limit to the number of proxies which the exempt authorised nominee may appoint in respect of each omnibus account it holds.

(5) Whereanauthorisednomineeappoints two (2)proxies,orwhere an exempt authorised nominee appoints two (2) or more proxies, the proportion of shareholdings to be represented by each proxy must be specified in the instrument appointing the proxies.

(6) A proxy appointed to attend and vote at ameeting of aCompany shall have the same rights as the Member to speak at the meeting.

(v) TodeletetheNotestotheProxyFormintheexistingArticle73andreplacewiththefollowingnewNotestoexistingArticle73toreadas follows:

ExistingArticle73–NotestoProxyForm

AproxymaybutneednotbeaMemberoftheCompanyandtheprovisions ofSection 149(1)(b) of theAct shall not apply to theCompany.

To be valid this form duly completed must be deposited at the registeredofficeoftheCompanynotlessthanforty-eight(48)hoursbefore the time for holding the meeting.

AMember shall be entitled to appointmore thanone (1) proxy(subject always to a maximum of two (2) proxies at each meeting) to attend and vote at the same meetings.

Where a Member appoints more than one (1) proxy (subject always to a maximum of two (2) proxies at each meeting), the apportionment shall be invalid unless he specifies the proportions of his holdings to be represented by each proxy.

Iftheappointorisacorporation,thisformmustbeexecutedunderSealorunderthehandsofitsattorney.



AmendedArticle73–NewNotestoProxyForm

(1) AMemberentitledtoattendandvoteattheabove-mentionedmeeting of the Company is entitled to appoint a proxy or not more than two (2) proxies to attend and vote instead of him. AproxymaybutneednotbeaMemberof theCompanyand theprovisionofSection149(1)(b) of theAct shall notapply to the Company. There shall be no restriction as to the qualificationoftheproxy.WhereaMemberappointstwo(2)proxies, he shall specify the proportion of his shareholdings toberepresentedbyeachproxy.Aproxyappointedtoattendand vote at a meeting of the Company shall have the same rights as the Member to speak at the meeting.

(2) To be valid, this form, duly completed must be deposited at theRegisteredOfficeof theCompanynot less than forty-eight (48)hoursbeforethetimeforholdingthemeetingorany adjournment thereof.

(3) Where a Member of the Company is an authorised nominee as definedundertheCentralDepositoriesAct,itmayappointatleast one (1) proxy but not more than two (2) proxies in respect ofeachSecuritiesAccountitholdswithordinarysharesoftheCompany standing to the credit of the saidSecuritiesAccount.

(4) WhereaMemberoftheCompanyisanexemptauthorisednominee which holds ordinary shares in the Company for multiple beneficial owners in one securities account (“omnibus account”), there is no limit to the number of proxies which the exempt authorised nominee may appoint in respect of each omnibus account it holds.

(5) Whereanauthorisednomineeappoints two (2)proxies,orwhere an exempt authorised nominee appoints two (2) or more proxies, the proportion of shareholdings to be represented by each proxy must be specified in the instrument appointing the proxies.

(6) Iftheappointorisacorporation,thisformmustbeexecutedunder its common seal or under the hand of an officer or attorney duly authorised.

vi) TodeletetheexistingArticle137andreplacewiththefollowingnewArticle137toreadasfollows:

ExistingArticle137

Anydividendorothermoneyspayableincashonorinrespectofasharemaybepaidbychequeorwarrantsentthroughtheposttothe registered address of the Member or person entitled thereto, or areentitledtheretoinconsequenceofthedeathorbankruptcyofthe holder, to any one of such persons or to such persons and such addressassuchpersonsmaybywritingdirect.Everysuchchequeor warrant shall be made payable to the order of the person to whom it is sent or to such person as the holder or person or persons entitledtotheshareinconsequenceofthedeathorbankruptcyoftheholdermaydirectandpaymentofthechequeifpurportingtobeendorsedshallbeagooddischargetotheCompany.Everysuchchequeorwarrantshallbesentattheriskofthepersonentitledtothe money represented thereby.


NewArticle137

SubjecttotheprovisionsoftheAct,theCentralDepositoriesActandtheRules,anydividend,interestorothermoneypayableincashinrespectofsharesmaybepaidbychequeorwarrantandsentthroughthepostdirected to the address of the holder or paid via electronic transfer of remittance to the account provided by the holder who is named in theRecordofDepositors or, if several persons are entitled thereto inconsequenceofthedeathorbankruptcyoftheholder,toanyoneofsuchpersons or to such person and to such address as such persons may by writingdirect.SubjecttotheprovisionsoftheAct,theCentralDepositoriesActandtheRules,everysuchchequeorwarrantorelectronictransferofremittance shall be made payable to the order of the person to whom it is sent or remitted or to such person as the person or persons entitled to the shareinconsequenceofthedeathorbankruptcyoftheholdermaydirectandthepaymentofanysuchchequeorwarrantorelectronictransferofremittance shall operate as a good discharge to the Company in respect of the dividend, interest or other money payable in cash represented thereby.Everychequeorwarrantorelectronictransferofremittanceshallbe sent or remitted at the risk of the person entitled to the money thereby represented.’’

