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Annual Audited Accounts

WHITE HORSE BERHAD

Subject Annual Audited Accounts - 31 December 2013

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White Horse Bhd- AFS 311213.pdf

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Announcement Info

Company Name WHITE HORSE BERHAD

Stock Name WTHORSE

Date Announced 30 Apr 2014

Category PDF Submission

Reference No CS-140430-40172

White Horse Berhad(455130-X)

(Incorporated in Malaysia)

Directors' Report and

Audited Financial Statements

31 December 2013

455130-X

White Horse Berhad


Contents Pages

Directors' report 1 - 5

Statement by directors 6

Statutory declaration 6

Independent auditors’ report 7 - 9

Statements of comprehensive income 10

Statements of financial position 11 - 12

Statements of changes in equity 13 - 15

Statements of cash flows 16 - 17

Notes to the financial statements 18 - 83

Supplementary information 84

455130-X

White Horse Berhad


Directors' report

Principal activities

Results

Group Company

RM'000 RM'000

Profit net of tax attributable to equity holders of the Company 48,182 16,365

Dividends

RM'000

In respect of financial year ended 31 December 2012

Final tax exempt dividend of 5% paid on 16 July 2013 11,471

In respect of financial year ended 31 December 2013

Interim tax exempt dividend of 5% paid on 13 January 2014 11,470

22,941

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 2013.

The principal activities of the Company are investment holding and provision of management

services. The principal activities of the subsidiaries are described in Note 16 to the financial

statements.

There have been no significant changes in the nature of the principal activities during the financial

year.

There were no material transfers to or from reserves or provisions during the financial year other

than as disclosed in the financial statements.

In the opinion of the directors, the results of the operations of the Group and of the Company

during the financial year were not substantially affected by any item, transaction or event of a

material and unusual nature.

The amount of dividends paid by the Company since 31 December 2012 were as follows:

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Dividends (continued)

Directors

Liao Yuan Shun

Liao Jung Chu

Liao Shen Hua

Teo Swee Teng

Teo Kim Lap

Teo Kim Tay

Cheng Soon Mong

Law Piang Woon

Chew Pei Fang

Rosita Yeo Swat Geok (Appointed on 19 April 2013)

Directors' benefits

At the forthcoming Annual General Meeting, a final tax exempt dividend of 5% in respect of the

current financial year ended 31 December 2013 on 229,405,900 ordinary shares, amounting to a

total dividend payable of RM11,470,295 (5 sen net per share) will be proposed for shareholders’

approval. The financial statements for the current financial year do not reflect this proposed

dividend. Such dividend, if approved by the shareholders, will be accounted for in equity as an

appropriation of retained earnings in the financial year ending 31 December 2014.

Neither at the end of the financial year, nor at any time during that year, did there subsist any

arrangement to which the Company was a party, whereby the directors might acquire benefits by

means of acquisition of shares in or debentures of the Company or any other body corporate.

Since the end of the previous financial year, no director has received or become entitled to

receive a benefit (other than benefits included in the aggregate amount of emoluments received

or due and receivable by the directors or the fixed salary of a full-time employee of the Company

as shown in Note 11 to the financial statements) by reason of a contract made by the Company

or a related corporation with any director or with a firm of which he is a member, or with a

company in which he has a substantial financial interest, except as disclosed in Note 29 to the

financial statements.

The names of the directors of the Company in office since the date of the last report and at the

date of this report are:

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Directors' interests

1.1.2013 Bought Sold 31.12.2013

Direct interest

Liao Yuan Shun 1,052,800 - - 1,052,800

Liao Jung Chu 1,098,000 - - 1,098,000

Liao Shen Hua 1,705,797 - - 1,705,797

Teo Swee Teng 11,073,593 - - 11,073,593

Teo Kim Lap 11,083,027 - - 11,083,027

Teo Kim Tay 12,409,015 - - 12,409,015

Cheng Soon Mong 4,877,735 - - 4,877,735

Indirect interest

Liao Yuan Shun 29,064,055 - - 29,064,055

Liao Jung Chu 41,117,303 - - 41,117,303

Liao Shen Hua 12,000,000 - - 12,000,000

Teo Swee Teng 2,425,000 - - 2,425,000

Teo Kim Lap 1,450,000 - - 1,450,000

Teo Kim Tay 150,000 - - 150,000

Cheng Soon Mong 132,500 - - 132,500

Chew Pei Fang 120,000 - - 120,000

Treasury shares

Liao Jung Chu by virtue of his interest in shares in the Company is also deemed interested in

shares of all the Company's subsidiaries to the extent the Company has an interest.

During the financial year, the Company repurchased 111,400 of its issued ordinary shares from

the open market at the average price of RM1.62 per share. The total consideration paid for the

repurchase including transaction costs was RM179,940. The shares repurchased are being held

as treasury shares in accordance with Section 67A of the Companies Act, 1965.

The other directors in office at the end of the financial year had no interest in shares in the

Company during the financial year.

As at 31 December 2013, the Company held as treasury shares a total of 10,594,100 of its

240,000,000 issued ordinary shares. Such treasury shares are held at a carrying amount of

RM16,284,000 and further relevant details are disclosed in Note 26(b) to the financial statements.

Number of ordinary shares of RM1 each

According to the register of directors' shareholdings, the interests of directors in office at the end

of the financial year in shares in the Company during the financial year were as follows:

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Other statutory information

(a)

(i)

(ii)

(b)

(i)

(ii)

(c)

(d)

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

(i)

(ii)

any charge on the assets of the Group or of the Company which has arisen since the end

of the financial year which secures the liabilities of any other person; or

any contingent liability of the Group or of the Company which has arisen since the end of

the financial year.

the values attributed to the current assets in the financial statements of the Group and of

the Company misleading.

Before the statements of comprehensive income and statements of financial position of the

Group and of the Company were made out, the directors took reasonable steps:

to ascertain that proper action had been taken in relation to the writing off of bad debts

and the making of provision for doubtful debts and satisfied themselves that all known

bad debts had been written off and that adequate provision had been made for doubtful

debts; and

to ensure that any current assets which were unlikely to realise their value as shown in

the accounting records in the ordinary course of business had been written down to an

amount which they might be expected so to realise.

At the date of this report, the directors are not aware of any circumstances which would

render:

the amount written off for bad debts or the amount of the provision for doubtful debts in

the financial statements of the Group and of the Company inadequate to any substantial

extent; and

At the date of this report, the directors are not aware of any circumstances which have arisen

which would render adherence to the existing method of valuation of assets or liabilities of the

Group and of the Company misleading or inappropriate.

At the date of this report, the directors are not aware of any circumstances not otherwise

dealt with in this report or financial statements of the Group and of the Company which

render any amount stated in the financial statements misleading.

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Other statutory information (continued)

(f) In the opinion of the directors:

(i)

(ii)

Significant event

Auditors

Teo Swee Teng Cheng Soon Mong

Details of significant event are as disclosed in Note 16 to the financial statements.

no item, transaction or event of a material and unusual nature has arisen in the interval

between the end of the financial year and the date of this report which is likely to affect

substantially the results of the operations of the Group or of the Company for the

financial year in which this report is made.

no contingent or other liability has become enforceable or is likely to become enforceable

within the period of twelve months after the end of the financial year which will or may

affect the ability of the Group or of the Company to meet its obligations when they fall

due; and

Signed on behalf of the Board in accordance with a resolution of the directors dated 21 April

2014.

The auditors, Ernst & Young, have expressed their willingness to continue in office.

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Statement by directors

Pursuant to Section 169 (15) of the Companies Act, 1965

Teo Swee Teng Cheng Soon Mong

Statutory declaration

Pursuant to Section 169 (16) of the Companies Act, 1965

Subscribed and solemnly declared by

the abovenamed Cheng Soon Mong

on 21 April 2014

at Johor Bahru in the State of Johor Cheng Soon Mong

Before me,

ABD KARIM BIN ABD RAHMAN

Commissioner for Oaths

We, Teo Swee Teng and Cheng Soon Mong, being two of the directors of White Horse Berhad,

do hereby state that, in the opinion of the directors, the accompanying financial statements set

out on pages 10 to 83 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 2013 and of their financial performance and cash flows for

the year then ended.

I, Cheng Soon Mong, being the Director primarily responsible for the financial management of

White Horse Berhad, do solemnly and sincerely declare that the accompanying financial

statements set out on pages 10 to 84 are in my opinion correct, and I make this solemn

declaration conscientiously believing the same to be true and by virtue of the provisions of the

Statutory Declarations Act, 1960.

Signed on behalf of the Board in accordance with a resolution of the directors dated 21 April

2014.

The information set out in Note 37 to the financial statements have been prepared in

accordance with the Guidance on Special Matter No.1, Determination of Realised and

Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities

Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants.

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Independent auditors’ report to the members of

White Horse Berhad


Report on the financial statements

Directors’ responsibility for the financial statements

Auditors’ responsibility

We have audited the financial statements of White Horse Berhad, which comprise statements

of financial position of the Group and of the Company as at 31 December 2013, and

statements of comprehensive income, statements of changes in equity and statements of

cash flows of the Group and of the Company for the year then ended, and a summary of

significant accounting policies and other explanatory information, as set out on pages 10 to

83.

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.

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 judgment,

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 the accounting policies used and the

reasonableness of accounting estimates made by the directors, as well as evaluating the

overall presentation of the financial statements.

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White Horse Berhad (continued)

Auditors’ responsibility (continued)

Opinion

Report on other legal and regulatory requirements

(a)

(b)

(c)

(d)

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

the following:

In our opinion, the accounting and other records and the registers required by the Act to

be kept by the Company and its subsidiaries of which we have acted as auditors have

been properly kept in accordance with the provisions of the Act.

We are satisfied that the financial statements of the subsidiaries that have been

consolidated with the financial statements of the Company are in form and content

appropriate and proper for the purposes of the preparation of the consolidated financial

statements and we have received satisfactory information and explanations required by

us for those purposes.

The auditors’ reports on the financial statements of the subsidiaries were not subject to

any qualification material to the consolidated financial statements and did not include

any comment required to be made under Section 174(3) of the Act.

We have considered the financial statements and the auditors’ reports of all the

subsidiaries of which we have not acted as auditors, which are indicated in Note 16 to

the financial statements, being financial statements that have been included in the

consolidated financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a

basis for our audit 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 2013 and of their financial performance

and cash flows for the year then ended in accordance with Malaysian Financial Reporting

Standards, International Financial Reporting Standards and the requirements of the

Companies Act, 1965 in Malaysia.

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White Horse Berhad (continued)

Other reporting responsibilities

Other matters

Ernst & Young Wun Mow Sang

AF: 0039 1821/12/14(J)

Chartered Accountants Chartered Accountant

Melaka, Malaysia

Date: 21 April 2014

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.

The supplementary information set out in Note 37 on page 84 is disclosed to meet the

requirement of Bursa Malaysia Securities Berhad. The directors are responsible for the

preparation of the supplementary information in accordance with Guidance on Special Matter

No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure

Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the

Malaysian Institute of Accountants ("MIA Guidance") and the directive of Bursa Malaysia

Securities Berhad. In our opinion, the supplementary information is prepared, in all material

respects, in accordance with the MIA Guidance and the directive of Bursa Malaysia Securities

Berhad.

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Statements of comprehensive income

For the financial year ended 31 December 2013

Note 2013 2012 2013 2012

RM'000 RM'000 RM'000 RM'000

Revenue 8 646,814 586,038 26,144 15,144

Cost of goods sold (460,308) (429,717) - -

Gross profit 186,506 156,321 26,144 15,144

Other items of income

Interest income 1,596 890 13 4

Other income 4,880 1,961 - -

Other items of expense

Administrative and general

expenses (68,523) (62,334) (3,478) (1,014)

Selling and distribution expenses (45,777) (44,574) - -

Interest expense (4,970) (3,408) - -

Share of results of joint venture (116) (84) - -

Profit before tax 9 73,596 48,772 22,679 14,134

Income tax expense 12 (25,414) (10,597) (6,314) (3,629)

Profit net of tax 48,182 38,175 16,365 10,505

Other comprehensive income:

Foreign currency translation 3,811 (19) - -

Other comprehensive income

for the year, net of tax 3,811 (19) - -

Total comprehensive

income for the year 51,993 38,156 16,365 10,505

Earnings per share

attributable to owners of

the parent

(sen per share):

Basic 13 21.0 16.6

The accompanying accounting policies and explanatory information

form an integral part of the financial statements.

