CN Asia Annual Report 2015
CN Asia Annual Report 2015
CN Asia Annual Report 2015
02
Corporate Information
04
Group Structure
05
06
07
Profile of Directors
08
10
12
17
18
19
20
Chairmans Statement
22
Financial Statements
23
97
Analysis of Shareholdings
98
Form of Proxy
AGENDA
1.
To receive the Audited Financial Statements for the financial year ended 31 December 2015 together
with the Reports of the Directors and the Auditors thereon.
(Resolution 1)
2.
To approve the payment of Directors fees in respect of the financial year ended 31 December 2015.
(Resolution 2)
3.
To re-elect Mr. Lee Lam who is retiring in accordance with Article 84 of the Companys Articles of
Association and being eligible has offered himself for re-election.
(Resolution 3)
4.
To consider and, if thought fit, to pass the following resolution:THAT pursuant to Section 129(6) of the Companies Act, 1965, Dato Hilmi bin Mohd Noor, who is
over the age of seventy (70) years, be and is hereby re-appointed as Director to hold office until the
conclusion of the next Annual General Meeting of the Company.
(Resolution 4)
5.
To re-elect Mr. Roy Ho Yew Kee who is retiring in accordance with Article 91 of the Companys
Articles of Association and being eligible has offered himself for re-election.
(Resolution 5)
6.
To re-appoint Messrs Kreston John & Gan as Auditors of the Company for the ensuing year and to
authorise the Board of Directors to fix their remuneration.
(Resolution 6)
As Special Business
To consider, and if thought fit, to pass the following resolution:7.
ORDINARY RESOLUTION
(Resolution 7)
ORDINARY RESOLUTION
Authority to allot and issue shares pursuant to Section 132D of the Companies Act, 1965
THAT pursuant to Section 132D of the Companies Act, 1965 and subject to the approval of the
relevant governmental and/or regulatory authorities, the Directors be and are hereby empowered to
allot and issue shares in the Company at any time and upon such terms and conditions and for such
purposes as the Directors may, in their absolute discretion deem fit provided that the aggregate
number of shares issued pursuant to this resolution does not exceed ten percentum (10%) of the
issued share capital of the Company for the time being and the Directors be and are hereby also
empowered to obtain the approval from Bursa Malaysia Securities Berhad for the listing of and
quotation for the additional shares so issued and that such authority shall continue in force until the
conclusion of the next Annual General Meeting of the Company.
9.
To transact any other business for which due notice shall have been given.
(Resolution 8)
(CONTD)
Notes:
1.
2.
3.
4.
5.
Only depositors whose names appear in the Record of Depositors as at 7 June 2016 shall be regarded as Members and
entitled to attend, speak and vote at the meeting.
A Member entitled to attend and vote at the meeting is entitled to appoint one (1) or more proxies to attend and vote
instead of him. A proxy may but need not be a Member of the Company and the provision of Section 149(1)(b) 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.
Where a Member appoints more than one (1) proxy, the appointment shall be invalid unless the Member specifies the
proportion of his shareholdings to be represented by each proxy.
The instrument appointing a proxy in the case of an individual shall be under the hand of the appointor or of his attorney
duly authorised or if the appointor is a corporation, either under seal or under the hand of an officer or attorney duly
authorised.
The Proxy Form must be deposited at the Registered Office of the Company at Lot 7907, Batu 11, Jalan Balakong, 43300
Seri Kembangan, Selangor Darul Ehsan, not less than forty eight (48) hours before the time set for holding the meeting
or any adjournment thereof.
(ii)
His vast experience, expertise and independent judgment contributed to the effective discharging of his duties.
He has been with the Company for more than 19 years where he has familiarised himself with the business and
provide element of objectivity to the Board of Directors.
He continues to be independent as there are no circumstances and relationships that create threats to his
independence.
He actively participated in board meetings and possess the appropriate competencies to enable him to apply his
professional judgment.
Resolution 8 - Authority to allot and issue shares pursuant to Section 132D of the Companies Act, 1965
The Resolution 8 proposed under item 8 of the agenda, if passed, will renew the authority given to the Directors of
the Company to issue and allot shares in the Company at any time, to such person or persons, upon such terms and
conditions and for such purposes as the Directors may, in their absolute discretion, deem fit (General Mandate),
provided that aggregate number of shares issued pursuant to this General Mandate does not exceed 10% of the total
issued share capital of the Company at the time of issue. This renewed General Mandate, unless revoked or varied at a
general meeting, will expire at the conclusion of the next Annual General Meeting (AGM) of the Company.
Pursuant to Section 132D of the Companies Act 1965, the Company has not issued any new shares under the general
mandate approved in the Nineteenth AGM held on 24 June 2015 and which will expire at the forthcoming Twentieth AGM
of the Company to be held on 15 June 2016.
The authority will provide flexibility to the Company for any possible fund raising activities, including but not limited to
further placing of shares, for purpose of funding future investment project(s), working capital and/or acquisitions.
CORPORATE INFORMATION
Board of Directors
Dato Hilmi bin Mohd Noor
(Independent Non-Executive Chairman)
Ho Cheng San
(Managing Director)
Audit Committee
Nomination Committee
Remuneration Committee
Company Secretaries
Principal Bankers
Solicitors
Investor Relations
Registered Office
Auditors
Registrars
Main Market
Bursa Malaysia Securities Berhad
GROUP STRUCTURE
100%
Chip Ngai Engineering
Works Sdn Bhd
(Incoporated in Malaysia)
Manufacturing and
trading of underground
and skid tanks, dish
ends, pressure vessels,
road tankers, piping for
the petroleum industry
and that of specialised
engineering works and
fabrication works
100%
CN ASIA CORPORATION BHD
(Company No.: 399442-A)
(Incorporated In Malaysia)
Investment Holding &
Providing Management Services
100%
Zhuhai CN Engineering
Works Co., Ltd.
(Incoporated in Peoples
Republic of China)
Manufacturing and trading
of tanks for specialised
industries
49%
PICN Engineering
Sdn Bhd
(Incoporated in Malaysia)
Fabrication and trading
of tanks for specialised
industries
100%
CN Asia Capital
Sdn Bhd
(Incoporated in Malaysia)
Investment Holding
100%
Douwin Sdn Bhd
(Incoporated in Malaysia)
Investment Holding
ISO 9001:2008
CIDB
UL 58 & UL 1746
NB Stamp
R Stamp
U Stamp
U2 Stamp
S Stamp
Manufacturing of underground and aboveground storage tanks for the petroleum and general process industries for
the local and global market.
2.
Manufacturing of dish heads and provision of plate rolling services for the food and beverage, petrochemical, energy
and heavy engineering industries worldwide.
3.
4.
Provision of engineering, procurement and construction (EPC) services for the following industries: Petrochemical
: carbon and cladded steel pressure vessels and heat exchangers
Food and Beverage Plant : stainless steel vessels, sterilizers, and etc
Power Generation
: supply and erection of flue stacks and heat recovery steam generator (HRSG)
pressure vessels
Bulking Terminal
: API 620,650 bulk vertical storage tanks inclusive of
- piling works
- civil foundation
- laying of pipes
- pigging and pump system
- loading station
- office and warehouse
Civil engineering and construction works is carried out in conjunction with the above products.
5.
Provision of heat treatment services to a varied range of vessel design and fabrication codes, be they ASME, PD, AS etc
complete with the necessary heat treatment reports and charts.
6.
PROFILE OF DIRECTORS
Ho Cheng San
Ho Cheng San, a Malaysian, aged 63, is the Managing Director of the Company and was appointed to the Board on 5 April
1997. He is currently a member of the Remuneration Committee and Chairman of the Option Committee. He obtained his
Diploma in Mechanical Engineering in 1978. He has more than 36 years of experiences in the Engineering, Procurement,
Construction and Commissioning of Palm Oil Mills, Petrochemical, Food and Beverage Plants and Manufacturing of Process
Plant Equipment World wide with Comprehensive after Sales Services and Maintenance of its equipment at its installation.
Mr Ho has been involved in housing and property development and has wide experience in the commercial and industrial
property sectors. He is the Chief Executive Officer and one of the founder of Cantik Realty Sdn Bhd and Tai Seng Housing
Development Co Sdn Bhd. He has more than 36 years of management experience in the field of marketing and property
development.
Mr Ho attended all five (5) Board Meetings held during the financial year ended 31 December 2015.
Mr Ho does not have any family relationship with any other Directors of the Company. He is a substantial shareholder of the
Company and his securities holding is set out in Analysis of Directors Shareholdings on page 99 of the Annual Report. There
is no conflict of interest with the Company except for those disclosed in Note 35 to the Financial Statements of this Annual
Report. He has not been convicted of any offences within the past 10 years.
(Chairman)
(Member)
(Member)
TERMS OF REFERENCE
Composition
The Committee must comprise at least three (3) members and all members must be Non-Executive Directors, with the
majority of whom are independent, including the Chairman. Any vacancy, resulting in there being no majority of independent
Directors or number of members reduced to below three (3), shall be filled within three (3) months. All members of the Audit
Committee must be financially literate and at least one (1) member shall be a professional or qualified accountant.
No alternate director shall be appointed as an Audit Committee member.
Authority
The Committee is authorised by the Board to investigate any activity within its terms of reference. It is authorised to seek
any information it requires from any employees and all employees are directed to co-operate with any request made by the
Committee. The Committee shall also have the authority to consult independent experts where they consider it necessary to
carry out their duties.
Meeting
The Committee shall meet at least four (4) times a year or at such meetings as the Chairman shall decide in order to fulfill its
duties. The Secretary of the Committee shall be responsible, in conjunction with the Chairman, for drawing up the agenda and
circulating to the Committee prior to each meeting.
The Secretary will also be responsible for keeping the minutes of the meetings of the Committee, and circulating them to
committee members and to other members of the Board of Directors.
A quorum shall consist of a majority of Committee members and in order to form a quorum, the majority of members present
must be independent directors.
Functions
The functions of the Committee are as follows:1.
review the following and report the same to the Board of Directors:(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
(i)
(j)
3.
MEETINGS
There were five (5) Audit Committee meetings held during the financial year ended 31 December 2015. Details of the members
attendances are as follows:Audit Committee Member
5/5
5/5
5/5
Upon invitation by the Committee, the Group Financial Controller attended all these meetings and the outsourced internal
auditors, Messrs. Lefis Consulting Sdn Bhd, attended all except the first and second Audit Committee Meetings. The previous
external auditors, Messrs. SJ Grant Thornton were invited to attend the first and second Audit Committee Meetings during
the financial year.
SUMMARY OF ACTIVITIES
A summary of the main activities carried out by the audit committee during the financial year included the following:
Reviewed the quarterly unaudited financial results of the Group and ensure compliance with approved accounting
standards, other legal and regulatory requirements prior to recommending to the Board for approval.
Reviewed the management letters and the audit reports of the external auditors.
Reviewed the annual audited financial statements of the Group and recommended to the Board for approval.
Reviewed deliberated internal audit reports and monitored / followed up on remedial actions as recommended by the
Internal Auditors.
Reviewed internal audit plan and considered the proposed audit fees of the Internal Auditors and the re-appointment of
the Internal Auditors for recommendation to the Board for their approval.
Discussed and considered the audit fees with the External Auditors for the financial year ended 31 December 2015.
Reviewed the risk management report on key risk profiles and risk management activities.
Reviewed the Audit Committee Report and Statement on Risk Management and Internal Control and recommended to
the Board for approval prior to the inclusion in the companys annual report.
Prepared the annual internal audit plan for approval by the Audit Committee.
Performed internal audit reviews to evaluate the adequacy of the internal control system on the overall control
environment within the Group.
Performed risk based audits on the purchase, control, record, maintenance and storage of tools of the Group based on
the annual internal audit plan.
Undertook investigation and special reviews on issues arising from the audits and / or requested by the management
and / or Audit Committee and issued reports accordingly to the management and / or Audit Committee.
Reviewed current system and key risk areas covering business process and reported the significant risk management
control to the Audit Committee on a quarterly basis to ensure proper internal controls are embedded in these process.
Further details on the internal audit functions are set out in the Statement on Risk Management and Internal Control of this
Annual Report.
ANNUAL REPORT 2015 | 11
DIRECTORS
i.
The Board
The Board has the overall responsibility for corporate governance, strategic direction and overseeing and evaluating
the business operation of the Group. It is also entrusted with the responsibility of exercising reasonable care of the
Company and Groups resources in the best interests of its shareholders.
ii.
iii.
Board Meetings
Board meetings are held at quarterly intervals with additional meetings convened when necessary.
There were five (5) Board Meetings held during the financial year ended 31 December 2015 with details of the attendance
of each member of the Board at the Board Meetings as follows:-
Name of Directors
Dato Hilmi bin Mohd Noor
Ho Cheng San
Ir. Lee Lam
Chong Ying Choy
Yoong Nim Chee
Roy Ho Yew Kee *
Status of Directorship
Non-Executive Chairman
Managing Director
Executive Director
Non Executive Director
Non Executive Director
Non Executive Director
Independent
Yes
No
No
Yes
Yes
Yes
Attendance of
Meeting
5/5
5/5
5/5
5/5
5/5
-
Percentage
(%)
100
100
100
100
100
NA
Board Charter
The Board is guided by its Term of Reference (Charter) which set out the roles and responsibilities of the Board. The
Charter has been adopted and will be reviewed periodically by the Board to ensure it is kept up-to-date with changes in
regulations and best practice and ensure its effectiveness and relevance to the Boards objective. The Board Charter is
available in the Companys website at www.cnasia.com.
v.
vi.
vii.
viii.
Board Independence
The Code recommends that the tenure of an Independent Director should not exceed a cumulative term of nine (9)
years. However, an Independent Director may continue to serve the Board upon reaching the nine (9) years limit subject
to the Independent Director re-designated as Non-Independent Director. In the event the Board intends to retain the
Director as Independent after the Independent Director has served a cumulative term of nine (9) years, the Board must
justify the decision and seek for shareholders approval at the Annual General Meeting.
