UMS-NEIKEN GROUP BERHAD (Company No. 650473-V) … Annual Report 2014 Quality & ReliableQuality &...

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Annual Report

2014

Quality & ReliableQuality & Reliable

The Better Connections to Your World

Corporate Information

Notice of Annual General Meeting

Statement Accompanying Notice of Annual General Meeting

Chairman’s Statement

Directors’ Profiles

Audit Committee Report Statement of Corporate Governance

Statement on Risk Management and Internal Control

Additional Compliance Information

Directors’ Responsibility Statement

Financial Statements

List of Properties

Analysis of Shareholdings

Proxy Form

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UMS-NEIKEN GROUP BERHAD (Company No. 650473-V) Annual Report 20142

Corporate Information

BOARD OF DIRECTORS

Cheng WongExecutive Chairman/Managing Director

Dee Kok YongExecutive Director

Yau Ming TeckIndependent Non-Executive Director(Appointed on 13 April 2015)

Amirul Azhar Bin BaharomIndependent Non-Executive Director(Appointed on 13 April 2015)

Cheng Siow ChunNon-Independent Non-Executive Director

AUDITORS

Crowe HorwathLevel 16 Tower CMegan Avenue II12, Jalan Yap Kwan Seng50450 Kuala LumpurTel : 03 2788 9999Fax : 03 2788 9998

REGISTERED OFFICE

10th Floor, Menara Hap SengNo. 1 & 3 Jalan P. Ramlee50250 Kuala LumpurTel : 03 2382 4288Fax : 03 2382 4170

HEAD OFFICE

Lot 5 Batu 17½, Jalan IpohRawang Industrial Estate48000 Rawang, Selangor Darul EhsanTel : 03 6091 4146Fax : 03 6091 2323

SHARE REGISTRAR

Tricor Investor Services Sdn BhdLevel 17, The Gardens North TowerMid Valley City, Lingkaran Syed Putra59200 Kuala LumpurTel : 03 2264 3883Fax : 03 2282 1886

PRINCIPAL BANKERS

United Overseas Bank (Malaysia) BhdAmBank (M) Berhad

STOCK EXCHANGE

Main MarketBursa Malaysia Securities Berhad

Stock Name : UMSNGBStock Code : 7227Sector : Industrial Products

AUDIT COMMITTEE

Yau Ming TeckChairman of Audit Committee,Independent Non-Executive Director

Amirul Azhar Bin BaharomIndependent Non-Executive Director

Cheng Siow ChunNon-Independent Non-Executive Director

NOMINATION COMMITTEE

Yau Ming TeckChairman of Nomination Committee,Independent Non-Executive Director


REMUNERATION COMMITTEE

Yau Ming TeckChairman of Remuneration Committee,Independent Non-Executive Director


COMPANY SECRETARIES

Anna Lee Ai Leng (LS 0009729)Lim Lee Kuan (MAICSA 7017753)

UMS-NEIKEN GROUP BERHAD (Company No. 650473-V) Annual Report 2014 3

Notice of Annual General Meeting

NOTICE IS HEREBY GIVEN that the Eleventh Annual General Meeting of the Company will be held at Tasik Puteri Golf & Country Club, Bandar Tasik Puteri, 48000 Rawang, Selangor Darul Ehsan on Wednesday, 27 May 2015 at 10.00 a.m. for the following purposes:

AGENDA

1. To table the Audited Financial Statements for the financial year ended 31 December 2014 together with the Reports of the Directors and Auditors thereon.

2. To re-elect Ms Cheng Siow Chun, who retires in accordance with Article 126 of the Articles of Association of the Company.

3. To elect the following Directors who retire in accordance with Article 131 of the Articles of Association of the Company:

(i) Mr Yau Ming Teck (ii) Encik Amirul Azhar Bin Baharom

4. To approve the payment of Directors’ Fees amounting to RM103,000 for the financial year ended 31 December 2014.

5. To approve the payment of Directors’ Fees amounting to RM103,000 for the financial year ending 31 December 2015.

6. To re-appoint Messrs Crowe Horwath as Auditors of the Company and to authorise

the Directors to fix their remuneration.

Special Business

To consider and if thought fit, to pass the following Ordinary Resolutions:

7. AUTHORITY TO ISSUE SHARES PURSUANT TO SECTION 132D OF THE COMPANIES ACT, 1965

“THAT pursuant to Section 132D of the Companies Act, 1965 (“the Act”), the Directors be and are hereby empowered to issue shares in the Company, at any time until the conclusion of the next Annual General Meeting and upon such terms and conditions and for such purposes as the Directors may, in their absolute discretion, deem fit, provided that the aggregate number of shares issued does not exceed ten per centum (10%) of the issued share capital of the Company at the time of issue and THAT the Directors be and are also empowered to obtain the approval for the listing of and quotation for the additional shares so issued on Bursa Malaysia Securities Berhad and THAT such authority shall continue to be in force until the conclusion of the next Annual General Meeting of the Company.”

8. PROPOSED RENEWAL OF EXISTING AND NEW SHAREHOLDERS’ MANDATE FOR RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING NATURE (“PROPOSED SHAREHOLDERS’ MANDATE”)

“THAT subject always to the provisions of the Companies Act, 1965 (“the Act”), the Memorandum & Articles of Association of the Company, the Listing Requirements of Bursa Malaysia Securities Berhad (“Bursa Securities”) and the regulations, guidelines and guidance notes issued from time to time by Bursa Securities or any other regulatory authorities, approval be and is hereby given to the Company and/or its subsidiary companies to enter into recurrent related party transactions of a revenue or trading nature as set out in Section 2.4 of the Circular to Shareholders dated 30 April 2015, provided that such transactions are undertaken in the ordinary course of business, on arm’s length basis and on normal commercial terms which are not more favourable to the related party than those generally available to the public and are not detrimental to the minority shareholders of the Company.

(Please refer to Note A)

(Ordinary Resolution 1)

(Ordinary Resolution 2)(Ordinary Resolution 3)






Notice of Annual General Meetingcont’d

THAT such approval shall continue to be in force until:

(a) the conclusion of the next annual general meeting (“AGM”) of the Company following this AGM at which time it will lapse, unless by a resolution passed at the meeting, the authority is renewed;

(b) the expiration of the period within which the next AGM after that date is required to be held pursuant to Section 143(1) of the Act (but shall not extend to such extension as may be allowed pursuant to Section 143(2) of the Act); or

(c) it is revoked or varied by resolution passed by the shareholders at a general meeting,

whichever is earlier;

AND THAT authority be and is hereby given to the Directors of the Company and its subsidiary to complete and do all such acts and things (including executing such documents as may be required) to give effect to such transactions as authorised by this Ordinary Resolution.

AND THAT the estimates given in respect of the recurrent related party transactions specified in Section 2.4 of the Circular being provisional in nature, the Directors and/or any of them be and are hereby authorised to agree to the actual amount(s) thereof provided that such amount or amounts comply with the procedures set out in Section 2.6 of the Circular.”

9. PROPOSED RENEWAL OF AUTHORITY FOR THE COMPANY TO PURCHASE ITS

OWN SHARES OF UP TO 10% OF THE ISSUED AND PAID-UP SHARE CAPITAL OF THE COMPANY (“PROPOSED RENEWAL OF SHARE BUY-BACK AUTHORITY”)

“THAT subject always to the Companies Act, 1965, the provisions of the Memorandum and Articles of Association of the Company, the Listing Requirements of Bursa Malaysia Securities Berhad (“Bursa Securities”) and all other applicable laws, guidelines, rules and regulations, the Company be and is hereby authorised to purchase such amount of ordinary shares of RM0.50 each in the Company as may be determined by the Directors of the Company from time to time through Bursa Securities as the Directors may deem fit and expedient in the interest of the Company, provided that:

(i) the aggregate number of shares purchased does not exceed 10% of the total issued and paid-up share capital of the Company as quoted on Bursa Securities as at the point of purchase;

(ii) an amount not exceeding the Company’s audited retained profit of

RM4,393,899 for the financial year ended 31 December 2014 at the time of the purchase(s) will be allocated by the Company for the purchase of own shares; and

(iii) the Directors of the Company may decide either to retain the shares purchased as treasury shares or cancel the shares or retain part of the shares so purchased as treasury shares and cancel the remainder or to resell the shares or distribute the shares as dividends;

THAT the authority conferred by this resolution shall commence immediately and shall continue to be in force until the conclusion of the next Annual General Meeting of the Company following the passing of this Ordinary Resolution, unless earlier revoked or varied by an Ordinary Resolution of the shareholders of the Company in a general meeting;




AND THAT authority be and is hereby given to the Directors of the Company to act and take all such steps and do all things as are necessary or expedient to implement, finalise and give full effect to the aforesaid purchase.”

By Order of the Board

ANNA LEE AI LENG (LS 0009729)LIM LEE KUAN (MAICSA 7017753)Company Secretaries

Selangor Darul Ehsan30 April 2015

Notes:

(A) This Agenda item is meant for discussion only as the provision of Section 169(1) of the Companies Act, 1965 does not require a formal approval of the shareholders and hence, is not put forward for voting.

(1) A member of the Company entitled to attend and vote at the meeting is entitled to appoint a proxy or proxies to attend and vote in his stead. A proxy may but need not be a member of the Company. A member may appoint any person to be his proxy without limitation. If the proxy is not a member, he need not be an advocate, an approved company auditor or a person approved by the Registrar of Companies.

(2) A member shall be entitled to appoint more than one proxy (subject always to a maximum of two (2) proxies at each meeting) to attend and vote at the same meeting. Where a member appoints two (2) proxies, the appointment shall be invalid unless the member specifies the proportion of his shareholding to be represented by each proxy.

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

(4) If no name is inserted in the space provided for the name of your proxy, the Chairman of the meeting will act as your proxy. (5) The instrument appointing a proxy must be deposited at the Registered Office of the Company at 10th Floor Menara Hap

Seng, No. 1 & 3 Jalan P. Ramlee, 50250 Kuala Lumpur not less than forty-eight (48) hours before the time for holding the meeting or any adjournment thereof.

(6) If the appointer is a corporation, the instrument appointing a proxy must be executed under its Common Seal or under the hand of its attorney.

(7) The Date of Record of Depositors for the purpose of determining Members’ entitlement to attend, vote and speak at the Meeting is 23 April 2015.

(8) Explanatory Notes on Special Business:

(i) Ordinary Resolution 7 Authority to Issue Shares Pursuant to Section 132D of the Companies Act, 1965

The proposed Ordinary Resolution 7, if passed, will give flexibility to the Directors of the Company to issue shares up to a maximum of ten per centum (10%) of the issued share capital of the Company at the time of such issuance of shares and for such purposes as they consider would be in the best interest of the Company without having to convene separate general meetings. This authority, unless revoked or varied at a general meeting, will expire at the conclusion of the next Annual General Meeting of the Company.

This is the renewal of the mandate obtained from the shareholders at the last Annual General Meeting (“the previous mandate”). The previous mandate was not utilised and no proceeds were raised. The purpose of this general mandate sought will provide flexibility to the Company for any possible fund raising activities but not limited for futher placement of shares for purpose of funding current and/or future investment projects, working capital, repayment of borrowings and/or acquisitions.




Statement AccompanyingNotice of Annual General MeetingPursuant to Paragraph 8.27(2) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad

(ii) Ordinary Resolution 8 Proposed Renewal of Existing and New Shareholders’ Mandate for Recurrent Related Party Transactions of a

Revenue or Trading Nature (“Proposed Shareholders’ Mandate”)

The proposed Ordinary Resolution 8, if passed, will allow the Group to enter into Recurrent Related Party Transactions of a Revenue or Trading Nature pursuant to the provisions of the Listing Requirements of Bursa Malaysia Securities Berhad.

Please refer to the Circular to Shareholders dated 30 April 2015 dispatched together with the Annual Report 2014.

(iii) Ordinary Resolution 9 Proposed Renewal of Authority for the Company to Purchase Its Own Shares of Up to 10% of the Issued and Paid-

Up Share Capital of the Company (“Proposed Renewal of Share Buy-Back Authority”)

The proposed Ordinary Resolution 9, if passed, will empower the Company to purchase and / or hold up to ten per centum (10%) of the issued and paid-up share capital of the Company. This authority unless revoked or varied by the Company at a General Meeting will expire at the next Annual General Meeting.

Please refer to the Statement to Shareholders in relation to the Proposed Renewal of Share Buy-Back Authority dated 30 April 2015 for further information.

The Directors who are standing for election at the Annual General Meeting are as follows:

1. Yau Ming Teck2. Amirul Azhar Bin Baharom

Further details of the Directors mentioned above are set out in the profile of Directors on page 9 to 10 of the Annual Report.


Chairman’s Statement

Dear Valued Shareholders,

On behalf of the Board of Directors of UMS-Neiken Group Berhad (“UMSN” or “the Company”), I am pleased to present the Annual Report and the Annual Audited Financial Statements of the Company for the financial year ended 31 December 2014.

FINANCIAL REVIEW

For the financial year under review, the Group achieved marginally increase in revenue and pre-tax profit of RM62.000 million and RM12.252 million respectively compared with a revenue of RM61.987 million and pre-tax profit of RM8.308 million in the previous financial year under continuing operations. However, the earnings per share of the Group increased from 7 sen in the previous financial year to 12 sen for the current financial year.

The Group earnings were affected by the following:

a) Favourable foreign exchange movement of US dollar as compared to Ringgit,

b) Improvement in gross profit margin,c) Gain on disposal of a freehold land and building

by a Malaysia subsidiary upon completion on 25 November 2014, which more than offset the loss from the completion of divestment of Hong Kong subsidiary on 21 February 2014,

d) Weaker performance in revenue, and loss incurred by home appliance segment, which were insignificant to the overall performance of the Group,

e) The higher financing cost for the purchase of a warehouse in the previous financial year.

OPERATIONAL UPDATES

To streamline for better improvement in profit margins, the Group completed the divestment of the loss-making Hong Kong subsidiary and the disposal of a property by a Malaysia subsidiary at a gain of approximately RM2.5 million.

In order to maintain its cost competitiveness, the Group expanded the manufacturing operations in its Vietnam factory, which has lower operational costs.

As part of the Group’s strategy to expand its export markets, the Group has actively participated in international exhibitions. The list of exhibitions, as stated at below.

1) MSE – Jeddah, KSA which arranged by Matrade Malaysia for SME company,

2) MSE – Phnom Penh, Cambodia which organised by Matrade for SME company,

3) Electric Myanmar 2014,4) Cambuild 2014, 5) The Big 5 Show, Dubai which was arranged

by Matrade for SME company, and6) Yearly Product Show at Matrade Exhibition Hall

2015 AND BEYOND

Based on Bank Negara Malaysia Annual Report 2014, the Malaysian economy is expected to register steady growth of 4.5% - 5.5% in 2015, supported mainly by sustained expansion in domestic demand amid strong domestic fundamentals and a resilient export sector. Domestic demand will continue to anchor growth in 2015, driven by private sector spending. After registering five consecutive years of above-average growth rates, private consumption is expected to grow by 6.0% in 2015. While the implementation of the GST in April and lower earnings in the commodity-related sectors are expected to affect spending, this will, however, be partially offset by higher household disposable incomes from lower fuel prices, the favourable labour market conditions and the Government measures to assist low- and middle-income households.


Chairman’s Statementcont’d

In the external sector, after a strong performance in 2014, the growth of gross exports is projected to moderate, amid lower commodity prices. Exports of manufactured products, however, are expected to increase at a stronger growth rate. Gross imports growth is expected to be higher in 2015, amid continued growth in intermediate imports given the expansion in export-oriented manufacturing.

Headline inflation is projected to be lower at 2% - 3% in 2015, largely on account of lower global energy and food prices. The decline in global oil prices will lead to lower domestic fuel prices through the managed float fuel pricing mechanism. The more subdued external price pressures would also mitigate increases in the cost of imports stemming from the recent ringgit depreciation, thereby moderating imported inflation. While the implementation of the GST would result in higher prices for some goods and services, the impact on overall headline is expected to be contained. The inflation rate in 2015 would also be affected by the new pricing mechanism for petrol prices in which there would be a more direct transmission of global oil price volatility into domestic prices given the market-based pricing of domestic fuel products. Nevertheless, the expectation is for underlying inflation to still remain relatively stable, amid modest demand pressures.

The external environment in 2015 will be more challenging. While improving, downside risks to the global growth outlook remain given the continued weakness in a number of major economies. In addition, given uneven growth prospects, monetary policies in the major economies could potentially diverge, which may lead to sizable shifts in global liquidity and contribute to greater volatility in global financial markets and capital flows. The sharp decline in the price of oil and the uncertainty over its future price path, coupled with the attendant effects on the prices of other commodities, further compounds the challenging global environment. Amid this challenging landscape, the focus of policies by the Government and the Bank will be on addressing domestic vulnerabilities and supporting the growth of the Malaysian economy.

In 2015, the Group expects a satisfactory performance, with GST implementation effective 1 April 2015 and the depreciation of RM against USD will positively affect the profit margin of the Group. However, the home appliances segment which imports from overseas will experience higher imported costs. With active participations in international exhibitions, the Group is also optimistic of expanding export markets.

DIVIDENDS

The Company paid a single tier interim dividend of 2.5 sen per ordinary share amounting to approximately RM1,965,000 in the previous financial year.

On 26 February 2015, the directors declared a single tier interim dividend of 2.5 sen per ordinary share amounting to approximately RM1,965,000 in respect of the financial year ended 31 December 2014. The interim dividend was paid on 31 March 2015.

CORPORATE SOCIAL RESPONSIBILITY

Our Group is aware of our corporate social responsibility (“CSR”) to our shareholders and the community which we live and operate in. In line with our core value to remain a responsible corporate citizen, we will continuously commit to make sustainable efforts to improve our CSR objectives with approximately RM100,000 as yearly budget.

Some of the activities undertaken during the year included:

(i) Recycling of paper based products and scrap items;(ii) Equip employees with improved skills and knowledge

by conducting on job training, value added programmes and seminars;

(iii) Provision of staff amenities and welfare; (iv) Yearly sponsorship to students, and(v) Set up yearly committed donations to various

educational, social and welfare programmes.

APPRECIATION

On behalf of the Board of Directors and the Company, I would like to express my sincere appreciation to our shareholders, stakeholders (including customers, vendors, business associates and bankers), my fellow directors, our dedicated management team and all employees of the Group for their continued commitment, loyalty, support and contribution in 2014 which resulted in another successful year for the Group.

CHENG WONGExecutive Chairman/Managing Director


Directors’ Profile

EXECUTIVE CHAIRMAN/MANAGING DIRECTOR

CHENG WONG, Malaysian, aged 64, was appointed to the Board on 20 October 2005.

Mr Cheng started his career as a partner in Seng Electric Co. (“Seng Electric”) as an electrical wholesaler and distributor in year 1970.

Seng Electric was converted to a private limited company under the name Seng Electric Co (M) Sdn Bhd (“SECSB”) in year 1976. Mr Cheng was appointed as the Managing Director of SECSB and was

primarily responsible for the marketing and financial management of SECSB. His capacity as the Managing Director of SECSB has given him invaluable experience in the marketing of electrical products in the Malaysian market.

In year 1980, Mr Cheng is one of the founder members of United MS Electrical Mfg. (M) Sdn Bhd ("UMSE"), a subsidiary of UMS-Neiken Group Berhad. He took on the role of Managing Director in UMSE and his main responsibilities include overseeing the financial planning, corporate matters, product diversification and supervision of marketing activities for both domestic and foreign markets.

Mr Cheng has had more than 30 years’ of experience in the electrical wiring accessories market.

INDEPENDENT NON-EXECUTIVE DIRECTOR

YAU MING TECK, Malaysian, aged 43 was appointed to the Board of UMS-Neiken Group Berhad on 13 April 2015. He was also appointed as the Chairman of the Audit Committee, Nomination Committee and Remuneration Committee.

Mr Yau is a graduate from Monash University, Melbourne with an Economic Degree in 1993. He is a qualified Certified Practicing Accountant (“CPA”) of the CPA Australia and a Chartered Accountant of Malaysian Institute of Accountants.

He had started his career with Coopers & Lybrands, Insolvency & Corporate Division and handled a wide portfolio of clients with diverse background and industries during his three years with the firm.

In 1997, he joined a Malaysian Main Board public listed company as Corporate Finance Manager and last served as a Financial Controller of another Main Board listed company in Bursa Malaysia in 2003. During his tenure with the public listed companies, he had predominantly taken charge of various corporate exercises and his skill in the area of corporate finance, financial management and strategic planning honed over 15 years has brought him to his private business practice in year 2004. He has the expertise in corporate and financial advisory in the areas of corporate finance, mergers & acquisitions and restructuring exercises with the focus of the business in People Republic of China, Singapore and Australia.

Mr Yau is currently an Independent Non-Executive Director of Overseas Enterprise Berhad, a public listed company in ACE Market of Bursa Malaysia and is a member of the Audit Committee. Mr Yau is also the Chairman of the Nomination Committee.

EXECUTIVE DIRECTOR

DEE KOK YONG, Malaysian, aged 39, was appointed to the Board on 31 October 2005. He is the Chairman of the Risk Management Committee.

Mr Dee obtained his Advanced Certificate in Marketing issued by the Chartered Institute of Marketing from Systematic College, Malaysia in year 2000.

Mr Dee joined Aves Technology Sdn Bhd as a Marketing Executive before moving on to Tanigra Marketing Sdn Bhd and served there from 1997 to 1998 as a Sales Executive where he gain experience in the sales and marketing on building materials from the construction industry.

Mr Dee joined United MS Cables Mfg. (M) Sdn Bhd as a Marketing Executive where he was in charge of sales in the northern and central regions of Malaysia. In year 2000, he joined UMSE as Marketing Executive in the Export division and was later promoted to the role of Marketing Manager in year 2003. Following his appointment as a director of UMSE on 1 March 2008, he was re-designated as the General Manager of UMSE.

Mr Dee also sits on the Board of Neiken Switchgear (S) Pte Ltd, an associate company of UMS-Neiken Group Berhad. Other than that, he is also a director of UMS-Neiken Industry Sdn Bhd.


AMIRUL AZHAR BIN BAHAROM, Malaysian, aged 42, was appointed to the Board of UMS-Neiken Group Berhad on 13 April 2015. Encik Amirul Azhar Bin Baharom holds a LLB Honours from Staffordshire University, United Kingdom.

