Triumphal Associates Bhd M

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1 Triumphal Associates Bhd M

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3 Contents 02 Corporate Information 04 Our Network 05 Corporate Structure 06 Profile of Directors 08 Chairman s Statement 11 Statement on Corporate Governance 21 Audit Committee Report 25 Statement on Risk Management and Internal Control 27 5-Year Group Financial Highlights 28 Financial Statements 106 List of Properties 109 Analysis of Shareholdings 112 Notice of 36th Annual General Meeting 114 Appendix I 115 Form of Proxy

4 02 CORPORATE INFORMATION Board of Directors Toh Thim Leong Executive Chairman Toh Chee Yeong Managing Director Chuah Sue Yin Independent Non-Executive Director Leung Hoong Leong Thong Kuan Independent Non-Executive Director Choo Yook Seng Independent Non-Executive Director

5 03 CORPORATE INFORMATION (cont d) Audit Committee Chairperson Chuah Sue Yin Members Leung Hoong Leong Thong Kuan Choo Yook Seng Nomination Committee Chairman Leung Hoong Leong Thong Kuan Members Chuah Sue Yin Choo Yook Seng Remuneration Committee Chairman Leung Hoong Leong Thong Kuan Members Toh Thim Leong Chuah Sue Yin Company Secretaries Ang Mui Kiow (LS ) Lim Seck Wah (MAICSA No ) Auditors SJ Grant Thornton Level 11, Bangunan Faber Imperial Court, Jalan Sultan Ismail, Kuala Lumpur Share Registrar Mega Corporate Services Sdn. Bhd. Level 15-2, Bangunan Faber Imperial Court Jalan Sultan Ismail, Kuala Lumpur Tel : Fax : Registered Office Suite 7E, Level 7, Menara Ansar, 65 Jalan Trus, Johor Bahru, Johor Tel : Fax : Principal Bankers OCBC Bank (Malaysia) Bhd. Public Bank Berhad Solicitors Steven Tai, Wong & Partners Website Securities Exchange Listing Main Market of Bursa Malaysia Securities Berhad (Bursa Securities) Sector : Trading/Services Stock Name : TRIUMPL Stock Code : 9911

6 04 OUR NETWORK Beijing Shandong Guangzhou Shanghai Tongxiang MALAYSIA Singapore Dealer Outlets Our Outlets Kota Kinabalu Keningau Lahad Datu Tawau Miri Kuala Lumpur Bintulu Johor Bahru Singapore Incorporated in 1977 and with over 35 years of thriving, Triumphal Associates Bhd. ( TAS ) has grown from a single spare parts retailing business to importing and wholesaling operation into a resilient and dynamic group with growing international presence and expanding manufacturing facilities. TAS has now emerged as one of the prominent manufacturers and distributors of heavy machinery spare parts in Malaysia and worldwide.

7 05 CORPORATE STRUCTURE Corporate Office: 24, Persiaran Industri, Bandar Sri Damansara, Kuala Lumpur. Tel : Fax : Branch Office: 125, Batu 4 1/2, Jalan Skudai, Tampoi, Johor Bahru, Johor. Tel : Fax : Triumphal Associates Bhd M 100% 100% 100% 100% 100% 51% 50% 100% 100% TMS Triumphal Machinery Supply Sdn. Bhd. ( D) TESP Triumphal Equipment Spare Parts Sdn. Bhd. ( W) USGP USG Products Sdn. Bhd. ( W) AEC AEC Products Limited ( ) TPEZ Triumphal Precision Engineering (Zhejiang) Ltd. ( ) SYPE ShengYou Precision Engineering Manufacturing (QuanZhou) Co. Ltd. ( ) SSTC Shandong Shantui Triumphal Construction Machinery Co., Ltd. ( ) USG USG Products (F.E.) Pte. Ltd. ( H) MTTS M.T.T.S. Pte. Ltd. ( G) 100% USG SHANGHAI USG Far East International Trading (Shanghai) Ltd. (307608)

8 06 PROFILE OF DIRECTORS Toh Thim Leong (Executive Chairman) aged 71, Malaysian Toh Thim Leong was appointed to the Board of Triumphal Associates Bhd. ( TAS ) on 25 May He is a member of the Remuneration Committee of TAS. Mr. Toh ventured into the business of machinery spare parts since 1969 and has vast experience and knowledge in the spare parts industry. Over the years, he is involved in the strategic planning and overall management and operation of TAS Group. His dynamism, vision and entrepreneur skill have contributed to the development and growth of the Group. He also sits on the Board of several other private limited companies. Toh Chee Yeong (Managing Director) aged 41, Malaysian Toh Chee Yeong was appointed to the Board of TAS on 19 June Mr. Toh holds a Master s degree in Business Administration from the University of Bath, United Kingdom and a Degree in Engineering (Hons) from the University of Warwick in United Kingdom. He worked as a Process Engineer in Texas Instrument (M) Sdn. Bhd. before joining TAS as an Engineering Manager and later as the Operations Manager prior to his appointment to the Board. Mr. Toh was appointed as the Managing Director of TAS in He also sits on the Board of several other private limited companies.

9 07 PROFILE OF DIRECTORS (cont d) Chuah Sue Yin (Independent Non-Executive Director) aged 42, Malaysian Chuah Sue Yin was appointed to the Board of TAS on 23 February She is the Chairman of the Audit Committee of TAS. She also serves as the member of Remuneration and Nomination Committee of TAS. Ms. Chuah holds a Management Science degree with honours from the University of Warwick in United Kingdom. She is also a Chartered Accountant of the Malaysian Institute of Accountants and an Associate of the Institute of Chartered Accountants in England and Wales. Leung Hoong Leong Thong Kuan (Independent Non-Executive Director) aged 76, Malaysian Leung Hoong Kuan was appointed to the Board of TAS on 1 September He serves as Chairman of Nomination Committee and Remuneration Committee of TAS. He is also a member of Audit Committee. Mr. Leung was the Chief Executive Officer of a leading foreign based insurance company and has more than 40 years of experience in the insurance industry. He is also currently sitting as an Independent Non-Executive Director on the board of one major insurance company in Malaysia. She was trained, qualified and worked in Pricewaterhousecoopers in United Kingdom before returning to Malaysia in 1999 to join Paul Chuah & Co as a senior manager. In 2004, she was admitted as a partner of Paul Chuah & Co. With effect from 1 April 2007 she was appointed as managing partner of Paul Chuah & Co. She has more than ten years experience in the accounting and auditing professions. She also sits on the board of several other private limited companies. Choo Yook Seng (Independent Non-Executive Director) aged 50, Malaysian Choo Yook Seng was appointed to the Board of TAS on 23 May He is a member of the Audit Committee and Nomination Committee. He is a Chartered Accountant of the Malaysian Institute of Accountants as well as a Chartered Accountant of the Institute of Chartered Accountants New Zealand. He holds an Executive MBA in General Management (with Merit) from the University of Bath, United Kingdom and a Bachelor of Business Studies in Accounting and Finance from Massey University, Palmerston North, New Zealand. Mr Choo has more than 20 years of working experience in areas of finance, accounting, auditing, corporate planning and human resource developments. He has held many senior posts and has worked in many Malaysia and foreign multinational conglomerates. Mr. Choo is currently the Project Director in Silverlake Relational Data Sdn Bhd, a subsidiary of the Silverlake Group. He was previously the Vice President of Corporate Reporting and Tax Administration of EON Bank Berhad and prior to that he was the Pacific Hub Financial Controller of Vestas Asia Pacific Wind Technology Pte. Ltd. in Singapore.

10 08 CHAIRMAN S STATEMENT On behalf of the Board of Directors of Triumphal Associates Bhd ( The Board ), it is my pleasure and privilege to present the Annual Report and Audited Financial Statements of the company and the Group ( The Group ) for the financial year ended 31 December Financial Review The overall business conditions and sentiment during the year were becoming very challenging. As of result of the uncertain economic climate, the global demand of our product is dropping and this has affected our financial performance significantly. For the financial year under review, the Group registered a decrease of 15.8 % in revenue to RM million for the year ended 31 December 2012 as compared to RM million achieved for the previous financial year. The thinner gross profit margin is due to competitive pricing and the overall higher operating costs, the profit after tax had decreased to RM 3.62 million as compared to RM million in the last financial year resulting in year-on-year decrease in profit after tax of 75 %. The earning per share ( EPS ) decreased from sen to 4.22 sen in the financial year ended Business Developments The speed of transformation from trading to manufacturing is now moving at a slower pace than anticipated due to the persistent global economy crisis. Our inroad into manufacturing from the traditional trading activities had not been a smooth path although our supply chain management strategies with regards to strategic sourcing, product grouping, market positioning and brand management had been enhanced and upgraded to a higher level. However, the Group will continue to invest in manufacturing activities for the next five years even during this global economic downturn and climate. The continuous investment in the manufacturing activities is the only viable way for us to stay competitive in the future.

11 09 CHAIRMAN S STATEMENT (cont d) The Group has already incurred substantial capital expenditure in the manufacturing facilities in China and Malaysia. Nevertheless, in order to substantially develop its manufacturing business, the Group will have to undertake more capital expenditure, especially in upgrading to automation facilities to manufacture high quality parts at competitive costs before the Group can reap the benefits from its investment in the manufacturing division. Corporate Governance The Board is fully committed to ensure the highest standard of corporate governance and is committed to apply and complied with the best practices and recommendations set out in the Malaysian Code on Corporate Governance As the Group operates in different global business environments, the Board recognizes its role in effective discharge of its stewardship responsibilities in respect of the Group s overall strategic direction, corporate governance, financial performance, allocation of resources and upholding the respective governing laws and regulations. The Board believes in ensuring and maintaining professionalism and integrity in its business and functional units, enhancing monitoring processes and aligning appropriate risks management and internal controls to mitigate risks that can impact corporate survival and weakening overall growth. Corporate Social Responsibility The Group recognizes and acknowledges its responsibility to uphold good corporate social responsibility and social conducts towards its marketplace, community, workplace and environment. In the workplace, the staffs are encouraged to interact and deliberate on issues affecting their jobs and the work place. The Group is also committed to maintain a safe and performance driven environment in the countries that its operate in order to inculcate and promote teamwork and meritocracy nurturing staffs potential and career progression. The Group acknowledges hard work and dedication by giving cash rewards, incentive trips, engaging staffs in training and brainstorming sessions, organising day trips, etc. The Group s social responsibility in the marketplace extends beyond maintaining good customer relationship. The Group is committed to ensure satisfying customer services, ethical business policies and improving business processes. The above commitment also extends to active procurement and sourcing in terms of safety and reliability in goods and services provided, engaging with stakeholders striking to maintain sustainable shareholders value.

12 10 CHAIRMAN S STATEMENT (cont d) Outlook and Prospects The Group had experienced a year of turbulence and dynamic global business environment in the financial year ended 31st December 2012 and the Group is expected to be facing its worst ever year in year The recent economic challenges gripping the United States of America, the Euro zone and China, which resulted by tightening measures and the austerity drive by various governments, the demand of our parts has been softened particularly from the international sales. The shrinking market size in our industry, the falling prices of our products from increasing competition and higher production cost (especially wages in the China manufacturing plant and the recent implementation of minimum wages by Malaysian Government) will exert significant pressure on already thinning profit margin and lower down the revenue. In addition, high depreciation costs from the continuous investment in capital expenditure will erode the profit margin further. As the financial and economic conditions in the advance economies deteriorated and the spill-over effect began to be felt by the Asian economies, the continuous rising costs associated with our operation and the business, the Group is facing a lot of uncertainties in the years ahead. In view of the above, the Group is expected to have a worsening profit outlook particularly during the gestation period for the next 2 to 3 years. Acknowledgements We would like to express our deepest appreciation to the Board of Directors for their contributions, supports, sound guidance and share experience towards the success of the Group. We would also like to extend our appreciation to the management and staffs for their commitment and hard work, our achievement and goals will not be possible without their dedication and teamwork. On behalf of the Board, I would like to express our utmost gratitude to our customers, business partners, bankers and shareholders for their steadfast supports and cooperation throughout the year. Toh Thim Leong Chairman

13 11 STATEMENT ON CORPORATE GOVERNANCE INTRODUCTION The Board of Directors ( Board ) of Triumphal Associates Bhd ( TAS ) is committed to ensure the highest standards of corporate governance are practiced throughout the Triumphal Associates Bhd Group of Companies ( Group ) as a fundamental part of discharging its responsibilities to protect and enhance shareholders value and the financial performance of the Group. Set out below is the manner in which the Group has applied the principles of good governance and the extent to which it has complied with the best practices set out in the Malaysian Code on Corporate Governance 2012 ( Code ). These principles and best practices have been applied and complied with throughout the year ended 31 December DIRECTORS 1. The Board and its responsibilities The Board recognizes its role in effective discharge of its stewardship responsibilities. To facilitate this role, the Board is responsible for the Group s overall strategic direction, corporate governance, financial performance, allocation of resources, establishing goals for management and monitoring the achievement of these goals. The Board has a formal schedule of matters reserved to its decision including approving and reviewing the quarterly unaudited consolidated results and recommendation by other Board Committees but is also tasked to decide on other significant matters as follow: Reviewing and adopting the Company s strategic plans Overseeing the conduct of the Company s business Identifying principal risks and ensuring the implementation of appropriate internal controls and mitigation measures Succession planning Reviewing the adequacy and the integrity of the internal controls system of the Company Acquisition, Disposal or Closure of a business Proposal of borrowings Annual budget Corporate restructuring Credit policy Capital Investment in Subsidiaries / Joint venture Declaration of Dividend The Board is duly assisted by several Board committees, namely, the Audit, Nomination and Remuneration Committee, which operate within approved terms of reference. These Committees have the authority to examine the particular issues and report to the Board with their recommendations. In manifestation of its commitment to the Code, the Board has established a Board Charter defining the respective roles, duties and responsibilities and the various legislations and regulations affecting their conduct and that the principles and practices of good corporate governance are applied in all their dealings in respect and on behalf of the Company. The Board Charter is subject to review periodically to ensure their relevance and compliance. The Board is also committed towards its responsibilities to uphold good corporate social responsibility towards its market place, workplace, environment and community.

14 12 STATEMENT ON CORPORATE GOVERNANCE (cont d) DIRECTORS (cont d) 2. Board Composition and Balance The Board consists of five (5) members; comprising an executive Chairman, a Managing Director and three (3) Independent Non-Executive Directors. Majority of the Directors are independent which complied with the Directors independence requirements set out under paragraph of the Listing Requirements that required at least two Directors or one-third of the Board of the company, whichever is the higher, to be independent Directors. A brief profile of each Director is set out in the section on Directors Profile in this Annual Report. The Directors, both executive and non-executive with their different backgrounds, specializations and calibre collectively bring with them considerable depth and wisdom of knowledge, expertise and experience in areas such as technical, finance, marketing, operations and corporate affairs relevant to the direction of the Group and give weight to Board s decisions. The executive Directors are responsible for business development, policies making and implementing the policies overseeing the operations as well as coordinating the development and implementation of business and corporate strategies. The Independent Non-Executive Directors do not participate in the day-to-day management of the company and have no other relationship which can materially interfere with their independent judgment. They deliberate and give independent judgment to the decision making of the Board and challenge the management objectively. There is a clear division in the roles of the Board Chairman and the Managing Director, each with clearly defined responsibilities to ensure that there is a balance of power and authority. The Board operates in an open environment in which opinions and information are freely exchanged and in these circumstances any concerns need not be focused on a single director as all members of the Board fulfill this role individually and collectively. The Board is satisfied that the current Board composition fairly reflects the interests of minority shareholders in the Company. 3. Board Committees The Board has delegated certain responsibilities to Board committees which operate within defined terms of reference, as follows: Board Committees Nomination Committee Remuneration Committee Audit Committee Key Functions Explained on pages 14 of this annual report Explained on pages 17 of this annual report Explained on pages 21 to 24 of this annual report All committees have written terms of reference and operating procedure that are reviewed intermittently. The Board receives reports of all Committees proceedings and deliberations and such reports are incorporated in the minutes of the full Board meeting. These committees were formed to enhance business and operational efficiency as well as efficacy. The Board retains full responsibilities for the direction and control of the Company and the Group.

15 13 STATEMENT ON CORPORATE GOVERNANCE (cont d) DIRECTORS (cont d) 4. Board Meetings The Board meets at scheduled interval with special meetings convened when decision are required expeditiously from the Board between scheduled meetings. During the year, the Board met on seven (7) occasions where all Board members bring an independent judgment to deliberate on a variety of matters including the Group s financial results, strategic and major investments decisions, internal control issues and corporate governance matters. Prior to the meetings of the Board and its three Committees, the agenda together with relevant comprehensive Board papers and reports requiring their consideration are circulated to Directors. This is to enable the Directors to obtain further clarification or explanation, where necessary, in order to be properly briefed before the meeting so that informed decisions can be made. All proceedings from the Board meetings are minuted. The attendance of each Director during the year is set below: Directors Designation No. of meetings attended Toh Thim Leong Executive Chairman 7/7 Toh Chee Yeong Managing Director 7/7 Chuah Sue Yin Independent Non-Executive Director 7/7 Leung Hoong Leong Thong Kuan Independent Non-Executive Director 6/7 Choo Yook Seng Independent Non-Executive Director 7/7 All the Directors have complied with the minimum 50% attendance requirements at Board meetings during the financial year as stipulated by the Listing Requirements. 5. Supply of Information and Access to Advice The Board recognizes that the decision making process is highly dependent on the quality of the information furnished. The Board Chairman plays a key role in ensuring that all Directors have full and timely access to the information pertaining to the Group s business and affairs. All Directors are provided in advance with an agenda and a set of board papers at least five (5) working days prior to Board Meetings to ensures sufficient time for understanding the issues to be deliberated and when necessary, to obtain further explanation and expedites the decision making process. The Directors review and approve all corporate announcements, including the announcements of the quarterly results. Detailed periodic briefings on the company performance, operational and corporate developments, industry outlook, and forward previews are also conducted for the Directors to ensure the Board is well informed on the Group s status quo, corporate trends, prospects and emerging issues. In exercising their duties, the Directors also have unrestricted access to all information within the Company as well as advice and services of the Company Secretary. There is also a formal procedure sanctioned by the Board, whether as a full board or on their own individual capacity, for Directors to obtain independent professional opinion and advice in furtherance of their duties at the Company s expense where required.

16 14 STATEMENT ON CORPORATE GOVERNANCE (cont d) DIRECTORS (cont d) 6. Appointments to the Board Nomination Committee The principal responsibility of the Nomination Committee is to assist the Board on all new Board and Board Committee appointments and to provide a formal and transparent procedure for such appointments. This Committee will ensure the selection of Board members with the right skill, expertise, industry knowledge thus strengthen the composition of the Board and contribute significantly to the effectiveness of the Board. The Nomination Committee is also supportive of gender diversity in the boardroom as recommended by the Code. The composition of the Committee and their duties are as follows:- Chairman: Leung Hoong Leong Thong Kuan - Independent Non-Executive Director Member: Member: Chuah Sue Yin - Independent Non-Executive Director Choo Yook Seng - Independent Non-Executive Director The Committee assists the Board in the following: To review the required mix of skills, experience and other qualities, including core competencies which Non-Executive Directors should bring to the Board; To recommend to the Board, candidates for all Directorship to be filled; To recommend to the Board, Directors to fill the seats on Board Committees; To assess the effectiveness of the Board as a whole, the Committees of the Board, and the contributions of each individual Director; and To examine the size of the Board with a view to determine the impact of the number upon its effectiveness. The Nomination Committee discussed and evaluated the performance of the Board during the financial year ended 31 December 2012 and concluded that the Board of the Company has been effective in leading and advising the management of the Company. It also concluded that the Board members possess the required mix of skills and experience to fulfill their duties. The Board through the Nomination Committee s annual appraisal believes that the current composition of the Board brings the required mix of skills and core competencies required for the Board to discharge its duties effectively. The Board appoints its members through a formal and transparent selection process. New appointees will be considered and evaluated on their skills, qualifications, experiences and other special qualities by the Nomination Committee. The Committee will then recommend the candidate to be approved and appointed by the Board. The Company Secretary will ensure that all appointments are properly made, and that legal and regulatory obligations are met. There is no new appointment of Board member during the financial year Re-election of Directors In accordance with the Company s Articles of Association, all Directors who are appointed by the Board are subject to re-election by shareholders at the forthcoming Annual General Meeting after their appointment. The Articles also provide at least one third of the remaining Directors are subject to re-election by rotation at each Annual General Meeting. The election of each Director is voted on separately. In accordance with Recommendation 3.2 of MCCG 2012, the tenure of independent director is up to nine years only.

17 15 STATEMENT ON CORPORATE GOVERNANCE (cont d) DIRECTORS (cont d) 8. Board Independence The Code recommends that the Chairman of the Board is a non-executive director or the Board must comprise a majority of independent directors if the Chairman is not an independent director. Currently the Company s Chairman is an executive director and the majority of the Board members are independent Directors; there are three (3) independent directors out of the total five (5) board members. The Independent Non- Executive Directors play a leading role in the Board Committees. The Board believes that the interests of shareholders are best served by a Chairman who is sanctioned by the shareholders and who will act in the best interests of shareholders as a whole. As the Chairman represents shareholder with a substantial interest in the Company, he is well placed to act on behalf of the shareholders and in their best interest. The Company complies with the Code though the Chairman is Executive, the Board comprises a majority of Independent Non-Executive Directors. The Board holds the view that the ability of an Independent Director to exercise independence is not a function of his length of service as an Independent Director. The suitability and ability of an Independent Director to carry out his roles and responsibilities effectively are very much a function of his calibre, qualifications, experience and personal qualities. 9. Time Commitment To ensure that the Directors have the time to focus and fulfill their roles and responsibilities effectively, appointees must indicate before accepting any new directorship the time expected to be spent on the new appointment and not to hold directorships in more than five public listed companies and must be able to commit sufficient time to the Company. The Board is satisfied with the level of time commitment given by the Directors towards fulfilling their roles and responsibilities as Directors of the Company; this is evidenced by the attendance record of the Directors at Board meeting. 10. Directors Training The Group acknowledges that continuous education is crucial for the Board members to ensure that the Directors are competent in carrying out their expected roles and responsibilities. Hence they are encouraged to attend training and update from time to time, particularly on relevant new laws and regulations and changing commercial risks to further enhance their skills and knowledge. Directors are further advised to attend talks, seminars, workshop, conferences organized by relevant regulatory authorities and professional bodies. As part of the process of appointing new directors, the Nomination Committee ensures that there is an orientation and education programme for the new Board members. At the date of this Annual Report, all existing Board members have successfully completed the Mandatory Accreditation programme ( MAP ) as stipulated by Bursa securities. The Board continues to evaluate and determine the training needs of its Directors to assist them in the discharge of their duties effectively pursuant to paragraph of the Listing Requirements.

18 16 STATEMENT ON CORPORATE GOVERNANCE (cont d) DIRECTORS (cont d) 10. Directors Training (cont d) All the Directors have attended the following seminars and trainings during the year save for Mr. Choo Yook Seng due to his committed schedule: Training Programmes Audit Peak Period Pointers Preparing for Transition from FRS Frameworks to MFRS Framework Updates to Listing Requirements Getting Ready for IFRS Convergence The Implication and Challenges to Public Listed companies The Law, The practice & You The Transfer Pricing Seminar 2012 Merger & Affiliation Seminar 2012 Implementing Audit Quality Control 2013 Budget Seminar Highlights of Revised and Re-drafted Clarified Standards Audit Documentation- for ISA Compliance Criminal Tax Investigations & Anti Money laundering Risk Committee Program-Insurance Bauma China 2012 Advance Oriental Wisdom and Enterprise Management Course for CEO During the ad hoc or scheduled meetings, directors also received the necessary updates and briefings particularly on regulatory, industry and legal developments, including business risks and measures to mitigate such risks. The Company Secretaries also circulate the relevant guidelines on statutory and regulatory requirements from time to time for the Directors reference and brief the Board members on the updates during the meetings. The company secretary attended all board and committee meetings.