The Board recognizes the importance of independence and objective in its decision making process. Nevertheless,
the Board is of the view that the Independent Director of the Company, Mr. Chong Ying Choy, who has served as
Independent Director for a cumulative tenure exceeding nine (9) years, has over the time developed increased insight
into the Company of which his experience and exposure to the Company over the years has provided an increasing
contribution to the effectiveness of the Board. Thus, the Board has elected to retain Mr. Chong as Independent Director
after due consideration of his experience and contribution to the Board. The Board will continuously review and evaluate
independent director annually, through its Nomination Committee, as recommended by the Code.
ix.
Directors Remuneration
The Remuneration Committee is responsible to recommend the remuneration at levels which are sufficient to attract
and retain the Directors needed to run the Company successfully taking into consideration all relevant factors including
the functions, workload and responsibilities involved. The remuneration of Director is in line with the Groups overall
policy on compensation and benefits with due consideration to compensation levels which is comparable among other
similar Malaysian Public Listed Companies. The Board as a whole determines the remuneration of Non-Executive
Directors.
Type of Remuneration
Fees
Salaries
Benefit-in-kind
Other Emoluments
Total
Executive
Directors
RM
24,000
558,600
182,516
92,747
857,863
Non-Executive
Directors
RM
85,420
85,420
Total
RM
109,420
558,600
182,516
92,747
943,283
The number of Directors of the Company who served during the financial year and whose total remuneration from the
Group falling within the respective bands are as follows:-
Range of Remuneration
RM100,000 and below
RM100,001-RM200,000
RM200,001-RM300,000
RM300,001-RM400,000
RM400,001-RM500,000
RM500,001 and above
x.
Number of Directors
Executive
Non-Executive
4
1
1
-
Directors Training
All Directors have successfully completed the Mandatory Accreditation Programme (MAP) as prescribed by Bursa
Securities. The Board has undertaken an assessment of the training needs of each director and the Directors will
continue to undergo relevant training programmes, seminars, workshops, talks and conferences to keep abreast with
new regulatory developments and relevant changes in business environment on a continuous basis in compliance with
paragraph 15.08 of the MMLR of Bursa Securities.
During the financial year ended 31 December 2015, the Directors have attended seminars and trainings as follows:Training/ Seminars title
Half-Day Seminar On Transfer Pricing Documentation Practical Issues In Implementing
The Requirements Of The Transfer Pricing Guideline
LHDNM-CTIM Tax Forum 2015
National Tax Conference 2015
MPERS: Planning And Performing For Your Transition
2016 Budget Seminar
Driving Corporate Performance in 2016
Date
9 February 2015
10 March 2015
25 & 26 August 2015
2 November 2015
5 November 2015
28 December 2015
BOARD COMMITTEES
The Board has established the following Board Committees to assist the Board in discharging its duties with specific terms
of reference:
Audit Committee
Nomination Committee
Remuneration Committee.
i.
Audit Committee
The Company has an Audit Committee whose composition meets the MMLR, where the majority member comprises of
Independent Directors. The terms of reference and further information of the Audit Committee are set out on pages 10
to 11 of this Annual Report in the Audit Committee Report.
Nomination Committee
The Nomination Committee comprises entirely of independent Non-Executive Directors. The Nomination Committee is
responsible for proposing new nominees for the Board appointments and assessing directors on an annual basis, the
contribution of each individual director and the overall effectiveness of the Board. In making these recommendations,
the Nomination Committee will consider the required mix of skills and experience of each member. The final decision
as to who shall be nominated should be the responsibility of the full Board after considering the recommendations of
the Committee.
The members of the Nomination Committee are:(1)
(2)
(3)
To identify, assess and recommend to the Board suitably qualified candidates for directorship on the Board as
well as members of the Board Committees.
To review and assess annually the overall composition of the Board in terms of appropriate balance of skills,
expertise, attributes and core competencies among executives, non executives and independent directors.
To review and assess annually the independence of directors.
To perform the formal assessment of the effectiveness of individual Directors and the annual appraisal of the
Executive Directors performance based on the selected performance criterias.
To ensure new Directors go through proper induction program.
The Committee should meet as and when deemed necessary and at least once a year. There was one (1) Nomination
Committee Meetings held during the financial year ended 31 December 2015 with full attendance registered by all
members. The Board, through the recent review and assessment of the Nomination Committee, confidently believe that
the size of the Board is appropriate and that there is appropriate mix of experience and expertise in the composition of
the Board.
iii.
Remuneration Committee
The Remuneration Committee comprises a majority of Non-Executive Directors, is responsible for making
recommendations to the Board on remuneration packages and benefits extended to the Managing Director and
Executive Director and to review their remuneration packages on an annual basis. Remuneration package of NonExecutive Directors will be a matter to be decided by the Board as a whole with the Directors concerned abstaining
from deliberations and voting on decisions in respect of his individual remuneration. Fees payable to Non-Executive
Directors is determined by the Board with the approval from shareholders at the Annual General Meeting.
In establishing the remuneration packages and benefits for the Managing Director and Executive Director, the
Remuneration Committee has regarded the packages offered by comparable companies, and may obtain independent
advice, where necessary. The remuneration of the Managing Director and the Executive Director comprises a fixed
salary and allowance approved by the Board, which is in line with the Groups performance.
The term of reference of the Remuneration Committee are as follows:
Financial Reporting
The Board aims to provide and present a balanced, clear and meaningful assessment of the Groups financial
performance and prospects at the end of the financial year, primarily through the annual financial statements, quarterly
announcement of results to shareholders as well as the Chairman Statement in the annual report. The Board is assisted
by the Audit Committee to ensure accuracy and adequacy of all information for disclosure.
A statement by the Directors of their responsibilities in respect of the audited financial statements is set out on page 17
of this Annual Report.
ii.
Internal Control
The Statement On Risk Management and Internal Control set out on pages 20 to 21 of this Annual Report provides an
overview of the Groups state of internal control.
iii.
This Statement on Corporate Governance was made in accordance with a resolution of the Board of Directors at a meeting
held on 31 March 2016.
16 | CN ASIA CORPORATION BHD (399442-A)
The Directors are responsible for the preparation of the financial statements of the Group that give a true and fair view of the
state of affairs of the Group and of the Company as at 31 December 2015 and of the results and cash flows of the Group and
of the Company for the financial year then ended in accordance with Malaysia Financial Reporting Standards, International
Financial Reporting Standards, the Companies Act, 1965 in Malaysia and the Main Market Listing Requirements of Bursa
Malaysia Securities Berhad.
In preparing the financial statements, the Directors have:
adopted appropriate accounting policies and applied these accounting policies consistently;
made judgements and estimates that are prudent and reasonable; and
prepared the financial statements on a going concern basis, unless they consider that to be inappropriate.
The Directors have the responsibility for ensuring that the Company and the Group keep accounting records which disclose
with reasonable accuracy at any time the financial position of the Group and of the Company and which enable them to ensure
the financial statements comply with the provisions of the Companies Act, 1965.
The Directors have overall responsibility for taking such steps that are reasonably open to them to safeguard the assets of the
Group and of the Company to prevent and detect fraud and other irregularities.
This Statement of Directors Responsibilities was made in accordance with a resolution of the Board of Directors at a meeting
held on 31 March 2016.
ANNUAL REPORT 2015 | 17
STATEMENT ON CORPORATE
SOCIAL RESPONSIBILITY
The Board of Directors acknowledges that Corporate Social Responsibility (CSR) is the basis for building positive relationship
towards the community, environment, its employees, customers, suppliers, shareholders and other stakeholders. Therefore,
the continuance practice of CSR activities is strongly encouraged to ensure that people within and outside the Group benefited
from the existence of the organization.
At present, the Group continues to focus on improving the health and safety as well as welfare of the employees and workers
within the organization. The Groups Health, Safety, Security and Environment (HSSE) committee has been actively promoting
health & safety activities in order to provide a safe and healthy work environment for its employees.
Various CSR activities carried out during the financial year ended 31 December 2015 are as follows:a)
Community
b)
Employees welfare
c)
Offer practical or industrial training to undergraduates from local colleges, universities and institution.
Contribution in the form of books to libraries of local universities.
Regular training, seminar, in-home trainings in various relevant fields were being conducted to enhance the
employees technical competency, productivity, leadership and management qualities.
The Company recognizes loyalty of its staff and award its long service staff a special gift at its annual gathering
dinner held at the beginning of the year.
Regular gathering events are being organized by the event committee to celebrate festive seasons of each race
and promote harmonize work environment in the Company.
Organize occasions for regular meet-ups between management and staff to foster better working relationships.
Regularly equip and replenish appropriate Personal Protection Equipment (PPE) for workers.
First Aid Drill and regular briefing for workers on health and safety procedures.
Organize fire safety talk to create awareness and prevention among employees.
Gotong-Royong within the factory compound was carried out to ensure clean and healthy work environment for
its employees.
Continuous training and supervision were provided to all levels of employees to promote a safe and healthy workenvironment in compliance with legislative requirements.
This Statement on Corporate Social Responsibility was made in accordance with a resolution of the Board of Directors at a
meeting held on 31 March 2016.
18 | CN ASIA CORPORATION BHD (399442-A)
SHARE BUYBACKS
There were no share buyback programme in place during the financial year.
IMPOSITION OF SANCTIONS/PENALTIES
There were no material sanction and/or penalty imposed on the Company and its subsidiaries, Directors or management by
any relevant regulatory bodies during the financial year.
NON-AUDIT FEES
The non-audit fees paid to the previous external auditors, Messrs SJ Grant Thornton during the financial year ended 31
December 2015 was amounted to RM3,180 /- (2014:RM3,180 /-).
PROFIT GUARANTEE
The Company did not give any profit guarantee to any parties during the financial year.
BOARD RESPONSIBILITY
The Board acknowledges its responsibilities for maintaining a sound system of internal control and an effective risk
management and in order to safeguard shareholders investments and the Groups assets and for reviewing its adequacy and
integrity. Due to the limitations that are inherent in any systems of risk management and internal control, the system adopted
by the Group is designed to manage rather than eliminate the risk of failure to achieve business objectives. Thus it can only
provide reasonable and not absolute assurance against material misstatement, fraud or loss.
RISK MANAGEMENT
Risk management is a firmly embedded process for identifying, evaluating, prioritizing and reporting the major business risks
within the Group with the objective of maintaining a sound system of internal control. Regular reviews, evaluation and update
of the risk profile and the corresponding action plans have been reported to the Board. The Board through its Audit Committee
will continue its effort to further enhance its risk management practices to ensure that the Groups assets and shareholders
interest are well protected and shareholders value is enhanced.
The Groups risk management framework is maintained and monitored by its Risk Management Committee, which is
administrated by an independent consulting firm, to achieve its risk management objectives. In order to attain this objective,
the Group has:
adopted a structured and systematic risk assessment, monitoring and reporting framework; and
enhanced the culture of risk awareness in the business processes through risk owners accountability and sign-off for
action plans and continuous monitoring by the various departments within the Group.
Hence, the Group has in place the necessary implementation, reviewing and reporting processes of its risk profile to cultivate
the appropriate discipline and control to continuously improvising its risk management capabilities among the respective risk
owner.
Organization structure with clear lines of roles and responsibilities including delegation of duties are well-defined to
ensure enhancement of the Groups performance.
Delegations of authority including authorization limits at appropriate levels of management are clearly defined to
ensure accountabilities and responsibilities.
Documented standard operating procedures and policies are regularly reviewed and revised to meet operational needs
and made available and accessible by all employees.
Systematic and regular audits are carried out to ensure compliance of the ISO 9001:2008 Quality Management Systems
of its subsidiary company, Chip Ngai Engineering Works Sdn Bhd.
Centralised human resource function that sets out the policies for recruitment, training and appraisal of the employees
within the Group.
The outsourced internal auditor assists the Audit Committee in discharging its duties in maintaining and monitoring the
internal control systems within the Group.
Regular Board and Audit Committee Meetings are carried out to review and assess the overall performance and internal
controls of the Group.
Adequate reports are generated on a consistent basis for review on the operational and financial performance of the
Group.
Scheduled and ad-hoc operation and management meetings were held and attended by the Managing Director,
Executive Director and head of departments to discuss and resolve business and operational issues.
Training and development programs are conducted to ensure the staff are competent in carrying out their duties and
responsibilities to achieve the Groups objectives.
CONCLUSION
The Board has received assurance from the Managing Director and the Financial Controller that the Companys risk
management and internal control system are operating adequately and effectively, in all material aspects, based on the risk
management and internal control system of the Company.
The Board believes that the above frameworks are considered appropriate for the Groups business operations to provide
reasonable assurance of their integrity of the Groups risk management and systems of internal control and that the risks
are at the acceptable level throughout the Groups business operations. There were no material losses incurred during the
financial year under review as a result of weaknesses in the Groups risk management and system of internal control.
The Board together with the management will continue to take preventive measures and appropriate actions in order to
strengthen the Groups control environment.
This Statement on Risk Management and Internal Control has been duly reviewed by the External Auditors pursuant to
Paragraph 15.23 of the MMLR of Bursa Securities.
ANNUAL REPORT 2015 | 21
CHAIRMAN STATEMENT
Dear Valued Shareholders,
On behalf of the Board of Directors, I am pleased to present the Annual Report
and Audited Financial Statements of CN Asia Corporation Bhd (CNASIA) for
the financial year ended 31 December 2015.
PERFORMANCE REVIEW
CORPORATE DEVELOPMENTS
DIVIDEND
The Board does not propose any payment of dividend for the
financial year ended 31 December 2015.
BOARD CHANGES
On behalf of the Board, I would like to take this opportunity
to welcome Mr. Roy Ho Yew Kee, who joined the Board as an
Independent Non-Executive Director on 10 December 2015.
ACKNOWLEDGEMENT
On behalf of the Board of Directors, I would like to express my
sincere appreciation to our valued shareholders, customers,
suppliers, bankers, advisors, business associates,
management, staff at all levels, the relevant authorities
and government agencies for their continued support,
commitment, contribution and confidence in the Group.
Last but not least, I would like to place on record my
appreciation and thanks of the valued counsel, guidance
and continued support I have received from my fellow Board
members for the past year.
FINANCIAL STATEMENTS
Directors Report
24
Statement by Directors
28
Statutory Declaration
28
29
31
32
33
34
36
37
38
39
40
DIRECTORS REPORT
The directors have pleasure in submitting their report and the audited financial statements of the Group and of the Company
for the financial year ended 31st December 2015.
