01 ANNUAL REPORT 2015

CONTENTS

Notice of Annual General Meeting 2 - 8

Statement accompanying the Notice of Annual General Meeting 9

Corporate Information 10

Financial Highlights 11

Directors' Profile 12 - 14

Managing Director's Statement 15 - 16

Statement on Corporate Social Responsibility 17

Statement on Corporate Governance 18 - 26

Statement of Risk Management and Internal Control 27 - 28

Audit Committee Report 29 - 32

Statement of Directors' Responsibility 33

Other Information required by the Main Market Listing Requirements of Bursa Malaysia Securities Berhad 34 - 35

Directors' Report 36 - 39

Statement by Directors 40

Statutory Declaration 40

Independent Auditors' Report 41 - 42

Statements of Comprehensive Income 43

Statements of Financial Position 44

Statements of Changes in Equity 45 - 46

Statements of Cash Flows 47 - 48

Notes to the Financial Statements 49 - 112

Supplementary Information 113

List of Properties owned by the Group 114

Analysis of Shareholdings 115 - 116

Proxy Form Enclosed 02 ANNUAL REPORT 2015

NOTICE OF ANNUAL GENERAL MEETING

NOTICE IS HEREBY GIVEN THAT the Twenty-second (22nd) Annual General Meeting of Suiwah Corporation Bhd (or “the Company”) will be held at Sunshine Banquet Hall, Level 4, Sunshine Square Complex, 1, Jalan Mayang Pasir, 11950 Bayan Baru, Penang on Thursday, 26 November 2015 at 11.00 a.m. for the following purposes:

AS ORDINARY BUSINESS:-

1. To receive the Audited Financial Statements for the year ended 31 May 2015 together with the Reports Resolution 1 of the Directors and Auditors thereon.

2. To approve the declaration of a first and final single tier dividend of 6% for the financial year ended Resolution 2 31 May 2015.

3. To re-elect the following Directors who are retiring in accordance with the Company’s Articles of Association:

Article 87 (a) Datin Cheah Gaik Huang; Resolution 3 (b) Y.B. Senator Dato’ Haji Mohd Suhaimi bin Abdullah; Resolution 4 (c) Jen Shek Voon Resolution 5

Article 89 (a) Hwang Shin Hung Resolution 6

4. To pass the following resolution pursuant to Section 129 of the Companies Act, 1965 as ordinary resolution:

“THAT Dato’ Ahmad Hassan bin Osman who is over the age of seventy years and retiring in accordance Resolution 7 with Section 129 of the Companies Act, 1965, be hereby re-appointed as Director of the Company and to hold office until the conclusion of the next Annual General Meeting.”

5. To approve the payment of directors’ fees of Ringgit Malaysia Two Hundred Thirty Nine Thousand and Resolution 8 Six Hundred (RM239,600) only for the year ended 31 May 2015.

6. To re-appoint Messrs. Ernst & Young as Auditors of the Company for the ensuing year and to authorise Resolution 9 the Directors to fix their remuneration.

AS SPECIAL BUSINESS:-

7. To consider and if thought fit, to pass the following resolutions with or without modification: -

7.1 ORDINARY RESOLUTION: AUTHORITY TO ISSUE AND ALLOT SHARES PURSUANT TO SECTION 132D OF THE COMPANIES ACT, 1965

“THAT, subject to Section 132D of the Companies Act, 1965 (“Act”), the Articles of Association Resolution 10 of the Company, other applicable laws, guidelines, rules and regulations and approvals of the relevant governmental and/or regulatory authorities, the Directors be and are hereby empowered to issue and allot shares in the Company, at any time to any person(s) other than a Director or major shareholder of the Company or person connected with any Director or major shareholder of the Company and upon such terms and conditions and for such purposes as the Directors may, in their absolute discretion deem fit, provided that the aggregate number of shares issued pursuant to this resolution does not exceed ten per centum (10%) of the issued and paid-up share capital of the Company (excluding treasury shares) for the time being AND THAT the Directors be and are also empowered to obtain the approval for the listing of and quotation for the additional shares so issued on Bursa Malaysia Securities Berhad;

AND FURTHER THAT such authority shall commence immediately upon the passing of this resolution and continue to be in force until the conclusion of the next Annual General Meeting of the Company.” 03 ANNUAL REPORT 2015

NOTICE OF ANNUAL GENERAL MEETING (CONTD.)

7.2 ORDINARY RESOLUTION: PROPOSED RENEWAL AND NEW SHAREHOLDERS’ MANDATE FOR RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING NATURE INVOLVING DATO’ HWANG THEAN LONG, DATIN CHEAH GAIK HUANG, HWANG POH CHOO, HWANG SIEW PENG, HWANG SHIN HUNG, SUIWAH HOLDINGS SDN BHD AND SUIWAH SUPERMARKET SENDIRIAN BERHAD

“THAT approval be and is hereby given to the Company’s subsidiaries to enter into and give Resolution 11 effect to the recurrent related party transactions of a revenue or trading nature involving Dato' Hwang Thean Long, Datin Cheah Gaik Huang, Hwang Poh Choo, Hwang Siew Peng, Hwang Shin Hung, Suiwah Holdings Sdn Bhd and Suiwah Supermarket Sendirian Berhad (hereinafter referred to as "Related Parties") as specified in Section 2.3 under Part A of the Circular dated 30 October 2015, and falling within the ambit of Part E, Paragraph 10.09 of Chapter 10 of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, which are necessary for the day-to-day operations and undertaken in the ordinary course of business of the Company, on terms not more favourable to Related Parties than those generally available to the public and not detrimental to minority shareholders of the Company;

THAT such approval unless revoked or varied by the Company in general meeting shall continue to be in full force and effect until:

(i) the conclusion of the next Annual General Meeting ("AGM") of the Company following the general meeting at which this mandate was passed, at which time it will lapse, unless by a resolution passed at the general meeting whereby the authority is renewed; or

(ii) the expiration of the period within which the next AGM of the Company after the date it is required to be held pursuant to Section 143(1) of the Companies Act, 1965 ("the Act") (but shall not extend to such extension as may be allowed pursuant to Section 143(2) of the Act); or

(iii) revoked or varied by resolution passed by the shareholders of the Company in a general meeting;

whichever is the earlier;

THAT the above mandate is subject to annual renewal and disclosure will be made in the annual report of the aggregate value of transactions conducted by the Group.

AND THAT the Directors of the Company be authorised to complete and do all such acts and things (including executing all such documents as may be required) as they may consider expedient or necessary to give effect to the above mandate.” 04 ANNUAL REPORT 2015

NOTICE OF ANNUAL GENERAL MEETING (CONTD.)

7.3 ORDINARY RESOLUTION: PROPOSED RENEWAL OF SHAREHOLDERS’ MANDATE FOR RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING NATURE INVOLVING DATUK HAJI RADZALI BIN HASSAN AND HOZONE SDN BHD

“THAT approval be and is hereby given to the Company’s subsidiaries to enter into and give Resolution 12 effect to the recurrent related party transactions of a revenue or trading nature involving Datuk Haji Radzali bin Hassan and person connected to him, namely Hozone Sdn Bhd (hereinafter referred to as "Interested Persons") as specified in Section 2.3 under Part A of the Circular dated 30 October 2015, and falling within the ambit of Part E, Paragraph 10.09 of Chapter 10 of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad which are necessary for the day-to-day operations and undertaken in the ordinary course of business of the Company, on terms not more favourable to Interested Persons than those generally available to the public and not detrimental to minority shareholders of the Company; THAT such approval unless revoked or varied by the Company in general meeting shall continue to be in full force and effect until: (i) the conclusion of the next Annual General Meeting ("AGM") of the Company following the general meeting at which this mandate was passed, at which time it will lapse, unless by a resolution passed at the general meeting whereby the authority is renewed; or (ii) the expiration of the period within which the next AGM of the Company after the date it is required to be held pursuant to Section 143(1) of the Companies Act, 1965 ("the Act") (but must not extend to such extension as may be allowed pursuant to Section 143(2) of the Act); or (iii) revoked or varied by resolution passed by the shareholders of the Company in a general meeting; whichever is the earlier; THAT the above mandate is subject to annual renewal and disclosure will be made in the annual report of the aggregate value of transactions conducted by the Group. AND THAT the Directors of the Company be authorised to complete and do all such acts and things (including executing all such documents as may be required) as they may consider expedient or necessary to give effect to the above mandate.”

7.4 ORDINARY RESOLUTION: PROPOSED RENEWAL OF SHAREHOLDERS’ MANDATE FOR RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING NATURE INVOLVING A DIRECTOR OF THE COMPANY’S SUBSIDIARY, NAMELY LOOI TIK MIOW

“THAT approval be and is hereby given to the Company’s subsidiaries to enter into and give Resolution 13 effect to the recurrent related party transactions of a revenue or trading nature involvinga Director of the Company’s subsidiary, namely Looi Tik Miow (hereinafter referred to as "Interested Director") as specified in Section 2.3 under Part A of the Circular dated 30 October 2015, and falling within the ambit of Part E, Paragraph 10.09 of Chapter 10 of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, which are necessary for the day- to-day operations and undertaken in the ordinary course of business of the Company, on terms not more favourable to Interested Director than those generally available to the public and not detrimental to minority shareholders of the Company; THAT such approval unless revoked or varied by the Company in general meeting shall continue to be in full force and effect until: (i) the conclusion of the next Annual General Meeting ("AGM") of the Company following the general meeting at which this mandate was passed, at which time it will lapse, unless by a resolution passed at the general meeting whereby the authority is renewed; or (ii) the expiration of the period within which the next AGM of the Company after the date it is required to be held pursuant to Section 143(1) of the Companies Act, 1965 ("the Act") (but must not extend to such extension as may be allowed pursuant to Section 143(2) of the Act); or (iii) revoked or varied by resolution passed by the shareholders of the Company in a general meeting; whichever is the earlier; THAT the above mandate is subject to annual renewal and disclosure will be made in the annual report of the aggregate value of transactions conducted by the Group. AND THAT the Directors of the Company be authorised to complete and do all such acts and things (including executing all such documents as may be required) as they may consider expedient or necessary to give effect to the above mandate.” 05 ANNUAL REPORT 2015

NOTICE OF ANNUAL GENERAL MEETING (CONTD.)

7.5 ORDINARY RESOLUTION: PROPOSED RENEWAL OF SHAREHOLDERS’ MANDATE FOR RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING NATURE INVOLVING A DIRECTOR OF THE COMPANY’S SUBSIDIARY, NAMELY LEONG KONG MENG

“THAT approval be and is hereby given to the Company’s subsidiaries to enter into and give Resolution 14 effect to the recurrent related party transactions of a revenue or trading nature involvinga Director of the Company’s subsidiary, namely Leong Kong Meng (hereinafter referred to as "Interested Director") as specified in Section 2.3 under Part A of the Circular dated 30 October 2015, and falling within the ambit of Part E, Paragraph 10.09 of Chapter 10 of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, which are necessary for the day- to-day operations and undertaken in the ordinary course of business of the Company, on terms not more favourable to Interested Director than those generally available to the public and not detrimental to minority shareholders of the Company; THAT such approval unless revoked or varied by the Company in general meeting shall continue to be in full force and effect until: (i) the conclusion of the next Annual General Meeting ("AGM") of the Company following the general meeting at which this mandate was passed, at which time it will lapse, unless by a resolution passed at the general meeting whereby the authority is renewed; or (ii) the expiration of the period within which the next AGM of the Company after the date it is required to be held pursuant to Section 143(1) of the Companies Act, 1965 ("the Act") (but must not extend to such extension as may be allowed pursuant to Section 143(2) of the Act); or (iii) revoked or varied by resolution passed by the shareholders of the Company in a general meeting; whichever is the earlier; THAT the above mandate is subject to annual renewal and disclosure will be made in the annual report of the aggregate value of transactions conducted by the Group. AND THAT the Directors of the Company be authorised to complete and do all such acts and things (including executing all such documents as may be required) as they may consider expedient or necessary to give effect to the above mandate.”

7.6 ORDINARY RESOLUTION: PROPOSED RENEWAL OF AUTHORITY FOR THE COMPANY TO PURCHASE ITS OWN SHARES OF UP TO 10% OF ITS ISSUED AND PAID-UP ORDINARY SHARE CAPITAL ("PROPOSED RENEWAL OF SHARE BUY-BACK MANDATE")

“THAT subject to the Companies Act, 1965 ("the Act"), the provisions of the Company’s Resolution 15 Memorandum and Articles of Association, Main Market Listing Requirements of Bursa Malaysia Securities Berhad ("Bursa Securities") and all other applicable laws, guidelines, rules and regulations, the Directors of the Company be and is hereby authorised, to the fullest extent permitted by law, to purchase such amount of ordinary shares of RM1.00 each in the Company ("SCB Shares") from time to time through Bursa Securities upon such terms and conditions as the Directors may deem fit and expedient in the interest of the Company provided that:- (i) the aggregate number of SCB Shares which may be purchased or held by the Company shall not exceed ten per centum (10%) of the total issued and paid-up ordinary share capital for the time being of the Company, subject to a restriction that the Company continues to maintain a shareholding spread that is in compliance with the Main Market Listing Requirements of Bursa Securities after the share purchase; (ii) the maximum fund to be allocated by the Company for the purpose of purchasing the SCB Shares under the Proposed Renewal of Share Buy-Back Mandate shall not exceed the retained profits and/or the share premium account of the Company for the time being; (iii) the authority hereby given shall commence immediately upon passing of this ordinary resolution and shall continue to be in force until: (a) the conclusion of the next Annual General Meeting ("AGM") of the Company following the forthcoming AGM, at which time the authority will lapse unless renewed by ordinary resolution passed at the general meeting, the authority is renewed, either unconditionally or subject to conditions; or (b) the expiration of the period within which the next AGM of the Company after the date it is required by law to be held; or (c) revoked or varied by ordinary resolution passed by the shareholders of the Company in a general meeting, whichever occurs first; but not so as to prejudice the completion of purchase(s) by the Company of the SCB Shares before the aforesaid expiry date and, made in any event, in accordance with the provisions of the guidelines issued by Bursa Securities and any prevailing laws, rules, regulations, orders, guidelines and requirements issued by any relevant authorities; and 06 ANNUAL REPORT 2015

NOTICE OF ANNUAL GENERAL MEETING (CONTD.)

(iv) upon completion of the purchase(s) of the SCB Shares by the Company, authority be and is hereby given to the Directors of the Company to decide at their absolute discretion to either to cancel the SCB Shares so purchased and/or to retain the SCB Shares so purchased as treasury shares which may be distributed as shares dividends to shareholders and if retained as treasury shares, may resell the treasury shares on Bursa Securities and/or subsequently cancelled, or to retain part of the SCB Shares so purchased as treasury shares and cancel the remainder in the manner as prescribed by the Act, rules, regulations and orders made pursuant to the Act and the requirements of the Bursa Securities and any other relevant authority for the time being in force; AND THAT authority be and is hereby unconditionally and generally given to the Directors of the Company to take all such steps as are necessary or expedient to implement, finalise, complete or to effect the Proposed Renewal of Share Buy-Back Mandate with full powers to assent to any conditions, modifications, resolutions, variations and/or amendments (if any) as may be imposed by the relevant authorities and to do all such acts and things as the said Directors may deem fit and expedient in the best interest of the Company to give effect to and to complete the purchase of the SCB Shares.”

7.7 ORDINARY RESOLUTION: MANDATE FOR Y.B. SENATOR DATO’ HAJI MOHD SUHAIMI BIN ABDULLAH TO CONTINUE TO ACT AS AN INDEPENDENT NON-EXECUTIVE DIRECTOR OF THE COMPANY

“THAT approval be and is hereby given to Y.B. Senator Dato’ Haji Mohd Suhaimi bin Abdullah, Resolution 16 who has served as an Independent Non-Executive Director of the Company for a cumulative term of more than nine (9) years, to continue to act as an Independent Non-Executive Director of the Company in compliance with the recommendation of Malaysian Code on Corporate Governance 2012.”

7.8 ORDINARY RESOLUTION: MANDATE FOR DATO’ AHMAD HASSAN BIN OSMAN TO CONTINUE TO ACT AS AN INDEPENDENT NON-EXECUTIVE DIRECTOR OF THE COMPANY

“THAT approval be and is hereby given to Dato’ Ahmad Hassan bin Osman, who has served Resolution 17 as an Independent Non-Executive Director of the Company for a cumulative term of more than nine (9) years, to continue to act as an Independent Non-Executive Director of the Company in compliance with the recommendation of Malaysian Code on Corporate Governance 2012.”

7.9 ORDINARY RESOLUTION: MANDATE FOR MR. JEN SHEK VOON TO CONTINUE TO ACT AS AN INDEPENDENT NON-EXECUTIVE DIRECTOR OF THE COMPANY

“THAT approval be and is hereby given to Mr. Jen Shek Voon, who has served as an Independent Resolution 18 Non-Executive Director of the Company for a cumulative term of more than nine (9) years, to continue to act as an Independent Non-Executive Director of the Company in compliance with the recommendation of Malaysian Code on Corporate Governance 2012.”

7.10 ORDINARY RESOLUTION: MANDATE FOR MR. WONG THAI SUN TO CONTINUE TO ACT AS AN INDEPENDENT NON-EXECUTIVE DIRECTOR OF THE COMPANY

“THAT approval be and is hereby given to Mr. Wong Thai Sun, who has served as an Independent Resolution 19 Non-Executive Director of the Company for a cumulative term of more than nine (9) years, to continue to act as an Independent Non-Executive Director of the Company in compliance with the recommendation of Malaysian Code on Corporate Governance 2012.” 07 ANNUAL REPORT 2015

NOTICE OF ANNUAL GENERAL MEETING (CONTD.)

NOTICE OF DIVIDEND ENTITLEMENT NOTICE IS ALSO HEREBY GIVEN THAT a first and final single tier dividend of 6% in respect of the financial year ended 31 May 2015, if approved by members of the Company, will be paid on 16 December 2015. The entitlement date for the dividend payment is 2 December 2015.

A Depositor shall qualify for entitlement only in respect of:-

(a) Shares transferred to the Depositor’s Securities Account before 4.00 p.m. on 2 December 2015 in respect of ordinary transfers; and

(b) Shares bought on the Bursa Malaysia Securities Berhad on a cum entitlement basis according to the Rules of the Bursa Malaysia Securities Berhad.

By Order of the Board,

THUM SOOK FUN (MIA 24701) Company Secretary

Dated: 30 October 2015 Penang

Explanatory Note to Special Business: -

(i) Resolution No. 10 - Authority to issue and allot shares pursuant to Section 132D of the Companies Act, 1965

For Resolution No. 10, further information in relation to the general mandate for issue of securities is set out in the Statement Accompanying Notice of 22nd AGM.

(ii) Resolution Nos. 11 to 14 - Proposed Renewal and New Shareholders’ Mandate for the recurrent related party transactions of a revenue or trading nature (“Proposed RRPT Mandate”)

The proposed adoption of Resolution Nos. 11 to 14, if passed, will enable the Company and/or its subsidiaries to enter into the recurrent transactions involving the interest of the Related Parties which are of a revenue or trading nature and necessary for the Group’s day to day operations subject to the transactions being carried out in the ordinary cause of business on terms not more favorable than those generally available to the public and are not detriment to the minority shareholders of the Company.

For further information, please refer to the Part A of the Circular/Statement to Shareholders dated 30 October 2015, which is dispatched together with the Company’s Annual Report 2015.

(iii) Resolution No. 15 - Proposed Renewal of Share Buy-Back Mandate

The proposed adoption of Resolution No. 15 is to renew the authority granted by the shareholders of the Company at the 21st AGM of the Company held on 17 November 2014. The Proposed Renewal of Share Buy-Back Mandate, if passed, will empower the Directors to buy-back and/or hold up to a maximum of 10% of the Company’s issued and paid-up ordinary share capital at any point of time, by utilising the funds allocated which shall not exceed the total retained profits and/or share premium account of the Company. This authority, unless revoked or varied by the Company in a general meeting, will expire at the conclusion of the next Annual General Meeting of the Company, or the expiration of period within which the next Annual General Meeting is required by law to be held, whichever is earlier.

For further information, please refer to the Part B of the Circular/Statement to Shareholders dated 30 October 2015, which is dispatched together with the Company’s Annual Report 2015. 08 ANNUAL REPORT 2015

NOTICE OF ANNUAL GENERAL MEETING (CONTD.)

(iv) Resolution Nos. 16 to 19 - Mandate for Y.B. Senator Dato’ Haji Mohd Suhaimi bin Abdullah, Dato’ Ahmad Hassan bin Osman, Mr. Jen Shek Voon and Mr. Wong Thai Sun to continue to act as Independent Non-Executive Director of the Company

Both the Nomination Committee and the Board have assessed the independence of the following Independent Directors, who have served as an Independent Non-Executive Director of the Company for a cumulative term of more than nine (9) years, and recommended them to continue to serve as Independent Non-Executive Director of the Company based on the following justifications:-

• Y.B. Senator Dato’ Haji Mohd Suhaimi bin Abdullah; • Dato’ Ahmad Hassan bin Osman; • Mr. Jen Shek Voon; and • Mr. Wong Thai Sun.

(a) They continue to fulfill the definition of independence as set out in Malaysian Code on Corporate Governance 2012 and Main Market Listing Requirements of Bursa Securities; (b) Their existing tenure in office (despite of more than 9 years) do not impair their independence; (c) They remain objective and independent in expressing their view and in participating in deliberation and decision making of the Board and Board Committee(s); and (d) They continue to demonstrate conduct and behaviour that are essential indicators of independence.

Notes: 1. In respect of deposited securities, only members whose names appear in the Record of Depositors on 19 November 2015 shall be eligible to attend, speak and vote at the Meeting. 2. A member entitled to attend and vote at the Meeting is entitled to appoint two (2) or more proxies to attend and vote in his or her stead. Where a member appoints two (2) proxies, the appointments shall be invalid unless he or she specifies the proportions of his or her shareholdings to be represented by each proxy. 3. A proxy may but does not need to be a member. There shall be no restriction as to the qualification of the proxy and the provision of Section 149(1)(a), (b) and (c) of the Companies Act, 1965 shall not apply to the Company. A proxy appointed to attend and vote at the Meeting shall have the same rights as the member to speak at the Meeting. 4. The instrument appointing a proxy shall be in writing under the hand of the appointor or his attorney duly authorised in writing or, if the appointor is a corporation, either under its seal or under the hand of an officer or attorney duly authorised. 5. Where a member of the Company is an exempt authorised nominee as defined under Securities Industry (Central Depositories) Act 1991 which holds ordinary shares in the Company for multiple beneficial owners in one securities account (“omnibus account”), there is no limit to the number of proxies which the exempt authorised nominee may appoint in respect of each omnibus account it holds. 6. The instrument appointing a proxy and the power of attorney or other authority if any, under which it is signed or a notarially certified copy of the power or authority shall be deposited at the registered office of the Company at No. 1-20- 1 SUNTECH @ Penang Cybercity, Lintang Mayang Pasir 3, 11950 Bayan Baru, Penang not less than forty-eight (48) hours before the time for holding the meeting or any adjournment thereof. 09 ANNUAL REPORT 2015

STATEMENT ACCOMPANYING THE NOTICE OF ANNUAL GENERAL MEETING (Pursuant to Paragraph 8.27(2) of the Main Market Listing Requirements of Bursa Securities)

A) Details of the individuals who are standing for re-election as Directors

As at date of this notice, there are no individuals who are standing for election as Directors (excluding the above Directors who are standing for re-election or re-appointment) at this forthcoming 22nd Annual General Meeting.

B) Statement relating to general mandate for issue of securities in accordance with Paragraph 6.03(3) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad

The resolution in relation to the authority to issue and allot shares pursuant to Section 132D of the Companies Act, 1965, is a renewal of the general mandate for the issue of new ordinary shares in the Company which was approved at the last Annual General Meeting (AGM) of the Company held on 17 November 2014.

As at the date of the Notice of the 22nd AGM, no new shares in the Company were issued pursuant to the mandate granted to the Directors at the 21st AGM held on 17 November 2014 and which will lapse at the conclusion of the 22nd AGM.

The general mandate if passed, will provide flexibility for the Company and empower the Directors of the Company to issue and allot ordinary shares in the capital of the Company for any fund raising activities, including but not limited to placing of shares, working capital and/or funding of strategic development of the Group. The renewal of the General Mandate is sought to provide flexibility and to avoid any delay arising from and cost in convening a general meeting to obtain approval from its shareholders for such issuance of shares up to an amount not exceeding in total 10% of the issued and paid-up share capital of the Company, as the Directors consider appropriate in the best interest of the Company. This General Mandate, unless revoked or varied by the Company in a general meeting, will expire at the conclusion of next AGM of the Company. 10 ANNUAL REPORT 2015

CORPORATE INFORMATION

BOARD OF DIRECTORS

DATO’ HWANG THEAN LONG - Managing Director DATIN CHEAH GAIK HUANG - Executive Director MS. HWANG SIEW PENG - Executive Director MR. HWANG SHIN HUNG - Executive Director DATUK HAJI RADZALI BIN HASSAN - Non-Independent Non-Executive Director Y.B. SENATOR DATO’ HAJI MOHD SUHAIMI BIN ABDULLAH - Independent Non-Executive Director DATO’ AHMAD HASSAN BIN OSMAN - Independent Non-Executive Director MR. WONG THAI SUN - Independent Non-Executive Director MR. JEN SHEK VOON - Independent Non-Executive Director

AUDIT COMMITTEE Y.B. SENATOR DATO’ HAJI MOHD SUHAIMI BIN ABDULLAH - Chairman DATO’ AHMAD HASSAN BIN OSMAN - Member MR. WONG THAI SUN - Member MR. JEN SHEK VOON - Member

NOMINATION COMMITTEE DATO’ AHMAD HASSAN BIN OSMAN - Chairman Y.B. SENATOR DATO’ HAJI MOHD SUHAIMI BIN ABDULLAH - Member MR. WONG THAI SUN - Member

REMUNERATION COMMITTEE DATO’ AHMAD HASSAN BIN OSMAN - Chairman Y.B. SENATOR DATO’ HAJI MOHD SUHAIMI BIN ABDULLAH - Member MR. WONG THAI SUN - Member

COMPANY SECRETARY THUM SOOK FUN (MIA 24701)

REGISTERED OFFICE No. 1-20-1 SUNTECH @ Penang Cybercity, Lintang Mayang Pasir 3, 11950 Bayan Baru, Penang, Malaysia. Tel. No. : +604-6437387 Fax No. : +604-6437389 Web Page : http://www.suiwah.com.my

SHARE REGISTRAR SECURITIES SERVICES (HOLDINGS) SDN BHD Suite 18.05, MWE Plaza, No. 8, Lebuh Farquhar, 10200 Penang, Malaysia. Tel. No. : +604-2631966 Fax No. : +604-2628544

AUDITORS ERNST & YOUNG (AF0039) Chartered Accountants 21st Floor, MWE Plaza, No. 8, Lebuh Farquhar, 10200 Penang, Malaysia.

ADVOCATES & SOLICITORS GHAZI & LIM WONG-CHOOI & MOHD. NOR ROWENA YAM, KHOO & ASSOCIATES

PRINCIPAL BANKERS OCBC BANK (MALAYSIA) BERHAD MALAYAN BANKING BERHAD

STOCK EXCHANGE LISTING Main Market of Bursa Malaysia Securities Berhad Stock Code : 9865 Stock Name : SUIWAH 11 ANNUAL REPORT 2015

FINANCIAL HIGHLIGHTS

2012 2013 2014 2015 RM’000 RM’000 RM’000 RM’000 Revenue 381,010 372,335 378,165 399,036 Profit Before Tax 12,622 19,187 14,845 16,278 Paid up Capital 61,000 61,000 61,000 61,000 Reserves 119,917 129,922 144,210 151,722

Revenue Profit Before Tax

RM'000 RM'000 405,000 25,000 400,000 395,000 20,000 390,000 385,000 15,000 380,000 375,000 10,000 399,036

370,000 19,187 16,278

365,000 5,000 14,845 12,622 381,010 360,000 378,165 372,335 355,000 0 2012 2013 2014 2015 2012 2013 2014 2015 Year Year

Paid-up Capital Reserves

RM'000 RM'000 70,000 160,000

60,000 140,000 120,000 50,000 100,000 40,000 80,000 30,000

60,000 151,722 61,000 61,000 61,000 61,000 144,210

20,000 129,922 40,000 119,917

10,000 20,000

0 0 2012 2013 2014 2015 2012 2013 2014 2015 Year Year 12 ANNUAL REPORT 2015

DIRECTORS’ PROFILE

DATO’ HWANG THEAN LONG - Managing Director Aged 66, Malaysian

Dato’ Hwang Thean Long was appointed to the Board on 10 December 1992. He is presently the Managing Director of the Company and also acting as director of the subsidiary companies namely Crimson Omega Sdn Bhd, PT Sunshine Amanjaya Indonesia, Qdos Holdings Bhd, Qdos Marketing Sdn Bhd, Sunshine (Labuan) Private Limited, Sunshine Supermarket & Departmental Store Sdn Bhd and Sunshine Wholesale Mart Sdn Bhd.

He has more than 44 years of experience in business industry especially supermarket retailing. He started his career with a mini market when he joined his father, the late Mr. Hwang Siong Wah, the founder of the well-known Swee Wah general merchant at Ayer Itam, Penang in 1970. After taking over the Swee Wah general merchant, he has expanded the business by opening additional outlets, which comprise of Sunshine Square, Sunshine Farlim Shopping Mall, Suiwah Ayer Itam, Sunshine Lip Sin and Sunshine Bertam. His current directorship in other public company includes Penang Commercial and Industrial Development Berhad.

He is also a major shareholder of the Company by virtue of his interests held through Suiwah Holdings Sdn Bhd and Suiwah Supermarket Sendirian Berhad in the Company. He is the spouse of Datin Cheah Gaik Huang, an Executive Director of the Company and the father of Ms. Hwang Siew Peng and Mr. Hwang Shin Hung, both are Executive Directors in the Company.

Dato’ Hwang Thean Long attended all the five (5) Board Meetings held during the financial year ended 31 May 2015.

Y.B. SENATOR DATO’ HAJI MOHD SUHAIMI BIN ABDULLAH - Independent Non-Executive Director Aged 57, Malaysian

Y.B. Senator Dato’ Haji Mohd Suhaimi Bin Abdullah was appointed to the Board on 10 December 1992. He is presently the Chairman of the Audit Committee and a member of the Nomination and Remuneration Committee of the Company. He is also a director of the subsidiary companies namely Crimson Omega Sdn Bhd and Qdos Holdings Bhd.

He graduated from Havering Technical College, London in 1981 with Diploma in Business Studies. Subsequently, he obtained a professional qualification in the Chartered Institute of Transport from School of Transport, University of London in 1985 and is a member of the Chartered Institute of Transport since 1989. From 1982 to 1984, while he was completing his studies, he was engaged as a secretary with the Majlis Pelajar-Pelajar Malaysia in London, UK. There, he managed the administrative and communicative matters between Ministries of Malaysia, which have contact with the Malaysian Students Societies Council in the UK and Ireland.

From 1984 to 1985, he was employed as a Marketing Executive in Mafeta Travel Agency Limited, London, UK where he managed the sales and marketing of air tickets for Malaysia and Far East countries. From 1985 to 1987, the Foundation of Mara Education engaged him as an Assistant Secretary II, where he handled the administrative matters of the foundation.

Also in 1986, he joined Angkatan Seniman Abad XX Sdn Bhd as an Executive Director. He was in charged of all administrative and financial matters for the company, which produced feature films and sitcoms for local media. Then in 1987, he joined YPM Realities Sdn Bhd as a General Manager and subsequently joined Yayasan Bumiputera Pulau Pinang Berhad also as a General Manager in 1991. He was in charge of the overall management and day-to-day operations of the companies. He currently is the Managing Director and Chief Executive Officer of Silver Ridge Holdings Bhd.

Y.B. Senator Dato’ Haji Mohd Suhaimi Bin Abdullah attended all the five (5) Board Meetings held during the financial year ended 31 May 2015.

DATIN CHEAH GAIK HUANG - Executive Director Aged 62, Malaysian

Datin Cheah Gaik Huang was appointed to the Board on 14 March 1997. She has more than 34 years of working experience in the supermarket retailing business and also acting as director of the subsidiary companies namely Aljano Sdn Bhd, Magirex Sdn Bhd, Sunshine Electrical Superstore Sdn. Bhd, Sunshine Supermarket & Departmental Store Sdn Bhd and Sunshine Wholesale Mart Sdn Bhd. She does not hold any directorship in other public companies.

She is the spouse of Dato’ Hwang Thean Long, the Managing Director and a major shareholder of the Company. Therefore, she is deemed to have an interest in shares of the Company by virtue of her husband’s shareholdings held through SHSB and SSSB in the Company. She is also the mother of Ms. Hwang Siew Peng, who is an Executive Director of the Company.

Datin Cheah Gaik Huang attended all the five (5) Board Meetings held during the financial year ended 31 May 2015. 13 ANNUAL REPORT 2015

DIRECTORS’ PROFILE (CONTD.)

MS. HWANG SIEW PENG - Executive Director Aged 41, Malaysian

Ms. Hwang Siew Peng was appointed to the Board on 26 December 2001. She also sits on the Board of Directors of several subsidiary companies of the Company and other private companies.

She holds a Bachelor of Commerce Degree (Marketing and Management) from Curtin University of Technology, Western Australia. She worked as store operational assistant before joining Suiwah group of companies as Business Development Executive in the year 2000. She does not hold any directorship in other public companies.

She is the daughter to Dato’ Hwang Thean Long and Datin Cheah Gaik Huang, who are the Executive Directors and major shareholders of the Company. Therefore, she is deemed to have interest in shares of the Company by virtue of the shareholdings of her parents.

Ms. Hwang Siew Peng attended all the five (5) Board Meetings held during the financial year ended 31 May 2015.