Group Company

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Statements of financial position

As at 31 December 2013

Note 2013 2012 2013 2012

RM'000 RM'000 RM'000 RM'000

Assets

Non-current assets

Property, plant and equipment 14 460,958 402,897 - -

Prepaid land lease payments 15 11,772 12,854 - -

Investments in subsidiaries 16 - - 223,384 140,000

Investment in joint venture 17 27 151 - -

Goodwill 677 677 - -

Other asset 18 19,023 - 19,023 -

492,457 416,579 242,407 140,000

Current assets

Inventories 19 369,005 277,636 - -

Trade and other receivables 20 137,902 145,229 58,690 108,669

Other current assets 21 33,752 22,212 76 76

Tax recoverable - - 722 646

Cash and bank balances 22 128,124 57,534 286 211

668,783 502,611 59,774 109,602

Total assets 1,161,240 919,190 302,181 249,602

Current liabilities

Loans and borrowings 23 196,284 135,642 - -

Trade and other payables 24 126,162 78,442 26,229 522

Taxation 7,116 2,559 - -

Dividend payable 11,480 11,513 11,480 11,513

341,042 228,156 37,709 12,035

Net current assets 327,741 274,455 22,065 97,567

Non-current liabilities

Loans and borrowings 23 2,954 - - -

Other payable 24 86,691 - 33,661 -

Deferred taxation 25 31,004 20,357 - -

120,649 20,357 33,661 -

Total liabilities 461,691 248,513 71,370 12,035

Net assets 699,549 670,677 230,811 237,567

Group Company

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Statements of financial position

As at 31 December 2013 (continued)

Note 2013 2012 2013 2012

RM'000 RM'000 RM'000 RM'000

Equity attributable to owners

of the parent

Share capital 26 240,000 240,000 240,000 240,000

Share premium 26 6,936 6,936 6,936 6,936

Treasury shares 26(b) (16,284) (16,104) (16,284) (16,104)

Retained earnings 27 463,966 438,725 159 6,735

Other reserve 28 4,931 1,120 - -

Total equity 699,549 670,677 230,811 237,567

Total equity and liabilities 1,161,240 919,190 302,181 249,602

Group Company

The accompanying accounting policies and explanatory information


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Statements of changes in equity


Foreign

currency Distributable

Equity, Share Share Treasury translation Retained

Note total capital premium shares reserve earnings

Group RM'000 RM'000 RM'000 RM'000 RM'000 RM'000

2013

Opening balance at 1 January 2013 670,677 240,000 6,936 (16,104) 1,120 438,725

Total comprehensive income 51,993 - - - 3,811 48,182

Transactions with owners

Purchase of treasury shares 26 (180) - - (180) - -

Dividends 34 (22,941) - - - - (22,941)

Total transactions with owners (23,121) - - (180) - (22,941)

Closing balance at 31 December 2013 699,549 240,000 6,936 (16,284) 4,931 463,966

---------------------- Non-Distributable ----------------------

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For the financial year ended 31 December 2013 (continued)

Foreign

currency Distributable

Equity, Share Share Treasury translation Retained

Note total capital premium shares reserve earnings

Group RM'000 RM'000 RM'000 RM'000 RM'000 RM'000

2012

Opening balance at 1 January 2012 655,746 240,000 6,936 (15,838) 1,139 423,509

Total comprehensive income 38,156 - - - (19) 38,175


Purchase of treasury shares 26 (266) - - (266) - -

Dividends 34 (22,959) - - - - (22,959)

Total transactions with owners (23,225) - - (266) - (22,959)

Closing balance at 31 December 2012 670,677 240,000 6,936 (16,104) 1,120 438,725

---------------------- Non-Distributable ----------------------

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Distributable

Equity, Share Share Treasury Retained

Note total capital premium shares earnings

Company RM'000 RM'000 RM'000 RM'000 RM'000

2013

Opening balance at 1 January 2013 237,567 240,000 6,936 (16,104) 6,735

Total comprehensive income 16,365 - - - 16,365


Purchase of treasury shares 26 (180) - - (180) -

Dividends 34 (22,941) - - - (22,941)

Total transactions with owners (23,121) - - (180) (22,941)

Closing balance at 31 December 2013 230,811 240,000 6,936 (16,284) 159

2012

Opening balance at 1 January 2012 250,287 240,000 6,936 (15,838) 19,189

Total comprehensive income 10,505 - - - 10,505


Purchase of treasury shares 26 (266) - - (266) -

Dividends 34 (22,959) - - - (22,959)

Total transactions with owners (23,225) - - (266) (22,959)

Closing balance at 31 December 2012 237,567 240,000 6,936 (16,104) 6,735

------------ Non-Distributable ------------

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

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Statements of cash flows


Group Company

2013 2012 2013 2012

RM'000 RM'000 RM'000 RM'000

Operating activities

Profit before tax 73,596 48,772 22,679 14,134

Adjustments for:

Amortisation of prepaid land lease

payments 1,084 1,084 - -

Bad debts written off 86 11 - -

Negative goodwill written off (2,220) - - -

Depreciation of property, plant and

equipment 42,521 40,376 - -

Gain on disposal of property, plant

and equipment (182) (146) - -

Interest expense 4,970 3,408 - -

Interest income (1,596) (890) (13) (4)

Net unrealised foreign exchange loss 1,130 194 1,378 -

Property, plant and equipment written off 32 138 - -

Impairment loss on trade receivables 2,275 40 - -

Reversal of allowance for impairment of

trade receivables (16) (156) - -

Share of results of joint venture 116 84 - -

Total adjustments 48,200 44,143 1,365 (4)

Operating cash flow before changes in

working capital 121,796 92,915 24,044 14,130

Changes in working capital

Decrease in receivables 490 2,284 31,608 -

(Increase)/decrease in other current

assets (11,540) 7,888 - (76)

Decrease/(increase) in inventories 6,030 (69,394) - -

(Decrease)/increase in payables (9,920) (5,598) 57,338 -

Total changes in working capital (14,940) (64,820) 88,946 (76)

Cash flow from operations 106,856 28,095 112,990 14,054

Taxes paid (18,618) (11,355) (6,390) (3,675)

Interest received 1,596 890 13 4

Interest paid (4,970) (3,408) - -

(21,992) (13,873) (6,377) (3,671)

Net cash flows from operating

activities 84,864 14,222 106,613 10,383

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Statements of cash flows


Group Company

2013 2012 2013 2012

RM'000 RM'000 RM'000 RM'000

Investing activities

Purchase of property, plant and

equipment (13,914) (21,539) - -

Proceeds from disposal of property,

plant and equipment 210 349 - -

Net cash outflow on acquistion of a

subsidiary (Note 16) (41,012) - (45,846) -

Additional investment in a subsidiary - - (37,538) -

Net cash flows used in investing

activities (54,716) (21,190) (83,384) -

Financing activities

Repayment by a subsidiary - - - 12,823

Dividends paid (22,974) (22,957) (22,974) (22,957)

Increase in loans and borrowings 63,596 10,696 - -

Purchase of treasury shares (180) (266) (180) (266)

Net cash flows from/(used in)

financing activities 40,442 (12,527) (23,154) (10,400)

Net increase/(decrease) in cash

and cash balances 70,590 (19,495) 75 (17)

Cash and cash balances at 1 January 57,534 77,029 211 228

Cash and cash balances at

31 December (Note 22) 128,124 57,534 286 211

The accompanying accounting policies and explanatory notes


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Notes to the financial statements


1. Corporate information

2. Basis of preparation

3. Basis of consolidation

-

-

-

The financial statements of the Group and the Company have been prepared in accordance

with Malaysian Financial Reporting Standards (MFRS) as issued by the Malaysian Accounting

Standards Board (MASB), International Financial Reporting Standards (IFRS) as issued by the

International Accounting Standards Board and the Companies Act, 1965 in Malaysia.

The financial statements of the Group and of the Company have also been prepared on a

historical basis, except as disclosed in the accounting policies below.

The financial statements are presented in Ringgit Malaysia (RM) and all values are rounded to

nearest thousand (RM'000) except when otherwise indicated.

The ability to use its power over the investee to affect its returns.

Power over the investee (i.e. existing rights that give it the current ability to direct the

relevant activities of the investee);

White Horse Berhad ("the Company") is a public limited liability company, incorporated and

domiciled in Malaysia, and is listed on the Main Market of Bursa Malaysia Securities Berhad.

The principal place of business and the registered office of the Company is located at PLO

464, Jalan Gangsa, Pasir Gudang Industrial Estate, 81700 Pasir Gudang, Johor.

The principal activities of the Company are investment holding and provision of management

services. The principal activities of the subsidiaries are described in Note 16. There have been

no significant changes in the nature of the principal activities during the financial year.

The consolidated financial statements comprise the financial statements of the Company and

of its subsidiaries as at 31 December 2013. Control is achieved when the Group is exposed, or

has rights, to variable returns from its involvement with the investee and has the ability to affect

those returns through its power over the investee. Specifically, the Group controls an investee

if and only if the Group has:

Exposure, or rights, to variable returns from its involvement with the investee; and

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3 Basis of consolidation (continued)

-

-

-

-

-

-

-

-

-

-

Derecognises the assets (including goodwill) and liabilities of the subsidiary;

Derecognises the carrying amount of any non-controlling interests;

Derecognises the cumulative translation differences recorded in equity;

Recognises the fair value of the consideration received;

Recognises the fair value of any investment retained;

Recognises any surplus or deficit in profit or loss; and

Reclassifies the parent’s share of components previously recognised in OCI to profit or

loss or retained earnings, as appropriate, as would be required if the Group had directly

disposed of the related assets or liabilities.

When the Group has less than a majority of the voting or similar rights of an investee, the

Group considers all relevant facts and circumstances in assessing whether it has power over

an investee, including:

The contractual arrangement with the other vote holders of the investee;

Rights arising from other contractual arrangements; and

The Group’s voting rights and potential voting rights.

The Group re-assesses whether or not it controls an investee if facts and circumstances

indicate that there are changes to one or more of the three elements of control. Consolidation

of a subsidiary begins when the Group obtains control over the subsidiary and ceases when

the Group loses control of the subsidiary. Assets, liabilities, income and expenses of a

subsidiary acquired or disposed of during the year are included in profit or loss from the date

the Group gains control until the date the Group ceases to control the subsidiary.

Profit or loss and each component of other comprehensive income (OCI) are attributed to the

equity holders of the parent of the Group and to the non-controlling interests, even if this

results in the non-controlling interests having a deficit balance. When necessary, adjustments

are made to the financial statements of subsidiaries to bring their accounting policies into line

with the Group’s accounting policies. All intra-group assets and liabilities, equity, income,

expenses and cash flows relating to transactions between members of the Group are

eliminated in full on consolidation.

A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as

an equity transaction. If the Group loses control over a subsidiary, it:

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4. Summary of significant accounting policies

4.1 Business combinations and goodwill

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 interests in the

acquiree. For each business combination, the Group elects whether to measure the non-

controlling interests in the acquiree at fair value or at the proportionate share of the

acquiree’s identifiable net assets. Acquisition-related costs are expensed as incurred 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.

Any contingent consideration to be transferred by the acquirer will be recognised at fair

value at the acquisition date. Contingent consideration classified as an asset or liability

that is a financial instrument and within the scope of MFRS 139 Financial Instruments:

Recognition and Measurement, is measured at fair value with changes in fair value

recognised either in either profit or loss or as a change to OCI. If the contingent

consideration is not within the scope of MFRS 139, it is measured in accordance with the

appropriate MFRS. Contingent consideration that is classified as equity is not re-

measured and subsequent settlement is accounted for within equity.

Goodwill is initially measured at cost, being the excess of the aggregate of the

consideration transferred and the amount recognised for non-controlling interests, and

any previous interest held, over the net identifiable assets acquired and liabilities

assumed. If the fair value of the net assets acquired is in excess of the aggregate

consideration transferred, the Group re-assesses whether it has correctly identified all of

the assets acquired and all of the liabilities assumed and reviews the procedures used to

measure the amounts to be recognised at the acquisition date. If the re-assessment still

results in an excess of the fair value of net assets acquired over the aggregate

consideration transferred, then the gain is recognised in profit or loss.

If the business combination is achieved in stages, any previously held equity interest is

re-measured at its acquisition date fair value and any resulting gain or loss is recognised

in profit or loss. It is then considered in the determination of goodwill.

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4. Summary of significant accounting policies (continued)

4.1 Business combinations and goodwill (continued)

4.2 Current versus non-current classification

- Expected to be realised or intended to sold or consumed in normal operating cycle;

- Held primarily for the purpose of trading;

- Expected to be realised within twelve months after the reporting period, or

-

After initial recognition, goodwill is measured at cost less any accumulated impairment

losses. For the purpose of impairment testing, goodwill acquired in a business

combination is, from the acquisition date, allocated to each of the Group’s cash-

generating units that are expected to benefit from the combination, irrespective of

whether other assets or liabilities of the acquiree are assigned to those units.

Where goodwill has been allocated to a cash-generating unit and part of the operation

within that unit is disposed of, the goodwill associated with the disposed operation is

included in the carrying amount of the operation when determining the gain or loss on

disposal. Goodwill disposed in these circumstances is measured based on the relative

values of the disposed operation and the portion of the cash-generating unit retained.

Assets and liabilities in statement of financial position are presented based on

current/non-current classification. An asset is current when it is:

Business combinations involving entities under common control are accounted for by

applying the pooling on interest method. The assets and liabilities of the combining

entities are reflected at their carrying amounts reported in the consolidated financial

statements of the controlling holding company. Any difference between the consideration

paid and the share capital of the "acquired" entity is reflected within equity as merger

reserve. The statement of comprehensive income reflects the results of the combining

entities for the full year, irrespective of when the combination takes place. Comparatives

are presented as if the entities have always been combined since the date the entities

had come under common control.

Cash or cash equivalent unless restricted from being exchanged or used to settle a

liability for at least twelve months after the reporting period.

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4.2 Current versus non-current classification (continued)

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

- It is expected to be settled in normal operating cycle;

- It is held primarily for the purpose of trading;

- It is due to be settled within twelve months after the reporting period; or

-

All other liabilities are classified as non-current.

Deferred tax assets and liabilities are classified as non-current assets and liabilities.

4.3 Fair value measurement

- In the principal market for the asset or liability; or

-

The fair value of an asset or a liability is measured using the assumptions that market

participants would use when pricing the asset or liability, assuming that market

participants act in their economic best interest.

A fair value measurement of a non-financial asset takes into account a market

participant's ability to generate economic benefits by using the asset in its highest and

best use or by selling it to another market participant that would use the asset in its

highest and best use.

Valuation techniques that are appropriate in the circumstances and for which sufficient

data are available, are used to measure fair value, maximising the use of relevant

observable inputs and minimising the use of unobservable inputs.

There is no unconditional right to defer the settlement of the liability for at least

twelve months after the reporting period.

Fair value is the price that would be received to sell an asset or paid to transfer a liability

in an orderly transaction between market participants at the measurement date. The fair

value measurement is based on the presumption that the transaction to sell the asset or

transfer the liability takes place either:

In the absence of a principal market, in the most advantageous market for the asset

or liability.

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

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4.3 Fair value measurement (continued)

Level 1 -

Level 2 -

Level 3 -

All assets and liabilities for which fair value is measured or disclosed in the financial

statements are categorised within the fair value hierarchy, described as follows, based

on the lowest level input that is significant to the fair value measurement as a whole:

Quoted (unadjusted) market prices in active markets for identical assets or

liabilities

Valuation techniques for which the lowest level input that is significant to the

fair value measurement is directly or indirectly observable

Valuation techniques for which the lowest level input that is significant to the

fair value measurement is unobservable

For assets and liabilities that are recognised in the financial statements on a recurring

basis, the Company determines whether transfers have occurred between levels in the

hierarchy by re-assessing categorisation (based on the lowest level input that is

significant to the fair value measurement as a whole) at the end of each reporting period.

Policies and procedures are determined by senior management for both recurring fair

value measurement and for non-recurring measurement.

External valuers are involved for valuation of significant assets and significant liabilities.

Involvement of external valuers is decided by senior management. Selection criteria

include market knowledge, reputation, independence and whether professional

standards are maintained. The senior management decides, after discussions with the

external valuers, which valuation techniques and inputs to use for each case.

At each reporting date, the senior management analyses the movements in the values of

assets and liabilities which are required to be re-measured or re-assessed according to

the accounting policies of the Company. For this analysis, the senior management

verifies the major inputs applied in the latest valuation by agreeing the information in the

valuation computation to contracts and other relevant documents.

For the purpose of fair value disclosures, classes of assets and liabilities are determined

based on the nature, characteristics and risks of the asset or liability and the level of the

fair value hierarchy as explained above.