PRINCIPAL ACTIVITIES
The Company is principally engaged in investment holding and providing management services, whilst the principal activities
of the subsidiary companies are set out in Note 5 to the financial statements. There have been no significant changes in the
nature of these activities of the Company and its subsidiaries during the financial year.
RESULTS
Group
Company
RM6,284,455
RM228,567
DIVIDENDS
No dividend has been paid, declared or proposed since the end of the previous financial year. The directors do not recommend
any dividend payment in respect of the current financial year.
CURRENT ASSETS
Before the financial statements of the Group and of the Company were made out, the directors took reasonable steps to
ascertain whether any current assets, other than debts, were unlikely to realise in the ordinary course of business their value
as shown in the accounting records of the Group and of the Company and to the extent so ascertained were written down to an
amount that they might be expected to realise.
At the date of this report, the directors are not aware of any circumstances that would render the values attributed to the
current assets in the financial statements of the Group and of the Company misleading.
VALUATION METHODS
At the date of this report, the directors are not aware of any circumstances which have arisen which render adherence to the
existing methods of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate.
any charge on the assets of the Group or of the Company that has arisen since the end of the financial year which
secures the liabilities of any other person, or
ii)
any contingent liability in respect of the Group or of the Company that has arisen since the end of the financial year.
No contingent liability or other liability of the Group or of the Company has become enforceable, or is likely to become
enforceable within the period of twelve months after the end of the financial year which, in the opinion of the directors, will or
may substantially affect the ability of the Group or of the Company to meet its obligations as and when they fall due.
CHANGE OF CIRCUMSTANCES
At the date of this report, the directors are not aware of any circumstances, not otherwise dealt with in this report or the
financial statements of the Group and of the Company, that would render any amount stated in the financial statements
misleading.
SHARE OPTIONS
No options have been granted by the Company to any parties during the financial year to take up unissued shares of the
Company.
No shares have been issued during the financial year by virtue of the exercise of any option to take up unissued shares of the
Company. At the end of the financial year, there were no unissued shares of the Company under options.
16,093,535
11,750
155,000
16,093,535
11,750
155,000
Indirect interests
Ho Cheng San *
2,619,759
2,619,759
* Deemed interest by virtue of his substantial shareholdings in CN Asia Engineering Sdn. Bhd.
By virtue of their interests in the shares of the Company, Ho Cheng San is deemed to have an interest in the shares of the
subsidiary companies during the financial year to the extent that CN Asia Corporation Bhd has an interest under Section 6A
of the Companies Act, 1965.
Save and except as disclosed above, none of the other directors holding office at the end of the financial year hold any shares
in the Company or in any related corporations during the financial year ended 31st December 2015.
DIRECTORS BENEFITS
Since the end of the previous financial year, none of the directors of the Company have received or become entitled to receive a
benefit (other than a benefit included in the aggregate amount of emoluments received or due and receivable by the directors
as shown in the financial statements) by reason of a contract made by the Company or a related corporation with the director
or with a firm of which the director is a member, or with a company in which the director has a substantial financial interest
except for any benefits which may be deemed to have arisen by virtue of the significant related party transactions as disclosed
in Note 35 to the financial statements.
There were no arrangements during and at the end of the financial year, to which the Company or its subsidiary companies is a
party, which had the object of enabling the directors of the Company to acquire benefits by means of the acquisition of shares
in or debentures of the Company or any other body corporate.
DISCLOSURE OF PN17
On 29th May 2015, the Company announced that it became an Affected Listed Issuer pursuant to Paragraph 2.1(e) of Practice
Note No.17 of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad. As a result, the Company is
required to submit a Regularisation Plan to the relevant authorities and to implement the Regularisation Plan within the
stipulated timeframe.
Ho Cheng San
Lee Lam
Kuala Lumpur,
Date : 15 April 2016
STATEMENT BY DIRECTORS
Ho Cheng San
Lee Lam
Kuala Lumpur
Date: 15 April 2016
STATUTORY DECLARATION
Ho Cheng San
Before me
D. SELVARAJ (W320)
Commissioner for Oaths
Kuala Lumpur
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
Companys 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 Companys
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 modified audit
opinion.
Qualified of Opinion
In our opinion, except for the effects on the financial statements of the matters as mentioned in the Basis for Qualified Opinions
paragraphs, the financial statements give a true and fair view of the financial position of the Group as of 31st December
2015 and of their financial performance and cash flows for the year then ended in accordance with applicable Malaysian
Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 1965
in Malaysia.
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 the subsidiary of which we have not acted as
auditors, which are indicated in Note 5 to the financial statements.
c)
We are satisfied that the financial statements of the subsidiaries that have been consolidated with the Companys
financial statements are in form and content appropriate and proper for the purposes of the preparation of the financial
statements of the Group and we have received satisfactory information and explanations required by us for those
purposes.
d)
The audit reports on the financial statements of the subsidiaries were subject to qualification as disclosed in Note 5 to
the Financial Statements but did not include any comment made under Section 174(3) of the Act.
OTHER MATTERS
The financial statements of the Group and the Company for the financial year 31st December 2014 were audited by another
firm of auditors who expressed an unmodified opinion but with Emphasis of Matter on those statements on 15th April 2015. The
Emphasis of Matter relates to the Groups abilities to continue as going concerns. As a result of the expression of emphasis of
matter, the Company became an affected listed issuer pursuant to Paragraph 2.1(e) of the Practice Note 17 of the Main Market
Requirements of Bursa Malaysia Securities Berhad.
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 contents of this report.
Note
2015
RM
2014
RM
4
5
7
26,162,703
16,062
26,178,765
27,493,947
29,842
76,609
27,600,398
8
9
10
11
3,914,573
2,036,502
707,831
278,065
5,658
421,374
7,364,003
33,542,768
3,962,593
3,530,728
1,938,322
806,634
5,658
231,289
388,960
10,864,184
38,464,582
ASSETS
Non-current Assets
Property, plant and equipment
Investment in associated company
Goodwill on consolidation
Current Assets
Inventories
Trade receivables
Amount due from contract customers
Other receivables, deposits and prepayments
Current tax asset
Deposit with a licensed bank
Cash and bank balances
13
Total Assets
EqUITY AND LIABILITIES
Equity attributable to owners
Share capital
Share premium
Translation reserve
Accumulated losses
14
15
15
15
45,382,500
3,491,965
187,492
(31,795,852)
17,266,105
45,382,500
3,491,965
102,129
(25,511,397)
23,465,197
Non-current Liabilities
Borrowings
16
395,744
395,744
488,501
488,501
Current Liabilities
Trade payables
Other payables and accruals
Amount due to associated company
Borrowings
19
20
21
16
2,027,887
1,940,399
34,000
11,878,633
15,880,919
16,276,663
33,542,768
1,886,708
595,332
55,800
11,973,044
14,510,884
14,999,385
38,464,582
Total Liabilities
Total Equity and Liabilities
The accompanying accounting policies and explanatory notes form an integral part of the financial statements.
ANNUAL REPORT 2015 | 31
Note
Revenue
Cost of sales
22
Gross loss
Other income
Selling and distribution costs
Administrative expenses
Other expenses
23
Finance costs
Loss from operations
Share of results of associated company
2015
RM
2014
RM
13,113,741
(14,437,518)
15,592,700
(15,845,911)
(1,323,777)
(253,211)
85,506
(77,875)
(3,641,408)
(578,086)
324,262
(125,996)
(3,377,115)
(95,585)
(5,535,640)
(3,527,645)
(735,035)
(710,446)
(6,270,675)
(4,238,091)
(13,780)
156
24
(6,284,455)
(4,237,935)
27
(6,284,455)
(4,237,935)
85,363
87,946
(6,199,092)
(4,149,989)
(6,284,455)
(4,237,935)
(6,199,092)
(4,149,989)
(13.85)
(9.34)
28
The accompanying accounting policies and explanatory notes form an integral part of the financial statements.
32 | CN ASIA CORPORATION BHD (399442-A)
Total
RM
45,382,500
3,491,965
14,183
(21,273,462)
27,615,186
(4,237,935)
(4,237,935)
Other comprehensive
income:Exchange translation
differences
87,946
87,946
87,946
(4,237,935)
(4,149,989)
45,382,500
3,491,965
102,129
(25,511,397)
23,465,197
(6,284,455)
(6,284,455)
Other comprehensive
income:Exchange translation
differences
85,363
85,363
85,363
(6,284,455)
(6,199,092)
45,382,500
3,491,965
187,492
(31,795,852)
17,266,105
The accompanying accounting policies and explanatory notes form an integral part of the financial statements.
ANNUAL REPORT 2015 | 33
Note
2015
RM
2014
RM
(6,284,455)
(4,237,935)
83,280
993,309
158,637
173,430
76,609
4,991
735,035
(1,265)
83,815
(1,800)
13,780
(26,256)
25,057
83,280
1,131,509
(36,892)
(92,789)
18,000
84,432
710,446
(7,164)
(156)
(85,452)
-
(3,956,833)
(2,432,721)
74,185
1,511,849
1,230,491
366,734
116,588
1,332,848
908,736
(166,478)
1,500,945
(113,704)
355,772
(61,879)
666,862
(9,329)
Interest paid
Tax refunded
(735,035)
-
(710,446)
36,273
(68,173)
(683,502)
Note
2015
RM
2014
RM
(68,173)
(683,502)
1,265
231,289
(56,864)
68,800
-
7,164
(6,954)
(795,992)
63,700
472,789
244,490
(259,293)
(664,000)
(21,800)
(97,607)
1,169,000
(4,502)
(95,989)
(783,407)
1,068,509
(607,090)
125,714
65,065
29,364
(4,213,477)
(4,368,555)
(4,755,502)
(4,213,477)
29
30
The accompanying accounting policies and explanatory notes form an integral part of the financial statements.
Note
2015
RM
2014
RM
14,416,461
14,416,461
14,416,461
14,416,461
1,000
14,942,446
5,658
5,187
70,533
15,140,831
5,658
6,319
14,954,291
15,223,341
29,370,752
29,639,802
45,382,500
3,491,965
(19,563,979)
45,382,500
3,491,965
(19,335,412)
29,310,486
29,539,053
60,266
100,749
60,266
100,749
60,266
100,749
29,370,752
29,639,802
ASSETS
Non-current Assets
Investment in subsidiary companies
Current Assets
Deposits and prepayment
Amount due from subsidiary companies
Current tax asset
Bank balance
11
12
Total Assets
EqUITY AND LIABILITIES
Equity attributable to owners
Share capital
Share premium
Accumulated losses
Current Liabilities
Other payables and accruals
Total Liabilities
Total Equity and Liabilities
14
15
15
20
The accompanying accounting policies and explanatory notes form an integral part of the financial statements.
36 | CN ASIA CORPORATION BHD (399442-A)
2015
RM
2014
RM
Revenue
Administrative expenses
Other expenses
22
60,000
(288,567)
-
60,000
(168,423)
(3,149,794)
24
(228,567)
(3,258,217)
27
(228,567)
(3,258,217)
Loss for the year, represents total comprehensive loss for the year
The accompanying accounting policies and explanatory notes form an integral part of the financial statements.
ANNUAL REPORT 2015 | 37
45,382,500
3,491,965
(16,077,195)
32,797,270
(3,258,217)
(3,258,217)
45,382,500
3,491,965
(19,335,412)
29,539,053
(228,567)
(228,567)
45,382,500
3,491,965
(19,563,979)
29,310,486
The accompanying accounting policies and explanatory notes form an integral part of the financial statements.
38 | CN ASIA CORPORATION BHD (399442-A)
Note
2015
RM
2014
RM
(228,567)
(3,258,217)
3,149,794
(228,567)
(108,423)
69,533
(40,483)
4,467
72,935
(199,517)
(31,021)
198,385
(1,132)
(31,021)
6,319
37,340
5,187
6,319
30
The accompanying accounting policies and explanatory notes form an integral part of the financial statements.
ANNUAL REPORT 2015 | 39
GENERAL INFORMATION
CN Asia Corporation Berhad is a public limited liability company, incorporated and domiciled in Malaysia and is listed
on the Main Market of Bursa Malaysia Securities Berhad. The address of the principal place of business and registered
office of the Company is as follows:Registered office and
Principal place of business
The consolidated financial statements of the Company as at and for the financial year ended 31st December 2015
comprise the Company and its subsidiaries (together referred to as the Group and individually referred to as Group
entities) and the Groups interest in associates.
The Company is principally engaged in investment holding and providing management services, whilst the principal
activities of the subsidiary companies are set out in Note 5 to the financial statements.
These financial statements were authorised for issue by the Board of Directors on 15 April 2016.
2.
Statement of compliance
The financial statements of the Group and the Company have been prepared in accordance with Malaysian
Financial Reporting Standards (MFRSs), International Financial Reporting Standards and the requirements of
the Companies Act, 1965 in Malaysia.
The following are accounting standards, amendments and interpretations of the MFRS framework that have been
issued by the Malaysian Accounting Standards Board (MASB) but have not been adopted by the Group and the
Company.
MFRSs, Interpretations and Amendments effective for annual periods beginning on or after 1 January 2016
Amendments to MFRS 5, Non-current Assets Held for Sale and Discontinued Operations (Annual
Improvements 2012-2014 Cycle)
Amendments to MFRS 7, Financial Instruments: Disclosures (Annual Improvements 2012-2014 Cycle)
Amendments to MFRS 10, Consolidated Financial Statements, MFRS 12, Disclosure of Interests in Other
Entities and MFRS 128, Investments in Associates and Joint Ventures Investment Entities: Applying the
Consolidation Exception
Amendments to MFRS 11, Joint Arrangements Accounting for Acquisitions of Interests in Joint Operations
MFRS 14, Regulatory Deferral Accounts
Amendments to MFRS 101, Presentation of Financial Statements Disclosure Initiative
Amendments to MFRS 116, Property, Plant and Equipment and MFRS 138, Intangible Assets Clarification
of Acceptable Methods of Depreciation and Amortisation
Amendments to MFRS 116, Property, Plant and Equipment and MFRS 114, Agriculture Agriculture:
Bearer Plants
Amendments to MFRS 119, Employee Benefits (Annual Improvements 2012-2014 Cycle)
Amendments to MFRS 127, Separate Financial Statements Equity Method in Separate Financial
Statements
Amendments to MFRS 134, Interim Financial Reporting (Annual Improvements 2012-2014 Cycle)
MFRSs, Interpretations and Amendments effective for annual periods beginning on or after 1 January 2018
2.