19 17 STATEMENT ON CORPORATE GOVERNANCE (cont d) DIRECTORS (cont d) 11. Directors Remuneration Remuneration Committee The Remuneration Committee is responsible to assist the Board to discharge its duty in remunerating each individual Director. The members of the Committee and its duties during the year are as follows: Chairman: Leung Hoong Leong Thong Kuan - Independent Non-Executive Director Members: Toh Thim Leong - Executive Chairman Chuah Sue Yin - Independent Non-Executive Director To review the annual remuneration package of each individual Director (both executive and non-executive); To recommend to the Board, the remuneration packages of the Directors (both executive and non-executive) of the Company. During the year, the retirement benefits due and payable is RM 6,360,932. The number of Directors whose total remuneration falls into the following bands are: Range of Remuneration The Committee assists the Board in the following:- The details of the remuneration of Directors on Group basis during the year are as follows: Non- Executive Executive RM RM Fee 70,000 75,000 Other Emoluments 2,593,125 - Benefits-in-Kind 59, Total 2,722,275 75,000 = ================================= Number of Director Non- Executive Executive RM 0 RM 50, RM 1,150,001 RM 1,200, RM 1,500,001 RM 1,550, Total 2 3 = =================================

20 18 STATEMENT ON CORPORATE GOVERNANCE (cont d) INVESTOR AND SHAREHOLDER RELATION The Company recognizes the importance of being accountable to its investors and as such has maintained an active and constructive communication line that enables the Board and Management to communicate effectively with its investors, stakeholders and public generally. Apart from complying with the continuing disclosure requirements as stipulated in the Listing Requirements of Bursa Securities, the Board also observes the recommendation of the Code with regard to strengthening communication and engagement with the shareholders. This is achieved principally through the annual and quarterly reports and the Annual General Meeting ( AGM ). When required, the Board holds dialogue with both private and institutional shareholders and investors on issues relevant to the Group. The AGM is the principal avenue for shareholders, investors and institutional investors to communicate and engage in dialogue with the Board and Management. The Board not only invites and encourages shareholders and stakeholders participation but allows them ample opportunity to raise questions on issues pertaining to the Company s financial and operational performance before passing the resolution to adopt the financial statements. To enable shareholders to fully understand each item of special business, a full explanation of the effects of the proposed resolutions are included in the notices. At the AGM, shareholders exercise their rights and the meeting is convened in strict compliance with the laws and procedures. These are crucial mechanisms in shareholder communication for the Company. The Company also maintains websites at and which contains certain information concerning the Group and it is updated on a regular basis. Shareholders and investors can access to the Group s quarterly financial result, annual report and other major corporate developments of the Group through announcements via Bursa Securities website. UPHOLD INTERGRITY IN FINANCIAL EPORTING 1. Financial reporting The Directors are responsible for ensuring that financial statements are drawn up in accordance with the requirements of the Companies Act, 1965 and in line with approved accounting standards in Malaysia so as to present a balanced and understandable assessment of the Company s position and prospects. This primarily presented through the annual financial statements and the quarterly announcements to shareholders as well as the Chairman s Statement in the annual report. The Audit Committee assists the Board in reviewing the Group s financial reporting processes and the quality of its financial reporting. 2. Director s responsibility statement in respect of the preparation of the audited financial statements pursuant to paragraph of the Listing Requirements The Board is responsible for ensuring that the financial statements give a true and fair view of the state of affairs of the Group and of the Company as at the end of the accounting period. In preparing the financial statements, the Directors have ensured that applicable approved accounting standards in Malaysia issued by the Malaysian Accounting Standards Board ( MASB ) and the provision of the Companies Act, 1965 are conformed and complied and suitable accounting policies applied and make reasonable and prudent judgments and estimates. The Directors also take the necessary steps to safeguard the assets of the Group and to prevent and detect fraud and other irregularities. 3. Relationship with the Auditors The Board maintains a formal and transparent professional relationship with the auditors, both external and internal, through the Audit Committee. The role of the Audit Committee in relation to the external auditors is described on page 21 to 24 of the Annual Report.

21 19 STATEMENT ON CORPORATE GOVERNANCE (cont d) RECOGNISE AND MANAGE RISKS Internal control The Board of Directors recognizes the importance of having a sound system of internal control and risk management practices. The Board affirms its overall responsibility for the Group s systems of internal control and risk management, and for reviewing the adequacy and integrity of those systems. The internal control system is designed to meet the Group s specific needs, to manage and mitigate the risks to which it is exposed. The system can only provide reasonable, and not absolute, assurance against material misstatement or loss. The Group has outsourced its Internal Audit function to Crowe Horwath Governance Sdn Bhd ( X). The internal auditors report to the Audit Committee and the audit function is independent of the activities they audit and perform with impartiality and professionally. The internal auditors assist the Board of Directors in monitoring and managing risks, enhancing the internal control and governance process. During the year, the internal auditors reported on the Company s system of internal and operational controls focusing on key areas of management and business risks. The Group s Statement on Risk Management and Internal Control, pursuant to paragraph 15.26(b) of the Listing Requirements is set out on page 25 to 26. ENSURE TIMELY AND HIGH QUALITY DISCLOSURE TAS s practice is to release all price sensitive information to Bursa Malaysia Securities Berhad (Bursa Malaysia) in a timely manner as required under the Main Market Listing Requirements and to the market and community generally through TAS s website and other appropriate channels. For disclosure purposes, price sensitive information is information that a reasonable person would expect to have a material effect on the price or value of TAS s securities. The Company Secretary is responsible for reviewing proposed disclosures and making decisions in relation to what information can or should be disclosed to the market. Each division in TAS is required to inform the Company Secretary about any potentially price sensitive information concerning TAS as soon as this becomes known.

22 20 STATEMENT ON CORPORATE GOVERNANCE (cont d) COMPLIANCE WITH THE CODE The Board strives to ensure that the Company complies with the Principles and recommendations of the Code. The Board will endeavour to improve and enhance its governance process and structures from time to time. Additional Information on the Board of Directors Family Relationship with any Director and/or Major Shareholder Except for Mr Toh Chee Yeong who is the son of Mr Toh Thim Leong and major Shareholder Madam Hong Kerk Ai, none of the Directors has family relationship with any other Directors or major shareholders of the company. Conflict of Interest All the Directors have no conflict of interest with the Company. Conviction for Offences (within the past 10 years, other than traffic offences) None of the Directors have any convictions for offences. Other Additional Compliance Information Status of utilization of proceeds from corporate proposal No proceeds were raised by the Company from any corporate proposal during the financial year ended 31 December Share Buy-backs The Company did not carry out any share buy-backs during the financial year ended 31 December Options, Warrants or Convertible Securities The Company has not issued any options, warrants or convertible securities during the financial year 31 December American Depository Receipt ( ADR ) or Global Depository Receipt ( GDR ) Programme During the financial year, the Company did not sponsor any ADR or GDR Programme. Material contracts The Company and/or its subsidiary companies had not entered into any material contracts which involved Directors and/or major shareholders interest, either still subsisting at the end of the financial year, or which were entered into since the end of the previous financial year except for the recurrent related parties transactions set out on pages 85. Recurrent Related Party Transactions The recurrent related party transactions for financial year 2012 is set out in page 85. Imposition of Sanctions or Penalties 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. Non-Audit Fees There was an amount of RM 25,100 being non-audit fees paid to external auditors by the Group for the financial year in respect of taxation services and review of the Statement on Risk Management and Internal Control. Variation in results There was no material variation between the audited results for the financial year and the unaudited results previously announced. Profit guarantee During the financial year, there was no profit guarantee given by the Company. Proposed Selective Capital Reduction and Repayment Exercise under Section 64 of the Companies Act, 1965 ( Proposed SCR ) As announced on 5 April 2013, the Company had received a letter from its major shareholders, Golden Power Holdings Sdn. Bhd. requesting the Company to undertake the Proposed SCR.

23 21 AUDIT COMMITTEE REPORT For the financial year ended 31 December 2012 OBJECTIVES OF AUDIT COMMITTEE To assist the Board in discharging its responsibilities by reviewing the adequacy and integrity of the Company s and the Group s internal control systems and management information systems, including systems for compliance with applicable laws, regulations, rules, directives and guidelines. To assess the independence and evaluate the capability and professionalism of the external auditors and thereby help assure that they will have free rein in the audit process. To provide, by way of regular meetings, a line of communication between the Board and the external auditors. To provide emphasis on the internal audit function by increasing the objectivity and independence of the internal auditors and provide a forum for discussion that is independent of the management. To review the quality of the audits conducted by the internal and external auditors of the Company. To enhance the perceptions held by stakeholders (including shareholders, regulators, creditors and employees) of the credibility and objectivity of financial reports. MEMBERSHIP AND MEETINGS The Audit Committee had five (5) meetings during the year ended 31 December The members of the Audit Committee and their attendance during the year are as follows:- Membership Designation No. of meetings attended Chuah Sue Yin Chairperson/Independent Non-Executive Director 5/5 Leung Hoong Member/Independent Non-Executive Director 4/5 Leong Thong Kuan Choo Yook Seng Member/Independent Non-Executive Director 5/5 TERMS OF REFERENCE OF THE COMMITTEE Membership The Committee shall be appointed by the Board from amongst its members and shall comprise not less than three (3) members, all of whom are non-executive Directors with majority of them being Independent Directors. The Chairman of the Committee shall be an Independent Non-Executive Director appointed by the Board. No alternate Director shall be appointed as a member of the Committee. At least one member of the Committee:- i) shall be a member of the Malaysian Institute of Accountants; or ii) if he is not a member of the Malaysian Institute of Accountants, he shall have at least three (3) years working experience and :- a) he must have passed the examinations specified in Part 1 of the 1st Schedule of the Accountants Act 1967; or b) he must be a member of one of the associations of accountants specified in Part II of the 1st Schedule of the Accountants Acts The term of office and performance of the Committee and each of its members must be reviewed by the Board at least once every three (3) years. If a member of the Committee resigns or for any other reason ceases to be a member with the result that the number of members is reduced to below three (3), the Board shall within three (3) months of that event, appoint such number of new members as may be required to make up a minimum number of three (3) members.

24 22 AUDIT COMMITTEE REPORT (cont d) For the financial year ended 31 December 2012 TERMS OF REFERENCE OF THE COMMITTEE (cont d) Authority The Committee is authorized by the Board to investigate any matter within its terms of reference, to obtain the resources which it needs, and to have full and unrestricted access to information. It is also authorized to seek any information it requires from any employee of the Group and all employees are directed to co-operate with any request made by the Committee. The Committee shall have direct communication channels with the external and internal auditors. The Committee is authorized by the Board to obtain independent professional or other advice at the Company s expense and to invite outsiders with relevant experience and expertise to attend meetings if it considers this necessary. Where the Committee is of the view that a matter reported by it to the Board has not been satisfactorily resolved resulting in a breach of the Listing Requirements of the Bursa Malaysia Securities Berhad, the Committee shall promptly report such matter to the Exchange. Be able to convene meetings with external auditors and internal auditors or both, excluding the attendance of the other directors and employees, whenever deemed necessary. Key Functions and Responsibilities To review the quarterly results and annual financial statements of the Company and the Group, and to recommend the same to the Board for approval whilst ensuring that they are prepared in a timely and accurate manner, complying with all applicable accounting and regulatory requirements and are promptly published. To review any related party transaction and conflict of interest situation that may arise within the Company or the Group, including any transaction, procedure or course or conduct that raises questions of management integrity. To review with the external and internal auditors whether the employees of the Group have given them appropriate assistance in discharging their duties. To review the adequacy of the scope, functions, competency and resources of the internal audit function and that it has the necessary authority to carry out its work. To review the internal audit plan and processes, the results of the internal audit programme or investigation undertaken and whether or not appropriate action is taken by management on the recommendations of the internal auditors. To appraise and review the performance of both the internal and external auditors. To approve any appointment or termination of the internal auditors and to review any resignations of internal auditors and provide resigning internal auditors the opportunities to submit reasons for resigning, where necessary. To review with the external auditors, the nature and scope of their audit plan, their evaluation of the system of internal controls and their management letter and discuss any matter that the external auditors may wish to raise in the absence of management, where necessary. To recommend to the Board on the appointment of the external auditors and their audit fee, after taking into consideration the independence and objectivity of the external auditors and the cost effectiveness of their audit. To discuss and review with the external auditors any proposal from them to resign as auditors. To review inspection and examination reports issued by any regulatory authority and to ensure prompt and appropriate actions are taken in respect of any findings. To perform any other functions as authorized by the Board.

25 23 AUDIT COMMITTEE REPORT (cont d) For the financial year ended 31 December 2012 TERMS OF REFERENCE OF THE COMMITTEE (cont d) Meetings Meetings shall be held at least four (4) times a year with a minimum quorum of two (2) members and the majority of members present shall be Independent Non-Executive Directors. Additional meetings may be called at any time at the discretion of the Committee. The head of internal audit shall be in attendance at meeting of the Committee. The Committee may invite the external auditors, the chief financial officer, any other Directors or members of the management and employees of the Group to be in attendance during meetings to assist in its deliberations. At least once a year, the Committee shall meet with the external auditors without any executive Board member present and upon the request of the external auditors, the Chairman of the Committee shall convene a meeting to consider any matter which the external auditors believe should be brought to the attention of the Board or shareholders. The Company Secretary shall be the Secretary of the Committee. The minutes of each Committee meeting shall be tabled to the Board by the Chairman of the Committee. Internal Audit Function The Company s internal audit function is carried out by Crowe Horwath Governance Sdn Bhd ( X), who is independent of the activities or operations of the Company. The internal auditors assist the Audit Committee in the discharge of its duties and responsibilities. The internal auditors are empowered to audit the Company s business units, review the units compliance with the internal control procedures, provide regular independent assessments of the adequacy, efficiency and effectiveness of internal control system, highlight areas of weaknesses and make appropriate recommendations to the Company for improvements.

26 24 AUDIT COMMITTEE REPORT (cont d) For the financial year ended 31 December 2012 SUMMARY OF ACTIVITIES OF THE AUDIT COMMITTEE FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2012 In line with the terms of reference of the Audit Committee, the Audit Committee carried out the following activities during the financial year ended 31 December 2012, in discharging its duties: Discussed and reviewed with the external auditors the Audit Approach Memorandum covering the audit objectives, scope of work, audit strategy, key audit areas and relevant technical pronouncements and accounting standards issued by MASB for the year. Reviewed with the external auditors the result of audit, the audit report, the audit findings and the management letters, including management s follow-up actions. Reviewed the audited financial statements and annual reports of the Company prior to submission to the Board for their consideration and approval. Recommended to the Board the appointment and re-appointment of External Auditors. Considered and recommended to the Board for approval of the audit fees payable to the external auditors. Met with the external auditors without the presence of Executive Board Members to discuss issues that they may have. Reviewed the outsourced internal auditors audit programme and plan to ensure adequate scope and coverage on the activities of the Group taking into consideration the assessment of the key risk areas. Reviewed the internal audit reports, audit recommendations made and management response to those recommendations on the effectiveness of the Group s internal control system, and monitored the progress of actions taken in relation to significant internal control issues based on internal audit findings. During the year, the Committee had reviewed three (3) Internal Control Reviews and one (1) Follow up Review which were completed according to the Annual Audit Plan. Reviewed the Company s quarterly unaudited financial results and recommended the same to the Board for approval before announcement to Bursa Malaysia Securities Berhad. Reviewed the recurrent related party transactions entered into by the Group during the year. Reviewed the Company s compliance in particular the quarterly and year-end financial statements with the Listing Requirements, MASB and other relevant legal and regulatory requirements. Reviewed the Group s compliance with the provision set out under the Malaysian Code of Corporate Governance for the purpose of preparing the Statement on Corporate Governance, Audit Committee Report and Statement on Risk Management and Internal Control pursuant to the Listing Requirements.

27 25 1. Introduction STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL The Board of Directors ( Board ) of Triumphal Associates Bhd ( TAS ) is pleased to set out below the Statement on Risk Management and Internal Control pursuant to paragraph 15.26(b) of the Bursa Malaysia Securities Berhad Listing Requirements. It was prepared in accordance with the Statement on Risk Management and Internal Control- Guidelines for Directors of Listed Issuers issued by Bursa Malaysia Securities Berhad. The Board acknowledges its role in maintaining and establishing a sound risk management framework and internal control system to safeguard shareholders investment and the Group s assets. 2. Responsibility The Board affirms its overall responsibility in implementing appropriate internal control system and reviewing the adequacy and integrity of the systems thereof and continuously embedding risk management in all aspects of Group s activities that may affect the achievement of its business objectives. The Board recognizes that while total elimination of risks is not possible; the risk framework and internal control system are designed to manage the Group s risk to be within the acceptable risk appetite and provide reasonable assurance against any material misstatement of management and financial information and records or against financial losses and fraud. 3. Risk Management The Board concurs that the mitigation of risks must be integral in its everyday operations in order for the risk management to be effective at all levels of the organization. The Group s Risk Management Committee is delegated with oversight of the risk management framework to ensure that it functions effectively. Senior management was tasked to identify the risks relevant to the business; implementing the designed risk framework in accordance with Group s objective and enhancing transparency and accountability. Significant risks affecting the Group s strategic and business plan including investment risks were escalated to the Board for their discussion and deliberation. The risk registers which were reviewed by the respective operating Heads were updated in terms of changes to risk, mitigation action plans and new risks identified. 4. Internal Audit Control and Activities The Audit Committee ( AC ) is tasked by the Board to review and monitor the effectiveness of the Group s system of internal control. In carrying out its responsibilities, the AC relies significantly on the support of the internal auditor. The Group s internal audit function is outsourced to Crowe Horwath Governance Sdn Bhd to provide independent, objective assurance and assessment on the adequacy, efficiency and effectiveness of the Group s risk management, internal control and governance processes. During the financial year ended 31 December 2012, the internal audit function carried out three Internal Control Reviews and one follow-up Review in accordance with the internal audit plan approved by the Audit Committee. The results of the internal audit reviews and the recommendations for improvement were presented to the Audit Committee at their quarterly meetings. The progress of implementation of the agreed action plans was also monitored through follow up reviews. Based on the internal audit reviews conducted during the year, weaknesses detected in the controls were rectified with control measures that were implemented immediately. There have been no significant problems with material internal controls weaknesses that required disclosure in the annual report and financial statements. The Jointly-controlled entity has not been dealt with as part of the group for the purposes of applying these guidelines. For the financial year ended 31 December 2012, the total costs incurred for the outsourced internal audit function is RM 60,000 excluding reimbursable expenses and service tax.

28 26 STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL (cont d) 4. Internal Audit Control and Activities (cont d) The other key elements of the Group s internal control systems are as follows:- There is a proper organisational structure with formally defined lines of authority and responsibilities as well as segregation of duties, to facilitate quick response to changes in the evolving business environment, effective supervision of day-to-day business conduct and accountability for operational performance. Internal controls are incorporated into standard operating policies and procedures to cover all critical and significant facets of the Group s business processes. These procedures will be reviewed and updated appropriately to reflect changing risks or to improve operational effectiveness. Certain of the Group s operations are ISO 9001:2008 certified. With such a certification, audits are conducted by external parties periodically to ensure compliance with the terms and conditions of the certification. The Corporate head office coordinates the budgeting process for the Group for the coming year where the annual budgets are approved at operating unit level and ultimately by the Board of Directors. Quarterly reports were prepared by the management for the review of the Audit Committee members, who subsequently present them to the Board for consideration and approval. The Board meets at least quarterly and has a formal agenda on matters for discussion. The Managing Director provides comprehensive explanation of pertinent issues. The Board is also kept updated on the Group s activities and operations on a regular basis. The Board and the management monitor the quarterly results of the Group against budgets and in the event of major variances, appropriate follow-up actions will be taken. Monthly management accounts containing key financial results and budget comparisons are also issued to senior management to enable them to have regular and updated information of the Group s performance. The Group also operates an information system which enables transactions to be captured, compiled and reported in a timely and accurate manner. Delegated authority limits are established for various financial and non-financial transactions and regularly reviewed and revised to ensure effectiveness. Adequate insurance coverage of major assets to ensure that assets of the Group are sufficiently covered against mishap that may result in material losses to the Group. Specific responsibilities have been delegated to the relevant Board Committees, all of which have formalized terms of reference. These committees have the authority to examine all matters within their scope and report to the Board with their recommendations. Regular visits to the operating units by senior management. 5. Board Assurance The Board is of the view that the Group s overall risk management and internal control system is operating adequately and effectively, in all material aspects, based on the risk management and internal control system of the Group and has received the assurance from the Managing Director and Finance Manager of the Group. The risk management process for identifying, evaluating and managing significant risks faced by the Group has been in place for the year under review and up to the date of approval of this statement for inclusion in the annual report.

29 27 5-YEAR GROUP FINANCIAL HIGHLIGHTS For the Financial Year Ended 31 December 2012 GROUP REVENUE GROUP PROFIT BEFORE TAX SHAREHOLDERS EQUITY 156, , , , ,824 13,165 7,916 18,801 18,600 6, , , , , , (RM 000) 0 (RM 000) (RM 000) Financial Year Ended 31 December Group Revenue (RM 000) 156, , , , ,824 Group Profit Before Tax (RM 000) 13,165 7,916 18,801 18,600 6,087 Dividend Per Ordinary Share (sen) Shareholders Equity (RM 000) 199, , , , ,922

30 FINANCIAL STATEMENTS 29 Directors Report and Statement 32 Statement by Director 32 Statutory Declaration 33 Independent Auditors Report 35 Statements of Financial Position 37 Statements of Comprehensive Income 38 Statements of Changes in Equity 40 Statements of Cash Flows 42 Notes to the Financial Statements 105 Disclosures of realised and unrealised profits/losses

31 29 DIRECTOR S REPORT AND STATEMENT For the financial year ended 31 December 2012 The Directors have pleasure in presenting their report together with the audited financial statements of the Group and of the Company for the financial year ended 31 December Principal activities The principal activities of the Company consist of investment holding and trading and marketing of spare parts for heavy equipment. The principal activities of the subsidiary companies are disclosed in Note 6 to the Financial Statements. There have been no significant changes in the nature of these activities of the Company and of its subsidiary companies during the financial year. Results Group RM Company RM Profit for the financial year 3,619,910 2,774,406 = ================================= Attributable to:- Owners of the Company 3,678,535 2,774,406 Non-controlling interest (58,625) ,619,910 2,774,406 = ================================= Reserves and provisions There were no material transfers to or from reserves or provisions during the financial year under review except as disclosed in the statements of changes in equity and notes to the financial statements. Dividends The amount of dividends paid and declared since the end of the last financial year was as follow:- First and final single tier dividend of 1 sen per ordinary share in respect of the financial year ended 31 December 2011 and paid on 25 July ,709 = ================ There were no dividends proposed, declared or paid in respect of the financial year ended 31 December 2012 by the Company. Directors of the Company The Directors in office since the date of the last report are:- Toh Thim Leong Toh Chee Yeong Chuah Sue Yin Leung Hoong Leong Thong Kuan Choo Yook Seng Directors interests The holdings and deemed holdings in the ordinary shares of the Company and of its related corporations (other than wholly-owned subsidiary companies) of those who were Directors at the financial year end as recorded in the Register of Directors Shareholdings are as follows:- RM

32 30 DIRECTOR S REPORT AND STATEMENT (cont d) For the financial year ended 31 December 2012 Directors interests (cont d) Number of ordinary shares of RM1.00 each Name of Directors Interest At Bought Sold At Company Toh Thim Leong Direct 4,870, ,870,860 Deemed 42,768,748 12,349,940-55,118,688 Toh Chee Yeong Direct 500, ,000 Deemed 38,719,678 12,349,940-51,069,618 By virtue of their substantial shareholdings in the Company, Toh Thim Leong and Toh Chee Yeong are also deemed to have interests in the ordinary shares of all the subsidiary companies of the Company as disclosed in Note 6 to the Financial Statements. Other than the above, none of the other Directors holding office at 31 December 2012 had any interest in the ordinary shares of the Company and of its related corporations during the financial year. Directors benefits Since the end of the previous financial year, no Director of the Company has received nor 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 notes to the financial statements) by reason of a contract made by the Company or a related corporation with a Director or with a firm of which the Director is a member, or with a company in which a Director has a substantial financial interest, except as disclosed in the Note 28 to the Financial Statements. There was no arrangement during and at the end of the financial year which had the object or objects of enabling Directors of the Company to acquire benefits by means of the acquisition of shares in or debentures of the Company or any other body corporate. Issue of shares and debentures There were no changes in the authorised, issued and paid-up capital and debentures of the Company during the financial year. Options granted over unissued shares No options were granted to any person to take up unissued shares of the Company during the financial year. Other statutory information Before the statements of financial position and statements of comprehensive income of the Group and of the Company were made out, the Directors took reasonable steps:- (a) to ascertain that action had been taken in relation to the writing off of bad debts and the making of provision for doubtful debts and satisfied themselves that all known bad debts had been written off and adequate provision for doubtful debts had been made; and (b) to ensure that any current assets 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 had 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:- (a) which would render the amount written off for bad debts or the amount of provision for doubtful debts in the financial statements of the Group and of the Company inadequate to any substantial extent; or (b) would render the value attributed to the current assets in the financial statements of the Group and of the Company misleading; or

33 31 DIRECTOR S REPORT AND STATEMENT (cont d) For the financial year ended 31 December 2012 Other statutory information (cont d) At the date of this report, the Directors are not aware of any circumstances (cont d):- (c) which have arisen which render adherence to the existing method of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate; or (d) not otherwise dealt with in this report or the financial statements that would render any amount stated in the financial statements of the Group and of the Company misleading. 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 in respect of the Group and of the Company which has arisen since the end of the financial year. No contingent liability or other liability of the Company or any company in the Group 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 as and when they fall due. In the opinion of the Directors, the results of the operations of the Group and of the Company during the financial year ended 31 December 2012 have not been substantially affected by any item, transaction or event of a material and unusual nature nor has any such item, transactions or event occurred in the interval between the end of the financial year and the date of this report. Events during the financial year and subsequent to the reporting date The events during the financial year and subsequent to the reporting date are disclosed in Note 33 to the Financial Statements. Auditors The auditors, Messrs SJ Grant Thornton, have expressed their willingness to continue in office. Signed on behalf of the Board of Directors in accordance with a resolution of the Board of Directors dated 5 April Toh Thim Leong Toh Chee Yeong Kuala Lumpur

34 32 STATEMENT BY DIRECTORS pursuant to Section 169(15) of the Companies Act, 1965 In the opinion of the Directors, the financial statements set out on pages 35 to 104 are drawn up in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company as at 31 December 2012 and of their financial performance and cash flows for the financial year ended on that date. In the opinion of the Directors, the supplementary information set out on page 105 had been complied with the Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosures Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, issued by the Malaysian Institute of Accountants, and presented based on the format prescribed by Bursa Malaysia Securities Berhad. Signed on behalf of the Board of Directors in accordance with a resolution of the Board of Directors dated 5 April Toh Thim Leong Toh Chee Yeong Kuala Lumpur STATUTORY DECLARATION pursuant to Section 169(16) of the Companies Act, 1965 I, Foo See Feng, being the officer primarily responsible for the financial management of Triumphal Associates Bhd., do solemnly and sincerely declare that to the best of my knowledge and belief, the financial statements set out on pages 35 to 105 are correct and I make this solemn declaration conscientiously believing the same to be true and by virtue of the Statutory Declarations Act, Subscribed and solemnly declared by the abovenamed in Kuala Lumpur in the Federal Territory on 5 April Foo See Feng Before me: Commissioner for Oaths

35 33 INDEPENDENT AUDITORS REPORT TO THE MEMBERS OF TRIUMPHAL ASSOCIATES BHD. Report on the Financial Statements We have audited the financial statements of Triumphal Associates Bhd., which comprise statements of financial position as at 31 December 2012 of the Group and of the Company, and statements of 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 notes, as set out on pages 35 to 104. Directors Responsibility for the Financial Statements The Directors of the Company are responsible for the preparation of financial statements so as to give a true and fair view in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia. The Directors are also responsible for such internal control as the Directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with approved standards on auditing in Malaysia. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance 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 of financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the 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 at 31 December 2012 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 Malaysia subsidiary companies of which we have acted as auditors have been properly kept in accordance with the provisions of the Act. (b) We have considered the accounts and the auditors reports of all the subsidiary companies of which we have not acted as auditors, which are indicated in Note 6 to the Financial Statements. (c) We are satisfied that the accounts of the subsidiary companies 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 accounts of the subsidiary companies did not contain any qualification or any adverse comment made under Section 174 (3) of the Act.