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4.4 Foreign currencies

(a) Functional and presentation currency

(b) Transactions and balances

Differences arising on settlement or translation of monetary items are recognised in

profit or loss with the exception of monetary items that are designated as part of the

hedge of the Group's net investment of a foreign operation. These are recognised in

OCI until the net investment is disposed of, at which time, the cumulative amount is

reclassified to profit or loss. Tax charges and credits attributable to exchange

differences on those monetary items are also recorded in OCI.

Non-monetary items that are measured in terms of historical cost in a foreign

currency are translated using the exchange rates at the dates of the initial

transactions. Non-monetary items measured at fair value in a foreign currency are

translated using the exchange rates at the date when the fair value is determined.

The gain or loss arising on translation of non-monetary items measured at fair value

is treated in line with the recognition of gain or loss on change in fair value of the

item (i.e., translation differences on items whose fair value gain or loss is

recognised in OCI or profit or loss are also recognised in OCI or profit or loss,

respectively).

Any goodwill arising on the acquisition of a foreign operation and any fair value

adjustments to the carrying amounts of assets and liabilities arising on the

acquisition are treated as assets and liabilities of the foreign operation and

translated at the spot rate of exchange at the reporting date.

Transactions in foreign currencies are initially recorded by the Group entities at the

functional currency spot rates at the date of the transaction first qualifies for

recognition. Monetary assets and liabilities denominated in foreign currencies are

translated at the functional currency spot rates at the reporting date.

The Group’s and the Company's financial statements are presented in Ringgit

Malaysian which is also the Company’s functional currency. Each entity in the Group

determines its own functional currency and items included in the financial

statements of each entity are measured using that functional currency.

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4.4 Foreign currencies (continued)

(c) Group companies

4.5 Revenue recognition

(a) Sale of goods

(b) Dividend income

(c) Management fees

Revenue is recognised to the extent that it is probable that the economic benefits will

flow to the Group or the Company and the revenue can be reliably measured, regardless

of when the payment is being made. Revenue is measured at the fair value of the

consideration received or receivable, taking into account contractually defined terms of

payment and excluding taxes or duty. The Group and the Company have concluded that

they are the principals in all of its revenue arrangements since they are the primary

obligors in all the revenue arrangements, have pricing latitude and are also exposed to

inventory and credit risks.

The specific recognition criteria described below must also be met before revenue is

recognised.

Revenue from the sale of goods is recognised when the significant risks and

rewards of ownership of the goods have passed to the buyer, usually on delivery of

the goods.

Dividend income is recognised when the Group’s and the Company's right to

receive payment is established.

Management fees are recognised when services are rendered.

On consolidation, the assets and liabilities of foreign operations are translated into

RM at the rate of exchange prevailing at the reporting date and their income

statements are translated at exchange rates prevailing at the dates of the

transactions. The exchange differences arising on translation for consolidation are

recognised in OCI. On disposal of a foreign operation, the component of OCI

relating to that particular foreign operation is recognised in profit or loss.

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4.5 Revenue recognition (continued)

(d) Interest income

(e) Rental income

4.6 Employee benefits

(i) Short term benefits

(ii) Defined contribution plans

Wages, salaries, bonuses and social security contributions are recognised as an

expense in the year in which the associated services are rendered by employees.

Short term accumulating compensated absences such as paid annual leave are

recognised when services are rendered by employees that increase their

entitlement to future compensated absences. Short term non-accumulating

compensated absences such as sick leave are recognised when the absences

occur.

For all financial instruments measured at amortised cost and interest bearing

financial assets classified as available for sale, interest income or expense is

recorded using the effective interest rate ("EIR"), which is the rate that exactly

discounts the estimated future cash payments or receipts through the expected life

of the financial instrument or a shorter period, where appropriate, to the net carrying

amount of the financial asset or liability. Interest income is included in finance

income in the profit or loss.

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.

The Group makes contributions to the Employees Provident Fund in Malaysia, a

defined contribution pension scheme. Contributions to defined contribution pension

schemes are recognised as an expense in the period in which the related service is

performed.

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4.7 Taxes

(a) Current income tax

(b) Deferred tax

(i)

(ii)

where the deferred tax liability arises from the initial recognition of goodwill or

of an asset or liability in a transaction that is not a business combination and,

at the time of the transaction, affects neither the accounting profit nor taxable

profit or loss; and

in respect of taxable temporary differences associated with investments in

subsidiaries and interest in a joint venture, where the timing of the reversal of

the temporary differences can be controlled and it is probable that the

temporary differences will not reverse in the foreseeable future.

Deferred tax liabilities are recognised for all taxable temporary differences, except:

Current income tax assets and liabilities for the current period are measured at the

amount expected to be recovered from or paid to the taxation authorities. The tax

rates and tax laws used to compute the amount are those that are enacted or

substantively enacted, at the reporting date in the countries where the Group

operates and generates taxable income.

Current income tax relating to items recognised directly in equity is recognised in

equity and not in profit or loss. Management periodically evaluates positions taken in

the tax returns with respect to situations in which applicable tax regulations are

subject to interpretation and establishes provisions where appropriate.

Deferred tax is provided using the liability method on temporary differences between

the tax bases of assets and liabilities and their carrying amounts for financial

reporting purposes at the reporting date.

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4.7 Taxes (continued)

(b) Deferred tax (continued)

(i)

(ii)

The carrying amount of deferred tax assets is reviewed at each reporting date and

reduced to the extent that it is no longer probable that sufficient taxable profit will be

available to allow all or part of the deferred tax asset to be utilised. Unrecognised

deferred tax assets are reassessed at each reporting date and are recognised to

the extent that it has become probable that future taxable profits will allow the

deferred tax asset to be recovered.

Deferred tax assets are recognised for all deductible temporary differences, the

carry forward of unused tax credits and any unused tax losses. Deferred tax assets

are recognised to the extent that it is probable that taxable profit will be available

against which the deductible temporary differences, and the carry forward of unused

tax credits and unused tax losses can be utilised, except:

where the deferred tax asset relating to the deductible temporary difference

arises from the initial recognition of an asset or liability in a transaction that is

not a business combination and, at the time of the transaction, affects neither

the accounting profit nor taxable profit or loss; and

in respect of deductible temporary differences associated with investments in

subsidiaries and interest in a joint venture, 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.

Deferred tax assets and liabilities are measured at the tax rates that are expected to

apply in the year when the asset is realised or the liability is settled, based on tax

rates (and tax laws) that have been enacted or substantively enacted at the

reporting date.

Deferred tax relating to items recognised outside profit or loss is recognised outside

profit or loss. Deferred tax items are recognised in correlation to the underlying

transaction either in OCI or directly in equity.

Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right

exists to set off current tax assets against current income tax liabilities and the

deferred taxes relate to the same taxable entity and the same taxation authority.

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4.7 Taxes (continued)

(b) Deferred tax (continued)

(c) Sales tax

(i)

(ii)

4.8 Cash dividend and non-cash distribution to equity holders of the parent

Tax benefits acquired as part of a business combination, but not satisfying the

criteria for separate recognition at that date, would be recognised subsequently if

new information about facts and circumstances changed. The adjustment would

either be treated as a reduction to goodwill (as long as it does not exceed goodwill)

if it is incurred during the measurement period or in profit or loss.

Revenues, expenses and assets are recognised net of the amount of sales tax,

except when:

the sales tax incurred on a purchase of assets or services is not recoverable

from the taxation authority, in which case the sales tax is recognised as part of

the cost of acquisition of the asset or as part of the expense item as

applicable; and

receivables and payables that are stated with the amount of sales tax included.

The net amount of sales tax recoverable from, or payable to, the taxation authority

is included as part of receivables or payables in the statement of financial position.

The Company recognises a liability to make cash or non-cash distributions to equity

holders of the parent when the distribution is authorised and the distribution is no longer

at the discretion of the Company. A distribution is authorised when it is approved by the

shareholders and a corresponding amount is recognised directly in equity.

Upon distribution of non-cash assets, any difference between the carrying amount of the

liability and the carrying amount of the assets distributed is recognised in profit or loss.

Non-cash distributions are measured at the fair value of the assets to be distributed with

fair value re-measurement recognised directly in equity.

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4.9 Property, plant and equipment

- Leasehold land : 60 to 99 years

- Buildings : 15 to 96 years

- Plant, machinery and equipment : 5 to 12 years

- Other assets : 3 to 10 years

An item of property, plant and equipment and any significant part initially recognised is

derecognised upon disposal or when no future economic benefits are expected from its

use or disposal. Any gain or loss on derecognition of the asset (calculated as the

difference between the net disposal proceeds and the carrying amount of the asset) is

included in the profit or loss when the asset is derecognised.

Property, plant and equipment are stated at cost, net of accumulated depreciation and/or

accumulated impairment losses, if any. Such cost includes the cost of replacing

component parts of the property, plant and equipment and borrowing costs for long-term

construction projects if the recognition criteria are met.

When significant parts of property, plant and equipment are required to be replaced at

intervals, the Group recognises such parts as individual assets with specific useful lives

and depreciates them accordingly. Likewise, when a major inspection is performed, its

cost is recognised in the carrying amount of the plant and equipment as a replacement if

the recognition criteria are satisfied. All other repair and maintenance costs are

recognised in the profit or loss as incurred. The present value of the expected cost for

the decommissioning of an asset after its use is included in the cost of the respective

asset if the recognition criteria for a provision are met.

Assets under construction included in property, plant and equipment are not depreciated

as these assets are not yet available for use.

Freehold land has an unlimited useful life and therefore is not depreciated. Depreciation

is calculated on a straight-line basis over the estimated useful lives of the assets as

follows:

The residual values, useful lives and methods of depreciation of property, plant and

equipment are reviewed at each financial year-end, and adjusted prospectively, if

appropriate.

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4.10 Leases

(a) As lessee

(b) As lessor

4.11 Borrowing costs

Operating lease payments are recognised as an operating expense in profit or loss

on a straight-line basis over the lease term.

Borrowing costs directly attributable to the acquisition, construction or production of an

asset that necessarily takes a substantial period of time to get ready for its intended use

or sale are capitalised as part of the cost of the asset. All other borrowing costs are

expensed in the period in which they occur. Borrowing costs consist of interest and other

costs that an entity incurs in connection with the borrowing of funds.

Finance leases that transfer substantially all the risks and benefits incidental to

ownership of the leased item to the Group, are capitalised at the commencement of

the lease at the fair value of the leased property or, if lower, at the present value of

the minimum lease payments. Lease payments are apportioned between finance

charges and reduction of the lease liability so as to achieve a constant rate of

interest on the remaining balance of the liability. Finance charges are recognised in

profit or loss as finance costs.

The determination of whether an arrangement is, or contains, a lease is based on the

substance of the arrangement at the inception date. The arrangement is assessed for

whether fulfilment of the arrangement is dependent on the use of a specific asset or

assets or the arrangement conveys a right to use the asset or assets, even if that right is

not explicitly specified in an arrangement.

A leased asset is depreciated over the useful life of the asset. However, if there is

no reasonable certainty that the Group will obtain ownership by the end of the lease

term, the asset is depreciated over the shorter of the estimated useful life of the

asset and the lease term.

Leases in which the Group does not transfer substantially all the risks and benefits

of ownership of the asset are classified as operating leases. Initial direct costs

incurred in negotiating an operating lease are added to the carrying amount of the

leased asset and recognised over the lease term on the same bases as rental

income. Contingent rents are recognised as revenue in the period in which they are

earned.

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4.12 Subsidiaries

4.13 Interest in a joint venture

4.14 Financial instruments

4.15 Financial assets

(a) Initial recognition and measurement

A financial instrument is any contract that gives rise to a financial asset of one entity and

a financial liability or equity instrument of another entity.

Financial assets are classified, at initial recognition, as financial assets at fair value

through profit or loss, loans and receivables, held-to-maturity investments, available-

for-sale financial assets, or as derivatives designated as hedging instruments in an

effective hedge, as appropriate. All financial assets are recognised initially at fair

value plus, in the case of financial assets not recorded at fair value through profit or

loss, transaction costs that are attributable to the acquisition of the financial asset.

Purchases or sales of financial assets that require delivery of assets within a time

frame established by regulation or convention in the marketplace (regular way

trades) are recognised on the trade date, i.e., the date that the Group commits to

purchase or sell the asset.

A subsidiary is an entity over which the Group has the power to govern the financial and

operating policies so as to obtain benefits from its activities.

Investments in subsidiaries are accounted for at cost less impairment losses.

A joint venture is a contractual arrangement whereby two or more parties undertake an

economic activity that is subject to joint control, where the strategic financial and

operating decisions relating to the activity require the unanimous consent of the parties

sharing control.

Investment in joint venture is stated at cost less impairment losses. On disposal of such

investment, the difference between net disposal proceeds and the carrying amounts is

included in profit or loss.

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4.15 Financial assets (continued)

(b) Subsequent measurement

(i) Financial assets at fair value through profit or loss

(ii) Loans and receivables

For purposes of subsequent measurement, financial assets are classified in four

categories:

Financial assets at fair value through profit or loss include financial assets held

for trading and financial assets designated upon initial recognition at fair value

through profit or loss. Financial assets are classified as held for trading if they

are acquired for the purpose of selling or repurchasing in the near term.

Derivatives, including separated embedded derivatives are also classified as

held for trading unless they are designated as effective hedging instruments as

defined by MFRS 139. The Group has not designated any financial assets at

fair value through profit or loss. Financial assets at fair value through profit or

loss are carried in the statement of financial position at fair value with net

changes in fair value presented as finance costs (negative net changes in fair

value) or finance income (positive net changes in fair value) in profit or loss.

Derivatives embedded in host contracts are accounted for as separate

derivatives and recorded at fair value if their economic characteristics and risks

are not closely related to those of the host contracts and the host contracts are

not held for trading or designated at fair value though profit or loss. These

embedded derivatives are measured at fair value with changes in fair value

recognised in profit or loss. Re-assessment only occurs if there is either a

change in the terms of the contract that significantly modifies the cash flows

that would otherwise be required or a reclassification of a financial asset out of

the fair value through profit or loss.

Loans and receivables are non-derivative financial assets with fixed or

determinable payments that are not quoted in an active market. After initial

measurement, such financial assets are subsequently measured at amortised

cost using the effective interest rate (EIR) method, less impairment. Amortised

cost is calculated by taking into account any discount or premium on

acquisition and fees or costs that are an integral part of the EIR. The EIR

amortisation is included in finance income in profit or loss. The losses arising

from impairment are recognised in profit or loss in finance costs for loans and

in cost of sales or other operating expenses for receivables. This category

generally applies to trade and other receivables.