Amendments to MFRS 10, Consolidated Financial Statements and MFRS 128, Investments in Associates
and Joint Ventures Sale or Contribution of Assets between an Investor and its Associate or Joint Venture
The Group and the Company plan to apply the abovementioned accounting standards, amendments and
interpretations:
from the annual period beginning on 1st January 2016 for those accounting standards, amendments or
interpretations that are applicable to the Group and the Company and effective for annual periods beginning
on or after 1st January 2016;
from the annual period beginning on 1st January 2018 for those accounting standards, amendments or
interpretations that are applicable to the Group and the Company and effective for annual periods beginning
on or after 1st January 2018.
The initial application of the accounting standards, amendments or interpretations are not expected to have
any material financial impacts to the current period and prior period financial statements of the Group and the
Company except as mentioned below :
MFRS 9, Financial Instruments
MFRS 9 replaces the guidance in MFRS 139, Financial Instruments: Recognition and Measurements on the
classification and measurement of financial assets and financial liabilities, and on hedge accounting.
MFRS 15, Revenue from Contracts with Customers
MFRS 15 replaces the guidance in MFRS 111, Construction Contracts, MFRS 118, Revenue, IC Interpretation
13, Customer Loyalty Programmes, IC Interpretation 15, Arrangements for Construction of Real Estate, IC
Interpretation 18, Transfers of Assets from Customers and IC Interpretation 131, Revenue Barter Transactions
Involving Advertising Services.
Amendments to MFRS 10, Consolidated Financial Statements, MFRS 12, Disclosure of Interest in Other Entities
and MFRS 128, Investments in Associates and Joint Ventures Investment Entities: Applying the Consolidation
Exception
The amendments to MFRS 10, MFRS 12 and MFRS 128 require an investment entity parent to fair value a
subsidiary providing investment-related services that is itself an investment entity, an intermediate parent
owned by an investment entity group can be exempted from preparing consolidated financial statements and a
non-investment entity investor can retain the fair value accounting applied by its investment entity associate or
joint venture.
The Group is currently assessing the financial impact that may arise from the adoption of MFRS 9, MFRS 15 and
amendments to MFRS 10, MFRS 12 and MFRS 128.
b)
Basis of measurement
The financial statements have been prepared on the historical cost basis other than as disclosed in Note 3.
c)
d)
ii)
iii)
iv)
v)
Inventories
Inventories are measured at the lower of cost and net realisable value. In estimating net realisable values,
management takes into account the most reliable evidence available at the times the estimates are made.
2.
Inventories (contd)
The Groups core business is subject to economical and technology changes which may cause selling price
to change rapidly, and the Groups loss to change.
The carrying amount of the Groups inventories at the end of the reporting period is disclosed in Note 8 to
the financial statements.
e)
f)
Disclosure of PN17
On 29th May 2015, the Company announced that it became an Affected Listed Issuer pursuant to Paragraph
2.1(e) of Practice Note No.17 of the Main Market Listed Requirements of Bursa Malaysia Securities Berhad. As a
result, the Company is required to submit a Regularisation Plan to the relevant authorities and to implement the
Regularisation Plan within the stipulated timeframe.
As at the date of this report, the Company is currently in the midst of formalising a regularisation plan. In the
event that this is not forthcoming, the Group and the Company may be unable to realise their assets and discharge
their liabilities in the normal course of business. Accordingly, the financial statements may require adjustments
relating to the recoverability and reclassification of recorded assets and liabilities that may be necessary should
the Group and the Company be unable to continue as going concerns.
3.
Basis of consolidation
i)
Subsidiaries
Subsidiaries are entities, including structured entities, controlled by the Company. The financial statements
of subsidiaries are included in the consolidated financial statements from the date that control commences
until the date that control ceases.
The Group controls an entity when it is exposed, or has rights, to variable returns from its involvement with
the entity and has the ability to affect those returns through its power over the entity. Potential voting rights
are considered when assessing control only when such rights are substantive. The Group considers it has
de facto power over an investee when, despite not having the majority of voting rights, it has the current
ability to direct the activities of the investee that significantly affect the investees return.
Investments in subsidiaries are measured in the Companys statement of financial position at cost less
any impairment losses, unless the investment is classified as held for sale or distribution. The cost of
investments includes transaction costs.
ii)
Business combinations
Business combinations are accounted for using the acquisition method from the acquisition date, which is
the date on which control is transferred to the Group.
When the excess is negative, a bargain purchase gain is recognised immediately in profit or loss.
For each business combination, the Group elects whether it measures the non-controlling interests in the
acquiree either at fair value or at the proportionate share of the acquirees identifiable net assets at the
acquisition date.
Transaction costs, other than those associated with the issue of debt or equity securities, that the Group
incurs in connection with a business combination are expensed as incurred.
iii)
Associates
Associates are entities, including unincorporated entities, in which the Group has significant influence, but
not control, over the financial and operating policies.
Investments in associates are accounted for in the consolidated financial statements using the equity
method less any impairment losses, unless it is classified as held for sale or distribution. The cost of the
investment includes transaction costs. The consolidated financial statements include the Groups share of
the profit or loss and other comprehensive income of the associates, after adjustments if any, to align the
accounting policies with those of the Group, from the date that significant influence commences until the
date that significant influence ceases.
When the Groups share of losses exceeds its interest in an associate, the carrying amount of that
interest including any long-term investments is reduced to zero, and the recognition of further losses is
discontinued except to the extent that the Group has an obligation or has made payments on behalf of the
associate.
When the Group ceases to have significant influence over an associate, any retained interest in the former
associate at the date when significant influence is lost is measured at fair value and this amount is regarded
as the initial carrying amount of a financial asset. The difference between the fair value of any retained
interest plus proceeds from the interest disposed of and the carrying amount of the investment at the date
when equity method is discontinued is recognised in the profit or loss.
When the Groups interest in an associate decreases but does not result in a loss of significant influence,
any retained interest is not remeasured. Any gain or loss arising from the decrease in interest is recognised
in profit or loss. Any gains or losses previously recognised in other comprehensive income are also
reclassified proportionately to the profit or loss if that gain or loss would be required to be reclassified to
profit or loss on the disposal of the related assets or liabilities.
Investments in associates are measured in the Companys statement of financial position at cost less
any impairment losses, unless the investment is classified as held for sale or distribution. The cost of
investments includes transaction costs.
iv)
3.
b)
Foreign currency
i)
ii)
Financial instruments
i)
ii)
b)
Held-to-maturity investments
Held-to-maturity investments category comprises debt instruments that are quoted in an active
market and the Group or the Company has the positive intention and ability to hold them to maturity.
Financial assets categorised as held-to-maturity investments are subsequently measured at
amortised cost using the effective interest method.
c)
3.
All financial assets, except for those measured at fair value through profit or loss, are subject to review for
impairment (see Note 3(j)(i)).
Financial liabilities
All financial liabilities are subsequently measured at amortised cost other than those categorised as fair
value through profit or loss.
Fair value through profit or loss category comprises financial liabilities that are derivatives (except for
a derivative that is a financial guarantee contract or a designated and effective hedging instrument),
contingent consideration in a business combination or financial liabilities that are specifically designated
into this category upon initial recognition.
Derivatives that are linked to and must be settled by delivery of equity instruments that do not have a
quoted price in an active market for identical instruments whose fair values otherwise cannot be reliably
measured are measured at cost.
Other financial liabilities categorised as fair value through profit or loss are subsequently measured at
their fair values with the gain or loss recognised in profit or loss.
iii)
iv)
v)
the recognition of an asset to be received and the liability to pay for it on the trade date, and
derecognition of an asset that is sold, recognition of any gain or loss on disposal and the recognition
of a receivable from the buyer for payment on the trade date.
Derecognition
A financial asset or part of it is derecognised when, and only when the contractual rights to the cash
flows from the financial asset expire or control of the asset is not retained or substantially all of the risks
and rewards of ownership of the financial asset are transferred to another party. On derecognition of a
financial asset, the difference between the carrying amount and the sum of the consideration received
(including any new asset obtained less any liability assumed) and any cumulative gain or loss that had been
recognised in equity is recognised in the profit or loss.
A financial liability or a part of it is derecognised when, and only when, the obligation specified in the
contract is discharged, cancelled or expires. On derecognition of a financial liability, the difference
between the carrying amount of the financial liability extinguished or transferred to another party and
the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in
profit or loss.
d)
ii)
Subsequent costs
The cost of replacing a component of an item of property, plant and equipment is recognised in the carrying
amount of the item if it is probable that the future economic benefits embodied within the component
will flow to the Group or the Company, and its cost can be measured reliably. The carrying amount of the
replaced component is derecognised to profit or loss. The costs of the day-to-day servicing of property,
plant and equipment are recognised in profit or loss as incurred.
3.
Depreciation
Depreciation is based on the cost of an asset less its residual value. Significant components of individual
assets are assessed, and if a component has a useful life that is different from the remainder of that asset,
then that component are depreciated separately.
Depreciation is recognised in profit or loss on a reducing balance method over the estimated useful lives
of each component of an item of property, plant and equipment from the date that they are available for
use. Leased assets are depreciated over the shorter of the lease term and their useful lives unless it is
reasonably certain that the Group will obtain ownership by the end of the lease term. Freehold land is
not depreciated. Property, plant and equipment under construction are not depreciated until the assets
are ready for their intended use. The principal annual rates of depreciation for the property, plant and
equipment are as follows :Rate %
Long-term leasehold land
Building
Motor vehicles
Plant and machinery
Furniture and fittings
86 - 99 years
84 - 92.5 years
5 - 10
5 - 10
20
Depreciation methods, useful lives and residual values are reviewed at end of the reporting period, and
adjusted as appropriate.
e)
Leased assets
i)
Finance lease
Leases in terms of which the Group or the Company assumes substantially all the risks and rewards of
ownership are classified as finance leases. Upon initial recognition, the leased asset is measured at an
amount equal to the lower of its fair value and present value of the minimum lease payments. Subsequent
to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that
asset.
Minimum lease payments made under finance leases are apportioned between the finance expense and the
reduction of the outstanding liability. The finance expense is allocated to each period during the lease term
so as to produce a constant periodic rate of interest on the remaining balance of the liability. Contingent
lease payments are accounted for by revising the minimum lease payments over the remaining term of the
lease when the lease adjustment is confirmed.
Leasehold land which in substance is a finance lease is classified as property, plant and equipment, or as
investment property if held to earn rental income or for capital appreciation or for both.
ii)
Operating lease
Leases, where the Group or the Company does not assume substantially all the risks and rewards of
ownership are classified as operating leases and, except for property interest held under operating lease,
the leased assets are not recognised on the statement of financial position. Property interest held under
an operating lease, which is held to earn rental income or for capital appreciation or both, is classified as
investment property and measured using fair value model.
Payments made under operating leases are recognised in profit or loss on a straight-line basis over the
term of the lease. Lease incentives received are recognised in profit or loss as an integral part of the total
lease expense, over the term of the lease. Contingent rentals are charged to profit or loss in the reporting
period in which they are incurred.
Leasehold land which in substance is an operating lease is classified as prepaid lease payments.
ANNUAL REPORT 2015 | 49
Intangible assets
i)
Goodwill
Goodwill arises on business combinations is measured at cost less any accumulated impairment losses.
In respect of equity-accounted associates and joint venture, the carrying amount of goodwill is included in
the carrying amount of the investment and an impairment loss on such an investment is not allocated to
any asset, including goodwill, that forms part of the carrying amount of the equity accounted associates
and joint venture.
ii)
iii)
Subsequent expenditure
Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in
the specific asset to which it relates. All other expenditure, including expenditure on internally generated
goodwill and brands, is recognised in profit or loss as incurred.
g)
Investment property
i)
ii)
3.
Inventories
Inventories are measured at the lower of cost and net realisable value.
The cost of inventories is calculated using the weighted average cost formula, and includes expenditure incurred
in acquiring the inventories, production or conversion costs and other costs incurred in bringing them to their
existing location and condition. In the case of work-in-progress and finished goods, cost includes an appropriate
share of production overheads based on normal operating capacity.
Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of
completion and the estimated costs necessary to make the sale.
i)
j)
Impairment
i)
Financial assets
All financial assets (except for financial assets categorised as fair value through profit or loss, investment
in subsidiaries and investment in associates and joint venture) are assessed at each reporting date whether
there is any objective evidence of impairment as a result of one or more events having an impact on the
estimated future cash flows of the asset. Losses expected as a result of future events, no matter how
likely, are not recognised. For an investment in an equity instrument, a significant or prolonged decline in
the fair value below its cost is an objective evidence of impairment. If any such objective evidence exists,
then the impairment loss of the financial asset is estimated.
An impairment loss in respect of loans and receivables and held-to-maturity investments is recognised
in profit or loss and is measured as the difference between the assets carrying amount and the present
value of estimated future cash flows discounted at the assets original effective interest rate. The carrying
amount of the asset is reduced through the use of an allowance account.
An impairment loss in respect of available-for-sale financial assets is recognised in profit or loss and
is measured as the difference between the assets acquisition cost (net of any principal payment and
amortisation) and the assets current fair value, less any impairment loss previously recognised. Where a
decline in the fair value of an available-for-sale financial asset has been recognised in other comprehensive
income, the cumulative loss in other comprehensive income is reclassified from equity to profit or loss.
An impairment loss in respect of unquoted equity instrument that is carried at cost is recognised in profit
or loss and is measured as the difference between the financial assets carrying amount and the present
value of estimated future cash flows discounted at the current market rate of return for a similar financial
asset.
Impairment losses recognised in profit or loss for an investment in an equity instrument classified as
available for sale is not reversed through profit or loss.
If, in a subsequent period, the fair value of a debt instrument increases and the increase can be objectively
related to an event occurring after the impairment loss was recognised in profit or loss, the impairment
loss is reversed, to the extent that the assets carrying amount does not exceed what the carrying amount
would have been had the impairment not been recognised at the date the impairment is reversed. The
amount of the reversal is recognised in profit or loss.