36 34 INDEPENDENT AUDITORS REPORT (cont d) TO THE MEMBERS OF TRIUMPHAL ASSOCIATES BHD. Other Reporting Responsibilities The supplementary information set out in 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 1. As stated in Note 34 to the Financial Statements, Triumphal Associates Bhd. adopted Malaysian Financial Reporting Standards on 1 January 2012 with a transition date of 1 January These standards were applied retrospectively by Directors to the comparative information in these financial statements, including the statements of financial position as at 31 December 2011 and 1 January 2011, and the statement of comprehensive income, statement of changes in equity and statement of cash flows for the financial year ended 31 December 2011 and related disclosures. We were not engaged to report on the restated comparative information and it is unaudited. Our responsibilities as part of our audit of the financial statements of the Group and of the Company for the financial year ended 31 December 2012 have, in these circumstances, included obtaining sufficient appropriate audit evidence that the opening balances as at 1 January 2012 do not contain misstatements that materially affect the financial position as at 31 December 2012 and financial performance and cash flows for the financial year then ended. 2. 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 SJ GRANT THORNTON (No. AF: 0737) Chartered Accountants DATO N. K. JASANI (NO: 708/03/14(J/PH)) Chartered Accountant Partner Kuala Lumpur 5 April 2013

37 35 STATEMENTS OF FINANCIAL POSITION As at 31 December 2012 Group Company Note RM RM RM RM RM RM Assets Non-current assets Property, plant and equipment 3 67,872,484 62,047,743 53,713,392 4,555,125 5,094,053 5,559,062 Prepaid land lease payments 4 7,069,787 7,356,991 3,805, Goodwill on consolidation 5 3,230,371 3,230,371 3,230, Investment in subsidiary companies ,213, ,405,624 85,681,981 Investment in jointlycontrolled entity 7 7,621,990 7,907,266 6,548,321 3,477,771 3,477,771 3,477,771 Other investments 8 1,999,234 1,999, ,667 1,902,732 1,902,732 - Deferred tax assets 9 3,250,200 3,155,600 2,746,000 2,131,000 1,948,600 1,606, Total non-current assets 91,044,066 85,697,205 70,255, ,279, ,828,780 96,324, Current assets Inventories ,923, ,174,636 91,479,707 26,915,482 28,688,151 25,423,564 Trade receivables 11 35,935,356 43,520,976 53,966,976 13,546,618 13,906,281 11,826,836 Other receivables 12 10,968,637 13,970,747 7,994,419 1,340,352 1,371,898 1,408,617 Amount due from subsidiary companies ,353,438 22,924,956 27,018,213 Tax recoverable , Cash and bank balances 14 24,607,207 27,746,220 35,023,133 10,728,127 14,191,608 15,561, Total current assets 185,434, ,434, ,464,235 73,884,017 81,082,894 81,238, Total assets 276,479, ,131, ,719, ,163, ,911, ,563,244 ===================================================================================== Equity and liabilities Equity Share capital 15 87,170,928 87,170,928 87,170,928 87,170,928 87,170,928 87,170,928 Reserves ,327, ,570, ,973,606 88,562,912 86,660,215 69,127, Equity attributable to owners of the Company 236,497, ,741, ,144, ,733, ,831, ,298,723 Non-controlling interest 424, Total equity 236,922, ,741, ,144, ,733, ,831, ,298, The accompanying notes form an integral part of the financial statements.

38 36 STATEMENTS OF FINANCIAL POSITION (cont d) As at 31 December 2012 Group Company Note RM RM RM RM RM RM Liabilities Non-current liabilities Loans and borrowings 16 2,086,219 4,044,000 2,045,014 2,028,000 4,044,000 1,992,000 Employee benefits ,963 6,448,662 5,928, ,963 6,448,662 5,928,541 Deferred tax liabilities 9 35,766 34,824 34, Total non-current liabilities 2,619,948 10,527,486 8,007,656 2,525,963 10,492,662 7,920, Current liabilities Trade payables 18 12,378,234 20,661,053 22,777,688 2,866,304 4,670,116 6,375,250 Other payables 19 11,632,540 14,538,085 10,951,396 5,102,167 6,955,530 4,302,715 Amount due to subsidiary companies , ,925 1,104,235 Employee benefits 17 6,360, ,360, Loans and borrowings 16 6,385,763 7,294,622 2,243,930 4,896,000 4,132,000 1,048,675 Tax payable 179,277 1,368,506 1,594, , , , Total current liabilities 36,936,746 43,862,266 37,567,334 19,903,852 16,587,869 13,343, Total liabilities 39,556,694 54,389,752 45,574,990 22,429,815 27,080,531 21,264, Total equity and liabilities 276,479, ,131, ,719, ,163, ,911, ,563,244 ===================================================================================== The accompanying notes form an integral part of the financial statements.

39 37 STATEMENTS OF COMPREHENSIVE INCOME For the financial year ended 31 December 2012 Group Company Note RM RM RM RM Revenue Goods sold 159,823, ,741,123 71,129,954 79,180,538 Dividend income ,500 18,100, ,823, ,741,123 71,621,454 97,281,378 Cost of sales (126,230,777) (144,968,778) (53,761,981) (58,085,487) Gross profit 33,592,917 44,772,345 17,859,473 39,195,891 Other income 2,535,365 2,799,548 94,654 64,464 Distribution expenses (6,662,976) (6,713,639) (3,553,475) (3,469,053) Administrative expenses (21,492,449) (22,328,670) (9,672,970) (10,958,261) Other expenses (2,079,342) (1,439,687) (561,526) (2,004,825) Interest income 244, , , ,260 Finance costs (455,073) (320,634) (377,827) (282,523) Operating profit 5,682,761 17,016,808 4,005,198 22,722,953 Share of profit after tax of jointly-controlled entity 404,035 1,582, Profit before tax 20 6,086,796 18,599,716 4,005,198 22,722,953 Tax expense 21 (2,466,886) (4,118,499) (1,230,792) (5,190,533) Profit for the financial year 3,619,910 14,481,217 2,774,406 17,532, Other comprehensive (loss)/income Exchange translation differences (1,046,101) 7,115, Other comprehensive (loss)/income for the financial year, net of tax (1,046,101) 7,115, Total comprehensive income for the financial year 2,573,809 21,596,930 2,774,406 17,532,420 = ==================================================================== Profit for the financial year attributable to:- Owners of the Company 3,678,535 14,481,217 2,774,406 17,532,420 Non-controlling interest (58,625) ,619,910 14,481,217 2,774,406 17,532,420 = ==================================================================== Total comprehensive income for the financial year attributable to:- Owners of the Company 2,628,193 21,596,930 2,774,406 17,532,420 Non-controlling interest (54,384) ,573,809 21,596,930 2,774,406 17,532,420 = ==================================================================== Earnings per share Basic (sen) = ================================== The accompanying notes form an integral part of the financial statements.

40 38 STATEMENTS OF CHANGES IN EQUITY For the financial year ended 31 December 2012 Attributable to owners of the Company Non-distributable Distributable Exchange Non- Share Share translation Capital Retained controlling Total Note capital premium reserve reserve earnings Total interest equity Group RM RM RM RM RM RM RM RM At 1 January ,170,928 1,360 1,394, , ,236, ,144, ,144,534 Total comprehensive income for the financial year - - 7,115,713-14,481,217 21,596,930-21,596, At 31 December ,170,928 1,360 8,509, , ,718, ,741, ,741,464 Transactions with owners:- Dividend paid to equity holders of the Company (871,709) (871,709) - (871,709) Subscription of shares in a subsidiary company by a non-controlling interest , , Total transactions with owners (871,709) (871,709) 478,807 (392,902) Foreign currency translation - - (1,050,342) - - (1,050,342) 4,241 (1,046,101) Profit for the financial year ,544 3,676,991 3,678,535 (58,625) 3,619,910 Total comprehensive income for the financial year - - (1,050,342) 1,544 3,676,991 2,628,193 (54,384) 2,573, At 31 December ,170,928 1,360 7,459, , ,523, ,497, , ,922,371 = ================================================================================================================

41 39 STATEMENTS OF CHANGES IN EQUITY (cont d) For the financial year ended 31 December 2012 Nondistributable Distributable Share Share Retained Total Note capital premium earnings equity Company RM RM RM RM At 1 January ,170,928 1,360 69,126, ,298,723 Total comprehensive income for the financial year ,532,420 17,532, At 31 December ,170,928 1,360 86,658, ,831,143 Transaction with owners:- Dividend paid to equity holders of the Company (871,709) (871,709) Total comprehensive income for the financial year - - 2,774,406 2,774, At 31 December ,170,928 1,360 88,561, ,733,840 = ==================================================================== The accompanying notes form an integral part of the financial statements.

42 40 STATEMENTS OF CASH FLOWS For the financial year ended 31 December 2012 Group Company Note RM RM RM RM Operating activities Profit before tax 6,086,796 18,599,716 4,005,198 22,722,953 Adjustments for:- Allowance for doubtful debts 850, ,952 11,792 32,042 Allowance for doubtful debts written back (782,824) (1,376,974) (4,342) - Amortisation on prepaid land lease payments 152, , Bad debts written off 74,626 28, Depreciation 4,020,407 3,930, , ,757 Employee benefits charged 410, , , ,121 Interest expense 455, , , ,523 Property, plant and equipment written off 47,869 96, Unrealised loss/(gain) on foreign exchange 410,855 (331,067) (5,570) 200,517 Inventories written down 898,612 1,320,497 48,053 61,109 Inventories written back (129,626) (338,463) - - Dividend income - - (491,500) (18,100,840) Loss/(Gain) on disposal of property, plant and equipment 1,491 (8,795) (7,741) (14,629) Interest income (244,319) (247,545) (216,869) (177,260) Impairment loss on investment in a subsidiary company ,000 1,500,000 Loss on disposal of other investments Waiver of debts from payables (43) - (43) - Share of profit of jointly-controlled entity (404,035) (1,582,908) Operating profit before working capital changes 11,848,127 21,745,612 5,270,288 7,717,293 Changes in working capital:- Inventories 3,531,997 (24,848,284) 1,724,616 (3,325,696) Receivables 10,590,593 7,801, ,439 (1,281,734) Payables (11,348,577) (1,476,152) (3,694,907) 713,814 Subsidiary companies - - 1,652,214 3,482, Cash from operations 14,622,140 3,223,063 5,471,650 7,306,624 Tax refund 12, , Tax paid (3,706,369) (4,929,917) (1,645,056) (2,139,940) Net cash from/(used in) operating activities 10,928,444 (1,567,406) 3,826,594 5,166,

43 41 STATEMENTS OF CASH FLOWS (cont d) For the financial year ended 31 December 2012 Group Company Note RM RM RM RM Investing activities Acquisition of property, plant and equipment 23 (10,578,546) (10,035,440) (216,981) (225,749) Acquisition of prepaid land lease payments - (3,286,305) - - Proceeds from disposal of other investments - 211, Proceeds from disposal of property, plant and equipment 150,715 21, ,400 14,630 Dividend received from:- - jointly-controlled entity , subsidiary companies ,740,000 Net cash outflow on deconsolidation of subsidiary companies 24 - (64,654) - - Acquisition of subsidiary companies - - (5,307,386) (25,126,375) Interest received 263, , , , Net cash used in investing activities (10,164,616) (12,905,568) (4,812,324) (11,420,234) Financing activities Proceeds from non-controlling interest 478, Repayment of term loans (9,789,189) (5,224,213) (4,032,000) (1,932,000) Payment of finance lease liabilities (93,232) (99,378) - (40,675) Drawdown of bankers acceptance 3,850,964 5,381,109 3,574,000 4,604,000 Repayment of bankers acceptance (4,534,677) (3,496,000) (3,794,000) (3,496,000) Drawdown of term loans 7,473,986 10,442,146 3,000,000 6,000,000 Dividends paid to owners of the Company (871,709) - (871,709) - Interest paid (426,965) (320,634) (352,605) (282,523) Net cash (used in)/from financing activities (3,912,015) 6,683,030 (2,476,314) 4,852, Cash and cash equivalents Net changes (3,148,187) (7,789,944) (3,462,044) (1,400,748) At beginning of financial year 27,746,220 35,023,133 14,191,608 15,561,200 Exchange differences on opening balances 9, ,031 (1,437) 31, At end of financial year 14 24,607,207 27,746,220 10,728,127 14,191,608 ==================================================================== The accompanying notes form an integral part of the financial statements.

44 42 NOTES TO THE FINANCIAL STATEMENTS Triumphal Associates Bhd. (the Company ) is a public limited liability company, incorporated and domiciled in Malaysia and is listed on the Main Market of Bursa Malaysia Securities Berhad. The addresses of its registered office and principal place of business are as follows:- Registered office Suite 7E, Level 7 Menara Ansar 65, Jalan Trus Johor Bahru Johor, Malaysia Principal place of business 24, Persiaran Industri Bandar Sri Damansara Kuala Lumpur Malaysia The consolidated financial statements as at and for the financial year ended 31 December 2012 comprise the Company and its subsidiary companies and the Group s interest in a jointly-controlled entity ( Group ). The principal activities of the Company consist of investment holding and trading and marketing of spare parts for heavy equipment. The principal activities of the subsidiary companies are disclosed in Note 6 to the Financial Statements. There have been no significant changes in the nature of these activities of the Company and of its subsidiary companies during the financial year. The financial statements were authorised for issue by the Board of Directors in accordance with a resolution of the Directors on 5 April Basis of preparation (a) Statement of compliance The financial statements of the Group and of the Company have been prepared in accordance with Malaysian Financial Reporting Standards ( MFRSs ), International Financial Reporting Standards ( IFRSs ) and the requirements of the Companies Act, 1965 in Malaysia (b) Basis of measurement The financial statements of the Group and of the Company have been prepared on the historical cost convention, unless otherwise indicated in the summary of significant accounting policies. (c) Functional and presentation currency These financial statements are presented in Ringgit Malaysia ( RM ), which is the Company s functional currency. All financial information is presented in RM, unless otherwise stated. (d) First-time adoption of MFRSs In the previous years, the financial statements of the Group and of the Company were prepared in accordance with Financial Reporting Standards ( FRSs ). These are the Group s and the Company s first financial statements prepared in accordance with MFRSs and MFRS 1, First-time Adoption of Malaysian Financial Reporting Standards has been applied. The explanation and financial impacts on transition to MFRSs are disclosed in Note 34 to the Financial Statements.

45 43 1. Basis of preparation (cont d) (e) Standards issued but not yet effective At the date of authorisation of these financial statements, certain new standards, amendments and interpretations to existing standards have been published by the Malaysian Accounting Standards Board ( MASB ) but are not yet effective, and have not been early adopted by the Group and the Company. Management anticipates that all of the relevant pronouncement will be adopted in the Group s and the Company s accounting policies for the first period beginning after the effective date of the pronouncement. Information on new standards, amendments and interpretations that are expected to be relevant to the Group s and the Company s financial statements is provided below. Certain other new standards and interpretations have been issued but are not expected to have a material impact on the Group s and the Company s financial statements. MFRS 9 Financial Instruments: Classification and Measurement MFRS 9, as issued, reflects the first phase of the MASB s work on the replacement of MFRS 139 and applies to classification and measurement of financial assets and financial liabilities as defined in MFRS 139. The standard was initially effective for annual periods beginning on or after 1 January 2013, but amendments to MFRS 9 Mandatory Effective Date of MFRS 9 and Transition Disclosures, issued in 1 March 2012, moved the mandatory effective date to 1 January In subsequent phases, the MASB will have address hedge accounting and impairment of financial assets. The adoption of the first phase of MFRS 9 will have an effect on the classification and measurement of the Group s and of the Company s financial assets, but will not have an impact on classification and financial liabilities. The Group will quantify the effect in conjunction with the other phases, when the final standard including all phases is issued. MFRS 119 Employee Benefits The amendments to MFRS 119 change the accounting for defined benefit plans and termination benefits. The most significant change relates to the accounting for changes in defined benefit obligations and plan assets. The amendments require the recognition of changes in defined benefit obligations and in fair value of plan assets when they occur, and hence eliminate the corridor method permitted under the previous version of MFRS 119 and accelerate the recognition of past service costs. The amendments require all actuarial gains and losses to be recognised immediately through other comprehensive income in order for the net pension asset or liability recognised in the consolidated statement of financial position to reflect the full value of the plan deficit and surplus. The adoption of amendments to MFRS 119 will result in a change in the accounting policy for the Group s and the Company s retirement benefits plan. The Group and the Company are currently examining the financial impact of adopting MFRS 119. (f) Significant accounting estimates and judgements Estimates, assumptions concerning the future and judgements are made in the preparation of the financial statements. They affect the application of the Group s and of the Company s accounting policies and reported amounts of assets, liabilities, income and expenses, and disclosures made. Estimates and underlying assumptions are assessed on an on-going basis and are based on experience and relevant factors, including expectations of future events that are believed to be reasonable under the circumstances. The actual results may differ from the judgements, estimates and assumptions made by the management, and will seldom equal the estimated results. Information about significant judgements, estimates and assumptions that have the most significant effect on recognition and measurement of assets, liabilities, income and expenses are discussed below:-

46 44 1. Basis of preparation (cont d) (f) Significant accounting estimates and judgements (cont d) Useful lives of depreciable assets The management estimates the useful lives of the property, plant and equipment to be within 5 to 50 years and reviews the useful lives of depreciable assets at each reporting date. The management assesses that the useful lives represent the expected utility of the assets to the Group and the Company. The carrying amounts are analysed in Note 3 to the Financial Statements. Actual results, however, may vary due to change in the expected level of usage and technological developments, which may result in adjusting the Group s and the Company s assets. Impairment of goodwill An impairment loss is recognised for the amount by which the asset s or cash-generating unit s carrying amount exceeds its recoverable amount. To determine the recoverable amount, the management estimates expected future cash flows from each cash-generating unit and determines a suitable interest rate in order to calculate the present value of those cash flows. In the process of measuring expected future cash flows, the management makes assumptions about future operating results. These assumptions relate to future events and circumstances. The actual results may vary and may cause significant adjustments to the Group s assets within the next financial year. In most cases, determining the applicable discount rate involves estimating the appropriate adjustment to market risk and the appropriate adjustment to asset-specific risk factors. Further details of the carrying values, key assumptions applied in the impairment assessment of goodwill and sensitivity analysis to changes in the assumptions are disclosed in Note 5 to the Financial Statements. Inventories Inventories are measured at the lower of cost and net realisable value. In estimating net realisable values, the management takes into account the most reliable evidence available at the times the estimates are made. The Group s and the Company s core business is subject to economical and technology changes which may cause selling prices to change rapidly, and the Group s and the Company s profit to change. The carrying amount of the Group s and of the Company s inventories at the reporting date is disclosed in Note 10 to the Financial Statements. Deferred tax assets Deferred tax assets are recognised for all deductible temporary differences, unutilised tax losses, unabsorbed capital allowances and unused tax credits to the extent that it is probable that taxable profit will be available against which all the deductible temporary differences, unutilised tax losses and unabsorbed capital allowances can be utilised. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and level of future taxable profits together with future tax planning strategies. Assumptions about generation of future taxable profits depend on management s estimates of future cash flows. These depend on estimates of future production and sales volume, operating costs, capital expenditure, dividends and other capital management transactions. Judgement is also required about application of income tax legislation. These judgements and assumptions are subject to risks and uncertainty, hence there is a possibility that changes in circumstances will alter expectations, which may impact the amount of deferred tax assets recognised in the statements of financial position and the amount of unrecognised tax losses and unrecognised temporary differences. The Group and the Company have recognised RM3,250,200 (2011: RM3,155,600 and : RM2,746,000) and RM2,131,000 (2011: RM1,948,600 and : RM1,606,000) respectively of deductible temporary differences as the management considers that it is probable that taxable profits will be available against which deductible temporary differences can be utilised.

47 45 1. Basis of preparation (cont d) (f) Significant accounting estimates and judgements (cont d) Impairment of loans and receivables The Group and the Company assess at each reporting date whether there is any objective evidence that a financial asset is impaired. To determine whether there is objective evidence of impairment, the Group and the Company consider factors such as the probability of insolvency or significant financial difficulties of the receivables and default or significant delay in payments. Where there is objective evidence of impairment, the amount and timing of future cash flows are estimated based on historical loss experience for assets with similar credit risk characteristics. The carrying amount of the Group s and of the Company s receivables at the reporting date is disclosed in Note 11 and 12 to the Financial Statements. Defined benefit liability Management estimates the defined benefit liability annually with the assistance of independent actuaries; however, the actual outcome may vary due to estimation uncertainties. The estimate of its defined benefit liability RM6,858,895 (2011 : RM6,448,662 and : RM5,928,541) is based on standard rates of inflation, disability, withdrawal, retirement and mortality. It also takes into account the Group s and the Company s specific anticipation of future salary increases. Discount factors are determined close to each year-end by reference to high quality corporate bonds that are denominated in the currency in which the benefits will be paid and that have terms to maturity approximating to the terms of the related pension liability. Estimation uncertainties exist, which may vary significantly in future appraisals of the Group s and of the Company s defined benefit obligations. Leases In applying the classification of leases in MFRS 117, the management considers its leases of motor vehicles as finance lease arrangements and prepaid land lease payments as operating lease arrangements. In some cases, the lease transaction is not always conclusive and the management uses judgement in determining whether the lease is a finance lease arrangement that transfers substantially all the risks and rewards incidental to ownership. 2. Significant accounting policies The Group and the Company apply the significant accounting policies, as summarised below, consistently throughout all periods presented in the financial statements and in preparing their opening MFRS statements of financial position at 1 January 2011 (the transition date to MFRS framework), unless otherwise stated. (a) Basis of consolidation The Group financial statements consolidate the audited financial statements of the Company and all of its subsidiary companies, which have been prepared in accordance with the Group s accounting policies. Amounts reported in the financial statements of subsidiary companies have been adjusted where necessary to ensure consistency with the accounting policies adopted by the Group. The financial statements of the Company and its subsidiary companies are all drawn up to the same reporting date. Unrealised gains and losses on transactions within the Group are eliminated. Where unrealised losses on intragroup asset sales are reversed on consolidation, the underlying asset is also tested for impairment from the Group perspective. Changes in the equity interest in a subsidiary company that do not result in a loss of control are accounted for as equity transactions. In such circumstances, the carrying amounts of the controlling and non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiary company. Any difference between the amount by which the non-controlling interest is adjusted and the fair value of the consideration paid or received is recognised directly in equity and attributed to owners of the Company.