DATO’ AHMAD HASSAN BIN OSMAN - Independent Non-Executive Director Aged 77, Malaysian

Dato’ Ahmad Hassan Bin Osman was appointed to the Board on 18 December 1995 and on 16 September 2004, his position has been redesignated from Non-Independent Non-Executive Director to Independent Non-Executive Director. He is presently the Chairman of the Nomination Committee and Remuneration Committee and also a member of Audit Committee in the Company. He is also a director of the subsidiary company, namely Qdos Holdings Bhd.

He graduated from the University of Malaya, Kuala Lumpur in 1962 and subsequently obtained a Masters Degree in Economics from the University of Wisconsin, Madison in 1978.

He has vast experience in the public service, spanning a period of over 30 years. His last post with the Government was as the Secretary-General of the Ministry of Housing and Local Government, Malaysia. Upon retirement, he was appointed as an Executive Director of the Islamic Development Bank based in Jeddah, Saudi Arabia from 1994 to 1997. His current directorship in other public company includes Kimble Corporation Bhd.

Dato’ Ahmad Hassan Bin Osman attended all the five (5) Board Meetings held during the financial year ended 31 May 2015.

MR. WONG THAI SUN - Independent Non-Executive Director Aged 60, Malaysian

Mr. Wong Thai Sun was appointed to the Board on 26 December 2001. He is a member of the Audit Committee, Nomination Committee and Remuneration Committee of the Company.

He holds a Bachelor of Economics and Accountancy from Australian National University. He is a member of the Malaysian Institute of Accountants and the Certified Public Accountants, Australia.

He has public practice experience in accountancy for over 30 years in Malaysia and in overseas and currently has his own public practice firm, which is Wong Thai Sun & Associates. He is the Independent Non-Executive Director of D’nonce Technology Bhd and Emico Holdings Bhd.

Mr. Wong Thai Sun attended all the five (5) Board Meetings held during the financial year ended 31 May 2015. 14 ANNUAL REPORT 2015

DIRECTORS’ PROFILE (CONTD.)

MR. JEN SHEK VOON - Independent Non-Executive Director Aged 68, Singaporean

Mr. Jen Shek Voon was appointed to the Board on 1 July 2004. He is also a member of the Audit Committee of the Company.

He has been appointed to the Board of Directors of a number of publicly listed companies on the stock exchanges of Singapore, Malaysia and Hong Kong SAR. He does not hold any directorship in other public companies in Malaysia. He is a fellow member of the Singapore Institute of Directors.

He holds Master of Bachelor of Accounting (Hons) from University of Singapore and obtained a post-graduate Commerce Hons degree from the University of New South Wales. He is a fellow of the Institute of Chartered Accountants in Australia, Association of Chartered Certified Accountants in United Kingdom and the Taxation Institute of Australia. He also is a Chartered Accountant of the Institute of Singapore Chartered Accountants (“ISCA”) and a member of Information System Audit and Control Association, British Computer Society, Institute of Internal Auditors and the Malaysian Institute of Accountants.

He currently manages his own public accounting practice, Jen Shek Voon PAS, as a sole proprietor. Mr. Jen is a Public Accountant Singapore, licensed by the Singapore Accounting and Corporate Regulatory Authority (“ACRA”).

Mr. Jen Shek Voon attended all the five (5) Board Meetings held during the financial year ended 31 May 2015.

DATUK HAJI RADZALI BIN HASSAN - Non-Independent Non-Executive Director Aged 58, Malaysian

Datuk Haji Radzali Bin Hassan is a Pioneering Environmental Entrepreneur, was appointed to the Board on 16 September 2004.

Born in 1957 in Perak, Datuk Radzali completed his Masters in Business Administration and holds an Advance Diploma in International Business Studies.

Datuk Radzali was conferred the Kestaria Setia DiRaja Award by DYMM Paduka Baginda Yang DiPertuan Agong in 1997, Darjah Mulia Seri Melaka by TYT Yang Di Pertua Negeri Melaka and Darjah Setia Pangkuan Negeri by TYT Yang Di Pertua Negeri Pulau Pinang.

Datuk Radzali is currently the Chairman/Group Managing Director of Harta Maintenance Sdn Bhd and Harta Group of Companies since April 1980, is also acting as director of the subsidiary companies namely Qdos Holdings Bhd and Qdos Flexcircuits Sdn Bhd. Datuk Radzali does not hold any directorship in other public companies.

Datuk Radzali is a major shareholder of the Company by virtue of his interests held through Hozone Sdn Bhd in the Company. Datuk is also a Director and shareholder of Hozone Sdn Bhd.

Datuk Haji Radzali Bin Hassan attended four (4) of the five (5) Board Meetings held during the financial year ended 31 May 2015.

MR. HWANG SHIN HUNG- Executive Director Aged 29, Malaysian

Mr. Hwang Shin Hung was appointed to the Board on 24 April 2015. He also sits on the Board of Directors of several subsidiary companies of the Company and other private companies.

He graduated from the University of Cambridge with a Master’s Degree in Industrial System, Manufacture and Management. He also holds a Bachelor Engineering in Electrical & Electronic Engineering from Imperial College London.

He started his career in Suiwa Hi-Tech Industrial Park in China and also worked at Intel (Product Engineer) and PricewaterhouseCoopers (Corporate Finance). He was a project consultant in numerous British companies such as Biochrom Ltd, Harvard Bioscience Inc., Shearline Ltd., Apollo Ltd., Halma Plc. and Herga Electric Ltd. He joined Federations of Malaysian Manufacturers Penang Branch and holds the position of Office Chairman for the period of 2014-2015. He was also elected as the FREPENCA Committee Member in The Free Industrial Zone, Penang, Companies’ Association for the period of 2015- 2016.

He is the son to Dato’ Hwang Thean Long, who is the Managing Director and major shareholder of Suiwah Corporation Bhd.

Save for the family relationship as disclosed above, none of the above Directors have any family relationship with other Directors and/or major shareholders of the Company. None of the above Directors have any conflict of interest with the Company or any conviction for any offences other than traffic offences within the past ten (10) years. 15 ANNUAL REPORT 2015

MANAGING DIRECTOR’S STATEMENT

On behalf of the Board of Directors, I have the pleasure to present to you the Annual Report of Suiwah Corporation Bhd. (“the Company”) and its group of companies (“the Group”) for the financial year ended 31 May 2015.

FINANCIAL OVERVIEW

The Group's financial position as at 31 May 2015 remains healthy. During the financial year ended 31 May 2015, the Group achieved revenue of RM399.04 million, which is 5.52% higher compared to RM378.17 million for the previous financial year. Property investment and development segment continued to perform a better year with 24.55% increase in revenue. Retail sales contributed RM314.40 million and manufacturing contributed RM75.87 million, which respectively represented growth of 2.72% and 16.34% against their previous year’s revenue.

Correspondingly, the Group registered a commendable profit before tax of RM16.28 million, representing 9.65% growth over the previous year’s performance.

However, the Group recorded a lower profit after tax of RM10.13 million as compared to RM17.90 million, recorded in the preceding financial year ended 31 May 2014, mainly due to the reversal of overprovision of taxation in prior year.

The drop in profit after tax during the financial year had translated to lower earnings per share of 17.67 sen as compared to 30.99 sen recorded in the preceding year ended 31 May 2014.

DIVIDEND

As part of the Group’s on-going effort to return value to shareholders, the Board has recommended a first and final single tier dividend of 6% for the FY2015. The proposed final dividend will be tabled for the shareholders’ approval at the forthcoming Twenty-second Annual General Meeting to be held on 26 November 2015.

OPERATIONS REVIEW

Retail Segment

We have a very strong brand and broad customer base, and we are building on this. We know our customers better than anyone else and are making progress with our strategy of offering a wide range of products and services across food and non-food, focusing on quality, customer service, greater value to customers and enhancing customers’ shopping experience.

In response to the changing labour market and to ensure the Group achieves a strategically aligned high performance organization, the Group embarked on a project to revamp its organisation structure design, revisiting staff’s job duties and remuneration packages. The objective is to transform and revamp the current process and benefits to a new organisation structure that is geared towards a high performance culture with key performance indicators and performance based incentives. The revamp is currently being progressively implemented across the Group at the divisional and operational levels. The transformation will further allow the Group a platform to focus on continuously improving its human capital management, career development and leadership development for staff.

Manufacturing Segment

The Group’s manufacturing segment recorded higher sales for FY2015, mainly due to the increasing sales from our new product family, Molded Interconnect Substrate (MIS).

Lean management practices and enhanced technological capabilities will be the main driving force to value-add the manufacturing segment. With market acceptance and increasing demand for (MIS), several pipe-line investments are underway for our new cutting-edge machineries. We foresee strong growth prospect in flexible printed circuits too with the rising popularity of telecommunications, consumer electronics and Internet of Things (IoT).

Property Investment and Development Segment

The Group’s property development arm, Crimson Omega Sdn Bhd, is set to launch its mixed development project in quick succession within the next one year.

Our product range include integrated high rise commercial developments, luxury serviced apartments, affordable health and wellness Business Park and hotel. Through this development arm, we have gained a development team with the expertise and proven capability to create and deliver highly sought Sunshine Tower. 16 ANNUAL REPORT 2015

MANAGING DIRECTOR’S STATEMENT (CONTD.)

LOOKING AHEAD

The impact from implementation of Goods and Service Tax (“GST”) and the weakening Ringgit Malaysia had resulted consumers' spending to grow at much lower pace compared to previous year. Consumers adopted a “wait and see” approach on the movement of the prices before purchase. Despite the challenging environment faced in the retail industry, the Group will continue its efforts to realign its growth strategies and putting in place stringent cost control measures, pursue to increase market share in terms of quality, pricing and achieve a wide range of product varieties.

CORPORATE RESPONSIBILITY

Within our business strategies, corporate responsibility remains an integral part of our efforts, despite the economic challenges we have faced. As we work to strengthen our business, we are committed to doing it right for our employees, shareholders, consumers, customers and the environment. We support programs that improve our local communities. We believe that our customers and suppliers value our efforts to operate in an ethical, environmentally sustainable, and socially responsible manner. The Group’s commitment to these aspects can be located in Statement on Corporate Social Responsibility in this Annual Report.

CORPORATE GOVERNANCE

The Group’s commitment to corporate governance is outlined in the Statement of Corporate Governance and other related reports found in the relevant sections of this Annual Report. The Board of Directors of the Company also ensures that the decision making process is impartial. Independence is assured in key appointments as well as maintaining proper standards of conduct at all times.

APPRECIATION

On behalf of the Group and the Board of Directors, I would like to thank all our shareholders, customers, bankers, suppliers, business associates and regulatory authorities for their invaluable and continuing support to the Group. We would also like to extend our gratitude and appreciation to the management team and all the employees of the Group for their diligent services, commitment and loyalty to the Group and innovations which have enabled the Group to achieve another successful year.

I would also like to extend my personal thanks to my fellow Directors for their constant dedication as the Group attributed its success to the leadership of its Board of Directors and it also owes much to the dedication of its employees and the support of its loyal customers and trust given by all our shareholders.

The Group will continue to embark on a series of adjustments its business strategies with an aim to diversify satisfactory performance for the upcoming financial year.

Thank you.

DATO HWANG THEAN LONG Managing Director

Date: 16 October 2015 17 ANNUAL REPORT 2015

STATEMENT ON CORPORATE SOCIAL RESPONSIBILITY (“CSR”)

Our business impacts the lives of millions of people every day. We believe that making this impact a positive one is not just the right thing to do - it also makes good business sense. The Group has been very active in organizing many CSR activities; engaging with our staff to behave responsibly toward the society in which we function.

In year 2015, we continued to show our commitment through the following events:-

• Sunshine Ramadan Charity Drive This is our annual commitment in bringing blessings and joy to 86 orphanages from Rumah Kebajikan Anak Perempuan Pulau Pinang and Rumah Kebajikan Anak Lelaki Pulau Pinang. On 19 July 2014, these orphanages are given Sunshine Gift Voucher to experience the thrills of shopping at Sunshine Square Bayan Baru to shop for their Raya goodies. We complemented their joy with hampers full of Raya goodies.

• Sunshine Gives Ramadan Joy to The Underprivileged Children We bring happiness and smiles to the underprivileged children at the Persatuan Kebajikan Orang Kurang Upaya Al- Bokhari, Permatang Damar Laut. On 22 July 2014, a visit was carried out by our subsidiary’s Director, Dato’ Hj. Abdul Rafique and Sunshine’s Management team giving out ‘duit raya’ and hampers to 60 unfortunate children at the center.

• Coaching The Young Scholars Working with Oriental Institute of Technology Taiwan and the competent managers of the Group, interns from Taiwan are provided with practical insight on what they learn theoretically at school in the various fields such as industrial design, advertisement design, products engineering and design. This program was carried out from 21 July 2014 to 7 September 2014.

• PC Recycling Program On 2 August 2014, Sunshine carried out another annual “PC Recycling Program”; a joint effort with Dell Asia Pacific Sdn Bhd, Penang Municipal Council and IRM Industries Sdn Bhd in reducing hazardous electronic wastes through recycling. An excellent collection unwanted electronic devices, used computer and peripherals with a total weight of 3,248.50 kg were collected from 120 participants in this 4 hours event held at Sunshine Square Bayan Baru.

• Green School Award 2015 The Retail Group forged a partnership with Penang State Government in its “Green School Award” held from April till October 2014 to effectively encourage excellence in environmental education for young people. The top three winners for the primary school category benefited from prizes worth RM7,800.00 sponsored by the Retail Group.

• A Wonderful Chinese New Year (“CNY”) with The Elderly In conjunction with the CNY celebrations, Sunshine team brought cheer around senior citizens with low income from Ayer Itam by giving out some ang pows and goodies. This good cause event was carried out on 25 January 2015 at Sunshine Farlim Shopping Mall.

• Colgate OHM Free Dental Check-up For the 8th succeeding year, Sunshine and Colgate Palmolive held the “Oral Health” campaign at Sunshine Square, Bayan Baru from 27 to 29 March 2015. Free dental checks are offered to the public and 300 children from various nurseries benefited from this campaign with good oral health information.

• Blood Donation Campaign Qdos has carried out a blood donation campaigns on 3 July 2014 and 9 March 2015 to replenish supplies of the blood bank in both the Penang General Hospital and Seberang Jaya Hospital.

Meanwhile, Sunshine Retail Group also held the “Blood Donation & Health Check” campaign at Sunshine Square, Bayan Baru in respond to the Health Ministry’s call to increase the blood bank level. A total of 208 packs of blood were collected when the campaign was held on 3 May 2015.

• Building Fund Raising Campaign Qdos complemented the Group’s CSR by sponsoring to Tzu Chi Foundation; an international humanitarian and non- governmental organization in its building fund raising event held on 8 August 2014 in aid of the 2 buildings of Tzu Chi Dialysis Center and Tzu Chi Education Center.

• Walk For A Life 2014 Qdos management and staffs give moral support and motivation to the People Living with HIV/AIDS (PLWHA) with their participation in the Walk For A Life 2014 on 30 November 2014 at the Esplanade Penang. 18 ANNUAL REPORT 2015

STATEMENT ON CORPORATE GOVERNANCE

Introduction

The Board of Directors (“Board”) of Suiwah Corporation Bhd (“SCB” or “Company”) recognizes the importance of adopting good corporate governance throughout the Group as a fundamental part of the Board’s responsibility to protect and enhance long-term shareholders’ value and the financial performance of the Company, whilst taking into account of the interests of other stakeholders.

The Statement below sets out how the Group has applied the principles and recommendations of Malaysian Code on Corporate Governance 2012 (“MCCG 2012” or “Code”) together with the provisions contained in the Main Market Listing Requirements of Bursa Malaysia Securities Berhad (“Listing Requirements”).

This Statement outlines the Group’s main corporate governance practices and policies in alignment with the recommended principles of MCCG 2012 as below:

• Establish clear roles and responsibilities • Strengthen composition • Reinforce independence • Foster commitment • Uphold integrity in financial reporting • Recognise and manage risks • Ensure timely and high quality disclosure • Strengthen relationship between company and shareholders

The following paragraphs describe how the Group has applied the Principles of the Code and how the Board has complied with the recommendations set out in the Code for the financial year ended 31 May 2015.

Principle 1 - Establish Clear Roles and Responsibilities

1.1 Board should establish clear functions reserved for Board and those to delegated to Management

The Board has been entrusted with the overall responsibility for the overall governance, strategic direction and overseeing the investments of the Group.

The Board retains full and effective control of the Group and assumes responsibility for determining the Group’s strategies and direction, shareholders and investors’ relationship, approval of annual and quarterly financial results, acquisition and disposal, major capital expenditure as well as reviewing the adequacy and integrity of the Group’s system of internal controls.

The responsibilities of the Board are inclusive of but not limited to:-

• review, adopt and monitor the implementation of a strategic plan for the Company to enhance the future growth of the Company;

• oversee the conduct of the Company’s business and evaluates whether the business is properly managed;

• identify principal risks and ensure the implementation of appropriate controls and systems to monitor and manage these risks in order to achieve a proper balance between risk incurred and potential returns to shareholders;

• review the adequacy and the integrity of the Company’s internal control system and management information systems, including systems for ensuring compliance with applicable laws, regulations, rules, directives and guidelines.

• oversee the development and implementation of shareholders’ communication policy for the Company to ensure effective communication with its shareholders and other stakeholders; and

• ensure that the Company’s financial statements are true and fair, and comply with all applicable laws and governmental regulations applicable to the Company’s business and its conduct

While Management is responsible for the day to day running of the Group’s business in accordance with the corporate objectives and goals and targets set by the Board.

The Board has delegated certain functions to certain Committees, e.g. Audit Committee, Nominating Committee and Remuneration Committee which each operating within it is clearly defined terms of reference. The Chairman of each Committee will report to the Board on the outcome of the Committee’s meetings which also include the key issues deliberated at the Committee’s meetings.

The Board has formalised a Whistle Blowing Policy, which provides guidelines and channels for the Company’s stakeholders or members of the public to report to the Company of any improper conduct on the part of any of its management, employees, directors and any other party in particular with respect to their obligations to the Company’s interests. A copy of this policy is published on the Company’s website (http://www.suiwah.com.my). 19 ANNUAL REPORT 2015

STATEMENT ON CORPORATE GOVERNANCE (CONTD.)

1.2 Board should establish clear roles and responsibilities in discharging its fiduciary and leadership functions

The Company is cognizant of the principle that there should be a clear division of responsibility between the Chairman and the Managing Director.

Currently, the position of the Chairman of the Company is vacant subsequent to the demise of the late Tun Dato’ Seri Utama Dr. Lim Chong Eu. In this respect, the Board normally elects among themselves to chair its meeting.

The Managing Director is responsible for, inter alia, exercising control over quality, quantity and timeliness of flow of information between management and the Board, and assisting in ensuring compliance with our Company’s guidelines on corporate governance. The Managing Director is also responsible for the operations, strategic planning, business development and generally charting the growth of our Company.

None of the members of the Board has unfettered powers of decision as the Group is running objectively on a transparent basis as the Board feels that there is adequate representation of independence and Non-Executive Directors (4 out of 9 are Independent Directors) on the Board. The Board is of the view that the process of decision making by the Board is independent and based on collective decisions without any individual exercising any considerable concentration of power or influence and there is good balance of power and authority with all critical committees chaired by independent Directors.

The Board comprises of the Managing Director, three (3) Executive Directors, one (1) Non-Independent Non- Executive Director and four (4) Independent and Non-Executive Directors, all of whom bring to the Group a broad and valuable range of experience. The Board has more than 1/3 Independent Directors as its members in which four (4) out of Nine (9) Directors are Independent and Non-Executive Directors.

The presence of Independent and Non-Executive Directors in the Board provides objectivity and they are of the caliber necessary to carry sufficient weight in Board decisions. The role of the Independent and Non-Executive Directors is particularly important in ensuring that the strategies proposed by the management are fully discussed and examined, and takes into account the long-term interests, not only of the shareholders, but also of employees, customers, suppliers, and the many communities in which the Group conducts business.

The Group Managing Director is responsible for the day to day management of the business and operations of the Company and Group. He is supported by a management team to ensure the operations are carried out smoothly.

The Board meets regularly at least four (4) times a year but additional meetings would be convened as and when necessary. At the end of every quarter, the Group’s financial statements and results are tabled and deliberated by the Board. During the Board Meeting, the Board reviews the operation and performance of the Group and any other strategic issues that may affect the Group’s business.

1.3 Formalise ethical standards through a code of conduct and ensure its compliance

The Board has in place a code of ethics for the Directors. The code includes amongst of others the respect for the individual, create a culture of open and honest communication, set tone at the top, uphold the law, avoid conflict of interest, set metrics and report results accurately. The Code of Conduct is available for reference at the Company’s website at www.suiwah.com.my

The Board conducted themselves in an ethical manner while executing their duties and functions, and complied with the Company’s Code of Ethics recommended by the Companies Commission of Malaysia.

In addition to the Company Directors’ Code of Ethics established by Companies Commission of Malaysia, both Directors and employees are required to uphold the highest integrity in discharging their duties and in dealings with various stakeholders such as shareholders, customers, fellow employees and regulators.

1.4 Ensure the Company’s strategy promote sustainability

The Company focuses on key areas of environment conservation and social contribution with the aim to promote sustainable development. A report on sustainability activities, demonstrating the Company’s commitment to the global environmental, social, governance and sustainability agenda, appears in the Corporate Responsibility Statement of this Annual Report. 20 ANNUAL REPORT 2015

STATEMENT ON CORPORATE GOVERNANCE (CONTD.)

1.5 Procedures to allow the Directors access to information and advice

All Directors have full and timely access to information through the Board papers distributed in a timely manner prior to the Board meetings. The Board papers provide, among others, periodic financial information, annual budget, operational and corporate issues, investment proposals and management proposals that require Board’s approval. Senior management staff may be invited to attend Board meetings to provide the Board detailed explanations and clarifications on certain matters that are tabled by them to the Board. The Directors may also interact directly with the Management, or request further explanation, information or updates on any aspect of the Company’s operations or business concerns from them. In this way the Board has full access to all information on the Company’s affairs to enable the proper discharge of duties.

The Board may seek independent professional advice at the Company’s expense on specific issues to enable it to discharge its duties in relation to the matters being deliberated. Individual Director may also obtain independent professional or other advice in furtherance of their duties, subject to the approval of the Board, depending on the quantum of the fees involved.

1.6 Ensure Board is supported by suitably qualified and competent Company Secretary

The Board is satisfied with the performance and support rendered by the Company Secretary to the Board in the discharge of its functions. The Company Secretary plays an advisory role to the Board in relation to the Company’s constitution, Board’s policies and procedures and compliance with the relevant regulatory requirements, codes or guidance and legislations. The Board is supported by suitably qualified and competent company secretary who is member of a professional body.

The Board has ready and unrestricted access to the advice and services of the Company Secretary, who is considered capable of carrying out the duties to which the post entails.

1.7 Formalise, periodically review and make public the Board Charter

The Board Charter (“Charter”) serves as a reference point for the Board’s activities where the Board has established clear functions reserved for the Board and those delegated to Management. The Charter provides guidance for Directors and Management on the responsibilities of the Board, its Committees and requirements of Directors and it is subject to periodical review to ensure consistency with the Board’s strategic intent as well as relevant standards of corporate governance. Salient terms of the Charter are made available at the Company’s website at www.suiwah.com.my

Principle 2 – Strengthen Composition

2.1 Establish a Nominating Committee (“NC”) which should comprise exclusively Non-Executive Directors, a majority of whom must be independent

The NC of the Company was established on 29 April 2002. The NC comprises three (3) Non-Executive Directors, majority of who are Independent Non-Executive Directors as follows:

Chairman Dato’ Ahmad Hassan Bin Osman (Independent Non-Executive Director)

Members Y.B. Senator Dato’ Haji Mohd Suhaimi Bin Abdullah (Independent Non-Executive Director) Mr. Wong Thai Sun (Independent Non-Executive Director)

The NC convened three (3) meetings with full attendance during the financial year 2015.

2.2 NC should develop, maintain and review criteria for recruitment process and annual assessment of Directors

The NC is empowered to bring to the Board, recommendations as to the appointment of any new Director or to fill board vacancies as and when they arise in making its recommendation, the NC will consider the required mix of skills, knowledge, expertise, experience and other qualities, including core competencies which should bring to the Board.

The NC is empowered to bring to the Board, recommendations as to the appointment of any new director or to fill board vacancies as and when they arise. In making its recommendation, the NC will consider the required mix of skills, knowledge, expertise, experience and other qualities, including core competencies which Directors of the Company should bring to the Board.

The NC also ensures that the Board has an appropriate balance of expertise and ability. For this purpose, the Committee regularly reviews the profile of the required skills and attributes. In addition, the Committee also regularly assesses the effectiveness of the Board as a whole and the contribution of each individual director including Independent Non- Executive Director. All assessments and evaluations carried out by the NC in discharging its functions have been well documented.

During the financial year 2015, the NC conducted an annual assessment of its Directors and the effectiveness of the Board of Directors as a whole. It also conducted an assessment of the Directors who are subject to retirement at the forthcoming Annual General Meeting (“AGM”) in accordance with the provisions of the Articles of Association of the Company and the relevant provisions of the Companies Act, 1965. 21 ANNUAL REPORT 2015

STATEMENT ON CORPORATE GOVERNANCE (CONTD.)

The nomination and election process for new director(s) is as follows:-

(i) The NC receives a nomination from :- a. A Director of the Company; or b. Requisition from the shareholders. (ii) The NC shall review the proposed candidate(s) and if need be, to meet up with the candidate(s) for an interview; (iii) The NC shall report its findings and recommendations to the Board for consideration; (iv) The Board through the NC, will review the suitability of an individual to be appointed taking into account the skills, expertise, background, experience, independent judgement, board interaction and any criteria deemed fit; (iv) If the nomination is from one of the Directors, the election process shall be conducted at a meeting of the Directors by show of hands; (v) If the nomination is from the shareholders, the election process shall be conducted at an AGM or Extraordinary General Meeting by show of hands or poll, as the case maybe; and (vi) Invitation or offer to be made to the proposed candidate(s) after the approval from the Board members at the meeting.

The Board, upon the assessment and recommendation made by the NC, has put in a Board Diversity Policy to ensure the Company’s strategic intent for boardroom diversity is the attraction, retention and development of a diverse team of skilled people towards the delivering of the Company’s strategy.

The Company has in place a Board Diversity Policy and it is published on the Company’s website (http://www.suiwah. com.my).

While the Board recognizes the initiatives by the government to enlarge the women’s representation at boardroom, the Board composition comprise of two (2) female Directors out of the nine (9) Directors.

During the financial year 2015, the NC conducted an assessment of the Directors who are subject to retirement at the forthcoming AGM in accordance with the provisions of the Articles of Association of the Company and the relevant provisions of the Companies Act, 1965.

2.3 Board should establish formal and transparent remuneration policies and procedures to attract and retain Directors

The Remuneration Committee (“RC”) of the Company comprises a majority of non-executive directors and its composition is as follows:-

Chairman Dato’ Ahmad Hassan Bin Osman (Independent Non-Executive Director)

Members Y.B. Senator Dato’ Haji Mohd Suhaimi Bin Abdullah (Independent Non-Executive Director) Mr. Wong Thai Sun (Independent Non-Executive Director)

The RC has convened only one (1) meeting with full attendance during the financial year 2015.

The RC is primarily responsible for recommending the policy and framework of directors’ remuneration, including the terms and remuneration of the executive directors, to the Board in order to align with the business strategy and long term objectives of the Company. The remuneration of directors is determined at levels which enable the Company to attract and retain Directors with the relevant experience and expertise to govern the Group effectively.

During the financial year 2015, the RC had performed its duty to assess annually the remuneration package of its Executive Directors and proposed the remuneration of Executive Directors to the Board for consideration.

In the case of Executive Directors, the remuneration comprises salary, allowances and bonus. The fees payable to Non-Executive Directors are approved by shareholders at each AGM. All Directors are also paid allowance for each meeting they attend. 22 ANNUAL REPORT 2015

STATEMENT ON CORPORATE GOVERNANCE (CONTD.)

The details of the Directors’ remuneration for the financial year ended 31 May 2015 are as follows:

Company Group Non- Non- Category of Remuneration Executive Executive Executive Executive Directors Directors Directors Directors (RM) (RM) (RM) (RM) Directors’ Fees 174,600 65,000 177,600 74,000 Salaries, Bonus and Other Emoluments - - 487,718 - Meeting Allowance 18,000 52,500 18,000 52,500

Total 192,600 117,500 683,318 126,500

The number of Directors whose remuneration falls into each successive band of RM50,000 is as follows:

Number of Directors Range of Remuneration Executive Directors Non-Executive Directors Below RM50,000 1 5 RM50,001- RM100,000 - - RM100,001- RM150,000 2 - RM300,001- RM350,000 1 - Above RM350,000 - -

Total 4 5

Principle 3 – Reinforce Independence

3.1 Board should undertake an assessment of its Independent Directors annually

The Board through the NC assessed the independence of Independent Directors on an annual basis, with a view to ensure the Independent Directors bring independent and objective judgement to the Board and this mitigates arising from conflict of interest or undue influence from interested parties. Where there is a likely conflict of interest position, the Board would take appropriate action to rectify the situation. Should any Director has an interest in any matter under deliberation, he is required to disclose his interest and abstain from participating in the discussions and voting on the matter.

The Board also received confirmation in writing from the Independent Directors of their independence. The Board is satisfied with the assessment of the Independent Directors.

3.2 Tenure of Independent Director should not exceed cumulative term of nine (9) years. Upon completion of tenure, Independent Director can continue serving but as Non-Executive Director

One of the recommendation of the Code states that the tenure of an Independent Director should be capped at nine (9) years, either be a consecutive service of nine (9) years or a cumulative service of nine (9) years with intervals. Upon completion of the nine (9) years tenure in office, an Independent Director may continue to serve on the company subject to the re-designation as a Non-Independent Director.

Currently, the following Independent Directors, who have served the Company as Independent Non-Executive Directors for a cumulative term more than nine (9) years are: - (i) Y.B. Senator Dato’ Haji Mohd Suhaimi Bin Abdullah (ii) Dato’ Ahmad Hassan Bin Osman (iii) Mr. Wong Thai Sun (iv) Mr. Jen Shek Voon

However, the NC and the Board have assessed the independence of Y.B. Senator Dato’ Haji Mohd Suhaimi Bin Abdullah, Dato’ Ahmad Hassan Bin Osman, Mr. Wong Thai Sun and Mr. Jen Shek Voon are satisfied with the skills, contribution and independent judgment that the said independent Directors bring to the Board and was of the view that the said Independent Directors remain objective and independent in expressing their views and in participating in deliberations and decision making of the Board and Board Committees. The length of their service on the Board does not in any way interfere with their exercise of independent judgment and ability to act in the best interests of the Company. 23 ANNUAL REPORT 2015

STATEMENT ON CORPORATE GOVERNANCE (CONTD.)

3.2 Tenure of Independent Director should not exceed cumulative term of nine (9) years. Upon completion of tenure, Independent Director can continue serving but as Non-Executive Director (contd.)

As all the members of NC have acted as Independent Directors for the tenure in office for more than a cumulative term of nine (9) years and in line with Recommendation 3.2 of MCCG 2012, the Board (save for Y.B. Senator Dato’ Haji Mohd Suhaimi Bin Abdullah, Dato’ Ahmad Hassan Bin Osman, Mr. Wong Thai Sun and Mr. Jen Shek Voon who have abstained themselves from deliberation and forming the opinion on the subject matter) recommends and supports them to continue to act as an Independent Non-Executive Directors of the Company. The relevant motion on the subject matter will be presented to the shareholders for consideration at the forthcoming AGM.

3.3 Must justify and seek shareholders’ approval in retaining Independent Directors (serving more than 9 years)

This was explained in the foregoing section.

3.4 Positions of Chairman and Managing Director to be held by different individuals

This was explained in the Paragraph 1.2 above.

3.5 The Board must comprise majority Independent Directors if the Chairman is not an Independent Director

It is recommended that the Board must comprise a majority of Independent Directors where the position of the Chairman is not an Independent Director. Currently, four (4) out of nine (9) directors are Independent Non-Executive Directors. The Board therefore has a strong independence element in its composition as there is an appropriate balance of power and authority in the Board to ensure that no individual dominates the decision making process and the results thereof.

Principle 4: Foster Commitment

4.1 Board should set expectations on time commitment for its members and protocols for accepting new directorships

The Board is satisfied with the level of time commitment given by the Directors towards fulfilling their rolesand responsibilities as Directors of the Company.

The Board would have at least four (4) regular scheduled meetings annually, with additional meetings convened as and when necessary.

A total of five (5) Board meetings were held in financial year ended 31 May 2015. The following is the record of attendance by the Board members during the financial year:-

Name of Directors Total Meetings Attended % of Attendance Executive Directors Dato’ Hwang Thean Long 5 100 Datin Cheah Gaik Huang 5 100 Ms. Hwang Siew Peng 5 100 Mr. Hwang Shin Hung (Note 1) N/A N/A Independent and Non-Executive Directors Y.B. Senator Dato’ Haji Mohd Suhaimi Bin Abdullah 5 100 Dato’ Ahmad Hassan Bin Osman 5 100 Mr. Wong Thai Sun 5 100 Mr. Jen Shek Voon 5 100 Non-Independent and Non-Executive Director Datuk Haji Radzali Bin Hassan 4 80

Note

Note 1 - Mr. Hwang Shin Hung was appointed as Executive Director with effect from 24 April 2015.

In the intervals between Board meetings, for exceptional matters requiring urgent Board decisions, the Board decisions are obtained via circular resolutions to which sufficient information required is attached to facilitate the Board in making informed decisions.

The Board is reminded to notify the Chairman before accepting any new directorship. 24 ANNUAL REPORT 2015

STATEMENT ON CORPORATE GOVERNANCE (CONTD.)

4.2 Board should ensure members have access to appropriate continuing education programme

All Directors have attended the Mandatory Accreditation Programme (“MAP”) as required by Bursa Malaysia Securities Berhad (“Bursa Securities”) on all directors of listed companies.

The Directors are encouraged to attend the relevant training courses deemed necessary so as to keep abreast with the changes on guidelines issued by the relevant authorities as well as the latest developments in the market place, which can complement their services to the Group. The Directors are also updated by the Company Secretary on any changes to legal and governance requirements of the Group.