Impairment (contd)
ii)
Other assets
The carrying amounts of other assets (except for inventories, amount due from contract customers,
deferred tax asset, assets arising from employee benefits, investment property measured at fair value
and non-current assets (or disposal groups) classified as held for sale) are reviewed at the end of each
reporting period to determine whether there is any indication of impairment. If any such indication exists,
then the assets recoverable amount is estimated. For goodwill and intangible assets that have indefinite
useful lives or that are not yet available for use, the recoverable amount is estimated each period at the
same time.
For the purpose of impairment testing, assets are grouped together into the smallest group of assets
that generates cash inflows from continuing use that are largely independent of the cash inflows of other
assets or cash-generating units. Subject to an operating segment ceiling test, for the purpose of goodwill
impairment testing, cash-generating units to which goodwill has been allocated are aggregated so that
the level at which impairment testing is performed reflects the lowest level at which goodwill is monitored
for internal reporting purposes. The goodwill acquired in a business combination, for the purpose of
impairment testing, is allocated to a cash-generating unit or a group of cash-generating units that are
expected to benefit from the synergies of the combination.
The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair
value less costs of disposal. In assessing value in use, the estimated future cash flows are discounted to
their present value using a pre-tax discount rate that reflects current market assessments of the time
value of money and the risks specific to the asset or cash-generating unit.
An impairment loss is recognised if the carrying amount of an asset or its related cash-generating unit
exceeds its estimated recoverable amount.
Impairment losses are recognised in profit or loss. Impairment losses recognised in respect of cashgenerating units are allocated first to reduce the carrying amount of any goodwill allocated to the cashgenerating unit (group of cash-generating units) and then to reduce the carrying amounts of the other
assets in the cash-generating unit (groups of cash-generating units) on a pro rata basis.
An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses
recognised in prior periods are assessed at the end of each reporting period for any indications that the
loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in
the estimates used to determine the recoverable amount since the last impairment loss was recognised.
An impairment loss is reversed only to the extent that the assets carrying amount does not exceed the
carrying amount that would have been determined, net of depreciation or amortisation, if no impairment
loss had been recognised. Reversals of impairment losses are credited to profit or loss in the financial year
in which the reversals are recognised.
k)
Equity instruments
Instruments classified as equity are measured at cost on initial recognition and are not remeasured subsequently.
i)
Issue expenses
Costs directly attributable to the issue of instruments classified as equity are recognised as a deduction
from equity.
ii)
Ordinary shares
Ordinary shares are classified as equity.
l)
Employee benefits
i)
3.
State plans
The Groups contributions to statutory pension funds are charged to profit or loss in the financial year to
which they relate. Prepaid contributions are recognised as an asset to the extent that a cash refund or a
reduction in future payments is available.
iii)
iv)
Termination benefits
Termination benefits are expensed at the earlier of when the Group can no longer withdraw the offer of
those benefits and when the Group recognises costs for a restructuring. If benefits are not expected to be
settled wholly within 12 months of the end of the reporting period, then they are discounted.
m)
Provisions
A provision is recognised if, as a result of a past event, the Group has a present legal or constructive obligation
that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the
obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects
current market assessments of the time value of money and the risks specific to the liability. The unwinding of
the discount is recognised as finance cost.
n)
Goods sold
Revenue from the sale of goods in the course of ordinary activities is measured at fair value of the
consideration received or receivable, net of returns and allowances, trade discounts and volume rebates.
Revenue is recognised when persuasive evidence exists, usually in the form of an executed sales
agreement, that the significant risks and rewards of ownership have been transferred to the customer,
recovery of the consideration is probable, the associated costs and possible return of goods can be
estimated reliably, there is no continuing management involvement with the goods, and the amount of
revenue can be measured reliably. If it is probable that discounts will be granted and the amount can be
measured reliably, then the discount is recognised as a reduction of revenue as the sales are recognised.
ii)
Construction revenue
Revenue from contract work-in-progress is recognised on the percentage of completion method when the
outcome of the contracts can be reliably estimated. The percentage of completion basis is computed based
on proportion of which the contract costs incurred for work performed to-date bear to the estimated total
contract cost for each contract respectively.
iii)
Rental income
Rental income from investment property is recognised in profit or loss on a straight-line basis over the
term of the lease. Lease incentives granted are recognised as an integral part of the total rental income,
over the term of the lease. Rental income from sub-leased property is recognised as other income.
iv)
Interest income
Interest income is recognised as it accrues using the effective interest method in profit or loss except for
interest income arising from temporary investment of borrowings taken specifically for the purpose of
obtaining a qualifying asset which is accounted for in accordance with the accounting policy on borrowing
costs.
Management fees
Management fees are recognised when the services are rendered.
o)
Borrowing costs
Borrowing costs that are not directly attributable to the acquisition, construction or production of a qualifying
asset are recognised in profit or loss using the effective interest method.
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are
assets that necessarily take a substantial period of time to get ready for their intended use or sale, are capitalised
as part of the cost of those assets.
The capitalisation of borrowing costs as part of the cost of a qualifying asset commences when expenditure
for the asset is being incurred borrowing costs are being incurred and activities that are necessary to prepare
the asset for its intended use or sale are in progress. Capitalisation of borrowing costs is suspended or ceases
when substantially all the activities necessary to prepare the qualifying asset for its intended use or sale are
interrupted or completed.
Investment income earned on the temporary investment of specific borrowings pending their expenditure on
qualifying assets is deducted from the borrowing costs eligible for capitalisation.
p)
Income tax
Income tax expense comprises current and deferred tax. Current tax and deferred tax are recognised in profit or
loss except to the extent that it relates to a business combination or items recognised directly in equity or other
comprehensive income.
Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates
enacted or substantively enacted by the end of the reporting period, and any adjustment to tax payable in respect
of previous financial years.
Deferred tax is recognised using the liability method, providing for temporary differences between the carrying
amounts of assets and liabilities in the statement of financial position and their tax bases. Deferred tax is not
recognised for the following temporary differences: the initial recognition of goodwill, the initial recognition of
assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor
taxable profit or loss. Deferred tax is measured at the tax rates that are expected to be applied to the temporary
differences when they reserve, based on the laws that have been enacted or substantively enacted by the end of
the reporting period.
Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities
and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on
different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets
and liabilities will be realised simultaneously.
A deferred tax asset is recognised to the extent that is probable that future taxable profits will be available
against which the temporary difference can be utilised. Deferred tax assets are reviewed at the end of each
reporting period and are reduced to the extent that it is no longer probable that the related tax benefit will be
realised.
Unutilised reinvestment allowance and investment tax allowance, being tax incentives that is not a tax base of
an asset, is recognised as a deferred tax asset to the extent that it is probable that future taxable profits will be
available against which the unutilised tax incentive can be utilised.
3.
Discontinued operations
A discontinued operation is a component of the Groups business that represents a separate major line of
business or geographical area of operations that has been disposed of or is held for sale or distribution, or is
a subsidiary acquired exclusively with a view to resale. Classification as a discontinued operation occurs upon
disposal or when the operation meets the criteria to be classified as held for sale, if earlier. When an operation
is classified as a discontinued operation, the comparative statement of profit or loss and other comprehensive
income is re-presented as if the operation had been discontinued from the start of the comparative period.
r)
s)
Operating segments
An operating segment is a component of the Group that engages in business activities from which it may earn
revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Groups
other components. Operating segment results are reviewed regularly by the chief operating decision maker,
which in this case is the Chief Executive Officer of the Group, to make decisions about resources to be allocated
to the segment and to assess its performance, and for which discrete financial information is available.
t)
Contingencies
i)
Contingent liabilities
Where it is not probable that an outflow of economic benefits will be required, or the amount cannot be
estimated reliably, the obligation is not recognised in the statements of financial position and is disclosed as
a contingent liability, unless the probability of outflow of economic benefits is remote. Possible obligations,
whose existence will only be confirmed by the occurrence or non-occurrence of one or more future events,
are also disclosed as contingent liabilities unless the probability of outflow of economic benefits is remote.
ii)
Contingent assets
When an inflow of economic benefit of an asset is probable where it arises from past events and where
existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future
events not wholly within the control of the entity, the asset is not recognized in the statements of financial
position but is being disclosed as a contingent asset. When the inflow of economic benefit is virtually
certain, then the related asset is recognised.
u)
quoted prices (unadjusted) in active markets for identical assets or liabilities that the Group can access
at the measurement date.
Level 2 :
inputs other than quoted prices included within Level 1 that are observable for the asset or liability,
either directly or indirectly.
Level 3 :
The Group recognises transfers between levels of the fair value hierarchy as of the date of the event or change in
circumstances that caused the transfers.
4.
Group
2015
Long term
leasehold
land
RM
Buildings
RM
Motor
vehicles, plant,
machinery,
furniture
and fittings,
and equipment
RM
7,162,083
521,286
7,228,000
120,000
37,657,196
56,864
(1,894,349)
53,652
694,938
(694,938)
52,742,217
56,864
(1,894,349)
-
7,683,369
7,348,000
62,315
35,935,678
62,315
50,967,047
Capital
work-inprogress
RM
Total
RM
At cost
Balance at 1/1/15
Additions
Disposal /Written off
Reclassification
Foreign currency
translation
Balance at 31/12/15
Accumulated Depreciation
Balance at 1/1/15
Charge for the year
Deletion
Foreign currency
translation
Balance at 31/12/15
749,523
83,280
-
602,334
86,047
-
23,244,577
907,262
(917,494)
24,596,434
1,076,589
(917,494)
832,803
688,381
48,815
23,234,345
48,815
24,804,344
Impairment losses
Balance at 1/1/15
Deletion
Balance at 31/12/15
Net Book Value
6,850,566
6,659,619
651,836
(651,836)
12,701,333
651,836
(651,836)
26,162,703
4.
Group
2014
Long term
leasehold
land
RM
Buildings
RM
Motor
vehicles, plant,
machinery,
furniture
and fittings,
and equipment
RM
7,162,083
-
7,228,000
-
37,415,303
459,218
(269,565)
173,164
521,774
-
51,978,550
980,992
(269,565)
7,162,083
7,228,000
52,240
37,657,196
694,938
52,240
52,742,217
Capital
work-inprogress
RM
Total
RM
At cost
Balance at 1/1/14
Additions
Disposal /Written off
Foreign currency
translation
Balance at 31/12/14
Accumulated Depreciation
Balance at 1/1/14
Charge for the year
Deletion
Foreign currency
translation
Balance at 31/12/14
666,243
83,280
-
516,286
86,048
-
22,450,076
1,045,461
(242,757)
23,632,605
1,214,789
(242,757)
749,523
602,334
(8,203)
23,244,577
(8,203)
24,596,434
Impairment losses
Balance at 1/1/14
Charge for the year
Balance at 31/12/14
Net Book Value
6,412,560
6,625,666
651,836
651,836
13,760,783
694,938
651,836
651,836
27,493,947
i)
The long term leasehold land have unexpired lease period of 76 years expiring in year 2091.
ii)
The leasehold land and buildings at carrying amounts of RM13,510,185 (2014 RM13,038,226) have been pledged
to licensed banks as security for credit facilities granted to the Group.
iii)
The carrying amount of property, plant and equipment at the reporting date held under finance lease is as
follows:Group
Motor vehicles
Furniture, fittings and equipment
2015
RM
2014
RM
571,019
571,019
713,774
10,930
724,704
2015
RM
2014
RM
28,298,215
(13,881,754)
14,416,461
28,298,215
(13,881,754)
14,416,461
Name of subsidiary
Country of
Incorporation
Principal activities
Effective equity
ownership Interest
2015
2014
%
%
Direct subsidiary
Asia Tank Containers
(Malaysia) Sdn. Bhd.
Malaysia
Manufacturing, repairing
and renting of transportable
containers for hazardous
chemicals
100
100
Malaysia
100
100
Malaysia
Investment holding
100
100
Malaysia
Investment holding
100
100
100
100
Indirect subsidiary
Zhuhai CN Engineering Works
Co., Ltd. (*)
Peoples Republic
of China
(*) The financial statements of the subsidiary company were audited by a firm other than Kreston John & Gan
i)
The auditors report of subsidiary company that was subject to the following Basis for Qualified of Opinion : Chip Ngai Engineering Works Sdn. Bhd.
The Company has prepared its financial statements by applying the going concern assumption, notwithstanding
that the Company incurred accumulated losses of RM7,433,655 as at 31st December 2015, and as of that date,
the Companys current liabilities exceeded its current assets by RM26,746,898, thereby indicating the existence
of a material uncertainty which many cast significant doubt about the Companys ability to continue as a going
concern. The ability of the Company to continue as a going concern is dependent on the future profitability of the
Company in order to enable it to meet its obligations and liabilities as and when they fall due.
5.
The auditors report of subsidiary companies that were subject to Emphasis of Matters :Asia Tank Containers (Malaysia) Sdn. Bhd.
The auditors draw attention to the financial statements which discloses the premise upon which the company has
prepared its financial statements by applying the going concern assumption, notwithstanding that the company
incurred accumulated losses of RM6,097,408 as at 31st December 2015, and as of that date, the companys
current liabilities exceeded its current assets by RM1,097,408, thereby indicating the existence of a material
uncertainty which may cast significant doubt about the companys ability to continue as a going concern. The
ability of the company to continue as a going concern is dependent on the continuous financial support from
holding company in order to enable it to meet its obligations and liabilities as and when they fall due.
CN Asia Capital Sdn. Bhd.
The auditors draw attention to the financial statements which discloses the premise upon which the Company has
prepared its financial statements by applying the going concern assumption, notwithstanding that the Company
incurred accumulated losses of RM40,336 as at 31st December 2015, and as of the date, the Companys current
liabilities exceeded its current asset by RM40,334, thereby indicating the existence of a material uncertainty
which may cast significant doubt about the Companys ability to continue as a going concern. The ability of the
Company to continue as a going concern is dependent on the continuous financial support from the holding
company in order to enable it to meet its obligations and liabilities as and when they fall due.
6.
2015
RM
2014
RM
159,301
(143,239)
16,062
159,301
(129,459)
29,842
Name of company
Country of
Incorporation
Malaysia
Principal activities
Effective equity
ownership interest
2015
2014
%
%
49
49
2014
RM
As at 31st December
Non-current assets
Current assets
Current liabilities
Net assets
24
34,757
(2,000)
32,781
30
63,094
(2,221)
60,903
(28,122)
318
156
16,062
29,842
(13,780)
156
The associated company does not have any significant restriction on its ability to transfer fund to the Company.