He began his career as a Research Analyst with Cazenove & Co and had been in the financial services industry for a number of years where he was attached with the Securities Commission, BDO

Capital Consultants Sdn Bhd and KAF Fund Management Sdn Bhd. He had also served as the Group Managing Director and CEO of Vastalux Energy Berhad.

He currently sits on board of Spring Gallery Berhad, Tecnic Group Berhad, BDO Capital Consultants Sdn Bhd and several other private limited companies.

NON-INDEPENDENT NON-EXECUTIVE DIRECTOR

CHENG SIOW CHUN, Malaysian, aged 33, was appointed to the Board on 17 September 2008. She is a member of the Audit Committee.

Ms. Cheng holds a Master of International Journalism and a Bachelor (Hons) in Mass Communication from University of Liverpool John Moores, United Kingdom.

Ms. Cheng has worked with both private and public corporations, namely in the Marketing and Public Relations division of Genting Group and Pearl International Hotel Kuala Lumpur. She was previously a TV Presenter with Astro Malaysia Holdings Berhad. She had served as a Teaching Assistant at Liverpool John Moores University and she was also a Lecturer at Tunku Abdul Rahman University College Kuala Lumpur from year 2008 to year 2010.

Ms. Cheng is currently the Manager of Public Relations and Communications at OSK Property Holdings Berhad.


Directors’ Profilecont’d

EXECUTIVE CHAIRMAN/MANAGING DIRECTOR

CHENG WONG, Malaysian, aged 64, was appointed to the Board on 20 October 2005.

Mr Cheng started his career as a partner in Seng Electric Co. (“Seng Electric”) as an electrical wholesaler and distributor in year 1970.

Seng Electric was converted to a private limited company under the name Seng Electric Co (M) Sdn Bhd (“SECSB”) in year 1976. Mr Cheng was appointed as the Managing Director of SECSB and was

primarily responsible for the marketing and financial management of SECSB. His capacity as the Managing Director of SECSB has given him invaluable experience in the marketing of electrical products in the Malaysian market.

In year 1980, Mr Cheng is one of the founder members of United MS Electrical Mfg. (M) Sdn Bhd ("UMSE"), a subsidiary of UMS-Neiken Group Berhad. He took on the role of Managing Director in UMSE and his main responsibilities include overseeing the financial planning, corporate matters, product diversification and supervision of marketing activities for both domestic and foreign markets.

Mr Cheng has had more than 30 years’ of experience in the electrical wiring accessories market.


YAU MING TECK, Malaysian, aged 43 was appointed to the Board of UMS-Neiken Group Berhad on 13 April 2015. He was also appointed as the Chairman of the Audit Committee, Nomination Committee and Remuneration Committee.

Mr Yau is a graduate from Monash University, Melbourne with an Economic Degree in 1993. He is a qualified Certified Practicing Accountant (“CPA”) of the CPA Australia and a Chartered Accountant of Malaysian Institute of Accountants.

He had started his career with Coopers & Lybrands, Insolvency & Corporate Division and handled a wide portfolio of clients with diverse background and industries during his three years with the firm.

In 1997, he joined a Malaysian Main Board public listed company as Corporate Finance Manager and last served as a Financial Controller of another Main Board listed company in Bursa Malaysia in 2003. During his tenure with the public listed companies, he had predominantly taken charge of various corporate exercises and his skill in the area of corporate finance, financial management and strategic planning honed over 15 years has brought him to his private business practice in year 2004. He has the expertise in corporate and financial advisory in the areas of corporate finance, mergers & acquisitions and restructuring exercises with the focus of the business in People Republic of China, Singapore and Australia.

Mr Yau is currently an Independent Non-Executive Director of Overseas Enterprise Berhad, a public listed company in ACE Market of Bursa Malaysia and is a member of the Audit Committee. Mr Yau is also the Chairman of the Nomination Committee.

EXECUTIVE DIRECTOR

DEE KOK YONG, Malaysian, aged 39, was appointed to the Board on 31 October 2005. He is the Chairman of the Risk Management Committee.

Mr Dee obtained his Advanced Certificate in Marketing issued by the Chartered Institute of Marketing from Systematic College, Malaysia in year 2000.

Mr Dee joined Aves Technology Sdn Bhd as a Marketing Executive before moving on to Tanigra Marketing Sdn Bhd and served there from 1997 to 1998 as a Sales Executive where he gain experience in the sales and marketing on building materials from the construction industry.

Mr Dee joined United MS Cables Mfg. (M) Sdn Bhd as a Marketing Executive where he was in charge of sales in the northern and central regions of Malaysia. In year 2000, he joined UMSE as Marketing Executive in the Export division and was later promoted to the role of Marketing Manager in year 2003. Following his appointment as a director of UMSE on 1 March 2008, he was re-designated as the General Manager of UMSE.

Mr Dee also sits on the Board of Neiken Switchgear (S) Pte Ltd, an associate company of UMS-Neiken Group Berhad. Other than that, he is also a director of UMS-Neiken Industry Sdn Bhd.


AMIRUL AZHAR BIN BAHAROM, Malaysian, aged 42, was appointed to the Board of UMS-Neiken Group Berhad on 13 April 2015. Encik Amirul Azhar Bin Baharom holds a LLB Honours from Staffordshire University, United Kingdom.

He began his career as a Research Analyst with Cazenove & Co and had been in the financial services industry for a number of years where he was attached with the Securities Commission, BDO

Capital Consultants Sdn Bhd and KAF Fund Management Sdn Bhd. He had also served as the Group Managing Director and CEO of Vastalux Energy Berhad.

He currently sits on board of Spring Gallery Berhad, Tecnic Group Berhad, BDO Capital Consultants Sdn Bhd and several other private limited companies.

NON-INDEPENDENT NON-EXECUTIVE DIRECTOR

CHENG SIOW CHUN, Malaysian, aged 33, was appointed to the Board on 17 September 2008. She is a member of the Audit Committee.

Ms. Cheng holds a Master of International Journalism and a Bachelor (Hons) in Mass Communication from University of Liverpool John Moores, United Kingdom.

Ms. Cheng has worked with both private and public corporations, namely in the Marketing and Public Relations division of Genting Group and Pearl International Hotel Kuala Lumpur. She was previously a TV Presenter with Astro Malaysia Holdings Berhad. She had served as a Teaching Assistant at Liverpool John Moores University and she was also a Lecturer at Tunku Abdul Rahman University College Kuala Lumpur from year 2008 to year 2010.

Ms. Cheng is currently the Manager of Public Relations and Communications at OSK Property Holdings Berhad.

Notes to Directors’ Profile:

1. Family Relationship Mr Dee Kok Yong is the nephew of Madam Dee Kim Huay, a deemed major shareholder of the Company. Madam Dee Kim

Huay is the spouse of Mr Cheng Wong.

Ms Cheng Siow Chun is the niece of Mr Cheng Wong.

The other Directors do not have any family relationship with any Directors and/or major shareholders of the Company.

2. Conviction of Offences None of the Directors have been convicted for any offences (other than traffic offences) within the past 10 years.

3. Conflict of Interest Save for those disclosed under Additional Compliance Information (Related Party Transactions) on pages 27 to 33 of this

Annual Report and the Circular to Shareholders dated [to insert] dispatched together with this Annual Report, all the Directors have no conflict of interest with the Company and its subsidiaries.

4. Attendance at Board Meetings The details of attendance of the Directors at the Board Meetings are set out on page 21 of this Annual Report.

5. Shareholdings The details of Directors’ Interest in the securities of the Company are set out in the Analysis of Shareholdings on pages 107 to

109 of this Annual Report.


Audit Committee Report

The Board of Directors of UMS-Neiken Group Berhad (“the Board”) is pleased to present the Audit Committee Report for the financial year ended 31 December 2014.

COMPOSITION AND MEETINGS

As at the date of this Annual Report, the Audit Committee comprises three (3) Directors as follows:

Chairman Lim Peng @ Lim Pang Tun - Independent Non-Executive Director

MembersLee Kok Yong - Independent Non-Executive DirectorCheng Siow Chun - Non-Independent Non-Executive Director

The Audit Committee met five (5) times during the financial year ended 31 December 2014 and the details of attendance of the Audit Committee Members are as follows:

Name of Director Attendance

Lim Peng @ Lim Pang Tun – Chairman (Resigned on 13 April 2015)Independent Non-Executive Director

5/5

Lee Kok Yong – Member (Resigned on 13 April 2015)Independent Non-Executive Director

5/5

Cheng Siow Chun – MemberNon-Independent Non-Executive Director

4/5

Details of the members of the Audit Committee are contained in the Profile of Directors as set out on pages 9 to 10 of this Annual Report.

The Senior Management, external auditors and persons carrying out the internal audit function or activity, or both are invited to attend the meeting where considered necessary. The Company Secretary is responsible for distributing the agenda of the meetings and relevant information to the Audit Committee members well in advance of their meetings, and recording the proceedings of the Audit Committee meetings.

SUMMARY OF TERMS OF REFERENCE

1. Composition

The Audit Committee shall be appointed from amongst the Board and shall comprise no fewer than three (3) members who are Non-Executive Directors. The majority of them shall be Independent Directors and at least one (1) member must be a member of the Malaysian Institute of Accountants or possesses such other qualifications and/or experience as approved by Bursa Malaysia Securities Berhad.

2. Meetings

The Audit Committee shall meet at least four (4) times in each financial year. The quorum for a meeting shall be two (2) members, provided that the majority of members present shall be Independent Directors.

The Audit Committee may call for a meeting as and when required with reasonable notice as the Committee Members may deem fit.

All decisions at such meeting shall be decided on a show of hands on a majority of votes.

The external auditors and persons carrying out the internal audit function or activity, or both may appear at any meeting at the invitation of the Audit Committee and shall appear before the Audit Committee when required to do so by the Audit Committee. The external auditors may also request a meeting, if they consider it necessary.


Audit Committee Reportcont’d

SUMMARY OF TERMS OF REFERENCE cont’d

3. Key Functions and Responsibilities

The key functions and responsibilities of the Audit Committee are as follows:

(a) To review with the external auditors, the audit plan, the scope of audit and their audit report;

(b) To review the adequacy of the scope, functions, competency and resources and set the standards of the internal audit function;

(c) To review the adequacy of and to provide independent assurance to the Board on the effectiveness of the Company’s risk management and risk assurance process;

(d) To evaluate the quality and effectiveness of the Company’s Internal Control system and management information systems, including compliance with applicable laws, rules, corporate governance requirements and guidelines;

(e) To recommend to the Board the Director’s Statement on Risk Management and Internal Control and any changes to the said Statement;

(f) To review the internal audit plan, results of the internal audit activity, investigations and Management’s

responses, as well as to ensure that appropriate action is taken on the recommendation of the internal audit function;

(g) To review the quarterly results and annual financial statements of the Group prior to submission to the Board of Directors;

(h) To review related party transactions entered into by the Company and the Group to ensure that they are in the best interest of the Group; fair, reasonable and on normal commercial terms; and not detrimental to minority shareholders;

(i) To review the procedures of recurrent related party transactions undertaken by the Company and the Group;

(j) To consider the appointment and/or re-appointment of external auditors and persons carrying out the internal audit functions, the audit fee and any questions of resignation or dismissal including recommending the nomination of person or persons as auditors; and

(k) To verify all Employees’ Share Option Scheme allocations to ensure that they are done in compliance with the criteria disclosed by the Company to its employees.

4. Rights

The Audit Committee shall:

(a) have authority to investigate any matter within its terms of reference;

(b) have the resources which are required to perform its duties;

(c) have full and unrestricted access to any information pertaining to the Group;

(d) have direct communication channels with the external auditors and person(s) carrying out the internal audit function or activity;

(e) be able to obtain independent professional or other advice;



SUMMARY OF TERMS OF REFERENCE cont’d

4. Rights cont’d

(f) be able to convene meetings with external auditors, persons carrying out the internal audit function or activity or both, excluding the attendance of other directors or employees of the Group, whenever deemed necessary;

(g) promptly report to Bursa Malaysia Securities Berhad, or such other name(s) as may be adopted by Bursa Malaysia Securities Berhad, matters which have not been satisfactorily resolved by the Board of Directors resulting in a breach of the Listing Requirements of Bursa Malaysia Securities Berhad;

(h) have the right to pass resolutions by a simple majority vote from the Committee and the Chairman shall have the casting vote should a tie arise;

(i) meet as and when required on a reasonable notice; and

(j) the Chairman shall call for a meeting upon the request of the external auditors.

5. Review of Audit Committee

The Board shall review the term of office and performance of the Audit Committee and each of its members at least once every three (3) years to determine whether the Audit Committee and its members have carried out their duties in accordance with their Terms of Reference.

SUMMARY OF ACTIVITIES OF THE AUDIT COMMITTEE

In accordance with the Terms of Reference of the Audit Committee, the following activities were undertaken by the Audit Committee during the year ended 31 December 2014, including the deliberation on and review of:

(i) the unaudited quarterly financial statements of the Group to ensure adherence to the regulatory reporting requirements and appropriate resolution prior to submission to the Board of Directors for approval.

(ii) the annual audited financial statements of the Company and of the Group prior to the submission to the Board of Directors for consideration and approval.

(iii) the audit plan of the external auditors in terms of their scope of audit prior to their commencement of their annual audit.

(iv) the related party transactions to ensure that they were not detrimental to the interests of the minority shareholders.

(v) the internal audit report which outlined the recommendations towards correcting areas of weaknesses and ensured that there were management action plans established for the implementation of the recommendations of the persons carrying out the internal audit function or activity.

(vi) the audit reports from the external auditors in relation to audit and accounting matters arising from the statutory audit; matters arising from the audit of the Group in meetings with the external auditors without the presence of the executive Board members and management.

(vii) the re-appointment of external auditors and their audit fees, after taking into consideration the independence and objectivity of the external auditors and the cost effectiveness of their audit, before the recommendation to the Board of Directors for approval.



INTERNAL AUDIT FUNCTION

The Company recognised that an internal audit function is essential to ensuring the effectiveness of the Group’s systems of internal control and is an integral part of the risk management process. The internal audit function for the Group has been outsourced to Audex Governance Sdn Bhd who conducts an independent review of the Group’s key processes and control system in place.

The internal audit activities have been carried out according to the internal audit plan that was approved by the Audit Committee. The Board had via the Audit Committee evaluated their effectiveness by reviewing the results of its works in Audit Committee meetings.

The internal audit function shall be independent of the activities or operation it audits and reports directly to the AC on the audit of the Group’s operating units, reviewing the units’ compliance to internal control procedures, highlighting weaknesses and making appropriate recommendations for improvement.

The Group had incurred a total amount of RM42,710.85 for the internal audit function during the financial year ended 31 December 2014.

This report is made in accordance with the resolution of the Board of Directors dated 13 April 2015.


Statement of Corporate Governance

The Board of Directors of UMS-Neiken Group Berhad (“the Company” or “UMSN”) is committed to cultivate a responsible organisation by instilling corporate conscience through meeting the Corporate Governance (“CG”) standards at all times.

This includes accountability and transparency which is observed throughout the Group as a fundamental part of building a resilient business and discharging its responsibilities to protect and enhance shareholder value and the financial performance of the Group.

The Board is pleased to report on the application by the Company and Group on the Principles set out in the Malaysian Code of Corporate Governance 2012 (“MCCG 2012”) having regard to the Recommendations under each Principle.

1.0 ESTABLISH CLEAR ROLES AND RESPONSIBILITIES

1.1 Clear functions of the Board and those delegated to Management

The Board is responsible for formulating and reviewing the strategic plans and key policies of the Company, and charting the course of the Group’s business operations whilst overseeing the Management’s performance, risk assessment and controls over business operations.

The Board delegates and confers some of its authorities and discretion on the Chairman, Executive Directors, and Management as well as on properly constituted Board Committees comprising mainly/exclusively Non-Executive Directors.

There is a clear division of responsibilities between the Chairman of the Board and the Managing Director (“MD”). The Chairman leads strategic planning at the Board level, while the Executive Director, led by the MD, is responsible for the implementation of the policies laid down and executive decision-making.

The role of Management is to support the Executive Director and implement the smooth general operations and financial business of the Company, in accordance with the delegated authority of the Board.

The Board Committees are made up of the Audit Committee (“AC”), Nomination Committee (“NC”), Remuneration Committee (“RC”) and Risk Management Committee (“RMC”); and are entrusted with specific responsibilities to oversee the Group’s affairs, with authority to act on behalf of the Board in accordance with their respective Terms of Reference. At each Board meeting, minutes of the Board Committee meetings are presented to keep the Board informed. The Chairman of the relevant Board Committees also reports to the Board on key issues deliberated by the Board Committees at their respective meetings.

In general, the Non-Executive Directors are independent of the Management with their roles to constructively steer and monitor the success of the Management in delivering the approved targets and business plans set by the Board. They have free and open contact with Management at all levels, and they engage with the external and internal auditors to address matters concerning Management and provide an independent judgement in the best interest of the Group.

Matters requiring the Board’s approval include the annual business plan and budget, capital management and investment policies, authority limits/levels, risk management policies, declaration of dividends, business continuity plan, issuance of new securities, business restructuring, expenditure above a certain limit, material acquisitions and disposition of assets.

1.2 Clear roles and responsibilities in discharging fiduciary and leadership functions

The Board has discharged its responsibilities in the best interests of the Company in the following:-

(a) Review and adopt the Company’s strategic plans

The Board has in place a strategy planning process, whereby the MD presents and proposes to the Board and the Management’s business plans for the ensuing year for the Board’s review and approval. The Board will deliberate both Management’s and its own perspectives, and challenge the Management’s views and assumptions to ensure the best outcome.


Statement of Corporate Governancecont’d

1. ESTABLISH CLEAR ROLES AND RESPONSIBILITIES cont’d

1.2 Clear roles and responsibilities in discharging fiduciary and leadership functions cont’d

(b) Oversee the conduct of the Company’s business

The MD is responsible for the day-to-day management of the business and operations of the Group in respect of both its regulatory and commercial functions. He is supported by the Management and the Group Accountant.

The Management’s performance, under the leadership of the MD, is assessed by the Board through monitoring of the adherence in delivering the approved targets and business plans against the performance of the Group.

(c) Identify principal risks and ensuring the implementation of appropriate internal controls and mitigation measures

The AC, through the internal audit function, advises the Board on areas of high risk faced by the Group and the adequacy of compliance and control throughout the organisation. The AC reviews the action plan implemented and makes relevant recommendations to the Board to manage risks.

(d) Succession Planning

The Board has entrusted the NC and RC with the responsibilities to review candidates for the Board and key management positions and to determine remuneration packages for these appointments, as well as to formulate nomination, selection, remuneration and succession policies for the Group.

(e) Oversee the development and implementation of a shareholder communications policy for the Company

The Company strongly believes that effective and timely communication is essential in maintaining good relations with the shareholders, investors and investment community.

In addition to the above, shareholders and investors can make inquiries about investor relations matters with designated management personnel directly responsible for investor relations matters via dedicated e-mail addresses available on the corporate website.

(f) Review the adequacy and integrity of management information and internal control system of the Company

The Board is ultimately responsible for the adequacy and integrity of the Company’s internal control system. Details pertaining to the Company’s internal control system and the reviews of its effectiveness are set out in the Statement on Risk Management and Internal Control of this Annual Report.

1.3 Ethical standards through Code of Conduct

The Board is guided by the Company’s Code of Conduct (“the Code”) for Directors and Employees in discharging its oversight role effectively. The Code requires all Directors to observe high ethical business standards, and to apply these values to all aspects of the Group’s business and professional practice and act in good faith in the best interests of the Group and its shareholders.

A summary of the Code has been published on the corporate website.

1.4 Strategies promoting sustainability

The Board shall endeavour to formalise the Company’s strategies on promoting sustainability and publish the same on the corporate website.



1. ESTABLISH CLEAR ROLES AND RESPONSIBILITIES cont’d

1.5 Access to information and advice

The Directors have individual and independent access to the advice and dedicated support services of the Company Secretaries in ensuring the effective functioning of the Board. The Directors may seek advice from Management on issues under their respective purview. The Directors may also interact directly with Management, or request further explanation, information or updates on any aspect of the Company’s operations or business concerns from them.

In addition, the Board may seek independent professional advice at the Company’s expense on specific issues to enable it to discharge its duties in relation to matters being deliberated.

1.6 Qualified and competent company secretaries

The Board is regularly updated and apprised by the Company Secretary on new regulation issued by the regulatory authorities. The Company Secretary also serves notice to the Directors and Principal Officers to notify them of closed periods for trading in UMSN shares.

The Company Secretary attends and ensures that all Board meetings are properly convened and that accurate and proper records of the proceedings and resolutions passed are taken and maintained in the statutory register of the Company.

The Company Secretary works closely with Management to ensure that there are timely and appropriate information flows within and to the Board and Board Committees.

1.7 Board Charter

In order to facilitate effective discharge of its duties, the Board is guided by the board charter which was adopted by the Board on 25 April 2013 on the need to safeguard the interests of the Group’s stakeholders. The board charter is also made publicly available on the corporate website.

The board charter serves to ensure that all Board members acting on the Group’s behalf are aware of their expanding roles and responsibilities. It sets out the strategic intent and specific responsibilities to be discharged by the Board members collectively and individually. It also regulates on how the Board conducts business in accordance with the CG principles.

2.0 STRENGTHEN COMPOSITION

2.1 NC

The NC was established on 27 April 2006 and comprises exclusively Independent Non-Executive Directors.

The NC is guided by specific terms of reference and the NC’s duties are as follows:

l To recommend candidates for all directorships to be filled by shareholders or the Board; l To recommend candidates to fill the seats on Board Committees; l To assess the contribution of each individual Director; l To review annually the Board structure, size, composition and the balance between Executive

Directors, Non-Executive Directors and Independent Directors to ensure that the Board has the appropriate mix of skills and experience including core competencies which Directors should bring to the Board and other qualities to function effectively and efficiently;

l To take the necessary steps to ensure that women candidates are sought as part of the Company’s recruitment exercise to facilitate an on-going implementation of its gender diversity policy;

l To review annually the independence of Independent Directors; l To ensure existence of an appropriate framework and succession plan for the Executive Director and

senior management of the Company; l To identify suitable orientation, educational and training programmes for continuous development of

Directors; l To establish and implement processes for assessing the effectiveness of the Board as a whole, the

Committees of the Board and assessing the contribution of each Director; and l To consider other matters as referred to the Committee by the Board.