During the year, the Board has assessed the training and development needs of the directors and decided to organise one (1) day in-house training to brief and update the directors of the followings:-

• Overview of the Sunshine Tower Project; • 2015 Roadmap for Sunshine Group; and • 2015 Roadmap for Qdos Group.

At the same time, the Board has also invited an external professional consulting firm to give briefing to the Board members in relation to the overview of Goods and Services Tax (“GST”) and its impact toward the Company before GST came into force.

In addition to the above in-house training organized by the Company for its Directors, the following Directors have also attended the following training programmes during the financial year ended 31 May 2015:-

No. of hours / Title of the seminars, workshops or courses attended Mode of Training days spent Dato’ Ahmad Hassan Bin Osman • Focus Group Session For Board Of Directors On Strengthening Seminar 1 day Corporate Governance Disclosure Among The Listed Issuer Datuk Haji Radzali Bin Hassan • Focus Group Session For Board Of Directors On Strengthening Seminar 1 day Corporate Governance Disclosure Among The Listed Issuer • Taklimat Perlaksanaan Program Promosi Kecemerlangan Organisasi Seminar 1 day (PPKO) • Organization Profile (OP) : Groom Big Workshop 2 days Mr. Wong Thai Sun • Malaysian Taxation for Entrepreneurs & Employers Seminar 1 day • New Public Rulings for 2014 & 2015 Seminar 1 day • GST for Property Developers & Construction Industry Seminar 1 day Ms. Hwang Siew Peng • Navigating The New Retail Landscape Seminar 1 day • FAPRA HOD Programme by Philippines Retail Association Program/Study Trip 4 days • Annual Shopping Mall Summit Hongkong Conference/Forum 2 days Mr. Hwang Shin Hung • Semiconductor Fabrication Technology Seminar 2 days • Principle In IC Packaging Seminar 2 days • IC Transposer & Embedded Passive Technologies Seminar 2 days • High Impact Leadership : Getting Result Workshop 1 day • Business Tax Services Seminar Seminar 1 day • Fundamentals of IC Packaging Seminar 2014 Seminar 2 days

Apart from the above formal seminars or courses, the Directors were also updated on the statutory and regulatory requirements from time to time through the Company Secretary during the Board meetings. The Board will continue keep abreast with new statutory or regulatory development and various operational issues facing the changing business environment within the Group.

Principle 5: Uphold integrity in financial reporting

5.1 Audit Committee should ensure financial statements comply with applicable financial reporting standards

The Board acknowledges their responsibility to ensure that the financial statements of the Company and the Group are prepared in accordance with the provisions of the Companies Act, 1965 and approved accounting standards in Malaysia so as to give a true and fair view of the state of affairs and the result of the Company and of the Group.

The Audit Committee assists the Board in scrutinizing information for disclosure to ensure accuracy, adequacy and completeness. The Responsibility Statement by the Directors pursuant to the Listing Requirements in relation to the financial statements is set out in this Annual Report. 25 ANNUAL REPORT 2015

STATEMENT ON CORPORATE GOVERNANCE (CONTD.)

5.2 Audit Committee should have policies and procedures to assess suitability and independence of External Auditors

A transparent and appropriate relationship with the External Auditors to enable them to independently report to shareholders in accordance with statutory and professional requirement is established through the Audit Committee. The role of the Audit Committee members and their relationship with the External Auditors may be found in the Audit Committee Report in the Annual Report.

The Audit Committee has obtained a written assurance from the external auditors confirming that they were, and has been, independent throughout the conduct of the audit engagement in accordance with the terms of all relevant professional and regulatory requirements.

The Audit Committee is satisfied with the competence and independence of the external auditors andhad recommended the re-appointment of the external auditors to the Directors at the Annual General Meeting.

The Audit Committee also met with the External Auditors twice during the financial year ended 31 May 2015 without the presence of Management and Executive Directors in compliance with the best practices of the Code. The Audit Committee would meets with the external auditors additionally whenever it deems necessary. In addition, the external auditors are invited to attend the AGM of the Company and are available to answer shareholders’ questions on the conduct of the statutory audit and the preparation and contents of their audit report.

Principle 6: Recognise and Manage Risks

6.1 Board should establish a sound framework to manage risks

The Audit Committee oversees the risk oversight and risk management of the Company through the adoption of risk management policy.

The Group is in the process to develop and formalize an appropriate risk management framework and structure and details of the risk management are set out in the Risk Management and Internal Controls Statement in this Annual Report.

6.2 Board should establish an internal audit function which reports directly to Audit Committee

It is the responsibility of the Board to maintain sound system of internal controls to safeguard shareholders’ investment.

The Internal Audit function of the Group has been outsourced to a professional firm who is assisting the Audit Committee in discharging its duties and responsibilities. The role of the Internal Audit is to provide the Audit Committee with independent assessment for adequate, efficient and effective internal control system to ensure compliance with policies and procedures. The Internal Audit function is also involved in risk management, risk evaluation and recommendation of control activities to manage such identified risk. The attainment of such objectives involves the following activities being carried out by the Internal Auditors:

(i) Reviewing and appraising the soundness, adequacy and application of accounting, financial and other controls and promoting effective control in the Company and the Group at reasonable cost. (ii) Ascertaining the extent to whom the Group’s and the Company’s assets are accounted for and safeguarded from losses of all kinds. (iii) Attending stock counts of merchandise. (iv) Appraising the reliability and usefulness of information developed within the Group and the Company for management reporting purposes. (v) Carrying out audit work and to liaise with the external auditors to maximise the use of resources and for effective coverage of audit risks. (vi) Recommending improvement to the existing systems of controls. (vii) Carrying out investigations and special reviews requested by management and/or the Audit Committee of the Company. (viii) Continuously identifying opportunity for improvement in the operations of business processes of the Company and the Group. (ix) Discuss with management action taken to improve the system of internal control.

The Internal Auditors attended the meetings and reported directly to the Audit Committee on the internal audit reports during the financial year. The Internal Auditors tabled their audit findings on inventory management and procurement and risk assessment 2015 to the Audit Committee.

The total costs of the internal audit function in respect of the financial year ended 31 May 2015 was RM12,800.00 only. 26 ANNUAL REPORT 2015

STATEMENT ON CORPORATE GOVERNANCE (CONTD.)

Principle 7: Ensure timely and high quality disclosure

7.1 Ensure company has appropriate corporate disclosure policies and procedures

The Board recognises the importance of disclosing of all material information in an accurate, clear and complete manner in accordance to the disclosure requirements as set out in the Listing.

The Board has delegated the authority to the Executive Directors to approve all announcements for release to Bursa Securities. The Group Managing Director and/or Executive Directors work closely with the Board, the Senior Management and the Company Secretary who are privy to the information to maintain strict confidentiality of the information.

7.2 Encourage company to leverage on information technology for effective dissemination of information The Company continues to recognise the importance of transparency and accountability to its shareholders and investors. The Board always ensures that the shareholders are informed of the financial performance and major corporate activities of the Company. Such information is communicated to shareholders and investors through various disclosures and announcements to Bursa Securities, including the quarterly financial results, annual reports and where appropriate, circulars and press releases.

Apart from the mandatory announcements through the Bursa Securities, the Company also maintains a website www.suiwah.com.my to which shareholders and investors can have access to information on the operations and business activities of the Group.

Investor relations activities such as meetings with fund managers and analysts and interviews by the press are held at appropriate time to explain the Group’s strategy, performance and major developments.

Principle 8: Strengthen relationship between Company and shareholders

8.1 Take reasonable steps to encourage shareholder participation at general meetings The AGM is the principal form for communicating with shareholders. Shareholders who are unable to attend are allowed to appoint proxy, who need not be the shareholders, to attend and vote on their behalf. Board members are present to answer questions raised by shareholders. Shareholders are given the opportunity to ask questions during the questions and answers session prior to each resolution being proposed to consideration by shareholders.

The Company provides information to the shareholders with regard to, amongst others, details of the AGM, their entitlement to attend the AGM, the right to appoint a proxy and also the qualifications of a proxy.

8.2 Board should encourage poll voting The Chairman of the meeting would remind the shareholders, proxies and corporate representatives on their rights to demand for a poll in accordance with the provisions of the Articles of Association of the Company for any resolutions. The voting process at the AGM shall be by way of show of hands unless a poll is demanded. The Chairman may demand for a poll for any substantive resolutions put forward for voting at the shareholders’ meetings, if so required. The Company’s share registrar’s system is well equipped for any poll voting should the circumstances arise.

8.3 Board should promote effective communication and proactive engagements with shareholders In maintaining the commitment to effective communication with shareholders, the Group adopts the practice of comprehensive, timely and continuing disclosures of information to its shareholders as well as to the general investing public. The practice of disclosure of information is not just established to comply with the requirements of the Listing Requirements. It also adopts the recommendations of the Code with regard to strengthening engagement and communication with shareholders. Where possible and applicable, the Group also provides additional disclosure of information on a voluntary basis. The Group believes that consistently maintaining a high level of disclosure and extensive communication with its shareholders is vital to shareholders and investors to make informed investment decisions.

The Annual Report is the main channel of communication between the Company and its stakeholders. The Annual Report communicates comprehensive information of the financial results and activities undertaken by the Group. As a listed issuer, the contents and disclosure requirements of the annual report are also governed by the Listing Requirements.

Another key avenue of communication with its shareholders is the Company’s AGM, which provides a useful forum for shareholders to engage directly with the Company’s Directors. At each AGM, the Directors of the Company would be present at the meetings to answer any questions that the shareholders may ask. The Chairman of the meeting provided time for the shareholders to ask questions for each agenda in the notice of the AGM. The External Auditors were also present at the AGM to answer any questions that the shareholders may ask. The shareholders were also able to meet with the Directors after the meeting while they mingled with the shareholders, proxies and corporate representatives.

Compliance Statement The Board is satisfied that in financial year 2015, save for the above relevant explanations, the Company is in compliance with principles and recommendations of the Code.

This statement is made in accordance with the resolution of the Board dated 17 September 2015. 27 ANNUAL REPORT 2015

STATEMENT OF RISK MANAGEMENT AND INTERNAL CONTROL

The Board is committed to nurture and preserve throughout the Group a sound system of risk management and internal controls and good corporate governance practices as set out in the Board’s Statement on Risk Management and Internal Control made in compliance with Para 15.26(b) of the Listing Requirements of Bursa Securities and guided by the Statement on Risk Management and Internal Control: Guidelines for Directors of Listed Issuers.

BOARD RESPONSIBILITY

The Board continually reviews the adequacy and effectiveness of the Group’s risk management and internal control system which has been embedded in all aspects of the Group’s activities and reviews the processes, responsibilities and assesses for reasonable assurance that risks have been managed within the Group’s risk appetite and tolerable ranges. In view of the limitations that are inherent in any systems of internal control, the systems of internal control are designed to manage risk within tolerable levels rather than eliminate the risk of failure to achieve business objectives. Hence, such system by its nature can only provide reasonable and not absolute assurance against material misstatement, error or losses.

The Board has received assurance from the Chief Executive Officer and Managing Director that the Group’s risk management and internal control system is operating adequately and effectively, in compliance with applicable laws, regulations, rule, directives and guidelines.

MANAGEMENT RESPONSIBILITY

The implementation of the risk management process for the Group is the responsibility of the Working Committee comprising the Chief Executive Officer and the Business / Operations Heads of the Group’s operating units. The Working Committee is tasked to undertake:

• The implementation and maintenance of the risk management process

• To ensure the effectiveness of the risk management process and the implementation of risk management policies

• The identification of risks relevant to the Group that may impede the achievement of its objectives

Acknowledging the differences in the operational set up of the Group’s principal subsidiary companies, the Working Committee has taken into account the representations made by its principal subsidiary companies in respect of their state of risk management process.

KEY RISK MANAGEMENT

With the increasingly complex and dynamic business environment, proactive management of the overall business risks is a prerequisite in ensuring that the organisation achieves its strategic objectives. The Group is committed to ensuring that it plans and executes activities to ensure that the risks inherent in its business activities are to be regarded an integral part of the Group’s philosophy and business practices and not in isolation. The management of risks is aimed at achieving an appropriate balance between realising opportunities for gains while minimising losses to the Group.

Goods and Services Tax Working Committee

The Group has established a Goods and Services Tax (GST) Working Committee which serves to inform and provide guidance to Directors, senior management, functional line management and staff in managing risks affecting the businesses and operations of the Group.

Disaster Recovery Solutions

With threats of management information system (“MIS”) failure and other potential hazards such as fires, floods, earthquakes and major equipment failures, amongst others, the continuity of business operations and statutory regulatory compliance is of a major concern to the Group.

In line with this, during the year, the Group has implemented a disaster recovery solution to ensure both critical data, application and complete system are protected across its retail business segment. Few back up servers are placed at various locations to act as a warm site for system recovery in the event of a MIS failure.

Directors’ Continuing Education Program

The Board and employees of the Group are committed to adhering to the best practices in corporate governance and observing the highest standards of integrity and behaviour in all activities conducted by the Group.

In furtherance of these commitments, the Education Program was aimed at providing the Directors with constructive strategic business plan, opportunities and risks.

The expectations of the Board are clearly discussed with and understood by the Management. 28 ANNUAL REPORT 2015

STATEMENT OF RISK MANAGEMENT AND INTERNAL CONTROL (CONTD.)

INTERNAL CONTROLS SYSTEM

The internal audit control system of the Group covers governance, risk management, organizational, financial strategy, business and operations, and regulatory and compliance control matters.

On quarterly basis, audit reports are submitted for review and approval by the Group Audit Committee. Included in the reports are recommended corrective measures on risk identified, if any, for implementation by Management.

INTERNAL CONTROL PROCESSES

The other key elements of the Group’s internal control systems are described below:-

• Clearly defined delegation of responsibilities to committees of the Board and to management of Head Office and operating units, are set out in the Company organization structure

• Authority and responsibility of each operating unit or department are clearly defined under respective job description. Each department is functioned and report independently to the Chief Executive Officer

• Grievance Procedures is incorporated in The Employees Handbook to raise employees concerns regarding malpractices and irregularities affecting the Group

• Code of ethics are established and adhered to by all employees to ensure high standards of conduct and ethical values in all business practices

• The Board reviews all areas of significant financial risk and approves all significant capital projects and investments after careful corporate review

• Annual budgets are reviewed and approved by the Chief Executive Officer. The Group senior management meets on a monthly basis with operating company management to review their business and financial performance against the business plans and approved budgets. Significant business risks and variances relevant to each operating company are reviewed in these meetings

• Regular visits to operating units by senior management

• In house training and development programmes conducted by outsourced training house, corresponding to the needs of all level of employees

• Relevant executive directors and senior management have been delegated with specific accountability for monitoring the performance of designated business operating units

• The system of internal control was satisfactory and has not resulted in any material losses, contingencies or uncertainties that would require disclosure in the Group’s Annual Report

REVIEW OF THE STATEMENT BY EXTERNAL AUDITOR

The external auditor has reviewed this Statement for inclusion in the Group’s Annual Report for the financial year ended 31 May 2015. The external auditor has reported to the Board that nothing has come to its attention that causes it to believe that the Statement is inconsistent with its understanding of the process adopted by the Board in reviewing the adequacy and integrity of the risk management system and internal controls.

The Group will continue to monitor all major risks affecting the Group and take the necessary measures to mitigate them and enhance the adequacy and effectiveness of the risk management and internal control system of the Group.

This Statement on Risk Management and Internal Control is made in accordance with the resolution of the Board of Directors dated 17 September 2015. 29 ANNUAL REPORT 2015

AUDIT COMMITTEE REPORT

Members

Y.B. Senator Dato’ Haji Mohd Suhaimi Bin Abdullah - Chairman (Independent Non-Executive Director) Dato’ Ahmad Hassan Bin Osman - Member (Independent Non-Executive Director) Mr. Wong Thai Sun - Member (Independent Non-Executive Director) Mr. Jen Shek Voon - Member (Independent Non-Executive Director)

Summary of Terms of Reference

Constitution

(i) The Audit Committee was established by the Board of Directors (“the Board”) of the Company on 21 June 1995.

(ii) The Board shall ensure that the composition and functions of the Audit Committee comply as far as possible with the Bursa Malaysia Securities Berhad’s (“Bursa Securities”) Main Market Listing Requirements (“Listing Requirements”) as well as other regulatory requirements.

Objectives

The principal objectives of the Audit Committee are to assist the Board in discharging its statutory duties and responsibilities relating to accounting and financial reporting practices of the Company and its subsidiaries. In addition, the Audit Committee shall:

(i) evaluate the quality of the audits performed by the Internal and External Auditors;

(ii) provide assurance that the financial information presented by Management is relevant, reliable and timely;

(iii) oversee compliance with laws and regulations and observance of a proper code of conduct; and

(iv) determine the quality, adequacy and effectiveness of the Group’s control environment and quality of the audits.

Membership

The Audit Committee shall be appointed by the Board from amongst its Directors which fulfill the following requirements:

(i) The Audit Committee must be composed of no fewer than three (3) members;

(ii) All the Audit Committee members must be Non-Executive Directors, with a majority of members must be independent. No alternate Director is to be appointed as a member of the Audit Committee.

(iii) At least one (1) member of the Audit Committee: (a) must be a member of the Malaysian Institute of Accountants (“MIA”); or (b) if he is not a member of the MIA, he must have at least three (3) years’ working experience; and i. he must have passed the examinations specified in Part I of the 1st Schedule of the Accountants Act, 1967; or ii. he must be a member of one of the associations of accountants specified in Part II of the 1st Schedule of the Accountants Act, 1967; or (c) fulfills such other requirements as prescribed or approved by Bursa Securities.

The definition of “Independent Directors” shall have the meaning given in Chapter 1.01 of the Listing Requirements.

The Chairman of the Audit Committee shall be appointed among the members of the Audit Committee who shall be an Independent Director. In the absence of the Audit Committee Chairman and/or an appointed deputy, the remaining Audit Committee members present shall elect one of themselves to chair the Audit Committee meeting.

Mr. Wong Thai Sun is a member of the MIA and the Certified Public Accountants, Australia. Mr. Jen Shek Voon is a Chartered Accountant of the Institute of Singapore Chartered Accountants (“ISCA”) and a member of Information System Audit and Control Association, British Computer Society, a member of Institute of Internal Auditors and MIA. 30 ANNUAL REPORT 2015

AUDIT COMMITTEE REPORT (CONTD.)

Meetings

(i) The Audit Committee shall meet at least four (4) times a year, with due notice of issues to be discussed, and shall record its conclusions in discharging its duties and responsibilities and at such times as and when necessary.

(ii) A quorum for the Audit Committee meeting shall consist of a majority of Independent Non-Executive Directors and shall not be less than two (2). For the purpose of this provision, any Audit Committee members who is able (directly or by telephone communication) to speak and shall be entitled to vote or be counted in quorum accordingly.

(iii) Upon the request of the External Auditors, the Chairman of the Audit Committee shall convene a meeting of the Audit Committee to consider any matter the External Auditors believe should be brought to the attention of the Directors or Shareholders.

(iv) Notice of Audit Committee meetings shall be given to all the Audit Committee members unless the Audit Committee waives such requirement.

(v) The Finance Manager, the Head of Internal Audit and representatives of the External Auditors shall normally attend meetings. Other Board members and employees may attend meetings upon the invitation of the Audit Committee. However, the Audit Committee shall meet with the External Auditors, the Internal Auditors or both, without other Board members and Management present whenever deemed necessary.

(vi) Questions arising at any meeting of the Audit Committee shall be decided by a majority of votes of the members present, and in the case of equality of votes, the Chairman of the Audit Committee shall have a second or casting vote.

(vii) The Company Secretary shall be the Secretary of the Audit Committee.

During the financial year ended 31 May 2015, five (5) Audit Committee meetings were held. Details of attendance of each Audit Committee member were as follows:-

No. of the Audit Committee Name of Directors % of Attendance Meetings Attended Y.B. Senator Dato’ Haji Mohd Suhaimi Bin Abdullah 5 100 Dato’ Ahmad Hassan Bin Osman 5 100 Mr. Wong Thai Sun 5 100 Mr. Jen Shek Voon 5 100

Authority

The Audit Committee shall, in accordance with a procedure to be determined by the Board and at the expense of the Company,

(i) have explicit authority to investigate any matter within its terms of reference, the resources to do so, and full access to information. All employees shall be directed to co-operate as requested by members of the Audit Committee.

(ii) have full and unlimited/unrestricted access to all information and documents/resources which are required to perform its duties as well as to the Internal and External Auditors and Senior Management of the Company and Group.

(iii) obtain independent professional or other advice and to invite outsiders with relevant experience to attend, if necessary.

(iv) have direct communication channels with the External Auditors and person(s) carrying out the internal audit function or activity.

Where the Audit Committee is of the view that the matter reported by it to the Board has not been satisfactorily resolved resulting in a breach of the Listing Requirements, the Audit Committee shall promptly report such matter to Bursa Securities. 31 ANNUAL REPORT 2015

AUDIT COMMITTEE REPORT (CONTD.)

Duties and Responsibilities

The duties and responsibilities of the Audit Committee are as follows:-

(i) to nominate a person or persons as Auditor;

(ii) to discuss with the External Auditors before the audit commences the nature and scope of the audit, ensure co- ordination where more than one (1) audit firm is involved;

(iii) to review with the External Auditors their evaluation of the system of internal controls and their audit report;

(iv) to review the Company’s quarterly/financial report and annual financial statements before submission to the Board, focusing particularly on: (a) the consistency of and any changes to the accounting policies and practices; (b) major judgemental areas; (c) significant adjustments resulting from the audit; (d) the going concern assumption; and (e) compliance with accounting standards and other legal and regulatory bodies requirements.

(v) to review any related party transactions and conflict of interest situation that may arise within the Company or the Group, including any transaction, procedure or course of conduct that raises questions of management integrity;

(vi) to discuss problems and reservations arising from the interim and final Audits, and any matter the auditor may wish to discuss (in the absence of Management, where necessary);

(vii) to review the External Auditors’ management letter and Management’s response;

(viii) to do the following, in relation to the internal audit function: (a) review the adequacy of the scope, functions, competency and resources of the internal audit function, and that it has the necessary authority to carry out its work; (b) review the internal audit programme and results of the internal audit process and, where necessary, ensure that appropriate actions are taken on the recommendations of the internal audit function; (c) review any appraisal or assessment of the performance of members of the internal audit function; (d) approve any appointment or termination of senior staff members of the internal audit function; and (e) take cognizance of resignations of internal audit staff members and provide the resigning staff member an opportunity to submit his reasons for resigning.

(ix) to verify the allocation of options pursuant to the Employees’ Share Option Scheme (“ESOS”) in compliance with the criteria as stipulated in the by-law of ESOS of the Company, if any;

(x) to review the cost effectiveness, independence and objectivity of the External Auditors and recommend forthe appointment/re-appointment of the External Auditors, the audit fee and any questions of resignation or dismissal of the External Auditors to the Board, to be put to Shareholders for approval at the general meeting in relation to appointment, re-appointment and dismissal of the Company’s External Auditors;

(xi) to establish policies governing the circumstances under which the contract in relation to the provision of non-audit services can be entered into by the Group with its External Auditors and procedures that need to be adhered;

(xii) to review the adequacy and effectiveness of risk management and internal control systems instituted within the Group;

(xiii) to report its findings on the financial and management performance, and other material matters to the Board;

(xiv) to consider the major findings of internal investigations and Management’s response; and

(xv) to consider other functions as may be agreed to by the Audit Committee and the Board of Directors. 32 ANNUAL REPORT 2015

AUDIT COMMITTEE REPORT (CONTD.)

Reporting Procedures

Minutes of each meeting shall be distributed to each member of the Audit Committee. The Audit Committee Chairman shall report on each meeting to the Board.

The minutes of the Audit Committee meeting shall be signed by the Chairman of the meeting at which the proceedings were held or by the Chairman of the next succeeding meeting.

Summary of Activities

During the financial year ended 31 May 2015, the Audit Committee carried out its duties and responsibilities in accordance with its terms of reference.

The main activities undertaken by the Audit Committee were as follows:

(i) Review of the quarterly unaudited consolidated financial statements before recommending them for the Board’s approval; (ii) Review of the annual consolidated financial statements of the Group and to discuss issues with the External Auditors before submission to the Board for approval; (iii) Review the accounting issues arising from the updates of the new developments on accounting standards issued by Malaysian Accounting Standard Board; (iv) Review of the related party transactions of the Company and its subsidiaries; (v) Review the internal audit reports, which highlighted the audit issues, recommendation and management’s response; (vi) Review of the External Auditors’ management letter and Management’s response; (vii) Review the External Auditors’ scope of work and plans for the year; and (viii) Reviewed the re-appointment and audit fees of the external auditors for the ensuing year.

Internal Audit Function

The Internal Audit function of the Group is assumed by the Internal Auditor appointed externally to assist the Audit Committee in discharging its duties and responsibilities. The role of the Internal Auditors is to provide the Audit Committee with independent assessment for adequate, efficient and effective Internal Control System to ensure compliance with policies and procedures. The Internal Audit function is also involved in risk management, risk evaluation and recommendation of control activities to manage such identified risk. The attainment of such objectives involves the following activities being carried out by Internal Audit function:

(i) Reviewing and appraising the soundness, adequacy and application of accounting, financial and other controls and promoting effective control in the Company and the Group at reasonable cost. (ii) Ascertaining the extent to whom the Group’s and the Company’s assets are accounted for and safeguarded from losses of all kinds. (iii) Attending stock counts of merchandise. (iv) Appraising the reliability and usefulness of information developed within the Group and the Company for management reporting purposes. (v) Carrying out audit work and to liaise with the External Auditors to maximise the use of resources and for effective coverage of audit risks. (vi) Recommending improvement to the existing systems of controls. (vii) Carrying out investigations and special reviews requested by Management and/or the Audit Committee of the Company. (viii) Continuously identifying opportunity for improvement in the operations of business processes of the Company and the Group. (ix) Discuss with management action taken to improve the system of internal control.

This statement is made in accordance with the resolution of the Board dated 17 September 2015. 33 ANNUAL REPORT 2015

STATEMENT OF DIRECTORS’ RESPONSIBILITY IN RELATION TO THE FINANCIAL STATEMENTS

The Board is required to prepare audited financial statements which give a true and fair view of the state of affairs of the Group and the Company at the end of each financial year and of their results and their cash flows for that year then ended.

In preparing the financial statements for the year ended 31 May 2015, the Board considers that:

(i) all applicable approved accounting standards in Malaysia have been followed;

(ii) the Group and the Company have used appropriate accounting policies and have consistently applied them;

(iii) reasonable and prudent judgments and estimates were made; and

(iv) the financial statements were prepared on the going concern basis as the Board has a reasonable expectation, having made enquiries, that the Group and the Company have adequate resources to continue in operational existence for the foreseeable future.

The Board is responsible for ensuring that the Group and the Company maintain accounting records which disclose with reasonable accuracy the financial position of the Group and the Company, and which enable them to ensure that the financial statements comply with the Companies Act, 1965.

The Board has general responsibilities for taking such steps that are reasonably available to them to safeguard the assets of the Group, and to prevent and detect fraud and other irregularities.

This statement is made in accordance with the resolution of the Board dated 17 September 2015. 34 ANNUAL REPORT 2015

OTHER INFORMATION REQUIRED BY THE MAIN MARKET LISTING REQUIREMENTS OF BURSA MALAYSIA SECURITIES BERHAD

Utilisation of Proceeds

No proceeds were raised by the Company from any corporate exercise during the financial year and no new shares being issued by the Company during the financial year based on the general mandate granted by the shareholders pursuant to Section 132D of the Companies Act, 1965 at the last Annual General Meeting of the Company.

Share Buy-back

During the financial year ended 31 May 2015, the details of its ordinary shares of RM1.00 each (“SCB Shares”) bought back by the Company are as follows:

Buy Back Price Per SCB Share No. of SCB Shares (RM) Average Cost Per Bought Back SCB Share* & retained as Total Cost* Monthly Breakdown Lowest Highest (RM) Treasury Shares (RM) July 2014 2.90 2.90 2.90 4,700 13,630.00 February 2015 2.64 2.64 2.64 5,600 14,784.00 Total: 10,300 28,414.00

Note: * exclude transaction charges.

A total of 10,300 SCB shares purchased by the Company were retained as treasury shares and no shares were resold or cancelled during the financial year. As at 31 May 2015, a total of 3,691,400 SCB Shares were held as treasury shares in accordance with Section 67A of the Companies Act, 1965.

Options, Warrants or Convertible Securities

There was no issue or exercise of options, warrants or convertible securities during the financial year.

Depository Receipt Programme

The Company did not sponsor any Depository Receipt programme during the financial year.

Sanctions and Penalties

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

Non-Audit Fees

The amount of non-audit fees paid to the External Auditors by the Group and by the Company for the financial year 2015 amounted to RM6,000.00 and RM6,000.00 respectively.

Variation in Results

There were no material variations between the audited results and the unaudited results for the year ended 31 May 2015 of the Group as previously announced.

Profit Guarantee

The Company did not provide any profit guarantee to any parties during the financial year.

Material Contracts

Other than those related party transactions disclosed in Note 42 to the audited financial statements, there were no material contracts outside the ordinary course of business, including contract relating to loan entered into by the Company and its subsidiaries involving Directors’ and major shareholders’ interests that are still subsisting at the end of financial year or which were entered into since the end of the previous financial year. 35 ANNUAL REPORT 2015

OTHER INFORMATION REQUIRED BY THE MAIN MARKET LISTING REQUIREMENTS OF BURSA MALAYSIA SECURITIES BERHAD (CONTD.)

Recurrent Related Party Transactions of a Revenue or a Trading Nature

The summary of the Recurrent Related Party Transactions which have been entered by the Group during the financial year ended 31 May 2015 are as follows:-

No. Nature of Transaction Interested Related Parties Transaction Value (RM) 1 Rental of premises which is located at Sunshine • SHSB RM1,943,316 Square (Level 2, 3 & 4), 1, Jalan Mahsuri measuring • Suiwah Supermarket approximately 9,635 square metres by Suiwah Sendirian Berhad (SSSB) Holdings Sdn Bhd (SHSB) to Sunshine Wholesale • Dato’ Hwang Thean Long Mart Sdn Bhd (SWMSB) for a monthly rental and • Datin Cheah Gaik Huang service charges of RM161,943 • Ms. Hwang Siew Peng • Mr. Hwang Shin Hung 2 Purchase of direct materials such as polyester and • Mr. Looi Tik Miow RM217,291 pressure sensitive adhesive by Qdos Flexcircuits Sdn Bhd (QFSB) from Zephyr (Penang) Sdn Bhd (ZSB) 3 Purchase of label sticker by SWMSB from ZSB • Mr. Looi Tik Miow NIL 4 Rental of premises which is located at 608 M&N, • SHSB RM48,000 Jalan Paya Terubong, Ayer Itam, Penang measuring • SSSB approximately 4,500 square feet by Dato’ Hwang • Dato’ Hwang Thean Long Thean Long to Sunshine Supermarket & Departmental • Datin Cheah Gaik Huang Store Sdn Bhd (SSDS) for a monthly rental of RM4,000 • Ms. Hwang Siew Peng • Mr. Hwang Shin Hung 5 Rental of premises which is located at 88 Lintang • SHSB RM24,000 Mayang Pasir 1, Mk 12, 11950 Bayan Baru, Penang • SSSB measuring approximately 139.79 square metres by • Dato’ Hwang Thean Long Meridian Chance Sdn Bhd (MCSB) to SWMSB for a • Datin Cheah Gaik Huang monthly rental of RM2,000 • Ms. Hwang Siew Peng • Mr. Hwang Shin Hung 6 Provide laundry services for cleaning clean room • Mr. Leong Kong Meng RM814 clothing to QFSB by Mylaco Sdn Bhd (MSB) • Ms. Hwang Siew Peng • Mr. Hwang Shin Hung 7 Sales of merchandise from SWMSB to MSB • Mr. Leong Kong Meng NIL • Ms. Hwang Siew Peng 8 Purchase of Dycem Cleanzone for floor coverings and • Hozone Sdn Bhd (HSB) NIL mat solutions by QFSB from Sinar Bekal (M) Sdn Bhd • Datuk Haji Radzali Bin (SBSB) Hassan 9 Provide Surface Mounted Technology (SMT) and other • SHSB RM1,046,486 subcontract services related to flexible printed circuits • SSSB boards to QFSB by Nanometric Electronics Sdn Bhd • Dato’ Hwang Thean Long (NESB) • Datin Cheah Gaik Huang • Ms. Hwang Siew Peng • Mr. Hwang Shin Hung • Mr. Leong Kong Meng 10 Sales of merchandise from SWMSB to NESB • SHSB NIL • SSSB • Dato’ Hwang Thean Long • Datin Cheah Gaik Huang • Ms. Hwang Siew Peng • Mr. Hwang Shin Hung • Mr. Leong Kong Meng 11 Rental of 80 car park bays located at Level 3 Sunshine • SHSB RM25,315 Square Complex, Lintang Mayang Pasir 1, Mk 12, • SSSB 11950 Bayan Baru, Penang by SHSB to SWMSB for a • Dato’ Hwang Thean Long monthly rental of RM4,000. • Datin Cheah Gaik Huang • Ms. Hwang Siew Peng • Mr. Hwang Shin Hung 12 Rental of hostel which is located at No 136-K, MK 13, • SHSB RM21,600 Lorong Rambutan, 11500 Air Itam, Penang measuring • SSSB approximately 1,949 square feet paid by QFSB to Dato • Dato’ Hwang Thean Long Hwang Thean Long for a monthly rental of RM1,800 • Datin Cheah Gaik Huang • Ms. Hwang Siew Peng • Mr. Hwang Shin Hung 13 Rental of office space which is located at 1-20-1, • SHSB RM439,760 SUNTECH @ Penang Cybercity, Lintang Mayang • SSSB Pasir 3, 11950 Bayan Baru, Penang, measuring • Dato’ Hwang Thean Long approximately 20,473 square feet by SHSB to SWMSB • Datin Cheah Gaik Huang for a monthly rental and service charges of RM36,647 • Ms. Hwang Siew Peng • Mr. Hwang Shin Hung 36 ANNUAL REPORT 2015

DIRECTORS’ REPORT

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 May 2015.