7.
INTANGIBLE ASSETS
Group
Goodwill
RM
Development
costs
RM
Total
RM
136,136
(136,136)
-
409,378
409,378
545,514
(136,136)
409,378
59,527
(59,527)
-
409,378
409,378
-
468,905
(59,527)
409,378
-
136,136
136,136
409,378
409,378
545,514
545,514
59,527
59,527
76,609
409,378
409,378
-
468,905
468,905
76,609
2015
Cost
At 1st January 2015
Addition
Written off
At 31st December 2015
Accumulated impairment and amortisation
At 1st January 2015
Amortisation for the year
Deletion
At 31st December 2015
Net Book Value
2014
Cost
At 1st January 2014
Addition
At 31st December 2014
Accumulated impairment and amortisation
At 1st January 2014
Amortisation for the year
At 31st December 2014
Net Book Value
i)
Development costs
The Directors are in the opinion that the future economic benefits of the research and development expenditure
can be determined with reasonable certainty and accordingly have capitalised these expenditure.
ii)
Goodwill on consolidation
Goodwill acquired in the business combination is, from the acquisition date, allocated to each of the Groups
cash-generating units that are expected to benefit from the synergies of the combination.
INVENTORIES
Group
At cost
Raw materials
Work-in-progress
Finished goods
Consumbles
2015
RM
2014
RM
450,834
2,214,440
950,797
298,502
3,914,573
664,162
2,070,971
765,649
461,811
3,962,593
The cost of inventories recognised as an expense during the financial year in the Group amounted to RM5,282,390 (2014
RM5,687,309).
The cost of inventories written off and recognised as expenses during the financial year in the Group amounted to
RM4,991 (2014 RM84,432).
9.
TRADE RECEIVABLES
Group
Trade receivables
Less : Allowance for impairment losses
2015
RM
2014
RM
2,147,911
(111,409)
2,036,502
3,643,937
(113,209)
3,530,728
2015
RM
2014
RM
113,209
(1,800)
111,409
95,209
(18,000)
113,209
The normal credit terms of trade receivables range from cash on delivery to 60 days (2014 14 to 60 days). Other terms
are assessed and approved on a case-by-case basis.
The foreign currency exposures of trade receivables of the Group are as follows :-
Brunei Dollar
Singapore Dollar
2015
RM
2014
RM
109,410
-
650,444
1,328,289
10.
11.
2015
RM
2014
RM
6,694,419
186,558
6,880,977
(4,273,843)
2,607,134
3,717,773
3,371,222
7,088,995
(394,576)
6,694,419
244,163
(59,917)
184,246
(13,549)
170,697
935,394
(688,007)
247,387
(3,224)
244,163
(5,000,260)
(1,330,035)
(6,330,295)
4,260,295
(2,070,000)
707,831
(1,213,900)
(4,184,160)
(5,398,060)
397,800
(5,000,260)
1,938,322
707,831
1,938,322
Other receivables
Deposits
Prepayments
Company
2015
RM
2014
RM
2015
RM
2014
RM
72,845
138,457
66,763
278,065
323,396
152,308
330,930
806,634
1,000
1,000
1,000
69,533
70,533
The foreign currency exposures of other receivables, deposits and prepayments of the Group are as follows :-
EURO
US Dollar
2015
RM
2014
RM
25,501
5,921
8,026
5,826
2015
RM
2014
RM
4,697,815
14,223,303
38,521
715,401
19,675,040
(4,732,594)
14,942,446
4,697,815
14,446,928
34,779
693,903
19,873,425
(4,732,594)
15,140,831
2015
RM
2014
RM
(4,732,594)
(4,732,594)
(1,582,800)
(3,149,794)
(4,732,594)
The amounts due from subsidiary companies are in respect of advances and payments made on behalf, which are nontrade in nature, unsecured and repayable on demand.
13.
14.
SHARE CAPITAL
Group and Company
2015
2014
Authorised :
50,000,000 ordinary shares of RM1 each
RM50,000,000
RM50,000,000
RM45,382,500
RM45,382,500
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 Companys residual
assets.
15.
RESERVES
Group
Non-distributable
Share premium
Foreign currency translation reserve
Distributable
Accumulated losses
2015
RM
2014
RM
3,491,965
187,492
3,491,965
102,129
3,679,457
3,594,094
(31,795,852)
(25,511,397)
(28,116,395)
(21,917,303)
Company
Non-distributable
Share premium
Distributable
Accumulated losses
2015
RM
2014
RM
3,491,965
3,491,965
(19,563,979)
(19,335,412)
(16,072,014)
(15,843,447)
Share premium
The share premium is not distributable by way of dividends and may be utilised in the manner set out in Section 60(3) of
the Companies Act 1965.
Translation reserve
The translation reserve comprises all foreign currency differences arising from the translation of the financial
statements of a foreign entity.
BORROWINGS
Group
2015
RM
2014
RM
395,744
395,744
488,501
488,501
5,974,000
4,981,314
92,757
11,048,071
6,953,000
4,409,418
97,607
11,460,025
635,000
195,562
830,562
11,878,633
320,000
193,019
513,019
11,973,044
5,974,000
4,981,314
488,501
11,443,815
6,953,000
4,409,418
586,108
11,948,526
635,000
195,562
830,562
12,274,377
320,000
193,019
513,019
12,461,545
Non-current liabilities
Secured
Finance lease liabilities
Current liabilities
Secured
Bankers acceptance
Bank overdrafts
Finance lease liabilities
Unsecured
Bankers acceptance
Bank overdrafts
Total current liabilities
Total borrowings
Secured
Bankers acceptance (Note 17)
Bank overdrafts (Note 17)
Finance lease liabilities (Note 18)
Unsecured
Bankers acceptance (Note 17)
Bank overdrafts (Note 17)
Effective interest rates per annum on the borrowings of the Group are as follows : Group
Bankers acceptance
Bank overdrafts
Finance lease liabilities
2015
RM
2014
RM
3.50 - 4.10
8.35 - 9.35
4.55 - 4.70
3.50 - 4.10
8.10 - 9.10
4.55 - 7.78
17.
First party legal charge over leasehold land and buildings owned by Chip Ngai Engineering Works Sdn. Bhd.
ii)
Third party charge over leasehold land owned by Douwin Sdn. Bhd.
iii)
Negative pledged over assets owned by Chip Ngai Engineering Works Sdn. Bhd.
iv)
Specific debenture over properties and fixtures and fittings attached to the properties owned by Chip Ngai
Engineering Works Sdn. Bhd.
v)
Unsecured
The bankers acceptance at amount of RM635,000 (2014 RM320,000) and bank overdraft at amount of RM195,562 (2014
RM193,109) are on clean basis.
The bankers acceptance bears interest rate of ranging 3.50% to 4.10% (2014 3.50% to 4.10%) per annum.
The bank overdraft bears interest at the rate of ranging 8.35% to 9.35% (2014 8.10% to 9.10%) per annum.
18.
2015
RM
2014
RM
112,164
112,164
309,349
7,651
541,328
(52,827)
488,501
121,644
112,164
336,492
92,024
662,324
(76,216)
586,108
97,197
290,948
7,599
395,744
92,757
304,907
90,837
488,501
92,757
488,501
97,607
586,108
Current liabilities
- not later than one year
19.
TRADE PAYABLES
Group
The normal credit terms of trade payables range from 30 to 90 days. However, the terms may vary upon negotiation with
the trade payables.
The foreign currency exposures of trade payables of the Group are as follows :-
Brunei Dollar
EURO
Singapore Dollar
US. Dollar
20.
2015
RM
2014
RM
75,988
93,796
942
7,084
80,000
400
6,460
Other payables
Accruals
Company
2015
RM
2014
RM
2015
RM
2014
RM
1,762,320
178,079
1,940,399
260,571
334,761
595,332
38,006
22,260
60,266
78,489
22,260
100,749
The foreign currency exposures of other payables and accruals of the Group are as follows :-
Brunei Dollar
Chinese Renminbi
Singapore Dollar
US. Dollar
21.
2015
RM
2014
RM
85,869
19,013
222,035
140,397
22.
REVENUE
Group
Revenue
Sales of goods
Contract revenue
Tank rental revenue
Management fee
23.
Company
2015
RM
2014
RM
2015
RM
2014
RM
13,000,591
99,544
13,606
13,113,741
12,880,696
2,683,215
28,789
15,592,700
60,000
60,000
60,000
60,000
OTHER INCOME
Group
2015
RM
2014
RM
1,265
56,185
1,800
26,256
85,506
129,681
7,164
102,890
84,527
324,262
Company
2015
RM
2014
RM
2015
RM
2014
RM
83,280
83,280
56,000
5,631
993,309
158,637
57,000
7,390
1,131,509
-
21,000
-
21,000
-
109,420
833,863
5,166
76,609
3,948
86,000
664,967
4,049
-
109,420
-
86,000
-
18,000
3,149,794
-
365,894
343,800
1,304
24,037
4,991
173,430
83,815
28,724
512,300
25,057
379,654
300,621
2,746
27,425
84,432
65,476
519,200
-
1,265
-
36,892
92,789
7,164
-
60,000
60,000
1,800
26,256
85,452
Loss before tax is arrived at after charging : Amortisation of long-term leasehold land
Auditors remuneration
- statutory audit
- other external auditor
Depreciation
Development cost written off
Directors remuneration
- Directors fee
- Directors emoluments
Empty cylinder rental
Goodwill written off
Hire of plant and machinery
Impairment loss on amount due from
subsidiaries
Impairment loss on trade receivables
Interest
- Bank overdrafts
- Bankers acceptance
- Bank guarantee
- Finance lease
Inventories written off
Loss on disposal of plant and equipment
Plant and equipment written off
Realised loss on foreign exchange
Rental of premises
Unrealised loss on foreign exchange
and after crediting :Gain on disposal of property, plant and
equipment
Gain on disposal of asset held for sale
Interest income
Management fee
Reversal of impairment loss on trade
receivables
Unrealised gain on foreign exchange
25.
Company
2015
RM
2014
RM
2015
RM
2014
RM
4,044,329
267,886
16,775
21,628
4,350,618
3,690,633
253,122
17,638
37,620
3,999,013
109,420
109,420
86,000
86,000
Included in employee benefits expense of the Group is executive directors remuneration excluding benefits-in-kind,
amounting to RM943,283 (2014 RM750,967) as disclosed in Note 26.
26.
DIRECTORS REMUNERATION
Group
Company
2015
RM
2014
RM
2015
RM
2014
RM
24,000
833,863
24,000
664,967
24,000
-
24,000
-
85,420
943,283
943,283
62,000
750,967
750,967
85,420
109,420
109,420
62,000
86,000
86,000
The number of directors of the Company and the subsidiary companies whose total remuneration during the year fell
within the following bands is analysed below : Number of directors
Group
Company
2015
2014
2015
2014
1
1
-
1
1
-
1
-
1
-
Non-Executive directors :
- Below RM50,000
- Above RM50,000
4
-
3
-
4
-
3
-
Company
2015
%
2014
%
2015
%
2014
%
(25)
(25)
(25)
(25)
3
22
-
7
18
-
25
-
25
-
Unabsorbed tax losses, capital allowances and unutilised reinvestment allowance of the Group which are available to
set-off against future chargeable income for which the tax effects have not been recognised in the financial statements
are shown below : Group
2015
RM
2014
RM
25,033,600
6,901,000
8,907,000
20,660,000
6,386,000
8,907,000
The potential deferred tax benefits that have not been accounted for in the financial statements are as follows : -
Group
Unabsorbed
tax losses
RM
Unabsorbed
capital
allowances
RM
Unutilised
reinvestment
allowances
RM
Accelerated
capital
allowances
RM
Total
RM
4,434,000
1,471,000
2,226,750
(5,045,250)
3,086,500
731,000
125,500
(81,750)
774,750
5,165,000
1,596,500
2,226,750
(5,127,000)
3,861,250
1,093,400
(250,400)
128,750
(69,050)
(89,050)
458,750
186,850
1,680,900
(221,650)
6,008,000
1,656,200
2,137,700
(4,481,400)
5,320,500
No deferred tax asset has been recognised as the Group is unable to ascertain whether it is probable that taxable profit
of the subsidiary companies will be available against which the deductible temporary differences can be utilised.
28.
Loss for the year attributable to ordinary equity holders of the Company
2015
RM
2014
RM
(6,284,455)
(4,237,935)
Number of shares
Weighted average number of ordinary shares in issue
Basic loss per share (sen)
45,382,500
45,382,500
(13.85)
(9.34)
Diluted :
The basic and diluted earnings per share are equal as the Company has no dilutive potential ordinary shares.
29.
30.
Company
2015
RM
2014
RM
2015
RM
2014
RM
56,864
-
980,992
(185,000)
56,864
795,992
Company
2015
RM
2014
RM
2015
RM
2014
RM
421,374
(5,176,876)
(4,755,502)
(4,755,502)
231,289
388,960
(4,602,437)
(3,982,188)
(231,289)
(4,213,477)
5,187
5,187
5,187
6,319
6,319
6,319
Chinese Renminbi
EURO
Hong Kong Dollar
Seychelles Rupee
Singapore Dollar
South African Rand
Us. Dollar
31.
2015
RM
2014
RM
275,017
839
60,396
52,772
786
43
60,396
576
291
357,211
SEGMENTAL INFORMATION
Segment information is presented in respect of the Groups business and geographical segments. The primary format,
business segments, is based on the Groups management and internal reporting structure.
Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be
allocated on a reasonable basis. Unallocated items mainly comprise interest-earning assets and revenue, interestbearing loans, borrowings and expenses, and corporate assets and expenses.
Segment capital expenditure is the total cost incurred during the year to acquire segment assets that are expected to
be used for more than one year.
Business segments
The Group comprises the following main business segments : Manufacturing
Manufacture tanks and related products, engineering works and fabrication works
Trading
Investment
Investment holdings
Management monitors the operating results of its business units separately for the purpose of making decisions about
resource allocation and performance assessment. Segment performance is evaluated based on operating profit or loss
which, in certain respects as explained in the table below, is measured differently from operating profit or loss in the
consolidated financial statements.