2.0 STRENGTHEN COMPOSITION cont’d

2.2 Develop, maintain and review criteria for recruitment and annual assessment of Directors

Board appointment process

The NC is responsible for identifying and recommending suitable candidates for Board membership and also for assessing the performance of the Directors on an on-going basis. The Board will have the ultimate responsibility and final decision on the appointment. This process shall ensure that the Board membership accurately reflects the long-term strategic direction and needs of the Company while it determines the skills matrix needed to support the strategic direction and needs of the Company.

Management shall then engage broadly to develop a pool of interested potential candidates meeting the skills, expertise, personal qualities and diversity requirements for both the Board and the Committee appointments.

The NC evaluates and matches the criteria of the candidate, and will consider diversity, including gender, where appropriate, and recommends to the Board for appointment.

Consideration will be given to those individuals possessing the identified skill, talent and experience.

The NC will contact those persons identified to determine the interest in serving the Company. This communication will ensure that prospective Board members have clarity regarding the nominating process as well as Director/Board profiles, roles and responsibilities, expectations of time commitments and other information as required.

According to the Articles of Association of the Company, all Directors are required to submit themselves for re-election at intervals of not more than three (3) years. The Articles of Association also state that one-third (1/3) of the Board members shall retire from office at the Annual General Meeting (“AGM”) and shall be eligible for re-election at the same AGM.

The new Director(s) duly appointed by the Board are then recommended for re-election at the AGM.

The Company shall then provide orientation and on-going education to the Board.

In making the selection, the Board is assisted by the NC to consider the following aspects:

n Probity, personal integrity and reputation – the person must have the personal qualities such as honesty, integrity, diligence and independence of mind and fairness.

n Competence and capability – the person must have the necessary skills, ability and commitment to carry out the role.

Annual Assessment

The Board is tasked to review and evaluate its own performance and the performance of its Committees on an annual basis. The performance evaluation comprises a Board Assessment, an Individual Director Self-Assessment and an Assessment of Independence of Independent Directors.

The assessment of the Board is based on specific criteria, covering areas such as the Board structure, Board operations, roles and responsibilities of the Board, the Board Committees and the Chairman’s role and responsibilities.

For Individual Director Self-Assessment, the assessment criteria include contribution to interaction, quality of inputs, and understanding of role.

The results of the assessment would form the basis of the NC’s recommendation to the Board for the re-election of Directors at the next AGM.




2.2 Develop, maintain and review criteria for recruitment and annual assessment of Directors cont’d

Gender diversity policy

The Company currently has one (1) female director and it shall endeavour to maintain this gender diversity policy at all times in accordance with the MCCG 2012.

2.3 Remuneration Policies and Procedures

The RC and the Board ensure that the Company’s remuneration policy remains supportive of the Company’s corporate objectives and is aligned with the interest of shareholders, and that the remuneration packages of Directors and key Senior Management Officers are sufficiently attractive to attract and to retain persons of high calibre.

The RC is tasked to review annually the performance of the Executive Director and submits recommendations to the Board on specific adjustments in remuneration and/or reward payments that reflect their respective contributions for the year, and which depend on the performance of the Group, achievement of the goals and/or quantified organisational targets as well as strategic initiatives set at the beginning of each year.

. The Board as a whole determines the remuneration of Non-Executive Directors and recommends the same

for shareholders’ approval.

The remuneration package of the Executive Director consists of monthly salary, bonus and benefits-in-kind such as company car and the benefit of Directors and Officers Liability Insurance in respect of any liabilities arising from acts committed in their capacity as Directors and Officers of the Company. The Directors and principal officers are required to contribute jointly towards the premium of the said policy.

Details of the aggregate remuneration of Directors (including benefits-in-kind) for financial year 2014 are as follows:

Salary(RM)

Fees(RM)

Bonus(RM)

Benefitsin- kind

(RM)Total(RM)

Executive Directors 800,000 - 1,094,716 228,483 2,123,199

Non-Executive Directors - 103,000 - 15,000 118,000

Total 800,000 103,000 1,094,716 243,483 2,241,199




2.3 Remuneration Policies and Procedures cont’d

The number of Directors whose remuneration falls within the following bands is tabulated as below:

Range of Remuneration (RM) Executive Directors Non-Executive Directors

50,000 and below - 3

150,001 to 200,000 - -

200,001 to 250,000 - -

250,001 to 400,000 1 -

600,001 to 650,000 - -

650,001 to 700,000 - -

700,001 to 750,000 - -

850,001 to 900,000 - -

1,000,001 to 1,050,000 - -

1,050,001 to 1,250,000 - -

1,250,001 to 1,500,000 - -

1,500,001 to 1,750,000 - -

1,750,001 to 2,000,000 1 -

3.0 REINFORCE INDEPENDENCE 3.1 Annual Assessment of Independence

The Board, through the NC, shall assess the independence of Independent Directors annually. The criteria for assessing the independence of an Independent Director include the relationship between the Independent Director and the Company and his involvement in any significant transaction with the Company.

3.2 Tenure of Independent Directors

The Board has adopted a nine-year policy for Independent Non-Executive Directors. An Independent Director may continue to serve on the Board subject to the director’s re-designation as a Non-Independent Director. Otherwise, the Board will justify and seek shareholders’ approval at the AGM in the event it retains the director as an Independent Director.

The Independent Non-Executive Directors have served for a tenure of 9 years in the Company.

3.3 Shareholders’ approval for the Continuance Office as Independent Directors

The Board would seek shareholders’ approval at the AGM if an Independent Director who has served in that capacity for more than nine years shall remain as an Independent Director.

The NC will assess the independence of the Independent Director based on the assessment criteria developed by the NC, and recommended to the Board for recommendation to shareholders for approval. Justification for the Board’s recommendation would be provided to shareholders.



3.0 REINFORCE INDEPENDENCE cont’d

3.4 Separation of the Positions of the Chairman and the MD

Mr Cheng Wong is currently holding the roles of the Chairman and the MD. This is in recognition of Mr Cheng Wong’s vast knowledge of the business and his “hands-on” management practices which have enabled the Group’s expansion for both the domestic and foreign markets in its chosen industries. Mr Cheng Wong has the overall responsibility for the Group’s business operations, organisational effectiveness and the implementation of Board policies and decisions. Nevertheless, the ultimate responsibility for the final decision on all matters lies with the Board. As such, the Board is of the opinion that the roles of the Chairman and the MD need not be assigned to two separate individual directors of the Company at this juncture, as recommended by MCCG 2012.

3.5 Composition of the Board

The Board currently comprises five (5) members, of whom two (2) are Independent Non-Executive Directors, one (1) Non-Independent Non-Executive Director and two (2) Executive Directors including the Chairman. The two (2) Independent Non-Executive Directors fulfilled the criteria of independence as defined in the Main Market Listing Requirements. The Independent Non-Executive Directors and the Non-Independent Non-Executive Director do not participate in the day-to-day management of the Company and do not involve themselves in business transactions or relationships with the Company, in order not to compromise their objectivity. In staying clear of any potential conflict of interest, the Independent Non-Executive Directors as well as the Non-Independent Non-Executive Director remain in a position to fulfil their responsibility to provide check and balance to the Board.

Both the Independent Non-Executive Directors and Non-Independent Non-Executive Director are of the calibre necessary to provide an independent judgment on the issues of strategy, performance and resource allocation. They carry sufficient weight in Board decisions to ensure long-term interest of the shareholders, employees, customers and other stakeholders.

The five (5) members of the Board are persons of high calibre and integrity, and they possess the appropriate skills and provide a wealth of knowledge, experience and skills in the key areas of accountancy, business operations and development, finance and risk management, amongst others.

Jointly with the Group Accountant, the MD is accountable to the Board over the daily management and development of the Company.

The profile of each of the Member of the Board is presented on the pages 9 to 10 of this Annual Report.

4.0 FOSTER COMMITMENT

4.1 Time Commitment

The Board is satisfied with the level of time commitment given by the Directors towards fulfilling their roles and responsibilities as Directors of UMSN. This is evidenced by the attendance record of the Directors at Board Meetings, as set out in the table below:

Name of DirectorAttendance

(As at 31/12/2014)

Cheng Wong 5/5

Dee Kok Yong 4/5

Lim Peng @ Lim Pang Tun 5/5

Lee Kok Yong 5/5

Cheng Siow Chun 4/5



4.0 FOSTER COMMITMENT cont’d

4.1 Time Commitment cont’d

To ensure that the Directors have the time to focus and fulfil their roles and responsibilities effectively, the Directors must not hold directorships in more than five (5) public listed companies and shall notify the Chairman before accepting any new directorship.

To facilitate the Directors’ time planning, an annual meeting schedule is prepared and circulated at the beginning of every year, as well as the tentative closed periods for dealings in securities by Directors based on the targeted date of announcements of the Group’s quarterly results.

4.2 Training

All Directors had completed the Mandatory Accreditation Programme (“MAP”) as prescribed by Bursa Securities. The Company will continue to identify suitable training for the Directors to equip and update themselves with the necessary knowledge in discharging their duty and responsibilities as Directors.

The Directors are encouraged to attend briefing, conferences, forums, trade fairs (locally and internationally), seminars and training to keep abreast with the latest developments in the industry and to enhance their skills and knowledge.

During the financial year ended 31 December 2014, the Group continued to indicate its interest to keep up with the latest development in the laws and regulations, business environment, and corporate governance development. The workshop organized by Bursa Malaysia Berhad for the Board Chairman series provided such a platform for effective leadership of the Board.

5.0 UPHOLD INTEGRITY IN FINANCIAL REPORTING

5.1 Compliance with applicable financial reporting standards

The Board is committed to providing a balanced, clear and meaningful assessment of the financial performance and prospects of the Company via all disclosures and announcements made.

The Board is assisted by the AC to oversee and scrutinise the process and quality of the financial reporting which includes reviewing and monitoring the integrity of the financial statements and the appropriateness of the Company’s accounting policies to ensure accuracy, adequacy and completeness of the report, as well as in compliance with the relevant accounting standards.

5.2 Assessment of suitability and independence of external auditors

The AC is responsible for reviewing audit, recurring audit-related and non-audit services provided by the external auditors. These recurring audit-related and non-audit services comprise regulatory reviews and reporting, interim reviews, tax advisory and compliance services.

The terms of engagement for services provided by the external auditors are reviewed by the AC prior to submission to the Board for approval.

The AC has reviewed the provision of non-audit services by the external auditors during the year and concluded that the provision of these services did not compromise the external auditors’ independence and objectivity as the amount of the fees paid for these services was not significant when compared to the total fees paid to the external auditors.

Having satisfied itself with Messrs Crowe Horwath’s performance, the AC will recommend their re-appointment to the Board, upon which the shareholders’ approval will be sought at the AGM.



6.0 RECOGNISE AND MANAGE RISKS

6.1 Sound framework to manage risks

The Board oversees, reviews and monitors the operation, adequacy and effectiveness of the Group’s system of internal controls.

The AC oversees the risk management framework of the Group and advises the Board on areas of high risk faced by the Group and the adequacy of compliance and control throughout the organisation. The AC also reviews the action plan implemented and makes relevant recommendations to the Board to manage residual risks.

The Company continues to maintain and review its internal control procedures to ensure the protection of its assets and its shareholders’ investment.

6.2 Internal Audit Function

The Company has outsourced its internal audit function to a professional services firm namely Audex Governance Sdn Bhd to assist the AC in discharging its duties and responsibilities in respect of reviewing the adequacy and effectiveness of the Group’s risk management and internal control systems.

The Statement on Risk Management and Internal Control as included on page 25 and 26 of this Annual Report provides the overview of the internal control framework adopted by the Company during the financial year ended 31 December 2014.

7.0 ENSURE TIMELY AND HIGH QUALITY DISCLOSURE

7.1 Corporate Disclosure Policy and Procedures

The Board shall ensure that all communications to the public are timely, factual, accurate, complete, broadly disseminated and where necessary, filed with regulators in accordance with applicable laws.

The MD and the Group Accountant are responsible for determining the materiality of the information and ensuring timely, complete and accurate disclosure of material information to the investing public in accordance with securities laws and stock exchange rules and regulations, monitoring compliance with this policy and overseeing the disclosure controls and procedures.

Sufficient information would be provided to the Company Secretary for drafting of the necessary announcement.

The Board is mindful that information which is expected to be material must be announced immediately, and that the confidential information should be handled properly to avoid leakage and improper use of such information.

7.2 Leverage on information technology for effective dissemination of information

UMSN’s website provides all relevant corporate information and it is accessible by the public. The Company’s website includes all announcements made by UMSN as well as its financial results.

Through the Company’s website, the stakeholders are able to direct queries to the Company.



8.0 STRENGTHEN RELATIONSHIP BETWEEN COMPANY AND SHAREHOLDERS

8.1 Encourage shareholder participation at general meetings

In an effort to encourage greater shareholders’ participation at AGMs, the Board takes cognisance in serving longer than the required minimum notice period for AGMs, when possible. The Chairman shall ensure that the Board is accessible to shareholders and an open channel of communication is cultivated.

UMSN encloses the Annual Report and Notice of AGM with regards to, amongst others, details of the AGM, their entitlement to attend the AGM, the right to appoint proxy and also the qualification of proxy.

The Company allows a shareholder to appoint a proxy who may not be a member of the Company. If the proxy is not a member of the Company, he/she need not be an advocate, an approved company auditors or a person approved by the Registrar of Companies.

To further promote participation of members through proxies, which is in line with the MMLR, the Company had amended its Articles of Association to include explicitly the right of proxies to speak at general meetings.

8.2 Encourage poll voting

At the 10th AGM of the Company held on 6 June 2014, all resolutions put forth for shareholders’ approval at the meeting were voted on by show of hands.

The Chairman would ensure that shareholders were informed of their rights to demand a poll vote at the commencement of the AGM.

8.3 Effective communication and proactive engagement

At the 10th AGM, Directors were present in person to engage directly with, and be accountable to the shareholders for their stewardship of the Company. The Directors, Management and external auditors were in attendance to respond to the shareholders’ queries.

From the Company’s perspective, the AGM also serves as a forum for Directors and Management to engage with the shareholders personally to understand their needs and seek their feedback. The Board welcomes questions and feedback from shareholders during and at the end of shareholders’ meeting and ensures their queries are responded in a proper and systematic manner.

COMPLIANCE STATEMENT

The Board believes that the Company has in 2014 adopted the Principles and Recommendations of the MCCG 2012 in all material aspects, save as disclosed therein.

This statement is made in accordance with the resolution of the Board dated 13 April 2015.


Statement on Risk Management and Internal Control

INTRODUCTION

The Board of UMS-Neiken Group Berhad is pleased to present below the Statement on Risk Management and Internal Control which outlines the nature and scope of the risk management and internal controls of the Group, excluding associated companies, for the financial year ended 31 December 2014. This Statement has been prepared in accordance with Paragraph 15.26(b) of the Main Market Listing Requirements of Bursa Securities and as guided by the Statement on Risk Management and Internal Control: Guidelines for Directors of Listed Issuers (“the Guidelines”).

BOARD’S RESPONSIBILITY

The Board acknowledges its responsibility and re-affirms its commitment in maintaining sound systems of risk management and internal control to safeguard shareholders’ investments and the Group’s assets as well as reviewing the adequacy and effectiveness of these systems. In this respect, the responsibility of reviewing the adequacy and effectiveness of the systems of internal controls has been delegated to the Audit Committee, which is empowered by its terms of reference to seek assurance on the adequacy and effectiveness of the internal control system through reports it receives from independent reviews carried out by the internal audit function and management letters, if any, issued by the external auditors. Significant control matters are reported to the Board by the Audit Committee.

However, as there are inherent limitations in any system of risk management and internal control, such systems put into effect by Management can only manage rather than eliminate all risks that may impede the achievement of the Group’s business objectives. Therefore, the risk management and internal control systems can only provide reasonable and not absolute assurance against material misstatement, operational failure, fraud or loss.

RISK MANAGEMENT FRAMEWORK

On a day-to-day basis, respective Heads of Department are responsible for managing risks of their departments. Significant risks identified and the corresponding internal controls implemented are discussed at regular meetings with the Heads of Department, key management staff and the Group Managing Director. These significant risks and its latest update are also brought to the attention of the Board members at their scheduled meetings via the Risk Management Committee (“RMC”) which consisted of four key officers of the Group determined by the Board. The Committee is responsible to overview significant risks identified, measure and monitor risk at satisfactory level, at monthly meeting.

The abovementioned risk management practices of the Group serve as the on-going process used to identify, evaluate and manage significant risks for the financial year under review and up to the date of approval of this Statement. The Board shall re-evaluate the existing risk management practices, and where appropriate and necessary, revise such practices accordingly.

INTERNAL AUDIT FUNCTION

The internal audit function is outsourced to an independent professional firm which reports directly to the Audit Committee and assists the Board and the Audit Committee in providing independent assessment on the adequacy and effectiveness of the Group’s internal control system.

During the financial year ended 31 December 2014, the internal audit function carried out audit reviews according to the internal audit plan approved by the Audit Committee. The results of the audit reviews and the recommendations for improvement were presented to the Audit Committee at their quarterly meetings. In addition, follow-up visits were also conducted to ascertain the status of implementation of agreed management action plans. The results of the follow-up reviews were also reported to the Audit Committee. Although certain internal control weaknesses were identified, none of the weaknesses has resulted in any material losses or contingencies that would require additional disclosure in this annual report.

The total professional fees paid for the outsourcing of internal audit function for the year ended 31 December 2014 amounting to RM42,710.85.


Statement on Risk Management and Internal Controlcont’d

OTHER KEY FEATURES OF INTERNAL CONTROL

Other key features of the Group’s internal control are as follows:

• The Group maintains formal and structured line of reporting that includes the division of responsibilities anddelegation of authority. It sets out the roles and responsibilities, appropriate authority limit matrix, review and approval procedures within the various operational segments.

• Asetofdocumentedinternalpoliciesandproceduresinrelationtomattersonhumanresourceandadministrationmanagement, IT policy, inventory, sales & marketing, credit control management, Purchasing and ISO quality assurance, with respective authority limit matrix, and of which is subject to regular review and improvement, are properly communicated to various departments for their execution and monitoring.

• Financial resultsarereviewedbytheAuditCommitteeandtheBoardonaquarterlybasis.Anannualbudget isprepared to facilitate the monitoring of Group financial performance and the review of its actual performance against budget.

• Relatedpartytransactionpoliciesandproceduresgoverningtheidentification,evaluationandmonitoringofanytransaction related to any significant shareholder and director for compliance and disclosure purpose at best endeavor of management.

ADEQUACY AND EFFECTIVENESS OF THE GROUP’S RISK MANAGEMENT AND INTERNAL CONTROL SYSTEM

The Board has received assurance from the Managing Director, Executive Director and Group Accountant that the Group’s risk management and internal control system are operating adequately and effectively in all material aspects. It is of the view that the risk management and internal control system is satisfactory and no material internal control failures nor have any of the reported weaknesses resulted in material losses or contingencies during the financial year under review.

REVIEW OF THE STATEMENT BY EXTERNAL AUDITORS

In accordance with Paragraph 15.23 of the Main Market Listing Requirements of Bursa Securities, the external auditors have reviewed this Statement for inclusion in the Annual Report of the Group for the year ended 31 December 2014 and reported to the Board that nothing has come to their attention that caused them to believe that the Statement is inconsistent with their understanding of the process the Board has adopted in the review of the adequacy and integrity of internal controls of UMS-Neiken Group Berhad.

This Statement was approved by the Board of Directors on 13 April 2015.


Additional Compliance Information

1. UTILISATION OF PROCEEDS

The Company did not undertake any corporate proposal for fund raising during the financial year under review.

2. SHARE BUY-BACK

During the financial year ended 31 December 2014, the Company bought back 2,000 of its own shares for a total consideration of RM1,593.47. These shares are presently held as treasury shares. None of the shares purchased has been resold or cancelled during the financial year.

MonthNo. of Shares Repurchased Highest Price

(RM)Lowest Price

(RM)Average Price

(RM)

Total Consideration

Paid(RM)

April 1,000 0.740 0.740 0.740 769.23

December 1,000 0.795 0.795 0.795 824.24

3. EMPLOYEES’ SHARE OPTION SCHEME

The Company did not implement any employees’ share option scheme during the financial year under review.

4. OPTIONS, WARRANTS OR CONVERTIBLE SECURITIES

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

5. AMERICAN DEPOSITORY RECEIPT (ADR)/GLOBAL DEPOSITORY RECEIPT (GDR)

The Company did not sponsor any ADR/GDR Programme during the financial year under review.

6. SANCTIONS AND/OR PENALTIES IMPOSED

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

7. NON-AUDIT FEES

There were non-audit fees of RM11,000 paid to the external auditors by the Group for the financial year ended 31 December 2014.

8. VARIATION IN RESULTS

There were no variations between the audited results for the financial year ended 31 December 2014 and the unaudited results previously announced.

The Company did not issue any profit estimate, forecast or projection in any public documents during the financial year.

9. PROFIT GUARANTEE

There was no profit guarantee issued by the Company and its subsidiaries during the financial year under review.


Additional Compliance Informationcont’d

10. MATERIAL CONTRACTS

Other than the recurrent related party transactions of a revenue or trading nature as disclosed in paragraph 11 below, there were no material contracts subsisting at the end of financial year or entered into since the end of previous financial year by the Company and its subsidiaries which involved the interests of directors and major shareholders.

11. RECURRENT RELATED PARTY TRANSACTIONS

The Company obtained the shareholders’ mandate for the Company and/or its subsidiaries to enter into recurrent related party transactions of a revenue and trading nature (“RRPT”) in their ordinary course of business at the Annual General Meeting held on 6 June 2014.

The Company will be seeking the shareholders’ approval for renewal of the shareholders’ mandate for the existing RRPT at the forthcoming Annual General Meeting to be held on 27 May 2015. The details of the new mandate to be sought are furnished in the Circular to Shareholders dispatched together with this Annual Report.

In accordance with Practice Note 12 of the Main Market Listing Requirements of Bursa Malaysia Securities

Berhad, the details of the RRPT conducted during the financial year ended 31 December 2014 pursuant to the shareholders’ mandate are as follows:

Parties transacting with the UMSN Group

Transacting company within the UMSN Group

Nature of transactions Related parties

Actual value of transactions for the financial year ended 31 December 2014

(RM)

UMSC (Provider)

UMSE(Recipient)

Purchase of copper wires and cables

Cheng Wongl A director and deemed

major shareholder of UMSN l A director of UMSCl Deemed interest in UMSC

through UMSH’s direct equity interest of 74.39% in UMSC

Ip Tai Hoil A deemed major

shareholder of UMSNl A shareholder of UMSC with

a direct equity interest of 5.83%

2,953,520

UMSC (Recipient)

UMSE(Provider)

Sales of electrical wiring accessories

Cheng Wongl A director and deemed

major shareholder of UMSN l A director of UMSCl Deemed interest in UMSC

through UMSH’s direct equity interest of 74.39% in UMSC

Ip Tai Hoil A deemed major shareholder

of UMSNl A shareholder of UMSC with

a direct equity interest of 5.83%

22,394



11. RECURRENT RELATED PARTY TRANSACTIONS cont’d





(RM)

Ming Kee (Provider)

HPL(Recipient)

Rental by HPL of office premises with a built-up area of approximately 1,600 square feet located at Flat A & B, Fook Shing Industrial Building, 1A Yuk Yat Street, Tokwawan, Kowloon, Hong Kong of HKD12,500 per month

Ip Tai Hoi

l A deemed major shareholder of UMSN

l A shareholder of Ming Kee with a direct interest of 87.50%

l Deemed interest in Ming Kee by virtue of the direct shareholding of 12.50% held by his wife in Ming Kee

-

Ming Kee (Provider)

HPL(Recipient)

Provision of business consultancy services to HPL

Ip Tai Hoi




-

Ming Kee (Recipient)

HPL(Provider)

Sale of power cord sets by HPL


shareholder of UMSNl A shareholder of Ming Kee

with a direct interest of 87.50%


-

Ming Kee (Provider)

HPL(Recipient)

Purchase of fuse links, screws and inserts for power cord sets by HPL


shareholder of UMSNl A shareholder of Ming Kee

with a direct interest of 87.50%


-








(RM)

HPE (Provider)

HPL(Recipient)

Purchase of cables by HPL


shareholder of UMSNl Deemed interest in HPE by

virtue of his 100% equity interest in High Project Holding Ltd which wholly owns HPE

-

HPE (Recipient)

HPL(Provider)



shareholder of UMSNl Deemed interest in HPE by

virtue of his 100% equity interest in High Project Holding Ltd which wholly owns HPE

-

GTL(Provider)

HPL(Recipient)

Purchase of fuse by HPL


shareholder of UMSNl Deemed interest in GTL

by virtue of his direct shareholdings of 36.75% equity interest in Group Talent Ltd

-

SE(Recipient)

HPL(Provider)


Ip Tai Hoi


l Deemed interest in SE by virtue of his direct shareholding of 70% equity interest in Supeready Elec (Fenghua) Co Ltd

-

Ming Kee(Provider)

UMSE(Recipient)

Purchase of hollow rivet

Ip Tai Hoi




108,337








(RM)

HPE(Provider)

UMSE(Recipient)

Purchase of cables, trailing socket

Ip Tai Hoi


l Deemed interest in HPE by virtue of his 100% equity interest in High Project Holding Ltd which wholly owns HPE

245,678

UMSC(Provider)

UMSUSS(Recipient)

Purchase of flexible cord

Cheng Wong

l A director and deemed major shareholder of UMSN

l A director of UMSC

l Deemed interest in UMSC through UMSH’s direct equity interest of 74.39% in UMSC

Ip Tai Hoi


l A shareholder of UMSC with a direct equity interest of 5.83%

-

UMSUSS(Provider)

UMSC(Recipient)

Sales of home appliances products

Cheng Wong




Ip Tai Hoi



-








(RM)

Ming Kee(Provider)

UMSI(Recipient)

Purchase of cables reel

Ip Tai Hoi




-

UMSC(Provider)

UMSI(Recipient)

Purchase of cables Cheng Wong




Ip Tai Hoi



1,168,875

UMSI(Provider )

UMSC (Recipient)

Sale of all types of electrical products

Cheng Wong




Ip Tai Hoi



-








(RM)

UMSE(Provider)

CICO(Recipient)

Sales of machinery, equipment

Cheng Wong


l A director of CICO

Ip Tai Hoi


l A director of CICO

l Direct equity interest of 100% in CICO

-

UMSC(Provider)

NSVN(Recipient)

Purchase of cables Cheng Wong




Ip Tai Hoi



126,468

Ming Kee(Provider )

NSVN(Recipient)

Purchase of hollow rivet

Ip Tai Hoi




-

Abbreviations

CICO : CICO Electrical Industries Sdn Bhd GTL : Group Talent Limited HPE : High Project Electric Wire & Cables Manufactory (Fenghua) Limited HPL : High Project Limited Ming Kee : Ming Kee Manufactory Ltd SE : Supeready Elec (Fenghua) Co Limited UMSC : United MS Cables Mfg. Sdn Bhd UMSE : United MS Electrical Mfg. (M) Sdn Bhd


Directors’ Responsibility Statementin respect of the Financial Statements

The Directors are required to prepare financial statements for each financial year which have been made out in accordance with the applicable approved accounting standards and give a true and fair view of the state of affairs of the Group and the Company at the end of the financial year and of their results and cash flows for that financial year.

In preparing the financial statements of the Company and of the Group for the financial year ended 31 December 2014, the Directors have:

l selected suitable accounting policies and applied them consistently; l made judgments and estimates that are reasonable and prudent; l ensured that all applicable accounting standards have been followed; and l prepared financial statements on the going concern basis.

The Directors are responsible to ensure that the Group and the Company keep accounting records which disclose with reasonable accuracy of the financial position of the Group and the Company which enable them to ensure that the financial statements comply with the Companies Act, 1965.

The Directors are also responsible 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.

Directors’ Report

Statement by Directors

Statutory Declaration

Independent Auditors‘ Report

Statements of Financial Position

Statements Of Profit or Loss and Other Comprehensive Income

Statements of Changes in Equity

Statements of Cash Flows

Notes to the Financial Statements

36

41

41

42

44

46

48

50

52

finan

cial s

tate

men

ts


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 2014.

PRINCIPAL ACTIVITIES

The Company is principally engaged in the business of investment holding. The principal activities of the subsidiaries are set out in Note 6 to the financial statements. There have been no significant changes in the nature of these activities during the financial year.

RESULTS

The Group The Company

RM’000 RM’000

Profit after taxation for the financial year 9,122 2,027

Attributable to:-

Owners of the Company 9,122 2,027

DIVIDENDS

Since the end of the previous financial year, the Company paid a single tier interim dividend of 2.5 sen per ordinary share amounting to approximately RM1,965,000 as declared in the directors’ report of the previous financial year.

On 26 February 2015, the directors declared a single tier interim dividend of 2.5 sen per ordinary share amounting to approximately RM1,965,000 in respect of the financial year ended 31 December 2014. The financial statements for the financial year ended 31 December 2014 do not reflect this declared dividend and such dividend will be accounted for as a liability in the financial year ending 31 December 2015.

RESERVES AND PROVISIONS

All material transfers to or from reserves or provisions during the financial year are disclosed in the financial statements.

ISSUES OF SHARES AND DEBENTURES

During the financial year:-

(a) there were no changes in the authorised and issued and paid-up share capital of the Company; and

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

TREASURY SHARES

The details of the treasury shares purchased and retained by the Company during the financial year are disclosed in Note 24 to the financial statements.

Directors’ Report


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 that adequate allowance had been made for impairment losses on receivables.

At the date of this report, the directors are not aware of any circumstances that would require the further writing off of bad debts, or the additional 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.

At the date of this report, the directors are not aware of any circumstances which would render the values attributed to the current assets in the financial statements misleading.

VALUATION METHODS

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

CONTINGENT AND OTHER LIABILITIES

The contingent liability is disclosed in Note 45 to the financial statements. At the date of this report, there does not exist:-

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

(b) 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

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

Directors’ Reportcont’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.

HOLDING COMPANIES

The immediate and ultimate holding companies are United MS Holdings Sdn. Bhd. and Chengco Enterprise Sdn. Bhd., respectively. Both the aforesaid holding companies are incorporated in Malaysia.

DIRECTORS

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

CHENG WONG DEE KOK YONG LIM PENG @ LIM PANG TUN LEE KOK YONG CHENG SIOW CHUN

DIRECTORS’ INTERESTS

According to the register of directors’ shareholdings, the interests of directors holding office at the end of the financial year 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 1.1.2014 Bought Sold At 31.12.2014

Direct Interest In the Company

Dee Kok Yong 37,000 - - 37,000

Indirect Interests In the Company

Cheng Wong * 40,025,520 - - 40,025,520

Cheng Wong ^ 28,000 - - 28,000

* - Deemed interest by virtue of his shareholding in the immediate and ultimate holding companies.^ - Deemed interest by virtue of the shares held by his daughter pursuant to Section 134(12)(c) of the Companies Act 1965.



DIRECTORS’ INTERESTS (cont’d)


At 1.1.2014 Bought Sold At 31.12.2014

The Immediate Holding Company,United MS Holdings Sdn. Bhd.

Ordinary Shares

Cheng Wong

- Direct interest 1,800,374 - - 1,800,374

- Indirect interest 9,836,832 - - 9,836,832

Number of Preference Shares of RM0.10 Each

At 1.1.2014 Bought Sold At 31.12.2014

The Immediate Holding Company,United MS Holdings Sdn. Bhd.

Preference Shares

Cheng Wong

- Direct interest 1,800,641 - - 1,800,641

- Indirect interest 9,739,963 - - 9,739,963


At 1.1.2014 Bought Sold At 31.12.2014

The Ultimate Holding Company, Chengco Enterprise Sdn. Bhd.

Ordinary Shares

Cheng Wong

- Direct interest 2,088,000 - - 2,088,000

By virtue of his interests in shares in the holding companies and in the Company, Cheng Wong is deemed to have interests in shares in the subsidiaries to the extent of the Company’s interests, in accordance with Section 6A of the Companies Act 1965 in Malaysia.

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



DIRECTORS’ BENEFITS

Since the end of the previous financial year, no director has received or become entitled to receive any benefit (other than a benefit included in the aggregate amount of emoluments received or due and receivable by 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 certain directors have substantial financial interests as disclosed in Note 42 to the financial statements.

Neither during nor at the end of the financial year was the Group or the Company a party to any arrangements whose object is to enable the directors to acquire benefits by means of the acquisition of shares in or debentures of the Company or any other body corporate.

SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR

The significant events during the financial year are disclosed in Note 48 to the financial statements.

AUDITORS

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

Signed in accordance with a resolution of the directors dated 13 April 2015

Cheng Wong Dee Kok Yong



We, Cheng Wong and Dee Kok Yong, being two of the directors of UMS-Neiken Group Berhad, state that, in the opinion of the directors, the financial statements set out on pages 44 to 105 are drawn up in accordance Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act 1965 in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company at 31 December 2014 and of their financial performance and cash flows for the financial year ended on that date.

The supplementary information set out in Note 49, which is not part of the financial statements, is prepared in all material respects, in accordance with Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants and the directive of Bursa Malaysia Securities Berhad.

Signed in accordance with a resolution of the directors dated 13 April 2015

Cheng Wong Dee Kok Yong

I, Cheng Wong, I/C No. 500703-10-5847, being the director primarily responsible for the financial management of UMS-Neiken Group Berhad, do solemnly and sincerely declare that the financial statements set out on pages 44 to 105 are, to the best of my knowledge and belief, correct, and I make this solemn declaration conscientiously believing the same to be true and by virtue of the provisions of the Statutory Declarations Act 1960.

Subscribed and solemnly declared byCheng Wong, I/C No. 500703-10-5847,at Kuala Lumpur in the Federal Territory on this 13 April 2015

Cheng Wong

Before me

Datin Hajah Raihela WanchikW-275Commissioner of Oath

Statement by Directors

Statutory Declaration


Report on the Financial Statements

We have audited the financial statements of UMS-Neiken Group Berhad, which comprise the statements of financial position as at 31 December 2014 of the Group and of the Company, and the statements of profit or loss and other comprehensive income, statements of changes in equity and statements of cash flows of the Group and of the Company for the financial year then ended, and a summary of significant accounting policies and other explanatory information, as set out on pages 44 to 105.

Directors’ Responsibility for the Financial Statements

The directors of the Company are responsible for the preparation of financial statements so as to give a true and fair view in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act 1965 in Malaysia. The directors are also responsible for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with approved standards on auditing in Malaysia. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgement, including the assessment of risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity’s preparation financial statements and that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the financial statements give a true and fair view of the financial position of the Group and of the Company as of 31 December 2014 and of their financial performance and cash flows for the financial year then ended in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act 1965 in Malaysia.

Report on Other Legal and Regulatory Requirements

In accordance with the requirements of the Companies Act 1965 in Malaysia, we also report the following:-

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

(b) We have considered the financial statements and the auditors’ reports of all the subsidiaries of which we have not acted as auditors, which are indicated in Note 6 to the financial statements.

(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 explanations required by us for those purposes.

(d) The audit reports on the financial statements of the subsidiaries did not contain any qualification or any adverse comment made under Section 174(3) of the Act.

Independent Auditors’ Reportto the Members of UMS-Neiken Group Berhad(Incorporated in Malaysia) Company No: 650473 - V


Other Reporting Requirements

The supplementary information set out in Note 49 on page 105 is disclosed to meet the requirement of Bursa Malaysia Securities Berhad and is not part of the financial statements. The directors are responsible for the preparation of the supplementary information in accordance with Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants (“MIA Guidance”) and the directive of Bursa Malaysia Securities Berhad. In our opinion, the supplementary information is prepared, in all material respects, in accordance with the MIA Guidance and the directive of Bursa Malaysia Securities Berhad.

Other Matters

This report is made solely to the members of the Company, as a body, in accordance with Section 174 of the Companies Act 1965 in Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of this report.

Crowe Horwath Chong Tuck WaiFirm No: AF 1018 Approval No : 3023/03/17 (J)Chartered Accountants Chartered Accountant

13 April 2015

Kuala Lumpur

Independent Auditors’ Reportto the Members of UMS-Neiken Group Berhad

(Incorporated in Malaysia) Company No: 650473 - Vcont’d



2014 2013 2014 2013

Note RM’000 RM’000 RM’000 RM’000

ASSETS

NON-CURRENT ASSETS

Investments in subsidiaries 6 - - 28,831 29,321

Investments in associates 7 2,809 2,360 - -

Property, plant and equipment 8 20,714 23,850 - -

Investment property 9 2,276 2,318 - -

Development expenditure 10 - - - -

Prepaid lease payments 11 351 345 - -

Amount owing by a subsidiary 12 - - 6,376 6,376

Deferred tax assets 13 101 176 - -

Other investment 14 - 3 - -

26,251 29,052 35,207 35,697

CURRENT ASSETS

Inventories 15 17,569 15,377 - -

Trade receivables 16 18,418 18,448 - -

Other receivables, deposits and prepayments 17 8,267 1,538 - -

Amount owing by an associate 18 2,776 2,916 - -

Amount owing by related parties 19 1 - - -

Tax recoverable 54 80 - -

Dividend receivable - - 4,800 4,300

Deposits with licensed banks 20 10,490 8,201 6,846 4,245

Cash and bank balances 5,259 4,014 33 40

62,834 50,574 11,679 8,585

Non-current assets classified as held for sale 21 - - - 4,569

Assets of disposal group classified as held for sale 22 - 8,870 - -

62,834 59,444 11,679 13,154

TOTAL ASSETS 89,085 88,496 46,886 48,851

Statements of Financial Positionat 31 December 2014

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



2014 2013 2014 2013

Note RM’000 RM’000 RM’000 RM’000

EQUITY AND LIABILITIES

EQUITY

Share capital 23 40,000 40,000 40,000 40,000

Treasury shares 24 (510) (508) (510) (508)

Reserves 25 32,267 24,055 5,925 5,863

TOTAL EQUITY 71,757 63,547 45,415 45,355

NON-CURRENT LIABILITIES

Term loan 26 7,638 8,087 - -

Deferred tax liabilities 27 1,102 1,102 - -

8,740 9,189 - -

CURRENT LIABILITIES

Trade payables 28 2,042 2,442 - -

Other payables and accruals 29 3,488 5,210 26 2,074

Amount owing to a subsidiary 12 - - 1,308 1,284

Amount owing to a related party 19 675 165 - -

Amount owing to directors 30 321 273 118 118

Short-term borrowings 31 1,309 3,723 - -

Provision for taxation 753 613 19 20

8,588 12,426 1,471 3,496

Liabilities of disposal group classified as held for sale 22 - 3,334 - -

8,588 15,760 1,471 3,496

TOTAL LIABILITIES 17,328 24,949 1,471 3,496

TOTAL EQUITY AND LIABILTIES 89,085 88,496 46,886 48,851

Statements of Financial Positionat 31 December 2014

cont’d




2014 2013 2014 2013

Note RM’000 RM’000 RM’000 RM’000

CONTINUING OPERATIONS

REVENUE 33 62,000 61,987 2,500 4,300

COST OF SALES (44,006) (44,963) - -

GROSS PROFIT 17,994 17,024 2,500 4,300

OTHER INCOME 4,717 1,383 448 294

22,711 18,407 2,948 4,594

SELLING AND DISTRIBUTION EXPENSES (1,497) (1,706) - -

ADMINISTRATIVE EXPENSES (6,867) (6,488) (315) (422)

OTHER EXPENSES (1,971) (1,907) (555) (2,496)

FINANCE COSTS (514) (423) - -

SHARE OF RESULTS IN ASSOCIATE, NET OF TAX 390 425 - -

PROFIT BEFORE TAXATION 34 12,252 8,308 2,078 1,676

INCOME TAX EXPENSE 35 (3,130) (2,508) (51) (33)

PROFIT AFTER TAXATION FROM CONTINUING OPERATIONS 9,122 5,800 2,027 1,643

DISCONTINUED OPERATIONS

LOSS AFTER TAXATION FROM DISCONTINUED OPERATIONS 36 - (449) - -

PROFIT AFTER TAXATION 9,122 5,351 2,027 1,643

OTHER COMPREHENSIVE INCOME

Items that may be reclassified subsequently to profit or loss

- Foreign currency translation differences 83 86 - -

- Foreign currency translation differencesfrom discontinued operations - 439 - -

- Foreign currency translation differencesreclassification to profit or loss on disposal of subsidiaries 913 - - -

- Share of associate’s foreign currency translation differences 59 - - -

TOTAL COMPREHENSIVE INCOME 10,177 5,876 2,027 1,643

Statements of Profit or Loss and Other Comprehensive Incomefor the financial year ended 31 December 2014




2014 2013 2014 2013

Note RM’000 RM’000 RM’000 RM’000

PROFIT AFTER TAXATION ATTRIBUTABLE TO:-

Owners of the Company 9,122 5,351 2,027 1,643

TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO:-

Owners of the Company 10,177 5,876 2,027 1,643

EARNINGS/(LOSS) PER SHARE (SEN)

Basic: 37

- continuing operations 11.6 7.4

- discontinued operations - (0.6)

Diluted:

- continuing operationsNot

ApplicableNot

Applicable

- discontinued operationsNot

ApplicableNot

Applicable

Statements of Profit or Loss and Other Comprehensive Income

for the financial year ended 31 December 2014cont’d



Non-Distributable Distributable

NoteShare

CapitalTreasury

SharesShare

Premium

ForeignCurrency

TranslationReserve

RetainedProfits Total

The Group RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Balance at 1.1.2013 40,000 (487) 1,531 (2,261) 20,482 59,265

Profit after taxation for the financial year - - - - 5,351 5,351

Other comprehensive expense for the financial year:

- foreign currency translation differences - - - 525 - 525

Total comprehensive income for the financial year - - - 525 5,351 5,876

Contributions by and distributions to owners of the Company:

- purchase of treasury shares - (21) - - - (21)

- dividend 38 - - - - (1,573) (1,573)

Balance at 31.12.2013/1.1.2014 40,000 (508) 1,531 (1,736) 24,260 63,547

Profit after taxation for the financial year - - - - 9,122 9,122

Other comprehensive income for the financial year:

Share of association’s other comprehensive income - - - 59 - 59

- foreign currency translation differences - - - 996 - 996

Total comprehensive income for the financial year - - - 1,055 9,122 10,177


- purchase of treasury shares 24 - (2) - - - (2)

- dividend 38 - - - - (1,965) (1,965)

Balance at 31.12.2014 40,000 (510) 1,531 (681) 31,417 71,757


Statements of Changes in Equityfor the financial year ended 31 December 2014


Non-Distributable Distributable

Share Treasury Share Retained

Note Capital Shares Premium Profits Total

The Company RM’000 RM’000 RM’000 RM’000 RM’000

Balance at 1.1.2013 40,000 (487) 1,531 4,262 45,306

Profit after taxation/Total comprehensive income for the financial year - - - 1,643 1,643


- purchase of treasury shares - (21) - - (21)

- dividend 38 - - - (1,573) (1,573)

Balance at 31.12.2013/ 1.1.2014 40,000 (508) 1,531 4,332 45,355

Profit after taxation/Total comprehensive income for the financial year - - - 2,027 2,027


- purchase of treasury shares 24 - (2) - - (2)

- dividend 38 - - - (1,965) (1,965)

Balance at 31.12.2014 40,000 (510) 1,531 4,394 45,415

Statements of Changes in Equityfor the financial year ended 31 December 2014

cont’d




2014 2013 2014 2013

RM’000 RM’000 RM’000 RM’000

CASH FLOWS FROM/(FOR) OPERATING ACTIVITIES

Profit/(Loss) before taxation:

- continuing operations 12,252 8,308 2,078 1,676

- discontinued operations - (538) - -

12,252 7,770 2,078 1,676

Adjustments for:-

Allowance for impairment losses on receivables 250 296 - -

Amortisation of prepaid lease payments 11 11 - -

Bad debts written off - 464 - -

Depreciation of investment property 42 - - -

Depreciation of property, plant and equipment 1,417 1,467 - -

Deposits written off 41 - - -

Impairment losses on:

- property, plant and equipment 40 16 - -

- investment in subsidiaries - - 490 2,496

Interest expense 514 418 - -

Inventories written down 293 196 - -

Inventories written off - 364 - -

Dividend income from subsidiaries - - (2,500) (4,300)

Loss on disposal of subsidiaries 1,032 - 65 -

Gain on disposal of plant and equipment (2,555) (155) - -

Unrealised gain on foreign exchange (964) (564) - -

Interest income (413) (265) (448) (294)

Share of results in associate (390) (425) - -

Reversal of:

- inventories written down (325) (152) - -

- allowance for impairment losses on receivables (342) (30) - -

Operating profit/(loss) before working capital changes 10,903 9,411 (315) (422)

Increase in inventories (2,160) (1,101) - -

(Increase)/Decrease in trade and other receivables (4,884) 1,478 - -

(Decrease)/Increase in trade and other payables (2,113) 3,476 (2,048) 2,054

Decrease/(Increase) in amount owing by an associate 292 (109) - -

(Increase)/Decrease in amount owing by related parties (1) 140 - -

Increase in amount owing to related parties 510 111 - -

CASH FROM/(FOR) OPERATIONS/BALANCE CARRIED FORWARD 2,547 13,406 (2,363) 1,632

Statements of Cash Flowsfor the financial year ended 31 December 2014




2014 2013 2014 2013

Note RM’000 RM’000 RM’000 RM’000

CASH FROM/(FOR) OPERATIONS/ BALANCE BROUGHT FORWARD 2,547 13,406 (2,363) 1,632

Interest paid (514) (418) - -

Income tax paid (2,889) (2,493) (52) (37)

NET CASH FLOW (FOR)/FROM OPERATING ACTIVITIES (856) 10,495 (2,415) 1,595

CASH FLOWS FROM/(FOR) INVESTING ACTIVITIES

Purchase of property, plant and equipment 39 (1,488) (5,087) - -

Purchase of investment property - (2,318) - -Proceeds from disposal of plant and

equipment 5,790 519 - -Proceeds from disposal of subsidiaries 22 2,574 - 4,504 -Proceeds from disposal of unit trust

investment 3 501 - -Treasury shares acquired (2) (21) (2) (21)Interest received 413 265 448 294Advances to an associate (152) (1,442) - -

Dividends received - - 2,000 1,350

Placement of fixed deposits pledged (51) (355) - -

NET CASH FROM/(FOR) INVESTING ACTIVITIES 7,087 (7,938) 6,950 1,623

CASH FLOWS FOR FINANCING ACTIVITIES

Dividend paid (1,965) (1,573) (1,965) (1,573)

Advances from a subsidiary - - 24 432

Advances/(Repayment) from directors 48 (105) - (3)

Repayment of hire purchase obligations (133) (35) - -

Repayment of term loan (429) (274) - -

Net (repayment)/advances of bankers’ acceptances (2,386) 256 - -

NET CASH FOR FINANCING ACTIVITIES (4,865) (1,731) (1,941) (1,144)

NET INCREASE IN CASH AND CASH EQUIVALENTS 1,366 826 2,594 2,074

EFFECTS OF FOREIGN EXCHANGE TRANSLATION 102 (74) - -

CASH AND CASH EQUIVALENTS AT BEGINNING OF THE FINANCIAL YEAR 13,105 12,353 4,285 2,211

CASH AND CASH EQUIVALENTS AT END OF THE FINANCIAL YEAR 40 14,573 13,105 6,879 4,285

Statements of Cash Flowsfor the financial year ended 31 December 2014

cont’d


UMS-NEIKEN GROUP BERHAD (Company No. 650473-V) Annual Report 2014UMS-NEIKEN GROUP BERHAD (Company No. 650473-V) Annual Report 201452

Notes to the Financial Statementsfor the financial year ended 31 December 2014

1. GENERAL INFORMATION

The Company is a public company limited by shares and is incorporated under the Companies Act 1965 in Malaysia. The domicile of the Company is Malaysia. The registered office and principal place of business are as follows:-

Registered office : 10th Floor Menara Hap Seng, No. 1 & 3, Jalan P. Ramlee, 50250 Kuala Lumpur.

Principal place of business : Lot 5 Batu 17 1/2, Jalan Ipoh, Rawang Industrial Estate,

48000 Rawang, Selangor Darul Ehsan.

The financial statements were authorised for issue by the Board of Directors in accordance with a resolution of the directors dated 13 April 2015.

2. PRINCIPAL ACTIVITIES

The Company is principally engaged in the business of investment holding. The principal activities of the subsidiaries are set out in Note 6 to the financial statements. There have been no significant changes in the nature of these activities during the financial year.

3. HOLDING COMPANIES

The immediate and ultimate holding companies are United MS Holdings Sdn. Bhd. and Chengco Enterprise Sdn. Bhd., respectively. Both the aforesaid holding companies are incorporated in Malaysia.

4. 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 in compliance with Malaysian Financial Reporting Standards (“MFRSs”), International Financial Reporting Standards and the requirements of the Companies Act 1965 in Malaysia.

4.1 During the current financial year, the Group has adopted the following new accounting standards and interpretations (including the consequential amendments, if any):-

MFRSs and IC Interpretations (Including The Consequential Amendments)

Amendments to MFRS 10, MFRS 12 and MFRS 127 (2011): Investment Entities

Amendments to MFRS 132: Offsetting Financial Assets and Financial Liabilities

Amendments to MFRS 136: Recoverable Amount Disclosures for Non-financial Assets

Amendments to MFRS 139: Novation of Derivatives and Continuation of Hedge Accounting

IC Interpretation 21 Levies

The adoption of the above accounting standards and interpretations (including the consequential amendments) did not have any material impact on the Group’s financial statements.



cont’d


4. BASIS OF PREPARATION (cont’d)

4.2 The Group has not applied in advance the following accounting standards and interpretations (including the consequential amendments, if any) that have been issued by the Malaysian Accounting Standards Board (MASB) but are not yet effective for the current financial year:-

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

MFRS 9 Financial Instruments (IFRS 9 issued by IASB in July 2014) 1 January 2018

MFRS 15 Revenue from Contracts with Customers 1 January 2017

Amendments to MFRS 10 and MFRS 128 (2011): Sale or Contribution of Assets between an Investor and its Associate or Joint Venture

1 January 2016

Amendments to MFRS 11 : Accounting for Acquisitions of Interests in Joint Operations 1 January 2016

Amendments to MFRS 10, MFRS 12 and MFRS 128 (2011): Investment Entities – Applying the Consolidation Exception

1 January 2016

Amendments to MFRS 101: Presentation of Financial Statements – Disclosure Initiative 1 January 2016

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

1 January 2016

Amendments to MFRS 116 and MFRS 141: Agriculture – Bearer Plants 1 January 2016

Amendments to MFRS 119: Defined Benefit Plans – Employee Contributions 1 July 2014

Amendments to MFRS 127 (2011): Equity Method in Separate Financial Statements 1 January 2016

Annual Improvements to MFRSs 2010 – 2013 Cycle 1 July 2014

Annual Improvements to MFRSs 2011 – 2014 Cycle 1 July 2014

Annual Improvements to MFRSs 2012 – 2014 Cycle 1 January 2016

The above accounting standards and interpretations (including the consequential amendments) are not relevant to the Group’s operations except as follows:-

MFRS 9 (IFRS 9 issued by IASB in July 2014) replaces the existing guidance in MFRS 139 and introduces a revised guidance on the classification and measurement of financial instruments, including a single forward-looking ‘expected loss’ impairment model for calculating impairment on financial assets, and a new approach to hedge accounting. Under this MFRS 9, the classification of financial assets is driven by cash flow characteristics and the business model in which a financial asset is held. Therefore, it is expected that the Group’s investments in unquoted shares that are currently stated at cost less accumulated impairment losses will be measured at fair value through other comprehensive income upon the adoption of MFRS 9. There will be no financial impact on the financial statements of the Group upon its initial application but may impact its future disclosure.

5. SIGNIFICANT ACCOUNTING POLICIES

5.1 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS

Estimates and judgements are continually evaluated by the directors and management are based on 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:-

(a) Depreciation of Property, Plant and Equipment

The estimates for the residual values, useful lives and related depreciation charges for the property, plant and equipment are based on commercial factors which could change significantly as a result of technical innovations and competitors’ actions in response to the market conditions.


Notes to the Financial Statementsfor the financial year ended 31 December 2014cont’d

5. SIGNIFICANT ACCOUNTING POLICIES (cont’d)

5.1 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (cont’d)

(a) Depreciation of Property, Plant and Equipment (cont’d)

The Group anticipates that the residual values of its property, plant and equipment will be insignificant. As a result, residual values are not being taken into consideration for the computation of 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.

(b) 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.

(c) Impairment of Non-Financial Assets

When the recoverable amount of an asset is determined based on the estimate of the value-in-use of the cash-generating unit to which the asset is allocated, the management is required to make 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.

(d) Classification between Investment Properties and Owner-occupied Properties

The Group determines whether a property qualifies as an investment property, and has developed a criteria in making that judgement. Investment property is a property held to earn rentals or for capital appreciation or both. Therefore, the Group considers whether a property generates cash flows largely independent of the other assets held by the Group.

Some properties comprise a portion that is held to earn rentals or for capital appreciation and another portion that is held for use in the production or supply of goods or services or for administrative purposes. If these portions could be sold separately (or leased out separately under a finance lease), the Group accounts for the portions separately. If the portions could not be sold separately, the property is an investment property only if an insignificant portion is held for use in the production or supply of goods or services or for administrative purposes.

Judgement is made on an individual property basis to determine whether ancillary services are so significant that a property does not qualify as investment property.

(e) Impairment of Trade and Other Receivables

An impairment loss is recognised when there is objective evidence that a financial asset is impaired. Management specifically reviews its loans and receivables financial assets and analyses historical bad debts, customer concentrations, customer creditworthiness, current economic trends and changes in the customer payment terms when making a judgement to evaluate the adequacy of the 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 similar credit risk characteristics. If the expectation is different from the estimation, such difference will impact the carrying value of receivables.



cont’d


5.1 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (cont’d)

(f) Write-down of Inventories

Reviews are made periodically by management on damaged, obsolete and slow-moving inventories. These reviews require judgement and estimates. Possible changes in these estimates could result in revisions to the valuation of inventories.

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

The Group carries certain financial assets and liabilities at fair value, which requires extensive use of 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 the Group uses different valuation methodologies. Any changes in fair value of these assets and liabilities would affect profit and/or equity.

5.2 BASIS OF CONSOLIDATION

The consolidated financial statements include the financial statements of the Company and its subsidiaries made up to the end of the reporting period.

Subsidiaries are entities (including structured entities) controlled by the Group. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity.

Subsidiaries are consolidated from the date on which control is transferred to the Group up to the effective date on which control ceases, as appropriate.

Intragroup transactions, balances, income and expenses are eliminated on consolidation. Where necessary, adjustments are made to the financial statements of subsidiaries to ensure consistency of accounting policies with those of the Group.

(a) Business Combinations

Acquisitions of businesses are accounted for using the acquisition method. Under the acquisition method, the consideration transferred for acquisition of a subsidiary is the fair value of the assets transferred, liabilities incurred and the equity interests issued by the Group at the acquisition date. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Acquisition-related costs, other than the costs to issue debt or equity securities, are recognised in profit or loss when incurred.

In a business combination achieved in stages, previously held equity interests in the acquiree are remeasured to fair value at the acquisition date and any corresponding gain or loss is recognised in profit or loss.

Non-controlling interests in the acquiree may be initially measured either at fair value or at the non-controlling interests’ proportionate share of the fair value of the acquiree’s identifiable net assets at the date of acquisition. The choice of measurement basis is made on a transaction-by-transaction basis.




5.2 BASIS OF CONSOLIDATION (cont’d)

(b) Non-Controlling Interests

Non-controlling interests are presented within equity in the consolidated statement of financial position, separately from the equity attributable to owners of the Company. Profit or loss and each component of other comprehensive income are attributed to the owners of the Company 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.

At the end of each reporting period, the carrying amount of non-controlling interests is the amount of those interests at initial recognition plus the non-controlling interests’ share of subsequent changes in equity.

(c) Changes In Ownership Interests In Subsidiaries Without Change of Control

All changes in the parent’s ownership interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions. Any difference between the amount by which the non-controlling interest is adjusted and the fair value of consideration paid or received is recognised directly in equity of the Group.

(d) Loss of Control

Upon the loss of control of a subsidiary, the Group recognises any gain or loss on disposal in profit or loss which is calculated as the difference between:-

(i) the aggregate of the fair value of the consideration received and the fair value of any retained interest in the former subsidiary; and

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

Amounts previously recognised in other comprehensive income in relation to the former subsidiary are accounted for in the same manner as would be required if the relevant assets or liabilities were disposed of (i.e. reclassified to profit or loss or transferred directly to retained profits). The fair value of any investments retained in the former subsidiary at the date when control is lost is regarded as the fair value on initial recognition for subsequent accounting under MFRS 139 or, when applicable, the cost on initial recognition of an investment in an associate or a joint venture.

5.3 FUNCTIONAL AND FOREIGN CURRENCIES

(a) 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.

The consolidated financial statements are presented in Ringgit Malaysia (“RM”), which is the Company’s functional and presentation currency.

(b) 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 existed when the values were determined. All exchange differences are recognised in profit or loss.



cont’d


5.3 FUNCTIONAL AND FOREIGN CURRENCIES (cont’d)

(c) Foreign Operations

Assets and liabilities of foreign operations are translated to RM at the rates of exchange ruling at the end of the reporting period. Revenues and expenses of foreign operations are translated at exchange rates ruling at the dates of the transactions. All exchange differences arising from translation are taken directly to other comprehensive income and accumulated in equity under the translation reserve. On the disposal of a foreign operation, the cumulative amount recognised in other comprehensive income relating to that particular foreign operation is reclassified from equity to profit or loss.

Goodwill and fair value adjustments arising from the acquisition of foreign operations are treated as assets and liabilities of the foreign operations and are recorded in the functional currency of the foreign operations and translated at the closing rate at the end of the reporting period.

5.4 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 instruments are classified as liabilities or equity in accordance with the substance of the contractual arrangement. Interest, dividends, gains and losses relating to a financial instrument classified as a liability, are reported as an expense or income. Distributions to holders of financial instruments classified as equity are charged directly to equity.

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.

A financial instrument is recognised initially at its fair value. Transaction costs that are directly attributable to the acquisition or issue of the financial instrument (other than a financial instrument at fair value through profit or loss) are added to/deducted from the fair value on initial recognition, as appropriate. Transaction costs on the financial instrument at fair value through profit or loss are recognised immediately in profit or loss.

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

(a) Financial Assets

On initial recognition, financial assets are classified as either financial assets at fair value through profit or loss, held-to-maturity investments, loans and receivables financial assets, or available-for-sale financial assets, as appropriate.

(i) Financial Assets at Fair Value through Profit or Loss

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.

Financial assets at fair value through profit or loss could be presented as current or non-current. Financial assets that are held primarily for trading purposes are presented as current whereas financial assets that are not held primarily for trading purposes are presented as current or non-current based on the settlement date.




5.4 FINANCIAL INSTRUMENTS (cont’d)

(a) Financial Assets (cont’d)

(ii) Held-to-maturity Investments

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 interest income recognised in profit or loss on an effective yield basis.

Held-to-maturity investments are classified as non-current assets, except for those having maturity within 12 months after the reporting date which are classified as current assets.

(iii) Loans and Receivables Financial Assets

Trade receivables and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as loans and receivables financial assets. Loans and receivables financial assets are measured at amortised cost using the effective interest method, less any impairment loss. Interest income is recognised by applying the effective interest rate, except for short-term receivables when the recognition of interest would be immaterial.

Loans and receivables financial assets are classified as current assets, except for those having settlement dates later than 12 months after the reporting date which are classified as non-current assets.

(iv) Available-for-sale Financial Assets

Available-for-sale financial assets are non-derivative financial assets that are designated in this category or are not classified in any of the other categories.

After initial recognition, available-for-sale financial assets are remeasured to their fair values at 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 the exception of impairment losses. On derecognition, the cumulative gain or loss previously accumulated in the fair value reserve is reclassified from equity into profit or loss.

Dividends on available-for-sale equity instruments are recognised in profit or loss when the Group’s right to receive payments is established.

Investments in equity instruments whose fair value cannot be reliably measured are measured at cost less accumulated impairment losses, if any.

Available-for-sale financial assets are classified as non-current assets unless they are expected to be realised within 12 months after the reporting date.

(b) Financial Liabilities

All financial liabilities are initially measured at fair value plus directly attributable transaction costs and subsequently measured at amortised cost using the effective interest method other than those categorised 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.



cont’d


5.4 FINANCIAL INSTRUMENTS (cont’d)

(b) Financial Liabilities (cont’d)

Financial liabilities are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the reporting date.

(c) Equity Instruments

Instruments classified as equity are measured at cost and are not remeasured subsequently.

(i) Ordinary Shares

Incremental costs directly attributable to the issue of new ordinary shares or options are shown in equity as a deduction, net of tax, from proceeds.

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

(ii) Treasury Shares

When the Company’s own shares recognised as equity are bought back, the amount of the consideration paid, including all costs directly attributable, are recognised as a deduction from equity. Own shares purchased that are not subsequently cancelled are classified as treasury shares and are presented as a deduction from total equity. Where such shares are subsequently sold or reissued, any consideration received, net of any direct costs, is included in equity.

Where such shares are subsequently sold or reissued, any consideration received, net of any direct costs, is included in equity.

(d) Derecognition

A financial asset or part of it is derecognised when, and only when, the contractual rights to the cash flows from the financial asset expire or the financial asset is transferred to another party without retaining control or substantially all risks and rewards of the asset. On derecognition of a financial asset, the difference between the carrying amount and the sum of the consideration received (including any new asset obtained less any new liability assumed) and any cumulative gain or loss that had been recognised in equity is recognised in profit or loss.

A financial liability or a part of it is derecognised when, and only when, the obligation specified in the contract is discharged or cancelled or expires. On derecognition of a financial liability, the difference between the carrying amount of the financial liability extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss.

5.5 INVESTMENTS IN SUBSIDIARIES

Investments in subsidiaries are stated at cost in the statement of financial position of the Company, and are 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. The cost of the investments includes transaction costs.

On the disposal of the investments in subsidiaries, the difference between the net disposal proceeds and

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




5.6 INVESTMENTS IN ASSOCIATES

An associate is an entity in which the Group has a long-term equity interest and where it exercises significant influence over the financial and operating policies.

The investment in an associate is accounted for in the consolidated statement of financial position using the equity method, based on the financial statements of the associate made up to 31 December 2014. The Group's share of the post acquisition profits and other comprehensive income of the associate is included in the consolidated statement of profit or loss and other comprehensive income, after adjustment if any, to align the accounting policies with those of the Group, from the date that significant influence commences up to the effective date on which significant influence ceases or when the investment is classified as held for sale. The Group's interest in the associate is carried in the consolidated statement of financial position at cost plus the Group’s share of the post-acquisition retained profits and reserves. The cost of investment includes transaction costs.

When the Group’s share of losses exceeds its interest in an associate, the carrying amount of that interest is reduced to zero, and the recognition of further losses is discontinued except to the extent that the Group has an obligation.

Unrealised gains on transactions between the Group and the associate are eliminated to the extent of the Group’s interest in the associate. Unrealised losses are eliminated unless cost cannot be recovered.

When the Group ceases to have significant influence over an associate and the retained interest in the former associate is a financial asset, the Group measures the retained interest at fair value at that date and the fair value is regarded as the initial carrying amount of the financial asset in accordance with MFRS 139. Furthermore, the Group also reclassifies its share of the gain or loss previously recognised in other comprehensive income of that associate to profit or loss when the equity method is discontinued. However, the Group will continue to use the equity method if the dilution does not result in a loss of significant influence or when an investment in a joint venture becomes an investment in an associate. Under such changes in ownership interest, the retained investment is not remeasured to fair value but a proportionate share of the amounts previously recognised in other comprehensive income of the associate will be reclassified to profit or loss where appropriate. All dilution gains or losses arising in investments in associates are recognised in profit or loss.

5.7 PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment, other than freehold land, are stated at cost less accumulated depreciation and impairment losses, if any.

Freehold land is stated at cost less impairment losses, and is not depreciated.

Depreciation is charged to profit or loss (unless it is included in the carrying amount of another asset) on 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:-

Buildings 2% - 10% Plant and machinery 5% - 20% Motor vehicles 10% - 20% Office equipment 10% Furniture and fittings 15% - 20% Computers 20% Electrical installation 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 benefits embodied in the items of the property, plant and equipment.



cont’d


5.7 PROPERTY, PLANT AND EQUIPMENT (cont’d)

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, 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 of property, plant and equipment are recognised in profit or loss as incurred. Cost also comprises the initial estimate of dismantling and removing the asset and restoring the site on which it is located for which the Group is obligated to incur when the asset is acquired, if applicable.

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use. Any gain or loss arising from derecognition of the asset is recognised in profit or loss.

Capital work-in-progress represents assets under construction, and which are not ready for commercial use at the end of the reporting date. Capital work-in-progress is stated at cost, and will be transferred to the relevant category of assets and depreciated accordingly when the assets are completed and ready for commercial use.

5.8 INVESTMENT PROPERTY

Investment property is property held either to earn rental income or for capital appreciation or for both. Investment property is stated at cost less accumulated depreciation and impairment losses, if any.

Depreciation is charged to profit or loss on the straight-line method over the estimated useful life of the investment property. The estimated useful life of the investment property is 55 years.

Investment property is derecognised when it has either been disposed of or when the investment property is permanently withdrawn from use and no future benefit is expected from its disposal.

On the derecognition of an investment property, the difference between the net disposal proceeds and the carrying amount is recognised in profit or loss.

Transfers are made to or from investment property only when there is a change in use. All transfers do not change the carrying amount of the property reclassified.

5.9 DEVELOPMENT EXPENDITURE

Development expenditure is recognised as an expense except that costs incurred on development projects are capitalised as non-current assets to the extent that such expenditure is expected to generate future economic benefits. Development expenditure is capitalised if, and only if an entity can demonstrate all of the following:-

(a) its ability to measure reliably the expenditure attributable to the asset under development; (b) the product or process is technically and commercially feasible; (c) its future economic benefits are probable; (d) its intention to complete and the ability to use or sell the developed asset; and (e) the availability of adequate technical, financial and other resources to complete the asset under

development.

Capitalised development expenditure is measured at cost less accumulated amortisation and impairment losses, if any. Development expenditure initially recognised as an expense is not recognised as assets in the subsequent period.

The development expenditure is amortised on a straight-line method over a period of 5 years when the products are ready for sale or use. In the event that the expected future economic benefits are no longer probable of being recovered, the development expenditure is written down to its recoverable amount.




5.10 IMPAIRMENT

(a) Impairment of Financial Assets

All financial assets (other than those categorised at fair value through profit or loss), are assessed at the end of each reporting period whether there is any objective evidence of impairment as a result of one or more events having an impact on the estimated future cash flows of the asset.

An impairment loss in respect of held-to-maturity investments and loans and receivables financial assets 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.

If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed through profit or loss to the extent that the carrying amount of the financial asset at the date the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised.

(b) Impairment of Non-Financial Assets

The carrying values of assets, other than those to which MFRS 136 - Impairment of Assets does not apply, are reviewed at the end of each reporting period for impairment when there is an indication that the assets might be impaired. Impairment is measured by comparing the carrying values of the 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.

An impairment loss is recognised in profit or loss.

When there is a change in the estimates used to determine the recoverable amount, a subsequent increase 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, unless the asset is carried at its revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.

5.11 PREPAID LEASE PAYMENTS

The prepaid lease payments relate to the cost of acquisition of land use rights for a lease term of the land of 41 years. The land use rights are not transferable and this cost is capitalised and amortised on a straight-line basis over the lease term.

5.12 ASSETS UNDER HIRE PURCHASE

Assets acquired under hire purchase are capitalised in the financial statements at the lower of the fair value of the leased assets and the present value of the minimum lease payments and, are depreciated in accordance with the policy set out in Note 5.7 above. Each hire purchase payment is allocated between 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.



cont’d


5.13 INVENTORIES

Inventories are stated at the lower of cost and net realisable value. Cost is determined on the first-in-first-out basis and comprises the purchase price, production or conversion costs and incidentals incurred in bringing the inventories to their present location and condition.

Net realisable value represents the estimated selling price less the estimated cost of completion and the estimated costs necessary to make the sale.

5.14 BORROWING COSTS

Borrowing costs, directly attributable to the acquisition, construction or production of qualified assets, are 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.

All other borrowing costs are recognised in profit or loss as expenses in the period in which they incurred.

Investment income earned on the temporary investment of specific borrowing pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation.

5.15 INCOME TAXES

Income tax for the year comprises current and deferred tax.

Current tax is the expected amount of income taxes payable in respect of the taxable profit for the reporting period 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 from goodwill or excess of the acquirer’s interest in the net fair value of the acquiree’s identifiable assets, 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.

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 comprehensive income or directly in equity and deferred tax arising from a business combination is included in the resulting goodwill or excess of the acquirer’s interest in the net fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities over the business combination costs.




5.16 CASH AND CASH EQUIVALENTS

Cash and cash equivalents comprise cash in hand, bank balances, demand deposits, bank overdrafts and short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value with original maturity periods of three months or less.

During the current financial year, the Group excluded deposits pledged to financial institutions from cash and cash equivalents for the purpose of the statements of cash flows. This change has been applied retrospectively with an adjustment made against the opening balance of the cash and cash equivalents as at 1 January 2013.

5.17 PROVISIONS

Provisions are recognised when the Group has a present obligation as a result of past events, when it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and when a reliable estimate of the amount can be made. Provisions are reviewed at the end of each reporting period and adjusted to reflect the current best estimate. Where the effect of the time value of money is material, the provision is the present value of the estimated expenditure required to settle the obligation. The unwinding of the discount is recognised as interest expense in profit or loss.

5.18 EMPLOYEE BENEFITS (a) Short-term Benefits

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

(b) Defined Contribution Plans

The Group’s contributions to defined contribution plans are recognised in profit or loss, in the period to which they relate. Once the contributions have been paid, the Group has no further liability in respect of the defined contribution plans.

5.19 RELATED PARTIES

A party is related to an entity (referred to as the “reporting entity”) if:-

(a) A person or a close member of that person’s family is related to a reporting entity if that person:-

(i) has control or joint control over the reporting entity; (ii) has significant influence over the reporting entity; or (iii) is a member of the key management personnel of the reporting entity or of a parent of the

reporting entity.

(b) An entity is related to a reporting entity if any of the following conditions applies:-

(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) One entity is an associate or joint venture of the other entity (or an associate or joint venture of 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) One entity is a joint venture of a third entity and the other entity is an associate of the third

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

reporting entity or an entity related to the reporting entity. If the reporting entity is itself such a 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) A person identified in (a)(i) above has significant influence over the entity or is a member 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.



cont’d


5.20 CONTINGENT LIABILITIES

A contingent liability is a possible obligation that arises from past events and whose existence will only be confirmed by the occurrence of one or more uncertain future events not wholly within the control of the Group. It can also be a present obligation arising from past events that is not recognised because it is not probable that an outflow of economic resources will be required or the amount of obligation cannot be measured reliably.

A contingent liability is not recognised but is disclosed in the notes to the financial statements. When a change in the probability of an outflow occurs so that the outflow is probable, it will then be recognised as a provision.

5.21 FAIR VALUE MEASUREMENTS

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using a valuation technique. The measurement assumes that the transaction takes place either in the principal market or in the absence of a principal market, in the most advantageous market. For non-financial asset, the fair value measurement takes into account a market’s participant’s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use. However, this basis does not apply to share-based payment transactions.

For financial reporting purposes, the fair value measurements are analysed into level 1 to level 3 as follows:-

Level 1: Inputs are quoted prices (unadjusted) in active markets for identical assets or liability that the entity can access at the measurement date;

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

Level 3: Inputs are unobservable inputs for the asset or liability.

The transfer of fair value between levels is determined as of the date of the event or change in circumstances that caused the transfer.

5.22 REVENUE AND OTHER INCOME

(a) Sale of Goods

Revenue is measured at fair value of the consideration received or receivable and is recognised upon delivery of goods and customers’ acceptance and where applicable, net of returns and trade discounts.

(b) Interest Income

Interest income is recognised on an accrual basis using the effective interest method.

(c) Dividend Income

Dividend income from investment is recognised when the right to receive dividend payment is established.

(d) Rental Income

Rental income is recognised on an accrual basis.



5. SIGNIFICANT ACCOUNTING POLICIES (cont’d) 5.23 NON-CURRENT ASSETS HELD FOR SALE AND DISCONTINUED OPERATIONS

Non-current assets (or disposal group comprising assets and liabilities) that are expected to be recovered primarily through sale rather than through continuing use are classified as held for sale. Immediately before classification as held for sale, the non-current assets (or the disposal group) are remeasured in accordance with the Group’s accounting policies. Upon classification as held for sale, the non-current assets (the disposal group) are not depreciated and are measured at the lower of their previous carrying amount and fair value less cost to sell. Any differences are recognised in profit or loss.

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

5.24 OPERATING SEGMENTS

An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Group’s other components. An operating segment’s operating results are reviewed regularly 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.

6. INVESTMENTS IN SUBSIDIARIES

The Company

2014 2013

RM’000 RM’000

Unquoted shares, at cost

- in Malaysia 29,901 29,901

- outside Malaysia - 6,778

29,901 36,679

Dividends out of pre-acquisition profits - (293)

Transferred to non-current asset classified as held for sale (Note 21) - (4,569)

29,901 31,817

Accumulated impairment losses:-

At 1 January 2,496 -

Addition during the financial year 490 2,496

Reversal during the financial year (1,916) -

At 31 December 1,070 2,496

28,831 29,321



cont’d

6. INVESTMENTS IN SUBSIDIARIES (cont’d)

Details of the subsidiaries are as follows:-

Name of SubsidiaryCountry of

IncorporationEffective Equity

Interest Principal Activities

2014 2013

% %

United MS Electrical Mfg. (M) Sdn. Bhd. (“UMSE”)

Malaysia 100 100 Designing, manufacturing and trading of electrical wiring accessories.

UMS-Neiken (M) Sdn. Bhd. (“UMSN”)

Malaysia 100 100 Marketing and trading in electrical products, accessories and appliances.

UMS-Universal Sales & Services Sdn. Bhd. * (“UMSUSS”)

Malaysia 100 100 Sales and services of electrical home appliances.

UMS Lamp (M) Sdn. Bhd. (“UMSL”)

Malaysia 100 100 Marketing and trading in lamps and fitting products.

UMS-Neiken Industry Sdn. Bhd. (“UMSI”)

Malaysia 100 100 Import and export or trading in any type of electrical products.

High Project Limited #@ (“HPL”)

Hong Kong SAR

- 100 Designing, manufacturing and trading of power cord sets.

High Project Electrical Manufactory (Dongguan) Ltd. #^@ (“HPEMDL”)

The People’s Republic of

China

- 100 Manufacturing of power cord sets.

Neiken Switchgear (VN) Co. Ltd. # (“NSVN”)

Vietnam 100 100 Manufacturing and trading of electrical wiring accessories.

* - 1 equity share held though UMSE # - Not audited by Messrs. Crowe Horwath ^ - Held through HPL @ - Transferred to non-current assets and assets of disposal group classified as held for sale, as disclosed in Note 21 and

Note 22 to the financial statements The Company assessed the recoverable amount of the investments in subsidiaries and determined that

an impairment loss should be recognised as the recoverable amount is lower than the carrying amount. The recoverable amount of the cash-generating unit is determined using the fair value less costs to sell approach, and this is derived from the net assets position of the respective subsidiaries as at the end of the reporting period.



7. INVESTMENTS IN ASSOCIATES

The Group

2014 2013

RM’000 RM’000

Unquoted shares outside Malaysia, at cost 1,200 1,200

Share of post acquisition profits 1,609 1,160

2,809 2,360

The details of the associates are as follows:-

Name of AssociateCountry of

Incorporation Effective Equity Interest Principal Activities

2014 2013

% %

Neiken Switchgear (S) Pte. Ltd. (“NSS”)

Republic of Singapore

50 50 Wholesale and distribution of electrical wiring accessories and related products.

Neiken Africa (Proprietary) Limited (“NAP”)

Republic ofBotswana

50 50 Dormant.

(a) The Group recognised its share of results in NSS based on the audited financial statements drawn up to 31 December 2014 (2013 - 31 December 2013).

(b) The summarised financial information for each associate that is material to the Group is as follows:-

Neiken Switchgear (S) Pte. Ltd.

2014 2013

RM’000 RM’000

At 31 December

Non-current assets 11,146 9,234

Current assets 6,387 6,105

Non-current liabilities (3,908) (3,271)

Current liabilities (8,024) (7,363)

Net assets 5,601 4,705 12-month period ended 31 December

Revenue 12,403 10,841

Profit for the financial year 779 850

Total comprehensive income 897 850

Group’s share of profit for the financial year 390 425

Group’s share of other comprehensive income 59 -



cont’d

7. INVESTMENTS IN ASSOCIATES (cont’d)

(b) The summarised financial information for each associate that is material to the Group is as follows:- (cont’d)

Neiken Switchgear (S) Pte. Ltd.

2014 2013

RM’000 RM’000

Reconciliation of net assets to carrying amount

Group’s share of net assets above 2,800 2,352

Premium on acquisition 16 16

Elimination of unrealised losses (7) (8)

Carrying amount of the Group’s interest in this associate 2,809 2,360 (c) The Group has not recognised losses relating to Neiken Africa (Proprietary) Limited, where its share of

losses exceeds the Group’s interest in this associate. The Group’s cumulative share of unrecognised losses at the end of reporting period and the share of the current financial year’s loss were immaterial. The Group has no obligation in respect of these losses.

8. PROPERTY, PLANT AND EQUIPMENT

At1.1.2014 Additions Disposals

ImpairmentLosses

DepreciationCharge

ExchangeDifference

At31.12.2014

RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

The Group

Net Book Value

Freehold land and buildings 19,662 381 (3,052) (40) (279) - 16,672

Factory buildings 849 - - - (79) 41 811

Plant and machinery 2,329 1,007 (172) - (704) 25 2,485

Motor vehicles 748 64 (9) - (281) 2 524

Office equipment 129 27 (2) - (41) - 113

Furniture and fittings 74 5 - - (11) - 68

Computers 59 4 - - (22) - 41

23,850 1,488 (3,235) (40) (1,417) 68 20,714



8. PROPERTY, PLANT AND EQUIPMENT (cont’d)

At1.1.2013

Transferred to Assets

of Disposal Group

Classified as Held

For Sale(Note 22) Additions Disposals

Impairment Losses

DepreciationCharge

ExchangeDifference

At31.12.2013

RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

The Group

Net Book Value

Freehold land and

buildings 7,990 - 11,972 - - (300) - 19,662

Factory buildings 601 - 267 - - (62) 43 849

Plant and machinery 2,280 (103) 1,118 (200) (16) (769) 19 2,329

Motor vehicles 552 - 429 - - (235) 2 748

Office equipment 155 - 28 (1) - (53) - 129

Furniture and fittings 108 (28) 18 - - (26) 2 74

Computers 70 - 11 - - (22) - 59

Construction in progress 16 - - (16) - - - -

11,772 (131) 13,843 (217) (16) (1,467) 66 23,850

AtCost

AccumulatedDepreciation

ImpairmentLosses

Net BookValue

RM’000 RM’000 RM’000 RM’000

2014

Freehold land and buildings 18,645 (1,933) (40) 16,672

Factory buildings 1,314 (503) - 811

Plant and machinery 23,589 (20,336) (768) 2,485

Motor vehicles 2,579 (2,055) - 524

Office equipment 898 (785) - 113

Furniture and fittings 238 (170) - 68

Computers 158 (117) - 41

Electrical installation 249 (249) - -

47,670 (26,148) (808) 20,714



cont’d

8. PROPERTY, PLANT AND EQUIPMENT (cont’d)

AtCost

AccumulatedDepreciation

ImpairmentLosses

Net BookValue

RM’000 RM’000 RM’000 RM’000

2013

Freehold land and buildings 21,797 (2,135) - 19,662

Factory buildings 1,230 (381) - 849

Plant and machinery 23,040 (19,943) (768) 2,329

Motor vehicles 2,537 (1,789) - 748

Office equipment 872 (743) - 129

Furniture and fittings 232 (158) - 74

Computers 154 (95) - 59

Electrical installation 249 (249) - -

50,111 (25,493) (768) 23,850

(a) The freehold land and buildings with a total net book value of approximately RM16,672,000 (2013 - RM16,527,000) have been pledged to financial institutions as security for banking facilities granted to subsidiaries as disclosed in Notes 26 and 31 to the financial statements.

(b) Included in assets of the Group at the end of the reporting period was a motor vehicle with a total net book value of approximately RM Nil (2013 – RM340,000) which was acquired under hire purchase terms.

9. INVESTMENT PROPERTY

The Group

2014 2013

RM’000 RM’000

Leasehold land, at cost:-

At 1 January 2,318 -

Additions - 2,318

At 31 December 2,318 2,318

Accumulated depreciation:-

At 1 January - -

Depreciation charge (42) -

At 31 December (42) -

Net book value at 31 December 2,276 2,318



10. DEVELOPMENT EXPENDITURE

The Group

2014 2013

RM’000 RM’000

Development expenditure 2,173 2,173

Less: Amortisation of development expenditure (2,173) (2,173)

Carrying value at 31 December - -

11. PREPAID LEASE PAYMENTS

The Group

2014 2013

RM’000 RM’000

Long-term leasehold land, at cost:-

At 1 January 448 422

Exchange differences 22 26

At 31 December 470 448

Accumulated amortisation:-

At 1 January (103) (86)

Amortisation charge during the year (11) (11)

Exchange differences (5) (6)

At 31 December (119) (103)

Carrying value at 31 December 351 345

12. AMOUNTS OWING BY/(TO) A SUBSIDIARY

The Company

2014 2013

RM’000 RM’000

Amount Owing By A Subsidiary

Non-current

Quasi loan:

- UMSE 6,376 6,376

Amount Owing To A Subsidiary

Current

Non-trade balance:

- UMSE (1,308) (1,284)



cont’d

12. AMOUNTS OWING BY/(TO) A SUBSIDIARY (cont’d)

(a) Quasi loans represent advances and payments made on behalf of which the settlement is neither planned nor likely to occur in the foreseeable future. These amounts are, in substance, a part of the Company’s net investment in the subsidiaries. The quasi loans are stated at cost less accumulated impairment losses, if any.

(b) The non-trade balance (current) is unsecured and payments made on behalf. The amount owing is repayable on demand and is to be settled in cash. Interest rate of 4% per annum is imposed on monthly outstanding balances until full settlement.

13. DEFERRED TAX ASSETS

The Group

2014 2013

RM’000 RM’000

At 1 January 176 176

Recognised in profit or loss (Note 35) (75) -

At 31 December 101 176

Deferred tax assets are attributable to the following:-

The Group

2014 2013

RM’000 RM’000

Unutilised tax losses - 78

Accelerated capital allowances over depreciation (36) (46)

Other temporary differences 137 144

101 176

14. OTHER INVESTMENT

The Group

2014 2013

RM’000 RM’000

United cash fund - 3

The Group designated this financial asset at fair value through profit or loss.



15. INVENTORIES

The Group

2014 2013

RM’000 RM’000

At cost:-

Raw materials 6,735 5,522

Work-in-progress 2,536 2,897

Finished goods 7,593 9,749

Goods-in-transit 376 -

Transferred to assets of disposal group classified as held for sale (Note 22) - (2,923)

17,240 15,245

At net realisable value:-

Raw materials 17 22

Work-in-progress 17 34

Finished goods 295 76

329 132

17,569 15,377

Recognised in profit or loss:-

Inventories recognised as cost of sales 31,019 35,177

Amount written off - 364

Amount written down to net realisable value 293 196

Reversal of written down 325 152

16. TRADE RECEIVABLES

The Group

2014 2013

RM’000 RM’000

Trade receivables 18,763 22,516

Allowance for impairment losses (345) (399)

Transferred to assets of disposal group classified as held for sale (Note 22) - (3,669)

18,418 18,448

Allowance for impairment losses:-

At 1 January (399) (210)

Addition for the financial year (250) (296)

Reversal during the financial year 304 30

Exchange difference - (5)

Transferred to assets of disposal group classified as held for sale (Note 22) - 82

At 31 December (345) (399)



cont’d

16. TRADE RECEIVABLES (cont’d)

(a) The Group’s normal trade credit terms range from 30 to 120 (2013 – 30 to 120) days.

(b) Trade receivables that are individually determined to be impaired relate to customers that are in significant financial difficulties and have defaulted on payments.

17. OTHER RECEIVABLES, DEPOSITS AND PREPAYMENTS

The Group

2014 2013

RM’000 RM’000

Other receivables:-

Third parties 5,385 505

Advances to suppliers 2,155 402

7,540 907

Allowance for impairment losses (13) (51)

7,527 856

Deposits 381 324

Prepayments 359 507

Transferred to assets of disposal group classified as held for sale (Note 22) - (149)

8,267 1,538

Allowance for impairment losses:-

At 1 January (51) (51)

Reversal during the financial year 38 -

31 December (13) (51)

(a) The advances to suppliers are unsecured and interest-free. The amount owing will be offset against future purchases from the suppliers.

(b) Included in amount owing by third parties of the Group at the end of the reporting period is an amount of approximately RM5,022,000 being the balance of sales consideration in relation to the disposal of a piece of property.

(c) Included in deposits of the Group at the end of the reporting period is an amount of approximately RM300,000 being the deposit paid for the purchase of a motor vehicle.



18. AMOUNT OWING BY AN ASSOCIATE

The Group

2014 2013

RM’000 RM’000

Amount Owing By An Associate

Current

Trade balance:

- NSS 162 454

Non-trade balance:

- NSS 2,614 2,462

2,776 2,916

(a) The trade balance is subject to the normal trade credit terms ranging from 90 to 120 (2013 – 90 to 120) days. The amount owing is to be settled in cash.

(b) The non-trade balance is unsecured and payments made on behalf. The amount owing is repayable on demand and is to be settled in cash. Interest rate of 4% per annum is imposed on each month end outstanding until full settlement.

19. AMOUNTS OWING BY/(TO) RELATED PARTIES

The Group

2014 2013

RM’000 RM’000

Amount Owing By Related Parties

Current

Trade balances:

- Supeready Elec. (Fenghua) Co Ltd. (“Supeready”) - 6

- United MS Cables Mfg Sdn. Bhd. (“UMSC”) 1 -

1 6

Transferred to assets of disposal group classified as held for sale (Note 22) - (6)

1 -

Amount Owing To Related Parties

Current

Trade balances:

- UMSC 675 165

- Group Talent Limited (“GTL”) - 75

- High Project Electric Wire & Cable Manufactory (Fenghua) Limited (“HPE”) - 121

- Ming Kee Manufactory Ltd. (“Ming Kee”) - 14

675 375

Transferred to liabilities of disposal group classified as held for sale (Note 22) - (210)

675 165



cont’d

19. AMOUNTS OWING BY/(TO) RELATED PARTIES (cont’d)

(a) The relationships with the related parties are disclosed in Note 42 to the financial statements.

(b) The trade balances are subjected to the normal trade credit terms ranging from 90 to 120 (2013 – 90 to 120) days. The amounts owing are to be settled in cash.

20. DEPOSITS WITH LICENSED BANKS

(a) The deposits with licensed banks of the Group and the Company at the end of the reporting period bore effective interest rates ranging from 0.25% to 3.60% (2013 - 0.25% to 3.40%) per annum. The deposits have maturity periods ranging from 1 day to 12 months (2013 - 1 day to 12 months).

(b) Included in deposits with licensed banks of the Group and the Company at the end of the reporting period was an amount of approximately RM1,091,000 (2013 – RM1,040,000) which has been pledged to licensed banks as security for banking facilities granted to a subsidiary as disclosed in Note 31 to the financial statements.

21. NON-CURRENT ASSETS CLASSIFIED AS HELD FOR SALE

The Company2014 2013

RM’000 RM’000

Reclassified from investment in subsidiaries (Note 6):

- HPL and its subsidiary, HPEMDL - 4,569

The disposal of investment in HPL and its subsidiary, HPEMDL was completed during the current financial year as disclosed in Note 22 to the financial statements.

22. DISPOSAL GROUP CLASSIFIED AS HELD FOR SALE

In the previous financial year, the Company entered into a Sale and Purchase Agreement with a third party to dispose of its entire equity interest in HPL for a total cash consideration of approximately RM4,600,000. The assets and liabilities of the HPL and its subsidiary have been presented as “Assets of disposal group classified as held for sales” and “Liabilities of disposal group classified as held for sale” in the previous financial year. The disposal was completed during the current financial year.

The assets and liabilities of the disposal group, measured at the lower of their carrying amounts and fair value less costs to sell, were as follows:-

The Group2014 2013

RM’000 RM’000

Assets

Property, plant and equipment (Note 8) - 131

Inventories (Note 15) - 2,923

Trade receivables (Note 16) - 3,587

Other receivables, deposits and prepayment (Note 17) - 149

Amount owing by a related party (Note 19) - 6

Tax recoverable - 144

Cash and bank balance (Note 40) - 1,930

Assets of disposal group classified as held for sale - 8,870



22. DISPOSAL GROUP CLASSIFIED AS HELD FOR SALE (cont’d)

The Group2014 2013

RM’000 RM’000

Liabilities

Trade payables - 2,791

Other payables and accruals (Note 29) - 333

Amount owing to related parties (Note 19) - 210

Liabilities of disposal group classified as held for sale - 3,334 In the previous financial year, the cumulative expenses recognised in other comprehensive income relating to the

disposal group amounted to approximately RM1,054,000.

The effect of disposal of the discontinued operations is as follows:-

The Group

The Company

2014 2014RM’000 RM’000

Investment in subsidiaries - 4,569

Assets of disposal group 8,870 -

Liabilities of disposal group (3,334) -

Net asset 5,536 4,569

Loss on disposal (1,032) (65)

Consideration received 4,504 4,504

Cash and cash equivalents disposed of (1,930) -

2,574 4,504

23. SHARE CAPITAL

The Group/The Company 2014 2013 2014 2013

Number Of Shares RM’000 RM’000

Ordinary Shares Of RM0.50 Each:-

Authorised 100,000,000 100,000,000 50,000 50,000

Issued And Fully Paid-Up 80,000,000 80,000,000 40,000 40,000

24. TREASURY SHARES During the financial year, the Company purchased 2,000 of its issued ordinary shares from the open market at an

average price of RM0.80 per share. The total consideration paid for the purchase was approximately RM2,000 including transaction costs. The shares purchased are held as treasury shares in accordance with Section 67A of the Companies Act 1965.

Of the total 80,000,000 issued and fully paid-up ordinary shares as the end of the reporting period, 1,404,200 ordinary shares are held as treasury shares by the Company. None of the treasury shares were resold or cancelled during the financial year.



cont’d

25. RESERVES


2014 2013 2014 2013

RM’000 RM’000 RM’000 RM’000

Share premium 1,531 1,531 1,531 1,531

Foreign exchange translation reserve (681) (1,736) - -

Retained profits 31,417 24,260 4,394 4,332

32,267 24,055 5,925 5,863

25.1 SHARE PREMIUM

The share premium is not distributable by way of dividends and may be utilised in the manner set out in Section 60(3) of the Companies Act 1965.

25.2 FOREIGN EXCHANGE TRANSLATION RESERVE

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

25.3 RETAINED PROFITS

Under the single tier tax system, tax on the Company’s profit is the final tax and accordingly, any dividends to the shareholders are not subject to tax.

26. TERM LOAN

The Group

2014 2013

RM’000 RM’000

Current (Note 31)

Not later than one year 459 439

Non-Current

Later than one year and not later than two years 479 459

Later than two years and not later than five years 1,566 1,500

Later than five years 5,593 6,128

7,638 8,087

8,097 8,526

(a) The term loan is secured by:-

(i) a legal charge on the existing loan agreement cum assignment over a 4 storey detached factory cum office building of a subsidiary; and

(ii) a corporate guarantee of the Company.

(b) The effective interest rate is 4.43% (2013 - 4.30%) per annum and repayable in 180 monthly instalments of RM66,423 effective from May 2013.



27. DEFERRED TAX LIABILITIES

The Group

2014 2013

RM’000 RM’000

At 1 January 1,102 1,087

Recognised in profit or loss (Note 35) - 15

At 31 December 1,102 1,102

Deferred tax liabilities are attributable to the following:-

The Group

2014 2013

RM’000 RM’000

Accelerated capital allowances over depreciation 906 906

Revaluation surplus 549 549

Other temporary differences (353) (353)

1,102 1,102

28. TRADE PAYABLES

The normal trade credit terms granted to the Group range from 14 to 90 (2013 – 14 to 90) days.

29. OTHER PAYABLES AND ACCRUALS


2014 2013 2014 2013

RM’000 RM’000 RM’000 RM’000

Other payables:-

Third parties 327 282 4 8

Advances from customers 597 2,443 - 2,046

924 2,725 4 2,054

Accruals 2,564 2,818 22 20

Transferred to liabilities of disposal group classified as held for sale (Note 22) - (333) - -

3,488 5,210 26 2,074

30. AMOUNT OWING TO DIRECTORS

The amount owing is non-trade in nature, unsecured, interest-free and repayable on demand. The amount owing is to be settled in cash.



cont’d

31. SHORT-TERM BORROWINGS

The Group

2014 2013

RM’000 RM’000

Banker’s acceptances 765 3,151

Hire purchase payable (Note 32) - 133

Term loan (Note 26) 459 439

Bank overdraft 85 -

1,309 3,723 (a) The bankers’ acceptances are secured by:-

(i) a legal charge on the existing loan agreement cum assignment over a 4 storey detached factory cum office building of a subsidiary;

(ii) a pledge of the fixed deposits of a subsidiary; and

(iii) a corporate guarantee of the Company.

(b) The bank overdraft bore an effective interest rate of 7.25% per annum and is secured by a corporate guarantee of the Company.

32. HIRE PURCHASE PAYABLE

The Group

2014 2013

RM’000 RM’000

Minimum hire purchase payments:

- not later than one year - 136

Less: Future finance charges - (3)

Present value of hire purchase payable - 133

Current

- not later than one year (Note 31) - 133

33. REVENUE

Revenue of the Group represents the invoiced value of goods sold less trade discounts and returns, whilst revenue of the Company is in respect of gross dividend income from subsidiaries.



34. PROFIT BEFORE TAXATION


2014 2013 2014 2013

RM’000 RM’000 RM’000 RM’000

Profit before taxation is arrived at after charging/(crediting):-

Allowance for impairment losses on receivables 250 296 - -

Amortisation of prepaid

lease payments 11 11 - -

Audit fee:

- current financial year 98 90 22 20

- underprovision in the previous financial year 7 7 2 2

Bad debts written off - 464 - -

Deposits written off 41 - - -

Depreciation of investment property 42 - - -

Depreciation of property, plant and equipment 1,417 1,467 - -

Directors’ fee 103 103 103 103

Directors’ non-fee emoluments 2,138 1,512 15 15

Interest expense:

- bank overdrafts 10 10 - -

- bankers’ acceptances 133 149 - -

- hire purchase 4 1 - -

- term loan 367 258 - -

Impairment losses on:

- property, plant and equipment 40 16 - -

- investment in subsidiaries - - 490 2,496

Inventories written down 293 196 - -

Inventories written off - 364 - -

Loss on disposal of subsidiaries 1,032 - 65 -

Loss on foreign exchange:

- unrealised 40 13 - -

- realised 12 33 - -

Rental of premises 26 104 - -

Staff costs:

- salaries and other benefits 10,173 9,502 - -

- defined contribution plans 541 523 - -



cont’d

34. PROFIT BEFORE TAXATION (cont’d)


2014 2013 2014 2013

RM’000 RM’000 RM’000 RM’000

Profit before taxation is arrived at after charging/(crediting):- (cont’d)

Dividend income from subsidiaries - - (2,500) (4,300)

Gain on disposal of plant and equipment (2,555) (155) - -

Gain on foreign exchange:

- unrealised (1,004) (572) - -

- realised (167) (201) - -

Interest income (413) (265) (448) (294)

Reversal of:

- allowance for impairment losses on receivables (342) (30) - -

- inventories written down (325) (152) - -

Rental income - (44) - -

Insurance claim received (71) (32) - -

35. INCOME TAX EXPENSE


2014 2013 2014 2013

RM’000 RM’000 RM’000 RM’000

Current tax expense:

- for the financial year 3,112 2,655 53 34

- overprovision in the previous financialyear (57) (162) (2) (1)

3,055 2,493 51 33

Deferred tax assets (Note 13):

- overprovision in the previous financial year 75 - - -

Deferred tax liabilities (Note 27):

- relating to originating and recognition oftemporary differences - 15 - -

75 15 - -

3,130 2,508 51 33



35. INCOME TAX EXPENSE (cont’d)

A reconciliation of the income tax expense applicable to the profit before taxation at the statutory tax rate to the income tax expense at the effective tax rate of the Group and the Company is as follows:-


2014 2013 2014 2013

RM’000 RM’000 RM’000 RM’000

Profit before taxation 12,252 8,308 2,078 1,676

Tax at the statutory tax rate 25% (2013 – 25%) 3,063 2,078 520 419

Tax effects of:-

Non-taxable income (339) (171) (625) (1,075)

Non-deductible expenses 217 763 158 690

Effects of differential in tax rates 1 - - -

Deferred tax assets not recognised during the financial year 92 - - -

Real property gains tax 139 - - -

(Over)/Underprovision in the previous financial year

- current year tax (57) (162) (2) (1)

- deferred tax assets 75 - - -

Others (61) - - -

Income tax expense for the financial year 3,130 2,508 51 33 No deferred tax asset is recognised in respect of the following item:-


2014 2013 2014 2013

RM’000 RM’000 RM’000 RM’000

Unutilised tax losses 44 28 - -

Accelerated capital allowances over depreciation 474 265 - -

Other temporary differences 418 275 - -

936 568 - -



cont’d

36. LOSS AFTER TAXATION FROM DISCONTINUED OPERATIONS

Analysis of the results of the discontinued operations in the previous financial year was as follows:-

The Group

2014 2013

RM’000 RM’000

Revenue - 6,597

Cost of sales - (6,063)

Gross profit - 534

Other income - 129

- 663

Selling and distribution expenses - (366)

Administrative expenses - (710)

Other expenses - (125)

Loss before taxation - (538)

Income tax expense - 89

Loss after taxation from discontinued operations - (449)

(a) Included in loss before taxation from the discontinued operations in the previous financial year were the following:-

The Group

2014 2013

RM’000 RM’000

Loss before taxation is arrived at after charging/(crediting):-

Audit fee - 16

Depreciation of property, plant and equipment - 56

Inventories written down - 16

Loss on foreign exchange: -

- realised - 21

Rental of premises - 362

Staff costs:

- salaries and other benefits - 1,553

Gain on foreign exchange:

- unrealised - (5)

Interest income - (1)



36. LOSS AFTER TAXATION FROM DISCONTINUED OPERATIONS (cont’d)

(b) The cash flows attributable to the discontinued operations in the previous financial year were the following:-

The Group

2014 2013

RM’000 RM’000

Net cash for operating activities - (3,130)

Net cash for investing activities - (188)

Net cash for discontinued operations - (3,318)

37. EARNINGS/(LOSS) PER SHARE

The Group

2014 2013

‘000 ‘000

Continuing operations

Profit attributable to owners of the Company, approximately (RM) 9,122 5,800

Weighted average number of ordinary shares:-

Issued ordinary shares at 1 January 78,598 78,649

Effect of treasury shares held (1) (21)

Weighted average number of ordinary shares at 31 December 78,597 78,628

Basic earnings per ordinary share (Sen) 11.6 7.4

Discontinued operations

(Loss)/Profit attributable to owners of the Company approximately (RM) - (449)

Weighted average number of ordinary shares at 31 December (as above) - 78,628

Basic (loss)/earnings per ordinary share (Sen) - (0.6)

The diluted earnings/(loss) per share was not presented as there were no dilutive potential ordinary shares outstanding at the end of the reporting period.

38. DIVIDEND

The Group/The Company

2014 2013

RM’000 RM’000

Paid:-

A single tier interim dividend of 2.50 sen per ordinary share (2013 – 2.00 sen) in current financial year 1,965 1,573



cont’d

38. DIVIDEND (cont’d)

On 26 February 2015, the Board declared a single tier interim dividend of 2.5 sen per ordinary share amounting to approximately RM1,965,000 in respect of the financial year ended 31 December 2014. The financial statements for the financial year ended 31 December 2014 do not reflect this declared dividend and such dividend will be accounted for as a liability in the financial year ending 31 December 2015.

39. PURCHASE OF PROPERTY, PLANT AND EQUIPMENT

The Group

2014 2013

RM’000 RM’000

Cost of property, plant and equipment purchased 1,488 13,843

Amount financed through hire purchase - (160)

Amount financed through term loan - (8,800)

Transferred to assets of disposal group classified as held for sale - 204

Cash disbursed for purchase of property, plant and equipment 1,488 5,087

40. CASH AND CASH EQUIVALENTS

For the purpose of the statements of cash flows, cash and cash equivalents comprise the following:-


2014 2013 2014 2013

RM’000 RM’000 RM’000 RM’000

Deposits with licensed banks (Note 20) 10,490 8,201 6,846 4,245


Bank overdraft (Note 31) (85) - - -

Transferred to assets of disposal group classified as held for sale (Note 22) - 1,930 - -

15,664 14,145 6,879 4,285

Less: Deposit pledged to licensed bank (Note 20) (1,091) (1,040) - -

14,573 13,105 6,879 4,285



41. 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:-


2014 2013 2014 2013

RM’000 RM’000 RM’000 RM’000

Directors of the Company

Executive directors:

- non-fee emoluments 2,123 1,497 - -

Non-executive directors:

- fee 103 103 103 103

- allowance 15 15 15 15

118 118 118 118

2,241 1,615 118 118

Directors of the Subsidiaries

Executive directors:

- non-fee emoluments 361 404 - -

2,602 2,019 118 118

(b) Details of directors’ emoluments for the Company received/receivable for the financial year in bands of RM50,000 are as follows:-

The Company

2014 2013

Executive Directors

Non-Executive Directors

Executive Directors

Non-Executive Directors

Below RM50,000 - 3 - 3

RM150,001 – RM200,000 - - - -

RM200,001 – RM250,000 - - 1 -

RM250,001 – RM400,000 1 - - -

RM600,001 – RM650,000 - - - -

RM650,001 – RM700,000 - - - -

RM700,001 – RM750,000 - - - -

RM850,001 – RM900,000 - - - -

RM1,000,001 – RM1,050,000 - - - -

RM1,050,001 – RM1,250,000 - - - -

RM1,250,001 – RM1,500,000 - - 1 -

RM1,500,001 – RM1,750,000 - - - -

RM1,750,001 – RM2,000,000 1 - - -



cont’d

42. SIGNIFICANT RELATED PARTY DISCLOSURES

(a) Identities of related parties

The Group has related party relationships with:-

(i) its holding companies as disclosed in Note 3 to the financial statements; and

(ii) directors, key management personnel, entities of which the directors and/or key management have significant financial interests and entities within the same group of the companies.

(b) In addition to the information detailed elsewhere in the financial statement, the Group and the Company carried out the following significant transactions with the related parties during the financial year :-

The Group

2014 2013

Note RM’000 RM’000

Associate company

NSS

- Sale of goods 896 1,225

- loan interest payable 98 82

Related company

UMSC (i)

- Sale of goods 24 44

- Purchase of goods 4,249 2,624

Related parties

Ming Kee (ii)

- Sale of goods - 37

- Purchase of goods 108 466

- Rental paid/payable - 15

HPC (ii)

- Purchase of goods 261 1,079

Group Talents Ltd. (ii)

- Purchase of goods - 83

Supeready Elec (Fenghua) Co Ltd. (ii)

- Sale of goods - 10

Cico Electrical Industries Sdn Bhd (ii)

- Sale of plant and machinery - 100



42. SIGNIFICANT RELATED PARTY DISCLOSURES (cont’d)

(i) a subsidiary of the immediate holding company.

(ii) a shareholder of the Company and a director of the immediate holding company, Ip Tai Hoi, has substantial financial interests.


2014 2013 2014 2013

RM’000 RM’000 RM’000 RM’000

Key management personnel compensation:

- short-term employee benefits 3,088 2,505 118 118

43. OPERATING SEGMENTS

Operating segments are prepared in a manner consistent with the internal reporting provided to the management as its chief operating decision maker in order to allocate resources to segments and to assess their performance. For management purposes, the Group is organised into business units based on their geographical region.

The management assesses the performance of the operating segments based on operating profit 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.

No segmental analysis by business segment is prepared as the Group operates predominantly in one industry.



cont’d

43. OPERATING SEGMENTS (cont’d)

Malaysia Vietnam Group

RM’000 RM’000 RM’000

2014

Revenue

Total revenue 92,058 4,446 96,504

Inter-segment revenue (30,118) (4,386) (34,504)

External revenue 61,940 60 62,000

Results

Segment results 9,726 131 9,857

Interest income 411 2 413

Unrealised gain on foreign exchange 1,004 - 1,004

Depreciation of investment property (42) - (42)

Depreciation of property, plant and equipment (1,268) (149) (1,417)

Amortisation of prepaid lease payments - (11) (11)

Deposits written off (41) - (41)

Impairment losses on receivables (250) - (250)

Inventories written down (293) - (293)

Unrealised loss on foreign exchange (3) (37) (40)

Gain on disposal of plant and equipment 2,555 - 2,555

Rental of premises (26) - (26)

Reversal of:

- inventories written down 225 100 325

- allowance for impairment losses on receivables 342 - 342

12,340 36 12,376

Finance costs (514)

Share of results in associates 390

Profit before taxation 12,252

Income tax expense (3,130)

Consolidated profit after taxation 9,122




Malaysia Vietnam Group

RM’000 RM’000 RM’000

2014

Assets

Segment assets 58,831 3,949 62,780

Deferred tax assets 101

Tax recoverable 54

Consolidated total assets 62,935

Liabilities

Segment liabilities 14,910 563 15,473

Deferred tax liabilities 1,102

Provision for taxation 753

Consolidated total liabilities 17,328

Other Segment Items

Investment in associates 2,809 - 2,809

Property, plant and equipment 19,258 1,456 20,714

Investment property 2,276 - 2,276

Prepaid lease payments - 351 351

24,343 1,807 26,150



cont’d


Continuing OperationsDiscontinued

Operations TotalOperationsMalaysia Vietnam Group Hong Kong

RM’000 RM’000 RM’000 RM’000 RM’000

2013

Revenue

Total revenue 98,753 1,293 100,046 6,597 106,643

Inter-segment revenue (36,785) (1,274) (38,059) - (38,059)

External revenue 61,968 19 61,987 6,597 68,584

Results

Segment results 10,194 (262) 9,932 (110) 9,822

Interest income 262 2 264 1 265

Rental income - 44 44 - 44

Unrealised gain on foreign exchange 572 - 572 5 577

Depreciation of property, plant and equipment (1,313) (98) (1,411) (56) (1,467)

Amortisation of prepaid lease payments - (11) (11) - (11)

Bad debts written off (464) - (464) - (464)

Impairment losses on receivables (296) - (296) - (296)

Inventories written down (82) (98) (180) (16) (196)

Inventories written off (364) - (364) - (364)

Unrealised loss on foreignexchange (1) (12) (13) - (13)

Gain on disposal of plant and equipment 155 - 155 - 155

Rental of premises (104) - (104) (362) (466)

Reversal of:

- inventories written down 152 - 152 - 152

- allowance for impairment losses on receivables 30 - 30 - 30

8,741 (435) 8,306 (538) 7,768

Finance costs (423) - (423)

Share of results in associates 425 - 425

Profit/(Loss) before taxation 8,308 (538) 7,770

Income tax expense (2,508) 89 (2,419)

Consolidated profit after taxation 5,800 (449) 5,351




Continuing OperationsDiscontinued

Operations TotalOperationsMalaysia Vietnam Group Hong Kong

RM’000 RM’000 RM’000 RM’000 RM’000

2013

Assets

Segment assets 47,895 2,599 50,494 8,870 59,364

Deferred tax assets 176

Tax recoverable 80

Consolidated total assets 59,620

Liabilities

Segment liabilities 17,005 2,895 19,900 3,334 23,234

Deferred tax liabilities 1,102

Provision for taxation 613

Consolidated total liabilities 24,949

Other Segment Items

Investment in associates 2,360 - 2,360 - 2,360

Property, plant and equipment 22,478 1,241 23,719 131 23,850

Investment property 2,318 - 2,318 - 2,318

Prepaid lease payments - 345 345 - 345

Other investment 3 - 3 - 3

27,159 1,586 28,745 131 28,876

Major Customers

There is no customer with revenue equal to or more than 10% of the Group’s revenue.

44. CAPITAL COMMITMENTS

The Group

2014 2013

RM’000 RM’000

Contracted But Not Provided For

- Purchase of a motor vehicle 917 -



cont’d

45. CONTINGENT LIABILITY

The Company

2014 2013

RM’000 RM’000

Unsecured

Corporate guarantee given to licensed banks for credit facilities granted to subsidiaries 36,650 36,074

46. FOREIGN EXCHANGE RATES

The principal closing foreign exchange rates used (expressed on the basis of one unit of foreign currency to RM equivalent) for the translation of the foreign currency balances at the end of reporting period are as follows:-

The Group

2014 2013

RM RM

United States Dollar 3.50 3.28

Singapore Dollar 2.65 2.59

Hong Kong Dollar 0.45 0.42

Chinese Renminbi 0.56 0.54

47. FINANCIAL INSTRUMENTS

The Group’s activities are exposed to a variety of market risk (including foreign currency risk, interest rate risk and equity price risk), credit risk and liquidity risk. The Group’s overall financial risk management policy focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group’s financial performance.

47.1 FINANCIAL RISK MANAGEMENT POLICIES The Group’s policies in respect of the major areas of treasury activity are as follows:-

(a) Market Risk

(i) Foreign Currency Risk

The Group is exposed to foreign currency risk on transactions and balances that are denominated in currencies other than Ringgit Malaysia. The currencies giving rise to this risk are primarily United States Dollar (“USD”), Hong Kong Dollar (“HKD”) and Singapore Dollar (“SGD”). Foreign currency risk is monitored closely on an ongoing basis to ensure that the net exposure is at an acceptable level.



47. FINANCIAL INSTRUMENTS (cont’d)

47.1 FINANCIAL RISK MANAGEMENT POLICIES (cont’d)

(a) Market Risk (cont’d)

(i) Foreign Currency Risk (cont’d)

Foreign currency exposure

United StatesDollar

HongKong

DollarSingapore

Dollar OthersRinggit

Malaysia Total


2014

Financial Assets

Trade receivables 4,172 - - - 14,246 18,418

Other receivables and deposits 168 - - - 5,585 5,753

Amount owing by an associate - 2,776 - - 2,776

Deposits with licensed banks 351 - - - 10,139 10,490

Cash and bank balances 2,770 - 8 9 2,472 5,259

7,461 - 2,784 9 32,442 42,696

Financial Liabilities

Trade payables 834 24 - - 1,184 2,042

Other payables and accruals 845 - - - 2,643 3,488

Short-term borrowings 85 - - - 1,224 1,309

1,764 24 - - 5,051 6,839

Net financial Assets/(liability) 5,697 (24) 2,784 9 27,391 35,857

Less: Net financialliabilities denominated in the respective entities’ functional currencies (900) - - - (27,391) (28,291)

Currency Exposure 4,797 (24) 2,784 9 - 7,566



cont’d





Foreign currency exposure (cont’d)

United StatesDollar

HongKong

DollarSingapore

Dollar OthersRinggit

Malaysia Total


2013

Financial Assets

Trade receivables 2,751 - 73 - 15,624 18,448

Other receivables and deposits 193 - - - 436 629

Amount owing by an associate - - 2,916 - - 2,916

Deposits with licensed banks 328 - - - 7,873 8,201

Cash and bank balances 1,190 - 5 2 2,817 4,014

4,462 - 2,994 2 26,750 34,208


Trade payables 538 236 - - 1,668 2,442

Other payables and accruals 559 - - - 4,651 5,210

Short-term borrowings 323 - - - 3,400 3,723

1,420 236 - - 9,719 11,375

Net financial Assets/(liability) 3,042 (236) 2,994 2 17,031 22,833

Less: Net financial liabilities denominated in the respective entities’ functional currencies (142) - - - (17,031) (17,173)

Currency Exposure 2,900 (236) 2,994 2 - 5,660







Foreign currency risk sensitivity analysis

A 5% strengthening/weakening of the Ringgit Malaysia against the HKD as at the end of the reporting period would have immaterial impact on the profit after taxation and equity. This assumes that all other variables remain constant except against the SGD and USD as follows:

The Group

2014 2013

RM’000 RM’000

Effects On Profit After Taxation/Equity

SGD/RM - strengthened by 5% 104 112

- weakened by 5% (104) (112)

USD/RM - strengthened by 5% 180 109

- weakened by 5% (180) (109)

(ii) Interest Rate Risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will 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 policy is to obtain the most favourable interest rates available. Any surplus funds of the Group will be placed with licensed financial institutions to generate interest income.

Information relating to the Group’s exposure to the interest rate risk of the financial assets and

liabilities are disclosed in Note 47.1 (c) to the financial statements.

Interest rate risk sensitivity analysis

The analysis is not presented as the sensitivity impact is immaterial.

(iii) Equity Price Risk

The Group does not have any quoted investments and hence is not exposed to equity price risk.

(b) Credit Risk

The Group’s exposure to credit risk, or the risk of counterparties defaulting, arises mainly from trade and other receivables. The Group manages its exposure to credit risk by the application of credit approvals, credit limits and monitoring procedures on an ongoing basis. For other financial assets (including cash and bank balances), 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 been incurred but not yet identified. Impairment is estimated by management based on prior experience and the current economic environment.



cont’d



(b) Credit Risk (cont’d)

(i) Credit risk concentration profile

The Group does not have any major concentration of credit risk related to any individual customer or counterparty.

(ii) Exposure to credit risk

As the Group does not hold any collateral, the maximum exposure to credit risk is represented by the carrying amount of the financial assets as at the end of the reporting period.

The exposure of credit risk for trade receivables (including amounts owing by associates and

related parties) by geographical region is as follows:-

The Group

2014 2013

RM’000 RM’000

Inside Malaysia 14,310 15,664

Outside Malaysia 4,271 3,238

18,581 18,902

(iii) Ageing analysis

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

GrossAmount

IndividualImpairment

CollectiveImpairment

CarryingValue

The Group RM’000 RM’000 RM’000 RM’000

2014

Not past due 16,919 - - 16,919

Past due:

- 121 to 240 days 1,634 - - 1,634

- 241 to 365 days 55 (27) - 28

- over 365 days 318 (318) - -

18,926 (345) - 18,581





(b) Credit Risk (cont’d)

(iii) Ageing analysis (cont’d)

Gross Individual Collective Carrying

Amount Impairment Impairment Value

The Group RM’000 RM’000 RM’000 RM’000

2013

Not past due 16,059 - - 16,059

Past due:

- 121 to 240 days 2,767 - - 2,767

- 241 to 365 days 110 (34) - 76

- over 365 days 365 (365) - -

19,301 (399) - 18,902

At the end of the reporting period, trade receivables that are individually impaired were those in significant financial difficulties and have defaulted on payments. These receivables are not secured by any collateral or credit enhancement.

The collective impairment allowance is determined based on estimated irrecoverable amounts

from the sale of goods, determined by reference to past default experience.

Trade receivables that are past due but not impaired

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.

Trade receivables that are neither past due nor impaired

A significant portion of trade receivables that are neither past due nor impaired are regular customers that have been transacting with the Group. The Groups uses ageing analysis to monitor the credit quality of the trade receivables. Any receivables having significant balances past due or more than 120 days, which are deemed to have higher credit risk, are monitored individually.



cont’d



(c) Liquidity Risk

Liquidity risk arises mainly from general funding and business activities. The Group practises prudent 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 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):-

WeightedAverageEffective

RateCarryingAmount

ContractualUndiscounted

Cash FlowsWithin1 Year

1 – 5Years

Over 5Years

The Group % RM’000 RM’000 RM’000 RM’000 RM’000

2014

Bank overdraft 7.25 85 85 85 - -

Bankers’ acceptances 4.80 765 765 765 - -

Term loan 4.43 8,097 10,628 797 3,188 6,643

Trade payables - 2,042 2,042 2,042 - -

Other payables and accruals - 3,488 3,488 3,488 - -

Amount owing to a related party - 675 675 675 - -

Amount owing to directors - 321 321 321 - -

15,473 18,004 8,173 3,188 6,643

2013

Hire purchase payable 4.91 133 136 136 - -

Bankers’ acceptances 4.40 3,151 3,151 3,151 - -

Term loan 4.30 8,526 11,425 797 3,188 7,440

Trade payables - 2,442 2,442 2,442 - -

Other payables and accruals - 5,210 5,210 5,210 - -

Amount owing to a related party - 165 165 165 - -

Amount owing to directors - 273 273 273 - -

19,900 22,802 12,174 3,188 7,440





(c) Liquidity Risk (cont’d)

WeightedAverageEffective

RateCarryingAmount

ContractualUndiscounted

Cash FlowsWithin1 Year

1 – 5Years

The Company % RM’000 RM’000 RM’000 RM’000

2014

Other payables and accruals - 26 26 26 -

Amount owing to a subsidiary - 1,308 1,308 1,308 -

Amount owing to directors - 118 118 118 -

1,452 1,452 1,452 -

2013

Other payables and accruals - 2,074 2,074 2,074 -

Amount owing to a subsidiary - 1,284 1,284 1,284 -

Amount owing to directors - 118 118 118 -

3,476 3,476 3,476 -

47.2 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 debt-to-equity ratio that complies with the debt covenants and regulatory, if any. The debt-to-equity ratio is calculated as total borrowings from financial institutions divided by total equity.

The debt-to-equity ratio of the Group at the end of the reporting period is not presented as its cash and cash equivalents exceeded the total borrowings from financial institutions.

Under the requirement of Bursa Malaysia Practice Note No. 17/2005, the Company is required to maintain a consolidated shareholders’ equity (total equity attributable to owners of the Company) equal to or not less than the 25% of the issued and paid-up share capital (excluding treasury shares) and such shareholders’ equity is not less than RM40 million. The Company has complied with this requirement.



cont’d


47.3 CLASSIFICATION OF FINANCIAL INSTRUMENTS


2014 2013 2014 2013

RM’000 RM’000 RM’000 RM’000

Financial Assets

Loans and receivables financial assets

Trade receivables 18,418 18,448 - -

Other receivables and deposits 5,753 629 - -

Amount owing by an associate 2,776 2,916 - -

Amount owing by a related party 1 - - -

Dividend receivable - - 4,800 4,300

Deposits with licensed banks 10,490 8,201 6,846 4,245


42,697 34,208 11,679 8,585

Fair value through profit or loss

Other investment - 3 - -


Other financial liabilities

Bank overdraft 85 - - -

Hire purchase payable - 133 - -

Bankers’ acceptances 765 3,151 - -

Term loan 8,097 8,526 - -

Trade payables 2,042 2,442 - -

Other payables and accruals 3,488 5,210 26 2,074

Amount owing to a subsidiary - - 1,308 1,284

Amount owing to a related company 675 165 - -

Amount owing to directors 321 273 118 118

15,473 19,900 1,452 3,476




47.4 FAIR VALUE INFORMATION

At the end of the reporting period, there was no financial instrument carried at fair values.

The fair values of the financial assets and financial liabilities maturing within the next 12 months approximated their carrying amounts due to the relatively short-term maturity of the financial instruments. The fair values are determined by discounting the relevant cash flows at rates equal to the current market interest rate plus appropriate credit rating, where necessary. The fair values are included in level 2 of the fair value hierarchy.

48. SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR

During the financial year:

(a) the wholly-owned subsidiary, United MS Electrical Mfg (M) Sdn Bhd, entered into a Sale and Purchase Agreement with Acestahl Rubber Sdn Bhd (Company No. 909234-K), for the disposal of a piece of freehold land measuring approximately 42,182 square feet together with a one and a half (1 ½) storey warehouse erected thereon and bearing postal address at Lot 659 (Sub Lot KS/E), Jalan Bukit Rawang Jaya, Batu 20, 48000 Rawang, Selangor Darul Ehsan for a total cash consideration of RM5.58 milliion. The disposal was completed during the current financial year.

(b) the Company completed the Sale of Share Agreement with Ip Tai Hoi Paul for the disposal of its entire shareholding in its wholly-owned subsidiary, High Project Limited (“HPL”), consisting of 8,800,000 ordinary shares of nominal value of HKD1 each for a total sale consideration of HKD10,796,000, or equivalent to RM4.60 million approximately. Upon completion, HPL ceased to be a wholly-owned subsidiary of the Company.



cont’d

49. SUPPLEMENTARY INFORMATION – DISCLOSURE OF REALISED AND UNREALISED PROFITS

The breakdown of the retained profits of the Group and of the Company as at the end of the reporting year into realised and unrealised profits are presented in accordance with the directive issued by Bursa Malaysia Securities Berhad and prepared in accordance with Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants, as follows:-


2014 2013 2014 2013

RM’000 RM’000 RM’000 RM’000

Total retained profits of the Company and its subsidiaries:

- realised 43,196 40,592 4,394 4,332

- unrealised (37) (393) - -

43,159 40,199 4,394 4,332

Total share of retained profits of an associate:

- realised 1,604 1,169 - -

- unrealised (4) (9) - -

44,759 41,359 4,394 4,332

Less: Consolidation adjustments (13,342) (17,099) - -

At 31 December 31,417 24,260 4,394 4,332


List of Propertiesas at 31 December 2014

LocationDescription of property

Tenure/ Expiry on

leaseYear of

Acquisition

Land area (square

feet)

Net Book Value(RM)

Approximate Age of

Building (Years)

Lot 5, Batu 7½ Jalan IpohRawang Industrial Estate48000 RawangSelangor Darul Ehsan

Single-storey detached factory with a 4-storey front office annex

Freehold 1991 58,017 4,726,407 20

B2-08 Taman OrchidRawang Perdana 248000 RawangSelangor Darul Ehsan

Five-storey medium cost apartment for workers’ accommodation

Freehold 2002 668 - 13

Lot 48, Jalan Industri 2/1 Rawang Integrated Industrial Park48000 RawangSelangor Darul Ehsan

Single-storey factory and three-storey office building

Freehold 2013 132,800 11,945,496 2

No. PT 4661, TempatBatu 17 ½Jalan Rawang Bandar Rawang TambahanDaerah GombakSelangor Darul Ehsan

Vacant land Leasehold 2013 92,558 2,276,230 -

Lot P2 Viet Huong Industrial Park Thuan Gio VillageThuan An DistrictBinh Duong ProvinceVietnam

Two-storey detached factory

Leasehold 2004 51,648 1,161,655 9

* The applicable closing foreign exchange rate used (expressed on the basis of US$1.00 = RM 3.4965 as at the balance sheet date).

107UMS-NEIKEN GROUP BERHAD (Company No. 650473-V) Annual Report 2014

Analysis of Shareholdingsas at 1 April 2015

Authorised Share Capital : RM50,000,000.00Issued and Fully Paid-Up Capital : RM40,000,000.00 Class of Shares : Ordinary shares of RM0.50 eachVoting Right : Every member of the Company, present in person or by proxy, shall have on a show of hands, one (1) vote or on a poll, one (1) vote for each share heldNumber of Shareholders : 883

ANALYSIS OF SHAREHOLDINGS

Size of Shareholdings No. of

Shareholders %No. of Shares %

Less than 100 5 0.57 254 0.00

100 to 1,000 182 20.61 144,911 0.18

1,001 to 10,000 457 51.76 2,572,710 3.27

10,001 to 100,000 200 22.65 6,241,600 7.94

100,001 to 3,929,789 35 3.96 11,363,762 14.46

3,929,790 and above 4 0.45 58,272,563 74.14

Total 883 100.00 78,595,800 100.00

SUBSTANTIAL SHAREHOLDERS’ SHAREHOLDINGS

Direct Interest Indirect Interest

NamesNo. of shares %*

No. of shares %*

1. United MS Holdings Sdn Bhd 40,025,520 50.93 - -

2. Ker Min Choo 12,498,100 15.90 - -

3. Ip Tai Hoi Paul 6,234,643 7.93 40,025,520(1) 50.93

4. Chengco Enterprise Sdn Bhd - - 40,025,520(2) 50.93

5. Cheng Wong - - 40,025,520(1) 50.93

6. Dee Kim Huay - - 40,025,520(3) 50.93

Notes:

* Excluding a total of 1,402,200 shares purchased by the Company and retained as treasury shares as at 1 April 2015.(1) Deemed interested by virtue of his direct interest in United MS Holdings Sdn Bhd (“UMSH”) and indirect interest in UMSH held

via Chengco Enterprise Sdn Bhd (“CESB”) pursuant to Section 6A of the Act.(2) Deemed interested by virtue of its direct interest in UMSH pursuant to Section 6A of the Act.(3) Deemed interested by virtue of her indirect interest in UMSH held via CESB pursuant to Section 6A of the Act.


DIRECTORS’ SHAREHOLDINGS

Direct Interest Indirect Interest

NamesNo. of shares %*

No. of shares %*

1. Cheng Wong - - 40,053,520** 50.96

2. Dee Kok Yong 37,000 0.05 - -

3. Lim Peng @ Lim Pang Tun - - - -

4. Lee Kok Yong - - - -

5. Cheng Siow Chun - - - -

* Excluding a total of 1,402,200 shares purchased by the Company and retained as treasury shares as at 1 April 2015.** Deemed interested by virtue of his: (i) Direct shareholding in UMSH and indirect shareholding in UMSH held via CESB pursuant to Section 6A of the Act =

40,025,520 (ii) Indirect interest by virtue of the shares held by his daughter pursuant to Section 134(12)(c) of the Act = 28,000

LIST OF THIRTY (30) LARGEST SHAREHOLDERS

No. NamesNo. of Shares %*

1. United MS Holdings Sdn Bhd 40,025,520 50.92

2. Ker Min Choo 8,000,000 10.18

3. Ip Tai Hoi Paul 6,234,643 7.93

4. Alliancegroup Nominees (Tempatan) Sdn BhdPledged Securities Account for Ker Min Choo

4,012,400 5.11

5. Ker Yan Ling 1,448,800 1.84

6. Lawrence Lee 1,072,549 1.36

7. Pang Chun Yue Andrew 1,072,549 1.36

8. Hii Kuong Jing 800,000 1.02

9. Maybank Nominees (Tempatan) Sdn BhdPledged Securities Account for Wong Toh Yeo

520,500 0.66

10. CIMSEC Nominees (Tempatan) Sdn BhdCIMB Bank for Ker Min Choo (MY1335)

485,700 0.62

11. Kek Kok Swee 421,800 0.54

12. HLB Nominees (Tempatan) Sdn BhdPledged Securities Account for Lim Chong Ee

386,000 0.49

13. RHB Capital Nominees (Tempatan) Sdn BhdPledged Securities Account for Fong Siling (CEB)

370,000 0.47

14. Mah Chin Heng 321,764 0.41

15. Lim Boh Koi 311,000 0.40

16. Chin Peng Kong 295,000 0.38

17. Public Nominees (Asing) Sdn BhdPledged Securities Account for Mok Jia Min (E-JBU)

274,400 0.35

Analysis of Shareholdingsas at 1 April 2015cont’d


LIST OF THIRTY (30) LARGEST SHAREHOLDERS (cont’d)

No. NamesNo. of Shares %*

18. Yeoh Kee Hock 267,200 0.34

19. Lee Pek Wah 262,000 0.33

20. Richard Keith Jones 221,000 0.28

21. RHB Nominees (Tempatan) Sdn BhdPledged Securities Account for Lily Wong Tze Ing

210,000 0.27

22. Imperis Corporation Sdn Bhd 209,000 0.27

23. RHB Nominees (Asing) Sdn BhdMing Kee Manufactory Limited

200,000 0.25

24. Ong Tiong Hing 192,000 0.24

25. Maybank Nominees (Tempatan) Sdn BhdPledged Securities Account for Eng Lai Sim

185,000 0.24

26. Kok Ah Kum @ Oh Boon Seck 182,200 0.23

27. Maybank Nominees (Tempatan) Sdn BhdPledged Securities Account for Wong Ing Wang

160,000 0.20

28. Siaw Sam Pat @ Siow Sak Voon 160,000 0.20

29. Tan Ah Kow @ Tan Chee Lin 155,000 0.20

30. Woung Lik Chiong 135,500 0.17

* Excluding a total of 1,402,200 shares purchased by the Company and retained as treasury shares as at 1 April 2015.

Analysis of Shareholdingsas at 1 April 2015

cont’d

110 UMS-NEIKEN GROUP BERHAD (Company No. 650473-V) Annual Report 2014

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UMS-NEIKEN GROUP BERHAD(Company No. 650473-V)(Incorporated in Malaysia under the Companies Act, 1965)

I/We NRIC No./Co. No. (full name in block letters)

of (full address)

Tel No. being a member/members of UMS-NEIKEN GROUP BERHAD hereby

appoint the *THE CHAIRMAN OF THE MEETING or failing him/her

Name Address NRIC/Passport No. Proportion of Shareholdings (%)

1.

*And/or (delete as appropriate)

2.

as my/our proxy/proxies, to vote for me/us on my/our behalf at the Eleventh Annual General Meeting of UMS-Neiken Group Berhad to be held at Tasik Puteri Golf & Country Club, Bandar Tasik Puteri, 48000 Rawang, Selangor Darul Ehsan on Wednesday, 27 May 2015 at 10.00 a.m., or at any adjournment thereof.

* If you wish to appoint other person(s) to be your proxy(ies), kindly delete the words “The Chairman of the Meeting or failing him/her” and insert the name(s) of the person(s) desired.

My/our proxy/proxies is/are to vote as indicated below:

Resolutions For Against

Ordinary Business

1. To re-elect Ms Cheng Siow Chun as Director.

2. To elect Mr Yau Ming Teck as Director.

3. To elect Encik Amirul Azhar Bin Baharom as Director.

4. To approve the Directors’ Fees amounting to RM103,000 for the financial year ended 31 December 2014.

5. To approve the Directors’ Fees amounting to RM103,000 for the financial year ending 31 December 2015.

6. To re-appoint Messrs Crowe Horwath as Auditors of the Company and to authorise the Directors to fix their remuneration.

Special Business

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

8. Proposed Renewal of Existing and New Shareholders’ Mandate for Recurrent Related Party Transactions of a Revenue or Trading Nature.

9. Proposed Renewal of Authority for the Company to Purchase Its Own Shares of up to 10% of the Issued and Paid-Up Share Capital of the Company.

(Please indicate with a cross (X) in the space provided, how you wish your vote to be cast in respect of the above resolutions. If you do not do so, the proxy may vote or abstain at his/her discretion.)

Signed this day of 2015

Notes:

(1) A member of the Company entitled to attend and vote at the meeting is entitled to appoint a proxy or proxies to attend and vote in his stead. A proxy may but need not be a member of the Company. A member may appoint any person to be his proxy without limitation. If the proxy is not a member, he need not be an advocate, an approved company auditor or a person approved by the Registrar of Companies.

(2) A member shall be entitled to appoint more than one proxy (subject always to a maximum of two (2) proxies at each meeting) to attend and vote at the same meeting. Where a member appoints two (2) proxies, the appointment shall be invalid unless the member specifies the proportion of his shareholding to be represented by each proxy.

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

(4) If no name is inserted in the space provided for the name of your proxy, the Chairman of the meeting will act as your proxy. (5) The instrument appointing a proxy must be deposited at the Registered Office of the Company at 10th Floor Menara Hap Seng, No. 1 & 3 Jalan P.

Ramlee, 50250 Kuala Lumpur not less than forty-eight (48) hours before the time for holding the meeting or any adjournment thereof. (6) If the appointer is a corporation, the instrument appointing a proxy must be executed under its Common Seal or under the hand of its attorney.(7) The Date of the Record of Depositors for the purpose of determining Members’ entitlement to attend, vote and speak at the Meeting is 23 April

2015.

No. of ordinary shares held CDS Account No.

PROXY FORM

Signature/Common Seal of Shareholder

AFFIxSTAMPHERE

1st fold here

Fold this flap for sealing

Then fold here

The Company Secretary

UMS-NEIKEN GROUP BERHAD (650473-V)

10th Floor Menara Hap SengNo. 1 & 3 Jalan P. Ramlee50250 Kuala Lumpur

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