48 46 2. Significant accounting policies (cont d) (a) Basis of consolidation (cont d) Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate of the consideration transferred, measured at acquisition date fair value and the amount of any non-controlling interest in the acquiree. For each business combination, the Group elects whether it measures the non-controlling interest in the acquiree either at fair value or at the proportionate share of the acquiree s identifiable net assets. Acquisition costs incurred are expensed and included in administrative expenses. When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date. This includes the separation of embedded derivatives in host contracts by the acquiree. If the business combination is achieved in stages, the acquisition date fair value of the acquirer s previously held equity interest in the acquiree is remeasured to fair value at the acquisition date through profit or loss. Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition date. Subsequent changes in the fair value of the contingent consideration which is deemed to be an asset or liability will be recognised in accordance with MFRS 139 either in profit or loss or as a charge to other comprehensive income. If the contingent consideration is classified as equity, it will not be remeasured. Subsequent settlement is accounted for within equity. In instances where the contingent consideration does not fall within the scope of MFRS 139, it is measured in accordance with the appropriate MFRS. Any excess of the cost of the business combination over the Group s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities represents goodwill on the statements of financial position. The goodwill is accounted for in accordance with the accounting policy for goodwill stated in Note 2(f) to the Financial Statements. Any excess of the Group s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities over the cost of business combination is recognised as income in the profit or loss on the date of acquisition. The financial statements of subsidiary companies are included in the consolidated financial statements from the date that control commences until the date that control ceases. Upon the loss of control of a subsidiary company, the Group derecognises the assets and liabilities of the subsidiary company, any non-controlling interests and the other components of equity related to the subsidiary company. Any surplus or deficit arising on the loss of control is recognised in profit or loss. If the Group retains any interest in the previous subsidiary company, then such interest is measured at fair value at the date that control is lost. Subsequently it is accounted for as an equity accounted investee or as an availablefor-sale financial asset depending on the level of influence retained. Non-controlling interests at the end of the reporting period, being the equity in a subsidiary company not attributable directly or indirectly to the equity holders of the Company, are presented in the consolidated statement of financial position and statement of changes in equity within equity, separately from equity attributable to the owners of the Company. Non-controlling interests in the results of the Group is presented in the consolidated statement of comprehensive income as an allocation of the profit or loss and the comprehensive income for the financial year between non-controlling interests and the owners of the Company. Losses applicable to the non-controlling interests in a subsidiary company are allocated to the non-controlling interests even if that results in a deficit balance.

49 47 2. Significant accounting policies (cont d) (a) Basis of consolidation (cont d) (i) Subsidiary companies Subsidiary companies are entities, including unincorporated entities, controlled by the Group. Control exists when the Group has the ability to exercise its power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting rights that exercisable are presently exercisable are taken into account. Investment in subsidiary companies are stated in the Company s statement of financial position at cost less impairment losses, unless the investment is classified as held for sale (or included in a disposal group that is classified as held for sale). In the Company s separate financial statements, on disposal of such investments, the difference between net disposal proceeds and its carrying amount is included in profit or loss. (ii) Jointly-controlled entity Jointly-controlled entity is the entity over whose activities the Group has joint control, established by contractual agreement and requiring unanimous consent for strategic financial and operating decisions. Jointly-controlled entity is accounted for in the consolidated financial statements using the equity method unless it is classified as held for sale (or included in a disposal group that is classified as held for sale). The consolidated financial statements include the Group s share of the income and expenses of the equity accounted jointly-controlled entity, after adjustments to align the accounting policies with those of the Group, from the date that joint control commences until the date that joint control ceases. When the Group s share of losses exceeds its interest in an equity accounted jointly-controlled entity, the carrying amount of that interest (including any long-term investments) is reduced to nil and the recognition of further losses is discontinued except to the extent that the Group has an obligation or has made payments on behalf of the jointly-controlled entity. Investment in jointly-controlled entity is stated in the Company s statement of financial position at cost less impairment losses, unless the investment is classified as held for sale (or included in a disposal group that is classified as held for sale). In the Company s separate financial statements, on disposal of such investments, the difference between net disposal proceeds and its carrying amounts is included in profit or loss. (b) Foreign currency translation (i) Foreign currency transactions Foreign currency transactions are translated into the functional currency of the respective Group entity, using the exchange rates prevailing at the dates of the transactions (spot exchange rate). Foreign exchange gains and losses resulting from the settlement of such transactions and from the remeasurement of monetary items at year-end exchange rates, whether realised or unrealised, are recognised in profit or loss except for exchange differences arising from monetary items that form part of the Group s net investment in foreign operations, which are recognised initially in other comprehensive income and accumulated under foreign currency translation reserve in equity. Non-monetary items measured at historical cost are translated using the exchange rates at the date of the transaction (not retranslated). Non-monetary items measured at fair value are translated using the exchange rates at the date when fair value was determined. Exchange differences arising on the translation of non-monetary items carried at fair value are included in profits or loss for the period except for the differences arising on the translation of non-monetary items in respect of which gains and losses are recognised directly in equity. Exchange differences arising from such non-monetary items are also recognised directly in equity.

50 48 2. Significant accounting policies (cont d) (b) Foreign currency translation (cont d) (ii) Operations denominated in functional currencies other than RM In the Group s financial statements, all assets, liabilities and transactions of Group entities with a functional currency other than the RM (the Group s presentation currency) are translated into RM upon consolidation. The functional currency of the entities in the Group has remained unchanged during the reporting period. On consolidation, assets and liabilities have been translated into RM at the closing rate at the reporting date. Income and expenses have been translated into the Group s presentation currency at the average rate over the reporting period. Exchange differences are charged or credited to other comprehensive income and recognised in the currency translation reserve in equity. On disposal of a foreign operation the cumulative translation differences recognised in equity (the exchange translation reserve) are reclassified to profit or loss and recognised as part of the gain or loss on disposal. Goodwill and fair value adjustments arising on the acquisition of a foreign entity have been treated as assets and liabilities of the foreign entity and translated into RM at the closing rate. (c) Property, plant and equipment (i) Recognition and measurement Items of property, plant and equipment are stated at cost less accumulated depreciation and impairment losses. Cost includes expenditures that are directly attributable to the acquisition of the asset and any other costs directly attributable to bringing the asset to working condition for its intended use, and the costs of dismantling and removing the items and restoring the site on which they are located. The cost of self-constructed assets also includes the cost of materials and direct labour. Purchased software that is integral to the functionality of the related equipment is capitalised as part of that equipment. The cost of property, plant and equipment recognised as a result of a business combination is based on fair value at acquisition date. The fair value of property is the estimated amount for which a property could be exchanged between a willing buyer and a willing seller in an arm s length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion. When significant parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment. Buildings that are leasehold property are also included in property, plant and equipment as if they are held under a finance lease. Such assets are depreciated over their expected useful lives (determined by reference to comparable owned assets) or over the term of the lease, if shorter. (ii) Subsequent costs The cost of replacing part of an item of property, plant and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Group and its cost can be measured reliably. The carrying amount of those parts that are replaced is derecognised. The costs of the day-to-day servicing of property, plant and equipment are recognised in the profit or loss as incurred. (iii) Depreciation Depreciation is recognised in the profit or loss on a straight-line basis over the estimated useful lives of each part of an item of property, plant and equipment. Buildings are depreciated on a straight-line basis over the shorter of the lease term and the estimated useful life of 50 years. Freehold land is not depreciated. Property, plant and equipment under construction are not depreciated until the assets are ready for their intended use.

51 49 2. Significant accounting policies (cont d) (c) Property, plant and equipment (cont d) (iii) Depreciation (cont d) The estimated useful lives for the current and comparative periods are as follows:- plant and machinery 5-10 years office equipment, furniture and computers 5-10 years motor vehicles 5-10 years renovations 10 years The depreciable amount is determined after deducting the residual value. The residual values, useful lives and depreciation method are reviewed at least annually to ensure that the amount, method and period of depreciation are consistent with previous estimates and the expected pattern of consumption of the future economic benefits embodied in the items of property, plant and equipment. (iv) Derecognition Property, plant and equipment are derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Gains or losses arising on the disposal of property, plant and equipment are determined as the difference between the disposal proceeds and the carrying amount of the assets and are recognised in profit or loss. (d) Construction work-in-progress Construction work-in-progress consists of buildings, plant and machinery under construction/installation for intended use as production facilities. The amount is stated at cost and includes capitalisation of interest incurred on borrowings related to property, plant and equipment under construction/installation until the property, plant and equipment are ready for their intended use. Assets under construction are not depreciated until it is completed and ready for its intended use. (e) Leases Finance Lease In accordance with MFRS 117 Leases, the economic ownership of a leased asset is transferred to the lessee if the lessee bears substantially all the risks and rewards related to the ownership of the leased asset. The related asset is then recognised at the inception of the lease at the fair value of the leased asset or, if lower, the present value of the lease payments plus incidental payments, if any. A corresponding amount is recognised as a finance leasing liability, irrespective of whether some of these lease payments are payable up-front at the date of inception of the lease. Leases of land and buildings are classified separately and are split into a land and a building element, in accordance with the relative fair values of the leasehold interests at the date the asset is recognised initially. Depreciation methods and useful lives for assets held under finance lease agreements correspond to those applied to comparable assets which are legally owned by the Group. The corresponding finance leasing liability is reduced by lease payments less finance charges, which are expensed as part of finance costs. The interest element of leasing payments represents a constant proportion of the capital balance outstanding and is charged to profit or loss over the period of the lease. The prepaid land lease payments are amortised over 30 to 999 years, which are equivalent to its lease terms. Operating Lease Leased payments for operating lease, where substantially all the risk and benefits remain with lessor, are charged as expenses in the period in which they incurred.

52 50 2. Significant accounting policies (cont d) (f) Intangible assets Goodwill Goodwill (negative goodwill) arises on the acquisition of subsidiary companies. Goodwill is measured at cost and is no longer amortised but tested for impairment at least annually or more frequently when there is objective evidence of impairment. Negative goodwill represents any excess of the Group s interest in the net fair value of acquiree s identifiable assets, liabilities and contingent liabilities over the cost of acquisition, it is recognised immediately in the profit or loss. Goodwill is allocated to cash-generating units and is tested annually for impairment or more frequently if events or changes in circumstances indicate that it might be impaired. A cash-generating unit (or group of cash-generating units) to which goodwill has been allocated is tested for impairment annually and, whenever there is an indication that the unit may be impaired, by comparing the carrying amount of the unit, including goodwill, with the recoverable amount of the unit. Where the recoverable amount of the cash-generating unit (or group of cash-generating units) is less than the carrying amount, an impairment loss is recognised in the profit or loss. Impairment losses recognised for goodwill are not reversed in subsequent period. An impairment loss recognised for goodwill should not be reversed in subsequent period. Gains or losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold. Where goodwill forms part of a cash-generating unit (or group of cash-generating units) and part of the operations within that unit is disposed of, the goodwill associated with the operations disposed of is included in the carrying amount of the operations when determining the gain or loss on disposal of the operations. Goodwill disposed of in these circumstances is measured based on the relative fair values of the operations disposed of and portion of the cash-generating unit retained. (g) Income tax Current tax Current tax expense is the expected amount of income taxes payable in respect of the taxable profit for the financial year and is measured using the tax rates that have been enacted or substantively enacted by the reporting date. Current tax for current and prior periods is recognised in financial position as liability (or asset) to the extent that it is unpaid (or refundable). Current tax is recognised in profit or loss except to the extent that the tax relates to items recognised outside profit or loss, either in other comprehensive income or directly in equity. Deferred tax Deferred tax liabilities and assets are provided for under the liability method in respect of all temporary differences at the reporting date between the carrying amount of an asset or liability in the financial position and its tax base including unused tax losses and capital allowances. Deferred tax liabilities are recognised for all temporary differences, except:- - where the deferred tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and - in respect of taxable temporary differences associated with investment in subsidiary companies and interest in joint ventures, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

53 51 2. Significant accounting policies (cont d) (g) Income tax (cont d) Deferred tax (cont d) Deferred tax assets are recognised for all deductible temporary differences, carry forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward unused tax credits and unused tax losses can be utilised except:- - where the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and - in respect of deductible temporary differences associated with investment in subsidiary companies and interest in joint ventures, deferred tax assets are recognised only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised. The carrying amount of a deferred tax asset is reviewed at each reporting date. If it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised, the carrying amount of the deferred tax asset will be reduced accordingly. When it becomes probable that sufficient taxable profit will be available, such reductions will be reversed to the extent of the taxable profit. Unrecognised deferred tax assets are reassessed at each reporting date and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax assets to be utilised. Deferred tax is 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 tax rates that have been enacted or substantively enacted by the reporting date. Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss. Deferred tax items are recognised in correlation to the underlying transaction either in other comprehensive income or directly in equity and deferred tax arising from a business combination is adjusted against goodwill on acquisition. Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority. (h) Inventories Inventories are measured at the lower of cost and net realisable value. The cost of inventories is based on a weighted average basis and includes expenditure incurred in acquiring the inventories and bringing them to their existing location and condition. In the case of work-in-progress and manufactured inventories, cost includes direct materials, direct labour and an appropriate share of production overheads based on normal operating capacity. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses.

54 52 2. Significant accounting policies (cont d) (i) Impairment of non-financial assets At each reporting date, the Group reviews the carrying amounts of its non-financial assets (exclude inventories and deferred tax assets) to determine whether there is any indication of impairment by comparing its carrying amount with its recoverable amount. Recoverable amount is the higher of an asset s fair value less costs to sell and its value in use. For the purpose of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash generating units). In assessing value-in-use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Where the carrying amount of an asset exceeds its recoverable amount, the asset is written down to its recoverable amount. Impairment losses recognised in respect of a cash-generating unit or groups of cashgenerating units are allocated first to reduce the carrying amount of any goodwill allocated to those units or group of units and then, to reduce the carrying amount of the other assets in the unit or groups of units on a pro-rate basis. An impairment loss is recognised as an expense in the profit or loss immediately. An assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses for an asset other than goodwill may no longer exist or may have decreased. If such indication exists, the recoverable amount is estimated. A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the asset recoverable amount since the last impairment loss was recognised. That increased amount cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in profit or loss. An impairment loss recognised for goodwill shall not be reversed in a subsequent period. (j) Financial instruments Financial assets and financial liabilities are recognised when the Group becomes a party to the contractual provisions of the financial instrument. Financial assets and financial liabilities are measured initially at fair value plus transactions costs, except for financial assets and financial liabilities carried at fair value through profit or loss, which are measured initially at fair value. Embedded derivative is recognised separately from the host contract and accounted for as a derivative if, and only if, it is not closely related to the economic characteristics and risks of the host contract and the host contract is not categorised at fair value through profit or loss. The host contract, in the event an embedded derivative is recognised separately, is accounted for in accordance with policy applicable to the nature of the host contract. Financial assets and financial liabilities are measured subsequently as described below:- Financial assets For the purpose of subsequent measurement, financial assets other than those designated and effective as hedging instruments are classified into the following categories upon initial recognition:- a) loans and receivables; b) financial assets at fair value through profit or loss; c) held to maturity investments; and d) available-for-sale financial assets.

55 53 2. Significant accounting policies (cont d) (j) Financial instruments (cont d) Financial assets (cont d) The category determines subsequent measurement and whether any resulting income and expense is recognised in profit or loss or in other comprehensive income. All financial assets except for those at fair value through profit or loss are subject to review for impairment at least once at each reporting date. Financial assets are impaired when there is any objective evidence that a financial asset or a group of financial assets is impaired. Different criteria to determine impairment are applied for each category of financial assets, which are described below. A financial asset is derecognised where the contractual right to receive cash flows from the asset has expired or when the financial assets and all substantial risks and rewards are transferred. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the period generally established by regulation or convention in the marketplace concerned. All regular way purchases and sales of financial assets are recognised or derecognised on the trade date, i.e. the date that the Group commits to purchase or sell the asset. At the reporting date, the Group has not designated any financial assets as at fair value through profit or loss and held to maturity investments. The Group carries only loans and receivables and available-for-sale financial assetsother investments on their statements of financial position. Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. After initial recognition, these are measured at amortised cost using the effective interest method, less impairment. Discounting is omitted where the effect of discounting is immaterial. Gains or losses are recognised in profit or loss when the loans and receivables are derecognised or impaired, and through the amortisation process. The Group s cash and cash equivalents, trade and most of the other receivables fall into this category of financial instruments. Loans and receivables are classified as current assets, except for those having maturity dates later than 12 months after the reporting date which are classified as non-current. Available-for-sale financial assets - Other investments Investment in equity instruments whose fair value cannot be reliably measured are measured at cost less impairment loss. Financial liabilities After the initial recognition, financial liability is classified as financial liability at fair value through profit or loss or other financial liabilities measured at amortised cost using the effective interest method. A financial liability is derecognised when the obligation under the liability is extinguished, discharged, cancelled or expired, or through amortisation process. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amount is recognised in profit or loss. At the reporting date, the Group has not designated any financial liabilities as at fair value through profit or loss. The Group carries only other financial liabilities on their statements of financial position.

56 54 2. Significant accounting policies (cont d) (j) Financial instruments (cont d) Financial liabilities (cont d) Other financial liabilities The Group s financial liabilities include borrowings, amount due to a subsidiary company, trade and other payables. Other financial liabilities are subsequently measured at amortised cost using the effective interest method. Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the reporting date. (k) Cash and cash equivalents Cash and cash equivalents consist of cash on hand, balances and deposits with banks and highly liquid investments which have an insignificant risk of changes in value. For the purpose of the statements of cash flows, cash and cash equivalents are presented net of bank overdrafts and pledged deposits. Bank overdrafts are shown in current liabilities in the statements of financial position. For the purpose of the financial position, cash and cash equivalents restricted to be used to settle a liability of 12 months or more after the reporting date are classified as non-current asset. (l) Impairment of financial assets The Group assesses at each reporting date whether there is any objective evidence that a financial asset is impaired. Trade and other receivables and other financial assets carried at amortised cost To determine whether there is objective evidence that an impairment loss on financial assets has been incurred, the Group considers factors such as the probability of insolvency or significant financial difficulties of the receivable and default or significant delay in payments. For certain categories of financial assets, such as trade receivables, assets that are assessed not to be impaired individually are subsequently assessed for impairment on a collective basis based on similar risk characteristics. Objective evidence of impairment for a portfolio of receivables could include the Group s past experience of collecting payments, an increase in the number of delayed payments in the portfolio past the average credit period and observable changes in national or local economic conditions that correlate with default on receivables. If any such evidence exists, the amount of impairment loss is measured as the difference between the asset s carrying amount and the present value of estimated future cash flow discounted at the financial asset s original effective interest rate. The impairment loss is recognised in profit or loss. The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables, where the carrying amount is reduced through the use of an allowance account. When a trade receivable becomes uncollectible, it is written off against the allowance account. If in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed to the extent that the carrying amount of the asset does not exceed its amortised cost at the reversal date. The amount of reversal is recognised in profit or loss. Unquoted equity securities carried at cost If there is objective evidence (such as significant adverse changes in the business environment where the issuer operates, probability of insolvency or significant financial difficulties of the issuer) that an impairment loss on financial assets carried at cost has been incurred, the amount of the loss is measured as the difference between the asset s carrying amount and the present value of estimated future cash flows discounted at the current market rate of return for a similar financial asset. Such impairment losses are not reversed in subsequent periods.

57 55 2. Significant accounting policies (cont d) (m) Equity, reserves and dividend payments An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities. Ordinary shares are equity instruments. Share capital represents the nominal value of shares that have been issued. Share premium includes any premiums received on issue of share capital. Any transaction costs associated with the issuing of shares are deducted from share premium, net of any related income tax benefits. Capital reserves represent appropriation of net profit of certain subsidiary companies in PRC in accordance with the local regulation. Retained earnings include all current and prior period retained profits. Interim dividends are simultaneously proposed and declared, because of articles of association of the Company grant the Directors the authority to declare interim dividends. Consequently, interim dividends are recognised directly as a liability when they are proposed and declared. Final dividends proposed by the Directors are not accounted for in shareholder s equity as an appropriation of retained profits, until they have been approved by the shareholders in the general meeting. When these dividends have been approved by the shareholders and declared, they are recognised as a liability. All transactions with owners of the Company are recorded separately within equity. (n) Provisions Provisions are recognised when there is a present legal or constructive obligation that can be estimated reliably, as a result of a past event, when it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions are not recognised for future operating losses. Any reimbursement that the Group can be virtually certain to collect from a third party with respect to the obligation is recognised as a separate asset. However, this asset may not exceed the amount of the related provision. Provisions are reviewed at each reporting date and adjusted to reflect the current best estimate. If it is no longer probable that an outflow of economic resources will be required to settle the obligation, the provision is reversed. Where the effect of the time of money is material, provision are discounted using a current pre tax rate that reflects, where appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost. (o) Financial guarantee contracts A financial guarantee contracts is a contract that requires the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified receivables fails to make payment when due. Financial guarantee contracts are recognised initially as a liability at fair value, net of transaction costs. Subsequent to initial recognition, financial guarantee contracts are recognised as income in profit or loss over the period of the guarantee. If the receivable fails to make payment relating to financial guarantee contact when it is due and the Group or the Company, as the issuer, is required to reimburse the holder for the associated loss, the liability is measured at the higher of the best estimate of the expenditure required to settle the present obligation at the reporting date and the amount initially recognised less cumulative amortisation.

58 56 2. Significant accounting policies (cont d) (p) Revenue recognition Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the Company and the revenue can be reliably measured. Revenue is measured at the fair value of consideration received or receivable. (i) Goods sold Revenue from the sale of goods is measured at fair value of the consideration received or receivable, net of returns and allowances, trade discounts and volume rebates. Revenue is recognised when the significant risks and rewards of ownership have been transferred to the buyer, recovery of the consideration is probable, the associated costs and possible return of goods can be estimated reliably, and there is no continuing management involvement with the goods. (ii) Dividend income Dividend income is recognised when the right to receive payment is established. (iii) Interest income Interest income is recognised on an accrual basis using the effective interest method. (iv) Rental income Rental income is accounted for on a straight-line basis over the lease terms. The aggregate costs of incentives provided to lessees are recognised as a reduction of rental income over the lease term on a straight-line basis. (q) Employee benefits (i) Short term employee benefits Short-term employee benefit obligations in respect of salaries, annual bonuses, paid annual leave and sick leave are measured on an undiscounted basis and are expensed once the related service is provided. A provision is recognised for the amount expected to be paid under short-term cash bonus or profit-sharing plans if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably. (ii) Defined contribution plans Defined contribution plans are post-employment benefit plans under which the Group pays fixed contributions into independent entities of funds and will have no legal or constructive obligation to pay further contribution if any of the funds do not hold sufficient assets to pay all employee benefits relating to employee services in the current and preceding financial years. Such contributions are recongised as an expense in the profit or loss as incurred. As required by law, companies in Malaysia make such contributions to the Employees Provident Fund ( EPF ). Some of the Group s foreign subsidiary companies also make contributions to their respective countries statutory pension schemes. Pursuant to the relevant regulations of The People s Republic of China ( PRC ) government, the Group participates in a local municipal government retirement benefits scheme (the Scheme ), whereby the subsidiary companies of the Company in the PRC are required to contribute a certain percentage of the basic salaries of its employees to the Scheme as their retirement benefits. The local municipal government undertakes to assume the retirement benefits obligations of all existing and future retired employees of the subsidiary companies. The only obligation of the Group with respect to the Scheme is to pay the ongoing required contributions under the Scheme mentioned above. Contributions under the Scheme are charged to the profit or loss as incurred. There is no provision under the Scheme whereby forfeited contributions may be used to reduce future contributions.