31.
a)
3,602,950
4,700,358
33,717,151
(184,807)
(184,807)
(184,807)
13,606
13,606
Trading
RM
31,563,969
(4,996,628)
1,265
(735,035)
(5,730,398)
(5,730,398)
13,100,135
13,100,135
Manufacturing
RM
Segment assets
Other information
Segment results
Interest income
Finance cost
Share of loss in associated company
Loss before taxation
Income tax expense
Loss for the year
Results
Revenue
Business Segments
2015
Business Segment
818,188
38,878,320
(253,880)
(253,880)
(253,880)
60,000
60,000
Investment
RM
(22,959,034)
(40,502,471)
(101,590)
(13,780)
(115,370)
(115,370)
(60,000)
(60,000)
Adjustments
and
eliminations
RM
16,276,663
33,542,768
(5,536,905)
1,265
(735,035)
(13,780)
(6,284,455)
(6,284,455)
13,113,741
13,113,741
Total
RM
31.
a)
25,057
(26,256)
(1,800)
56,864
Included in the measure of segment assets are : Additions to non-current assets other than financial instruments and
deferred tax assets
-
9,438
4,991
57
Trading
RM
51,562
990,608
158,637
83,758
Manufacturing
RM
Other information
Amortisation of long leasehold land
Depreciation of property, plant and equipment
Development cost written off
Inventories written off
Plant and equipment written off
Non-cash expenses
Loss on disposal of property, plant and equipment
Loss on unrealised foreign exchange
Non-cash income
Gain on unrealised foreign exchange
Reversal of impairment losses on trade receivables
Business Segments
2015
Investment
RM
31,718
(6,737)
-
Adjustments
and
eliminations
RM
56,864
(26,256)
(1,800)
173,430
25,057
83,280
993,309
158,637
4,991
83,815
Total
RM
31.
a)
(4,006,131)
(4,006,131)
3,787,877
4,700,478
36,031,708
32,428,907
(79,320)
(79,320)
(79,320)
-
28,789
28,789
Trading
RM
Segment assets
Other information
(3,302,849)
7,164
(710,446)
-
15,563,911
15,563,911
Manufacturing
RM
Segment results
Interest income
Finance cost
Share of profit in associated company
Results
Revenue
Business Segments
2014
833,670
39,147,682
(3,277,809)
(3,277,809)
(3,277,809)
-
60,000
60,000
Investment
RM
(22,963,670)
(40,502,685)
3,125,325
3,125,325
3,125,169
156
(60,000)
(60,000)
Adjustments
and
eliminations
RM
14,999,385
38,464,582
(4,237,935)
(4,237,935)
(3,534,809)
7,164
(710,446)
156
15,592,700
15,592,700
Total
RM
31.
a)
18,000
(85,452)
(36,892)
(92,789)
980,992
Included in the measure of segment assets are : Additions to non-current assets other than financial instruments
and deferred tax assets
-
13,246
84,432
Trading
RM
51,562
1,095,603
-
Manufacturing
RM
Other information
Amortisation of intangible assets
Bad debts written off
Depreciation of property, plant and equipment
Inventories written off
Non-cash expenses
Impairment losses
- Trade receivables
Non-cash income
Gain on unrealised foreign exchange
Gain on disposal of property, plant and equipment
Gain on disposal of asset held for sale
Business Segments
2014
Investment
RM
(185,000)
31,718
22,660
-
Adjustments
and
eliminations
RM
795,992
(85,452)
(36,892)
(92,789)
18,000
83,280
1,131,509
84,432
Total
RM
31.
Geographical segment
In presenting information on the basis of geographical segments, segment revenue is based on the geographical
location of customers whereas segment assets are based on the geographical location of assets.
Malaysia
RM
Republic of
China
RM
Elimination
RM
Consolidated
RM
13,113,741
60,000
13,173,741
(60,000)
(60,000)
13,113,741
13,113,741
Results
Operating results
Interest income
Finance cost
Share of loss in associated company
Profit before taxation
Income tax expense
Loss for the year
(5,429,684)
1,265
(735,035)
(6,163,454)
(6,163,454)
(5,631)
(5,631)
(5,631)
(101,590)
(13,780)
(115,370)
(115,370)
(5,536,905)
1,265
(735,035)
(13,780)
(6,284,455)
(6,284,455)
Assets
Segment assets /Total assets
73,343,693
701,546
(40,502,471)
33,542,768
Liabilities
Segment liabilities /Total liabilities
39,216,684
19,013
(22,959,034)
16,276,663
Geographical Segments
2015
Malaysia
RM
Republic of
China
RM
Elimination
RM
Consolidated
RM
51,562
31,718
83,280
1,000,046
158,637
4,991
83,815
(6,737)
-
993,309
158,637
4,991
83,815
173,431
173,431
25,057
25,057
(26,256)
(26,256)
(1,800)
(1,800)
56,864
56,864
31.
Geographical Segments
Malaysia
RM
Republic of
China
RM
Elimination
RM
Consolidated
RM
15,592,700
60,000
15,652,700
(60,000)
(60,000)
15,592,700
15,592,700
2014
Revenue from external customers
Revenue from internal
Segment revenue
Results
Operating results
Interest income
Finance cost
Share of profit in associated
company
Profit before taxation
Income tax expense
Loss for the year
(6,618,063)
6,954
(710,446)
(41,915)
210
-
3,125,169
-
(3,534,809)
7,164
(710,446)
(7,321,555)
(7,321,555)
(41,705)
(41,705)
156
3,125,325
3,125,325
156
(4,237,935)
(4,237,935)
Assets
Segment assets /Total assets
78,364,455
602,812
(40,502,685)
38,464,582
Liabilities
Segment liabilities /Total liabilities
37,963,044
11
(22,963,670)
14,999,385
Malaysia
RM
Republic of
China
RM
Elimination
RM
Consolidated
RM
51,562
31,718
83,280
1,074,393
84,432
34,456
-
22,660
-
1,131,509
84,432
18,000
18,000
(84,527)
(925)
(85,452)
(36,892)
(36,892)
(92,789)
(92,789)
980,992
(185,000)
795,992
32.
FINANCIAL INSTRUMENTS
a)
Group
Carrying
amount
RM
L&R
RM
FL
RM
2,036,502
72,845
421,374
2,530,721
2,036,502
72,845
421,374
2,530,721
(2,027,887)
(1,940,399)
(34,000)
(6,609,000)
(5,176,876)
(488,501)
(16,276,663)
(2,027,887)
(1,940,399)
(34,000)
(6,609,000)
(5,176,876)
(488,501)
(16,276,663)
3,530,728
323,396
231,289
388,960
4,474,373
3,530,728
323,396
231,289
388,960
4,474,373
(1,886,708)
(595,332)
(55,800)
(7,273,000)
(4,602,437)
(586,108)
(14,999,385)
(1,886,708)
(595,332)
(55,800)
(7,273,000)
(4,602,437)
(586,108)
(14,999,385)
2015
Financial assets
Trade receivables
Other receivables
Cash and bank balances
Financial liabilities
Trade payables
Other payables and accruals
Amount due to associated company
Bankers acceptance
Bank overdrafts
Finance lease liabilities
2014
Financial assets
Trade receivables
Other receivables
Deposit with a licensed bank
Cash and bank balances
Financial liabilities
Trade payables
Other payables and accruals
Amount due to associated company
Bankers acceptance
Bank overdrafts
Finance lease liabilities
Company
Carrying
amount
RM
L&R
RM
FL
RM
14,942,446
5,187
14,947,633
14,942,446
5,187
14,947,633
(60,266)
(60,266)
(60,266)
(60,266)
15,140,831
6,319
15,147,150
15,140,831
6,319
15,147,150
(100,749)
(100,749)
2015
Financial assets
Amount due from subsidiary companies
Cash and bank balances
Financial liabilities
Other payables and accruals
2014
Financial assets
Amount due from subsidiary companies
Cash and bank balances
Financial liabilities
Other payables and accruals
b)
Credit risk
Liquidity and cash flow risk
Market risk
Operational risk
i)
Credit risk
Credit risk is the risk of a financial loss to the Group if a customer or counterparty to a financial instrument
fails to meet its contractual obligations. The Groups exposure to credit risk arises principally from
its receivables from customers. The Companys exposure to credit risk arises principally from loans
and advances to subsidiaries and financial guarantees given to banks for credit facilities granted to
subsidiaries. The Group also has an internal credit review which is conducted if the credit risk is material.
Trade receivables are monitored on an ongoing basis via Group management reporting procedures.
Receivables
Risk management objectives, policies and processes for managing the risk
The credit risk is controlled by the application of credit approvals, limits and monitoring procedures. Credit
risks are minimised and monitored via strictly limiting the Groups associations to business partners
with high credit worthiness. The Group also has an internal credit review which is conducted if the credit
risk is material. Trade receivables are monitored on an ongoing basis via Group management reporting
procedures.
32.
Trade receivables
2015
2014
RM1,612,526
RM2,647,749
Management has taken reasonable steps to ensure that receivables that are neither past due nor impaired
are measured at their realisable values. A significant portion of these receivables are regular customers
that have been transacting with the Group. The Group uses ageing analysis to monitor the credit quality
of the receivables. Any past due receivables having significant balances, which are deemed to have higher
credit risk, are monitored individually.
The trade receivables are not secured by any collateral or supported by any other credit enhancements.
The Group maintains an ageing analysis in respect of trade receivables only. The ageing analysis of the
trade receivables is as follows : -
Gross
RM
Individual
impairment
RM
Collective
impairment
RM
Net
RM
834,459
379,746
933,706
2,147,911
(111,409)
(111,409)
834,459
379,746
822,297
2,036,502
1,533,668
93,366
2,016,903
3,643,937
(113,209)
(113,209)
1,533,668
93,366
1,903,694
3,530,728
2015
Not past due
Past due 1 - 30 days
Past due Over 30 days
2014
Not past due
Past due 1 - 30 days
Past due Over 30 days
2015
RM
2014
RM
113,209
(1,800)
111,409
95,209
18,000
113,209
Risk management objectives, policies and processes for managing the risk
The Company provides unsecured loans and advances to subsidiaries. The Company monitors the results
of the subsidiaries regularly.
Exposure to credit risk, credit quality and collateral
As at the end of the reporting period, the maximum exposure to credit risk is represented by their carrying
amounts in the statement of financial position.
Impairment losses
As at the end of the reporting period, there was no indication that the loans and advances to the subsidiaries
are not recoverable. The Company does not specifically monitor the ageing of current advances to the
subsidiaries.
Financial guarantees
Risk management objectives, policies and processes for managing the risk
The Company provides unsecured financial guarantees to banks in respect of banking facilities granted
to certain subsidiaries. The Company monitors on an ongoing basis the results of the subsidiaries and
repayments made by the subsidiaries.
Exposure to credit risk, credit quality and collateral
The maximum exposure to credit risk amounts to RM11,852,976 (2014 RM12,035,725) representing the
outstanding banking facilities of the subsidiaries as at the end of the reporting period.
As at the end of the reporting period, there was no indication that any subsidiary would default on
repayment.
The financial guarantees have not been recognised since the fair value on initial recognition was not
material.
ii)
32.
b)
ii)
2014
2015
Group
1,886,708
595,332
7,273,000
4,602,437
55,800
586,108
14,999,385
2,027,887
1,940,399
6,609,000
5,176,876
34,000
488,501
16,276,663
Carrying
amount
RM
3.50-4.10
8.10-9.10
4.55-4.70
3.50-4.10
8.35-9.35
4.55-4.70
Effective
Interest /
Expense Rate
%
1,886,708
595,332
7,273,000
4,602,437
55,800
662,324
15,075,601
2,027,887
1,940,399
6,609,000
5,176,876
34,000
541,328
16,329,490
Contractual
cash
flows
RM
1,886,708
595,332
7,273,000
4,602,437
55,800
121,644
14,534,921
2,027,887
1,940,399
6,609,000
5,176,876
34,000
112,164
15,900,326
Under
1 year
RM
112,164
112,164
112,164
112,164
1-2
years
RM
336,492
336,492
309,349
309,349
2-5
years
RM
92,024
92,024
7,651
7,651
More than
5 years
RM
The table below summarises the maturity profile of the Groups and the Companys financial liabilities as at the end of the reporting period based on
undiscounted contractual payments : -
Maturity analysis
32.
b)
ii)
2014
2015
Company
100,749
60,266
Carrying
amount
RM
Effective
Interest /
Expense Rate
%
100,749
60,266
Contractual
cash
flows
RM
100,749
60,266
Under
1 year
RM
1-2
years
RM
2-5
years
RM
More than
5 years
RM
32.
Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates
that will affect the Groups financial position or cash flows.
Currency risk
The Group is exposed to foreign currency risk on sales that are denominated in a currency other than the
respective functional currency of Group entities. The currency giving rise to this risk was primarily US.
Dollar (USD), Singapore Dollar (SGD), Renminbi (RMB), Hong Kong Dollar (HKD), South African
Rand (ZAR), Seychelles Rupee (SCR), EURO (EURO) and Brunei Dollar (BND).
Group
US. Dollar
- Other receivables, deposits and prepayments (Note 11)
- Trade payables (Note 19)
- Other payables and accruals (Note 20)
- Cash and bank balances (Note 30)
Singapore Dollar
- Trade receivables (Note 9)
- Trade payables (Note 19)
- Other payables and accruals (Note 20)
- Cash and bank balances (Note 30)
Chinese Renminbi
- Other payables and accruals (Note 20)
- Cash and bank balances (Note 30)
Hong Kong Dollar
- Cash and bank balances (Note 30)
South African Rand
- Cash and bank balances (Note 30)
Seychelles Rupee
- Cash and bank balances (Note 30)
EURO
- Other receivables, deposits and prepayments (Note 11)
- Trade payables (Note 19)
- Cash and bank balances (Note 30)
Brunei Dollar
- Trade receivables (Note 9)
- Trade payables (Note 19)
- Other payables and accruals (Note 20)
2015
RM
2014
RM
5,921
(7,084)
(140,397)
52,772
5,826
(6,460)
357,211
(942)
(222,035)
-
1,328,289
(400)
576
(19,013)
275,017
598
43
291
60,396
60,396
25,501
(93,796)
839
8,026
(80,000)
786
109,410
(75,988)
(85,869)
650,444
-
Decrease
2014
Equity
RM
Profit
before
tax
RM
Equity
RM
Loss
before
tax
RM
(5,763)
(5,763)
(116,281)
(116,281)
A 5% of weakened of RM against the above foreign currency at the end of the reporting period would have
had equal but opposite effect on the above currency to the amount shown above, on the basis that all other
variables remained constant.
Interest rate risk
The Groups fixed rate borrowings are exposed to a risk of change in their fair value due to changes in
interest rate. The Groups variable rate borrowings are exposed to a risk of change in cash flows due to
changes interest rates. Short term investment such as deposits with licensed bank are not significantly
exposed to interest rate risk.
Risk management objectives, policies and processes for managing the risk
The Groups policy is to borrow principally on the floating rate basis but to retain a proportion of fixed rate
debt. The objectives for the mix between fixed and floating rate borrowings are set to reduce the impact of
an upward change in interest rates while enabling benefits to be enjoyed if interest rates fall.
Exposure to interest rate risk
The interest rate profile of the Groups and the Companys significant interest-bearing financial instruments,
based on carrying amounts as at the end of the reporting period was : -
Group
Fixed rate instruments
Deposits with licensed banks
Finance lease liabilities
Floating rate instruments
Bank overdraft
Bankers acceptance
2015
RM
Effective
Interest rate
%
2014
RM
Effective
Interest rate
%
(488,501)
4.55-4.70
231,289
(586,108)
3.30
2.38-4.35
(5,176,876)
(6,609,000)
8.35-9.35
3.50-4.10
(4,602,437)
(7,273,000)
8.10-9.10
3.50-4.10
Interest /Expense rate risk sensitivity analysis : Fair value sensitivity analysis for fixed rate instruments
The Company does not account for any fixed rate financial assets and liabilities at fair value through profit
or loss. Therefore, a change on interest rates at the end of the reporting period would not affect profit or
loss.
90 | CN ASIA CORPORATION BHD (399442-A)
32.
Interest /Expense rate risk sensitivity analysis (contd): Cash flow sensitivity analysis for variable rate instruments
At the reporting date, if interest rates had been 100 basis points lower/higher, with all other variables held
constant, the Groups loss net of tax would have been RM144,846 higher/lower, arising mainly as a result
of lower/higher interest expense on floating rate borrowings. The assumed movement in basis points for
interest /expense rate sensitivity analysis is based on the currently observable market environment.
iv)
Operational risk
The operational risk arises from the daily activities of the Group which includes legal, credit reputation and
financing risk and other risks associated to daily running of its business operations.
Such risks are mitigated through proper authority levels of approval limits, clear reporting structure,
segregation of duties, policies and procedures implemented and periodic management meetings.
In dealing with its stewardship, the directors recognise that effective risk management is an integral part
of good business practice.
The directors will pursue an ongoing process of identifying, assessing and managing key business areas,
overall operational and financial risks faced by the business units as well as regularly reviewing and
enhancing risk mitigating strategies with its appointed and key management personnel.
32.
c)
Financial liabilities
Bank overdraft
Bankers acceptance
Finance lease liabilities
2014
Financial liabilities
Bank overdraft
Bankers acceptance
Finance lease liabilities
2015
Group
Carrying
amount
RM
Total
fair value
RM
- 4,228,238
- 7,006,744
530,665
- 11,765,647
4,228,238
7,006,744
530,665
530,665
4,228,238 4,602,437
7,006,744 7,273,000
530,665
586,108
530,665 12,461,545
The table below analyses financial instruments carried at fair value and those not carried value for which fair value is disclosed, together with their fair values and
carrying amounts shown in the statement of financial position.
32.
33.
Type
Bank borrowing
Discounted cash flows using a rate based on the current market rate of borrowing of the
respective Group entities at the reporting date.
CAPITAL MANAGEMENT
The Groups objectives when managing capital is to maintain a strong capital base and safeguard the Groups ability to
continue as going concern, so as to maintain investor, creditor and market confidence and to sustain future development
of the business.
There were no changes in the Groups approach to capital management during the financial year.
34.
CONTINGENT LIABILITIES
Group
Secured
Corporate guarantees issued to bank for
bank facilities granted to a subsidiary
company
Bank guarantee issued in favour of third
parties
Unsecured
Corporate guarantees issued to bank for
bank facilities granted to a subsidiary
company
Company
2015
RM
2014
RM
2015
RM
2014
RM
11,022,414
11,522,706
67,100
151,000
67,100
151,000
830,562
11,852,976
513,019
12,035,725
Group
Secured
The bank guarantee is secured by the leasehold land and buildings of subsidiary companies.
The directors are of the opinion that adequate allowance has been made in the financial statements for any possible
liabilities.
35.
RELATED PARTIES
Identity of related parties
For the purposes of these financial statements, parties are considered to be related to the Company if the Company has
the ability, directly or indirectly, to control the party or exercise significant influence over the party in making financial
and operating decisions, or vice versa, or where the Company and the party are subject to common control or common
significant influence. Related parties may be individuals or other entities.
Significant related company transactions in the financial statements are as follows : Group
2015
RM
2014
RM
96,000
336,000
96,000
336,000
Company
2015
RM
2014
RM
60,000
60,000
Company
2015
RM
2014
RM
2015
RM
2014
RM
850,536
676,472
109,420
86,000
92,747
943,283
74,495
750,967
109,420
86,000
2015
RM
2014
RM
2015
RM
2014
RM
943,283
750,967
109,420
86,000
Company
36.
COMPARATIVE FIGURES
i)
The following comparative figures have been reclassified to conform with the current years presentation : -
As previously
RM
As reclassified
report
RM
12,693,917
9,224,944
3,468,973
-
Consolidated statement of profit or loss and other comprehensive income: - Distribution costs
- Other expenses
- Cost of sales
ii)
The financial statements for the financial year ended 31st December 2014 were audited by a firm of auditors other
than Kreston John & Gan.
2015
RM
2014
RM
(24,729,315)
1,199
(18,658,264)
85,452
(24,728,116)
(18,572,812)
(143,239)
(129,459)
(24,871,355)
(18,702,271)
(6,924,497)
(6,809,126)
(31,795,852)
(25,511,397)
(19,563,979)
-
(19,335,412)
-
(19,563,979)
(19,335,412)
Company
Total accumulated losses of the Company
- realised
- unrealised
The determination of realised and unrealised profits is based on the Guidance of Special Matter No. 1, Determination
of Realised and Unrealised Profit or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad
Listing Requirements, issued by Malaysian Institute of Accountants on 20th December 2010.
OWNER
AND
LOCATION
1
DESCRIPTION
AND ExISTING
USE
LAND /
BUILT-UP
AREA
(Sq.FT.)
NET
BOOK
VALUE
(RM)
99 years lease
expiring on
11 October 2091 /
22 years
Industrial land
constructed with
office block
and plant
104,004.05/
72,200
11,099,625
99 years lease
expiring on
11 October 2091/-
Industrial land
used as an open
storage yard
70,596.86/-
2,410,560
TENURE /
APPROxIMATE
AGE OF
BUILDINGS
Notes:
For all properties held as long term leasehold properties, the Group has elected to apply the optional exemption, upon
the transition to MFRS, to use the previous revaluation value of these properties as deemed cost under MFRSs. Thus, no
revaluation was done on these properties.
ANALYSIS OF SHAREHOLDINGS
AS AT 31 MARCH 2016
Authorised Share Capital
Issued and Fully Paid-Up Capital
Class of Shares
Voting Rights
:
:
:
:
RM50,000,000
RM45,382,500
Ordinary Shares of RM1.00 each
One Vote Per RM1.00 Share
DISTURBUTION OF SHAREHOLDINGS
Size of
Shareholdings
No. of
Shareholders
% of
Shareholders
No. of
Shares Held
% of
Issued Capital
1-99
100-1,000
1,001-10,000
10,001-100,000
100,001-less than 5% of issued shares
5% and above of issued shares
416
123
1,232
207
41
3
20.57
6.08
60.93
10.24
2.03
0.15
19,763
74,870
3,393,866
6,809,950
13,641,957
21,442,094
0.04
0.16
7.48
15.01
30.06
47.25
Total
2,022
100.00
45,382,500
100.00
No. of
Shares Held
% of
Issued Capital
16,093,535
2,728,800
2,619,759
1,450,000
1,186,900
1,110,400
747,100
35.46
6.01
5.77
3.20
2.62
2.45
1.65
632,000
614,308
1.39
1.36
562,950
451,100
389,400
350,000
1.24
0.99
0.86
0.77
331,000
310,000
304,000
0.73
0.68
0.67
303,000
280,888
273,800
266,400
0.67
0.62
0.60
0.59
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Ho Cheng San
Charles Ross Mckinnon
CN Asia Engineering Sdn Bhd
Charles Ross Mckinnon
Tengku AB Malek Bin Tengku Mohamed
Oon Kim Woon
Public Nominees (Tempatan) Sdn Bhd
Pledged Securities Account For Au Kwan Seng (E-KLC)
Lee Hui Leong
UOB Kay Hian Nominees (Asing) Sdn Bhd
Exempt An For UOB Kay Hian Pte Ltd (A/C Clients)
Angeline Chan Kit Fong
Yew Siew Choo
Chong Mong Yuen
TA Nominees (Tempatan) Sdn Bhd
Pledged Securities Account For Khong Cheng Yee
Goh Chin Chooi
Ang Pek See
HSBC Nominees ( Asing) Sdn Bhd
Exempt An For Credit Suisse ( SG BR-TST-Asing)
Lee Kooi Yin
Hoo Soot Khing
Lee Wan Hooi
M & A Nominee (Tempatan) Sdn Bhd
Pledged Securities Account For Fong Kiah Yeow (M & A)
AS AT 31 MARCH 2016
21
No. of
Shares Held
% of
Issued Capital
250,000
0.55
241,000
238,400
233,161
228,800
200,000
199,700
191,500
187,700
0.53
0.53
0.51
0.51
0.44
0.44
0.42
0.41
180,000
0.40
33,155,601
73.06
22
23
24
25
26
27
28
29
30
Total
SUBSTANTIAL SHAREHOLDERS
No. of Shares Held
Direct
Indirect
Name
1
2
3
Ho Cheng San
Charles Ross Mckinnon
CN Asia Engineering Sdn Bhd
16,093,535
4,178,800
2,619,759
2,619,759*
-
% of Issued Capital
Direct
Indirect
35.46
9.21
5.77
5.77
-
Deemed interested by virtue of his substantial shareholdings in CN Asia Engineering Sdn Bhd
DIRECTORS SHAREHOLDINGS
Name
Dato Hilmi bin Mohd Noor
Ho Cheng San
Ir. Lee Lam
Chong Ying Choy
Yoong Nim Chee
Roy Ho Yew Kee
2,619,759*
-
% of Issued Capital
Direct
Indirect
35.46
0.03
0.34
-
5.77
-
Deemed interested by virtue of his substantial shareholdings in CN Asia Engineering Sdn Bhd
FORM OF PROxY
CN ASIA CORPORATION BHD (399442-A)
(Incorporated In Malaysia)
I/We
(NRIC/Company No.)
of
(fulladdress)
of
(fulladdress)
(name of proxy in full) (NRIC No:
or failing him/her,
of
(fulladdress)
orthe CHAIRMAN OF THE MEETING as my/our proxy to vote for me/us on my/our behalf at the Twentieth Annual General Meeting
of the Company to be held at Meeting Room Livia 1, UG Level, ibis Styles Kuala Lumpur Cheras, C180 Hotel Sdn Bhd, Jalan C180/1,
Dataran C180, 43200 Cheras, Selangor Darul Ehsan on Wednesday, 15 June 2016 at 10.00 a.m. and at any adjournment thereof,
and to vote as indicated below:Resolution 1
Resolution 2
Resolution 3
Resolution 4
Resolution 5
Resolution 6
Resolution 7
Resolution 8
Resolution
Toreceive the Audited Financial Statements for the financial year ended 31
December 2015 together with the Reports of the Directors and the Auditors
thereon.
Toapprovepaymentof directors fees in respect of the financial year ended
31 December 2015.
To re- elect as Director Mr. Lee Lam (retires under Article 84 of the
Companys Articles of Association).
To re-appoint Dato Hilmi bin Mohd Noor as Director pursuant to Section
129(6) of the Companies Act, 1965.
To re-elect as Director Mr. Roy Ho Yew Kee (retires under Article 91 of the
Companys Article of Association).
To re-appoint Messrs Kreston John & Gan as Auditors and to authorise the
Director to fix their remuneration.
To retain Mr. Chong Ying Choy as an Independent Non-Executive Director.
Authority to allot and issue shares pursuant to Section 132D of the Companies
Act, 1965.
For
Against
(Please indicate with an (X) in the spaces provided whether you wish your votes to be cast for or against the resolution. In the
absence of specific directions, your proxy will vote or abstain from voting at his/her discretion.)
No of Shares
Proxy 1
Proxy 2
Proxy 3
Total
Dated this
Percentage
100%
day of
2016
Signature/Common Seal of Shareholder
Contact No.:
Notes:
1. Only depositors whose names appear in the Record of Depositors as at 7 June 2016 shall be regarded as Members and entitled to attend,
speak and vote at the meeting.
2.
A Member entitled to attend and vote at the meeting is entitled to appoint one (1) or more proxies to attend and vote instead of him. A proxy
may but need not be a Member of the Company and the provisions of Section 149(1)(b) of the Companies Act, 1965 shall not apply to the
Company. A proxy appointed to attend and vote at the meeting shall have the same rights as the Member to speak at the meeting.
3.
Where a Member appoints more than one (1) proxy, the appointment shall be invalid unless the Member specifies the proportion of his
shareholdings to be represented by each proxy.
4.
The instrument appointing a proxy in the case of an individual shall be under the hand of the appointor or of his attorney duly authorised or if
the appointor is a corporation, either under seal or under the hand of an officer or attorney duly authorised.
5.
The Proxy Form must be deposited at the Registered Office of the Company at Lot 7907, Batu 11, Jalan Balakong, 43300 Seri Kembangan,
Selangor Darul Ehsan, not less than forty eight (48) hours before the time set for holding the meeting or any adjournment thereof.
AFFIX
STAMP
The Company Secretary