6. Totransactanyotherbusinessofwhichduenoticeshallhavebeengiven.

BYORDEROFTHEBOARD

CHANLAICHOON(MAICSANo:0809269) CompanySecretary

KualaLumpur06June2013




NOTES

1. Amemberof theCompanyentitled toattendandvoteat theabovemeetingmayappointup to two (2)proxiestoattendandvoteinsteadofhim/her.AproxymaybutneednotbeamemberoftheCompanyandtheprovisionsofSection149(1)(b)oftheCompaniesAct,1965shallnotapplytotheCompany.

2. Theinstrumentappointingaproxyshallbeinwritingunderthehandoftheappointororofhisattorneyduly

authorisedinwriting.Iftheappointorisacorporation,itmustbeexecutedunderitsCommonSealorsignedbyitsattorneyorbyanofficeronbehalfofthecorporation.

3. Tobevalid,theinstrumentappointingaproxymustbedepositedattheCompany’sRegisteredOffice,Level

22MajuTower,1001JalanSultanIsmail,50250KualaLumpur,Malaysianotlessthanforty-eight(48)hoursbefore the time for holding the meeting.

4. IftheFormofProxyisreturnedwithoutanyindicationastohowtheproxyshallvote,theproxywillvoteor

abstainashethinksfit.Whereamemberappointsmorethanoneproxy(subjectalwaystoamaximumoftwo(2)proxiesateachmeeting),he/sheshallspecifyintheinstrumentappointingtheproxies,theproportionofhis/hershareholdingstoberepresentedbyeachproxy.

5. WhereaMemberoftheCompanyisanAuthorisedNominee(asdefinedundertheSecuritiesIndustry(Central

Depositories)Act,1991,itmayappointatleastone(1)proxyinrespectofeachSecuritiesAccountitholdswithordinarysharesoftheCompanystandingtothecreditofthesaidSecuritiesAccount.

6. ForthepurposesofdeterminingaMemberwhoshallbeentitledtoattendandvoteattheforthcoming13thAnnualGeneralMeetingoftheCompany,theCompanyshallberequestingtheRecordofDepositorsasat21June2013.OnlyadepositorwhosenameappearsintheRecordofDepositorsasat21June2013shallbeentitledtoattendandvoteatthismeetingaswellasforappointmentofproxy/proxiestoattendandvotein his stead.

7. ExplanatoryNoteA

ThisAgendaitemismeantfordiscussiononly.TheprovisionsofSection169oftheCompaniesAct,1965andtheArticlesofAssociationrequirethattheauditedfinancialstatementsandtheReportsoftheDirectorsandAuditorsthereonbelaidbeforetheCompanyatitsAnnualGeneralMeeting.Assuchthisitemisnotabusinesswhichrequiresaresolutiontobeputtovotebyshareholders.

8. ExplanatoryNotesonSpecialBusinesstobetransacted:

(a) OrdinaryResolution5–AuthoritytoissuesharespursuanttoSection132DoftheCompaniesAct,1965

TheOrdinaryResolution5,ifpassed,willgivetheDirectorsoftheCompany,fromthedateoftheaboveGeneralMeeting,authoritytoissueandallotordinarysharesfromtheunissuedcapitaloftheCompanyforsuchpurposesastheDirectorsconsiderwouldbeintheinterestoftheCompany.Thisauthoritywill,unlessrevokedorvariedbytheCompanyinGeneralMeeting,expireatthenextAnnualGeneralMeeting.

AsatthedateofthisNotice,7,000,000newordinarysharesintheCompanywereissuedpursuanttothemandategrantedtotheDirectorsatthe12thAnnualGeneralMeetingheldon26June2012andwhichwilllapseattheconclusionofthe13thAnnualGeneralMeeting.TheproceedsofRM4,200,000raisedfromtheissuanceof7,000,000newordinarysharesviathePrivatePlacementasatthedateofthisNoticewereutilizedforworkingcapitaloftheCompanyandtodefrayexpensesrelatedtothePrivate Placement.

Thegeneralmandateforissueofsharesisanewmandate.ThegeneralmandatesoughtwillenabletheDirectorsoftheCompanytoissueandallotshares,includingbutnotlimitedforfurtherplacingofsharesforpurposeoffundingcurrentand/orfutureinvestmentprojects,workingcapitaland/oracquisitions,atanytimetosuchpersonsintheirabsolutediscretionwithoutconveningageneralmeetingasitwouldbebothcostsandtime-consumingtoorganiseageneralmeeting.