59 57 2. Significant accounting policies (cont d) (q) Employee benefits (cont d) (iii) Defined benefit plans The Group s net obligation in respect of defined benefit retirement plan for certain Directors is calculated by estimating the amount of future benefit that the Directors have earned in return for their service in the current and prior periods; that benefit is discounted to determine the present value. The discount rate is the yield at the reporting date on high quality corporate bonds or government bonds. The calculation is performed by a qualified actuary using the projected unit credit method. When the benefits of a plan are improved, the portion of the increased benefit relating to past service by employees is recognised as an expense in the profit or loss on a straight-line basis over the average period until the benefits become vested. To the extent that the benefits vest immediately, the expense is recognised immediately in the profit or loss. The liability recognised in the statements of financial position for defined benefits plans is the present value of the defined obligation (DBO) at the reporting date, together with adjustments for the unrecognised actuarial gains or losses and past service costs. Acturial gains and losses are not recognised as an expense unless the total unrecognised gain or loss exceeds 10% of the greater of the obligation. The amount exceeding this 10% corridor is charged or credited to profit or loss over the employees expected average remaining working lives. Acturial gains and losses within the 10% corridor are disclosed separately. Past service costs are recognised immediately in profit or loss, unless the changes to the pension plan are conditional on the employees remaining in service for a specified period of time (the vesting period). In this case, the past service costs are amortised on a straight-line basis over the vesting period. The Group recognises gains and losses on the curtailment or settlement of a defined benefit plan when the curtailment or settlement occurs. The gain or loss on curtailment comprises any resulting change in the fair value of plan assets, change in the present value of defined benefit obligation and any related actuarial gains and losses and past service cost that had not previously been recognised. (iv) Employee leave entitlement Employee entitlements to annual leave are recognised as a liability when they accrue to the employees. The estimated liability for leave is recognised for services rendered by employees up to the reporting date. (v) Employee public welfare expenses Employee public welfare expenses for the subsidiary companies incorporated in PRC ranges from 1% to 14% of the China statutory profit after tax during the current financial period less accumulated loss in prior year, if any. The full amount of each financial period allocation will be expensed to profit or loss. (r) Borrowing costs Borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset are capitalised during the period of time that is necessary to complete and prepare the asset for its intended use or sale. Capitalisation of borrowing costs commences when the activities to prepare the asset for its intended use or sale are in progress and the expenditures and borrowing costs are incurred. Borrowing costs are capitalised until the assets are substantially completed for their intended use or sale. Other borrowing costs are expensed in the period in which they are incurred. Borrowing costs consist of interest and other costs that the Group incurred in connection with the borrowing of funds.

60 58 2. Significant accounting policies (cont d) (s) Earnings per ordinary share The Group presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to owners of the Company by the weighted average number of ordinary shares outstanding during the period. Diluted EPS is determined by dividing the profit or loss attributable to owners of the Company and the weighted average number of ordinary shares outstanding for the effects of all dilutive potential equity instruments, which comprise convertible notes and share options granted to employees. (t) Segment reporting Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified to makes strategic decisions. Additional disclosures on each of these segments are shown in Note 31 to the Financial Statements. (u) Contingent liabilities A contingent liability is a possible obligation that arises from past events and whose existence will only be confirmed by the occurrence or non-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 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 such that outflow is probable and can be measured reliably, they will then be recognised as a provision. (v) Related parties A related party is a person or entity that is related to the Group. A related party transaction is a transfer of resources, services or obligations between the Group and its related party, regardless of whether a price is charged. (a) A person or a close member of that person s family is related to the Group if that person:- (i) Has control or joint control over the Group; (ii) Has significant influence over the Group; or (iii) Is a member of the key management personnel of the corporate shareholders of the Group, or the Group. (b) An entity is related to the Group if any of the following conditions applies:- (i) The entity and the Group are members of the same group. (ii) The Group is an associate or joint venture of the other entity. (iii) Both the Group and the entity are joint ventures of the same third party. (iv) The Group 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 benefits of employees of either the Group or an entity related to the Group. (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 corporate shareholders of the Group or the Group.

61 59 3. Property, plant and equipment Office equipment, Construction Land and Plant and furniture and Motor work-inbuildings machinery computers vehicles progress Total Group RM RM RM RM RM RM Cost At 1 January ,796,237 15,827,670 10,347,899 6,829,109 1,548,216 84,349,131 Additions 217,530 5,133, , ,313 3,763,855 10,035,440 Disposals - - (47,524) (65,260) - (112,784) Written off - - (209,289) - - (209,289) Exchange differences 1,092,055 1,428, ,883 80, ,914 3,080, At 31 December ,105,822 22,389,622 10,913,109 7,088,173 5,645,985 97,142,711 Additions 310,415 3,334, ,841 22,796 6,518,127 10,770,546 Disposals (133,353) (35,826) (4,730) (22,193) - (196,102) Written off - (106,721) (89,400) (3,889) - (200,010) Reclassification - 23, (23,686) - Exchange differences 852,196 (1,421,974) (210,090) (3,267) (179,347) (962,482) At 31 December ,135,080 24,183,154 11,193,730 7,081,620 11,961, ,554, Accumulated depreciation At 1 January ,270,794 4,368,723 8,024,324 4,971,898-30,635,739 Charge during the financial year 1,160,823 1,456, , ,030-3,930,239 Disposals - - (36,980) (62,876) - (99,856) Written off - - (112,502) - - (112,502) Exchange differences 323, ,172 70,763 52, , At 31 December ,755,394 6,119,606 8,658,280 5,561,688-35,094,968 Charge during the financial year 814,774 2,091, , ,311-4,020,407 Disposals (22,003) (14,511) (2,556) (4,826) - (43,896) Written off - (63,700) (85,136) (3,305) - (152,141) Exchange differences 816,245 (974,639) (76,255) (2,510) - (237,159) At 31 December ,364,410 7,158,457 9,062,954 6,096,358-38,682, Net carrying amount At 31 December ,770,670 17,024,697 2,130, ,262 11,961,079 67,872,484 ===================================================================================== At 31 December ,350,428 16,270,016 2,254,829 1,526,485 5,645,985 62,047,743 ===================================================================================== At 1 January ,525,443 11,458,947 2,323,575 1,857,211 1,548,216 53,713,392 =====================================================================================

62 60 3. Property, plant and equipment (cont d) Analysis of land and building:- Freehold land Buildings Renovations Total Group RM RM RM RM Cost At 1 January ,836,269 41,201,002 1,758,966 49,796,237 Additions - 156,950 60, ,530 Exchange differences - 1,083,551 8,504 1,092, At 31 December ,836,269 42,441,503 1,828,050 51,105,822 Additions - 14, , ,415 Disposal - (133,353) - (133,353) Exchange differences - 839,975 12, , At 31 December ,836,269 43,162,424 2,136,387 52,135, Accumulated depreciation At 1 January ,835,970 1,434,824 3,270,794 Charge during the financial year - 1,087,627 73,196 1,160,823 Exchange differences - 315,543 8, , At 31 December ,239,140 1,516,254 14,755,394 Charge during the financial year - 711, , ,774 Disposal - (22,003) - (22,003) Exchange differences - 805,117 11, , At 31 December ,733,451 1,630,959 16,364, Net carrying amount At 31 December ,836,269 28,428, ,428 35,770,670 = ==================================================================== At 31 December ,836,269 29,202, ,796 6,350,428 = ==================================================================== At 1 January ,836,269 29,365, ,142 36,525,443 = ====================================================================

63 61 3. Property, plant and equipment (cont d) Office equipment, Land and furniture and Motor buildings computers vehicles Total Company RM RM RM RM Cost At 1 January ,421,223 5,220,195 3,389,140 14,030,558 Additions 13, ,095 93, ,749 Disposals - (850) (59,475) (60,325) Written off - (63,240) - (63,240) At 31 December ,434,583 5,275,200 3,422,959 14,132,742 Additions 172,435 41,270 3, ,981 Disposals (133,352) (1,588) - (134,940) Written off - (8,085) (3,889) (11,974) At 31 December ,473,666 5,306,797 3,422,346 14,202, Accumulated depreciation At 1 January ,605,672 4,507,497 2,358,327 8,471,496 Charge during the financial year 109, , , ,757 Disposals - (850) (59,474) (60,324) Written off - (63,240) - (63,240) At 31 December ,714,802 4,674,859 2,649,028 9,038,689 Charge during the financial year 124, , , ,666 Disposals (22,003) (278) - (22,281) Written off - (8,085) (3,305) (11,390) At 31 December ,817,173 4,875,343 2,955,168 9,647, Net carrying amount At 31 December ,656, , ,178 4,555,125 = ==================================================================== At 31 December ,719, , ,931 5,094,053 = ==================================================================== At 1 January ,815, ,698 1,030,813 5,559,062 = ====================================================================

64 62 3. Property, plant and equipment (cont d) Analysis of land and building:- Freehold land Buildings Renovations Total Company RM RM RM RM Cost At 1 January ,061,958 3,569, ,107 5,421,223 Additions ,360 13, At 31 December ,061,958 3,569, ,467 5,434,583 Additions , ,435 Disposals - (133,352) - (133,352) At 31 December ,061,958 3,435, ,902 5,473, Accumulated depreciation At 1 January ,030, ,101 1,605,672 Charge during the financial year - 71,383 37, , At 31 December ,101, ,848 1,714,802 Charge during the financial year - 69,383 54, ,374 Disposals - (22,003) - (22,003) At 31 December ,149, ,839 1,817, Net carrying amount At 31 December ,061,958 2,286, ,063 3,656,493 = ==================================================================== At 31 December ,061,958 2,467, ,619 3,719,781 = ==================================================================== At 1 January ,061,958 2,538, ,006 3,815,551 = ==================================================================== Group One of the buildings, with net carrying amount of RM3,015,777 (2011: RM3,121,510 and : RM3,224,799) situated on a piece of land under operating lease as disclosed in Note 25 to the Financial Statements, is charged to a bank as security for borrowings (Note 16 to the Financial Statements). Certain plant and machinery with net carrying amount of RMNil (2011: RMNil and : RM2,382,859) situated in the PRC is charged to a bank as security for borrowings (Note 16 to the Financial Statements). The term loan was fully settled during the previous financial year. The net carrying amount of property, plant and equipment which are under finance lease arrangement amounted to RM163,200 (2011: RM133,733 and : RM400,713) and pledged as security for the related finance lease liabilities. Company The net carrying amount of property, plant and equipment which are acquired under finance lease arrangements amounted to RMNil (2011: RMNil and : RM226,256) and pledged as security for the related finance lease liabilities.

65 63 4. Prepaid land lease payments Cost Group RM RM At 1 January 8,350,000 4,637,321 Addition - 3,286,305 Translation differences (140,909) 426, At 31 December 8,209,091 8,350, Accumulated amortisation At 1 January 993, ,783 Amortisation charged during the financial year 152, ,345 Translation differences (6,427) 17, At 31 December 1,139, , Net carrying amount 7,069,787 7,356,991 = ================================= Group RM RM RM Analysed as:- Short leasehold land 6,568,951 6,854,854 3,302,099 Long leasehold land 500, , , ,069,787 7,356,991 3,805,538 = ======================================================= Group RM RM RM Amount to be amortised:- Not later than one year 152, ,345 82,327 Later than one year but not later than five years 611, , ,308 Later than five years 6,305,347 6,640,266 3,393, ,069,787 7,356,991 3,805,538 = ======================================================= 5. Goodwill and consolidation Impairment testing for cash-generating units containing goodwill For the purpose of impairment testing, goodwill is allocated to the Group s operating divisions which represent the lowest level within the Group at which the goodwill is monitored for internal management purposes.

66 64 5. Goodwill and consolidation (cont d) The aggregate carrying amounts of goodwill allocated to each unit are as follows:- Group RM RM RM Sales and distribution units in Republic of Singapore 3,230,371 3,230,371 3,230,371 = ======================================================= The recoverable amount for the above was based on its value in use and was determined by discounting the future cash flows generated from the continuing use of those units and was based on the following key assumptions:- Cash flows were projected based on actual operating results and a 5-year business plan. Revenue was projected annual increase of approximately 10% (2011: 10%) per annum. Expenses were projected annual increase of approximately 2% to 5% (2011: 2% to 5%) per annum. A pre-tax discount rate was applied in determining the recoverable amount of the unit. The discount rate was estimated based on the Group s existing rate of borrowing. The values assigned to the key assumptions represent management s assessment of future trends in the industry. A reasonably possible change in a key assumption does not have any significant difference to the recoverable amount.

67 65 6. Investment in subsidiary companies Company RM RM RM Unquoted shares, at cost 115,713, ,405,624 91,933,830 Less: Impairment loss (3,500,000) (3,000,000) (1,500,000) Accumulated dividend received out of pre-acquisition profits - - (4,751,849) ,213, ,405,624 85,681,981 = ======================================================= Details of the subsidiary companies, all of which are 100% (2011: 100% and : 100%) owned except for ShengYou Precision Engineering Manufacturing (QuanZhou) Co. Ltd. which is 51% (2011: Nil% and : Nil%) are as follows:- Name of Company Principal activities Place of incorporation Triumphal Machinery Supply Dormant Malaysia Sdn. Bhd. Triumphal Equipment Spare Dealer and distributor of spare parts for Malaysia Parts Sdn. Bhd heavy equipment and wire ropes USG Products Sdn. Bhd. Manufacturing and sale of heavy machinery Malaysia filters and spare parts USG Products (F.E.) Pte. Ltd. * Sales and distribution of spare parts for Republic of Singapore tractors and earthmoving equipment AEC Products Dormant United Kingdom Triumphal Precision Development, production and sale of PRC Engineering (Zhejiang) Ltd. * floating seals, engineering tools and machinery components M.T.T.S. Pte. Ltd. * Sales of spare parts of heavy machinery Republic of Singapore and investment holding ShengYou Precision Manufacturing of replacement parts, sales PRC Engineering Manufacturing and marketing services (QuanZhou) Co.Ltd.* Subsidiary company of M.T.T.S. Pte. Ltd. USG Far East International Trading of spare parts for tractors and PRC Trading (Shanghai) Ltd.* earth moving equipment * Audited by other firms of Special audit was carried out by SJ Grant Thornton

68 66 7. Investment in jointly-controlled entity Group Company RM RM RM RM RM RM Unquoted shares, at cost 3,477,771 3,477,771 3,477,771 3,477,771 3,477,771 3,477, Share of postacquisition reserves Retained earnings At 1 January 3,957,719 3,165,651 1,705, Total comprehensive income 404,035 1,582,908 1,921, Dividend declared (491,500) (790,840) (461,600) At 31 December 3,870,254 3,957,719 3,165, Translation reserve 273, ,776 (95,101) ,621,990 7,907,266 6,548,321 3,477,771 3,477,771 3,477,771 ===================================================================================== Consists of the following:- Country of Effective ownership Name of company Principal activity incorporation interest % % % Jointly-controlled entity Shandong Shantui Development, PRC Triumphal Construction manufacturing and trading Machinery Co., Ltd.* of spare parts and components for earth moving machinery * Audited by other firms of accountants The Group s interest in the assets and liabilities, revenue and expenses of the jointly controlled entity is as follows:- Group RM RM RM Non-current assets 6,493,835 6,218,793 3,620,778 Current assets 19,713,930 29,450,531 16,051,594 Current liabilities (18,585,775) (27,762,058) (13,124,051) Net assets 7,621,990 7,907,266 6,548,321 = ======================================================= Income 40,848,944 43,686,859 23,132,152 Expenses (40,444,909) (42,103,951) (21,210,654) Group s share of profit 404,035 1,582,908 1,921,498 = ======================================================= The jointly-controlled entity does not have any contingent liability at 1 January 2011, 31 December 2011 and 31 December 2012.

69 67 8. Other investments Group Company RM RM RM RM RM RM Unquoted shares, at cost At 1 January 1,999, , ,918 1,902, Reclassified from investment in subsidiary companies (Note 24) - 1,999, ,902,732 - Disposal during the financial year - (211,667) (715,251) At 31 December 1,999,234 1,999, ,667 1,902,732 1,902,732 - ===================================================================================== Investment in subsidiary companies has been reclassified to other investments in view of the subsidiary companies have been placed under ongoing voluntarily liquidation process and the Group and the Company are unable to exercise management control over the subsidiary companies. 9. Deferred tax assets/(liabilities) Group Company RM RM RM RM At 1 January 3,120,776 2,711,899 1,948,600 1,606,000 Recognised in profit or loss 94, , , ,600 Translation differences (942) (723) At 31 December 3,214,434 3,120,776 2,131,000 1,948,600 = ====================================================================

70 68 9. Deferred tax assets/(liabilities) (cont d) Presented as follows:- Group Company RM RM RM RM RM RM Deferred tax assets 3,250,200 3,155,600 2,746,000 2,131,000 1,948,600 1,606,000 Deferred tax liabilities (35,766) (34,824) (34,101) ,214,434 3,120,776 2,711,899 2,131,00 1,948,600 1,606,000 ===================================================================================== Deferred tax assets of the Group:- Unrealised Property, Defined loss in plant and benefits foreign equipment Allowances obligations Provisions exchange Total RM RM RM RM RM RM At 1 January 2011 (259,400) 1,475,400 1,482,000 48,000-2,746,000 Recognised in profit or loss 124, , ,000 (12,400) 49, , At 31 December 2011 (135,000) 1,594,000 1,612,000 35,600 49,000 3,155,600 Recognised in profit or loss (17,000) (54,500) 102, ,100 (57,000) 94, At 31 December 2012 (152,000) 1,539,500 1,714, ,700 (8,000) 3,250,200 ===================================================================================== Deferred tax liabilities of the Group:- Property, plant and equipment RM At 1 January 2011 (34,101) Translation differences (723) At 31 December 2011 (34,824) Translation differences (942) At 31 December 2012 (35,766) = ====================

71 69 9. Deferred tax assets/(liabilities) (cont d) Deferred tax assets of the Company:- Unrealised Property, Defined gain in plant and benefits foreign equipment Allowances Provisions obligations exchange Total RM RM RM RM RM RM At 1 January 2011 (211,000) 384,000-1,482,000 (49,000) 1,606,000 Recognised in profit or loss 97,600 16, ,000 99, , At 31 December 2011 (113,400) 400,000-1,612,000 50,000 1,948,600 Recognised in profit or loss 1,400 12, , ,000 (58,000) 182, At 31 December 2012 (112,000) 412, ,000 1,714,000 (8,000) 2,131,000 ===================================================================================== Unrecognised deferred tax assets Deferred tax assets have not been recognised in respect of the following items in certain subsidiary companies:- Group RM RM Taxable temporary differences (4,800,000) (4,430,000) Unutilised capital allowances 5,230,000 4,300,000 Unutilised reinvestment allowances 6,890,000 6,890,000 Unabsorbed tax losses ,320,000 6,760,000 = ================================= The unutilised capital allowances, unutilised reinvestment allowances and unabsorbed tax losses do not expire under current tax legislation. Deferred tax assets have not been recognised in respect of these items because it is not probable that future taxable profit will be available against which the subsidiary companies can utilise the benefits therefrom.

72 Inventories Group Company RM RM RM RM RM RM Trading inventories 98,571,991 98,294,114 80,127,987 26,915,482 28,688,151 25,423,564 Raw materials 9,680,366 15,118,340 9,336, Work in progress 5,670,691 4,762,182 2,014, ,923, ,174,636 91,479,707 26,915,482 28,688,151 25,423,564 ===================================================================================== Group A total of RM126,230,777 (2011: RM144,968,778) of inventories was included in profit or loss as expense. This includes RM898,612 (2011: RM1,320,497) resulting from write down and RM129,626 (2011: RM338,463) resulting from write back of inventories during the financial year. Company A total of RM53,761,981 (2011: RM58,085,487) of inventories was included in profit or loss as expense. This includes RM48,053 (2011: RM61,109) resulting from write down of inventories during the financial year. The written down amount of inventories was reversed when the related inventories were sold above their carrying amounts and increased in net realisable value because of changed economic circumstances. 11. Trade receivables Group Company RM RM RM RM RM RM Trade receivables 37,789,411 45,300,968 56,450,924 13,618,615 13,970,828 11,859,341 Less: Allowance for impairment losses At 1 January (1,779,992) (2,483,948) (5,874,934) (64,547) (32,505) (81,637) Allowance for doubtful debts (850,290) (670,952) (626,031) (11,792) (32,042) - Allowance for doubtful debts written back 782,824 1,376,974 2,180,457 4,342-49,132 Written off - - 1,711, Exchange difference (6,597) (2,066) 125, At 31 December (1,854,055) (1,779,992) (2,483,948) (71,997) (64,547) (32,505) ,935,356 43,520,976 53,966,976 13,546,618 13,906,281 11,826,836 =====================================================================================

73 Trade receivables (cont d) Allowance for doubtful debts is made for debtors that the management considers the recoverability to be doubtful. On a quarterly basis, the management reviews trade receivables ageing report, repayment history and any other available evidence of possible default by receivables. Trade receivables are non-interest bearing, unsecured and the normal trade credit terms granted by the Group and the Company to the trade receivables ranging from 30 days to 120 days (2011: 30 days to 120 days and : 30 days to 120 days). Analysis by currencies:- Group Company RM RM RM RM RM RM RM 24,532,296 25,425,770 35,851,281 13,546,284 13,906,192 11,816,695 Singapore Dollar 3,727,689 5,574,407 6,749, US Dollar 5,767,992 8,918,522 2,107, ,141 Euro 1,471,021 3,517,425 8,233, Renminbi 436,358 84,852 1,025, ,935,356 43,520,976 53,966,976 13,546,618 13,906,281 11,826,836 ===================================================================================== 12. Other receivables Group Company RM RM RM RM RM RM Non-trade receivables, deposits and prepayment 10,968,637 13,970,747 7,994,419 1,340,352 1,371,898 1,408,617 ===================================================================================== Other receivables are non-interest bearing, unsecured and repayable on demand. Analysis by currencies:- Group Company RM RM RM RM RM RM RM 969, , , , , ,332 Renminbi 9,462,538 12,218,783 6,132, , , ,600 Euro 181,278 59, , ,720 Singapore Dollar 161, , , US Dollar 194, , ,172 29, ,498 51,965 Japanese Yen 49 71,717 43, Other currencies ,968,637 13,970,747 7,994,419 1,340,352 1,371,898 1,408,617 =====================================================================================

74 Amount due from/(to) subsidiary companies The amounts due from/(to) subsidiary companies are non-interest bearing, unsecured and repayable upon demand. Analysis by currencies:- Company RM RM RM Amount due from subsidiary companies:- RM 21,179,025 22,916,034 26,811,996 Renminbi 157,318 8,922 9,007 US Dollar 5,839-52,285 Euro ,925 Great Britain Pound 11, ,353,438 22,924,956 27,018,213 = ======================================================= Amount due to subsidiary companies:- RM 103, ,365 Renminbi 156, Euro 45, US Dollar 268, , , , ,925 1,104,235 = ======================================================= 14. Cash and bank balances Group Company RM RM RM RM RM RM Cash and bank balances 18,645,804 16,856,603 19,275,833 4,766,724 3,701,992 5,194,733 Short term deposits with licensed banks 5,961,403 10,889,617 15,747,300 5,961,403 10,489,616 10,366, ,607,207 27,746,220 35,023,133 10,728,127 14,191,608 15,561,200 ===================================================================================== Analysis by currencies:- Group Company RM RM RM RM RM RM RM 18,127,228 17,312,231 20,174,073 10,505,708 13,330,265 12,623,981 US Dollar 3,763,244 4,786,549 5,868,606 93, ,179 2,084,561 Euro 147,293 2,798,501 3,133,553 52, , ,494 Singapore Dollar 1,879,424 1,574,273 4,205,721 7,437 7,362 7,473 Renminbi 684,198 1,269,493 1,635,236 66,465 56,496 56,423 Other currencies 5,820 5,173 5,944 2,490 2,040 1, ,607,207 27,746,220 35,023,133 10,728,127 14,191,608 15,561,200 =====================================================================================

75 Share capital and reserves Share capital Group/Company Group/Company Number of ordinary shares RM RM RM RM RM RM Authorised:- Ordinary share of RM1.00 each 100,000, ,000, ,000, ,000, ,000, ,000,000 ===================================================================================== Issued and fully paid-up:- Ordinary share of RM1.00 each 87,170,928 87,170,928 87,170,928 87,170,928 87,170,928 87,170,928 ===================================================================================== The holders of ordinary shares are entitled to receive dividends as and when declared by the Company. All ordinary shares carry one vote per share without restrictions and rank equally with regard to the Company residual assets. Reserves Group Company RM RM RM RM RM RM Non-distributable Share premium 1,360 1,360 1,360 1,360 1,360 1,360 Exchange translation reserve 7,459,642 8,509,984 1,394, Capital reserves 342, , , Distributable Retained earnings 141,523, ,718, ,236,823 88,561,552 86,658,855 69,126, ,327, ,570, ,973,606 88,562,912 86,660,215 69,127,795 ===================================================================================== Share premium Share premium represents the excess of the consideration received over the nominal value of shares issued by the Company. It is not to be distributed by way of cash dividends and its utilisation shall be in the manner as set out in Section 60(3) of the Companies Act, 1965 in Malaysia. Exchange translation reserve The exchange translation reserve represents exchange differences arising from the translation of the financial statements of foreign operations whose functional currencies are different from that of the Group s presentation currency. Capital reserves Capital reserves represent appropriation of net profit of certain subsidiary companies in the PRC in accordance with the local regulation. Retained earnings The Company has elected for the irrevocable option under the Finance Act 2007 to disregard the 108 balance as at 31 December Hence, the Company will be able to distribute dividends out of its entire retained earnings as at 31 December 2012 under the single tier system. The Company has a tax exempt income account of approximately RM12,690,951 (2011: RM12,690,951) from which tax exempt dividends can be declared.