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(b) Subsequent measurement (continued)

(iii) Held-to-maturity investments

(iv) Available-for-sale (AFS) financial investments

Non-derivative financial assets with fixed or determinable payments and fixed

maturities are classified as held to maturity when the Group has the positive

intention and an ability to hold them to maturity. After initial measurement, held

to maturity investments are measured at amortised cost using the EIR, less

impairment. Amortised cost is calculated by taking into account any discount or

premium on acquisition and fees or costs that are an integral part of the EIR.

The EIR amortisation is included as finance income in profit or loss. The losses

arising from impairment are recognised in profit or loss as finance costs. There

Group did not have any held-to-maturity investments during the years ended

31 December 2013 and 2012.

AFS financial investments include equity investments and debt securities.

Equity investments classified as AFS are those that are neither classified as

held for trading nor designated at fair value through profit or loss. Debt

securities in this category are those that are intended to be held for an

indefinite period of time and that may be sold in response to needs for liquidity

or in response to changes in the market conditions.

After initial measurement, AFS financial investments are subsequently

measured at fair value with unrealised gains or losses recognised in OCI and

credited in the AFS reserve until the investment is derecognised, at which time

the cumulative gain or loss is recognised in other operating income, or the

investment is determined to be impaired, when the cumulative loss is

reclassified from the AFS reserve to profit or loss in finance costs. Interest

earned whilst holding AFS financial investments is reported as interest income

using the EIR method.

The Group evaluates whether the ability and intention to sell its AFS financial

assets in the near term is still appropriate. When, in rare circumstances, the

Group is unable to trade these financial assets due to inactive markets, the

Group may elect to reclassify these financial assets if the management has the

ability and intention to hold the assets for foreseeable future or until maturity.

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(iv) Available-for-sale (AFS) financial investments (continued)

(c) Derecognition

-

-

Continuing involvement that takes the form of a guarantee over the transferred

asset is measured at the lower of the original carrying amount of the asset and the

maximum amount of consideration that the Group could be required to repay.

A financial asset (or, where applicable, a part of a financial asset or part of a group

of similar financial assets) is primarily derecognised (i.e. removed from the

statements of financial position) when:

The rights to receive cash flows from the asset have expired;

The Group has transferred its rights to receive cash flows from the asset or

has assumed an obligation to pay the received cash flows in full without

material delay to a third party under a ‘pass-through’ arrangement; and either

(a) the Group has transferred substantially all the risks and rewards of the

asset, or (b) the Group has neither transferred nor retained substantially all the

risks and rewards of the asset, but has transferred control of the asset.

When the Group has transferred its rights to receive cash flows from an asset or

has entered into a pass-through arrangement, it evaluates if and to what extent it

has retained the risks and rewards of ownership. When it has neither transferred

nor retained substantially all of the risks and rewards of the asset, nor transferred

control of the asset, the Group continues to recognise an associated liability. The

transferred asset and the associated liability are measured on a basis that reflects

the rights and obligations that the Group has retained.

For a financial asset reclassified from the AFS category, the fair value carrying

amount at the date of reclassification becomes its new amortised cost and any

previous gain or loss on the asset that has been recognised in equity is

amortised to profit or loss over the remaining life of the investment using the

EIR. Any difference between the new amortised cost and the maturity amount

is also amortised over the remaining life of the asset using the EIR. If the asset

is subsequently determined to be impaired, then the amount recorded in equity

is reclassified to profit or loss.

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(d) Impairment of financial assets

(i) Financial assets carried at amortised cost

The Group assesses at each reporting date whether there is any objective evidence

that a financial asset or a group of financial assets is impaired. An impairment exists

if one or more events that has occured since the initial recognition of the asset (an

incurred ‘loss event’), has an impact on the estimated future cash flows of the

financial asset or the group of financial assets that can be reliably estimated.

Evidence of impairment may include indications that the debtors or a group of

debtors is experiencing significant financial difficulty, default or delinquency in

interest or principal payments, the probability that they will enter bankruptcy or other

financial reorganisation and where observable data indicate that there is a

measurable decrease in the estimated future cash flows, such as changes in

arrears or economic conditions that correlate with defaults.

For financial assets carried at amortised cost, the Group first assesses

whether impairment exists individually for financial assets that are individually

significant, or collectively for financial assets that are not individually

significant. If the Group determines that no objective evidence of impairment

exists for an individually assessed financial asset, whether significant or not, it

includes the asset in a group of financial assets with similar credit risk

characteristics and collectively assesses them for impairment. Assets that are

individually assessed for impairment and for which an impairment loss is, or

continues to be, recognised are not included in a collective assessment of

impairment.

The amount of any impairment loss identified is measured as the difference

between the asset’s carrying amount and the present value of estimated future

cash flows (excluding future expected credit losses that have not yet been

incurred). The present value of the estimated future cash flows is discounted at

the financial asset’s original effective interest rate.

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(d) Impairment of financial assets (continued)

(i) Financial assets carried at amortised cost (continued)

(ii) Available-for-sale (AFS) investments

The carrying amount of the asset is reduced through the use of an allowance

account and the loss is recognised in profit or loss. Interest income (recorded

as finance income in profit or loss) continues to be accrued on the reduced

carrying amount and is accrued using the rate of interest used to discount the

future cash flows for the purpose of measuring the impairment loss. Loans

together with the associated allowance are written off when there is no realistic

prospect of future recovery and all collateral has been realised or has been

transferred to the Group. If, in a subsequent year, the amount of the estimated

impairment loss increases or decreases because of an event occurring after

the impairment was recognised, the previously recognised impairment loss is

increased or reduced by adjusting the allowance account. If a write-off is later

recovered, the recovery is credited to finance costs in profit or loss.

For AFS financial investments, the Group assesses at each reporting date

whether there is objective evidence that an investment or a group of

investments is impaired.

In the case of equity investments classified as AFS, objective evidence would

include a significant or prolonged decline in the fair value of the investment

below its cost. ‘Significant’ is evaluated against the original cost of the

investment and ‘prolonged’ against the period in which the fair value has been

below its original cost. When there is evidence of impairment, the cumulative

loss (measured as the difference between the acquisition cost and the current

fair value, less any impairment loss on that investment previously recognised in

profit or loss) is removed from OCI and recognised in profit or loss. Impairment

losses on equity investments are not reversed through profit or loss; increases

in their fair value after impairment are recognised in OCI.

In the case of debt instruments classified as AFS, the impairment is assessed

based on the same criteria as financial assets carried at amortised cost.

However, the amount recorded for impairment is the cumulative loss measured

as the difference between the amortised cost and the current fair value, less

any impairment loss on that investment previously recognised in profit or loss.

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(d) Impairment of financial assets (continued)

(ii) Available-for-sale (AFS) investments (continued)

4.16 Financial liabilities

(a) Initial recognition and measurement

(b) Subsequent measurement

(i) Financial liabilities at fair value through profit or loss

All financial liabilities are recognised initially at fair value and, in the case of loans

and borrowings and payables, net of directly attributable transaction costs.

The Group’s financial liabilities include trade and other payables, loans and

borrowings and financial guarantee contracts.

Future interest income continues to be accrued based on the reduced carrying

amount of the asset, using the rate of interest used to discount the future cash

flows for the purpose of measuring the impairment loss. The interest income is

recorded as part of finance income. If, in a subsequent year, the fair value of a

debt instrument increases and the increase can be objectively related to an

event occurring after the impairment loss was recognised in profit or loss, the

impairment loss is reversed through profit or loss.

Financial liabilities are classified, at initial recognition, as financial liabilities at fair

value through profit or loss, loans and borrowings, payables, or as derivatives

designated as hedging instruments in an effective hedge, as appropriate.

The measurement of financial liabilities depends on their classification, as described

below:

Financial liabilities at fair value through profit or loss include financial liabilities

held for trading and financial liabilities designated upon initial recognition as at

fair value through profit or loss.

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4.16 Financial liabilities (continued)


(i) Financial liabilities at fair value through profit or loss (continued)

(ii) Loans and borrowings

After initial recognition, interest-bearing loans and borrowings are

subsequently measured at amortised cost using the EIR method. Gains and

losses are recognised in profit or loss when the liabilities are derecognised as

well as through the EIR amortisation process.

Amortised cost is calculated by taking into account any discount or premium on

acquisition and fees or costs that are an integral part of the EIR. The EIR

amortisation is included as finance costs in profit or loss.

Financial liabilities are classified as held for trading if they are incurred for the

purpose of repurchasing in the near term. This category also includes

derivative financial instruments entered into by the Group that are not

designated as hedging instruments in hedge relationships as defined by MFRS

139. Separated embedded derivatives are also classified as held for trading

unless they are designated as effective hedging instruments.

Gains or losses on liabilities held for trading are recognised in profit or loss.

Financial liabilities designated upon initial recognition at fair value through

profit or loss are designated at the initial date of recognition, and only if the

criteria in MFRS 139 are satisfied. The Group has not designated any financial

liability at fair value through profit or loss.

This category generally applies to interest-bearing loans and borrowings.

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4.16 Financial liabilities (continued)

(c) Financial guarantee contracts

(d) Derecognition

(e) Offsetting of financial instruments

4.17 Derivative financial instruments

A financial liability is derecognised when the obligation under the liability is

discharged or cancelled, or expires. When an existing financial liability is replaced

by another from the same lender on substantially different terms, or the terms of an

existing liability are substantially modified, such an exchange or modification is

treated as the derecognition of the original liability and the recognition of a new

liability. The difference in the respective carrying amounts is recognised in profit or

loss.

Financial assets and financial liabilities are offset and the net amount is reported in

the consolidated statement of financial position if there is a currently enforceable

legal right to offset the recognised amounts and there is an intention to settle on a

net basis, to realise the assets and settle the liabilities simultaneously.

Financial guarantee contracts issued by the Group are those contracts that require

a payment to be made to reimburse the holder for a loss it incurs because the

specified debtor fails to make a payment when due in accordance with the terms of

a debt instrument. Financial guarantee contracts are recognised initially as a liability

at fair value, adjusted for transaction costs that are directly attributable to the

issuance of the guarantee. Subsequently, the liability is measured at the higher of

the best estimate of the expenditure required to settle the present obligation at the

reporting date and the amount recognised less cumulative amortisation.

Derivative financial instruments, such as forward currency contracts is used to hedge its

foreign currency risks. Such derivative financial instruments are initially recognised at fair

value on the date on which a derivative contract is entered into and are subsequently re-

measured at fair value. Derivatives are carried as financial assets when the fair value is

positive and as financial liabilities when the fair value is negative.

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4.17 Derivative financial instruments (continued)

4.18 Inventories

-

-

4.19 Impairment of non-financial assets

Inventories are stated at the lower of cost and net realisable value. Costs incurred in

bringing the inventories to their present location and condition are accounted for as

follows:

Finished goods and work-in-progress: costs of direct materials and labour and a

proportion of manufacturing overheads based on normal operating capacity but

excluding borrowing costs. These costs are assigned on a weighted average basis.

Net realisable value is the estimated selling price in the ordinary course of business less

estimated costs of completion and the estimated costs necessary to make the sale.

Raw materials and consumable supplies: purchase costs on a weighted average

basis.

At each reporting date, an assessment is made as to whether there is an indication that

an asset may be impaired. If any indication exists, or when annual impairment testing for

an asset is required, the asset’s recoverable amount is estimated. An asset’s

recoverable amount is the higher of an asset’s or cash-generating unit’s (CGU) fair value

less costs of disposal and its value in use. Recoverable amount is determined for an

individual asset unless the asset does not generate cash inflows that are largely

independent of those from other assets or groups of assets. When the carrying amount

of an asset or CGU exceeds its recoverable amount, the asset is considered impaired

and is written down to its recoverable amount.

The purchase contracts that meet the definition of a derivative under MFRS 139 are

recognised in profit or loss as cost of sales. Commodity contracts that are entered into

and continue to be held for the purpose of the receipt or delivery of a non-financial item

in accordance with the expected purchase, sale or usage requirements are held at cost.

Any gains or losses arising from changes in the fair value of derivatives are taken directly

to profit or loss.

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4.19 Impairment of non-financial assets (continued)

For assets other than goodwill, an assessment is made at each reporting date to

determine whether there is an indication that previously recognised impairment losses no

longer exist or have decreased. If such indication exists, the recoverable amount of the

asset or CGU is estimated. A previously recognised impairment loss is reversed only if

there has been a change in the assumptions used to determine the asset’s recoverable

amount since the last impairment loss was recognised. The reversal is limited so that the

carrying amount of the asset does not exceed its recoverable amount, nor 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.

Impairment calculation are based on detailed budgets and forecast calculations, which

are prepared separately for each CGU to which the individual assets are allocated.

These budgets and forecast calculations generally cover a period of five years. For

longer periods, a long-term growth rate is calculated and applied to project future cash

flows after the fifth year.

Impairment losses of continuing operations, including impairment on inventories, are

recognised in profit or loss in expense categories consistent with the function of the

impaired asset.

Goodwill is tested for impairment annually at reporting date and when circumstances

indicate that the carrying value may be impaired. Impairment is determined by assessing

the recoverable amount of each CGU (or group of CGUs) to which the goodwill relates.

When the recoverable amount of the CGU is less than its carrying amount, an

impairment loss is recognised. Impairment losses relating to goodwill cannot be reversed

in future periods.

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. In determining fair value less costs of

disposal, recent market transactions are taken into account. If no such transactions can

be identified, an appropriate valuation model is used. These calculations are

corroborated by valuation multiples, quoted share prices for publicly traded companies or

other available fair value indicators.

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4.20 Cash and short-term deposits

4.21 Provisions

4.22 Share capital and share issuance expenses

4.23 Treasury shares

4.24 Contingent assets

Provisions are recognised when there is a present obligation (legal or constructive) as a

result of a past event and 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. When it is expected that some or all of a provision

to be reimbursed, for example, under an insurance contract, the reimbursement is

recognised as a separate asset, but only when the reimbursement is virtually certain.

The expense relating to a provision is presented in profit or loss net of any

reimbursement.

Own equity instruments that are reacquired (treasury shares) are recognised at cost and

deducted from equity. No gain or loss is recognised in profit or loss on the purchase,

sale, issue or cancellation of such equity instruments. Any difference between the

carrying amount and the consideration, if reissued, is recognised in share premium.

An equity instrument is any contract that evidences a residual interest in the assets of

the Group and of the Company after deducting all of its liabilities. Ordinary shares are

equity instruments and are recorded at the proceeds received, net of directly attributable

incremental transaction costs.

Cash and short-term deposits in the statement of financial position comprise cash at

banks and on hand and short-term deposits with a maturity of three months or less.

For the purpose of the consolidated statement cash flows, cash and bank balances

consist of cash and short-term deposits as defined above.

Where it is not probable that there is an inflow of economic benefits, or the amount

cannot be estimated reliably, the asset is not recognised in the statements of financial

position and is disclosed as a contingent asset, unless the probability of inflow of

economic benefits is remote. Possible obligations, whose existence will only be

confirmed by the occurence or non-occurence of one or more future events, are also

disclosed as contingent assets unless the probability of inflow of economic benefits is

remote.

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4.25 Segment reporting

5. New and amended standards and interpretations

MFRS 1

MFRS 1

MFRS 3 MFRS 3 Business Combinations (IFRS 3 issued by IASB in March 2004)

MFRS 7

MFRS 10 Consolidated Financial Statements

MFRS 10

MFRS 11 Joint Arrangements

MFRS 11 Amendments to MFRS 11 Joint Arrangements (Transition Guidance)

MFRS 12 Disclosure of Interests in Other Entities

MFRS 12

MFRS 13 Fair Value Measurement

MFRS 101

MFRS 101

MFRS 116

MFRS 119 Employee Benefits

MFRS 127

Amendments to MFRS 1 First-time Adoption of Malaysian Financial Reporting

Standards (Government Loans)

Amendments to MFRS 1 First-time Adoption of Malaysian Financial Reporting

Standards (Annual Improvements 2009 - 2011 Cycle)

Amendments to MFRS 7 Financial Instruments: Disclosures (Offsetting

Financial Assets and Financial Liabilities)

Amendments to MFRS 10 Consolidated Financial Statements (Transition

Guidance)

Amendments to MFRS 12 Disclosure of Interests in Other Entities (Transition

Guidance)

Amendments to MFRS 101 Presentation of Financial Statements (Presentation

of Items of Other Comprehensive Income)

Amendments to MFRS 101 Presentation of Financial Statements (Annual

Improvements 2009 - 2011 Cycle)

Amendments to MFRS 116 Property, Plant and Equipment (Annual


Consolidated and Separate Financial Statements (IAS 27 as revised by IASB

in December 2003)

The following new and amended standards and interpretations, which became effective during

the year, are applied for the first time:

For management purposes, the Group is organised into operating segments based on

their geographical location which are independently managed by the respective segment

managers responsible for the performance of the respective segments under their

charge. The segment managers report directly to the management of the Company who

regularly review the segment results in order to allocate resources to the segments and

to assess the segment performance. Additional disclosures on each of these segments

are shown in Note 35, including the factors used to identify the reportable segments and

the measurement basis of segment information.

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5. New and amended standards and interpretations (continued)

MFRS 127 Separate Financial Statements

MFRS 128 Investments in Associates and Joint Ventures

MFRS 132

MFRS 134

IC Int. 2

IC Int. 20

MFRS 13 Fair Value Measurement

These amendments further provide clarification on the requirements for comparative

information (consequential amendment to MFRS 101).

MFRS 13 establishes a single source of guidance under MFRS for all fair value

measurements. MFRS 13 does not change when an entity is required to use fair value, but

rather provides guidance on how to measure fair value under MFRS when fair value is required

or permitted.

Amendments to MFRS 132 Financial Instruments: Presentation (Annual


Amendments to MFRS 134 Interim Financial Reporting (Annual Improvements

2009 - 2011 Cycle)

Amendments to IC Int. 2 Members' Shares in Co-operative Entities and Similar

Instruments (Annual Improvements 2009 - 2011 Cycle)

Stripping Costs in the Production Phase of a Surface Mine

Adoption of the above standards and interpretations did not have any effect on the financial

performance or position of the Group and the Company except for those discussed below:

Amendments to MFRS 1 First-time Adoption of Malaysian Financial Reporting Standards

(Annual Improvements 2009 - 2011 Cycle)

These amendments clarify whether an entity can apply MFRS 1 if it meets the criteria for

applying MFRS 1 and has applied (a) MFRS 1 in a previous reporting period or (b) MFRSs in a

previous reporting period when MFRS 1 did not exist.

The amendments also address the treatment of borrowing cost previously capitalised and the

accounting treatment after the transition date for borrowings costs that relate to qualifying

assets under construction at transition date.

MFRS 12 Disclosures of Interests in Other Entities

MFRS 12 includes all disclosure requirements for interests in subsidiaries, joint arrangements,

associates and structured entities. A number of new disclosures are required. This standard

affects disclosures only and has no impact on the Group’s financial position or performance.

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5. New and amended standards and interpretations (continued)

6. New and amended standards issued but not yet effective

Effective for annual periods

Description beginning on or after

1 January 2014

1 January 2014

1 January 2014

1 January 2014

Amendments to MFRS 101: Presentation of Financial Statements (Presentation of Items of

Other Comprehensive Income)

The amendments to MFRS 101 change the grouping of items presented in other

comprehensive income. Items that could be reclassified (or recycled) to profit or loss at a

future point in time would be presented separately from items which will never be reclassified.

The amendments affect presentation only and have no impact on the Group's financial

position and performance.

Amendments to MFRS 101: Presentation of Financial Statements (Annual Improvements 2009

- 2011 Cycle)

These amendments clarify the requirements for comparative information for the statement of

financial position when an equity (a) changes accounting policies or makes retrospective

restatements or reclassification; and (b) provides financial statements beyond the minimum

comparative information requirements.

MFRS 127 Separate Financial Statements

As a consequence of the new MFRS 10 and MFRS 12, MFRS 127 is limited to accounting for

subsidiaries, jointly controlled entities and associates in separate financial statements.

MFRS 128 Investments in Associates and Joint Ventures

As a consequence of the new MFRS 11 and MFRS 12, MFRS 128 is renamed as MFRS 128

Investments in Associates and Joint Ventures. This new standard describes the application of

the equity method to investments in joint ventures in addition to associates.

New and amended standards issued but not yet effective up to the date of issuance of these

financial statements are as follows:

Amendments to MFRS 10 Consolidated Financial Statements

(Investment Entities)

Amendments to MFRS 12 Disclosure of Interests in Other

Entities (Investment Entities)

Amendments to MFRS 127 Consolidated and Separate Financial

Statements (Investment Entities)

Amendments to MFRS 132 Financial Instruments: Presentation

(Offsetting Financial Assets and Financial Liabilities)

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6. New and amended standards issued but not yet effective (continued)

Effective for annual periods

Description beginning on or after

1 January 2014

1 January 2014

1 January 2014

1 July 2014

1 July 2014

1 July 2014

To be announced

To be announced

To be announced

MFRS 9 Financial instruments

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

Annual Improvements to MFRSs 2010–2012 Cycle

Annual Improvements to MFRSs 2011–2013 Cycle

MFRS 9 Financial Instruments (IFRS 9 issued by IASB in

November 2009)

MFRS 9 Financial Instruments (IFRS 9 issued by IASB in

October 2010)

MFRS 9 Financial Instruments: Hedge Accounting and

amendments to MFRS 9, MFRS 7 and MFRS 139

Amendments to MFRS 136 Recoverable Amount Disclosures for

Non-Financial Assets

Amendments to MFRS 139 (Novation of Derivatives and

Continuation of Hedge Accounting)

IC Interpretation 21 Levies

Amendments to MFRS 119 Defined Benefit Plans: Employee

Contributions

The directors expect that the adoption of the above standards and interpretations will have no

material impact on the financial statements in the period of initial application except as

disclosed below:

MFRS 9, as issued, reflects the first phase of the work on 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 March 2012, moved the mandatory effective date to 1

January 2015. Subsequently, on 14 February 2014, it was announced that the new effective

date will be decided when the project is closer to completion. The adoption of the first phase of

MFRS 9 will have an effect on the classification and measurement of the financial assets, but

will not have an impact on classification and measurements of the financial liabilities. The

effect will be quantified in conjunction with the other phases, when the final standard including

all phases is issued.

These amendments provide relief from discontinuing hedge accounting when novation of a

derivative designated as a hedging instrument meets certain criteria. No derivatives were

novated during the current period. However, these amendments would be considered for future

novation.

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7. Significant accounting judgments and estimates

7.1 Judgments made in applying accounting policies

7.2 Estimates and assumptions

(a) Useful lives of plant and machinery

(b) Impairment of loans and receivables

The preparation of these financial statements requires management to make judgments,

estimates and assumptions that affect the reported amounts of revenues, expenses, assets

and liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities.

Uncertainty about these assumptions and estimates could result in outcomes that require a

material adjustment to the carrying amount of assets or liabilities affected in future periods.

The cost of plant and machinery for the manufacture of tiles is depreciated on a

straight-line basis over the assets’ useful lives. Management estimates the useful

lives of these plant and machinery to be 5 to 12 years. These are common life

expectancies applied in the industry. Changes in the expected level of usage and

technological developments could impact the economic useful lives and the residual

values of these assets, therefore future depreciation charges could be revised.

The key assumptions concerning the future and other key sources of estimation

uncertainty at the reporting date, that have a significant risk of causing a material

adjustment to the carrying amounts of assets and liabilities within the next financial year,

are described below. The Group based its assumptions and estimates on parameters

available when the financial statements were prepared. Existing circumstances and

assumptions about future developments, however, may change due to market changes

or circumstances arising beyond the control of the Group. Such changes are reflected in

the assumptions when they occur.

The Group assesses 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 considers factors such as the probability of insolvency or

significant financial difficulties of the debtor and default or significant delay in

payments.

In the process of applying the Group’s accounting policies, management has not made

any critical judgments, apart from those involving estimations, which could have a

significant effect on the amounts recognised in the financial statements.

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7. Significant accounting judgements and estimates (continued)

7.2 Estimates and assumptions (continued)

(b) Impairment of loans and receivables (continued)

(c) Taxes

(d) Fair value measurement of financial instruments

Contingent consideration, resulting from business combinations, is valued at fair

value at the acquisition date as part of the business combination. When contingent

consideration meets the defination of a financial asset, it is subsequently re-

measured to fair value at each reporting date. The determination of the fair value is

based on discounted cash flows. The key assumptions take into considertaion the

probability of meeting performance target and the discount factor.

As part of the accounting for the acquisition of White Horse Ceramic Industries

(Vietnam) Co., Ltd., contingent consideration with an estimated fair value of

RM18,371,000 was recognised at the acquisition date and re-measured to

RM19,023,000 as at the reporting date. Future developments may require further

revisions to the estimate. The maximum consideration to be received is

USD12,000,000. The contingent consideration is classified as other financial asset.

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 loans and receivable

at the reporting date is disclosed in Note 20. If the present value of estimated future

cash flows varies by 10% from management’s estimates, the Group’s allowance for

impairment will increase/decrease by RM33,000 (2012: RM61,000).

Deferred tax assets are recognised for unutilised tax losses and unused tax credits

to the extent that it is probable that taxable profits will be available against which the

losses and credits can be utilised. Significant management judgment is required to

determine the amount of deferred tax assets that can be recognised, based upon

the likely timing and the level of future taxable profits together with future tax

planning strategies.

As at the end of the reporting period as disclosed in Note 25, the Group has

unutilised tax losses and unabsorbed capital allowances amounting in total to

RM43,607,000 (2012: RM Nil) for which deferred tax assets have not been

recognised. The Group has no taxable temporary differences nor any tax planning

opportunities available that could partly support the recognition of these losses and

credits as deferred tax assets.

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8. Revenue

Group Company

2013 2012 2013 2012

RM'000 RM'000 RM'000 RM'000

Gross dividends from a subsidiary - - 26,000 15,000

Management fees from a subsidiary - - 144 144

Sale of goods 646,814 586,038 - -

646,814 586,038 26,144 15,144

9. Profit before tax

Group Company

2013 2012 2013 2012

RM'000 RM'000 RM'000 RM'000

Auditors’ remuneration

- Statutory audit

Company's auditors 186 134 39 36

Other auditors 83 79 - -

Bad debts written off 86 11 - -

Impairment loss on trade receivables 2,275 40 - -

Amortisation of prepaid land lease

payments 1,084 1,084 - -

Depreciation of property, plant

and equipment 42,521 40,376 - -

Non-executive directors'

remuneration 1,510 1,385 439 323

Property, plant and equipment

written off 32 138 - -

Operating lease:

- minimum lease payments for

land and buildings 3,075 2,541 - -

- income (565) (333) - -

Employee benefits expense

(Note 10) 85,431 83,949 264 176

Net foreign exchange losses 3,235 2,900 1,378 -

Gain on disposal of property, plant

and equipment (182) (146) - -

Negative goodwill written off (2,220) - - -

Reversal of allowance for impairment

of trade receivables (16) (156) - -

The following items have been included in arriving at profit before tax:

Revenue of the Group and of the Company consists of the following:

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10. Employee benefits expense

Group Company

2013 2012 2013 2012

RM'000 RM'000 RM'000 RM'000

Wages and salaries 74,585 73,095 264 176

Social security contributions 707 697 - -

Contributions to defined contribution

plan 5,963 6,129 - -

Other staff related expenses 4,176 4,028 - -

85,431 83,949 264 176

11. Directors' remuneration

Group Company

2013 2012 2013 2012

RM'000 RM'000 RM'000 RM'000

Executive:

Salaries and other emoluments 711 714 - -

Fees

- current year's provision 220 176 220 176

- underprovision in prior year 44 - 44 -

Bonus 104 93 - -

Contributions to defined

contribution plan 49 53 - -

Benefits-in-kind 81 115 - -

1,209 1,151 264 176

Non executive:

Salaries and other emoluments 718 739 9 13

Fees

- current year's provision 370 310 370 310

- underprovision in prior year 60 - 60 -

Bonus 94 84 - -



Social security costs 1 1 - -


# 1,335 1,234 439 323

Included in employee benefits expense of the Group are executive directors' remuneration

amounting to RM1,128,000 (2012: RM1,036,000) as further disclosed in Note 11.

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11. Directors' remuneration (continued)

Group Company

2013 2012 2013 2012

RM'000 RM'000 RM'000 RM'000

Other Directors:

Executive directors of the subsidiaries:

Salaries and other emoluments 119 120 - -

Fees 60 44 - -

Bonus 13 11 - -




202 190 - -

Total excluding benefits in kind 2,638 2,421 703 499

#

2013 2012

Number of Directors Number of Directors

Non- Non-

Executive executive Executive executive

Below RM50,000 - 3 - 3

RM150,001 – RM200,000 - - - 1

RM200,001 – RM250,000 1 1 1 1

RM250,001 – RM300,000 - 1 - -

RM300,001 – RM350,000 - 1 - 1

RM400,001 – RM450,000 - - 1 1

RM450,001 – RM500,000 1 1 - -

RM500,001 – RM550,000 1 - 1 -

3 7 3 7

The number of directors of the Company whose total remuneration during the year fall within

the following bands is analysed below:

This includes remuneration of RM1,176,000 (2012: RM1,131,000) paid to non-executive

directors of the Company, who are executive directors of the subsidiaries.