(b) SpecialResolution1-ProposedAmendmentstotheCompany’sArticlesofAssociation

TheSpecialResolution1,ifpassed,willbringtheArticlesofAssociationoftheCompanyinlinewithamendmentstotheMainMarketListingRequirementsofBursaMalaysiaSecuritiesBerhad.

Proxy Form✄

I/We _______________________________________________________________________________________________

NewandOldNRICNo./CompanyNo. ________________________________________________________________

of _________________________________________________________________________________________________

____________________________________________________________________________________________________

being a member(s) of PFCE BERHAD hereby appoint ___________________________________________________

___________________________________________________________________ (fullnameasperNRICandNRICNo.)

of _________________________________________________________________________________________________

____________________________________________________________________________________________________

orfailinghim/her ____________________________________________________________________________________

____________________________________________________________________________________________________

of _________________________________________________________________________________________________

____________________________________________________________________________________________________

orfailinghim/her,theChairmanoftheMeeting,asmy/ourproxytovoteforme/usonmy/ourbehalfatthe13thAnnualGeneralMeetingoftheCompanytobeheldatMultaqamHall,Level10,MajuTower,1001JalanSultanIsmail,50250KualaLumpur,MalaysiaonFriday,28June2013at11.00a.m.oratanyadjournmentthereof,inthemanner indicated below:

No Resolution For Against

1

Tore-electthefollowingDirectorsretiringunderArticle91oftheCompany’sArticleofAssociation:MrOwHangSen Resolution1

2 Datuk Lim Chaing Cheah Resolution2

3 MrOngTengKek Resolution3

4 ToappointAuditorsandtoauthorisetheDirectorstofix their remuneration

Resolution4

5 AuthoritytoissuesharespursuanttoSection132DoftheCompaniesAct,1965

Resolution5

6 ProposedAmendmentstotheCompany’sArticlesofAssociation

SpecialResolution1

Pleaseindicatewith“X”howyouwishyourvotetobecast.Intheabsenceofspecificdirections,yourProxywillvote or abstain as he thinks fit.

Dated this __________ day of _________________ 2013___________________________________SignatureofMemberorCommonSeal

NOTES:

1. AmemberoftheCompanyentitledtoattendandvoteattheabovemeetingmayappointuptotwo(2)proxiestoattendandvoteinsteadofhim/her.AproxymaybutneednotbeamemberoftheCompanyandtheprovisionsofSection149(1)(b)oftheCompaniesAct,1965shallnotapplytotheCompany.

2. Theinstrumentappointingaproxyshallbeinwritingunderthehandoftheappointororofhisattorneydulyauthorisedinwriting.Iftheappointorisacorporation,itmushbeexecutedunderitsCommonSealorsignedbyitsattorneyorbyanofficeronbehalfofthecorporation.

3. Tobevalid,theinstrumentappointingaproxymustbedepositedattheCompany’sRegisteredOffice,Level22MajuTower,1001JalanSultanIsmail,50250KualaLumpur,Malaysianotlessthanforty-eight(48)hoursbeforethetimeforholdingthemeeting.

4. IftheFormofProxyisreturnedwithoutanyindicationastohowtheproxyshallvote,theproxywillvoteorabstainashethinksfit.Whereamemberappointsmorethanoneproxy(subjectalwaystoamaximumoftwo(2)proxiesateachmeeting),he/sheshallspecifyintheinstrumentappointingtheproxies,theproportionofhis/hershareholdingstoberepresentedbyeachproxy.

5. WhereaMemberoftheCompanyisanAuthorisedNominee(asdefinedundertheSecuritiesIndustry(CentralDepositories)Act,1991,itmayappointatleastone(1)proxyinrespectofeachSecuritiesAccountitholdswithordinarysharesoftheCompanystandingtothecreditofthesaidSecuritiesAccount.

NumberofSharesHeld:

CDSAccountNo:

PFCE Berhad(504718-U)

AFFIXSTAMP

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PFCE Berhad(504718-U)

CompanySecretaryLevel 22 Maju Tower

1001JalanSultanIsmail50250KualaLumpur

Malaysia

PFCE BERH

AD

• AN

NUA

L REPORT 2012 ANNUAL

REPORT

dedicated toexcellence

2012

www.pfcebhd.com

PFce Berhad(504718-U)

Level 32, Maju tower1001 Jalan Sultan ismail50250 Kuala LumpurMalaysia

Tel • +603-2772 8775Fax • +603-2772 8405Email • [email protected]

PFCE BERHAD(504718-U)

PFCE BERHAD 3 • PFCE BERHAD annual report 2012 CORPORATE STRuCTuRE 65% PFCE Offshore Worldwide...

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