76 Loans and borrowings Group Company RM RM RM RM RM RM Non-current Secured Finance lease liabilities 58,219-53, Unsecured Term loans 2,028,000 4,044,000 1,992,000 2,028,000 4,044,000 1,992, ,086,219 4,044,000 2,045,014 2,028,000 4,044,000 1,992, Current Secured Term loans 1,116,600 2,331,375 1,137, Finance lease liabilities 95,520 54,138 98, , ,212,120 2,385,513 1,235, ,675 Unsecured Bankers acceptance 1,165,643 1,885, ,000 1,108,000 - Term loans 4,008,000 3,024,000 1,008,000 4,008,000 3,024,000 1,008, ,385,763 7,294,622 2,243,930 4,896,000 4,132,000 1,048, ,471,982 11,338,622 4,288,944 6,924,000 8,176,000 3,040,675 ===================================================================================== Analysis by currencies:- Group Company RM RM RM RM RM RM RM 7,077,739 8,176,000 3,398,675 6,924,000 8,176,000 3,040,675 Singapore Dollar 625,800 1,882, , Renminbi 768,443 1,280, , US Dollar , ,471,982 11,338,622 4,288,944 6,924,000 8,176,000 3,040,675 ===================================================================================== Term loans The term loans are secured by a mortgage over the leasehold building of a subsidiary company (Note 3 to the Financial Statements) and a corporate guarantee by the Company. The interest rate on the term loans is based on the rate ranges from 4.9% to 7.3% (2011: 4.5% to 5.0%) per annum. The repayment terms are monthly installments. Bankers acceptance The bankers acceptance are unsecured, bear interest ranging from 4.0% to 4.7% (2011: 4.2% to 4.7%) per annum and repayable upon maturity date.

77 Loans and borrowings (cont d) Terms and debt repayment schedule Year of Carrying Under 1-5 Group maturity amount 1 year years 2012 RM RM RM Term loans ,152,600 5,124,600 2,028,000 Bankers acceptance ,165,643 1,165,643 - Finance lease liabilities ,739 95,520 58, ,471,982 6,385,763 2,086,219 = ================================================== 2011 Term loans ,399,375 5,355,375 4,044,000 Bankers acceptance ,885,109 1,885,109 - Finance lease liabilities ,138 54, ,338,622 7,294,622 4,044,000 = ================================================== Term loan ,137,672 2,145,672 1,992,000 Finance lease liabilities ,272 98,258 53, ,288,944 2,243,930 2,045,014 = ================================================== Year of Carrying Under 1-5 Company maturity amount 1 year years 2012 RM RM RM RM Term loans ,036,000 4,008,000 2,028,000 Bankers acceptance , , ,924,000 4,896,000 2,028,000 = ================================================== 2011 Term loans ,068,000 3,024,000 4,044,000 Bankers acceptance ,108,000 1,108, ,176,000 4,132,000 4,044,000 = ================================================== Term loans ,000,000 1,008,000 1,992,000 Finance lease liability ,675 40, ,040,675 1,048,675 1,992,000 = ==================================================

78 Loans and borrowings (cont d) Finance lease liabilities Finance lease liabilities are payable as follows: Minimum lease Net present payments Interest value 2012 RM RM RM Group Less than one year 101,664 6,144 95,520 Between one to five years 59,304 1,085 58, ,968 7, ,739 = ======================================================= 2011 Minimum lease Net present payments Interest value 2011 RM RM RM Group Less than one year 55,375 1,237 54,138 = ======================================================= Minimum lease Net present payments Interest value RM RM RM Group Less than one year 102,247 3,989 98,258 Between one to five years 54,226 1,212 53, ,473 5, ,272 = ======================================================= Company Less than one year 41, ,675 = ======================================================= The fair value of loans and borrowings equals their carrying amount as the impact of discounting is not significant.

79 Employee benefits Group/Company RM RM RM Retirement benefits - Present value of unfunded obligations Non-current 497,963 6,448,662 5,928,541 Current 6,360, ,858,895 6,448,662 5,928,541 = ======================================================= The reconciliation of the Group s and of the Company s defined benefit obligations to the amounts presented on the statements of financial position for each reporting periods are presented below:- Group/Company RM RM RM Present value of unfunded obligations 6,939,163 6,448,662 5,928,541 Net actuarial gain not recognised (80,268) Total employee benefits 6,858,895 6,448,662 5,928,541 = ======================================================= The current portion of these liabilities represents the Group s and the Company s obligations to a Director that are expected to be settled during financial year 2013 and the remaining part of employee benefits is considered noncurrent. Liability for defined benefit obligations The Group and the Company have an unfunded defined benefit plan that provides benefits to eligible Directors. Under the plan, eligible Directors are entitled to benefits based on last drawn final salary and length of service at the time the benefits become vested upon their retirement age of 70 or optional retirement age of 60 or upon ill health or death. Movement in the net liability recognised in the statements of financial position Group/Company RM RM At 1 January 6,448,662 5,928,541 Expense recognised in the profit or loss 410, , At 31 December 6,858,895 6,448,662 = =================================

80 Employee benefits (cont d) Expense recognised in the profit or loss Group/Company RM RM Under administrative expenses Current service cost 23, ,408 Interest on obligation 386, , , ,121 = ================================= Principal actuarial assumptions used at the reporting date:- Group/Company % % Discount rate 6 5 = ================================= 18. Trade payables Trade payables are non-interest bearing, unsecured and are granted with the normal trade credit terms ranging from 14 days to 90 days (2011: 14 days to 90 days and : 14 days to 90 days). Analysis by currencies:- Group Company RM RM RM RM RM RM RM 1,863,006 2,244,680 3,632, , , ,105 Euro 4,602,741 8,463,217 13,003,662 1,463,198 1,068,573 4,931,949 Renminbi 4,035,287 4,912,461 3,079, US Dollar 1,409,291 4,412,486 2,400, ,895 3,121, ,196 Singapore Dollar 466, , , Australian Dollar - 166, , Other currencies 1,048 72,860 42, ,378,234 20,661,053 22,777,688 2,866,304 4,670,116 6,375,250 =====================================================================================

81 Other payables Group Company RM RM RM RM RM RM Non-trade payables and accrual of expenses 11,632,540 14,538,085 10,951,396 5,102,167 6,955,530 4,302,715 ===================================================================================== Other payables are non-interest bearing, unsecured and repayable on demand. Analysis by currencies:- Group Company RM RM RM RM RM RM RM 6,010,535 7,976,701 5,495,072 5,102,167 6,955,530 4,302,715 Renminbi 2,281,406 2,589,609 1,860, Euro 2,362,031 2,406, Singapore Dollar 886,349 1,492,419 3,572, US Dollar 92,219 73,128 23, ,632,540 14,538,085 10,951,396 5,102,167 6,955,530 4,302,715 ===================================================================================== 20. Profit before tax Group Company RM RM RM RM Profit before tax is arrived at after charging:- Auditors remuneration - Company s auditors - Statutory audit 139, ,300 99,300 98,300 - Other 25,100 34,700 13,500 10,000 - Other auditors 93,416 95, Allowance for doubtful debts 850, ,952 11,792 32,042 Inventories written down 898,612 1,320,497 48,053 61,109 Amortisation on prepaid land lease payments 152, , Bad debts written off 74,626 28, Depreciation of property, plant and equipment 4,020,407 3,930, , ,757 Directors emoluments - Fees 145, , , ,792 - Other emoluments 2,263,090 3,798,456 1,661,249 3,079,456 - Contribution to Employees Provident Fund 330, , , ,113 - Expenses related to defined benefits plan 410, , , ,121 Impairment loss on investment in a subsidiary company ,000 1,500,000

82 Profit before tax (cont d) Group Company RM RM RM RM Profit before tax is arrived at after charging (cont d):- Interest expense - Finance lease liabilities 8,233 4, Overdraft 33,892 33, Term loans 385, , , ,156 - Bankers acceptance 27,514 40,856 27,514 40,856 Loss on disposal of other investments Loss on disposal of property, plant and equipment 9,232 6, Operating lease rental of and and building 727, , , ,600 Personnel expenses (exclude executive Directors) - Contribution to Employees Provident Fund 1,728,933 1,041, , ,399 - Other emoluments 16,888,131 14,984,043 5,176,588 4,783,060 Property, plant and equipment written off 47,869 96, Realised loss on foreign exchange 584, , ,082 Rental of equipment 16,758 9,570 11,180 9,570 Rental of premises 89, Unrealised loss on foreign exchange 434, , ,517 = ==================================================================== and after crediting:- Allowance for doubtful debts written back 782,824 1,376,974 4,342 - Bad debts recovered 58, Inventories written back 129, , Dividend income - Subsidiary companies ,310,000 - Jointly-controlled entity , ,840 Gain on disposal of property, plant and equipment 7,741 14,891 7,741 14,629 Interest income 244, , , ,260 Realised gain on foreign exchange 1,181, ,960 41,948 - Rental income of land and buildings 3,200 5,768 15,000 15,000 Share of profit after tax of jointly-controlled entity 404,035 1,582, Waiver of debts from payables Unrealised gain on foreign exchange 23, ,006 5,570 - = ==================================================================== The estimated monetary value of Directors benefits-in-kind of the Group and of the Company is RM59,150 (2011: RM59,150) and RM59,150 (2011: RM59,150) respectively.

83 Tax expense Group Company RM RM RM RM Tax expense - Current year 2,590,523 4,694,456 1,407,434 5,548,646 - Transferred from deferred tax assets (94,600) (409,600) (182,400) (342,600) - (Over)/Under provision in prior year (29,037) (166,357) 5,758 (15,513) ,466,886 4,118,499 1,230,792 5,190,533 = ==================================================================== Malaysian income tax is calculated at the statutory tax rate of 25% (2011: 25%) of the estimated taxable profits for the financial year. A reconciliation of income tax expense applicable to profit before tax at the statutory tax rate to income tax expense at the effective tax rate of the Group and of the Company are as follows:- Group Company RM RM RM RM Profit before tax 6,086,796 18,599,716 4,005,198 22,722,953 = ==================================================================== At Malaysian statutory tax rate of 25% 1,521,699 4,649,929 1,001,300 5,680,738 Tax effects in respect of:- (Over)/Under provision in prior year (29,037) (166,357) 5,758 (15,513) Expenses not deductible for tax purposes 1,164, , , ,605 Effect in change of tax rates on opening deferred tax - 3, Expenses allowable for double deductions (7,143) - (7,143) - Effect of different tax rates in foreign jurisdiction (102,679) (440,295) - - Utilisation of previously unrecognised deferred tax assets 140,000 97, Income not subject to income tax (220,044) (945,316) (143,802) (977,297) Total tax expense 2,466,866 4,118,499 1,230,792 5,190,533 = ==================================================================== The Group s unutilised capital allowances and unutilised reinvestment allowances which can be carried forward to offset against future taxable profit amounted to approximately RM5,230,000 (2011: RM4,300,000) and RM6,890,000 (2011: RM6,890,000) respectively. 22. Earnings per share Basic earnings per ordinary shares The calculation of basic earnings per share was based on the profit attributable to owners of the Company and a weighted average number of ordinary shares issued calculated as follows:-

84 Earnings per share (cont d) Basic earnings per ordinary shares (cont d) Group Profit for the financial year attributable to ordinary equity holders of the Company (RM) 3,678,535 14,481,217 = ================================= Weighted average number of ordinary shares at 31 December 87,170,928 87,170,928 = ================================= Basic earnings per share (sen) = ================================= Diluted earnings per ordinary shares No diluted earnings per share is presented as there is no dilutive potential equity instruments. 23. Acquisition of property, plant and equipment Group Company RM RM RM RM Current year s purchase of property, plant and equipment 10,770,546 10,035, , ,749 Less: - - Acquisition by means of finance lease arrangement (192,000) ,578,546 10,035, , ,749 = ==================================================================== 24. Summary of effects on deconsolidation of subsidiary companies During the previous financial year, the Company liquidated its wholly-owned subsidiary companies, Triumphal Capital Holdings Sdn. Bhd. and Triumphal Industries Supply Sdn. Bhd.. The deconsolidation had the following effects on the financial position of the Group as at the end of the previous financial year:- Group RM RM Trade and other receivables - 1,971,230 Cash and bank balances - 64,654 Trade and other payables - (36,500) Tax payable - (150) Net assets deconsolidated - 1,999,234 Less: Reclassify to other investments (Note 8) - (1,999,234) Less: Cash and bank balances on deconsolidation of subsidiary companies - (64,654) Net cash outflow on deconsolidation of subsidiary companies - (64,654) = =================================

85 Lease commitments Operating lease Total future minimum lease payments payable under non-cancellable operating leases are as follows:- Group RM RM Less than one year 418, ,126 Between one and five years 1,446,001 1,308,764 More than five years 354, , ,218,814 2,312,271 = ================================= The above operating lease of the Group relates to a subsidiary company s lease of a land for a period expiring in The lease rentals of the land are subject to an annual increase not exceeding 7.6% (2011: 7.6%) per annum. Finance lease The future minimum lease payments under finance leases are disclosed in Note 16 to the Financial Statements. 26. Capital and investment commitments Capital commitment Group RM RM Authorised and contracted for: - - Plant and machinery 439,968 - = ================================= Investment commitment The Group has entered into agreements with Tongxiang Economic Development Board to invest in China, via their subsidiary company, Triumphal Precision Engineering (Zhejiang) Ltd. At the reporting date, the total investment commitment is USD25,000,000 (RM80,866,000) (2011: USD25,000,000 (RM79,213,000)). The Group has invested with an accumulated investment of USD23,800,000 (RM77,196,000) (2011: USD22,250,000 (RM72,387,000)) and it still has a balance of USD1,200,000 (RM3,670,000) (2011: USD2,750,000 (RM6,826,000)) to be invested in the next financial year.

86 Contingent assets/(liabilities) (a) Contingent assets During the reporting year, a subsidiary company of the Group have seek compensation claim amounting to SGD135,000 (RM337,932) from an ex-employee of the subsidiary company through a written agreement. The subsidiary company may take further action against the ex-employee in the event that the ex-employee breaches any conditions stated in the agreement. As of the date of this report, the subsidiary company has received compensation claim amounted to SGD45,000 (RM112,644) from the ex-employee. The management is of the view that the outstanding compensation claim of SGD90,000 (RM225,288) may not be realised in the event that the subsidiary company take further action against the ex-employee as a result of his breach of any conditions stated in the agreement. Accordingly, the outstanding balance of SGD90,000 (RM225,288) has been disclosed as contingent assets in the financial statements. (b) Contingent liabilities Company Unsecured:- RM RM Corporate guarantees given by the Company to financial institutions for credit facilities granted to subsidiary companies utilised amount 1,116,600 2,331,375 = ================================= The corporate guarantees do not have a determinable effect on the terms of the credit facilities due to the banks and financial institutions requiring parent company s guarantee as a pre-condition for approving the credit facilities granted to the subsidiary companies. The actual terms of the credit facilities are likely to be the best indicator of at market terms and hence the fair value of the credit facilities are equal to the credit facilities amount received by the subsidiary companies. As such, there is no value on the corporate guarantee to be recognised in the financial statements. 28. Related party disclosures Controlling related party relationships are as follows:- i) The Company s subsidiary companies are as disclosed in Note 6 to the Financial Statements. ii) The majority shareholders who are Directors of the Company, Mr. Toh Thim Leong and Mr. Toh Chee Yeong, through their direct and beneficial shareholdings in Triumphal Resources Sdn. Bhd., Triumphal Engineering Supply Sdn. Bhd., Triumphal Development Sdn. Bhd. and Golden Power Holdings Sdn. Bhd.. Identity of related parties For the purposes of these financial statements, parties are considered to be related to the Group if the Group has the ability, directly or indirectly, to control the party or exercise significant influence over the party in making financial and operating decisions, or vice versa, or where the Group and the party are subject to common control or common significant influence. Related parties may be individuals or other entities. The Group has a related party relationship with its subsidiary companies (see Note 6 to the Financial Statements), jointly-controlled entity (see Note 7 to the Financial Statements), Directors and key management personnel. Significant transactions and balances with related parties other than those disclosed elsewhere in the financial statements are as follows:-

87 Related party disclosures (cont d) Related party transactions Group Company RM RM RM RM Sales - Subsidiary companies ,622,699 25,996,263 = ==================================================================== Purchases - Subsidiary companies ,416,226 13,689,526 - Shandong Shantui Triumphal Construction Machinery Co. Ltd. (1) - 659, ,853 = ==================================================================== Rental paid - Subsidiary company , ,000 - Triumphal Engineering Supply Sdn. Bhd.(2) 180, , , ,000 - Golden Power Holdings Sdn. Bhd. (2) 15,600 15,600 15,600 15,600 - Paid or payable to a Director - 2, = ==================================================================== Travelling ticket - Sinair Travel Sdn. Bhd. (3) 287, , , ,437 = ==================================================================== Rental received - Subsidiary companies ,000 15,000 = ==================================================================== Handling fee paid - Subsidiary company , ,000 = ==================================================================== Dividends received from - Subsidiary companies ,310,000 - Shandong Shantui Triumphal Construction Machinery Co. Ltd. (1) , ,840 = ==================================================================== Note (1) Note (2) Note (3) a jointly-controlled entity with 50% shares owned by Triumphal Associates Bhd. a company in which Mr. Toh Thim Leong and his spouse and Mr. Toh Chee Yeong, have substantial interest and Mr. Toh Thim Leong and Mr. Toh Chee Yeong are Directors. a company in which Mr. Toh Thim Leong has substantial interest. Compensation of key management personnel The remuneration of key management personnel is same with the Directors remuneration as disclosed in Note 20 to the Financial Statements. The Group and the Company have no other members of key management personnel apart from the Board of Directors. Outstanding balances arising from related party transactions The outstanding balances arising from related party transactions as at the reporting date were disclosed in Note 13 to the Financial Statements.

88 Financial risk management objectives and policies Financial risks The Group and the Company are exposed to financial risks arising from their operations and the use of financial instruments. Financial risk management policy is established to ensure that adequate resources are available for the development of the Group s and of the Company s business whilst managing its credit risk, liquidity risk, foreign currency risk, interest rate risk and market price risk. The Group and the Company operate within clearly defined policies and procedures that are approved by the Board of Directors to ensure the effectiveness of the risk management process. The main areas of financial risks faced by the Group and the Company and the policy in respect of the major areas of treasury activity are set out as follows:- Credit risk Credit risk is the risk of a financial loss to the Group and the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations. It is the Group s and the Company s policy to enter into financial instrument with a diversity of creditworthy counterparties. The Group and the Company do not expect to incur material credit losses of its financial assets or other financial instruments. Concentration of credit risk exists when changes in economic, industry and geographical factors similarly affect the group of counterparties whose aggregate credit exposure is significant in relation to the Group s and the Company s total credit exposure. The Group s and the Company s portfolio of financial instrument is broadly diversified along industry, product and geographical lines and transactions are entered into with diverse creditworthy counterparties, thereby mitigate any significant concentration of credit risk. It is the Group s and the Company s policy that all customers who wish to trade on credit terms is subject to credit verification procedures. The Group and the Company do not offer credit terms without the approval of the head of credit control. The areas where the Group and the Company are exposed to credit risk are as follows:- Receivables With a credit policy in place to ensure the credit risk is monitored on an ongoing basis, the management has taken reasonable steps to ensure that receivables that are neither past due nor impaired are stated at their realisable values. A significant portion of these receivables are regular customers that have been transacting with the Group and the Company. The Group and the Company use aging analysis to monitor the credit quality of the receivables. Any receivables having significant balances past due more than credit terms granted are deemed to have higher credit risk and are monitored individually. Concentration of credit risk The credit risk concentration profile of the Group and of the Company as at the reporting date is as follows:- Group Company RM RM RM RM RM RM By country:- Malaysia 24,532,630 25,424,484 35,861,421 13,546,618 13,906,281 11,826,836 Singapore 9,680,819 14,992,699 16,991, PRC 1,721,907 3,103,793 1,114, ,935,356 43,520,976 53,966,976 13,546,618 13,906,281 11,826,836 ===================================================================================== By industry sector:- Manufacturing 1,893,910 3,296,719 1,325, Trading 34,041,446 40,224,257 52,641,814 13,546,618 13,906,281 11,826, ,935,356 43,520,976 53,966,976 13,546,618 13,906,281 11,826,836 =====================================================================================

89 Financial risk management objectives and policies (cont d) Financial risks (cont d) Credit risk (cont d) Receivables (cont d) Concentration of credit risk (cont d) At the reporting date, approximately 16% (2011: 14% and : 34%) of the Group s trade receivables were due from one major customer. At the reporting date, none of the Company s trade receivables were due from one major customer. Trade receivables ageing analysis Group 2012 Individually Gross impaired Net RM RM RM Not past due 16,621,847 (8,229) 16,613,618 Past due 0 30 days 7,308,116-7,308,116 Past due days 3,658,124-3,658,124 Past due days 3,217,185 (6,085) 3,211,100 Past due days 1,457,499 (3,642) 1,453,857 Past due more than 120 days 5,526,640 (1,836,099) 3,690, ,789,411 (1,854,055) 35,935,356 = ======================================================= 2011 Individually Gross impaired Net RM RM RM Not past due 20,678,684-20,678,684 Past due 0 30 days 10,919,140 (2,243) 10,916,897 Past due days 5,032,190 (8,585) 5,023,605 Past due days 2,619,795 (7,896) 2,611,899 Past due days 1,266,115 (5,230) 1,260,885 Past due more than 120 days 4,785,044 (1,756,038) 3,029, ,300,968 (1,779,992) 43,520,976 = ======================================================= Individually Gross impaired Net RM RM RM Not past due 21,549,586-21,549,586 Past due 0 30 days 11,261,659 (24,010) 11,237,649 Past due days 5,143,293 (10,566) 5,132,727 Past due days 5,318,651 (10,034) 5,308,617 Past due days 2,720,171 (17,429) 2,702,742 Past due more than 120 days 10,457,564 (2,421,909) 8,035, ,450,924 (2,483,948) 53,966,976 = =======================================================

90 Financial risk management objectives and policies (cont d) Financial risks (cont d) Credit risk (cont d) Receivables (cont d) Trade receivables ageing analysis (cont d) Company 2012 Individually Gross impaired Net RM RM RM Not past due 8,222,496-8,222,496 Past due 0 30 days 2,834,863-2,834,863 Past due days 1,090,264-1,090,264 Past due days 421, ,881 Past due days 517,551 (2,558) 514,993 Past due more than 120 days 531,560 (69,439) 462, ,618,615 (71,997) 13,546,618 = ======================================================= 2011 Individually Gross impaired Net RM RM RM Not past due 8,235,263-8,235,263 Past due 0 30 days 3,187,786-3,187,786 Past due days 1,617,580-1,617,580 Past due days 664, ,157 Past due days 129, ,421 Past due more than 120 days 136,621 (64,547) 72, ,970,828 (64,547) 13,906,281 = ======================================================= Individually Gross impaired Net RM RM RM Not past due 7,416,121-7,416,121 Past due 0 30 days 2,134,032-2,134,032 Past due days 1,045,388-1,045,388 Past due days 551, ,266 Past due days 344, ,101 Past due more than 120 days 368,433 (32,505) 335, ,859,341 (32,505) 11,826,836 = =======================================================

91 Financial risk management objectives and policies (cont d) Financial risks (cont d) Credit risk (cont d) Receivables (cont d) Financial assets that are neither past due nor impaired Group Trade and other receivables that are neither past due nor impaired are creditworthy receivables with good payment records with the Group. None of the Group s trade receivables that are neither past due nor impaired have been renegotiated during the financial year. Company Trade and other receivables that are neither past due nor impaired are creditworthy receivables with good payment records with the Company. None of the Company s trade receivables that are neither past due nor impaired have been renegotiated during the financial year. Financial assets that are past due but not impaired Group Trade receivables of RM19,321,738 (2011: RM22,842,292 and : RM32,471,390) were past due but not impaired. These relate to a number of independent customers from whom there is no recent history of default and directors expect they are recoverable. Company Trade receivables of RM5,324,122 (2011: RM5,671,018 and : RM4,410,715) were past due but not impaired. These relate to a number of independent customers from whom there is no recent history of default and directors expect they are recoverable. Financial assets that are impaired Group and Company Trade receivables that are individually determined to be impaired at the reporting date relate to receivables that are in significant financial difficulties and have defaulted on payments. These receivables are not secured by any collateral or credit enhancements. Intercompany balances Concentration of credit risk The Company has no significant concentration of credit risk with any single intercompany. Financial assets that are neither past due nor impaired Intercompanies that are neither past due nor impaired are creditworthy receivables with good payment records with the Company. As at the reporting date, there was no indication that the intercompany balances are not recoverable. Financial assets that are past due but not impaired There are no intercompany balances of the Company that are past due but not impaired. Financial assets that are impaired There are no intercompany balances of the Company that are impaired.