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12. Income tax expense

Major components of income tax expense

Group Company

2013 2012 2013 2012

RM'000 RM'000 RM'000 RM'000

Statement of comprehensive

income:

Current income tax:

- Malaysian income tax 23,182 15,619 6,314 3,629

- Foreign tax 872 586 - -

Over provision in prior years (346) (117) - -

23,708 16,088 6,314 3,629

Deferred income tax (Note 25):

- Origination and reversal of

temporary differences (973) (2,352) - -

- Under/(over) provision in prior years 2,679 (3,139) - -

1,706 (5,491) - -

Income tax expense

recognised in profit or loss 25,414 10,597 6,314 3,629

Reconciliation between tax expense and accounting profit

2013 2012

Group RM'000 RM'000

Profit before tax 73,596 48,772

Taxation at Malaysian statutory tax rate of 25% (2012: 25%) 18,399 12,193

Different tax rates in other countries (220) (125)

Adjustments:

Expenses not deductible for tax purposes 3,194 2,047

Income not subject to tax (655) (166)

Deferred tax asset not recognised in respect of

current year's tax losses 2,653 -

Over provision of income tax in prior years (346) (117)

Under/(over) provision of deferred tax in prior years 2,679 (3,139)

Others (290) (96)

Income tax expense recognised in profit or loss 25,414 10,597

The reconciliation between tax expense and the product of accounting profit multiplied by the

applicable corporate tax rate for the years ended 31 December 2013 and 2012 are as follows:

The major components of income tax expense for the years ended 31 December 2013 and

2012 are:

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12. Income tax expense (continued)

Reconciliation between tax expense and accounting profit (continued)

2013 2012

RM'000 RM'000

Company

Profit before tax 22,679 14,134

Taxation at Malaysian statutory tax rate of 25% (2012: 25%) 5,670 3,534

Adjustment:

Expenses not deductible for tax purposes 644 95

Income tax expense recognised in profit or loss 6,314 3,629

13. Earnings per share

(a) Basic

2013 2012

Profit net of tax attributable to owners of the

parent (RM'000) 48,182 38,175

Weighted average number of ordinary shares in

issue ('000) * 229,435 229,643

Basic earnings per share (sen) 21.0 16.6

*

The Malaysian corporate income tax rate is expected to reduce from 25% to 24% with effect

from year of assessment 2016 as announced in the 2014 Budget. The reduction in income tax

rate has no significant impact to the Group and the Company.

Group

The weighted average number of shares takes into account the weighted average

effect of changes in treasury shares transactions during the year.

Basic earnings per share amounts are calculated by dividing profit for the year, net of tax,

attributable to owners of the parent by the weighted average number of ordinary shares

outstanding during the financial year.

The following tables reflect the profit and share data used in the computation of basic

earnings per share for the years ended 31 December:

Taxation for other jurisdictions is calculated at the rates prevailing in the respective

jurisdictions. The above reconciliation is prepared by aggregating separate reconciliations for

each national jurisdiction.

Domestic income tax is calculated at the Malaysian statutory tax rate of 25% (2012: 25%) of

the estimated assessable profit for the year.

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13. Earnings per share (continued)

(b) Diluted

14. Property, plant and equipment

Plant,

machinery

* Land and and # Other

buildings equipment assets Total

RM'000 RM'000 RM'000 RM'000

Group

Cost:

At 1 January 2012 301,862 547,499 28,376 877,737

Additions 6,786 10,558 4,195 21,539

Disposals (1) (635) (822) (1,458)

Written off - (1,490) (288) (1,778)

Exchange differences 295 (11) (102) 182

At 31 December 2012 and

1 January 2013 308,942 555,921 31,359 896,222

Acquisition of subsidiary 31,845 52,169 625 84,639

Additions 717 12,281 916 13,914

Reclassification - (337) (1,697) (2,034)

Disposals (5) (1,041) (152) (1,198)

Written off (6) (628) (387) (1,021)

Exchange differences 1,341 941 258 2,540

At 31 December 2013 342,834 619,306 30,922 993,062

There is no diluted earnings per share as the Company does not have any dilutive

potential ordinary shares.

55

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14. Property, plant and equipment (continued)

Plant,

machinery

* Land and and # Other

buildings equipment assets Total

RM'000 RM'000 RM'000 RM'000

Group

Accumulated depreciation

and impairment:

At 1 January 2012 54,220 378,785 22,803 455,808

Charge for the year 6,367 31,323 2,686 40,376

Disposals - (538) (717) (1,255)

Written off - (1,384) (256) (1,640)

Exchange differences 90 (13) (41) 36

At 31 December 2012 and

1 January 2013 60,677 408,173 24,475 493,325

Charge for the year 7,591 32,245 2,685 42,521

Reclassification - (337) (1,697) (2,034)

Disposals (1) (1,022) (147) (1,170)

Written off (2) (606) (381) (989)

Exchange differences 300 1 150 451

At 31 December 2012 68,565 438,454 25,085 532,104

Net carrying amount

At 31 December 2012 248,265 147,748 6,884 402,897

At 31 December 2013 274,269 180,852 5,837 460,958

# Other assets comprise office equipment, furniture, fixtures, computers, renovation and

motor vehicles.

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* Land and buildings

Long term

Freehold leasehold

land land Buildings Total

RM'000 RM'000 RM'000 RM'000

Cost:

At 1 January 2012 10,800 55,499 235,563 301,862

Additions - - 6,786 6,786

Disposal - - (1) (1)

Exchange differences - - 295 295

At 31 December 2012

and 1 January 2013 10,800 55,499 242,643 308,942

Acquisition of subsidiary 31,845 31,845

Additions - - 717 717


Written off - - (6) (6)

Exchange differences - - 1,341 1,341

At 31 December 2013 10,800 55,499 276,535 342,834

Accumulated depreciation:

At 1 January 2012 - 5,140 49,080 54,220

Charge for the year - 770 5,597 6,367


At 31 December 2012

and 1 January 2013 - 5,910 54,767 60,677

Charge for the year - 891 6,700 7,591


Written off - - (2) (2)


At 31 December 2013 - 6,801 61,764 68,565

Net carrying amount

At 31 December 2012 10,800 49,589 187,876 248,265

At 31 December 2013 10,800 48,698 214,771 274,269

(a) The carrying amount of motor vehicle registered in the name of a director and held in trust

on behalf of the Group amounted to RM Nil (2012: RM56,000).

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(b)

Group

2013 2012

RM'000 RM'000

Buildings 31,328 -

Plant, machinery and equipment 43,309 -

74,637 -

(c)

15. Prepaid land lease payments

2013 2012

RM'000 RM'000

Cost:

At 1 January 22,429 22,440

Exchange differences 3 (11)

At 31 December 22,432 22,429

Accumulated amortisation:

At 1 January 9,575 8,495

Amortisation for the year 1,084 1,084

Exchange differences 1 (4)

At 31 December 10,660 9,575

Net carrying amount 11,772 12,854

Amount to be amortised:

- Not later than one year 1,084 1,084

- Later than one year but not later than five years 4,336 4,336

- Later than five years 6,352 7,434

16. Investments in subsidiaries

Company

2013 2012

RM'000 RM'000

Unquoted shares, at cost 223,384 140,000

Prepaid land lease payments are subject to negative pledge in relation to the bank borrowings

granted to the Group as referred to in Note 23.

Group

All assets were subject to negative pledge in relation to the bank borrowings granted to

the Group as referred to in Note 23.

The net carrying amounts of property, plant and equipment pledged for borrowings (Note

23) are as follow:

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16. Investments in subsidiaries (continued)

Details of the subsidiaries are as follows:

Name of Country of Proportion (%) of

subsidiaries incorporation Principal activities ownership interest

2013 2012

Held by the Company:

White Horse Malaysia Manufacture and 100 100

Ceramic Industries distribution of ceramic and

Sdn. Bhd. 1 homogeneous tiles

White Horse Malaysia 100 100

Marketing Sdn. Bhd. 1

White Horse Vietnam Manufacture and 100 -

Ceramic Industries distribution of ceramic and

(Vietnam) Co., Ltd. 2 homogeneous tiles

Held through White Horse Ceramic Industries Sdn. Bhd.:

Singapore 100 100

100 100

White Horse Thailand 100 100

Ceramic

(Thailand) Ltd. 3

White Horse India - 100

Ceramic (India)

Pte. Ltd. *

PT WH Ceramic Indonesia 100 100

Indonesia 3

White Horse Cambodia 100 100

Ceramic

(Cambodia) Ltd. 1

Grand Mark People's 100 100

International Republic

Co., Ltd. 3

of China

Distribution of ceramic

and homogeneous tiles



Ceased operations

White Horse Ceramic

(Phil.) Inc. 3

Distribution of ceramic,

building materials, and

hardware

Marketing and

distribution of building

materials



Philippines



White Horse Ceramic (S)

Pte. Ltd. 3



# #

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1 Audited by Ernst & Young, Malaysia2 Audited by member firm of Ernst & Young Global3 Audited by firms other than Ernst & Young

* White Horse Ceramic (India) Pte. Ltd. had been struck off on 5 July 2013.

#

(i) White Horse Ceramic Industries Sdn. Bhd. 99%

(ii) White Horse Ceramic (S) Pte. Ltd. 1%

Acquisition of a subsidiary

2013

RM'000

Revenue 27,616

Loss for the year (6,374)

Carrying

Fair value amount

RM'000 RM'000

Property, plant and equipment 84,639 62,991

Trade and other receivables 13,752 13,752

Inventories 97,399 97,399

Tax recoverable 557 999

Cash and bank balances 4,834 4,834

201,181 179,975

The acquired subsidiary has contributed the following results to the Group:

If the acquisition had occurred on 1 January 2013, the Group's revenue and loss for the year

would have been RM707,049,000 and RM37,433,000 respectively.

The fair values of the identifiable assets and liabilities of WHV as at the date of acquisition

were:

On 15 October 2013, the Company acquired 100% of the equity interest in White Horse

Ceramic Industries (Vietnam) Co., Ltd. ("WHV"), a company incorporated in Vietnam for a cash

consideration of USD21,000,000 from White Horse Investment (S) Pte. Ltd. ("WHI"). As a

result, the Company became the holding company of WHV.

The total equity interests held by the Group is 100% and it is held by the following

subsidiaries:

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Acquisition of a subsidiary (continued)

Carrying

Fair value amount

RM'000 RM'000

Trade and other payables 113,016 113,016

Loans and borrowings 31,315 31,315

Deferred tax liabilities 8,784 3,372

153,115 147,703

Net identifiable assets 48,066 32,272

Group's interest in the fair value of net identifiable assets 48,066

Negative goodwill (2,220)

Total cost of acquisition 45,846

The effect of the acquisition on cash flows is as follows:

RM'000

Consideration settled in cash 45,846

Cash and cash equivalents of subsidiary acquired (4,834)

Net cash outflow of the Group 41,012

17. Investment in joint venture

2013 2012

RM'000 RM'000

Unquoted shares, at cost 379 379

Share of post-acquisition reserves (428) (312)

Exchange differences 76 84

27 151

Details of the jointly controlled entity are as follows:

Name of joint Country of Proportion (%) of

venture incorporation Principal activities ownership interest

2013 2012

WH Ceramic Australia 50 50

(Australia) Pty Ltd

Marketing and

distribution of building

materials

Group

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17. Investment in joint venture (continued)

2013 2012

RM'000 RM'000

Assets and liabilities

Current assets 513 1,384

Non-current assets - 23

Total assets 513 1,407

Current liabilities 486 1,256

Total liabilities 486 1,256

Income and expenses:

Income - 2,729

Expenses (116) (2,813)

18. Other asset

Significant unobservable valuation inputs are provided below:

Assumed probability-adjusted profit after tax of WHV USD5,600,000

Discount rate 2.60%

RM'000

Opening balance as at 1 January 2013 -

Asset arising on business combination 18,371

Unrealised fair value changes recognised in profit or loss 652

Closing balance as at 31 December 2013 19,023

Significant increase (decrease) in the profit after tax of WHV would result in higher (lower) fair

value of the contingent indemnification asset, while significant increase (decrease) in the

discount rate would result in lower (higher) fair value of the asset.

A reconciliation of fair value measurement of the contingent indemnification asset is provided

below:

This represents the contingent indemnification asset recognised on the acquisition of WHV.

WHI, the selling shareholder of WHV guarantees that WHV will achieve cumulative adjusted

profit after tax of not less than USD12,000,000 from financial period 2013 to 2016. In the event

there is a total guaranteed profit shortfall, WHI has contractually agreed to indemnify the

Company such shortfall. A contingent indemnification asset of RM19,023,000, has been

recognised by the Group and the Company based on the latest information available. The

indemnification asset is deducted from consideration payable for the business combination.

The aggregate amounts of each of the current assets, non-current assets, current liabilities,

income and expenses related to the Group’s interests in the jointly-controlled entity are as

follows:

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19. Inventories

Group

2013 2012

RM'000 RM'000

Cost

Raw materials 64,728 39,493

Work-in-progress 14,694 9,574

Finished goods 245,549 198,754

Packing materials 1,710 1,707

Abrasive stones 1,969 1,483

Consumable supplies 22,600 10,854

351,250 261,865

Net realisable value

Raw materials 2,347 2,383

Finished goods 15,408 13,388

369,005 277,636

20. Trade and other receivables

Group

2013 2012 2013 2012

Current RM'000 RM'000 RM'000 RM'000

Trade receivables

Third parties 106,090 98,992 - -

Due from a jointly controlled entity 1,141 2,206 - -

Due from companies in which

certain directors of the Company

have interests:

- Teobros Ceramica Sdn. Bhd. * 28,388 30,641 - -

- White Horse Ceramic

Industries (Vietnam) Co. Ltd. * - 13,696 - -

- White Horse Ceramic Co., Ltd. * 2,147 2,119 - -

137,766 147,654 - -

Less : Allowance for impairment

(third parties) (7,284) (5,185) - -

Trade receivables, net 130,482 142,469 - -

Other receivables

Due from a subsidiary - - 58,690 108,669

Other receivables and deposits 7,420 2,760 - -

7,420 2,760 58,690 108,669

137,902 145,229 58,690 108,669

Total trade and other receivables 137,902 145,229 58,690 108,669

Add: Cash and bank

balances (Note 22) 128,124 57,534 286 211

Total loans and receivables 266,026 202,763 58,976 108,880

Company

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20. Trade and receivables (continued)

*

(a) Trade receivables

Ageing analysis of trade receivables

The ageing anaylsis of the Group's trade receivables is as follows:

2013 2012

RM'000 RM'000

Neither past due nor impaired 91,098 99,030

1 to 30 days past due not impaired 12,239 12,315




More than 121 days past due not impaired 17,864 14,095

39,046 42,827

Impaired 7,622 5,797

137,766 147,654

Receivables that are neither past due nor impaired

Receivables that are past due but not impaired

Trade and other receivables that are neither past due nor impaired are creditworthy

debtors with good payment records with the Group.