Principal activities

The principal activities of the Company are investment holding, provision of management services and letting of property.

The principal activities of the subsidiaries, joint venture and associate are described in Notes 18, 19 and 20 to the financial statements respectively.

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

Results Group Company RM RM

Profit for the year 10,134,961 29,670,123

Attributable to: Equity holders of the Company 10,126,599 29,670,123 Non-controlling interests 8,362 - 10,134,961 29,670,123

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 other than as disclosed in the financial statements.

Dividend

The amount of dividend paid by the Company since 31 May 2014 was as follows:

RM In respect of the financial year ended 31 May 2014 as reported in the directors' report of that year:

First and final single tier dividend of 6%, approved on 17 November 2014 and paid on 18 December 2014 3,438,867

At the forthcoming Annual General Meeting, a first and final single tier dividend of 6% in respect of the current financial year ended 31 May 2015, on 57,294,648 ordinary shares (the number of outstanding ordinary shares in issue of the Company as at 31 May 2015 after the set off with 3,705,600 ordinary shares bought back by the Company and held as treasury shares subsequent to the financial year end) amounting to RM3,437,679 (6 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 dividends when approved by the shareholders will be accounted for in equity as an appropriation of retained earnings in the financial year ending 31 May 2016.

Directors

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:

Dato' Hwang Thean Long Dato' Haji Mohd Suhaimi bin Abdullah * Dato' Ahmad Hassan bin Osman * Datin Cheah Gaik Huang Hwang Siew Peng Wong Thai Sun * Jen Shek Voon ^ Datuk Haji Radzali bin Hassan Hwang Shin Hung (Appointed on 24 April 2015)

* Being members of Audit, Remuneration and Nomination Committees ^ Being member of Audit Committee 37 ANNUAL REPORT 2015

DIRECTORS’ REPORT (CONTD.)

Directors' benefits

Neither at the end of the financial year, nor at any time during that year, did there subsist any arrangement to which the Company was a party, whereby the directors might acquire benefits by means of 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 salaries of directors who are full-time employees of the Company or its subsidiaries as shown in Note 7 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 the director is a member, or with a company in which the director has a substantial financial interest, except as disclosed in Note 42 to the financial statements.

Directors' interests

According to the register of directors' shareholdings, the interests of directors in office at the end of the financial year in shares and options over shares in the Company during the financial year were as follows:

Number of ordinary shares of RM1 each 1 June 2014/Date of 31 May appointment Acquired Sold 2015 The Company

Direct interest Dato' Hwang Thean Long 4,445,381 - - 4,445,381 Dato' Haji Mohd Suhaimi bin Abdullah 417,125 - - 417,125 Datin Cheah Gaik Huang 26,400 - - 26,400

Indirect interest Dato' Hwang Thean Long * 10,959,105 - - 10,959,105 Hwang Siew Peng ** 15,430,886 - - 15,430,886 Datuk Haji Radzali bin Hassan *** 12,117,948 - - 12,117,948 Hwang Shin Hung **** 15,404,486 - - 15,404,486

Indirect interest

Interest of Spouse/Children of the Directors ^ Dato’ Hwang Thean Long 26,400 - - 26,400 Datin Cheah Gaik Huang 15,404,486 - - 15,404,486

* By virtue of his interests in shares of Suiwah Holdings Sdn. Bhd. and Suiwah Supermarket Sendirian Berhad, both companies incorporated in Malaysia, Dato' Hwang Thean Long is deemed to have an interest in the shares of the Company and all its subsidiaries to the extent both these companies have interests.

** By virtue of the interests of her parents, Dato' Hwang Thean Long and Datin Cheah Gaik Huang, Hwang Siew Peng is deemed to have an interest in the shares of the Company and all its subsidiaries to the extent her parents have interests.

*** By virtue of his interest in shares of Hozone Sdn. Bhd. ("Hozone"), a company incorporated in Malaysia, Datuk Haji Radzali bin Hassan is deemed to have an interest in the shares of the Company, and all its subsidiaries to the extent Hozone has an interest.

**** By virtue of the interests of his father, Dato' Hwang Thean Long, Hwang Shin Hung is deemed to have an interest in the shares of the Company and all its subsidiaries to the extent his father has an interest.

^ Disclosure pursuant to Section 134 (12) (c) of the Companies Act 1965

None of the other directors in office at the end of the financial year had any interest in shares in the Company or its related corporations of the Company during the financial year. 38 ANNUAL REPORT 2015

DIRECTORS’ REPORT (CONTD.)

Treasury shares

During the financial year, the Company bought back 10,300 of its issued ordinary shares from the open market at an average price of RM2.77 per share. The total consideration paid for the share buy back including transaction costs was RM28,571. The shares bought back are being held as treasury shares.

As at 31 May 2015, the Company held as treasury shares a total of 3,691,400 of its 61,000,248 issued ordinary shares. Such treasury shares are held at a carrying amount of RM5,402,952 including transaction costs and further relevant details are disclosed in Note 30(a) to the financial statements.

Subsequent to the financial year end, the Company bought back 14,200 of its issued ordinary shares from the open market at an average price of RM2.91 per share. The total consideration paid for the share buy back was RM41,561, consisting of consideration paid amounting to RM41,322 and transaction costs of RM239. The share buy back transactions were financed by internally generated funds.

Other statutory information

(a) 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:

(i) to ascertain that proper action had been taken in relation to the writing off of bad debts and the making of provision for doubtful debts and satisfied themselves that all known bad debts had been written offand that adequate allowance for doubtful debts has been made in the financial statements of the Group. The directors were also satisfied that there were no known bad debts and that no allowance for doubtful debts was necessary in the financial statements of the Company; and

(ii) to ensure that any current assets which were unlikely to realise their values as shown in the accounting records in the ordinary course of business had been written down to an amount which they might be expected so to realise.

(b) At the date of this report, the directors are not aware of any circumstances which would render:

(i) the amount written off for bad debts or the amount of the provision for doubtful debts in the financial statements of the Group inadequate to any substantial extent nor are they aware of any circumstances which would render it necessary to write off any bad debts or allowance for doubtful debts in the financial statements of the Company; and

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

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

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

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

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

(ii) any contingent liability of the Group and of the Company which have arisen since the end of the financial year. 39 ANNUAL REPORT 2015

DIRECTORS’ REPORT (CONTD.)

Other statutory information (contd.)

(f) In the opinion of the directors:

(i) no contingent or other liability has become enforceable or is likely to become enforceable within the period of twelve months after the end of the financial year which will or may affect the ability of the Group or of the Company to meet their obligations when they fall due; and

(ii) no item, transaction or event of a material and unusual nature has arisen in the interval between the end of the financial year and the date of this report which is likely to affect substantially the results of the operations of the Group or of the Company for the financial year in which this report is made.

Subsequent events

Details of the subsequent events are disclosed in Note 47 to the financial statements.

Auditors

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

Signed on behalf of the Board in accordance with a resolution of the directors dated 23 September 2015.

Dato' Hwang Thean Long Wong Thai Sun 40 ANNUAL REPORT 2015

STATEMENT BY DIRECTORS PURSUANT TO SECTION 169(15) OF THE COMPANIES ACT, 1965

We, Dato' Hwang Thean Long and Wong Thai Sun, being two of the directors of Suiwah Corporation Bhd., do hereby state that, in the opinion of the directors, the accompanying financial statements set out on pages 43 to 112 are drawn upin 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 May 2015 and of their financial performance and cash flows for the year then ended.

The information set out in Note 49 to the financial statements on page 113 have been prepared in accordance with the Guidance on Special Matter No.1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants.

Signed on behalf of the Board in accordance with a resolution of the directors dated 23 September 2015.

Dato' Hwang Thean Long Wong Thai Sun

STATUTORY DECLARATION PURSUANT TO SECTION 169(16) OF THE COMPANIES ACT, 1965

I, Dato' Hwang Thean Long, being the director primarily responsible for the financial management of Suiwah Corporation Bhd., do solemnly and sincerely declare that the accompanying financial statements set out on pages 43 to 113 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.

Subscribed and solemnly declared by the abovenamed Dato' Hwang Thean Long at Georgetown in the state of Penang on 23 September 2015 Dato' Hwang Thean Long

Before me, HAJI MOHAMED YUSOFF BIN MOHD. IBRAHIM No. P156 Commissioner for Oaths 41 ANNUAL REPORT 2015

INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF SUIWAH CORPORATION BHD. (Incorporated in Malaysia)

Report on the financial statements

We have audited the financial statements of Suiwah Corporation Bhd., which comprise the statements of financial position as at 31 May 2015 of the Group and of the Company, and the statements of comprehensive income, statements of changes in equity and statements of cash flows of the Group and of the Company for the year then ended, and a summary of significant accounting policies and other explanatory information, as set out on pages 43 to 112.

Directors’ responsibility for the financial statements

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

Auditors’ responsibility

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

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our 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 accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial statements.

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

Opinion

In our opinion, the financial statements give a true and fair view of the financial position of the Group and of the Company as at 31 May 2015 and of their financial performance and cash flows for the year then ended in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act 1965 in Malaysia.

Report on other legal and regulatory requirements

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

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

(b) We have considered the financial statements and the auditors’ reports of all the subsidiaries of which we have not acted as auditors, which are indicated in Note 18 to the financial statements, being financial statements that have been included in the consolidated financial statements.

(c) We are satisfied that the financial statements of the subsidiaries that have been consolidated with the financial statements of the Company are in form and content appropriate and proper for the purposes of the preparation of the consolidated financial statements and we have received satisfactory information and explanations required by us for those purposes.

(d) The auditors’ reports on the financial statements of the subsidiaries were not subject to any qualification and did not include any comment required to be made under Section 174(3) of the Act.

Other reporting responsibilities

The supplementary information set out in Note 49 on page 113 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. 42 ANNUAL REPORT 2015

INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF SUIWAH CORPORATION BHD. (Incorporated in Malaysia) (CONTD.)

Other Matters

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

Ernst & Young Adeline Chan Su Lynn AF: 0039 No. 3082/07/17(J) Chartered Accountants Chartered Accountant

Penang, Malaysia Date: 23 September 2015 43 ANNUAL REPORT 2015

STATEMENTS OF COMPREHENSIVE INCOME FOR THE FINANCIAL YEAR ENDED 31 MAY 2015

Group Company 2015 2014 2015 2014 Note RM RM RM RM

Revenue 4 399,036,393 378,165,018 30,256,684 6,547,320 Other operating income 5 2,747,711 2,744,203 3,596,588 7,917,588 Changes in inventories of merchandise, finished goods and work-in-progress 6,301,392 878,834 - - Raw materials and consumable goods used (44,460,262) (28,963,877) - - Inventories purchased (266,413,398) (261,512,839) - - Cost of inventory property 15 - (2,834,809) - - Employee benefits expense 6 (28,321,683) (25,402,214) (192,680) (193,110) Reversal of inventories written down 330,780 157,494 - - Amortisation of intangible asset 17 (345,295) (374,070) - - Amortisation of land use rights 16 (41,143) (215,266) - - Commission (1,540,136) (1,403,018) - - Depreciation of: - property, plant and equipment 13 (8,292,663) (10,496,176) (929) (972) - investment property 14 - - (473,171) (473,171) Net gain/(loss) on financial assets at fair value through profit or loss 4,960 (170,859) - - Net fair value loss on derivatives (220,297) - - - Reversal of impairment loss on investment in a subsidiary 18 - - - 342,276 Promotional expenses (5,968,583) (5,216,191) - - Property, plant and equipment written off (1,838) (46,967) - - Operating leases - minimum lease payment for: - land and buildings (3,556,135) (3,472,493) - - - equipment and machinery (102,000) (42,000) - - Subcontract charges (4,566,012) (4,905,718) - - Upkeep and maintenance (5,636,879) (4,590,964) - - Utilities (12,011,536) (9,873,083) (1,704) (1,602) Other operating expenses 8 (9,511,676) (6,465,488) (609,543) (521,492) Operating profit 17,431,700 15,959,517 32,575,245 13,616,837 Finance costs 9 (1,072,917) (1,172,674) (1,954,044) - Share of (loss)/profit in a joint venture (81,267) 57,768 - - Profit before tax 16,277,516 14,844,611 30,621,201 13,616,837 Income tax (expense)/benefit 10 (6,142,555) 3,056,102 (951,078) (1,515,227) Profit net of tax 10,134,961 17,900,713 29,670,123 12,101,610

Other comprehensive income Other comprehensive income to be reclassified to profit or loss in subsequent periods Foreign currency translation 824,749 (37,344) - -

Total comprehensive income for the year 10,959,710 17,863,369 29,670,123 12,101,610

Profit for the year attributable to: Equity holders of the Company 10,126,599 17,763,907 29,670,123 12,101,610 Non-controlling interests 8,362 136,806 - - 10,134,961 17,900,713 29,670,123 12,101,610

Total comprehensive income attributable to: Equity holders of the Company 10,951,348 17,726,563 29,670,123 12,101,610 Non-controlling interests 8,362 136,806 - - 10,959,710 17,863,369 29,670,123 12,101,610

Earnings per share attributable to equity holders of the Company (sen) Basic/Diluted, for profit for the year 11 17.67 30.99

The accompanying accounting policies and explanatory information form an integral part of the financial statements. 44 ANNUAL REPORT 2015

STATEMENTS OF FINANCIAL POSITION AS AT 31 MAY 2015

Group Company 2015 2014 2015 2014 Note RM RM RM RM Assets

Non-current assets

Property, plant and equipment 13 140,588,615 131,662,728 2,206 3,135 Investment property 14 - - 23,027,120 23,500,291 Inventory property 15 6,865,612 - - - Land use rights 16 - 41,143 - - Intangible asset 17 6,186,535 6,531,830 - - Investments in subsidiaries 18 - - 68,298,619 68,298,619 Investment in a joint venture 19 12,713,214 12,068,371 - - Investment in an associate 20 - - - - Investment securities 21 3,114 3,114 - - Goodwill on consolidation 22 4,665,045 4,665,045 - - Prepayment 23 500,000 - - - 171,522,135 154,972,231 91,327,945 91,802,045

Current assets Inventory property 15 16,950,609 23,525,714 - - Inventories 24 37,205,784 33,736,041 - - Trade and other receivables 25 32,420,186 21,591,575 48,808,592 34,991,436 Other current assets 26 8,498,946 505,849 18,400 14,932 Tax recoverable 931,732 4,275,057 - - Loan receivables 27 1,500 84,236 - - Short term investments 28 16,292,026 24,309,096 - - Cash and bank balances 29 25,489,950 27,844,565 5,345,711 3,213,822 137,790,733 135,872,133 54,172,703 38,220,190 Total assets 309,312,868 290,844,364 145,500,648 130,022,235

Equity and liabilities

Equity attributable to equity holders of the Company

Share capital 30 61,000,248 61,000,248 61,000,248 61,000,248 Treasury shares 30 (5,402,952) (5,374,381) (5,402,952) (5,374,381) Share premium 30 13,934,711 13,934,711 13,934,711 13,934,711 Other reserve 31 (2,087,621) (2,912,370) - - Retained earnings 32 139,874,948 133,187,216 64,795,513 38,564,257 207,319,334 199,835,424 134,327,520 108,124,835 Non-controlling interests 884,196 875,834 - - Total equity 208,203,530 200,711,258 134,327,520 108,124,835

Non-current liabilities Government grant 33 64,583 114,583 - - Borrowings 34 10,103,992 11,370,090 - - Trade and other payables 35 6,881,303 6,299,262 - - Deferred tax 36 1,518,735 1,703,446 - - 18,568,613 19,487,381 - -

Current liabilities Provision for liabilities 37 256,517 256,517 - - Government grant 33 50,000 50,000 - - Borrowings 34 5,926,361 6,659,164 - - Trade and other payables 35 72,537,222 61,196,999 10,687,239 21,838,164 Other current liabilities 38 277,959 - 14,846 - Derivatives 39 220,297 - - - Deferred revenue 40 1,923,157 1,712,534 - - Tax payable 1,349,212 770,511 471,043 59,236 82,540,725 70,645,725 11,173,128 21,897,400 Total liabilities 101,109,338 90,133,106 11,173,128 21,897,400 Total equity and liabilities 309,312,868 290,844,364 145,500,648 130,022,235

The accompanying accounting policies and explanatory information form an integral part of the financial statements. 45 ANNUAL REPORT 2015

STATEMENTS OF CHANGES IN EQUITY FOR THE FINANCIAL YEAR ENDED 31 MAY 2015 RM Total Total equity (27,663) (28,571) (3,507,533) (3,438,867) 17,863,369 10,959,710 200,711,258 200,711,258 200,711,258 200,711,258 186,383,085 208,203,530 - - - RM Non- 8,362 (68,204) 807,232 136,806 875,834 875,834 884,196 interests controlling RM Total Total (27,663) (28,571) (3,439,329) (3,438,867) 17,726,563 10,951,348 185,575,853 199,835,424 199,835,424 207,319,334 - - RM Retained earnings (3,439,329) (3,438,867) 17,763,907 10,126,599 118,862,638 118,862,638 133,187,216 133,187,216 139,874,948 Distributable - - - - RM Other (37,344) 824,749 reserves (2,875,026) (2,912,370) (2,912,370) (2,087,621) ------RM Share premium 13,934,711 13,934,711 13,934,711 13,934,711 13,934,711 13,934,711 13,934,711 13,934,711 Non-distributable - - - - RM shares Attributable to equity holders of the Company (27,663) (28,571) Treasury Treasury (5,346,718) (5,374,381) (5,374,381) (5,402,952) ------RM Share capital 61,000,248 61,000,248 61,000,248 61,000,248 Group At 1 June 2013 comprehensive income for the year Total Dividend (Note 12) At 31 May 2014 Purchase of treasury shares At 1 June 2014 Total comprehensive income for the year Total Dividend (Note 12) At 31 May 2015 Purchase of treasury shares 46 ANNUAL REPORT 2015

STATEMENTS OF CHANGES IN EQUITY (CONTD.) FOR THE FINANCIAL YEAR ENDED 31 MAY 2015

Non-distributable Distributable Share Treasury Share Retained Total capital shares premium earnings equity RM RM RM RM RM Company

At 1 June 2013 61,000,248 (5,346,718) 13,934,711 29,901,976 99,490,217 Total comprehensive income for the year - - - 12,101,610 12,101,610 Dividend (Note 12) - - - (3,439,329) (3,439,329) Purchase of treasury shares - (27,663) - - (27,663) At 31 May 2014 61,000,248 (5,374,381) 13,934,711 38,564,257 108,124,835

At 1 June 2014 61,000,248 (5,374,381) 13,934,711 38,564,257 108,124,835 Total comprehensive income for the year - - - 29,670,123 29,670,123 Dividend (Note 12) - - - (3,438,867) (3,438,867) Purchase of treasury shares - (28,571) - - (28,571) At 31 May 2015 61,000,248 (5,402,952) 13,934,711 64,795,513 134,327,520

The accompanying accounting policies and explanatory information form an integral part of the financial statements. 47 ANNUAL REPORT 2015

STATEMENTS OF CASH FLOWS FOR THE FINANCIAL YEAR ENDED 31 MAY 2015

Group Company 2015 2014 2015 2014 Note RM RM RM RM

Operating activities

Profit before tax 16,277,516 14,844,611 30,621,201 13,616,837 Adjustments for: Amortisation of: - government grant 5 (50,000) (50,000) - - - land use rights 16 41,143 215,266 - - - intangible assets 17 345,295 374,070 - - Bad debts written off 8 116,170 34,317 - - Depreciation of: - property, plant and equipment 13 8,292,663 10,496,176 929 972 - investment property 14 - - 473,171 473,171 Gross dividends from subsidiaries 4 - - (28,600,000) (4,830,636) Finance costs 9 1,072,917 1,172,674 1,954,044 - Interest income 5 (1,106,250) (835,610) (3,596,588) (84,409) Net (gain)/loss on financial assets at fair value through profit or loss (4,960) 170,859 - - Net fair value loss on derivatives 220,297 - - - Reversal of inventories written down (330,780) (157,494) - - Reversal of impairment loss on investment in a subsidiary 18 - - - (342,276) Gain on disposal of property plant and equipment 5 - (42,114) - - Property, plant and equipment written off 1,838 46,967 - - Allowance for impairment of doubtful debts 8 55,508 - - - Reversal of allowance for impairment loss 5 - - - (7,833,179) Unrealised foreign exchange losses/(gains) 8 1,701,979 (172,744) - - Share of loss/(profit) in a joint venture 81,267 (57,768) - - Operating cash flows before changes in working capital 26,714,603 26,039,210 852,757 1,000,480 (Increase)/Decrease in inventory property (290,507) 2,640,766 - - Increase in prepayment (500,000) - - - (Increase)/Decrease in receivables (12,619,532) 2,697,260 (103,926) - Increase in other current assets (7,993,097) (107,534) (3,468) - Increase in inventories (3,138,963) (67,336) - - Increase/(Decrease) in payables 11,922,264 4,963,338 (16,077) 16,005 Increase in other current liabilities 277,959 - 14,846 - Increase in deferred revenue 210,623 395,730 - - Cash generated from operations 14,583,350 36,561,434 744,132 1,016,485 Interest paid (1,072,917) (1,172,674) - - Interest received 1,106,250 835,610 79,132 84,409 Tax paid (2,405,240) (2,989,422) (539,271) (458,488) Net cash from operating activities 12,211,443 33,234,948 283,993 642,406 48 ANNUAL REPORT 2015

STATEMENTS OF CASH FLOWS (CONTD.) FOR THE FINANCIAL YEAR ENDED 31 MAY 2015

Group Company 2015 2014 2015 2014 Note RM RM RM RM Investing activities

Increase in deposits pledged to banks (12,466) (10,738) - - Decrease/(Increase) in deposits placed with licensed banks (more than 3 months) (31,619) (933) - - Decrease/(Increase) in short term investments 8,022,030 (10,781,120) - - Proceeds from disposal of property, plant and equipment - 316,727 - - Net dividends received - - 28,600,000 3,630,636 Purchase of property, plant and equipment 13 (17,220,388) (26,748,726) - - Net cash (used in)/from investing activities (9,242,443) (37,224,790) 28,600,000 3,630,636

Financing activities

(Repayment of)/Proceeds from term loan, net (2,229,911) 10,696,012 - - Dividend paid to: - non controlling interest of subsidiaries - (68,204) - - - shareholders of holding company 12 (3,438,867) (3,439,329) (3,438,867) (3,439,329) Purchase of treasury shares 30 (28,571) (27,663) (28,571) (27,663) (Increase)/Decrease in amounts due from subsidiaries - - (10,195,774) 9,115,380 Decrease in amounts due to subsidiaries - - (13,088,892) (10,715,768) Net changes in bankers' acceptances (4,921,016) 1,583,767 - - Net cash (used in)/from financing activities (10,618,365) 8,744,583 (26,752,104) (5,067,380) Net (decrease)/increase in cash and cash equivalents (7,649,365) 4,754,741 2,131,889 (794,338) Effects of exchange rate changes 98,639 20,631 - - Cash and cash equivalents as at 1 June 2014 / 2013 27,000,894 22,225,522 3,213,822 4,008,160 Cash and cash equivalents as at 31 May 2015 / 2014 29 19,450,168 27,000,894 5,345,711 3,213,822

The accompanying accounting policies and explanatory information form an integral part of the financial statements. 49 ANNUAL REPORT 2015

NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MAY 2015

1. Corporate information

The Company is a public limited liability company, incorporated and domiciled in Malaysia and listed on the Main Market of Bursa Malaysia Securities Berhad ("Bursa Malaysia"). The registered office of the Company is located at No. 1-20-1 SUNTECH @ Penang Cybercity, Lintang Mayang Pasir 3, 11950 Bayan Baru, Penang.

The principal activities of the Company are investment holding, provision of management services and letting of property. The principal activities of the subsidiaries, joint venture and associate are described in Notes 18, 19 and 20 respectively. There have been no significant changes in the nature of the principal activities during the financial year.

2. Summary of significant accounting policies

2.1 Basis of preparation

The financial statements of the Group and of the Company have been prepared in accordance with Malaysian Financial Reporting Standards ("MFRS"), International Financial Reporting Standards ("IFRS") and the requirements of the Companies Act 1965 in Malaysia.

The financial statements have been prepared on a historical cost basis except those disclosed below in the accounting policies.

The financial statements are presented in Ringgit Malaysia ("RM").

2.2 Changes in accounting policies

The accounting policies adopted are consistent with those of the previous financial year except as follows:

On 1 June 2014, the Group and the Company adopted the following new and amended MFRSs and IC Interpretation mandatory for annual financial periods beginning on or after 1 June 2014.

Effective for financial periods Description beginning on or after

Amendments to MFRS 132: Offsetting Financial Assets and Financial Liabilities 1 January 2014 Amendments to MFRS 10, MFRS 12 and MFRS 127: Investment Entities 1 January 2014 Amendments to MFRS 136: Recoverable Amount Disclosures for Non-Financial Assets 1 January 2014 Amendments to MFRS 139: Novation of Derivatives and Continuation of Hedge Accounting 1 January 2014 IC Interpretation 21 Levies 1 January 2014

The nature and impact of the new and amended MFRSs and IC Interpretation are described below:

Amendments to MFRS 132: Offsetting Financial Assets and Financial Liabilities

The amendments clarify the meaning of “currently has a legally enforceable right to set-off” and “simultaneous realisation and settlement”. These amendments are to be applied retrospectively. These amendments have no impact on the Group, since none of the entities in the Group has any offsetting arrangements.

Amendments to MFRS 10, MFRS 12 and MFRS 127: Investment Entities

These amendments provide an exception to the consolidation requirement for entities that meet the definition of an investment entity under MFRS 10 Consolidated Financial Statements and must be applied retrospectively, subject to certain transition relief. The exception to consolidation requires investment entities to account for subsidiaries at fair value through profit or loss. These amendments have no impact on the Group, since none of the entities in the Group qualifies to be an investment entity under MFRS 10. 50 ANNUAL REPORT 2015

NOTES TO THE FINANCIAL STATEMENTS (CONTD.) FOR THE FINANCIAL YEAR ENDED 31 MAY 2015

2. Summary of significant accounting policies (contd.)

2.2 Changes in accounting policies (contd.)

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

The amendments to MFRS 136 remove the requirement to disclose the recoverable amount of a cash-generating unit (CGU) to which goodwill or other intangible assets with indefinite useful lives has been allocated when there has been no impairment or reversal of impairment of the related CGU. In addition, the amendments introduce additional disclosure requirements when the recoverable amount is measured at fair value less costs of disposal. These new disclosures include the fair value hierarchy, key assumptions and valuation techniques used which are in line with the disclosure required by MFRS 13 Fair Value Measurements.

The application of these amendments has had no material impact on the disclosures in the Group’s financial statements.

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

These amendments provide relief from the requirement to discontinue hedge accounting when a derivative designated as a hedging instrument is novated under certain circumstances. The amendments also clarify that any change to the fair value of the derivative designated as a hedging instrument arising from the novation should be included in the assessment and measure of hedge effectiveness. Retrospective application is required.

These amendments have no impact on the Group as the Group does not have any derivatives that are subject to novation.

2.3 Standards Issued but not yet effective

The standards and interpretations that are issued but not yet effective up to the date of issuance of the Group’s and the Company’s financial statements are disclosed below. The Group and the Company intend to adopt these standards, if applicable, when they become effective. Effective for annual periods Description beginning on or after

Amendments to MFRS 119: Defined Benefit Plans: Employee Contributions 1 July 2014 Annual Improvements to MFRSs 2010-2012 Cycle 1 July 2014 Annual Improvements to MFRSs 2011-2013 Cycle 1 July 2014 Annual Improvements to MFRSs 2012-2014 Cycle 1 January 2016 Amendments to MFRS 116 and MFRS 138: Clarification of Acceptable Methods of Depreciation and Amortisation 1 January 2016 Amendments to MFRS 116 and MFRS 141: Agriculture: Bearer Plants 1 January 2016 Amendments to MFRS 10 and MFRS 128: Sale or Contribution of Assets between an Investor and its Associate or Joint Venture 1 January 2016 Amendments to MFRS 11: Accounting for Acquisitions of Interests in Joint Operations 1 January 2016 Amendments to MFRS 127: Equity Method in Separate Financial Statements 1 January 2016 Amendments to MFRS 101: Disclosure Initiatives 1 January 2016 Amendments to MFRS 10, MFRS 12 and MFRS 128: Investment Entities: Applying the Consolidation Exception 1 January 2016 MFRS 14 Regulatory Deferral Accounts 1 January 2016 MFRS 15 Revenue from Contracts with Customers 1 January 2018 MFRS 9 Financial Instruments 1 January 2018

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 discussed below: 51 ANNUAL REPORT 2015

NOTES TO THE FINANCIAL STATEMENTS (CONTD.) FOR THE FINANCIAL YEAR ENDED 31 MAY 2015

2. Summary of significant accounting policies (contd.)

2.3 Standards Issued but not yet effective (contd.)

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

The amendments clarify that revenue reflects a pattern of economic benefits that are generated from operating a business (of which the asset is part) rather than the economic benefits that are consumed through the use of an asset. As a result, a revenue-based method cannot be used to depreciate property, plant and equipment and may only be used in very limited circumstances to amortise intangible assets.

The amendments are effective prospectively for annual periods beginning on or after 1 January 2016, with early adoption permitted. These amendments are not expected to have any impact to the Group as the Group has not used a revenue-based method to depreciate its non-current assets.

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

The amendments clarify that:

- gains and losses resulting from transactions involving assets that do not constitute a business, between investor and its associate or joint venture are recognised in the entity’s financial statements only to the extent of unrelated investors’ interests in the associate or joint venture; and

- gains and losses resulting from transactions involving the sale or contribution to an associate of a joint venture of assets that constitute a business is recognised in full.

The amendments are to be applied prospectively to the sale or contribution of assets occurring in annual periods beginning on or after 1 January 2016. Earlier application is permitted. The directors of the Company do not anticipate that the application of these amendments will have a material impact on the Group’s financial statements.

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

The amendments to MFRS 11 require that a joint operator which acquires an interest in a joint operations which constitute a business to apply the relevant MFRS 3 Business Combinations principles for business combinations accounting. The amendments also clarify that a previously held interest in a joint operation is not remeasured on the acquisition of an additional interest in the same joint operation while joint control is retained. In addition, a scope exclusion has been added to MFRS 11 to specify that the amendments do not apply when the parties sharing joint control, including the reporting entity, are under common control of the same ultimate controlling party.

These amendments are to be applied prospectively for annual periods beginning on or after 1 January 2016, with early adoption permitted. The directors of the Company do not anticipate that the application of these amendments will have a material impact on the Group’s financial statements.

Amendments to MFRS 127: Equity Method in Separate Financial Statements

The amendments will allow entities to use the equity method to account for investments in subsidiaries, joint ventures and associate in their separate financial statements. Entities already applying MFRS and electing to change to the equity method in its separate financial statements will have to apply this change retrospectively. For first-time adopters of MFRS electing to use the equity method in its separate financial statements, they will be required to apply this method from the date of transition to MFRS. The amendments are effective for annual periods beginning on or after 1 January 2016, with early adoption permitted. These amendments will not have any impact on the Group’s financial statements. 52 ANNUAL REPORT 2015

2. Summary of significant accounting policies (contd.)

2.3 Standards Issued but not yet effective (contd.)

Amendments to MFRS 101: Disclosure Initiatives

The amendments to MFRS 101 include narrow-focus improvements in the following five areas:

(i) Materiality (ii) Disaggregation and subtotals (iii) Notes structure (iv) Disclosure of accounting policies (v) Presentation of items of other comprehensive income arising from equity accounted investments

The directors of the Company do not anticipate that the application of these amendments will have a material impact on the Group's financial statements.

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

The amendments clarify that the exemption from presenting consolidated financial statements applies to a parent entity that is a subsidiary of an investment entity, when the investment entity measures all of its subsidiaries at fair value. The amendments further clarify that only a subsidiary that is not an investment entity itself and provides support services to the investment entity is consolidated. In addition, the amendments also provides that if an entity that is not itself an investment entity has an interest in an associate or joint venture that is an investment entity, the entity may, when applying the equity method, retain the fair value measurement applied by that investment entity associate or joint venture to the investment entity associate’s or joint venture’s interests in subsidiaries.

The amendments are to be applied retrospectively and are effective for annual periods beginning on or after 1 January 2016, with early adoption permitted. These amendments will not have any impact on the Group’s financial statements.

MFRS 15 Revenue from Contracts with Customers

MFRS 15 establishes a new five-step model that will apply to revenue arising from contracts with customers. MFRS 15 will supersede the current revenue recognition guidance including MFR 118 Revenue, MFRS 111 Construction Contracts and the related interpretations when it becomes effective.

The core principle of MFRS 15 is that an entity should recognise revenue which depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.

Under MFRS 15, an entity recognises revenue when (or as) a performance obligation is satisfied, i.e when “control” of the goods or services underlying the particular performance obligation is transferred to the customer.

Either a full or modified retrospective application is required for annual periods beginning on or after 1 January 2018 with early adoption permitted. The Group and the Company are currently assessing the impact of MFRS 15 and plan to adopt the new standard on the required effective date.

MFRS 9 Financial Instruments

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

Annual Improvements to MFRSs 2010–2012 Cycle

The Annual Improvements to MFRSs 2010-2012 Cycle include a number of amendments to various MFRSs, which are summarised below. The directors of the Company do not anticipate that the application of these amendments will have a significant impact on the Group's financial statements. 53 ANNUAL REPORT 2015

2. Summary of significant accounting policies (contd.)

2.3 Standards Issued but not yet effective (contd.)

Annual Improvements to MFRSs 2010–2012 Cycle (contd.)

MFRS 3 Business Combinations

The amendments to MFRS 3 clarifies that contingent consideration classified as liabilities (or assets) shouldbe measured at fair value through profit or loss at each reporting date, irrespective of whether the contingent consideration is a financial instrument within the scope of MFRS 9 or MFRS 139. The amendments are effective forbusiness combinations for which the acquisition date is on or after 1 July 2014.

MFRS 8 Operating Segments

The amendments are to be applied retrospectively and clarify that:

- an entity must disclose the judgements made by management in applying the aggregation criteria in MFRS 8, including a brief description of operating segments that have been aggregated and the economic characteristics used to assess whether the segments are similar; and

- the reconciliation of segment assets to total assets is only required to be disclosed if the reconciliation is reported to the chief operating decision maker.

MFRS 116 Property, Plant and Equipment and MFRS 138 Intangible Assets

The amendments remove inconsistencies in the accounting for accumulated depreciation or amortisation when an item of property, plant and equipment or an intangible asset is revalued. The amendments clarify that the gross carrying amount is adjusted in a manner consistent with the revaluation of the carrying amount of the asset and that accumulated depreciation/amortisation is the difference between the gross carrying amount and the carrying amount after taking into account accumulated impairment losses.

MFRS 124 Related Party Disclosures

The amendments clarify that a management entity providing key management personnel services to a reporting entity is a related party of the reporting entity. The reporting entity should disclose as related party transactions the amounts incurred for the service paid or payable to the management entity for the provision of key management personnel services.

Annual Improvements to MFRSs 2011–2013 Cycle

The Annual Improvements to MFRSs 2011-2013 Cycle include a number of amendments to various MFRSs, which are summarised below. The directors of the Company do not anticipate that the application of these amendments will have a significant impact on the Group's financial statements.

MFRS 3 Business Combinations

The amendments to MFRS 3 clarify that the standard does not apply to the accounting for formation of all types of joint arrangement in the financial statements of the joint arrangement itself. This amendment is to be applied prospectively.

MFRS 13 Fair Value Measurement

The amendments to MFRS 13 clarify that the portfolio exception in MFRS 13 can be applied not only to financial assets and financial liabilities, but also to other contracts within the scope of MFRS 9 (or MFRS 139 as applicable). 54 ANNUAL REPORT 2015

2. Summary of significant accounting policies (contd.)

2.3 Standards Issued but not yet effective (contd.)

Annual Improvements to MFRSs 2011–2013 Cycle (contd.)

MFRS 140 Investment Property

The amendments to MFRS 140 clarify that an entity acquiring investment property must determine whether:

- the property meets the definition of investment property in terms of MFRS 140; and - the transaction meets the definition of a business combination under MFRS 3,

to determine if the transaction is a purchase of an asset or is a business combination.

Annual Improvements to MFRSs 2012–2014 Cycle

The Annual Improvements to MFRSs 2012-2014 Cycle include a number of amendments to various MFRSs. The directors of the Company do not anticipate that the application of these amendments will have a significant impact on the Group’s financial statements.

MFRS 5 Non-current Assets Held for Sale and Discontinued Operations

The amendment to MFRS 5 clarifies that changing from one of these disposal methods to the other should not be considered to be a new plan of disposal, rather it is a continuation of the original plan. There is therefore no interruption of the application of the requirements in MFRS 5.

The amendment also clarifies that changing the disposal method does not change the date of classification. This amendment is to be applied prospectively to changes in methods of disposal that occur in annual periods beginning on or after 1 January 2016, with earlier application permitted.

MFRS 7 Financial Instruments: Disclosures

The amendment clarifies that a servicing contract that includes a fee can constitute continuing involvement ina financial asset. An entity must assess the nature of the fee and arrangement against the guidance for continuing involvement in MFRS 7 in order to assess whether the disclosures are required.

In addition, the amendment also clarifies that the disclosures in respect of offsetting of financial assets and financial liabilities are not required in the condensed interim financial report.

MFRS 134 Interim Financial Reporting

MFRS 134 requires entities to disclose information in the notes to the interim financial statements ‘if not disclosed elsewhere in the interim financial report’.

The amendment states that the required interim disclosures must either be in the interim financial statements or incorporated by cross-reference between the interim financial statements and wherever they are included within the greater interim financial report (e.g., in the management commentary or risk report). The other information within the interim financial report must be available to users on the same terms as the interim financial statements and at the same time.

2.4 Basis of consolidation

The consolidated financial statements comprise the financial statements of the Company and its subsidiaries as at the reporting date. The financial statements of the subsidiaries used in the preparation of the consolidated financial statements are prepared for the same reporting date as the Company. Consistent accounting policies are applied to like transactions and events in similar circumstances. 55 ANNUAL REPORT 2015

2. Summary of significant accounting policies (contd.)

2.4 Basis of consolidation (contd.)

The Company controls an investee if and only if the Company has all the following:

(i) Power over the investee (i.e existing rights that give it the current ability to direct the relevant activities of the investee);

(ii) Exposure, or rights, to variable returns from its investment with the investee; and

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

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

(i) The size of the Company’s holding of voting rights relative to the size and dispersion of holdings of the other vote holders;

(ii) Potential voting rights held by the Company, other vote holders or other parties;

(iii) Rights arising from other contractual arrangements; and

(iv) Any additional facts and circumstances that indicate that the Company has, or does not have, the current ability to direct the relevant activities at the time that decisions need to be made, including voting patterns at previous shareholders’ meetings.

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

Losses within a subsidiary are attributed to the non-controlling interests even if that results in a deficit balance.

Changes in the Group’s ownership interests in subsidiaries that do not result in the Group losing control over the subsidiaries are accounted for as equity transactions. The carrying amounts of the Group’s interests and the non- controlling interests are adjusted to reflect the changes in their relative interests in the subsidiaries. The resulting difference is recognised directly in equity and attributed to owners of the Company.

When the Group loses control of a subsidiary, a gain or loss calculated as the difference between (i) the aggregate of the fair value of the consideration received and the fair value of any retained interest and (ii) the previous carrying amount of the assets and liabilities of the subsidiary and any non-controlling interest, is recognised in profit or loss. The subsidiary’s cumulative gain or loss which has been recognised in other comprehensive income and accumulated in equity are reclassified to profit or loss or where applicable, transferred directly to retained earnings. The fair value of any investment retained in the former subsidiary at the date control is lost is regarded as the cost on initial recognition of the investment.

2.5 Transactions with non-controlling interests

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

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

Total comprehensive income within a subsidiary is attributed to the non-controlling interest even if it results in a deficit balance.

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:

- derecognises the assets (including goodwill) and liabilities of the subsidiary; - derecognises the carrying amount of any non-controlling interest; - 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 other comprehensive income to profit or loss or retained earnings, as appropriate. 56 ANNUAL REPORT 2015

2. Summary of significant accounting policies (contd.)

2.6 Subsidiaries

A subsidiary is an entity over which the Company has all the following:

(i) Power over the investee (i.e existing rights that give it the current ability to direct the relevant activities of the investee);

(ii) Exposure, or rights, to variable returns from its investment with the investee; and

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

In the Company’s separate financial statements, investments in subsidiaries are accounted for at cost less any accumulated impairment losses. On disposal of such investments, the difference between net disposal proceeds and their carrying amounts is included in profit or loss.

2.7 Investments in an associates and joint ventures

An associate is an entity in which the Group has significant influence. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies.

A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the joint arrangement. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require the unanimous consent of the parties sharing control.

On acquisition of an investment in associate or joint venture, any excess of the cost of investment over the Group’s share of the net fair value of the identifiable assets and liabilities of the investee is recognised as goodwill and included in the carrying amount of the investment. Any excess of the Group’s share of the net fair value of the identifiable assets and liabilities of the investee over the cost of investment is excluded from the carrying amount of the investment and is instead included as income in the determination of the Group’s share of the associate’s or joint venture’s profit or loss for the period in which the investment is acquired.

An associate or a joint venture is equity accounted for from the date on which the investee becomes an associate or a joint venture.

Under the equity method, on initial recognition the investment in an associate or a joint venture is recognised at cost, and the carrying amount is increased or decreased to recognise the Group's share of the profit or loss and other comprehensive income of the associate or joint venture after the date of acquisition. When the Group’s share of losses in an associate or a joint venture equals or exceeds its interest in the associate or joint venture, the Group does not recognise further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the associate or joint venture.

Profits and losses resulting from upstream and downstream transactions between the Group and its associate or joint venture are recognised in the Group’s financial statements only to the extent of unrelated investors’ interests in the associate or joint venture. Unrealised losses are eliminated unless the transaction provides evidence of an impairment of the asset transferred.

The financial statements of the associates and joint ventures are prepared as of the same reporting date as the Company. Where necessary, adjustments are made to bring the accounting policies in line with those of the Group.

After application of the equity method, the Group applies MFRS 139 Financial Instruments: Recognition and Measurement to determine whether it is necessary to recognise any additional impairment loss with respect to its net investment in the associate or joint venture. When necessary, the entire carrying amount of the investment is tested for impairment in accordance with MFRS 136 Impairment of Assets as a single asset, by comparing its recoverable amount (higher of value in use and fair value less costs to sell) with its carrying amount. Any impairment loss is recognised in profit or loss. Reversal of an impairment loss is recognised to the extent that the recoverable amount of the investment subsequently increases.

In the Company’s separate financial statements, investments in associates and joint ventures are accounted for at cost less any accumulated impairment losses. On disposal of such investments, the difference between net disposal proceeds and their carrying amounts is included in profit or loss. 57 ANNUAL REPORT 2015

2. Summary of significant accounting policies (contd.)

2.8 Intangible assets

(a) Goodwill

Goodwill is initially measured at cost. Following initial recognition, goodwill is measured at cost less any accumulated impairment losses.

For the purpose of impairment testing, goodwill acquired is allocated, from the acquisition date, to each of the Group’s cash-generating units that are expected to benefit from the synergies of the combination.

The cash-generating unit to which goodwill has been allocated is tested for impairment annually and whenever there is an indication that the cash-generating unit may be impaired, by comparing the carrying amount of the cash-generating unit, including the allocated goodwill, with the recoverable amount of the cash-generating unit. Where the recoverable amount of the cash-generating unit is less than the carrying amount, an impairment loss is recognised in the profit or loss. Impairment losses recognised for goodwill are not reversed in subsequent periods.

Where goodwill forms part of a cash-generating unit and part of the operation within that cash-generating unit is disposed of, the goodwill associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal of the operation. Goodwill disposed of in this circumstance is measured based on the relative fair values of the operations disposed of and the portion of the cash-generating unit retained.

Goodwill and fair value adjustments arising on the acquisition of foreign operation on or after 1 January 2006 are treated as assets and liabilities of the foreign operations and are recorded in the functional currency of the foreign operations and translated in accordance with the accounting policy set out in Note 2.27.

Goodwill and fair value adjustments which arose on acquisitions of foreign operation before 1 January 2006 are deemed to be assets and liabilities of the Company and are recorded in RM at the rates prevailing at the date of acquisition.

(b) Other intangible assets

Intangible assets acquired separately are measured initially at cost. Following initial acquisition, intangible assets are measured at cost less any accumulated amortisation and any accumulated impairment losses.

Intangible assets with finite useful lives are amortised over the estimated useful lives and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method are reviewed at least at each financial year-end. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset is accounted for by changing the amortisation period or method, as appropriate, and are treated as changes in accounting estimates. The amortisation expense on intangible assets with finite lives is recognised in profit or loss.

Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in profit or loss when the asset is derecognised. 58 ANNUAL REPORT 2015

2. Summary of significant accounting policies (contd.)

2.9 Property, plant and equipment and depreciation

All items of property, plant and equipment are initially recorded at cost. The cost of an item of property, plant and equipment is recognised as an asset if, and only if, it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably.

Subsequent to recognition, property, plant and equipment are measured at cost less accumulated depreciation and any accumulated impairment losses. When significant parts of property, plant and equipment are required tobe replaced in intervals, the Group recognises such parts as individual assets with specific useful lives and depreciation, respectively. Likewise, when a major inspection is performed, its cost is recognised in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are recognised in profit or loss as incurred.

Short-term leasehold land 5% - 6% Long-term leasehold land amortised over 99 years Long-term leasehold apartment 1.27% Buildings 2% - 18% Plant and machinery 10% - 20% Office equipment, renovation, furniture and fittings 10% - 20% Computers 20% - 33.3% Motor vehicles 10% - 20%

Capital work-in-progress are not depreciated as these assets are not yet available for use.

The carrying values of property, plant and equipment are reviewed for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable.

The residual value, useful life and depreciation method are reviewed at each financial year-end, and adjusted prospectively, if appropriate.

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

2.10 Investment properties

Investment properties are measured at cost model which is to measure investment properties at cost less accumulated depreciation and any accumulated impairment losses.

Depreciation is computed on a straight-line basis over the estimated useful lives of the assets as follows:

Buildings 1% - 2%

A property interest under an operating lease is classified and accounted for as an investment property on a property- by-property basis when the Group holds it to earn rentals or for capital appreciation or both. Any such property interest under an operating lease classified as an investment property is carried at fair value.

Investment properties are derecognised when either they have been disposed of or when the investment property is permanently withdrawn from use and no future economic benefit is expected from its disposal. Any gain or loss on the retirement or disposal of an investment property is recognised in profit or loss in the year of retirement or disposal.

Transfers are made to or from investment property only when there is a change in use. For a transfer from investment property to owner-occupied property, the deemed cost for subsequent accounting is the fair value at the date of change in use. For a transfer from owner-occupied property to investment property, the property is accounted for in accordance with the accounting policy for property, plant and equipment set out in Note 2.9 up to the date of change in use. 59 ANNUAL REPORT 2015

2. Summary of significant accounting policies (contd.)

2.11 Inventory property

Property acquired or being constructed for sale in the ordinary course of business, rather than to be held for rental or capital appreciation, is held as inventory property and is measured at the lower of cost and net realisable value.

Net realisable value is the estimated selling price in the ordinary course of the business, based on market prices at the reporting date and discounted for the time value of money if material, less costs to completion and the estimated costs of sale.

The cost of inventory property recognised in profit or loss on disposal is determined with reference to the specific costs incurred on the property sold and an allocation of any non-specific costs based on the relative size of the property sold.

2.12 Impairment of non-financial assets

The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, or when an annual impairment assessment for an asset is required, the Group makes an estimate of the asset’s recoverable amount.

An asset’s recoverable amount is the higher of an asset’s fair value less costs to sell and its value in use. For the purpose of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units (“CGU”)).

In assessing value in use, the estimated future cash flows expected to be generated by the asset are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Where the carrying amount of an asset exceeds its recoverable amount, the asset is written down to its recoverable amount. Impairment losses recognised in respect of a CGU or groups of CGUs are allocated first to reduce the carrying amount of any goodwill allocated to those units or groups of units and then, to reduce the carrying amount of the other assets in the unit or groups of units on a pro-rata basis.

Impairment losses are recognised in profit or loss except for assets that are previously revalued where the revaluation was taken to other comprehensive income. In this case the impairment is also recognised in other comprehensive income up to the amount of any previous revaluation.

An assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognised. If that is the case, the carrying amount of the asset is increased to its recoverable amount. That increase cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised previously. Such reversal is recognised in profit or loss unless the asset is measured at revalued amount, in which case the reversal is treated as a revaluation increase. Impairment loss on goodwill is not reversed in a subsequent period.

2.13 Financial assets

Financial assets are recognised in the statements of financial position when, and only when, the Group andthe Company become a party to the contractual provisions of the financial instrument.

When financial assets are recognised initially, they are measured at fair value, plus, in the case of financial assets not at fair value through profit or loss, directly attributable transaction costs.

The Group and the Company determine the classification of their financial assets at initial recognition, and the categories include financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments and available-for-sale financial assets. 60 ANNUAL REPORT 2015

2. Summary of significant accounting policies (contd.)

2.13 Financial assets (contd.)

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

Financial assets are classified as financial assets at fair value through profit or loss if they are held for trading or are designated as such upon initial recognition. Financial assets held for trading are derivatives (including separated embedded derivatives) or financial assets acquired principally for the purpose of selling in the near term.

Subsequent to initial recognition, financial assets at fair value through profit or loss are measured at fair value. Any gains or losses arising from changes in fair value are recognised in profit or loss. Net gains or net losses on financial assets at fair value through profit or loss do not include exchange differences, interest and dividend income. Exchange differences, interest and dividend income on financial assets at fair value through profit or loss are recognised separately in profit or loss as part of other losses or other income.

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

(b) Loans and receivables

Financial assets with fixed or determinable payments that are not quoted in an active market are classified as loans and receivables.

Subsequent to initial recognition, loans and receivables are measured at amortised cost using the effective interest method. Gains and losses are recognised in profit or loss when the loans and receivables are derecognised or impaired, and through the amortisation process.

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

(c) Held-to-maturity investments

Financial assets with fixed or determinable payments and fixed maturity are classified as held-to-maturity when the Group has the positive intention and ability to hold the investment to maturity.

Subsequent to initial recognition, held-to-maturity investments are measured at amortised cost using the effective interest method. Gains and losses are recognised in profit or loss when the held-to-maturity investments are derecognised or impaired, and through the amortisation process.

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

(d) Available-for-sale financial assets

Available-for-sale financial assets are financial assets that are designated as available for sale or are not classified in any of the three preceding categories.

After initial recognition, available-for-sale financial assets are measured at fair value. Any gains or losses from changes in fair value of the financial assets are recognised in other comprehensive income, except that impairment losses, foreign exchange gains and losses on monetary instruments and interest calculated using the effective interest method are recognised in profit or loss. The cumulative gain or loss previously recognised in other comprehensive income is reclassified from equity to profit or loss as a reclassification adjustment when the financial asset is derecognised. Interest income calculated using the effective interest method is recognised in profit or loss.

Dividends on an available-for-sale equity instrument are recognised in profit or loss when the Group’s and the Company's right to receive payment is established.

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

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

A financial asset is derecognised when the contractual right to receive cash flows from the asset has expired. On derecognition of a financial asset in its entirety, the difference between the carrying amount and the sumofthe consideration received and any cumulative gain or loss that had been recognised in other comprehensive income is recognised in profit or loss. 61 ANNUAL REPORT 2015

2. Summary of significant accounting policies (contd.)

2.13 Financial assets (contd.)

Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the period generally established by regulation or convention in the marketplace concerned. All regular way purchases and sales of financial assets are recognised or derecognised on the trade date i.e., the date that the Group and the Company commit to purchase or sell the asset.

2.14 Impairment of financial assets

The Group and the Company assess at each reporting date whether there is any objective evidence that a financial asset is impaired.

(a) Trade and other receivables and other financial assets carried at amortised cost

To determine whether there is objective evidence that an impairment loss on financial assets has been incurred, the Group and the Company consider factors such as the probability of insolvency or significant financial difficulties of the debtor and default or significant delay in payments. For certain categoriesof financial assets, such as trade receivables, assets that are assessed not to be impaired individually are subsequently assessed for impairment on a collective basis based on similar risk characteristics. Objective evidence of impairment for a portfolio of receivables could include the Group’s and the Company's past experience of collecting payments, an increase in the number of delayed payments in the portfolio past the average credit period and observable changes in national or local economic conditions that correlate with default on receivables.

If any such evidence exists, the amount of impairment loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the financial asset’s original effective interest rate. The impairment loss is recognised in profit or loss.

The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables, where the carrying amount is reduced through the use of an allowance account. When a trade receivable becomes uncollectible, it is written off against the allowance account.

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

(b) Available-for-sale financial assets

Significant or prolonged decline in fair value below cost, significant financial difficulties of the issuer or obligor, and the disappearance of an active trading market are considerations to determine whether there is objective evidence that investment securities classified as available-for-sale financial assets are impaired.

If an available-for-sale financial asset is impaired, an amount comprising the difference between its cost (net of any principal payment and amortisation) and its current fair value, less any impairment loss previously recognised in profit or loss, is transferred from equity to profit or loss.

Impairment losses on available-for-sale equity investments are not reversed in profit or loss in the subsequent periods. Increase in fair value, if any, subsequent to impairment loss is recognised in other comprehensive income. For available-for-sale debt investments, impairment losses are subsequently reversed in profit or loss if an increase in the fair value of the investment can be objectively related to an event occurring after the recognition of the impairment loss in profit or loss. 62 ANNUAL REPORT 2015

2. Summary of significant accounting policies (contd.)

2.15 Financial liabilities

Financial liabilities are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability.

Financial liabilities, within the scope of MFRS 139, are recognised in the statements of financial position when, and only when, the Group and the Company become a party to the contractual provisions of the financial instrument. Financial liabilities are classified as either financial liabilities at fair value through profit or loss or otherfinancial liabilities.

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

Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss.

Financial liabilities held for trading include derivatives entered into by the Group and the Company that do not meet the hedge accounting criteria. Derivative liabilities are initially measured at fair value and subsequently stated at fair value, with any resultant gains or losses recognised in profit or loss. Net gains or losses on derivatives include exchange differences.

The Group and the Company have not designated any financial liabilities as at fair value through profit or loss.

(b) Other financial liabilities

The Group’s and the Company's other financial liabilities include trade payables, other payables and loans and borrowings.

Trade and other payables are recognised initially at fair value plus directly attributable transaction costs and subsequently measured at amortised cost using the effective interest method.

Loans and borrowings are recognised initially at fair value, net of transaction costs incurred, and subsequently measured at amortised cost using the effective interest method. Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the reporting date.

For other financial liabilities, gains and losses are recognised in profit or loss when the liabilities are derecognised, and through the amortisation process.

A financial liability is derecognised when the obligation under the liability is extinguished. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in profit or loss.

2.16 Fair value instruments

The Group and the Company measure financial instruments, such as, embedded derivatives, at fair value at each reporting date. Also, fair values of financial instruments measured at amortised cost are disclosed in Note 43.

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

- in the principal market for the asset or liability; or - in the absence of a principal market, in the most advantageous market for the asset or liability. 63 ANNUAL REPORT 2015

2. Summary of significant accounting policies (contd.)

2.16 Fair value instruments (contd.)

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

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

The Group and the Company use valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.

All assets and liabilities for which fair value is measured 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:

Level 1 : Quoted (unadjusted) market prices in active markets for identical assets or liabilities;

Level 2 : Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable;

Level 3 : Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.

For assets and liabilities that are recognised in the financial statements on a recurring basis, the Group and the Company determine whether transfers have occurred between Levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.

The Group and the Company determine the policies and procedures for recurring fair value measurement, such as properties and unquoted available-for-sale (“AFS”) financial assets.

External valuers may be involved for valuation of significant assets, such as properties and AFS financial assets. Involvement of external valuers is decided upon annually by the Group and by the Company. Selection criteria include market knowledge, reputation, independence and whether professional standards are maintained.

At each reporting date, the Group and the Company analyse the movements in the values of assets and liabilities which are required to be re-measured or re-assessed as per the Group’s and the Company’s accounting policies. For this analysis, the Group and the Company verify the major inputs applied in the latest valuation by agreeing the information in the valuation computation to contracts and other relevant documents.

The Group and the Company, in conjunction with the Group’s and the Company’s external valuers, also compare the changes in the fair value of each asset and liability with relevant external sources, where practical, to determine whether the change is reasonable.

For the purpose of fair value disclosures, the Group and the Company have determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above. 64 ANNUAL REPORT 2015

2. Summary of significant accounting policies (contd.)

2.17 Income taxes

i. Current tax

Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the reporting date.

Current taxes are recognised in profit or loss except to the extent that the tax relates to items recognised outside profit or loss, either in other comprehensive income or directly in equity.

ii. Deferred tax

Deferred tax is provided using the liability method on temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

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

- where the deferred tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and

- in respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

Deferred tax assets are recognised for all deductible temporary differences, carry forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised except:

- where the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and

- in respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, deferred tax assets are recognised only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised.

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are reassessed at each reporting date and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax assets to be utilised.

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

Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss. Deferred tax items are recognised in correlation to the underlying transaction either in other comprehensive income or directly in equity and deferred tax arising from a business combination is adjusted against goodwill on acquisition. Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority. 65 ANNUAL REPORT 2015

2. Summary of significant accounting policies (contd.)

2.17 Income taxes (contd.)

iii. Sales tax and Goods and Services Tax (“GST”)

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

- where the sales tax and GST incurred in a purchase of assets or services is not recoverable from the taxation authority, in which case the sales tax and GST 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 and GST included.

The net amount of sales tax and GST recoverable from, or payable to, the taxation authority is included as part of other current assets or liabilities in the statements of financial position.

2.18 Share capital and share issuance expenses

An equity instrument is any contract that evidences a residual interest in the assets of the Group and the Company after deducting all of its liabilities. Ordinary shares are equity instruments.

Ordinary shares are recorded at the proceeds received, net of directly attributable incremental transaction costs. Ordinary shares are classified as equity. Dividends on ordinary shares are recognised in equity in the period in which they are declared.

2.19 Treasury shares

When shares of the Company, that have not been cancelled, recognised as equity are reacquired, the amount of consideration paid is recognised directly in equity. Reacquired shares are classified as treasury shares and presented as a deduction from total equity. No gain or loss is recognised in profit or loss on the purchase, sale, issue or cancellation of treasury shares. When treasury shares are reissued by resale, the difference between the sales consideration and the carrying amount is recognised in equity.

2.20 Cash and cash equivalents

Cash and cash equivalents comprise cash at bank and on hand, demand deposits, and short-term, highly liquid investments with maturity of 3 months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. These also include bank overdrafts that form an integral part of the Group’s and the Company's cash management.

2.21 Inventories

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

Cost of inventories of merchandise held for resale is determined using the weighted average method.

Cost of manufactured goods is determined using the first in, first out method. The cost of raw materials comprises costs of purchase. The cost of finished goods and work-in-progress comprise costs of raw materials, direct labour, other direct costs and appropriate proportions of manufacturing overheads based on normal operating capacity.

The cost of properties held for sale comprises cost associated with the acquisition of land, direct costs and appropriate proportions of common costs. Cost is determined on a specific identification basis.

Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs necessary to make the sale. 66 ANNUAL REPORT 2015

2. Summary of significant accounting policies (contd.)

2.22 Leases

i. As lessee

Finance leases, which transfer to the Group substantially all the risks and rewards incidental to ownership of the leased item, are capitalised at the inception of the lease at the fair value of the leased asset or, if lower, at the present value of the minimum lease payments. Any initial direct costs are also added to the amount capitalised. Lease payments are apportioned between the finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged to profit or loss. Contingent rents, if any, are charged as expenses in the periods in which they are incurred.

Leased assets are depreciated over the estimated useful life of the asset. However, if there is no reasonable certainty that the Group will obtain ownership by the end of the lease term, the asset is depreciated over the shorter of the estimated useful life and the lease term.

Operating lease payments are recognised as an expense in profit or loss on a straight-line basis over the lease term. The aggregate benefit of incentives provided by the lessor is recognised as a reduction of rental expense over the lease term on a straight-line basis.

ii. As lessor

Leases where the Group and the Company retain substantially all the risks and rewards of ownership of the asset are classified as operating leases. Initial direct costs incurred in negotiating an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same bases as rental income. The accounting policy for rental income is set out in Note 2.28 (v).

2.23 Borrowings costs

Borrowing costs are capitalised as part of the cost of a qualifying asset if they are directly attributable to the acquisition, construction or production of that asset. Capitalisation of borrowing costs commences when the activities to prepare the asset for its intended use or sale are in progress and the expenditures and borrowing costs are incurred. Borrowing costs are capitalised until the assets are substantially completed for their intended use or sale.

All other borrowing costs are recognised in profit or loss in the period they are incurred. Borrowing costs consist of interest and other costs that the Group and the Company incurred in connection with the borrowing of funds.

2.24 Financial guarantee contracts

A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due.

Financial guarantee contracts are recognised initially as a liability at fair value, net of transaction costs. Subsequent to initial recognition, financial guarantee contracts are recognised as income in profit or loss over the period of the guarantee. If the debtor fails to make payment relating to a financial guarantee contract when it is due and the Group, as the issuer, is required to reimburse the holder for the associated loss, the liability is measured at the higher of the best estimate of the expenditure required to settle the present obligation at the reporting date and the amount initially recognised less cumulative amortisation.

2.25 Provisions

Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of economic resources will be required to settle the obligation and the amount of the obligation can be estimated reliably.

Provisions are reviewed at each reporting date and adjusted to reflect the current best estimate. If it is no longer probable that an outflow of economic resources will be required to settle the obligation, the provision is reversed. If the effect of the time value of money is material, provisions are discounted using a current pre tax rate that reflects, where appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost. 67 ANNUAL REPORT 2015

2. Summary of significant accounting policies (contd.)

2.26 Employee benefits

i. Short term benefits

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.

ii. Defined contribution plans

Defined contribution plans are post-employment benefit plans under which the Group pays fixed contributions into separate entities or funds and will have no legal or constructive obligation to pay further contributions if any of the funds do not hold sufficient assets to pay all employee benefits relating to employee services in the current and preceding financial years. Such contributions are recognised as an expense in profit or loss as incurred. As required by law, companies in Malaysia make such contributions to the Employees Provident Fund ("EPF"). The Group's foreign subsidiary also make contributions to its respective country's statutory pension scheme.

2.27 Foreign currencies

i. Functional and presentation currency

The individual financial statements of each entity in the Group are measured using the currency of the primary economic environment in which the entity operates ("the functional currency"). The financial statements of the Group and of the Company are presented in Ringgit Malaysia ("RM"), which is also the Company's functional currency.

ii. Foreign currency transactions

Transactions in foreign currencies are measured in the respective functional currencies of the Company and its subsidiaries and are recorded on initial recognition in the functional currencies at exchange rates approximating those ruling at the transaction dates. Monetary assets and liabilities denominated in foreign currencies are translated at the rate of exchange ruling at the reporting date. Non-monetary items denominated in foreign currencies that are measured at historical cost are translated using the exchange rates as at the dates of the initial transactions. Non-monetary items denominated in foreign currencies measured at fair value are translated using the exchange rates at the date when the fair value was determined.

Exchange differences arising on the settlement of monetary items or on translating monetary items at the reporting date are recognised in profit or loss except for exchange differences arising on monetary items that form part of the Group’s net investment in foreign operations, which are recognised initially in other comprehensive income and accumulated under foreign currency translation reserve in equity. The foreign currency translation reserve is reclassified from equity to profit or loss of the Group on disposal of the foreign operation.

Exchange differences arising on the translation of non-monetary items carried at fair value are included in profit or loss for the period except for the differences arising on the translation of non-monetary items in respect of which gains and losses are recognised directly in equity. Exchange differences arising from such non-monetary items are also recognised directly in equity.

iii. Foreign operations

The results and financial position of foreign operations that have a functional currency different from the presentation currency of the consolidated financial statements are translated into RM as follows:

- Assets and liabilities for each statement of financial position presented are translated at the closing rate prevailing at the reporting date; - Income and expenses for each statement of comprehensive income are translated at average exchange rates for the year, which approximate the exchange rates at the dates of the transactions; and - All resulting exchange differences are taken to the foreign currency translation reserve within equity. 68 ANNUAL REPORT 2015

2. Summary of significant accounting policies (contd.)

2.27 Foreign currencies (contd.)

iii. Foreign operations (contd.)

Goodwill and fair value adjustments arising on the acquisition of foreign operations on or after 1 January 2006 are treated as assets and liabilities of the foreign operations and are recorded in the functional currency of the foreign operations and translated at the closing rate at the reporting date. Goodwill and fair value adjustments which arose on the acquisition of foreign subsidiaries before 1 January 2006 are deemed to be assets and liabilities of the parent company and are recorded in RM at the rates prevailing at the date of acquisition.

2.28 Revenue recognition

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. The following specific recognition criteria must also be met before revenue is recognised:

i. Sale of goods

Revenue is recognised net of sales taxes and upon transfer of significant risks and rewards of ownership to the buyer. Revenue is not recognised to the extent where there are significant uncertainties regarding recovery of the consideration due, associated costs or the possible return of goods.

ii. Sale of completed property

A property is regarded as sold when the significant risks and returns have been transferred to the buyer, which is normally on unconditional exchange of contracts. For conditional exchanges, sales are recognised only when all the significant conditions are satisfied.

iii. Dividend income

Dividend income is recognised when the Group's right to receive payment is established.

iv. Management fees

Management fees are recognised when services are rendered.

v. Rental income

Rental income is recognised on a straight-line basis over the term of the lease. The aggregate cost of incentives provided to lessees is recognised as a reduction of rental income over the lease term on a straight- line basis.

vi. Interest income

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

vii. Revenue on award credits

Revenue on award credits is recognised based on the number of award credits that have been redeemed in exchange for free or discounted goods, relative to the total number of award credits expected to be redeemed.

2.29 Government grant

Government grant is recognised at its fair value where there is reasonable assurance that the grant will be received and all conditions attached will be met. Where the grant relates to an asset, the fair value is recognised as deferred capital grant in the statements of financial position and is amortised to the statements of comprehensive income over the expected useful life of the relevant asset by equal annual instalments.

Grant contributed towards the acquisition of plant and equipment is deducted from the cost of those assets. 69 ANNUAL REPORT 2015

2. Summary of significant accounting policies (contd.)

2.30 Land use rights

Land use rights are initially measured at cost. Following initial recognition, land use rights are measured at cost less accumulated amortisation and accumulated impairment losses. The land use rights are amortised over the lease term of 6 years.

2.31 Segment reporting

For management purposes, the Group is organised into operating segments based on their products and services which are independently managed by the respective segment managers responsible for the performance of the respective segments under their charge. The segment managers report directly to the management of the Company who regularly review the segment results in order to allocate resources to the segments and to assess the segment performance. Additional disclosures on each of these segments are shown in Note 46, including the factors used to identify the reportable segments and the measurement basis of segment information.

2.32 Contingencies

A contingent liability or asset is a possible obligation or asset that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of uncertain future event(s) not wholly within the control of the Group and of the Company.

Contingent liabilities and assets are not recognised in the statements of financial position of the Group and of the Company.

2.33 Current and non-current classification

The Group and the Company present assets and liabilities in statements of financial position based on current and non-current classification.

An asset is classified as current when it is:

- expected to be realised or intended to be sold or consumed in normal operating cycle; - held primarily for the purpose of trading; - expected to be realised within 12 months after the reporting period; or - cash and cash equivalents unless restricted from being exchanged or used to settle a liability for at least 12 months after the reporting period.

All other assets are classified as non-current.

A liability is classified as 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 12 months after the reporting period; or - there is no unconditional right to defer the settlement of the liability for at least 12 months after the reporting period.