92 Financial risk management objectives and policies (cont d) Financial risks (cont d) Credit risk (cont d) Deposits with banks Concentration of credit risk The Group and the Company have no significant concentration of credit risk with any single banks. Financial assets that are neither past due nor impaired Deposits with banks that are neither past due nor impaired are placed with reputable financial institutions with high credit ratings and no history of default. As at the reporting date, there was no indication that the deposits with banks are not recoverable. Financial assets that are past due but not impaired There are no deposits with banks of the Group and of the Company that are past due but not impaired. Financial assets that are impaired There are no deposits with banks of the Group and of the Company that are impaired. Financial guarantee/corporate guarantee The Company provides unsecured financial guarantees to banks in respect of banking facilities granted to subsidiary companies. The Company monitors on an ongoing basis the results of the subsidiary companies and repayments made by the subsidiary companies. As at the reporting date, there was no indication that any subsidiary company would default on repayment as the banking facilities was fully settled as at year end. Liquidity risk Liquidity risk is the risk that the Group and the Company will not be able to meet their financial obligations as they fall due to shortage of funds. In managing its exposures to liquidity risk arises principally from its various payables, loans and borrowings, the Group and the Company maintain a level of cash and cash equivalents and bank facilities deemed adequate by the management to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they fall due. The Group and the Company aim to maintain balance of sufficient cash and deposits and flexibility in funding by keeping diverse sources of committed and uncommitted credit facilities from various banks. The areas where the Group and the Company are exposed to liquidity risk are as follows:-

93 Financial risk management objectives and policies (cont d) Financial risks (cont d) Liquidity risk (cont d) Analysis of financial instruments by contractual maturities The table below analyses the maturity profile of the Group s and of the Company s financial liabilities based on contractual undiscounted cash flows:- Group 2012 On demand or within one One to five Over five year years years Total RM RM RM RM Trade payables 12,378, ,378,234 Other payables 11,632, ,632,540 Loans and borrowings 6,385,763 2,086,219-8,471, ,396,537 2,086,219-32,482,756 = ======================================================================== 2011 On demand or within one One to five Over five year years years Total RM RM RM RM Trade payables 20,661, ,661,053 Other payables 14,538, ,538,085 Loans and borrowings 7,294,622 4,044,000-11,338, ,493,760 4,044,000-46,537,760 = ======================================================================== On demand or within one One to five Over five year years years Total RM RM RM RM Trade payables 22,777, ,777,688 Other payables 10,951, ,951,396 Loans and borrowings 2,243,930 2,045,014-4,288, ,973,014 2,045,014-38,018,028 = ========================================================================

94 Financial risk management objectives and policies (cont d) Financial risks (cont d) Liquidity risk (cont d) Analysis of financial instruments by contractual maturities (cont d) The table below analyses the maturity profile of the Group s and of the Company s financial liabilities based on contractual undiscounted cash flows (cont d):- Company 2012 On demand or within one One to five Over five year years years Total RM RM RM RM Trade payables 2,866, ,866,304 Other payables 5,102, ,102,167 Amount due to subsidiary companies 574, ,015 Loans and borrowings 4,896,000 2,028,000-6,924, ,438,486 2,028,000-15,466,486 = ======================================================================== 2011 On demand or within one One to five Over five year years years Total RM RM RM RM Trade payables 4,670, ,670,116 Other payables 6,955, ,955,530 Amount due to subsidiary companies 493, ,925 Loans and borrowings 4,132,000 4,044,000-8,176, ,251,571 4,044,000-20,295,571 = ======================================================================== On demand or within one One to five Over five year years years Total RM RM RM RM Trade payables 6,375, ,375,250 Other payables 4,302, ,302,715 Amount due to subsidiary companies 1,104, ,104,235 Loans and borrowings 1,048,675 1,992,000-3,040, ,830,875 1,992,000-14,822,875 = ========================================================================

95 Financial risk management objectives and policies (cont d) Financial risks (cont d) Foreign currency risk Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Group and the Company are exposed to foreign currency risk on sales, purchases, investments, and borrowings that are denominated in a currency other than the respective functional currencies of Group entities. The currency giving rise to this risk is primarily US Dollar (USD), Singapore Dollar (SGD), Euro and China Renminbi (RMB). The Group and the Company are also exposed to currency translation risk arising from its net investment in foreign operation in Singapore and China. The investment is not hedged as currency positions in RMB and SGD are considered to be long-term in nature. The Group s and the Company s exposure to foreign currency risk, based on carrying amounts as at the reporting date was disclosed in the respective financial assets and financial liabilities note to the financial statements. To mitigate the Group s and the Company s exposure to foreign currency risk, where necessary, the Group and the Company enter into forward foreign currency exchange contracts to hedge the risk exposure on the receivables and payables. The Group and the Company also maintain gross profit margin levels that is sufficient to absorb the cost of purchases denominated in foreign currencies. Foreign currency sensitivity analysis The following table demonstrates the sensitivity of the Group s and of the Company s profit net of tax to a reasonably possible change in the USD, RMB, Euro and SGD exchange rates against the respective functional currencies of the Group entities, with all other variables held constant. Group Company RM RM RM RM Increase/ Increase/ Increase/ Increase/ (Decrease) (Decrease) (Decrease) (Decrease) Profit net Profit net Profit net Profit net of tax of tax of tax of tax RM/RMB - strengthened 2% (2011: 1%) 65,248 7,683 17,691 (403) - weakened 2% (2011: 1%) (65,248) (7,683) (17,691) 403 RM/USD - strengthened 3% (2011: 1%) (13,915) (19,884) (27,677) 87,863 - weakened 3% (2011: 1%) 13,915 19,884 27,677 (87,863) RM/Euro - strengthened 1% (2011: 1%) (14,109) (7,231) (14,560) (19,702) - weakened 1% (2011: 1%) 14,109 7,231 14,560 19,702 SGD/USD - strengthened 1% (2011:1%) 56,976 52, weakened 1% (2011:1%) (56,976) (52,334) - - SGD/Euro - strengthened 1% (2011:1%) (37,548) (62,573) weakened 1% (2011: 1%) 37,548 62, RMB/SGD - strengthened 1% (2011:1%) - 27, weakened 1% (2011: 1%) - (27,225) - - RMB/USD - strengthened 7 % (2011:Nil%) 209, weakened 7% (2011: Nil%) (209,302) ==================================================================== The assumed movement in the above foreign currency exchange rate for the foreign currency exchange rate sentivity analysis is based on the prudent estimate of the current market environment. The exposure to foreign exchange risk varies during the financial year depending on the volume of overseas transactions. Nonetheless, the analysis above is considered to be representative of the Group s and of the Company s exposure to foreign currency risk.

96 Financial risk management objectives and policies (cont d) Financial risks (cont d) Interest rate risk Interest rate risk is the risk that the fair value or future cash flows of the Group s and of the Company s financial instruments will fluctuate because of changes in market interest rates. Short term receivables and payables are not significantly exposed to interest rate risk. The Group s and the Company s interest rate management objective is to manage the interest expenses consistent with maintaining an acceptable level of exposure to interest rate fluctuation. In order to achieve this objective, the Group and the Company target a mix of fixed and floating debt based on assessment of its existing exposure and desired interest rate profile. The interest rate profile of the Group s and of the Company s significant interest-bearing financial instruments, based on carrying amounts as at the reporting date were disclosed in the Note 16 to the Financial Statements. Average effective annual interest Less than Group rate Total 1 year 1 5 years 2012 % RM RM RM Fixed rate instruments - Short term deposits with licensed bank ,961,403 5,961, Unsecured term loans (6,036,000) (4,008,000) (2,028,000) - Secured term loans (1,116,600) (1,116,600) - - Unsecured banker acceptance (1,165,643) (1,165,643) - - Finance lease liabilities 2.8 (153,739) (95,520) (58,219) (2,510,579) (424,360) (2,086,219) = ================================================== Average effective annual interest Less than rate Total 1 year 1 5 years 2011 % RM RM RM Fixed rate instruments - Short term deposits with licensed bank ,899,617 10,899, Unsecured term loans (7,068,000) (3,024,000) (4,044,000) - Secured term loans 5.0 (2,331,375) (2,331,375) - - Unsecured banker acceptance (1,885,109) (1,885,109) - - Finance lease liabilities (54,138) (54,138) (439,005) 3,604,995 (4,044,000) = ==================================================

97 Financial risk management objectives and policies (cont d) Financial risks (cont d) Interest rate risk (cont d) Average effective annual interest Less than Group (cont d) rate Total 1 year 1 5 years % RM RM RM Fixed rate instruments - Short term deposits with licensed bank ,747,300 15,747, Secured term loans 5.0 (1,137,672) (1,137,672) - - Unsecured term loans 4.6 (3,000,000) (1,008,000) (1,992,000) - Finance lease liabilities (151,272) (98,258) (53,014) ,458,356 13,503,370 (2,045,014) = ================================================== Average effective annual interest Less than Company rate Total 1 year 1 5 years 2012 % RM RM RM Fixed rate instruments - Short term deposits with licensed bank ,961,403 5,961, Unsecured term loan (6,036,000) (4,008,000) (2,028,000) - Unsecured banker acceptance (888,000) (888,000) (962,597) 1,065,403 (2,028,000) = ================================================== Average effective annual interest Less than rate Total 1 year 1 5 years 2011 % RM RM RM Fixed rate instruments - Short term deposits with licensed bank ,489,616 10,489, Unsecured term loan (7,068,000) (3,024,000) (4,044,000) - Unsecured banker acceptance (1,108,000) (1,108,000) ,313,616 6,357,616 (4,044,000) = ==================================================

98 Financial risk management objectives and policies (cont d) Financial risks (cont d) Interest rate risk (cont d) Average effective annual interest Less than Company (cont d) rate Total 1 year 1 5 years % RM RM RM Fixed rate instruments - Short term deposits with licensed bank ,366,467 10,366, Unsecured term loan 4.6 (3,000,000) (1,008,000) (1,992,000) - Finance lease liabilities 3.8 (40,675) (40,675) ,325,792 9,317,792 (1,992,000) = ================================================== Sensitivity analysis There is no sensitivity analysis as the Group and the Company do not have financial instruments at floating interest rate. Market price risk Market price risk is the risk that the fair value or future cash flows of the Group s and of the Company s financial instruments will fluctuate because of changes in market prices (other than foreign exchange or interest rates). The Group and the Company do not hold any quoted or marketable financial instrument, hence is not exposed to any movement in market prices. Fair value of financial instruments No fair value had been disclosed for the following:- Financial assets and financial liabilities The carrying amounts of financial assets and liabilities of the Group and of the Company at the reporting date approximate their fair values due to their short-term nature or that they are floating rate instruments that are re-priced to market interest rates on or near the reporting date. Investment in unquoted shares It was not practicable to estimate the fair value of the Group s and the Company s investment in unquoted shares due to the lack of comparable quoted prices in active market. In addition, it is impracticable to use valuation technique to estimate the fair value reliably as a result of significant variability in the inputs of the valuation technique and the investee had been placed in the process of liquidation. Fair value hierarchy No fair value hierarchy has been disclosed as the Group and the Company do not have financial instruments measured at fair value.

99 Capital management The primary objective of the Group s and of the Company s capital management is to ensure that it maintains a strong credit rating and healthy capital ratio in order to support its business and optimise shareholder value. To maintain or adjust the capital structure, the Group and the Company may adjust the dividend payment to shareholders, return capital to shareholders or issue new share capital. No changes were made in the objective, policies or processes during the financial year ended 31 December 2012 and financial year ended 31 December The Group and the Company manage their capital structure and make adjustments to it in light of changes in economic conditions. The subsidiary companies of the Group are required by Foreign Enterprise Law of PRC to contribute to and maintain a non-distributable statutory reserve fund whose utilisation is subject to the approval by the relevant PRC authorities. This externally imposed capital requirement has been complied by the subsidiary companies in PRC for the financial year ended 31 December 2011 and financial year ended 31 December Segment reporting Business segments The Group comprises the following main business segments:- Trading of spare parts for heavy equipment, tractors, earthmoving equipment, wire ropes and filters; and Manufacturing of heavy machinery filters, floating seals, engineering tools and machinery components. Management monitors the operating results of its business units separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on operating profit or loss which, in certain respects as explained in the table below, is measured differently from operating profit or loss in the consolidated financial statements. Transfer prices between operating segments are on negotiated basis in a manner similar to transactions with third parties.

100 Segment reporting (cont d) Business segments (cont d) Trading of spare parts for heavy equipment, Manufacturing of heavy tractors, earthmoving machinery filters, floating equipment, wire ropes seals, engineering tools and and filters machinery components Eliminations Consolidated RM RM RM RM RM RM RM RM RM RM RM RM Business segments Revenue from external customers 131,352, ,729,648 28,471,225 26,011, ,823, ,741,123 Inter-segments revenue 111,850 60,709 11,346,484 10,617,995 (11,458,334) (10,678,704) Total revenue 131,464, ,790,357 39,817,709 36,629,470 (11,458,334) (10,678,704) 159,823, ,741,123 ===================== =================== ==================== = ================== Results Interest income 236, ,364 8,078 6, , ,545 Finance costs (412,967) (319,362) (42,106) (1,272) - - (455,073) (320,634) Depreciation and amortisation (908,287) (1,385,674) (3,264,842) (2,687,910) - - (4,173,129) (4,073,584) Share of profit after tax of equity accounted jointlycontrolled entity ,035 1,582, ,035 1,582,908 Other non-cash expenses (1,680,890) (300,807) (100,593) (281,324) - - (1,781,483) (582,131) Tax expense (2,278,780) (3,894,052) (188,106) (224,447) - - (2,466,886) (4,118,499) Segment profit/(loss) 5,661,628 12,491,793 (2,256,799) 2,154, ,081 (165,438) 3,619,910 14,481,217 ===================== =================== ==================== = ================== Assets Investment in a jointlycontrolled entity ,621,990 7,907,266 6,548, ,621,990 7,907,266 6,548,321 Additions to non-current assets 339, , ,474 10,431,495 12,932,708 5,967, ,770,546 13,321,745 6,600,304 Segment assets 170,477, ,387, ,689, ,001, ,743,515 77,030, ,479, ,131, ,719,524 ====================================================================================================================== Liabilities Segment liabilities 32,716,084 46,297,523 40,066,126 6,840,610 8,092,229 5,508, ,556,694 54,389,752 45,574,990 ======================================================================================================================

101 Segment reporting (cont d) Business segments (cont d) Notes to the nature of adjustments and eliminations to arrive at amounts reported in the consolidated financial statements:- Inter-segment revenues are eliminated on consolidation. Other material non-cash (expenses)/income consist of the following items:- Group RM RM (Loss)/Gain on disposal of property, plant and equipment (1,491) 8,795 Property, plant and equipment written off (47,869) (96,787) Employee benefits charged (410,233) (520,121) Unrealised (loss)/gain on foreign exchange (410,855) 331,067 Net (allowance)/reversal of doubtful debts (67,466) 706,022 Bad debts written off (74,626) (28,969) Net inventories written down (768,986) (982,034) Loss on disposal of other investments - (104) Waiver of debts from payables (1,781,483) (582,131) = ================================= Additions to non-current assets consist of:- Group RM RM RM Property, plant and equipment 10,770,546 10,035,440 6,600,304 Prepaid land lease payment - 3,286, ,770,546 13,321,745 6,600,304 = ======================================================= Geographical information Revenue and non-current assets information based on the geographical location of customers and assets respectively are as follows:- Group RM RM Revenue from external customers by location of customers:- Malaysia 100,579, ,847,019 Overseas* 59,243,995 65,894, ,823, ,741,123 = ================================= * Overseas contains countries with no individually revenue that more than 10% of the total consolidated revenue.

102 Segment reporting (cont d) Geographical information (cont d) Group RM RM RM Non-current assets by location of assets:- Malaysia 41,823,867 42,813,135 40,910,685 Singapore 3,677,582 3,456,410 3,679,756 PRC 42,292,417 36,272,060 22,918, ,793,866 82,541,605 67,509,289 = ======================================================= Non-current assets information presented above consist of the following items as presented in the statements of financial position:- Group RM RM RM Property, plant and equipment 67,872,484 62,047,743 53,713,392 Prepaid land lease payments 7,069,787 7,356,991 3,805,538 Goodwill on consolidation 3,230,371 3,230,371 3,230,371 Investment in jointly-controlled entity 7,621,990 7,907,266 6,548,321 Other investments 1,999,234 1,999, , ,793,866 82,541,605 67,509,289 = ======================================================= Information about major customers Revenue from one major customer amount to approximately RM19,450,507 (2011: RM18,184,000) arising from sales in the trading segment. 32. Dividend Group/Company RM RM First and final single tier dividend of 1 sen per ordinary share in respect of financial year ended 31 December 2011 and paid on 25 July ,709 - = ================================= 33. Events during the financial year and subsequent to the reporting date (i) On 12 March 2012, the Company and a PRC shareholder have incorporated a subsidiary company namely Shengyou Precision Engineering Manufacturing (QuanZhou) Co. Ltd. ( ShengYou ), a private limited liability company incorporated in PRC vide a shareholder agreement for the purpose of developing a new and steady supply chain for the Company s wholly-owned subsidiary company, Triumphal Precision Engineering (Zhejiang) Ltd.. After the incorporation of Shengyou, the Company has 51% equity interest and the PRC shareholder has 49% equity interest in ShengYou. (ii) On 5 April 2013, the Board of Directors of the Company has received a letter dated 5 April 2013 from its major shareholder, Golden Power Holdings Sdn. Bhd., requesting the Company to undertake a selective capital reduction and repayment exercise under Section 64 of the Companies Act, 1965 ( Proposed SCR ). The non-interested Directors of the Company will deliberate on the Proposed SCR and decide on the next course of action.

103 Explanation of transition to MFRSs As stated in Note 1(d) to the Financial Statements, these are the first financial statements of the Group and of the Company prepared in accordance with MFRSs. The accounting policies set out in Note 2 to the Financial Statements have been applied in preparing the financial statements of the Group and of the Company for the financial year ended 31 December 2012, the comparative information presented in these financial statements for the financial year ended 31 December 2011 and in the preparation of the opening MFRS statements of financial position at 1 January 2011 (the date of transition to MFRSs). The financial impacts of the transition to MFRS on equity, total comprehensive income and reported cash flows are presented in this section and are further explained in the following notes First-time adoption exceptions and exemptions applied Upon transition, MFRS 1 permits exceptions and exemptions from full retrospective application of MFRS. The Group and the Company have applied the mandatory exceptions and certain optional exemptions, as set out below. Mandatory exceptions to the retrospectively application adopted by the Group and the Company:- (i) Financial assets and liabilities that have been derecognised before the date of transition to MFRS under FRS have not been recognised under MFRS unless they qualify for recognition as a result of a later transaction or event. (ii) The Group and the Company will only apply hedge accounting in the opening statement of financial position if all the requirements in MFRS 139 were met at the date of transition. (iii) The Group and the Company have used estimates under MFRS that are consistent with those applied under FRS unless there is objective evidence those estimates were in error. (iv) The Group has applied MFRS 127 prospectively in relation to requirements on non-controlling interests. Optional exemptions applied by the Group and the Company:- (i) The Group has elected not to apply MFRS 3 Business Combinations retrospectively to business combinations that occurred before the date of transition. The Group has elected not to restate business combinations that occurred before the date of transition to MFRS. At 1 January 2011, the goodwill under FRS relates to the Singapore operations. The carrying amount of goodwill has not been adjusted for any intangible assets subsumed within goodwill or for tangible assets that do not qualify for recognition under MFRS. At that date, it was tested for impairment based on cash flow forecasts made at that date. No impairment was identified. Therefore the carrying amount of goodwill under FRS is recognised upon transition to MFRS. (ii) The Group has elected not to apply MFRS 121 retrospectively to fair value adjustments and goodwill from business combinations that occurred before the date of transition to MFRS. Such fair value adjustments and goodwill are treated as assets and liabilities of the parent rather than the assets and liabilities of the acquiree. Therefore, those assets and liabilities are already expressed in the functional currency of the parent or are non-monetary foreign currency items and no further translation difference occurs. (iii) The Group has elected to apply MFRS 123 prospectively to borrowing costs relating to qualifying assets for which the commencement date for capitalisation is on or after the date of transition. (iv) The Group has elected not to reset the cumulative translation differences for all foreign operations as at date of transition to MFRS.

104 Explanation of transition to MFRSs (cont d) 34.1 First-time adoption exceptions and exemptions applied (cont d) Optional exemptions applied by the Group and the Company (cont d):- (v) The Group has elected to recognise all cumulative actuarial gain and losses for its defined benefit plans at the date of transition. After that date, the Group s accounting policy is to use the corridor approach and split actuarial gains and losses into an unrecognised and a recognised portion. Further, the Group has elected to use the exemption not to disclose defined benefit plan surplus/deficit and experience adjustments before the date of transition. (vi) The Company has elected to use the carrying amount under FRS as the date of transition as the cost of investment in subsidiary companies. Other than the adoption of the above mandatory exceptions and optional exemptions, no other mandatory exceptions and optional exemptions that are applicable to the Group and the Company Reconciliation of equity and statements of financial position items The reconciliation of equity and statements of financial position items presented under FRSs to presented under MFRSs is as follows: Effect of Effect of transition transition Note FRSs to MFRSs MFRSs FRSs to MFRSs MFRSs RM RM RM RM RM RM Group Assets Non-current assets Deferred tax assets ,503, ,000 2,746,000 2,880, ,000 3,155,600 = ================================================================================== Liabilities Non-current liabilities Employee benefits ,957, ,495 5,928,541 5,347,707 1,100,955 6,448,662 = ================================================================================== Equity Reserves 126,702,101 (728,495) 125,973, ,396,491 (825,955) 147,570,536 = ================================================================================== Company Assets Non-current assets Deferred tax assets ,363, ,000 1,606,000 1,673, ,000 1,948,600 = ================================================================================== Liabilities Non-current liabilities Employee benefits ,957, ,495 5,928,541 5,347,707 1,100,955 6,448,662 = ================================================================================== Equity Reserves 69,856,290 (728,495) 69,127,795 87,486,170 (825,955) 86,660,215 = ==================================================================================

105 Explanation of transition to MFRSs (cont d) 34.2 Reconciliation of equity and statements of financial position items (cont d) The total effect on retained earnings is further analysed as follows:- Group Company RM RM RM RM Transition adjustment recorded in retained earnings Net adjustment on defined benefit plans (971,495) (129,460) (971,495) (129,460) Net adjustment on deferred tax arising from defined benefit plans 243,000 32, ,000 32, Effect of transition to MFRS on retained earnings (728,495) (97,460) (728,495) (97,460) = ==================================================================== 34.3 Reconciliation of total comprehensive income for the financial year ended 31 December 2011 The reconciliation of statements of comprehensive income items presented under FRSs to presented under MFRSs is as follow: Effect of transition FRSs to MFRSs FRSs Group RM RM RM Administrative expenses - Employee benefits (22,199,210) (129,460) (22,328,670) = ================================================== Tax expense (4,150,499) 32,000 (4,118,499) = ================================================== Company Administrative expenses - Employee benefits (10,828,801) (129,460) (10,958,261) = ================================================== Tax expense (5,222,533) 32,000 (5,190,533) = ==================================================

106 Explanation of transition to MFRSs (cont d) 34.4 Material adjustments to the statements of cash flows for the financial year ended 31 December 2011 The reconciliation of statements of cash flows items presented under FRSs presented under MFRS is as follow: Effect of transition FRSs to MFRSs FRSs Group RM RM RM Operating activities Profit before tax 18,729,176 (129,460) 18,599,716 = ================================================== Adjustments for:- Employee benefits charged 390, , ,121 = ================================================== Company Operating activities Profit before tax 22,852,413 (129,460) 22,722,953 = ================================================== Adjustments for:- Employee benefits charged 390, , ,121 = ================================================== 34.5 Impairment losses recognised at the date of transition The Group and the Company have applied MFRS 136 in determining whether any impairment losses arose/ reversal at the date of transition to MFRS. No impairment losses were identified/reversed Note to the reconciliations Defined benefits plans Recognition of actuarial gains or losses The Group and the Company use the corridor approach under MFRS. At the date of transition of 1 January 2011, the Group and the Company have elected to apply the exemption in MFRS 1 and recognise all actuarial gains and losses in the statements of financial position, i.e. the full net pension liability is recognised at the date of transition of 1 January The non-current defined benefit plans are increased as follows:- Group Company RM RM RM RM Recognition of actuarial gains or losses 971, , , ,460 = ==================================================================== The deferred tax assets are increased as follows:- Group Company RM RM RM RM Deferred tax arising from defined benefit plans 243,000 32, ,000 32,000 = ====================================================================

107 105 DISCLOSURES OF REALISED AND UNREALISED PROFITS/LOSSES With the purpose of improving transparency, Bursa Malaysia Securities Berhad has on 25 March 2010, and subsequently on 20 December 2010, issued directives which require all listed corporations to disclose the breakdown of retained earnings into realised and unrealised on Group and Company basis in the annual audited financial statements. The breakdown of retained earnings as at the reporting date, which has been prepared by the Directors in accordance with the directives from Bursa Malaysia Securities Berhad stated above and the Guidance on Special Matter No. 1 - Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants, are as follows:- Group Company RM RM RM RM RM RM Total retained earnings of the Company and its subsidiary companies:- - Realised 137,592, ,433, ,253,348 86,424,982 84,910,772 67,326,093 - Unrealised 2,803,579 3,451,843 2,961,596 2,136,570 1,748,083 1,800, ,396, ,884, ,214,944 88,561,552 86,658,855 69,126, Total share of retained earnings from the jointly-controlled entity - Realised 2,983,141 3,802,866 3,916, Unrealised (65,734) 2,814 15, ,917,407 3,085,680 3,932, Less:- Consolidation adjustments 1,790,649 2,252,626 3,910, Total retained earnings as per consolidated financial statements 141,523, ,718, ,236,823 88,561,552 86,658,855 69,126,435 ===================================================================================== The above disclosures were approved by the Board of Directors in accordance with a resolution of the Directors on 5 April 2013.