The Group has no significant concentration of credit risk that may arise from exposure to

a single or to groups of debtors except for the amounts due from companies in which

certain directors have interests as disclosed above.

The Group's normal trade credit term ranges from 30 to 180 days. Other credit terms are

assessed and approved on a case-by-case basis. They are recognised at their original

invoice amounts which represent their fair values on initial recognition.

These companies are substantially owned by certain directors of the Company as

disclosed in Note 29.

None of the Group’s trade receivables that are neither past due nor impaired have been

renegotiated during the financial year.

The Group has trade receivables amounting to RM39,046,000 (2012: RM42,827,000) that

are past due at the reporting date but not impaired. The directors are of the opinion that

the receivables are collectible in view of long term business relationships with the

customers. These receivables are unsecured in nature.

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20. Trade and receivables (continued)

(a) Trade receivables (continued)

Receivables that are impaired

2013 2012

RM'000 RM'000

Trade receivable - nominal amounts 7,622 5,797

Less: Allowance for impairment (7,284) (5,185)

338 612

Movement in allowance accounts:

2013 2012

RM'000 RM'000

At 1 January 5,185 5,303

Acquisition of subsidiary 222 -

Charge for the year (Note 9) 2,275 40

Written off (378) -

Reversal of impairment losses (Note 9) (16) (156)

Exchange difference (4) (2)

At 31 December 7,284 5,185

(b) Related party balances

21. Other current assets

Group Company

2013 2012 2013 2012

RM'000 RM'000 RM'000 RM'000

Prepaid operating expenses 8,071 6,461 76 76

Advances to suppliers of raw

materials and property, plant and

equipment 25,681 15,751 - -

33,752 22,212 76 76

Amount due from a subsidiary is non-interest bearing, unsecured and repayable on

demand.

The Group’s trade receivables that are impaired at the reporting date and the movement

of the allowance accounts used to record the impairment are as follows:

Trade receivables that are individually determined to be impaired at the reporting date

relate to debtors that are in significant financial difficulties and have defaulted on

payments. These receivables are not secured by any collateral or credit enhancements.

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22. Cash and bank balances

Group Company

2013 2012 2013 2012

RM'000 RM'000 RM'000 RM'000

Cash on hand and at banks 38,355 34,350 286 211

Deposits with banks 89,769 23,184 - -

Cash and bank balances 128,124 57,534 286 211

23. Loans and borrowings

Group

2013 2012

Maturity RM'000 RM'000

Current

Secured:

USD bank loan at COF + 1.75% p.a. 2014 11,947 -

Unsecured:

Bankers’ acceptances at 3.37% (2012: 3.37%) p.a. 2014 37,683 23,532

Export credit refinancing at 3.26% p.a. 2014 - 9,384

Revolving credits at 2.55% (2012: 2.55%) p.a. 2014 146,654 102,726

196,284 135,642

Non-current

Secured:

USD bank loan at COF + 1.75% p.a. 2015 - 2017 2,954 -

2,954 -

Total loans and borrowings 199,238 135,642

Group

2013 2012

RM'000 RM'000

On demand or within one year 196,284 135,642

More than 1 year and less than 2 years 985 -

More than 2 years and less than 5 years 1,969 -

199,238 135,642

The remaining maturities of the loans and borrowings as at 31 December 2013 are as follows:

Short-term deposits are made for varying periods with maturity of less than three months

depending on the immediate cash requirements of the Group, and earn interest at the

respective short-term deposit rates. The weighted average effective interest rates as at 31

December 2013 for the Group was 2.66% (2012: 2.85%) per annum.

Bank balances of the Group amounting to RM41,000 (2012: RM34,000) are held under trust by

certain managerial staff of the Group.

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23. Loans and borrowings (continued)

USD bank loan at COF + 1.75%

24. Trade and other payables

Group Company

2013 2012 2013 2012

RM'000 RM'000 RM'000 RM'000

Current

Trade payables

Third parties 46,682 39,367 - -

Due to a company in which certain

directors of the Company have

interests:

- Teobros Ceramica Sdn. Bhd. 184 - - -

46,866 39,367 - -

Other payables



interests -White Horse Investment

(S) Pte. Ltd.* 33,867 - 25,596 -

Other payables and accruals 45,429 39,075 633 522

79,296 39,075 26,229 522

126,162 78,442 26,229 522

Non-current

Other payable



interests -White Horse Investment

(S) Pte. Ltd.* 86,691 - 33,661 -

Total trade and other payables 212,853 78,442 59,890 522

Add: Loans and borrowings (Note 23) 199,238 135,642 - -

Total financial liabilities carried

at amortised cost 412,091 214,084 59,890 522

*

The loans and borrowings are subject to negative pledge over all assets of the Group as

referred to in Notes 14 and 15.

A company owned substantially by certain directors of the Company, namely Liao Yuan

Shun, Liao Jung Chu, Liao Shen Hua, Teo Swee Teng, Teo Kim Lap, Teo Kim Tay and

Cheng Soon Mong.

This loan is secured by a mortgage over certain of the Group's property, plant and equipment

(Note 14) and joint and several guarantee of directors of a subsidiary.

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24. Trade and other payables (continued)

(a) Trade payables

(b) Related party balances

25. Deferred tax

Group

2013 2012

RM'000 RM'000

At 1 January 20,357 26,063

Acquisition of subsidiary 8,965 -

Recognised in profit or loss (Note 12) 1,706 (5,491)

Exchange differences (24) (215)

At 31 December 31,004 20,357

Deferred Deferred

tax liabilities tax assets

Accelerated

capital Provisions

allowances and others Total

RM'000 RM'000 RM'000

At 1 January 2012 35,301 (9,238) 26,063

Recognised in profit or loss (5,389) (102) (5,491)

Exchange differences 5 (220) (215)

At 31 December 2012 29,917 (9,560) 20,357

Recognised in profit or loss 680 1,026 1,706

Acquisition of subsidiary - 8,965 8,965

Exchange differences 6 (30) (24)

At 31 December 2013 30,603 401 31,004

Unregonised tax losses

At the reporting date, the Group has tax losses of approximately RM43,607,000 (2012: RM nil)

that are available for offset against future taxable profits of the companies in which the losses

arose, for which no deferred tax asset is recognised due to uncertainty of its recoverability.

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

The amounts are non-interest bearing. The normal trade credit terms granted to the

Group range from 30 to 90 days.

Amounts due to a company in which certain directors of the Company have interests are

unsecured and non-interest bearing.

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26. Share capital, share premium and treasury shares

Total

Share Share share

capital capital capital

(Issued and Treasury (Issued and Share and share Treasury

fully paid) shares fully paid) premium premium shares

'000 '000 RM'000 RM'000 RM'000 RM'000

Group and Company

At 1 January 2012 240,000 10,322 240,000 6,936 246,936 (15,838)

Purchase of treasury shares - 161 - - - (266)

At 31 December 2012 and 1 January 2013 240,000 10,483 240,000 6,936 246,936 (16,104)

Purchase of treasury shares - 111 - - - (180)

At 31 December 2013 240,000 10,594 240,000 6,936 246,936 (16,284)

Number of ordinary l------------------------------ Amount ------------------------------l

share of RM1 each

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26. Share capital, share premium and treasury shares (continued)

Number of ordinary

shares of RM1 each Amount

2013 2012 2013 2012

'000 '000 RM'000 RM'000

Authorised share capital

At 1 January/31 December 1,000,000 1,000,000 1,000,000 1,000,000

(a) Share capital

(b) Treasury shares

27. Retained earnings

The holders of ordinary shares (except treasury shares) are entitled to receive dividends

as and when declared by the Company. All ordinary shares carry one vote per share

without restrictions and rank equally with regard to the Company's residual assets.

Treasury shares relate to ordinary shares of the Company that are held by the Company.

The amount consists of the acquisition costs of treasury shares net of the proceeds

received on their subsequent sale or issuance.

The Company acquired 111,400 (2012: 161,100) shares in the Company through

purchases on Bursa Malaysia Securities Berhad during the financial year. The total

amount paid to acquire the shares was RM179,940 (2012: RM265,750) and this is

presented as a component within shareholders’ equity.

The directors of the Company are committed to enhancing the value of the Company for

its shareholders and believe that the repurchase plan can be applied in the best interests

of the Company and its shareholders. The repurchase transactions were financed by

internally generated funds. The shares repurchased are being held as treasury shares.

Prior to the year of assessment 2008, Malaysian companies adopted the full imputation

system. In accordance with the Finance Act 2007 which was gazetted on 28 December 2007,

companies shall not be entitled to deduct tax on dividends paid, credited or distributed to its

shareholders, and such dividends will be exempted from tax in the hands of the shareholders

("single tier system"). However, there is a transitional period of six years, expiring on 31

December 2013, to allow companies to pay franked dividends to their shareholders under

limited circumstances. Companies also have an irrevocable option to disregard the 108

balance and opt to pay dividends under the single tier system. The change in the tax

legislation also provides for the 108 balance to be locked-in as at 31 December 2007 in

accordance with Section 39 of the Finance Act 2007.

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27. Retained earnings (continued)

28. Other reserve

Foreign

currency

translation

reserve

Group RM'000

At 1 January 2012 1,139


Foreign currency translation (19)

At 31 December 2012 / 1 January 2013 1,120


Foreign currency translation 3,811

At 31 December 2013 4,931

Foreign currency translation reserve

The foreign currency 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.

The Company did not elect for the irrevocable option to disregard the 108 balance.

Accordingly, during the transitional period, the Company may utilise the credit in the 108

balance to distribute cash dividend payments to ordinary shareholders as defined under the

Finance Act 2007. As at 31 December 2012, the Company has sufficient credit in the 108

balance to pay franked dividends out of its entire retained earnings. Any 108 balance which

has not been utilised as at 31 December 2013 is disregarded. Thereafter, the Company may

distribute dividends out of its entire retained earnings under the single tier system.

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29. Related party transactions

(a) Sale and purchase of goods and services

Group Company

2013 2012 2013 2012

RM'000 RM'000 RM'000 RM'000

Gross dividend income from

White Horse Ceramic

Industries Sdn. Bhd.,

a subsidiary - - 26,000 15,000

Management fees from

subsidiaries - - 144 144

Sales of goods to joint venture,

WH Ceramic (Australia)

Pty. Ltd. ("WHA") - 3,308 - -

Sales commission paid to

joint venture, WHA - 649 - -

Purchases of goods from

White Horse Ceramic

Industries (Vietnam) Co.

Ltd. # 11,286 52,016 - -

Sales of goods to Teobros

Ceramica Sdn. Bhd. * 31,824 36,349 - -

Sales of raw materials,

consumable supplies and

products to White Horse

Ceramic Industries

(Vietnam) Co. Ltd. # 5,390 27,865 - -

Sales of raw materials,

consumable supplies and

products to White

Horse Ceramic Co., Ltd @ 3,676 2,549 - -

#

*

@

In addition to the related party information disclosed elsewhere in the financial

statements, the following significant transactions between the Group and related parties

took place at terms agreed between the parties during the financial year:

A company owned substantially by certain directors, namely Teo Swee Teng, Teo

Kim Lap and Teo Kim Tay.

A company owned substantially by certain directors, namely Liao Yuan Shun, Liao

Jung Chu and Liao Shen Hua.

A company owned substantially by certain directors, namely Teo Swee Teng, Teo

Kim Lap, Teo Kim Tay, Liao Yuan Shun, Liao Jung Chu, Liao Shen Hua and Cheng

Soon Mong. As disclosed in Note 16, this company become a subsidiary of the

Company during the year.

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29. Related party transactions (continued)

(b) Compensation of key management personnel

30. Commitments

(a) Capital commitments

Group

2013 2012

RM'000 RM'000

In respect of capital expenditure:

- Approved and contracted for - 4,192

b) Operating lease commitments - as lessee

Group

2013 2012

RM'000 RM'000

Future minimum rentals payments:

Not later than 1 year 5,860 4,203

Later than 1 year and not later than 5 years 5,746 4,138

After 5 years 14,944 -

26,550 8,341

The future aggregate minimum lease payments under non-cancellable operating leases

contracted for as at the reporting date but not recognised as liabilities are as follows:

The remuneration of key management personnel comprising solely executive directors is

disclosed in Note 11.

The Group has entered into non-cancellable operating lease agreements for the use of

land and buildings. These leases have an average life of between 2 to 44 years with

renewal option included in the certain contracts. Certain contracts include escalation

clauses computed based on percentage of rental while others include fixed rentals for an

average life of between 2 to 5 years. There are no restrictions placed upon the Group by

entering into these leases.

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31. Fair value of financial instruments

Determination of fair value

Note

Trade and other receivables (current) 20

Trade and other payables (current) 24

Loans and borrowings (current) 23

Loans and borrowings (non-current) 23

32. Financial risk management objectives and policies

The following are classes of financial instruments that are not carried at fair value and whose

carrying amounts are reasonable approximation of fair value:

The carrying amounts of these financial assets and liabilities are reasonable approximation of

fair values, either due to their short-term nature or that they are floating rate instruments that

are re-priced to market interest rates on or near the reporting date.

Financial instruments that are not carried at fair value and whose carrying amounts are

reasonable approximation of fair value

The Group is exposed to market risk, credit risk and liquidity risk. The Group’s senior

management oversees the management of these risks and ensures that the Group’s financial

risk activities are governed by appropriate policies and procedures and that financial risks are

identified, measured and managed in accordance with the Group’s policies and risk objectives.

All derivative activities for risk management purposes are carried out by senior management

who have the appropriate skills, experience and supervision. It is the Group’s policy that no

trading in derivatives for speculative purposes may be undertaken. The Board of Directors

reviews and agrees policies for managing each of these risks, which are summarised below.

The carrying amounts of the current portion of loans and borrowings are reasonable

approximations of fair values due to the insignificant impact of discounting.

The fair values of current loans and borrowings are estimated by discounting expected future

cash flows at market incremental lending rate for similar types of lending, borrowing or leasing

arrangements at the reporting date.

Financial liabilities, other than derivatives, comprise loans and borrowings, trade and other

payables, and financial guarantee contracts. The main purpose of these financial liabilities is

to finance the Group’s and the Company's operations and to provide guarantees to support its

operations. Financial assets include trade and other receivables and cash and short-term

deposits that derive directly from its operations.

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32. Financial risk management objectives and policies (continued)

(a) Market risk

(b) Interest rate risk

Effect on Group's

profit before tax

2013 2012

RM'000 RM'000

Increase in 10 basis points (199) (136)

Decrease in 10 basis points 199 136

(c) Foreign currency risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will

fluctuate because of changes in market prices. Market risk comprises interest rate risk

and foreign exchange currency risk. Financial instruments affected by market risk

include loans and borrowings, deposits, available-for-sale investments and derivative

financial instruments.

Interest rate risk is the risk that the fair value or future cash flows of a financial

instrument will fluctuate because of changes in market interest rates. Exposure to the

risk of changes in market interest rates relates primarily to the long-term debt obligations

with floating interest rates.

Interest rate risk arises primarily from interest-bearing borrowings. Interest rate exposure

is managed by maintaining a balanced mix of fixed and floating rate borrowings and

regular reviews of its debt portfolio.

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. Exposure to the

risk of changes in foreign exchange rates relates primarily to the operating activities

when revenue or expense is denominated in a currency other than Ringgit Malaysia,

notably the United States Dollars (USD), Singapore Dollars (SGD) and Euro. Such

transactions are kept to an acceptable level.

Information on maturity dates and effective interest rates of financial assets and liabilities

are disclosed in their respective notes.

The following table demonstrates the sensitivity to a reasonably possible change in

interest rates based on the utilisation of floating rate loans and borrowings throughout

the reporting period. With all other variables held constant, the Group's profit before tax

is affected through the impact on floating rate borrowings, as follows:

The assumed movement in basis points for the interest rate sensitivity analysis is based

on the currently observable market environment.

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(c) Foreign currency risk (continued)

United

Functional Currency Singapore States

of Group Companies Dollars Dollars Euro Total

RM'000 RM'000 RM'000 RM'000

At 31 December 2013

Singapore Dollars - 1,167 - 1,167

Ringgit Malaysia (282) (129,303) (149) (129,734)

Indonesian Rupiah ("IDR") - 79 - 79

Vietnamese Dong ("VND") - (83,600) (1,224) (84,824)

(282) (211,657) (1,373) (213,312)

At 31 December 2012

Singapore Dollars - 2,449 - 2,449

Ringgit Malaysia (451) (43,520) (785) (44,756)

Indonesian Rupiah ("IDR") - (2,388) - (2,388)

Philippine Peso ("Peso") - (804) - (804)

(451) (44,263) (785) (45,499)

Sensitivity analysis for foreign currency risk

Group

2013 2012

RM'000 RM'000

USD/RM - strengthened 5% (2012 : 5%) (6,465) (2,176)

- weakened 5% (2012 : 5%) 6,465 2,176

SGD/RM - strengthened 5% (2012 : 5%) (14) 23

- weakened 5% (2012 : 5%) 14 (23)

Euro/RM - strengthened 5% (2012 : 5%) (7) (39)

- weakened 5% (2012 : 5%) 7 39

Net Financial Assets/(Liabilities) Held in

Non-Functional Currency

The following table illustrates the hypothetical sensitivity of the Group's profit before tax

to a reasonably possible change in the USD, SGD and Euro exchange rate at the

reporting date against the functional currency of the Group, with all other variables held

constant.

Profit before tax

The net unhedged financial assets/(financial liabilities) of the Group that are not

denominated in its functional currency are as follows:

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(c) Foreign currency risk (continued)

Sensitivity analysis for foreign currency risk (continued)

Group

2013 2012

RM'000 RM'000

USD/SGD - strengthened 5% (2012 : 5%) 58 425

- weakened 5% (2012 : 5%) (58) (425)

USD/IDR - strengthened 5% (2012 : 5%) 4 (957)

- weakened 5% (2012 : 5%) (4) 957

USD/Peso - strengthened 5% (2012 : 5%) - 39

- weakened 5% (2012 : 5%) - (39)

USD/VND - strengthened 5% (2012 : 5%) (4,180) -

- weakened 5% (2012 : 5%) 4,180 -

Euro/VND - strengthened 5% (2012 : 5%) (61) -

- weakened 5% (2012 : 5%) 61 -

(d) Credit risk

Exposure to credit risk

-

- A nominal amount of RM184,337,000 (2012: RM135,642,000) relating to a

corporate guarantee provided by the Company to financial institutions for credit

facilities utilised by subsidiaries.

The Group's objective is to seek continual revenue growth while minimising losses

incurred due to increased credit risk exposure. The Group trades only with recognised

and creditworthy third parties. It is the Group’s policy that all customers who wish to trade

on credit terms are subject to credit verification procedures. In addition, receivable

balances are monitored on an ongoing basis with the result that the Group’s exposure to

bad debts is not significant.

Profit before tax

Credit risk is the risk of loss that may arise on outstanding financial instruments should a

counterparty default on its obligations. The Group's and the Company’s exposure to

credit risk arises primarily from trade and other receivables. For other financial assets

(including cash and bank balances), the Group and the Company minimise credit risk by

dealing exclusively with high credit rating counterparties.

At the reporting date, the Group's and the Company's maximum exposure to credit risk is

represented by:

The carrying amount of each class of financial assets recognised in the statement

of financial position, with positive fair values.

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(d) Credit risk (continued)

Credit risk concentration profile

Financial assets that are neither past due nor impaired

Financial assets that are either past due or impaired

(e) Liquidity risk

At the reporting date, the Group does not have any significant exposure to any individual

customer or counterparty except for companies in which certain directors have interests

as disclosed in Note 20. The directors believe that this does not create significant impact

for the Group in view of the fact that the directors have direct participation and influential

power in the management of these counterparties.

Information regarding trade and other receivables that are neither past due nor impaired

is disclosed in Note 20. Deposits with banks that are neither past due nor impaired are

placed with or entered into with reputable financial institutions with high credit ratings and

no history of default.

Information regarding financial assets that are either past due or impaired is disclosed in

Note 20.

Liquidity risk is the risk that the Group and the Company will encounter difficulty in

meeting financial obligations due to shortage of funds. The Group and the Company’s

exposure to liquidity risk arises primarily from mismatches of the maturities of financial

assets and liabilities. The Group and the Company’s objective is to maintain a balance

between continuity of funding and flexibility through the use of stand-by credit facilities.

The Group and the Company manage its debt maturity profile, operating cash flows and

the availability of funding so as to ensure that refinancing, repayment and funding needs

are met. As part of its overall liquidity management, the Group and the Company

maintain sufficient levels of cash or cash convertible investments to meet its working

capital requirements. In addition, the Group and the Company strives to maintain

available banking facilities at a reasonable level to its overall debt position. As far as

possible, the Group and the Company raises committed funding from financial

institutions and balances its portfolio with some short term funding so as to achieve

overall cost effectiveness.

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(e) Liquidity risk (continued)

Analysis of financial instruments by remaining contractual maturities

Within One to

one year five years Total

RM'000 RM'000 RM'000

Group

Financial liabilities:

Trade and other payables 127,283 105,360 232,643

Loans and borrowings 196,284 2,954 199,238

Total undiscounted financial liabilities 323,567 108,314 431,881

Company


Other payables, excluding financial

guarantees* 26,979 36,226 63,205

Total undiscounted financial liabilities 26,979 36,226 63,205

Within One to

one year five years Total

RM'000 RM'000 RM'000

Group


Trade and other payables 78,442 - 78,442

Loans and borrowings 135,642 - 135,642

Total undiscounted financial liabilities 214,084 - 214,084

Company


Other payables, excluding financial

guarantees* 522 - 522

Total undiscounted financial liabilities 522 - 522

*

l------------------------ 2013 ----------------------l

l------------------------ 2012 ----------------------l

The table below summarises the maturity profile of the Group’s liabilities at the reporting

date based on contractual undiscounted repayment obligations.

At the reporting date, the counterparties to the financial guarantees do not have a

right to demand cash as defaults have not occurred. Accordingly, financial

guarantees under the scope of MFRS 139 are not included in the above maturity

profile analysis.

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33. Capital management

Group Company

2013 2012 2013 2012

Note RM'000 RM'000 RM'000 RM'000

Loans and borrowings 23 199,238 135,642 - -

Trade and other payables 24 212,853 78,442 59,890 522

Less: - Cash and bank

balances 22 (128,124) (57,534) (286) (211)

Net debt 283,967 156,550 59,604 311

Total capital 699,549 670,677 230,811 237,567

Capital and net debt 983,516 827,227 290,415 237,878

Gearing ratio 28.9% 18.9% 20.5% 0.1%

34. Dividends

Group and Company

2013 2012

RM'000 RM'000

Recognised during the financial year:

Dividends on ordinary shares:

- Final tax exempt dividend for 2012 : 5 sen 11,471 11,483

(2011 : 5 sen) per share

- Interim tax exempt dividend for 2013 : 5 sen

(2012 : 5 sen) per share 11,470 11,476

22,941 22,959

Proposed but not recognised as a liability as at 31 December:

Dividend on ordinary shares, subject to shareholders’ approval

at the AGM:

- Final tax exempt dividend for 2013 : 5 sen

(2012 : 5 sen) per share 11,470 11,476

The Group monitors capital using a gearing ratio, which is net debt divided by total capital plus

net debt. The Group includes within net debt, loans and borrowings, trade and other payables,

less cash and bank balances.

The Group manages its capital structure and makes adjustments to it, in light of changes in

economic conditions. To maintain or adjust the capital structure, the Group may adjust the

dividend payment to shareholders. No changes were made in the objectives, policies or

processes during the years ended 31 December 2013 and 31 December 2012.

The primary objective of the Group’s capital management is to ensure that it maintains a

healthy capital ratio to support its operations and maximise shareholder value.

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34. Dividends (continued)

35. Segmental reporting

31 December 2013

Malaysia Vietnam Others Eliminations Notes Consolidated

RM'000 RM'000 RM'000 RM'000 RM'000

Revenue

External sales 549,144 18,842 78,828 - 646,814

Inter-segment sales 25,018 8,774 481 (34,273) A -

Total revenue 574,162 27,616 79,309 (34,273) 646,814

Results

Interest income 1,537 9 50 - 1,596

Depreciation and

amortisation 36,559 4,651 2,395 - 43,605

Segment profit/(loss) 86,760 (6,733) (1,345) (5,086) B 73,596

Assets

Additions to

non-current assets 12,320 1,415 179 - C 13,914

Segment assets 880,483 198,882 81,171 704 D 1,161,240

At the forthcoming Annual General Meeting, a final tax exempt dividend of 5% in respect of the

current financial year ended 31 December 2013 on 229,405,900 ordinary shares, amounting to a

total dividend payable of RM11,470,295 (5 sen net per share) will be proposed for shareholders’

approval. The financial statements for the current financial year do not reflect this proposed

dividend. Such dividend, if approved by the shareholders, will be accounted for in equity as an

appropriation of retained earnings in the financial year ending 31 December 2014.

For management purposes, the Group is organised into business units based on their

geographical areas, and has three reportable operating segments.

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. Group financing (including finance costs), income taxes and share of results of joint

venture are managed on a group basis and are not allocated to operating segments.

The directors are of the opinion that all inter-segment transactions have been entered into in the

normal course of business and have been established on negotiated and mutually agreed terms.

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35. Segmental reporting (continued)

31 December 2013 (continued)


RM'000 RM'000 RM'000 RM'000 RM'000

Liabilities

Segment liabilities 327,458 87,428 8,685 38,120 E 461,691

Other segment

information

Capital

commitments - - - - -

31 December 2012


RM'000 RM'000 RM'000 RM'000 RM'000

Revenue

External sales 512,607 - 73,431 - 586,038

Inter-segment sales 28,070 - 523 (28,593) A -

Total revenue 540,677 - 73,954 (28,593) 586,038

Results

Interest income 831 - 59 - 890

Depreciation and

amortisation 38,797 - 2,663 - 41,460

Segment profit 50,106 - 2,158 (3,492) B 48,772

Assets

Additions to

non-current assets 19,602 - 1,937 - C 21,539

Segment assets 835,637 - 82,725 828 D 919,190

Liabilities

Segment liabilities 222,662 - 2,935 22,916 E 248,513

Other segment

information

Capital

commitments 4,192 - - - 4,192

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35. Segmental reporting (continued)

A

B

2013 2012

RM'000 RM'000

Share of results of joint venture (116) (84)

Finance costs (4,970) (3,408)

(5,086) (3,492)

C

2013 2012

RM'000 RM'000

Property, plant and equipment 13,914 21,539

D

2013 2012

RM'000 RM'000

Investment in joint venture 27 151

Goodwill 677 677

704 828

E

2013 2012

RM'000 RM'000

Income tax payable 7,116 2,559

Deferred tax liabilities 31,004 20,357

38,120 22,916

36. Authorisation of financial statements for issue

The following items are added to/(deducted from) segment assets to arrive at total

assets reported in the consolidated statement of financial position:

The following items are added to/(deducted from) segment liabilities to arrive at total

liabilties reported in the consolidated statement of financial position:

The financial statements for the year ended 31 December 2013 were authorised for issue in

accordance with a resolution of the directors on 21 April 2014.

Inter-segment revenues are eliminated on consolidation.

The following items are added to/(deducted from) segment profit to arrive at "profit

before tax " presented in the consolidated statement of comprehensive income.

Additions to non-current assets consist of:

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37. Supplementary information – Breakdown of realised and unrealised retained earnings

2013 2012 2013 2012

RM'000 RM'000 RM'000 RM'000

Total retained earnings of the

White Horse Berhad and

its subsidiaries:

- Realised 486,791 578,062 159 6,735

- Unrealised (32,148) (26,965) - -

454,643 551,097 159 6,735

Total share of retained earnings

from joint venture

- Realised (429) (312) - -

Less: Consolidated adjustment 9,752 (112,060) - -

Total Group's retained earnings as

per consolidated accounts 463,966 438,725 159 6,735

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

2013 into realised and unrealised earnings is presented in accordance with the directive issued

by Bursa Malaysia Securities Berhad dated 25 March 2010 and prepared in accordance with

Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses

in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing

Requirements, as issued by the Malaysian Institute of Accountants.

Group Company

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