All other liabilities are classified as non-current.

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

2.34 Offsetting of financial instruments

Financial assets and financial liabilities are offset and the net amount is reported in the 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. 70 ANNUAL REPORT 2015

2. Summary of significant accounting policies (contd.)

2.35 Related parties

A related party is defined as follows:

a) a person or a close member of that person’s family is related to the Company if that person:

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

b) an entity is related to the Company if any of the following conditions applies:

(i) if the entity and the Company are members of the same group (which means that each parent, subsidiary and fellow subsidiary is related to the others); (ii) one entity is an associate or joint venture of the other entity (or an associate or joint venture of a member of a group of which the other entity is a member); (iii) both entities are joint ventures of the same third party; (iv) one entity is a joint venture of a third entity and the other entity is an associate of the third entity; (v) the entity is a post-employment benefit plan for the benefit of employees of either the Company or an entity related to the Company. If the Company is itself such a plan, the sponsoring employers are also related to the Company; (vi) the entity is controlled or jointly controlled by a person identified in (a); or (vii) a person identified in (a) (i) has significant influence over the entity or is a member ofthekey management personnel of the entity (or of a parent of the entity).

3. Significant accounting judgements and estimates

The preparation of the financial statements of the Group and of the Company requires management tomake judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities at the reporting date. However, uncertainty about these assumptions and estimates could result in outcomes that could require a material adjustment to the carrying amount of the asset or liability affected in the future.

3.1 Judgements made in applying accounting policies

In the process of applying the Group’s accounting policies, management has made the following judgements, apart from those involving estimations, which have the most significant effect on the amounts recognised in the financial statements:

i. Classification of property

The Group has developed certain criteria based on MFRS 140: Investment Property in making judgement whether a property qualifies as an investment property. Investment property is a property held to earn rentals or for capital appreciation or both.

The Company has leased out its building to a subsidiary for its use as a supermarket and departmental store and accordingly the building is classified as investment property in the Company's financial statements. The building is classified as property, plant and equipment in the Group's financial statements as it is held for use in the supply of goods and services.

Property that is held for sale in the ordinary course of business is classified as inventory property.

ii. Operating lease commitments – the Company as a lessor

The Company has entered into property leases with a subsidiary on its investment properties. The Company has determined that it retains all the significant risks and rewards of ownership of these properties which are leased out as operating leases. 71 ANNUAL REPORT 2015

3. Significant accounting judgements and estimates (contd.)

3.2 Key sources of estimation uncertainty

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 discussed below.

i. Impairment of goodwill

The Group determines whether goodwill are impaired at least on an annual basis. This requires an estimation of the value-in-use of the cash-generating units ("CGU") to which goodwill are allocated. Estimating a value- in-use amount requires management to make an estimate of the expected future cash flows from the CGU and also to choose a suitable discount rate in order to calculate the present value of those cash flows. The carrying amount of the goodwill as at 31 May 2015 of the Group was RM4,665,045 (2014: RM4,665,045) is disclosed in Note 22.

ii. Deferred tax assets

Deferred tax assets are recognised for all unused tax losses and unabsorbed capital allowances to the extent that it is probable that taxable profit will be available against which the losses and capital allowances can be utilised. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and level of future taxable profits together with future tax planning strategies. The total carrying value of unrecognised tax losses and capital allowances of the Group is disclosed in Note 36.

iii. Deferred revenue

The Group allocates the consideration received from the sale of goods to the goods sold and the points issued under its loyalty programme. The consideration allocated to the points issued is measured at their fair value.

The carrying amount of deferred revenue allocated to the award credits at the reporting date was RM1,923,157 (2014: RM1,712,534) is disclosed in Note 40.

iv. Impairment loss on investments in subsidiaries, joint venture and associate

The Company carried out the impairment test based on the estimation of the higher of the value-in-use or the fair value less cost to sell of the cash-generating units ("CGU") to which the investments in subsidiaries, joint venture and associate belong to. Estimating the recoverable amount requires the Company to make an estimate of the expected future cash flows from the CGU and also to determine a suitable discount rate in order to calculate the present value of those cash flows. The Company has recognised impairment loss in respect of investments in subsidiaries and associate.

The carrying amount at the reporting date for investments in subsidiaries, joint venture and associate is disclosed in Notes 18, 19 and 20 respectively.

4. Revenue Group Company 2015 2014 2015 2014 RM RM RM RM

Sales of goods 386,986,245 368,698,511 - - Proceeds from the sale of inventory property - 3,590,160 - - Sales of completed properties 4,801,892 354,100 - - Loan interest income 2,990 5,600 - - Rental income from: - investment property - - 1,656,684 1,656,684 - operating leases, other than those relating to investment property 7,245,266 5,516,647 - - Management fees from subsidiaries - - - 60,000 Gross dividends from subsidiaries - - 28,600,000 4,830,636 399,036,393 378,165,018 30,256,684 6,547,320 72 ANNUAL REPORT 2015

5. Other operating income

Group Company 2015 2014 2015 2014 RM RM RM RM

Advertising and promotional income 379,206 407,785 - - Amortisation of government grant (Note 33) 50,000 50,000 - - Gain on disposal of property, plant and equipment - 42,114 - - Commission income 7,742 6,808 - - Insurance claim 3,844 - - - Interest income 1,106,250 835,610 3,596,588 84,409 Miscellaneous 1,200,669 1,401,886 - - Reversal of allowance for impairment loss (Note 25(b)) - - - 7,833,179 2,747,711 2,744,203 3,596,588 7,917,588

6. Employee benefits expense Group Company 2015 2014 2015 2014 RM RM RM RM

Wages and salaries 22,659,045 20,919,332 - - Executive directors' remuneration (Note 7) 1,437,626 1,309,982 192,600 192,600 Social security contributions 212,990 200,721 - - Contributions to defined contribution plan 1,667,087 1,476,442 - - Other benefits 2,344,935 1,495,737 80 510 28,321,683 25,402,214 192,680 193,110

7. Directors' remuneration Group Company 2015 2014 2015 2014 RM RM RM RM Directors of the Company

Executive: Salaries and other emoluments 423,806 395,706 18,000 18,000 Fees 177,600 177,600 174,600 174,600 Bonus 47,000 52,500 - - Contributions to defined contribution plan 34,912 32,070 - - 683,318 657,876 192,600 192,600

Non-executive: Other emoluments 52,500 50,000 52,500 50,000 Fees 74,000 74,000 65,000 65,000 126,500 124,000 117,500 115,000 73 ANNUAL REPORT 2015

7. Directors' remuneration (contd.) Group Company 2015 2014 2015 2014 RM RM RM RM Directors of subsidiaries

Executive: Salaries and other emoluments 650,735 482,206 - - Fees 9,000 9,000 - - Bonus 14,000 93,684 - - Contributions to defined contribution plan 80,573 67,216 - - 754,308 652,106 - - Non-executive: Fees 150,000 150,000 - -

Total directors’ remuneration (Note 42(b)) 1,714,126 1,583,982 310,100 307,600 Estimated money value of benefits-in-kind 23,215 22,952 - -

Total directors’ remuneration including benefits-in-kind 1,737,341 1,606,934 310,100 307,600

Analysis: Total executive directors' remuneration (Note 6) 1,437,626 1,309,982 192,600 192,600 Total non-executive directors' remuneration (Note 8) 276,500 274,000 117,500 115,000 Total directors' remuneration 1,714,126 1,583,982 310,100 307,600 Estimated money value of benefits-in-kind 23,215 22,952 - - Total directors’ remuneration including benefits-in-kind 1,737,341 1,606,934 310,100 307,600

The executive directors’ remuneration of the Group amounting to RM1,437,626 (2014: RM1,309,982) are paid to the present directors of the Group.

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

Number of directors 2015 2014 Executive directors: Below RM50,000 1 - RM50,001 - RM100,000 - - RM100,001 - RM150,000 2 2 RM300,001 - RM350,000 1 1

Non-executive directors: Below RM50,000 5 5 74 ANNUAL REPORT 2015

8. Other operating expenses

Included in other operating expenses are:

Group Company 2015 2014 2015 2014 RM RM RM RM Auditors' remuneration: - statutory audit - current year 152,645 153,832 25,000 25,000 - underprovision in prior years 15,500 - 3,000 - - other services 6,000 5,000 6,000 3,000 Allowance for impairment of doubtful debts 55,508 - - - Bad debts written off 116,170 34,317 - - Foreign exchange losses/(gains) - realised 1,988,078 (975,401) - - - unrealised 1,701,979 (172,744) - - Non-executive directors' remuneration (Note 7) - present directors 276,500 274,000 117,500 115,000

9. Finance costs Group Company 2015 2014 2015 2014 RM RM RM RM Interest expense: Bankers' acceptances 56,919 100,007 - - Bank overdrafts 11,049 285,203 - - Term loans 657,978 476,163 - - Amounts due to subsidiaries - - 1,954,044 - Unwinding of discount on non-current payable 346,971 311,301 - - 1,072,917 1,172,674 1,954,044 -

10. Income tax expense Group Company 2015 2014 2015 2014 RM RM RM RM Current year income tax: Malaysian income tax 6,021,556 4,651,694 821,042 1,517,567 Under/(Over)provision in prior year 305,710 (6,790,216) 130,036 (2,340) 6,327,266 (2,138,522) 951,078 1,515,227 Deferred tax (Note 36): Relating to origination and reversal of temporary differences (214,365) (682,825) - - Relating to reduction in Malaysian income tax rate 9,574 - - - Under/(Over)provision inprior year 20,080 (234,755) - - (184,711) (917,580) - - Income tax recognised in profit or loss 6,142,555 (3,056,102) 951,078 1,515,227

Domestic income tax is calculated at the Malaysian statutory tax rate of 25% (2014: 25%) of the estimated assessable profit for the year. The domestic statutory tax rate will be reduced to 24% from current year rate of 25%, effective year of assessment 2016. The computation of deferred tax as at 31 May 2015 has reflected these changes.

Taxation of other jurisdictions is calculated at the rates prevailing in the respective jurisdiction. 75 ANNUAL REPORT 2015

10. Income tax expense (contd.)

A reconciliation of income tax expense applicable to profit before tax at the statutory income tax rate to income tax expense at the effective income tax rate of the Group and of the Company is as follows: 2015 2014 RM RM Group

Profit before tax 16,277,516 14,844,611

Taxation at Malaysian statutory tax rate of 25% (2014: 25%) 4,069,379 3,711,153 Effect on opening deferred tax of reduction in Malaysian income tax rate 9,574 - Different tax rates in other countries (1,041) - Expenses not deductible for tax purposes 2,387,056 1,773,006 Income not subject to tax (1,248,582) (1,764,281) Effect of utilisation of previously unrecognised deferred tax assets (151,920) (8,374) Utilisation of current year's reinvestment allowances (517,360) - Deferred tax assets not recognised during the year 1,269,659 257,365 Under/(Over)provision of income tax expense in prior year 305,710 (6,790,216) Under/(Over)provision of deferred tax in prior year 20,080 (234,755) Income tax expense/(benefit) for the year 6,142,555 (3,056,102)

Company

Profit before tax 30,621,201 13,616,837

Taxation at Malaysian statutory tax rate of 25% (2014: 25%) 7,655,300 3,404,209 Expenses not deductible for tax purposes 724,434 164,881 Income not subject to tax (7,558,692) (2,051,523) Under/(Over)provision of income tax expense in prior year 130,036 (2,340) Income tax expense for the year 951,078 1,515,227

Group

(i) A subsidiary has on 18 January 2010 obtained approval from the Malaysian Investment Development Authority ("MIDA"), subject to certain conditions being complied with, 100% tax exemption on its statutory income on "Fine Resolution Interconnect Flexible Printed Circuit Boards" (Pitch < 3mm) for a period of 5 years from the "Production Date". The subsidiary has subsequently applied to MIDA to vary one of its conditions and its application has been approved by MIDA. The subsidiary has in turn submitted an application to fix its "Production Date" to the Ministry of International Trade and Industry ("MITI").

On 23 July 2013, MITI has approved the subsidiary's application and fixed 1 June 2009 as the "Production Date" of the subsidiary where 100% of its statutory income on "Fine Resolution Interconnect Flexible Printed Circuit Boards" (Pitch < 3mm) is tax exempted for a period of 5 years from 1 June 2009 to 31 May 2014.

In prior year, the subsidiary has re-submitted the revised corporate tax return to the tax authority for year of assessments 2010, 2011, 2012 and 2013. Accordingly, the tax paid in respect of these years of assessment amounting to approximately RM6,800,000 have been reversed as overprovision in prior year and recorded as tax recoverable as at 31 May 2014.

(ii) Another subsidiary has on 1 July 2014 obtained approval for the following incentives from the Malaysian Investment Development Authority ("MIDA"), subject to certain conditions being complied with:

- 100% tax exemption on its statutory income on "Molded Interconnect Substrate" for a period of 10 years from the "Production Date", - R&D "matching" grant of 50% up to a maximum of RM3,146,200, - Training "matching" grant of 50% up to a maximum of RM142,000, - Modernisation and upgrading of facilities and tools "matching" grant of 50% up to a maximum of RM1,211,000.

The subsidiary is in the process of submitting an application to fix its “Production Date” to the Ministry of International Trade and Industry ("MITI") for approval. 76 ANNUAL REPORT 2015

10. Income tax expense (contd.)

Group (contd.)

(iii) Subsequent to the reporting date, a subsidiary was subjected to an Inland Revenue Board ("IRB") field audit covering the years of assessment 2010 to 2011, where the IRB has in turn raised assessments for additional tax liabilities and penalties amounting to RM168,132. As it is still at the early stage and the subsidiary is still in discussions with the IRB, no provision for the additional tax liabilities and penalties in dispute has been made as at the reporting date.

11. Basic earnings per share

Basic earnings per share amounts are calculated by dividing profit for the year attributable to ordinary equity holders of the Company by the weighted average number of ordinary shares in issue during the financial year, excluding treasury shares held by the Company.

Diluted earnings per share amounts are calculated by dividing profit for the year from continuing operations, net of tax, attributable to owners of the parent by the weighted average number of ordinary shares outstanding during the financial year plus the weighted average number of ordinary shares that would be issued on the conversion of all the dilutive potential ordinary shares into ordinary shares.

Group 2015 2014 RM RM

Profit for the year attributable to ordinary equity holders of the Company (RM) 10,126,599 17,763,907 Weighted average number of ordinary shares in issue 57,308,848 57,319,148 Basic earnings per share (sen) 17.67 30.99 Diluted earnings per share (sen) 17.67 30.99

12. Dividend

Amount Net dividend per share 2015 2014 2015 2014 RM RM Sen Sen Group and Company

In respect of financial year ended 31 May 2013:

First and final dividend of 8% less 25% taxation, declared on 28 November 2013 and paid on 18 December 2013 - 3,439,329 - 3.44

In respect of financial year ended 31 May 2014:

First and final single tier dividend of 6% declared on 17 November 2014 and paid on 18 December 2014 3,438,867 - 6.00 - 3,438,867 3,439,329 6.00 3.44

At the forthcoming Annual General Meeting, a first and final single tier dividend of 6% in respect of the current financial year ended 31 May 2015, on 57,294,648 ordinary shares (the number of outstanding ordinary shares in issue of the Company as at 31 May 2015 after the set off with 3,705,600 ordinary shares bought back by the Company and held as treasury shares subsequent to year end) amounting to RM3,437,679 (6 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 dividends when approved by the shareholders will be accounted for in equity as an appropriation of retained earnings in the financial year ending 31 May 2016. 77 ANNUAL REPORT 2015

13. Property, plant and equipment Office equipment, renovation, furniture, Capital Land and Plant and fittings and Motor work-in- Buildings* machinery computers vehicles progress Total Group RM RM RM RM RM RM

2015

Cost At 1 June 2014 119,450,098 65,297,711 23,635,944 3,131,457 16,014,632 227,529,842 Additions 2,470,785 1,099,359 953,347 101,300 12,595,597 17,220,388 Reclassifications - 6,349,583 - - (6,349,583) - Write off - (483,820) (295,528) - - (779,348) At 31 May 2015 121,920,883 72,262,833 24,293,763 3,232,757 22,260,646 243,970,882

Accumulated depreciation At 1 June 2014 25,824,513 47,917,637 19,744,941 2,380,023 - 95,867,114 Depreciation charge for the year 2,632,916 4,331,310 1,141,818 186,619 - 8,292,663 Write off - (483,820) (293,690) - - (777,510) At 31 May 2015 28,457,429 51,765,127 20,593,069 2,566,642 - 103,382,267

Net carrying amount At 31 May 2015 93,463,454 20,497,706 3,700,694 666,115 22,260,646 140,588,615

2014

Cost At 1 June 2013 81,082,688 63,104,649 24,714,978 3,131,457 38,897,943 210,931,715 Additions 155,038 1,215,268 1,750,450 - 23,627,970 26,748,726 Reclassifications 38,212,372 7,986,191 312,718 - (46,511,281) - Disposals - (1,601,407) - - - (1,601,407) Write off - (5,406,990) (3,142,202) - - (8,549,192) At 31 May 2014 119,450,098 65,297,711 23,635,944 3,131,457 16,014,632 227,529,842

Accumulated depreciation At 1 June 2013 22,201,106 49,613,625 21,214,741 2,170,485 - 95,199,957 Depreciation charge for the year 3,546,453 5,008,001 1,732,184 209,538 - 10,496,176 Reclassifications 76,954 (17,172) (59,782) - - - Disposals - (1,326,794) - - - (1,326,794) Write off - (5,360,023) (3,142,202) - - (8,502,225) At 31 May 2014 25,824,513 47,917,637 19,744,941 2,380,023 - 95,867,114

Net carrying amount At 31 May 2014 93,625,585 17,380,074 3,891,003 751,434 16,014,632 131,662,728 78 ANNUAL REPORT 2015

13. Property, plant and equipment (contd.)

* Land and buildings

Short-term Long-term Long-term Freehold leasehold leasehold leasehold land land land apartment Buildings Total Group RM RM RM RM RM RM

2015

Cost At 1 June 2014 4,521,690 3,313,143 17,370,000 1,030,570 93,214,695 119,450,098 Additions - - - - 2,470,785 2,470,785 At 31 May 2015 4,521,690 3,313,143 17,370,000 1,030,570 95,685,480 121,920,883

Accumulated depreciation At 1 June 2014 - 999,835 1,096,591 28,492 23,699,595 25,824,513 Depreciation charge for the year - 63,848 701,818 13,212 1,854,038 2,632,916 At 31 May 2015 - 1,063,683 1,798,409 41,704 25,553,633 28,457,429

Net carrying amount At 31 May 2015 4,521,690 2,249,460 15,571,591 988,866 70,131,847 93,463,454

2014

Cost At 1 June 2013 - 3,313,143 17,370,000 1,030,570 59,368,975 81,082,688 Additions - - - - 155,038 155,038 Reclassifications 4,521,690 - - - 33,690,682 38,212,372 At 31 May 2014 4,521,690 3,313,143 17,370,000 1,030,570 93,214,695 119,450,098

Accumulated depreciation At 1 June 2013 - 935,987 1,096,591 15,280 20,153,248 22,201,106 Depreciation charge for the year - 63,848 - 13,212 3,469,393 3,546,453 Reclassifications - - - - 76,954 76,954 At 31 May 2014 - 999,835 1,096,591 28,492 23,699,595 25,824,513

Net carrying amount At 31 May 2014 4,521,690 2,313,308 16,273,409 1,002,078 69,515,100 93,625,585 79 ANNUAL REPORT 2015

13. Property, plant and equipment (contd.)

Office equipment, renovation, furniture, Plant and fittings and Motor machinery computers vehicles Total Company RM RM RM RM

2015

Cost At 1 June 2014/At 31 May 2015 1,443,263 44,295 535,017 2,022,575

Accumulated depreciation At 1 June 2014 1,441,513 42,911 535,016 2,019,440 Depreciation charge for the year 299 630 - 929 At 31 May 2015 1,441,812 43,541 535,016 2,020,369

Net carrying amount At 31 May 2015 1,451 754 1 2,206

2014

Cost At 1 June 2013/At 31 May 2014 1,443,263 44,295 535,017 2,022,575

Accumulated depreciation At 1 June 2013 1,441,171 42,281 535,016 2,018,468 Depreciation charge for the year 342 630 - 972 At 31 May 2014 1,441,513 42,911 535,016 2,019,440

Net carrying amount At 31 May 2014 1,750 1,384 1 3,135

(a) Included in property, plant and equipment are:

(i) a motor vehicle of the Company with net carrying amount of RM1 (2014: RM1) which is registered under the name of an employee of the subsidiary in trust for the Company;

(ii) motor vehicles of a subsidiary with net carrying amount of RM29,037 (2014: RM47,173) which are registered under the name of a director of the Company, i.e. Dato' Hwang Thean Long in trust for the said subsidiary;

(iii) leasehold land of a subsidiary with a net carrying amount of RM Nil (2014: RM16,273,409) pledged to a bank to secure bank borrowings as disclosed in Note 34. The pledge has been discharged upon settlement of the bank borrowings during the year;

(iv) freehold land and building of a subsidiary with a net carrying amount of RM4,521,690 (2014: RM4,521,690) and RM32,810,141 (2014: RM33,123,704) respectively, pledged to a bank to secure bank borrowings as disclosed in Note 34; and

(v) fully depreciated property, plant and equipment which are still in use with the following costs:

Group Company 2015 2014 2015 2014 RM RM RM RM

Buildings 12,095,359 938,648 - - Plant and machinery 30,081,718 24,241,679 1,440,273 1,440,273 Office equipment, renovation, furniture and fittings 12,159,974 5,922,352 18,290 18,290 Computers 4,953,611 4,566,212 21,803 21,803 Motor vehicles 1,622,473 1,470,050 535,017 535,017 60,913,135 37,138,941 2,015,383 2,015,383 80 ANNUAL REPORT 2015

13. Property, plant and equipment (contd.)

(b) The short-term leasehold land has an unexpired lease of 34 years (2014: 35 years).

(c) The long-term leasehold land has an unexpired lease of 89 years (2014: 90 years).

(d) The long-term leasehold apartment has an unexpired lease of 75 years (2014: 76 years).

(e) Included in the buildings of the Group are buildings erected on land leased from statutory bodies with a net carrying amount of RM1,777,005 (2014: RM2,160,285).

14. Investment property Company 2015 2014 Leasehold land and building RM RM

Cost At 1 June 2014 / 31 May 2015 29,078,033 29,078,033

Accumulated depreciation At 1 June 2014 / 2013 5,577,742 5,104,571 Depreciation charge for the year 473,171 473,171 At 31 May 2015 / 2014 6,050,913 5,577,742

Net carrying amount At 31 May 2015 / 2014 23,027,120 23,500,291

Company

The investment property of the Company has an open market value of approximately RM28,100,000 (2014: RM25,800,000) and is leased to a subsidiary for its use as a supermarket and departmental store.

The title deed of the investment property is registered under the name of a corporate shareholder of the Company, i.e. Suiwah Holdings Sdn. Bhd., a company in which a director of the Company, i.e. Dato' Hwang Thean Long has a substantial interest. The strata title of the building is in the process of being transferred to the Company.

Direct operating expenses incurred by the Company on the investment property during the financial year amounted to RM660,511 (2014: RM652,357).

Valuation technique and inputs used in the fair value disclosure as at 31 May 2015 is shown below:

Description Significant Fair value Valuation unobservable RM technique input Range

Leasehold land and building 28,100,000 Market Price per RM272 - comparable square feet RM608 approach 81 ANNUAL REPORT 2015

15. Inventory property Group 2015 2014 Non-current Note RM RM Land held for property development (a) 6,865,612 -

Current Property development cost (b) 16,950,609 23,525,714 23,816,221 23,525,714

(a) Land held for property development Freehold Development land cost Total RM RM RM Group

2015

At 1 June 2014 - - - Reclassification 4,470,910 2,394,702 6,865,612 At 31 May 2015 4,470,910 2,394,702 6,865,612

2014

At 1 June 2013 / 31 May 2014 - - -

(b) Property development costs Freehold Leasehold Development land land costs Total RM RM RM RM Group

2015

At 1 June 2014 4,470,910 12,417,091 6,637,713 23,525,714 Costs incurred during the year - - 290,507 290,507 Reclassification (4,470,910) - (2,394,702) (6,865,612) At 31 May 2015 - 12,417,091 4,533,518 16,950,609

2014

At 1 June 2013 7,305,719 12,417,091 6,443,670 26,166,480 Costs incurred during the year - - 194,043 194,043 Disposals (2,834,809) - - (2,834,809) At 31 May 2014 4,470,910 12,417,091 6,637,713 23,525,714

The long term leasehold land was pledged to a bank to secure bank borrowings as disclosed in Note 34 and has an unexpired lease of 89 years (2014: 90 years). The pledge has been discharged upon settlement of the bank borrowings during the year.

16. Land use rights

Group 2015 2014 RM RM

At 1 June 2014 / 2013 41,143 256,409 Amortisation during the year (41,143) (215,266) At 31 May 2015 / 2014 - 41,143 82 ANNUAL REPORT 2015

17. Intangible asset Group 2015 2014 RM RM Patent license Cost: At 1 June 2014 / 31 May 2015 6,905,900 6,905,900

Accumulated amortisation: At 1 June 2014 / 2013 374,070 - Amortisation during the year 345,295 374,070 At 31 May 2015 / 2014 719,365 374,070

Net carrying amount: At 31 May 2015 / 2014 6,186,535 6,531,830

18. Investments in subsidiaries Company 2015 2014 RM RM

Unquoted shares in Malaysia, at cost: 69,260,773 69,260,773 Accumulated impairment losses (962,154) (962,154) 68,298,619 68,298,619

Impairment assessment

As at 31 May 2015, the Company carried out a review of the recoverable amount of its investments in subsidiaries. The review has led to the retention of the impairment loss of RM962,154 previously recognised in profit or loss, reducing the net carrying amount of the investment to RM68,298,619.

As at 31 May 2014, a reversal of impairment loss of RM342,276 has been recognised in profit or loss, increasing the net carrying amount of the investment in Great Support Sdn. Bhd. to its recoverable amount.

(a) Details of the Group's subsidiaries are as follows:

% of ownership interest held by the Group Name of subsidiaries 2015 2014 Principal activities

Incorporated in Malaysia

Sunshine Wholesale Mart Sdn. Bhd. 100 100 Operator of a supermarket and departmental store and money lending

Sunshine Supermarket & Departmental Store 100 100 Operator of supermarkets and Sdn. Bhd. (i) departmental stores

Sunshine Link Sdn. Bhd. 100 100 Investment holding

Aljano Sdn. Bhd. 100 100 Trading in general merchandise, garments and construction materials

Magirex Sdn. Bhd. 100 100 Property investment

Sunshine Electrical Superstore Sdn. Bhd. 100 100 Supply of electricity

Great Support Sdn. Bhd. 75 75 Property development 83 ANNUAL REPORT 2015

18. Investments in subsidiaries (contd.)

(a) Details of the Group's subsidiaries are as follows: (contd.)

% of ownership interest held by the Group Name of subsidiaries 2015 2014 Principal activities

Crimson Omega Sdn. Bhd. 100 100 Property development

Silver Resort Sdn. Bhd. 100 100 Property development

Sunshine Amanjaya Sdn. Bhd. (ii) 100 100 Sub-letting of properties and trading of merchandise goods

Sunshine (Labuan) Private Limited (ii) 100 100 Dormant

Qdos Holdings Bhd. 100 100 Investment holding

Sunshine Amanjaya Pte Ltd (ii), (iii) 51 51 International trading business

Incorporated in Indonesia

PT. Sunshine Amanjaya Indonesia (iv) 100 100 Intended principal activities are to act as a main distributor, importer and exporter of merchandise goods

Held under Qdos Holdings Bhd.

Incorporated in Malaysia

Qdos Flexcircuits Sdn. Bhd. 100 100 Manufacturing of flexible printed circuit boards

Qdos Technology Sdn. Bhd. 100 100 Researching, developing, designing and prototyping of flexible printed circuit boards

Qdos Marketing Sdn. Bhd. 100 100 Designing flexible printed circuit boards and trading in general merchandise

Qdos Interconnect Sdn. Bhd. 100 100 Manufacturing and trading in semiconductor

Held under Qdos Flexcircuits Sdn. Bhd.

Incorporated in India

Qdos Flexcircuits (India) Private Limited (ii) 100 100 Intended principal activity is to design flexible printed circuit boards.

(i) The retail operation has been transferred to Sunshine Wholesale Mart Sdn. Bhd. during the year;

(ii) Audited by firms of auditors other than Ernst & Young;

(iii) The Company has a 50% equity interest in the subsidiary and the remaining 1% equity interest is held by a wholly owned subsidiary, Sunshine Wholesale Mart Sdn. Bhd.; 84 ANNUAL REPORT 2015

18. Investments in subsidiaries (contd.)

(a) Details of the Group's subsidiaries are as follows: (contd.)

(iv) The Company has a 99% equity interest in the subsidiary and the remaining 1% equity interest is held by a wholly owned subsidiary, Sunshine Amanjaya Sdn. Bhd.;

(b) Summarised financial information of Great Support Sdn. Bhd. which has non-controlling interests thatis material to the Group is set out below. The summarised financial information presented below is the amount before inter-company elimination. The non-controlling interests in respect of Sunshine Amanjaya Pte Ltd is not material to the Group.

(i) Summarised statement of financial position 2015 2014 RM RM

Non-current assets - - Current assets 3,172,642 3,180,511 Total assets 3,172,642 3,180,511

Current liabilities, representing total liabilities 4,651 68,907 Net assets 3,167,991 3,111,604

Equity attributable to: - owners of the Company 2,375,993 2,333,703 - non controlling interests 791,998 777,901

(ii) Summarised statement of comprehensive income 2015 2014 RM RM

Revenue - 3,590,160 Profit for the year, representing total comprehensive income for the year 56,387 568,585

Profit for the year, representing total comprehensive income for the year attributable to: - owners of the Company 42,290 426,439 - non controlling interests 14,097 142,146

Dividend paid to non controlling interests - 68,204

(iii) Summarised cash flows 2015 2014 RM RM

Net cash (used in)/from operating activities (165,369) 3,422,452 Net cash from investing activities 64,256 35,732 Net cash used in financing activities - (277,673) Net (decrease)/increase in cash and cash equivalents (101,113) 3,180,511 Cash and cash equivalents as at 1 June 2014/2013 3,180,511 - Cash and cash equivalents as at 31 May 2015/2014 3,079,398 3,180,511

(c) On 25 May 2015, at Great Support Sdn. Bhd's Extraordinary General Meeting, a resolution was passed for it to be voluntarily wound up by way of a Member's Voluntary Winding-up pursuant to Section 254(1)(b) of the Companies Act, 1965 with effect from that date. 85 ANNUAL REPORT 2015

19. Investment in a joint venture

Group 2015 2014 RM RM

Unquoted shares outside Malaysia, at cost 15,063,373 15,063,373 Share of post acquisition reserve (68,923) 12,344 Exchange differences (2,281,236) (3,007,346) 12,713,214 12,068,371

During the year ended 31 May 2011, the Group’s subsidiaries, Qdos Flexcircuits Sdn. Bhd. and its subsidiary, Qdos Flexcircuits (India) Private Limited have entered into a Shareholders' Agreement with M.J Shantharam, Valdel Real Estate Pvt. Ltd and Exora Technologies Private Limited (‘’Exora’’) to subscribe up to 22,500,000 new shares of Rupees 10 each in Exora, representing 49% of the equity interest in Exora, for a total cash consideration of approximately RM15 million.

As at 31 May 2014, the Group’s subsidiaries have in total subscribed for 22,151,893 shares of Rupees 10 each in Exora, representing 49% of the equity interest in Exora for a total cash consideration of RM15,063,373.

The Group has 49% of the voting rights of its joint arrangement. Under the contractual arrangement, unanimous consent is required from all parties to the agreement for all relevant activities.

The joint arrangement is structured via a separate entity and provides the Group with the rights to the net assets of the entity under the arrangement. Therefore, this entity is classified as a joint venture of the Group.

(a) Details of the joint venture are as follows:

% of ownership interest Accounting held by the Group model Name of joint venture 2015 2014 Nature of relationship applied

Held under Qdos Flexcircuits Sdn. Bhd. and its subsidiary

Incorporated in India

Exora Technologies 49 49 It is strategic for the Group's Equity Private Limited business development in method India to venture into the development of commercial/ residential properties in India through a special purpose vehicle. 86 ANNUAL REPORT 2015

19. Investment in a joint venture (contd.)

(b) Summarised financial information of Exora is set out as below. The summarised information represents the amounts in the MFRS financial statements of the joint venture and not the Group's share of those amounts.

(i) Summarised statement of financial position

2015 2014 RM RM Assets Non-current assets 5,055,841 2,720

Current Trade receivables 2,479,730 1,633,608 Cash and cash equivalents 4,412,897 2,606,241 Short term loans and advances 12,766,940 24,450,644 Other current assets 22,379,850 7,336,664 42,039,417 36,027,157 Total assets 47,095,258 36,029,877

Current liabilities Short term borrowings 6,215,769 11,479,870 Trade payables 153,906 245 Other current liabilities 5,816,538 32,933 Share application monies 9,160,152 - Total liabilities 21,346,365 11,513,048 Net assets 25,748,893 24,516,829

(ii) Summarised statement of comprehensive income

2015 2014 RM RM

Other income 247,822 179,908 Administration expenses (58,954) (11,062) Finance cost (203) (24) Other expenses (354,525) (205) (Loss)/Profit before tax (165,860) 168,617 Tax expense - (50,723) (Loss)/Profit after tax, representing total comprehensive income (165,860) 117,894

(c) Reconciliation of the summarised financial information presented above to the carrying amount of the Group’s interest in joint venture:

2015 2014 RM RM

Current assets 42,039,417 36,027,157 Non-current assets 5,055,841 2,720 Current liabilities (21,346,365) (11,513,048) Net assets at 31 May 25,748,893 24,516,829 Interest in joint venture 12,616,958 12,013,246 Goodwill 96,256 55,125 Carrying value of the Group's interest in joint ventures 12,713,214 12,068,371 87 ANNUAL REPORT 2015

20. Investment in an associate Group Company 2015 2014 2015 2014 RM RM RM RM

Unquoted shares outside Malaysia, at cost 1,631,726 1,631,726 1,631,726 1,631,726 Accumulated impairment losses - - (1,631,726) (1,631,726) 1,631,726 1,631,726 - - Share of post acquisition reserve (1,513,625) (1,513,625) - - Exchange difference (118,101) (118,101) ------

Impairment assessment

The Company has carried out a review of the recoverable amount of its investment in associate due to its net liability position. The review has led to the retention of the impairment loss of RM1,631,726 previously recognised in profit or loss, reducing the net carrying amount of the investment to nil.

(a) Details of the associate are as follows:

% of ownership interest held Accounting by the Group model Name of associate 2015 2014 Nature of relationship applied

Incorporated in India

Valdel Oil and Gas Private 25 25 The intended principal activity Equity Limited ("VOG") is to carry on business method connected with oil and natural gas.

(b) Summarised financial information of VOG is set out below. The summarised financial information represents the amounts in the MFRS financial statements of the associate and not the Group’s share of those amounts.

(i) Summarised statement of financial position 2015 2014 RM RM

Non-current assets 5,462,109 5,211,741 Current assets 410,738 306,391 Total assets 5,872,847 5,518,132

Non-current liabilities 374 9,874 Current liabilities 7,274,751 6,698,193 Total liabilities 7,275,125 6,708,067 Net liabilities (1,402,278) (1,189,935)

(ii) Summarised statement of comprehensive income 2015 2014 RM RM

Revenue 547,690 550,009 Loss before tax (188,975) (304,216) Loss after tax, representing total comprehensive income (188,975) (304,216) 88 ANNUAL REPORT 2015

21. Investment securities Group 2015 2014 RM RM Non-current

Available-for-sale financial assets - Equity instruments (quoted in Malaysia) 2,841 2,841 - Equity instruments (quoted outside Malaysia) 273 273 3,114 3,114

Market value 6,023 6,216

22. Goodwill on consolidation Group 2015 2014 RM RM

At 31 May 4,665,045 4,665,045

Impairment test on goodwill

(a) Allocation of goodwill

Goodwill has been allocated to the Group's cash-generating units ("CGU") identified according to the business segment and relates to the manufacturing and designing of flexible printed circuits boards as follows:

2015 2014 RM RM

Manufacturing 4,665,045 4,665,045

(b) Key assumptions used in value-in-use ("VIU")calculations

The recoverable amount of the CGU is determined based on VIU calculations using cash flow projections based on financial forecasts approved by management covering a 5-year period.

The following describes each key assumption on which management has based its cash flow projection for VIU calculations of CGU to undertake impairment testing of goodwill:

(i) Budgeted gross margin

The basis used to determine the value assigned to the budgeted gross margin is the average gross margin achieved in the year immediately before the budgeted year adjusted for expected efficiency improvement, market and economic conditions and internal resource efficiency, where applicable.

(ii) Growth rate

The weighted average growth rate used is consistent with the long term average growth rate for the relevant industry. The forecasted growth rate used to extrapolate cash flows beyond the five-year period is 3.6% (2014: 3.6%).

(iii) Discount rate

The discount rate used is on a basis that reflects specific risks relating to the relevant business segment. The pre-tax discount rate applied to the cash flow projections is 10.93% (2014: 9.6%).

Sensitivity to changes in assumptions

With regard to the assessment of value-in-use of the CGU, management believes that no reasonable change in any of the above key assumptions would cause the carrying value of the CGU to materially exceed its recoverable amount. 89 ANNUAL REPORT 2015

23. Prepayment

The Group intends to develop the existing long-term leasehold land into one block of complex with a 39-storey commercial space and a 2-storey basement ("Development"). During the financial year ended 31 May 2015, the Group has obtained the approval to construct the Development from the Housing Development Authority.

On 10 March 2015, the Group and the Trustees of Leong San Tong Khoo Kongsi (Penang) Registered (the "Owner”) have entered into an agreement to create a fresh lease of 99 years from the date of issuance of strata titles in respect of the Development if the strata title is issued before 1 December 2021 or a lease expiring on 1 December 2120 if the strata title is issued on or after 1 December 2021. The leasehold land has an unexpired lease of 89 years as at the reporting date.

According to the agreement, the Group is liable to pay a consideration amounting to RM7.6 million as set out below:

(i) RM500,000 shall be paid upon the execution of the agreement; and (ii) RM7.1 million shall be paid within 30 days from the date of issuance of the strata titles in respect of the said Development by the relevant authorities (i.e. on or before 1 December 2021).

The long term prepayment of RM500,000 represents the amount fully paid upon the execution of the agreement.

24. Inventories Group 2015 2014 RM RM At cost:

Merchandise held for resale 21,168,567 21,047,243 Raw materials 7,979,172 4,630,669 Work-in-progress 3,911,140 2,664,016 Finished goods 1,708,797 617,256 Properties held for sale 965,128 4,328,413 Spare parts 1,472,980 448,444 37,205,784 33,736,041

The cost of inventories recognised as an expense during the year amounted to RM304,572,268 (2014: RM289,597,882). The reversal of write-down of inventories amounting to RM330,780 (2014: RM157,494) was made during the year when the related inventories were sold above their carrying amounts.

25. Trade and other receivables

Group Company 2015 2014 2015 2014 RM RM RM RM Trade receivables

Third parties 29,165,377 17,756,403 - - Allowance for impairment (55,508) - - - Trade receivables, net 29,109,869 17,756,403 - -

Other receivables

Due from subsidiaries: - Magirex Sdn. Bhd. - - 1,249,870 1,378,260 - Sunshine Amanjaya Sdn. Bhd. - - - 179,176 - Sunshine Supermarket & Departmental Store Sdn. Bhd. - - 6,651,016 5,730,989 - Sunshine Wholesale Mart Sdn. Bhd. - - 1,628,578 27,693,517 - Sunshine (Labuan) Private Limited - - 6,660 3,773 - Sunshine Amanjaya Pte. Ltd. - - 471 4,721 90 ANNUAL REPORT 2015

25. Trade and other receivables (contd.)

Group Company 2015 2014 2015 2014 RM RM RM RM Other receivables (contd.)

- Sunshine Electrical Superstore Sdn. Bhd. - - 159,673 - - Sunshine Link Sdn. Bhd. - - 41,510 - - Silver Resort Sdn. Bhd. - - 8,141,823 - - Crimson Omega Sdn. Bhd. - - 30,814,201 - - Qdos Flexcircuits Sdn. Bhd. - - 9,802 - - Qdos Technology Sdn. Bhd. - - 40 - - Qdos Marketing Sdn. Bhd. - - 22 -

Deposits for: - Rental 758,433 759,273 - - - Others 894,852 1,933,869 1,000 1,000 Rental income receivable 81,244 56,664 - - Sundry receivables 1,575,788 1,085,366 103,926 - Other receivables 3,310,317 3,835,172 48,808,592 34,991,436 Total trade and other receivables 32,420,186 21,591,575 48,808,592 34,991,436 Add: Loan receivables (Note 27) 1,500 84,236 - - Add: Cash and bank balances (Note 29) 25,489,950 27,844,565 5,345,711 3,213,822 Total loans and receivables 57,911,636 49,520,376 54,154,303 38,205,258

(a) Trade receivables

The Group's primary exposure to credit risk arises through the trade receivables of its subsidiaries carrying out manufacturing activities. The Group's trading terms with its customers are mainly on credit, except for new customers, where payment in advance is normally required. The normal credit periods range from 30 to 75 days (2014: 30 to 75 days). Other credit terms are assessed and approved on a case-by-case basis. The Group seeks to maintain strict control over its outstanding receivables and has a credit control department to minimise credit risk. Overdue balances are reviewed regularly by senior management.

At 31 May 2015, the Group has significant exposure to a group of customers, which constitutes approximately 27% (2014: 45%) of the trade receivables as at year end.

Ageing analysis of trade receivables

The ageing analysis of the Group’s trade receivables is as follows : 2015 2014 RM RM

Neither past due nor impaired 16,801,003 9,664,823

1 to 30 days past due not impaired 6,943,381 3,790,705 31 to 60 days past due not impaired 2,741,720 2,025,912 61 to 90 days past due not impaired 1,027,562 711,837 91 to 120 days past due not impaired 738,511 428,679 More than 121 days past due not impaired 857,692 1,134,447 12,308,866 8,091,580 Impaired 55,508 - 29,165,377 17,756,403

Receivables that are neither past due nor impaired

Trade receivables that are neither past due nor impaired are creditworthy debtors with good payment records with the subsidiaries.

None of the Group’s trade receivables that are neither past due nor impaired have been renegotiated during the financial year. 91 ANNUAL REPORT 2015

25. Trade and other receivables (contd.)

(a) Trade receivables (contd.)

Receivables that are past due but not impaired

The Group has trade receivables amounting to RM12,308,866 (2014: RM8,091,580) that are past due at the reporting date but not impaired. These relate to customers which have no recent history of default and are monitored on an on-going basis. The receivables that are past due but not impaired are unsecured in nature.

Receivables that are impaired

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:

Group 2015 2014 RM RM Trade receivables: - nominal amounts 55,508 - Allowance for impairment (55,508) - - -

Movement in allowance accounts:

Group 2015 2014 RM RM

At 1 June 2014 / 2013 - - Charge for the year 55,508 - At 31 May 2015 / 2014 55,508 -

(b) Amounts due from subsidiaries

Amounts due from subsidiaries are bearing interest ranging from 4% to 4.72% per annum and are repayable on demand. These amounts are unsecured and are to be settled in cash.

Company 2015 2014 RM RM Other receivables: - nominal amounts 48,703,666 34,990,436 Allowance for impairment - - 48,703,666 34,990,436

Movement in allowance accounts:

Company 2015 2014 RM RM

At 1 June 2014 / 2013 - 7,833,179 Reversal of impairment loss (Note 5) - (7,833,179) At 31 May 2015 / 2014 - -

At 31 May 2013, the Company has provided an allowance of RM7,833,179 for impairment of the unsecured advances to subsidiaries with nominal amounts of RM8,733,639. At 31 May 2014, the Company has made a reversal of these impairment.

Further details on related party transactions are disclosed in Note 42.

Other information on financial risks of receivables are disclosed in Note 44. 92 ANNUAL REPORT 2015

26. Other current assets Group Company 2015 2014 2015 2014 RM RM RM RM

Prepayments 2,047,153 505,849 18,400 14,932 Goods and Services Tax recoverable 32,993 - - - Share application monies 6,418,800 - - - 8,498,946 505,849 18,400 14,932

Included in prepayments of the Group is a facility fee amounting to RM1,000,000 paid to a financial institution for loan application to construct the Development project as disclosed in Note 23. As at the reporting date, the loan has yet to be drawndown by the Group.

Share application monies relate to the subscription of 49% equity interest in Exora Technologies Private Limited (“Exora”), a joint venture of the Group which is incorporated in India by a subsidiary, Qdos Flexcircuits (India) Private Limited (“Qdos India). The new shares have yet to be allotted to Qdos India as at the reporting date, pending the increase in authorized share capital in Exora. The share application money has been pending for 11 months beyond the period for allotments.

27. Loan receivables Group 2015 2014 RM RM

Unsecured advances repayable within twelve months 1,500 78,466 Loan interest receivable - 5,770 1,500 84,236

The advances are made by a subsidiary, Sunshine Wholesale Mart Sdn. Bhd. whose principal activities include that of money lending under the Moneylenders Act 1951. The advances bear interest rates of 6% to 12% (2014: 12% to 18%) per annum.

28. Short term investments Group 2015 2014 RM RM Financial assets at fair value through profit or loss - Unit trust funds (quoted in Malaysia) 15,804,309 17,036,600 - Unquoted investments 487,717 7,272,496 16,292,026 24,309,096

Market value of quoted unit trust funds 15,804,309 17,036,600

Other information on financial risks of short term investments is disclosed in Note 44.

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

Cash on hand and at banks 23,102,194 23,892,895 5,345,711 3,213,822 Deposits with licensed banks: - short term placements 1,500,000 2,400,000 - - - fixed deposits 887,756 1,551,670 - - 25,489,950 27,844,565 5,345,711 3,213,822 93 ANNUAL REPORT 2015

29. Cash and bank balances (contd.)

Included in cash at banks of the Group are amounts of RM2,381,643 (2014: RM2,331,480) held pursuant to Section 7A of the Housing Development (Control and Licensing) Act 1966 and are restricted from use in other operations.

Deposits with licensed banks of the Group amounting to RM443,274 (2014: RM430,808) have been pledged to banks as collaterals for bank facilities and bankers' guarantees obtained.

Deposits with licensed banks of the Group amounting to RM213,854 (2014: RM207,962) are held in trust by a director.

The range of interest rates earned per annum and the maturities period during the financial year for short term placements and fixed deposits were as follows: 2015 2014

Interest rates 2.95% - 8.85% 2.75% - 9.00% Maturity period 3 - 365 days 14 - 365 days

Other information on financial risks of cash and cash equivalents is disclosed in Note 44.

For the purposes of the statements of cash flows, cash and cash equivalents comprise the following as at the reporting date: Group Company 2015 2014 2015 2014 RM RM RM RM

Deposits with licensed banks 2,387,756 3,951,670 - - Less: Fixed deposits pledged to banks (443,274) (430,808) - - Fixed deposits (more than 90 days) (444,482) (412,863) - - 1,500,000 3,107,999 - - Add: Cash on hand and at banks 23,102,194 23,892,895 5,345,711 3,213,822 Less: Bank overdraft (Note 34) (5,152,026) - - - Cash and cash equivalents 19,450,168 27,000,894 5,345,711 3,213,822

30. Share capital, share premium and treasury shares

Number of ordinary shares of RM1 each Amount Share Share capital capital (issued and Treasury (issued and Treasury Share fully paid) shares fully paid) shares premium RM RM RM

At 1 June 2013 61,000,248 (3,666,100) 61,000,248 (5,346,718) 13,934,711 Purchase of treasury shares - (15,000) - (27,663) - At 31 May 2014 61,000,248 (3,681,100) 61,000,248 (5,374,381) 13,934,711

At 1 June 2014 61,000,248 (3,681,100) 61,000,248 (5,374,381) 13,934,711 Purchase of treasury shares - (10,300) - (28,571) - At 31 May 2015 61,000,248 (3,691,400) 61,000,248 (5,402,952) 13,934,711

Number of ordinary Amount shares of RM1 each 2015 2014 2015 2014 RM RM Authorised:

At 1 June and 31 May 100,000,000 100,000,000 100,000,000 100,000,000

There is no movement in issued and fully paid/ authorised share capital during the year.

The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the Company. All ordinary shares rank equally with regard to the Company's residual assets. 94 ANNUAL REPORT 2015

30. Share capital, share premium and treasury shares (contd.)

(a) Treasury shares

The shareholders of the Company, by an ordinary resolution passed in the last annual general meeting held on 17 November 2014, renewed their mandate for the Company to buy back its own ordinary shares.

During the financial year, the Company bought back 10,300 (2014: 15,000) ordinary shares ofRM1.00 each ("Shares") from the open market at an average price of RM2.77 (2014: RM1.84) per Share. The total consideration paid for the share buy back was RM28,571 (2014: RM27,663), including transaction costs of RM157 (2014: RM153). The Shares bought back are retained as treasury shares. None of the treasury shares held were resold or cancelled during the financial year.

As at 31 May 2015, the Company held a total of 3,691,400 Shares (2014: 3,681,100) as treasury shares out of its total issued and paid up share capital. Hence, the number of outstanding Shares in issue after deducting the treasury shares as at 31 May 2015 was 57,308,848 (2014: 57,319,148) Shares. The treasury shares have no rights to voting, dividends or participation in other distribution.

Subsequent to the financial year end, the Company bought back 14,200 of its issued ordinary shares from the open market at an average price of RM2.91 per Share. The total consideration paid for the share buy back was RM41,561, including transaction costs of RM239. The purchase transactions were financed by internally generated funds.

31. Other reserve (non-distributable) Foreign currency translation reserve 2015 2014 Group RM RM

At 1 June 2014 / 2013 (2,912,370) (2,875,026) Foreign currency translation 824,749 (37,344) At 31 May 2015 / 2014 (2,087,621) (2,912,370)

Other reserve of the Group represents foreign currency translation reserve. The foreign currency translation reserve is used to record 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. It is also used to record the exchange differences arising from monetary items which form part of the Group's net investment in foreign operations, where the monetary item is denominated in either the functional currency of the reporting entity or the foreign operation.

32. Retained earnings

The Company may distribute dividends out of its entire retained earnings as at 31 May 2015 and 31 May 2014 under the single tier system.

As at 31 May 2015, the Company has tax exempt profits available for distribution of approximately RM226,897 (2014: RM226,897), subject to the agreement of the Inland Revenue Board. 95 ANNUAL REPORT 2015

33. Government grant Group 2015 2014 RM RM Cost: At 1 June 2014 / 31 May 2015 400,000 400,000

Accumulated amortisation: At 1 June 2014 / 2013 235,417 185,417 Amortisation during the year (Note 5) 50,000 50,000 At 31 May 2015/ 2014 285,417 235,417

Net carrying amount: Current 50,000 50,000 Non-current 64,583 114,583 114,583 164,583

Government grant relates to grant received for the acquisition of plant and equipment for development activities undertaken by a subsidiary of the Group to promote technology advancement. There are no unfulfilled conditions or contingencies attached to the grant.

34. Borrowings Group 2015 2014 RM RM Short term borrowings: Secured: Bank overdraft 5,152,026 - Bankers' acceptances - 4,921,016 Term loan 774,335 1,738,148 5,926,361 6,659,164 Long term borrowings: Secured: Term loan 10,103,992 11,370,090

Total borrowings: Bank overdraft 5,152,026 - Bankers' acceptances - 4,921,016 Term loan 10,878,327 13,108,238 16,030,353 18,029,254 Maturity of borrowings: On demand or within one year 5,926,361 6,659,164 More than 1 year and less than 2 years 1,681,537 2,154,922 More than 2 years and less than 5 years 2,883,040 2,809,779 More than 5 years 5,539,415 6,405,389 16,030,353 18,029,254

The bank borrowings of the Group are secured by way of:

(i) a corporate guarantee by the Company;

(ii) a first legal charge over the leasehold land of a subsidiary included under property, plant and equipment and inventory property with a net carrying amount of RM Nil (2014: RM16,273,409) and RM Nil (2014: RM12,417,091) as disclosed in Note 13 and Note 15 respectively. The term loan has been fully settled during the year.

(iii) a first party first fixed charge over a piece of land and building of a subsidiary with a net carrying amount of RM4,521,690 (2014: RM4,521,690) and RM32,810,141 (2014: RM33,123,704) as disclosed in Note 13 respectively.

Bank overdraft is denominated in RM and bears an interest rate of 6% (2014: Nil) per annum.

The bankers' acceptances bore interest rates at the reporting date at Nil (2014: 3.73% to 3.92%) per annum. 96 ANNUAL REPORT 2015

34. Borrowings (contd.)

The term loan of the Group is repayable over one hundred and fourty three (143) equal monthly instalments of RM111,590 commencing 4 January 2014. The last instalment may vary to ensure full settlement of the term loan.The term loan bore profit rates ranging from 5.1% to 5.35% (2014: 5.1%) per annum at the reporting date.

Other information on financial risks of borrowings is disclosed in Note 44.

35. Trade and other payables

Group Company 2015 2014 2015 2014 RM RM RM RM Current Trade payables Third parties 59,095,596 49,015,481 - - Related party * 42,766 30,443 - - 59,138,362 49,045,924 - -

Other payables Due to subsidiaries: - Crimson Omega Sdn. Bhd. - - - 20,099,627 - Aljano Sdn. Bhd. - - 7,859,853 1,189,349 - Silver Resort Sdn. Bhd. - - - 58,427 - PT Sunshine Amanjaya Indonesia - - 151,315 144,006 - Sunshine Amanjaya Sdn. Bhd. - - 2,345,393 - Due to tooling suppliers 137,901 112,109 - - Deposits received 4,500 4,500 - - Rental deposits 1,426,475 1,540,379 - - Accruals 5,403,113 4,141,005 266,100 285,105 Other payables 6,347,179 6,353,082 64,578 61,650 Related party ** 79,692 - - - 13,398,860 12,151,075 10,687,239 21,838,164 72,537,222 61,196,999 10,687,239 21,838,164

Non-current Other payable 6,881,303 6,299,262 - -

Total trade and other payables 79,418,525 67,496,261 10,687,239 21,838,164 Add: Borrowings (Note 34) 16,030,353 18,029,254 - - Total financial liabilities carried at amortised cost 95,448,878 85,525,515 10,687,239 21,838,164

* The related party is Zephyr (Penang) Sdn. Bhd., a company in which a director of a subsidiary, Qdos Holdings Bhd., i.e. Looi Tik Miow, has an interest.

** The related party is Nanometric Electronics Sdn. Bhd., a company in which a director of the Company, i.e. Dato' Hwang Thean Long, has an interest.

(a) Trade payables

Trade payables are non-interest bearing and the normal trade credit terms granted to the Group range from 30 to 90 days (2014: 30 to 90 days).

(b) Other payables

Included in current and non-current payables of the Group is RM573,442 (2014: RM503,941) and RM6,881,302 (2014: RM6,299,262) respectively for the acquisition of intangible assets. The amount is payable by way of instalments in the aggregate sum of USD3,000,000 either upon the achievement of certain cumulative targeted sales quantity or by instalments ranging between USD200,000 to USD400,000 over a period of 10 years by 31 December 2022, whichever is earlier. The gross payable is recognised based on the net present value discounted at a rate of 4.95% per annum. 97 ANNUAL REPORT 2015

35. Trade and other payables (contd.)

(c) Amounts due to subsidiaries

Amounts due to subsidiaries are bearing interest ranging from 4% to 4.72% per annum and are repayable on demand. These amounts are unsecured and are to be settled in cash.

Further details on related party transactions are disclosed in Note 42.

Other information on financial risks of payables are disclosed in Note 44.

36. Deferred tax Group 2015 2014 RM RM

At 1 June 2014 / 2013 1,703,446 2,621,026 Recognised in profit or loss (Note 10) (184,711) (917,580) At 31 May 2015 / 2014 1,518,735 1,703,446

Presented after appropriate offsetting as follows: Deferred tax liabilities 1,518,735 1,703,446 Deferred tax assets - - At 31 May 1,518,735 1,703,446

The components and movements of deferred tax liabilities and assets during the financial year prior to offsetting are as follows:

Deferred tax liabilities of the Group

Property, plant and Revaluation equipment surplus * Others Total RM RM RM RM

At 1 June 2014 1,423,380 1,061,148 106,827 2,591,355 Recognised in profit or loss (155,501) (29,605) (25,030) (210,136) At 31 May 2015 1,267,879 1,031,543 81,797 2,381,219

At 1 June 2013 2,181,650 1,090,752 102,873 3,375,275 Recognised in profit or loss (758,270) (29,604) 3,954 (783,920) At 31 May 2014 1,423,380 1,061,148 106,827 2,591,355

Deferred tax assets of the Group

Provisions Others Total RM RM RM

At 1 June 2014 (543,529) (344,380) (887,909) Recognised in profit or loss 67,449 (42,024) 25,425 At 31 May 2015 (476,080) (386,404) (862,484)

At 1 June 2013 (489,374) (264,875) (754,249) Recognised in profit or loss (54,155) (79,505) (133,660) At 31 May 2014 (543,529) (344,380) (887,909) 98 ANNUAL REPORT 2015

36. Deferred tax (contd.)

* Revaluation surplus relates to revaluation of property, plant and equipment in prior years. Upon transition to MFRS, the Group elected to measure all its property, plant and equipment using cost model. Accordingly, the revaluation surplus was transferred to retained earnings on date of transition to MFRS.

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

Group 2015 2014 RM RM

Unused tax losses 6,739,492 4,287,458 Unabsorbed capital allowances 6,378,763 4,958,558 Other deductible temporary differences 598,644 - 13,716,899 9,246,016

The availability of the unused tax losses and unabsorbed capital allowances for offsetting against future taxable profits of the respective subsidiaries are subject to no substantial change in shareholdings under the Income Tax Act 1967 and guidelines issued by the tax authority.

No deferred tax assets are recognised in respect of the above as it is not probable that future taxable profit will be available against which these items can be utilised.

37. Provision for liabilities Group 2015 2014 RM RM

At 31 May 256,517 256,517

This represents provision for liquidated damages in respect of the development projects undertaken by a subsidiary. The provision is recognised for expected liquidated damages claims based on the terms of the applicable sale and purchase agreements.

38. Other current liabilities Group Company 2015 2014 2015 2014 RM RM RM RM

Goods and Services Tax payable 277,959 - 14,846 -

39. Derivatives Group 2015 2014 RM RM Contract/ Contract/ Notional Assets/ Notional Assets/ amount (liabilities) amount (liabilities) Non-hedging derivatives: Forward currency contracts: 11,559,100 (220,297) 8,642,400 -

The Group uses forward currency contracts to manage some of the transaction exposure. These contracts are not designated as cash flow or fair value hedges and are entered into for periods consistent with currency transaction exposure. Such derivatives do not qualify for hedge accounting.

Forward currency contracts are used to hedge the Group’s receivables and payables denominated in US Dollar (“USD”) for which firm commitments existed as at 31 May 2015, extending to November 2015 as disclosed in Note 44(b). 99 ANNUAL REPORT 2015

39. Derivatives (contd.)

During the year, the Group recognised a loss of RM220,297 (2014: RM Nil) arising from fair value changes of its forward currency contracts. The fair value changes are attributable to changes in foreign exchange spot and forward rates. The method and assumptions applied in determining the fair values of derivatives are disclosed in Note 43.

40. Deferred revenue

The Group operates a loyalty programme which allows customers to accumulate points when they purchase products in the Group’s supermarket and departmental stores. The points can be redeemed for free or for discounted goods from the Group’s supermarket and departmental stores.

Deferred revenue represents consideration received from the sale of goods that is allocated to the points issued under the loyalty programme that are expected to be redeemed but are still outstanding as at the reporting date.

At 31 May 2015, the estimated liability for unredeemed points amounted to RM1,923,157 (2014: RM1,712,534):

Group 2015 2014 RM RM

At 1 June 2014 / 2013 1,712,534 1,316,804 Recognised in profit or loss (net) 210,623 395,730 At 31 May 2015 / 2014 1,923,157 1,712,534

41. Commitments

(a) Capital commitments Group 2015 2014 RM RM Capital expenditure: Approved and contracted for: - Land and building 4,973,000 10,997,000 - Machineries 231,000 528,000

(b) Operating lease commitments – as lessee

The Group has entered into non-cancellable operating lease agreements for the use of the leasehold land and buildings. These leases have an average life of between 3 and 15 years with no renewal or purchase option included in the contracts. There were no restrictions placed upon the Group by entering into these leases.

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:

Group 2015 2014 RM RM

Not later than 1 year 3,985,030 3,622,977 Later than 1 year and not later than 5 years 11,925,188 4,110,413 Later than 5 years 174,615 288,408 16,084,833 8,021,798 100 ANNUAL REPORT 2015

41. Commitments (contd.)

(c) Operating lease commitments – as lessor

The Group and the Company have entered into commercial property leases on the investment property and property, plant and equipment. These non-cancellable leases have remaining lease terms of between two and four years. All leases include a clause to enable upward revision of the rental charge on an annual basis based on prevailing market conditions.

Future minimum rentals receivable under non-cancellable operating leases at the reporting date are as follows: Group Company 2015 2014 2015 2014 RM RM RM RM

Not later than 1 year 3,909,642 2,182,235 1,656,684 1,656,684 Later than 1 year and not later than 5 years 1,042,881 468,365 - - 4,952,523 2,650,600 1,656,684 1,656,684

42. Related party disclosures

(a) Related party transactions

In addition to the related party information disclosed elsewhere in the financial statements, the following significant transactions between the Group and the Company and related parties took place at terms agreed between the parties during the financial year:

2015 2014 Group RM RM

Rental paid/payable to: - Suiwah Holdings Sdn. Bhd., a corporate shareholder 2,408,391 2,311,571 - Suiwah Supermarket Sdn. Bhd., a company in which a director of the Company, i.e. Dato' Hwang Thean Long has an interest 21,600 21,164 - a director of the Company, i.e. Dato’ Hwang Thean Long 48,000 48,000 - Meridian Chance Sdn. Bhd., a company connected with a director of the Company, i.e. Dato’ Hwang Thean Long by virtue of his family relationship 24,000 24,000 Purchases of merchandise from Zephyr (Penang) Sdn. Bhd., a company in which Looi Tik Miow, a director of a subsidiary, Qdos Holdings Bhd., has an interest 217,291 269,810 Provision of Surface Mounted Technology(SMT) and other subcontract services related to flexible printed circuits boards to Qdos Flexcircuits Sdn. Bhd. by Nanometric Electronics Sdn. Bhd., a company in which Dato' Hwang Thean Long, a director of the Company, has an interest 1,046,486 1,290,408 Laundry services charges paid/payable to Mylaco Sdn. Bhd., a company in which a director of the Company, i.e. Hwang Siew Peng has an interest 814 - Sales of merchandise to Nanometric Electronics Sdn. Bhd., a company in which Dato' Hwang Thean Long, a director of the Company, has an interest - 2,207 101 ANNUAL REPORT 2015

42. Related party disclosures (contd.)

(a) Related party transactions (contd.)

Company

Gross dividends from subsidiaries 28,600,000 4,830,636 Management fees from subsidiaries - 60,000 Rental income from a subsidiary 1,656,684 1,656,684 Additional investment in subsidiary - 8,700,000 Interest received/receivable from subsidiaries: - Sunshine Supermarket & Departmental Store Sdn. Bhd. 493,699 - - Crimson Omega Sdn. Bhd. 236,322 - - Sunshine Wholesale Mart Sdn. Bhd. 2,473,897 - - Magirex Sdn. Bhd. 139,182 - - Sunshine (Labuan) Private Limited 390 - - Sunshine Amanjaya Sdn. Bhd. 109,003 - - Sunshine Amanjaya Pte Ltd 470 - - Silver Resort Sdn. Bhd. 62,904 - - Sunshine Electrical Superstore Sdn. Bhd. 1,272 - - Sunshine Link Sdn. Bhd. 317 - Interest paid/payable to subsidiaries: - Crimson Omega Sdn. Bhd. 1,764,340 - - Aljano Sdn. Bhd. 150,891 - - Silver Resort Sdn. Bhd. 9,442 - - Sunshine Amanjaya Sdn. Bhd. 21,991 - - PT Sunshine Amanjaya Indonesia 7,380 - Advances (from)/to or repayment (to)/from subsidiaries, net: - Sunshine Supermarket & Departmental Store Sdn. Bhd. 646,037 500,000 - Crimson Omega Sdn. Bhd. (749,963) (2,500,000) - Sunshine Wholesale Mart Sdn. Bhd. 439,586 2,706,657 - Magirex Sdn. Bhd. 323,037 460,000 - Aljano Sdn. Bhd. - (350,000) - Sunshine (Labuan) Private Limited 2,496 2,459 - Sunshine Amanjaya Sdn. Bhd. 198,037 - - Sunshine Amanjaya Pte Ltd 4,721 28,113 - PT Sunshine Amanjaya Indonesia - (144,592) - Sunshine Electrical Superstore Sdn. Bhd. 51,963 - Assignment of inter-company receivables/(payables) from a subsidiary, Sunshine Wholesale Mart: - Sunshine Supermarket & Departmental Store Sdn. Bhd. 1,207,566 - - Crimson Omega Sdn. Bhd. 51,816,849 - - Magirex Sdn. Bhd. 55,465 - - Aljano Sdn. Bhd. (6,721,538) - - Sunshine Amanjaya Sdn. Bhd. (1,706,320) - - Sunshine Amanjaya Pte Ltd 1 - - Silver Resort Sdn. Bhd. 8,270,932 - - PT Sunshine Amanjaya Indonesia 72 - - Sunshine Electrical Superstore Sdn. Bhd. 106,438 - - Sunshine Link Sdn. Bhd. 41,192 - - Qdos Flexcircuits Sdn. Bhd. 9,802 - - Qdos Technology Sdn. Bhd. 40 - - Qdos Marketing Sdn. Bhd. 22 -

Datin Cheah Gaik Huang, Hwang Siew Peng and Hwang Shin Hung are also deemed interested in the transactions in which Dato’ Hwang Thean Long has an interest by virtue of their family relationships.

Information regarding outstanding balances arising from related party transactions as at 31 May 2015 are disclosed in Notes 25 and 35. 102 ANNUAL REPORT 2015

42. Related party disclosures (contd.)

(b) Compensation of key management personnel

The remuneration of directors and other members of key management personnel during the year was as follows:

Group Company 2015 2014 2015 2014 RM RM RM RM Short term employee benefits 1,682,761 1,564,874 310,100 307,600 Defined contribution plan 125,229 108,754 - - 1,807,990 1,673,628 310,100 307,600

Included in the remuneration of total key management personnel are:

Group Company 2015 2014 2015 2014 RM RM RM RM Directors' remuneration (Note 7) 1,714,126 1,583,982 310,100 307,600

43. Fair value of financial instruments

(a) Fair value of financial instruments by classes that are carried at fair value

The following table shows an analysis of financial instruments carried at fair value by level of fair value hierarchy :

Level 1 Level 2 Level 3 Total Group RM RM RM RM

2015

Financial assets Investment securities Quoted equity instruments (Note 21) 3,114 - - 3,114

Short term investments - Quoted unit trust funds (Note 28) 15,804,309 - - 15,804,309 - Unquoted investments (Note 28) - 487,717 - 487,717

Financial liabilities Derivatives (Note 39) - 220,297 - 220,297

2014

Financial assets Investment securities Quoted equity instruments (Note 21) 3,114 - - 3,114

Short term investments - Quoted unit trust funds (Note 28) 17,036,600 - - 17,036,600 - Unquoted investments (Note 28) - 7,272,496 - 7,272,496 103 ANNUAL REPORT 2015

43. Fair value of financial instruments (contd.)

(a) Fair value of financial instruments by classes that are carried at fair value (contd.)

Assets for which fair values are disclosed

Company

2015

Investment properties (Note 14) - 28,100,000 - 28,100,000

2014

Investment properties (Note 14) - 25,800,000 - 25,800,000

Fair value hierarchy

The Group and the Company classify fair value measurement using a fair value hierarchy that reflects the significance of the inputs used in making the measurement. The fair value hierarchy has the following levels:

Level 1 : Quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2 : Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices).

Level 3 : Inputs for the assets and liability that are not based on observable market data (unobservable inputs).

(b) Fair value of financial instruments by classes that are not carried at fair value and whose carrying amounts are reasonable approximation of fair value

The following are classes of financial instruments that are not carried at fair value and whose carrying amounts are reasonable approximation of fair value:

Note

Trade and other receivables 25 Loan receivables 27 Bank borrowings (current) 34 Bank borrowings (non-current) 34 Trade and other payables (current) 35 Trade and other payable (non-current) 35

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.

The carrying amounts of the bank borrowings are reasonable approximations of fair values due to the insignificant impact of discounting.

The fair values of bank borrowings and trade and other payables (non-current) 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. 104 ANNUAL REPORT 2015

43. Fair value of financial instruments (contd.)

(b) Fair value of financial instruments by classes that are not carried at fair value and whose carrying amounts are reasonable approximation of fair value (contd.)

Amounts due from/to related companies and subsidiaries

The fair values of these financial instruments 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.

Derivatives

Forward currency contracts are valued using a valuation technique with market observable inputs. The models incorporate various inputs including the credit quality of counterparties, foreign exchange spot and forward rates and interest rate curves.

44. Financial risk management objectives and policies

The Group is exposed to financial risks arising from their operations and the use of financial instruments. The key financial risks include interest rate risk, foreign currency risk, liquidity risk, credit risk and market price risk.

The Board of Directors reviews and agrees policies and procedures for the management of these risks. The Audit Committee provides independent oversight to the effectiveness of the risk management process.

It is, and has been throughout the current and previous financial year, the Group’s policy that no derivatives shall be undertaken except for the use as hedging instruments where appropriate and cost-efficient. The Group does not apply hedge accounting.

The following sections provide details regarding the Group’s exposure to the above-mentioned financial risks and the objectives, policies and processes for the management of these risks.

(a) Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of the Group’s and the Company's financial instruments will fluctuate because of changes in market interest rates.

As the Group and the Company has no significant interest-bearing financial assets, the Group's and the Company's income and operating cash flows are substantially independent of changes in market interest rates. The Group's and the Company's interest-bearing financial assets are mainly short term in nature and have been mostly placed as deposits in licensed banks.

The Group's and the Company's interest rate risk arises primarily from amount due from subsidiaries and interest-bearing borrowings. The amounts due from subsidiaries and borrowings at floating rates expose the Group and the Company to cash flow interest rate risk. Borrowings obtained at fixed rates expose the Group and the Company to fair value interest rate risk. The Group and the Company manages its interest rate exposure by maintaining a mix of fixed and floating rate borrowings.

Sensitivity analysis for interest rate risk

At the reporting date, if interest rates had been 10 basis points lower/higher, with all other variables held constant, the Group’s and the Company's profit net of tax would have been RM16,030 (2014: RM18,029) higher/lower and RM36,528 (2014: RM Nil) lower/higher respectively, arising mainly as a result of higher/lower interest expense and lower/higher interest income on floating rate for loans and borrowings and amounts due from subsidiaries respectively. The assumed movement in basis points for interest rate sensitivity analysis is based on the currently observable market environment. 105 ANNUAL REPORT 2015

44. Financial risk management objectives and policies (contd.)

(b) Foreign currency risk

Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates.

Some of the Group’s subsidiaries have transactional currency exposures arising from sales or purchases that are denominated in a currency other than the respective functional currencies of the Group’s subsidiaries, primarily RM. The foreign currency in which these transactions are denominated is mainly US Dollars (“USD”).

Approximately 16% (2014: 14%) of the Group’s subsidiaries' sales are denominated in foreign currencies. The Group’s subsidiaries’ trade receivables and trade payables balances at the reporting date have similar exposures.

The Group also holds cash and cash equivalents denominated in foreign currencies for working capital purposes. At the reporting date, such foreign currency balances (mainly in USD) amounted to RM5,196,965 (2014: RM12,085,331) for the Group.

Sensitivity analysis for foreign currency risk

The following table demonstrates the sensitivity of the Group’s profit net of tax to a reasonably possible change in the USD exchange rates against the respective functional currencies of the Group entities, with all other variables held constant.

Increase/(decrease) in profit net of tax 2015 2014 RM RM

USD/RM - strengthened 5% 581,308 (198,834) - weakened 5% (581,308) 198,834

(c) Liquidity risk

Liquidity risk is the risk that the Group or the Company will encounter difficulty in meeting financial obligations due to shortage of funds. The Group’s and the Company’s exposure to liquidity risk arises primarily from mismatches of the maturities of financial assets and liabilities. The Group’s 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 their debt maturity profile, operating cash flows and the availability of funding so as to ensure that all 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 their working capital requirements. In addition, the Group and the Company strive to maintain available banking facilities of a reasonable level to its overall debt position. Furthermore, the Group and the Company are able to raise funds from both capital markets and financial institutions and balance its portfolio with combination of a mixture of short and long term fundings so as to achieve overall cost effectiveness. 106 ANNUAL REPORT 2015

44. Financial risk management objectives and policies (contd.)

(c) Liquidity risk (contd.)

Analysis of financial instruments by remaining contractual maturities

The table below summarises the maturity profile of the Group’s and the Company’s liabilities at the reporting date based on contractual undiscounted repayment obligations.

2015 On demand or One to Over within one year five years five years Total Group RM RM RM RM

Financial assets: Trade receivables 29,109,869 - - 29,109,869 Other receivables 3,311,817 - - 3,311,817 Cash and bank balances 25,489,950 - - 25,489,950 Short term investments 16,292,026 - - 16,292,026 Total undiscounted financial assets 74,203,662 - - 74,203,662

Financial liabilities: Trade payables 59,138,362 - - 59,138,362 Other payables 14,090,019 5,529,275 2,764,638 22,383,932 Borrowings 6,491,103 6,695,387 6,273,932 19,460,422 Derivatives 220,297 - - 220,297 Total undiscounted financial liabilities 79,939,781 12,224,662 9,038,570 101,203,013

Total net undiscounted financial liabilities (5,736,119) (12,224,662) (9,038,570) (26,999,351)

Company

Financial assets: Other receivables 104,926 - - 104,926 Amounts due from subsidiaries 48,703,666 - - 48,703,666 Cash and bank balances 5,345,711 - - 5,345,711 Total undiscounted financial assets 54,154,303 - - 54,154,303

Financial liabilities: Other payables 330,678 - - 330,678 Amounts due to subsidiaries 10,356,561 - - 10,356,561 Total undiscounted financial liabilities 10,687,239 - - 10,687,239

Total net undiscounted financial assets 43,467,064 - - 43,467,064 107 ANNUAL REPORT 2015

44. Financial risk management objectives and policies (contd.)

(c) Liquidity risk (contd.)

Analysis of financial instruments by remaining contractual maturities (contd.)

2014 On demand or One to Over within one year five years five years Total Group RM RM RM RM

Financial assets: Trade receivables 17,756,403 - - 17,756,403 Other receivables 3,919,408 - - 3,919,408 Cash and bank balances 27,844,565 - - 27,844,565 Short term investments 24,309,096 - - 24,309,096 Total undiscounted financial assets 73,829,472 - - 73,829,472

Financial liabilities: Trade payables 49,045,924 - - 49,045,924 Other payables 12,290,134 4,501,000 3,536,500 20,327,634 Borrowings 7,237,892 7,202,630 7,359,041 21,799,563 Total undiscounted financial liabilities 68,573,950 11,703,630 10,895,541 91,173,121

Total net undiscounted financial assets/ (liabilities) 5,255,522 (11,703,630) (10,895,541) (17,343,649)

Company

Financial assets: Other receivables 1,000 - - 1,000 Amounts due from subsidiaries 34,990,436 - - 34,990,436 Cash and bank balances 3,213,822 - - 3,213,822 Total undiscounted financial assets 38,205,258 - - 38,205,258

Financial liabilities: Other payables 346,755 - - 346,755 Amounts due to subsidiaries 21,491,409 - - 21,491,409 Total undiscounted financial liabilities 21,838,164 - - 21,838,164

Total net undiscounted financial assets 16,367,094 - - 16,367,094

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 investment securities, cash and bank balances and derivatives), the Group and the Company minimise credit risk by dealing exclusively with high credit rating counterparties.

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.

For transactions that do not occur in the country of the relevant operating unit, the Group does not offer credit terms without the approval. 108 ANNUAL REPORT 2015

44. Financial risk management objectives and policies (contd.)

(d) Credit risk (contd.)

i. Exposure to credit risk

At the reporting date, the Group’s and the Company’s maximum exposure to credit risk are represented by:

(a) The carrying amount of each class of financial assets recognised in the statements of financial position.

(b) A nominal amount of RM382,536,177 (2014: RM24,780,112) relating to corporate guarantees provided by the Company to financial institutions as securities for credit facilities granted to subsidiaries.

Information regarding credit enhancements for trade and other receivables are disclosed in Note 25.

ii. Credit risk concentration profile

The Group determines concentrations of credit risk by monitoring the country sector profile of its trade receivables on an ongoing basis. The credit risk concentration profile of the Group’s trade receivables at the reporting date are as follows:

2015 2014 RM % RM % By country: Within Malaysia 22,967,146 79 12,428,456 70 Germany 1,527,621 5 890,306 5 Switzerland 16,511 - 34,664 - Singapore 1,223,211 4 1,987,164 11 Other countries 3,375,380 12 2,415,813 14 Total 29,109,869 100 17,756,403 100

iii. Financial assets that are neither past due nor impaired

Information regarding trade receivables that are neither past due nor impaired is disclosed in Note 25.

iv. Financial assets that are either past due or impaired

Information regarding trade receivables that are either past due or impaired is disclosed in Note 25.

(e) Market price risk

Market price risk is the risk that the fair value or future cash flows of the Group’s financial instruments will fluctuate because of changes in market prices (other than interest or exchange rates).

The Group is exposed to equity price risk arising from its investment in quoted equity instruments. The quoted equity instruments in Malaysia are listed on Bursa Malaysia. 109 ANNUAL REPORT 2015

45. Capital management

The primary objective of the Group's capital management is to ensure that it maintains a strong credit rating and healthy capital ratios in order to support its business and maximise shareholder value.

The Group manages its capital structure and makes adjustments to it, in light of changes in economic conditions. To maintain or adjust the capital structure, the Group may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. No changes were made in the objectives, policies or processes during the years ended 31 May 2015 and 31 May 2014.

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, borrowings, trade and other payables, less short term investments and cash and bank balances. Capital includes equity attributable to the owners of the parent.

Group 2015 2014 Note RM RM

Borrowings 34 16,030,353 18,029,254 Trade and other payables 35 79,418,525 67,496,261 Less: - short term investments 28 (16,292,026) (24,309,096) - cash and bank balances 29 (25,489,950) (27,844,565) Net debt 53,666,902 33,371,854

Equity attributable to the owners of the parent, representing total capital 207,319,334 199,835,424

Capital and net debt 260,986,236 233,207,278

Gearing ratio 21% 14%

46. Segment information

For management purposes, the Group is organized into business units based on their products and services, and there are four reportable operating segments as follows:

(i) Retail - operation of supermarkets and departmental stores and a hypermarket;

(ii) Manufacturing - manufacturing and designing of flexible printed circuits boards;

(iii) Property investment and development of residential and commercial properties; and

(iv) Trading

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 terms and conditions that are not materially different from those obtained in transaction with unrelated parties.

There are minimal inter-segment sales within the Group. 110 ANNUAL REPORT 2015

46. Segment information (contd.)

(a) Business segment Property investment and Retail Manufacturing development Trading Eliminations Consolidated 2015 RM RM RM RM RM RM

Revenue and expenses

Revenue Segment revenue Sales to external customers 314,399,191 75,868,252 8,289,426 479,524 - 399,036,393 Inter-segment sales 230,092 - 3,389,042 - (3,619,134) - Total revenue 314,629,283 75,868,252 11,678,468 479,524 (3,619,134) 399,036,393

Results Segment results 10,100,785 4,504,727 1,778,718 (58,780) - 16,325,450 Interest income 7,492,652 836,111 2,717,141 171 (9,939,825) 1,106,250 Finance costs (1,072,917) Share of loss in a joint venture (81,267) Profit before tax 16,277,516 Income tax expense (6,142,555) Profit for the year 10,134,961

Assets Segment assets 93,951,206 111,774,665 86,661,268 3,280,783 - 295,667,922 Investment in a joint venture - 12,713,214 - - - 12,713,214 Unallocated assets 931,732 Total assets 309,312,868

Liabilities Segment liabilities 59,046,952 19,342,373 1,417,735 2,403,978 - 82,211,038 Unallocated liabilities 18,898,300 Total liabilities 101,109,338

Other segment information Additions to non-current assets 5,231,033 11,600,672 380,883 7,800 - 17,220,388 Amortisation expense - 345,295 41,143 - - 386,438 Depreciation 3,300,375 3,672,112 1,289,582 30,594 - 8,292,663 Non-cash expenses other than depreciation, amortisationand impairment losses 111,772 1,869,343 - 58,672 - 2,039,787 111 ANNUAL REPORT 2015

46. Segment information (contd.)

(a) Business segment (contd.) Property investment and Retail Manufacturing development Trading Eliminations Consolidated 2014 RM RM RM RM RM RM

Revenue and expenses

Revenue Segment revenue Sales to external customers 306,075,503 65,214,393 6,655,437 219,685 - 378,165,018 Inter-segment sales 227,208 - 3,377,088 - (3,604,296) - Total revenue 306,302,711 65,214,393 10,032,525 219,685 (3,604,296) 378,165,018

Results Segment results 10,203,031 6,244,924 (1,467,227) 143,179 - 15,123,907 Interest income 137,437 608,905 89,268 - - 835,610 Finance costs (1,172,674) Share of profit in a joint venture 57,768 Profit before tax 14,844,611 Income tax benefit 3,056,102 Profit for the year 17,900,713

Assets Segment assets 85,310,160 100,239,250 86,021,792 2,929,733 - 274,500,935 Investment in a joint venture - 12,068,371 - - - 12,068,371 Unallocated assets 4,275,058 Total assets 290,844,364

Liabilities Segment liabilities 52,342,254 13,872,891 1,306,813 2,107,939 - 69,629,897 Unallocated liabilities 20,503,209 Total liabilities 90,133,106

Other segment information Additions to non-current assets 16,728,343 9,633,402 254,301 132,680 - 26,748,726 Amortisation expense - 374,070 215,266 - - 589,336 Depreciation 3,019,664 3,915,329 3,511,115 50,068 - 10,496,176 Non-cash expenses/(benefit) other than depreciation, amortisation and impairment losses 46,057 (173,906) - (347) - (128,196) 112 ANNUAL REPORT 2015

46. Segment information (contd.)

(b) Geographical segments

The Group operates locally except for the manufacturing segment which has a wholly owned subsidiary in India. All of the Group's manufacturing activities are conducted in Malaysia while the overseas subsidiary is principally engaged in the design of flexible printed circuit boards.

The following table provides an analysis of the Group's revenue, segment assets and capital expenditure by geographical segment:

Singapore, United India, Vietnam States of Indonesia America, Sri Lanka, China Europe, Thailand and Taiwan and Ireland and Malaysia Australia Hong Kong New Zealand Consolidated RM RM RM RM RM 2015

Total revenue from external customers 373,764,288 3,512,884 2,050,270 19,708,951 399,036,393 Segment assets 287,128,736 6,449,120 - 2,090,066 295,667,922 Capital expenditure 15,109,336 - - 2,111,052 17,220,388

2014

Total revenue from external customers 357,204,166 3,035,237 1,725,780 16,199,835 378,165,018 Segment assets 268,051,815 6,449,120 - - 274,500,935 Capital expenditure 26,748,726 - - - 26,748,726

47. Subsequent events

There were no material events subsequent to the end of the year except as follows:

(i) On 22 June 2015, a subsidiary, Qdos Holdings Bhd (“Qdos Holdings”) has entered into a Facilitation Fund Agreement (“Agreement”) with Northern Corridor Implementation Authority (“NCIA”), an entity established under the Northern Corridor Implementation Authority Act 2008 where NCIA has agreed in principle to assist Qdos Holdings by providing facilitation funding up to RM2,000,000 within 24 months from the date of the fulfilment of the conditions precedent to this Agreement, to develop, manufacture and market the product, Molded Interconnect Substrate. The facilitation funding received is a capital grant and non-refundable subject to the terms and conditions per the agreement.

(ii) On 10 August 2015, a subsidiary, Great Support Sdn. Bhd. (“GSSB”), which has been placed under members’ voluntary winding-up (Note 18 (c)) has initiated its first return of approximately RM2,460,000, being the surplus of assets to the shareholders of GSSB by way of cash.

48. Authorisation of financial statements for issue

The financial statements were authorised for issue by the Board of Directors in accordance with a resolution of the directors on 23 September 2015. 113 ANNUAL REPORT 2015

SUPPLEMENTARY INFORMATION

49. Supplementary information – breakdown of retained profits into realised and unrealised

The breakdown of the retained profits of the Group and of the Company as at 31 May 2015 into realised and unrealised profits is presented in accordance with the directive issued by Bursa Malaysia Securities Berhad dated 25 March 2010 and prepared in accordance with Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants.

The retained earnings as at reporting date may be analysed as follows:

Group Company 2015 2014 2015 2014 RM RM RM RM

Total retained earnings of the Company and its subsidiaries - Realised 165,470,131 157,491,254 64,795,513 38,564,257 - Unrealised (1,477,669) 100,468 - - 163,992,462 157,591,722 64,795,513 38,564,257

Total share of accumulated (losses)/profit from joint venture - Realised (68,923) 12,344 - -

Total share of accumulated losses from associate - Realised (1,513,625) (1,513,625) - - - Unrealised (118,101) (118,101) - - 162,291,813 155,972,340 64,795,513 38,564,257 Consolidation adjustments (22,416,865) (22,785,124) - - Retained earnings as per financial statements 139,874,948 133,187,216 64,795,513 38,564,257 114 ANNUAL REPORT 2015

LIST OF PROPERTIES OWNED BY THE GROUP AS AT 31 MAY 2015

Location Description Existing Use / Land Area / Tenure Age Of Net Book Type Built Up Area Building Value (RM)

No. 1, Jalan Mayang Pasir, Basement Supermarket 33,000 sq ft & 99 years 22 years 23,027,122 11950 Bayan baru, level & Level 34,584 sq ft leasehold Pulau Pinang 1, Sunshine expiring Square 2091 Complex

No. 2A, Lebuhraya Leasehold land Warehouse 61,237 sq ft & 60 years 25 years 4,097,860 Kampung Jawa, with a 37,600 sq ft leasehold 11900 Bayan Lepas, warehouse expiring Pulau Pinang and 3 storey 2050 office block

Lots Nos. 7411 - 7434, 7451 - Freehold land Development 320,797 sq ft Freehold Not 4,470,910 7480, 7506 - 7616, Mukim 7, land land Applicable Province Wellesley South, Penang

Lot 7703, Mukim 13, N.E.D, Leasehold land Development 392,345 sq ft 99 years Not 27,988,681 Bandar Baru Air Itam, land leasehold Applicable Penang expiring 2104

No. 99, Lebuhraya Leasehold land Factory 87,736 sq ft & 60 years 15 years 8,579,115 Kampung Jawa, with double 89,160 sq ft leasehold Taman Perindustrian storey factory expiring Bayan Lepas, building 2049 11900 Penang

3-9-3A, Jalan Bukit Jambul, Condominium Accomodation 2,281 sq ft 99 years 6 years 988,865 11900 Bayan Lepas leasehold Penang expiring 2090

No 294, Jalan Thean Teik, Ground floor Supermarket & 67,972 sq ft & 9 years 7 years 20 Bandar Baru Air Itam, & Level 1, Departmental 91,035 sq ft leasehold 11500 Penang Sunshine Farlim expiring Mall 2017

No 5047, Diatas Sebahagian Leasehold land Warehouse 64,400 sq ft 16 years 5 years 1,512,274 Lot HS (D) 9813, Plot ('A'), with a leasehold Jalan Bagan Dalam, warehouse expiring Dermaga Butterworth 2023 Seksyen 4, 12100 Seberang Perai Utara, Pulau Pinang

1, Persiaran Dagangan, Freehold land Supermarket & 720,000 sq ft Freehold Not 37,331,832 Pusat Bandar Bertam with 1 sub- Departmental land Applicable Perdana, basement and 2 13200 Kepala Batas storey shopping Pulau Pinang mall, Sunshine Bertam

Unit 0225 Phase 12 Town House Accomodation 1,258 sq ft Freehold Not 2,090,067 1293, Coyote Creek Way land Applicable Milpitas CA 95035 U.S.A 115 ANNUAL REPORT 2015

ANALYSIS OF SHAREHOLDINGS AS AT 5 OCTOBER 2015

Authorised Capital : RM100,000,000 Issued and Fully Paid-Up Capital : RM61,000,248 comprising of 61,000,248 Ordinary Shares of RM1.00 each Class of Equity Securities : Ordinary Shares of RM1.00 each (“Shares”) Voting Rights : 1 vote per Share

Distribution Schedule of Shareholders No of Holders Holdings No. of Shares % # 59 Less than 100 2,174 0.00 273 100 - 1,000 190,754 0.33 876 1,001 - 10,000 3,435,872 6.00 188 10,001 to 100,000 shares 5,370,323 9.37 36 100,001 to less than 5% of issued shares 18,694,506 32.63 4 5% and above of issued shares 29,601,019 51.66 1,436 57,294,648 100.00

# This represents the total issued and paid up capital of RM61,000,248, comprising of 61,000,248 Shares after deducting 3,705,600 Shares retained by the Company (or “SCB”) as treasury shares.

30 Largest Securities Account Holders (without aggregating the securities from different securities accounts belonging to the same person) No. of No. Name Shares held % # 1 HOZONE SDN. BHD. 12,117,948 21.15 2 SUIWAH HOLDINGS SDN. BHD. 7,591,200 13.25 3 DAUNPURI SDN. BHD. 6,595,171 11.51 4 SUIWAH HOLDINGS SDN. BHD. 3,296,700 5.75 5 DATO’ HWANG THEAN LONG 2,296,881 4.01 6 WONG THAN KIM 2,207,380 3.85 7 DATO’ HWANG THEAN LONG 2,148,500 3.75 8 HLB NOMINEES (TEMPATAN) SDN BHD 1,801,500 3.14 (PLEDGED SECURITIES ACCOUNT FOR LIM CHAI BENG) 9 LENA LEONG OY LIN 1,428,600 2.49 10 CARTABAN NOMINEES (TEMPATAN) SDN BHD 1,000,000 1.75 TMF TRUSTEES MALAYSIA BERHAD FOR RHB-OSK PRIVATE FUND-SERIES 6 11 LOOI TIK MIOW 668,300 1.17 12 HO SOO TAK 597,040 1.04 13 MAYBANK NOMINEES (TEMPATAN) SDN BHD 540,000 0.94 MAYBANK TRUSTEES BERHAD FOR RHB DYNAMIC FUND 14 TEO KWEE HOCK 469,300 0.82 15 UNG PENG JOO 464,400 0.81 16 KENANGA NOMINEES (TEMPATAN) SDN BHD 417,125 0.73 (PLEDGED SECURITIES ACCOUNT FOR YB SENATOR DATO’ HAJI MOHD SUHAIMI BIN ABDULLAH) 17 BARBARA ELIZABETH NG 364,800 0.64 18 LIM KENG HONG 322,600 0.56 19 HWANG SIEW PENG 300,000 0.52 20 JF APEX NOMINEES (TEMPATAN) SDN BHD 289,900 0.51 (PLEDGED SECURITIES ACCOUNT FOR TEO SIEW LAI) 21 LENA LEONG OY LIN 288,700 0.50 22 CHEK KENG LONG 251,960 0.44 23 CHAN SENG CHEONG 230,820 0.40 24 LEONG KOK TAI 211,100 0.37 25 CH'NG BOON CHONG 192,700 0.34 26 LEE ENG HOCK & CO. SENDIRIAN BERHAD 190,000 0.33 27 KANG KHOON SENG 180,000 0.31 28 YEAP SHIEW LAN 180,000 0.31 29 ALLIANCEGROUP NOMINEES (TEMPATAN) SDN BHD 177,600 0.31 (PLEDGED SECURITIES ACCOUNT FOR OOI CHIN HOCK) 30 DATO’ POH BIN SENG 172,000 0.30 116 ANNUAL REPORT 2015

ANALYSIS OF SHAREHOLDINGS AS AT 5 OCTOBER 2015 (CONTD.)

Substantial Shareholders’ (Direct & Indirect) (excluding those who are bare trustees pursuant to Section 69 of the Companies Act, 1965) No. of Shares beneficially held by the Substantial Shareholders No. Name of Shareholders Direct Interest % # Indirect Interest % # Note 1 Hozone Sdn Bhd 12,117,948 21.15 - - 2 Suiwah Holdings Sdn Bhd 10,887,900 19.00 - - 3 Daunpuri Sdn Bhd 6,595,171 11.51 - - 4 Dato' Hwang Thean Long 4,445,381 7.76 11,285,505 19.70 (i) 5 Datin Cheah Gaik Huang 26,400 0.05 15,704,486 27.41 (ii) 6 Suiwah Supermarket Sendirian Bhd 71,205 0.12 10,887,900 19.00 (iii) 7 Hwang Siew Peng 300,000 0.52 15,430,886 26.93 (iv) 8 Datuk Haji Radzali bin Hassan - - 12,117,948 21.15 (v) 9 Che Wan Bin Mat - - 6,595,171 11.51 (vi) 10 Yeoh Eng Wan - - 6,595,171 11.51 (vi)

Notes : (i) Deemed interested through his shareholdings in Suiwah Holdings Sdn Bhd (SHSB) and Suiwah Supermarket Sdn Bhd (SSSB) by virtue of Section 6A of the Companies Act, 1965 (the Act) and the shareholdings of both his wife and daugther, Datin Cheah Gaik Huang and Hwang Siew Peng in SCB. (ii) Deemed interested through the shareholdings of her husband, Dato' Hwang Thean Long and her daugther, Hwang Siew Peng in SCB. (iii) Deemed interested through SHSB in SCB by virtue of Section 6A of the Act. (iv) Deemed interested through the shareholdings of her parents, Dato' Hwang Thean Long and Datin Cheah Gaik Huang in SCB (v) Deemed interested through his shareholdings in Hozone Sdn Bhd pursuant to Section 6A of the Act. (vi) Deemed interested through their shareholdings in Daunpuri Sdn Bhd pursuant to Section 6A of the Act.

Directors’ Shareholdings (Direct & Indirect) No. of Shares beneficially held by the Directors Name of Directors Direct Interest % # Indirect Interest % # Note Dato' Hwang Thean Long 4,445,381 7.76 11,285,505 19.70 (i) Datin Cheah Gaik Huang 26,400 0.05 15,704,486 27.41 (ii) Y.B. Senator Dato' Haji Mohd Suhaimi bin Abdullah 417,125 0.73 - - Dato' Ahmad Hassan bin Osman - - - - Datuk Haji Radzali bin Hassan - - 12,117,948 21.15 (iii) Wong Thai Sun - - - - Hwang Siew Peng 300,000 0.52 15,430,886 26.93 (iv) Jen Shek Voon - - - - Hwang Shin Hung - - - -

Notes : (i) Deemed interested through his shareholdings in SHSB and SSSB by virtue of Section 6A of the Act and the shareholdings of both his wife and daugther, Datin Cheah Gaik Huang and Hwang Siew Peng in SCB. (ii) Deemed interested through the shareholdings of her husband, Dato' Hwang Thean Long and her daugther, Hwang Siew Peng in SCB. (iii) Deemed interested through his shareholdings in Hozone Sdn Bhd pursuant to Section 6A of the Act. (iv) Deemed interested through the shareholdings of her parents, Dato' Hwang Thean Long and Datin Cheah Gaik Huang in SCB.

Interest In The Related Corporation

Dato’ Hwang Thean Long, Datin Cheah Gaik Huang, Hwang Siew Peng and Datuk Haji Radzali Bin Hassan by virtue of their interest in Shares in the Company, are deemed interested in Shares of all the Company’s subsidiaries to the extent the Company has an interest.

Save as disclosed above, none of the other Directors in office have any interest in Shares in the Company or its related corporations. 117 ANNUAL REPORT 2015

PROXY FORM

No. of Shares held

I/We ______(FULL NAME IN CAPITAL LETTERS) of ______(FULL ADDRESS) member/members of the abovenamed Company, hereby appoint ______of ______or failing him,______of ______or the Chairman of the Meeting, as *my/our proxy to vote for *me/us on *my/our behalf at the Twenty-second (22nd) Annual General Meeting of the Company to be held at Sunshine Banquet Hall, Level 4, Sunshine Square Complex, 1, Jalan Mayang Pasir, 11950 Bayan Baru, Penang on Thursday, 26 November 2015 at 11.00 a.m. and at any adjournment thereof.

*My/Our Proxy is to vote as indicated below:

AS ORDINARY BUSINESS: For Against Resolution 1 To receive the Audited Financial Statements for the year ended 31 May 2015 together with the Reports of the Directors and Auditors thereon. Resolution 2 To approve the declaration of a first and final single tier dividend of 6% for the financial year ended 31 May 2015. Resolution 3 To re-elect Datin Cheah Gaik Huang as Director of the Company. Resolution 4 To re-elect Y.B. Senator Dato’ Haji Mohd Suhaimi bin Abdullah as Director of the Company. Resolution 5 To re-elect Jen Shek Voon as Director of the Company. Resolution 6 To re-elect Hwang Shin Hung as Director of the Company. Resolution 7 To re-appoint Dato’ Ahmad Hassan bin Osman as Director of the Company. Resolution 8 To approve the payment of Directors’ fees. Resolution 9 To re-appoint Messrs. Ernst & Young as Auditors of the Company and to authorise the Directors to fix their remuneration. AS SPECIAL BUSINESS: Resolution 10 Ordinary Resolution – Authority to issue and allot shares pursuant to Section 132D of the Companies Act, 1965. Resolution 11 Ordinary Resolution - Proposed renewal and new shareholders’ mandate for recurrent related party transactions of a revenue or trading nature ("RRPTs") involving Dato’ Hwang Thean Long, Datin Cheah Gaik Huang, Hwang Poh Choo, Hwang Siew Peng, Hwang Shin Hung, Suiwah Holdings Sdn Bhd and Suiwah Supermarket Sendirian Berhad. Resolution 12 Ordinary Resolution - Proposed renewal of shareholders’ mandate for RRPTs involving Datuk Haji Radzali bin Hassan and Hozone Sdn Bhd. Resolution 13 Ordinary Resolution - Proposed renewal of shareholders’ mandate for RRPTs involving Looi Tik Miow. Resolution 14 Ordinary Resolution - Proposed renewal of shareholders’ mandate for RRPTs involving Leong Kong Meng. Resolution 15 Ordinary Resolution - Proposed renewal of Shares Buy-Back Mandate. Resolution 16 Ordinary Resolution - Mandate for Y.B. Senator Dato’ Haji Mohd Suhaimi bin Abdullah to continue to act as an Independent Non-Executive Director of the Company. Resolution 17 Ordinary Resolution - Mandate for Dato’ Ahmad Hassan bin Osman to continue to act as an Independent Non- Executive Director of the Company. Resolution 18 Ordinary Resolution - Mandate for Mr. Jen Shek Voon to continue to act as an Independent Non-Executive Director of the Company. Resolution 19 Ordinary Resolution - Mandate for Mr. Wong Thai Sun to continue to act as an Independent Non-Executive Director of the Company.

(Please indicate with an “X” in the appropriate box against each Resolution how you wish your proxy to vote. If no instruction is given, the proxy will vote or abstain at his/her discretion). * Strike out whichever not applicable.

Signed this day of 2015.

Signature of Shareholder/Common Seal

Notes: 1. In respect of deposited securities, only members whose names appear in the Record of Depositors on 19 November 2015 shall be eligible to attend, speak and vote at the Meeting. 2. A member entitled to attend and vote at the Meeting is entitled to appoint two (2) or more proxies to attend and vote in his or her stead. Where a member appoints two (2) proxies, the appointments shall be invalid unless he or she specifies the proportions of his or her shareholdings to be represented by each proxy. 3. A proxy may but does not need to be a member. There shall be no restriction as to the qualification of the proxy and the provision of Section 149 (1)(a), (b) and (c) of the Companies Act, 1965 shall not apply to the Company. A proxy appointed to attend and vote at the Meeting shall have the same rights as the member to speak at the Meeting. 4. The instrument appointing a proxy shall be in writing under the hand of the appointor or his attorney duly authorised in writing or, if the appointor is a corporation, either under its seal or under the hand of an officer or attorney duly authorised. 5. Where a member of the Company is an exempt authorised nominee as defined under Securities Industry (Central Depositories) Act 1991 which holds ordinary shares in the Company for multiple beneficial owners in one securities account (“omnibus account”), there is no limit to the number of proxies which the exempt authorised nominee may appoint in respect of each omnibus account it holds. 6. The instrument appointing a proxy and the power of attorney or other authority if any, under which it is signed or a notarially certified copy of the power or authority shall be deposited at the registered office of the Company at No. 1-20-1 SUNTECH @ Penang Cybercity, Lintang Mayang Pasir 3, 11950 Bayan Baru, Penang not less than forty-eight (48) hours before the time for holding the meeting or any adjournment thereof. 7. Any alteration in this form must be initialed. Please fold across the line and close

stamp

To : The Company Secretary

SUIWAH CORPORATION BHD (253837-H) No. 1-20-1 SUNTECH @ Penang Cybercity, Lintang Mayang Pasir 3, 11950 Bayan Baru, Penang, Malaysia.

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