108 106 LIST OF PROPERTIES As at 31 December 2012 Beneficial Location Description Tenure Land area / Approximate Net Book Date Owner (existing use) Floor area age of Value Of (Square Building(s) as at Acquisition metres) (years) 12/31/2012 (RM) TAS HS (D) PT Light Industrial Freehold 5, ,494, Mukim Sg.Buloh Land District of Petaling (5-storey office (known as 24 Persiaran Industri cum warehouse) Bandar Sri Damansara Kuala Lumpur) HS (D) PT Apartment Freehold , Mukim Batu (accomodation District of Gombak for staff) (known as ATI-5-D Desa Aman Puri Apts) HS (D) PT Apartment Freehold , Mukim Batu (accomodation District of Gombak for staff) (known as AS2-9-E Desa Aman Puri Apts) TMS Title No. Town Lease Double-storey Leasehold 1, , Ref No: industrial 60 years District of Tawau building (office expiring on (known as TB 5437, Jalan Apas cum warehouse) Batu 2 1/2, Tawau, Sabah) Title No. Country Lease units single-storey Leasehold 1, , & Country Lease workshops (office 999 years (known as Lot 31 & Lot 32 cum warehouse) expiring on Kimbell Light Industrial Centre, Batu 1 1/2, Jalan Dam Lahad Datu, Sabah) Title No Country Lease Semi-detached Leasehold , Ref No: house 999 years District of Tawau (accomodation expiring on (known as Lot 3 Mile 3 1/2 for staff) Jalan Bunga Raya Tawau, Sabah) Title No. Country Lease Semi-detached Leasehold , Ref no: (accomodation 999 years (known as TB 3444, Taman Lai Lai for staff) expiring on Mile 2 1/2, Jalan Sin On Tawau, Sabah)

109 107 LIST OF PROPERTIES (cont d) As at 31 December 2012 Beneficial Location Description Tenure Land area / Approximate Net Book Date Owner (existing use) Floor area age of Value Of (Square Building(s) as at Acquisition metres) (years) 12/31/2012 (RM) TESP Lot 4425 Block 32 Double-storey Leasehold , Kemena Land District terraced dwelling 60 years (known as 233 Taman Bandar Jaya house expiring on Jalan Tun Hussein Onn Bintulu) (accomodation for staff) Lot 2980 Block 5 Town land Industrial land Leasehold 8, to 35 1,819, Miri Concession Land District (office cum 60 years situated at Krokop Road, Krokop warehouse) expiring on Miri, Sarawak Lot 4184 Parcel Apartment Freehold , & (accomodation (known as Unit 2.15 (2nd Floor) for staff) Block 5 Lambir Land District Miri, Sarawak) Lot S17 Sedco Industrial Estate Single-storey Leasehold , Jalan Nabawan semi-detached light 99 years Keningau, Sabah industrial building expiring on (office cum warehouse) Title No. Country Lease units of terrace Leasehold 1, , Lot 2, District of Kota Kinabalu light industrial 60 years (known as Lorong Buah 3-storey expiring on Belimbing 1 buildings (office Off Jalan Kolombuong cum warehouse) Miles 5 1/2, Off Tuaran Road Inanam, Kota Kinabalu Sabah) Bintulu, Sarawak Renovation on rented proporties* Note * This is in resepect of renovation works carried out on rented properties in Bintulu, Sarawak.

110 108 LIST OF PROPERTIES (cont d) As at 31 December 2012 Beneficial Location Description Tenure Land area / Approximate Net Book Date Owner (existing use) Floor area age of Value Of (Square Building(s) as at Acquisition metres) (years) 12/31/2012 (RM) USGP GM543 Lot 728, Mukim Kapar, Office/ Freehold 23, ,458, District of Kelang, Selangor factory building (known as Lot 728, cum warehouse Jalan Kapar / KU6, Taman Klang Utama, Klang, Selangor) GM6695 Lot Mukim Kapar Double-storey Freehold , District of Kelang, Selangor terrace house (known as 6, Jalan 19B/KU 4 (Accomodation Taman Kelana, Batu 5, for staff) Jalan Keretapi Lama, Klang, Selangor) USG Lease No.: I/094722L Double-storey Leasehold 8, ,438, Lot 991 Mukim 11, Kranji industrial 30 years (known as 23B Sungei Kadut building (office expiring on Street 1 Singapore ) cum warehouse) TPEZ & Office/ Leasehold 50, ,853, factory building 50 years Economic Development Zone, cum warehouse expiring on Phase 3, Guangan Road, Tongxiang, Zhejiang Industrial land Leasehold 33, ,343, Economic Development Zone, 50 years Phase 3, Guangan Road, expiring on Tongxiang, Zhejiang

111 109 Authorized Share Capital Issued And Fully Paid-Up Share Capital Class of Shares Voting Rights No. of Shareholders : 855 ANALYSIS OF SHAREHOLDINGS As at 30 April 2013 : RM100,000, : RM87,170, : Ordinary Shares of RM1.00 Each : One Vote Per Ordinary Share DISTRIBUTION OF SHAREHOLDINGS AS AT 30 APRIL 2013 Category No. of Shareholders No. of Shares Percentage Less than , , ,001 10, ,207, , , ,960, ,001 less than 5% of issued shares 33 17,249, % and above of issued shares 3 61,682, Total ,170, LIST OF SUBSTANTIAL SHAREHOLDERS AS AT 30 APRIL 2013 Interests In Shares Percentage No. Name of Substantial Shareholders Direct Deemed Note (%) 1. Toh Thim Leong 4,870,860 55,118,688 (a) Hong Kerk Ai 4,049,070 55,940,478 (b) Toh Chee Yeong 500,000 51,069,618 (c) Golden Power Holdings Sdn. Bhd. 34,213,932 16,855,686 (d) Chen Chin Lin 280,000 16,855,686 (e) Tan Ah Tan Thin Ngin 27,000 16,855,686 (e) Tan Thin Leong 2,000 16,855,686 (e) Triumphal Resources Sdn. Bhd. 16,855, TTN (Malaysia) Sdn. Bhd. - 16,855,686 (f) Permodalan Nasional Berhad 10,613, Yayasan Pelaburan Bumiputra - 10,613,260 (g) DIRECTORS INTERESTS IN SHARES AS AT 30 APRIL 2013 Interests In Shares Percentage No. Name of Directors Direct Deemed Note (%) A. In the Company 1. Toh Thim Leong 4,870,860 55,118,688 (a) Toh Chee Yeong 500,000 51,069,618 (c) Chuah Sue Yin Leung Hoong Leong Thong Kuan Choo Yook Seng

112 110 ANALYSIS OF SHAREHOLDINGS (cont d) As at 30 April 2013 DIRECTORS INTERESTS IN SHARES AS AT 30 APRIL 2013 (cont d) In Related Corporations B. By virtue of their substantial shareholdings in the Company, Toh Thim Leong and Toh Chee Yeong are deemed to have interests in the ordinary shares of the following subsidiaries: Interests In Shares Percentage Direct Deemed Note (%) i. Triumphal Machinery Supply Sdn. Bhd. ( D) - RM400, ii. Triumphal Equipment Spare Parts Sdn. Bhd. ( W) - RM1,368, iii. USG Products Sdn. Bhd. ( W) - RM2,380, iv. USG Products (F.E.) Pte. Ltd. ( H) - SGD3,000, v. AEC Products Limited ( ) vi. Triumphal Precision Engineering (Zhejiang) Ltd. ( ) - USD25,000, vii. M.T.T.S. Pte. Ltd. ( G) - SGD20, viii. USG Far East International Trading (Shanghai) Ltd. (307608) - USD300, ix. ShengYou Precision Engineering Manufacturing (QuanZhou) Co. Ltd. ( ) - RMB2,000, Joint Venture Company x. Shandong Shantui Triumphal Construction Machinery Co. Ltd. ( ) - RMB15,000, Note: (a) Deemed interest by virtue of his substantial interest in Golden Power Holdings Sdn. Bhd., Triumphal Resources Sdn. Bhd. and the shareholding of his spouse, Madam Hong Kerk Ai. (b) Deemed interest by virtue of her substantial interest in Golden Power Holdings Sdn. Bhd. and her interest and her spouse interest in Triumphal Resources Sdn. Bhd. and the shareholding of her spouse, Mr Toh Thim Leong. (c) Deemed interest by virtue of his substantial interest in Golden Power Holdings Sdn. Bhd., a company which also has substantial interest in the share capital of Triumphal Resources Sdn. Bhd. (d) Deemed interest by virtue of its substantial interest in Triumphal Resources Sdn. Bhd. (e) Deemed interest by virtue of his interest in TTN (Malaysia) Sdn. Bhd. (f) Deemed interest by virtue of its substantial interest in Triumphal Resources Sdn. Bhd. (g) Deemed interest by virtue of its substantial interest in Permodalan Nasional Berhad.

113 111 ANALYSIS OF SHAREHOLDINGS (cont d) As at 30 April 2013 LIST OF TOP 30 SHAREHOLDERS/DEPOSITORS AS AT 30 APRIL 2013 Name No. Of Shares Held Percentage (%) 1. GOLDEN POWER HOLDINGS SDN BHD 34,213, TRIUMPHAL RESOURCES SDN BHD 16,855, PERMODALAN NASIONAL BERHAD 10,613, TOH THIM LEONG 3,354, HONG KERK AI 2,747, WONG LOK ONG LOK JEE 2,010, TOH THIM LEONG 1,516, NG AH HWANG TONG LEONG 1,314, HONG KERK AI 769, HONG KERK AI 532, TOH CHEE YEONG 500, HLB NOMINEES (TEMPATAN) SDN BHD - PLEDGED SECURITIES ACCOUNT FOR GOH CHU LEONG 345, CHEN CHIN LIN 280, ALLIANCE GROUP NOMINEES (TEMPATAN) SDN BHD - PLEDGED SECURITIES ACCOUNT FOR TAN WUI YEE 245, PUBLIC NOMINEES (TEMPATAN) SDN BHD - PLEDGED SECURITIES ACCOUNT FOR LEE SIE LEE AH TONG 240, MAK LAI KUAN 231, LIM POE ENG 203, PUBLIC NOMINEES (ASING) SDN BHD - PLEDGED SECURITIES ACCOUNT FOR HIROSHI YAMAGUCHI 200, WONG AH YONG 200, AMBANK (M) BERHAD - PLEDGED SECURITIES ACCOUNT FOR WONG AH YONG 188, TOH AH TOH SIOK FONG 179, WONG TRACTOR (JINJANG) SDN BHD 172, TAN WEE HIONG 171, CITIGROUP NOMINEES (TEMPATAN) SDN BHD - PLEDGED SECURITIES ACCOUNT FOR WONG AH YONG 171, WONG KEE HUI 171, KENANGA NOMINEES (TEMPATAN) SDN BHD - PLEDGED SECURITIES ACCOUNT FOR LOW CHENG TEONG 170, CIMSEC NOMINEES (ASING) SDN BHD - EXEMPT AUTHORISED NOMINEE FOR CIMB SECURITIES (SINGAPORE) PTE LTD 168, HDM NOMINEES (ASING) SDN BHD - DBS VICKERS SECS (S) PTE LTD FOR KIAN ANN ENGINEERING LTD 162, LEE KUANG YAM 156, YAP SOOK CHIN 150,

114 112 Notice of 36th Annual General Meeting NOTICE IS HEREBY GIVEN that the Thirty-Sixth Annual General Meeting of TRIUMPHAL ASSOCIATES BHD. will be held at Kayangan Suites, Pulai Springs Resort, 20km, Jalan Pontian Lama, Pulai, Johor on 25 June 2013 at a.m. to consider, and if thought fit, to pass the following as Resolutions:- AGENDA ORDINARY BUSINESS 1. To receive the Audited Financial Statements of the Company and its Group for the year ended 31 December 2012 together with the Directors and Auditors Reports thereon. (Please refer to Note A.) 2. To approve the payment of Directors Fees for the year ended 31 December To re-elect the following retiring directors pursuant to Section 129(6) of the Companies Act, 1965: i) Mr. Leung Hoong Leong Thong Kuan ii) Mr. Toh Thim Leong 4. To re-elect the following director retiring in accordance with the Articles of Association of the Company: Ms. Chuah Sue Yin - Article To re-appoint Messrs SJ Grant Thornton as Auditors of the Company and to authorize the Directors to fix their remuneration Ordinary Resolution 1 Ordinary Resolution 2 Ordinary Resolution 3 Ordinary Resolution 4 Ordinary Resolution 5 AS SPECIAL BUSINESS 6. AUTHORITY TO ISSUE SHARES PURSUANT TO SECTION 132D OF THE COMPANIES ACT, 1965 THAT pursuant to Section 132D of the Companies Act, 1965 and subject to the approvals of the relevant governmental and/or regulatory authorities, the Directors be and are hereby empowered to issue shares in the Company from time to time and upon such terms and conditions and for such purposes as the Directors may in their absolute discretion deem fit, provided that the aggregate number of shares issued pursuant to this resolution does not exceed ten (10) per cent of the issued share capital of the Company for the time being AND THAT the Directors be and are also hereby empowered to obtain the approval from the Bursa Malaysia Securities Berhad for the listing and quotation of the additional shares so issued AND THAT such authority shall continue in force until the conclusion of the next Annual General Meeting of the Company. Ordinary Resolution 6 7. PROPOSED AMENDMENTS TO THE COMPANY S ARTICLES OF ASSOCIATION THAT the Proposed Amendments to the Company s Articles of Association as set out in Appendix I of the be and are hereby approved and adopted AND THAT the Directors and Secretaries of the Company be and are hereby authorised to take all steps as are necessary and expedient in order to implement, finalise and give full effect to the Proposed Amendments to the Company s Articles of Association. Special Resolution 1 By Order of the Board ANG MUI KIOW (LS ) LIM SECK WAH (MAICSA ) Company Secretaries Johor Darul Takzim 4 June 2013

115 113 Notice of 36th Annual General Meeting (cont d) NOTES: A. This Agenda item is meant for discussion only as the provision in the Company s Articles of Association does not require a formal approval of shareholders and hence, is not put forward for voting. 1. For the purpose of determining a member who shall be entitled to attend, speak and vote at the Annual General Meeting, the Company shall be requesting the Record of Depositors as at 19 June Only a depositor whose name appears on the Record of Depositors as at 19 June 2013 shall be entitled to attend the said meeting or appoint proxies to attend, speak and vote on his/her stead. 2. A member of the Company entitled to attend and vote at the above meeting is entitled to appoint one or more proxies to attend and vote in his/her stead. A proxy may but need not be a member of the Company and the provisions of Section 149(1)(b) of the Companies Act, 1965 shall not apply to the Company. 3. Where a member appoints more than one proxy, the appointment shall be invalid unless he/she specifies the proportions of his/her holdings to be represented by each proxy. 4. The instrument appointing a proxy shall be in writing under the hand of the appointer or of his/her attorney duly authorised in writing or, if the appointer is a corporation, either under Seal or under the hand of an officer or attorney duly authorised. 5. (i) Where a member of the Company is an authorised nominee as defined in accordance with the Securities Industry (Central Depositories) Act, 1991, it may appoint at least one proxy in respect of each securities account it holds with ordinary shares of the Company standing to the credit of the said securities account. (ii) Where a member of the Company is an exempt authorized 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 authorized nominee may appoint in respect of each omnibus account it holds. 6. All forms of proxy must be deposited at the Registered Office of the Company situated at Suite 7E, Level 7, Menara Ansar, 65, Jalan Trus, Johor Bahru, Johor, Malaysia not less than 48 hours before the time appointed for holding the meeting or any adjournment thereof. 7. Explanatory Notes on Special Business: 7.1 The proposed Ordinary Resolution 6 is a renewal of the mandate given to the Company by the shareholders at the previous Annual General Meeting held on 19 June 2012, if duly passed, is primarily to give flexibility to the Board of Directors to issue and allot shares at any time in their absolute discretion and for such purposes as they consider would be in the interest of the Company without convening a general meeting. This authority, unless revoked or varied at a general meeting, will expire at the next annual general meeting of the Company. The Company continues to consider opportunities to broaden its earnings potential. If any of the expansion/ diversification proposals involves the issue of new shares, the Directors, under certain circumstance when the opportunity arises, would have to convene a general meeting to approve the issue of new shares even though the number involved may be less than 10% of the issued capital. In order to avoid any delay and costs involved in convening a general meeting to approve such issue of shares, it is thus considered appropriate that the Directors be empowered to issue shares in the Company, up to any amount not exceeding in total 10% of the issued share capital of the Company for the time being, for such purposes. The renewed authority for allotment of shares will provide flexibility to the Company for the allotment of shares for the purpose of funding future investment, working capital and/or acquisitions. The Company had on 2 July 2012, submitted to Bursa Malaysia Securities Berhad to withdraw the application for an extension of time for private placement exercise for it is infeasible to carry on private placement at the current weak sentimental in stock market. The Board of Directors would look for other alternatives to address the shortfall of public spread pursuant to Paragraph 8.02(1) of the Main Market Listing Requirements. No shares have been issued and allotted by the Company since obtaining the said authority from its shareholders at the last Annual General Meeting held on 19 June The proposed Special Resolution 1 is to streamline the Company s Articles of Association to be in line with the recent amendments to the Bursa Malaysia Securities Berhad Main Market Listing Requirements. Please refer to the Appendix I which is attached to the for details of the proposed amendments.

116 114 APPENDIX I PROPOSED AMENDMENTS TO THE COMPANY S ARTICLES OF ASSOCIATION The existing Articles are proposed to be amended by the alterations, modifications, deletions and/or additions, wherever necessary, whereby the affected existing Articles are reproduced here with the proposed amendments, in bold, alongside it, as follows: Article No. Existing Article Amended Article 2 (New Interpretation) Exempt Authorised Nominee an authorised nominee defined under the Central Depositories Act which is exempted from compliance with provisions of subsection 25A(1) of the Central Depositories Act. 2 (aa) securities - Shall have the meaning given in Section 2 of the Securities Commission Act (2) Subject to any special rights or restrictions as to voting attached to any class or classes of shares by or in accordance with these Articles, on a show of hands a holder of ordinary shares or preference shares who is personally present or by proxy or by attorney or other duly authorised representative shall have one (1) vote and in the case of a poll every member present in person or by proxy or by attorney or other duly authorized representative shall have one (1) vote for every share held by him. Securities - Shall have the meaning given in Section 2(1) of the Capital Markets and Services Act Subject to any special rights or restrictions as to voting attached to any class or classes of shares by or in accordance with these Articles, on a show of hands a holder of ordinary shares or preference shares who is personally present or by proxy or by attorney or other duly authorised representative shall have one (1) vote and in the case of a poll every member present in person or by proxy or by attorney or other duly authorized representative shall have one (1) vote for every share held by him. A proxy appointed to attend and vote at the meeting of the Company shall have the same rights as the Member to speak at the meeting and there shall be no restriction as to the qualification of the proxy. Section 149 (1) (a) of the Act shall not apply to the Company. 90 Where a member of the Company is an authorised nominee as defined under the Central Depositories Act, it may appoint at least one (1) proxy in respect of each securities account it holds with ordinary shares of the Company standing to the credit of the said securities account. Other than an Exempt Authorised Nominee, where a member of the Company is an authorised nominee as defined under the Central Depositories Act, it may appoint at least one (1) proxy in respect of each securities account it holds with ordinary shares of the Company standing to the credit of the said securities account. 90.(A) (New provision) Where a Member is an Exempt Authorised Nominee which holds Securities for multiple beneficial owners in one (1) 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. Where an Exempt Authorised Nominee appoints more than one (1) proxy in respect of each Omnibus Account, the appointment shall not be valid unless the Exempt Authorised Nominee specifies the proportion of theshareholding to be represented by each of the proxy.

117 No. of ordinary shares held FORM OF PROXY (Before completing this form please refer to the notes below) TRIUMPHAL ASSOCIATES BHD. (Company No: M) (Incorporated in Malaysia) I/We I.C. No./Co. No./CDS No. (Full name in block letters) of (Full address) being a member/members of TRIUMPHAL ASSOCIATES BHD. hereby appoint the following person(s):- Name of proxy, NRIC No. & Address No. of shares to be represented by proxy or failing him/her, the Chairman of the Meeting as my/our proxy to vote for me/us on my/our behalf at the Thirty-Sixth Annual General Meeting of the Company to be held at Kayangan Suites, Pulai Springs Resort, 20km, Jalan Pontian Lama, Pulai, Johor on 25 June 2013 at a.m. My/our proxy/proxies is/are to vote as indicated below:- Ordinary Resolution 1 Directors fees FIRST PROXY SECOND PROXY FOR AGAINST FOR AGAINST Ordinary Resolution 2 Re-election of Mr. Leung Hoong Leong Thong Kuan Ordinary Resolution 3 Re-election of Mr. Toh Thim Leong Ordinary Resolution 4 Re-election of Ms. Chuah Sue Yin Ordinary Resolution 5 Re-appointment of auditors Ordinary Resolution 6 Authority to issue shares pursuant to Section 132D of the Companies Act, 1965 Special Resolution 1 Proposed Amendments to the Company s Articles of Association (Please indicate with an X in the space provided how you wish your vote to be cast. If no instruction as to voting is given, the proxy will vote or abstain from voting at his/her/their discretion). Dated this day of 2013 Signature/Common Seal Notes:- 1. For the purpose of determining a member who shall be entitled to attend, speak and vote at the Annual General Meeting, the Company shall be requesting the Record of Depositors as at 19 June Only a depositor whose name appears on the Record of Depositors as at 19 June 2013 shall be entitled to attend the said meeting or appoint proxies to attend, speak and vote on his/her stead. 2. A member of the Company entitled to attend and vote at the above meeting is entitled to appoint one or more proxies to attend and vote in his/her stead. A proxy may but need not be a member of the Company and the provisions of Section 149(1)(b) of the Companies Act, 1965 shall not apply to the Company. 3. Where a member appoints more than one proxy, the appointment shall be invalid unless he/she specifies the proportions of his/her holdings to be represented by each proxy. 4. The instrument appointing a proxy shall be in writing under the hand of the appointer or of his/her attorney duly authorised in writing or, if the appointer is a corporation, either under Seal or under the hand of an officer or attorney duly authorised. 5. (i) Where a member of the Company is an authorised nominee as defined in accordance with the Securities Industry (Central Depositories) Act, 1991, it may appoint at least one proxy in respect of each securities account it holds with ordinary shares of the Company standing to the credit of the said securities account. (ii) Where a member of the Company is an exempt authorized 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 authorized nominee may appoint in respect of each omnibus account it holds. 6. All forms of proxy must be deposited at the Registered Office of the Company situated at Suite 7E, Level 7, Menara Ansar, 65, Jalan Trus, Johor Bahru, Johor, Malaysia not less than 48 hours before the time appointed for holding the meeting or any adjournment thereof.

118 please fold here Affix stamp here The Secretary TRIUMPHAL ASSOCIATES BHD. (33113-M) Suite 7E, Level 7, Menara Ansar, 65 Jalan Trus, Johor Bahru, Johor, Malaysia. please fold here

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120 Triumphal Associates Bhd M 24, Persiaran Industri, Bandar Sri Damansara, Kuala Lumpur, Malaysia Tel: Fax: